| Subject: | [socialcredit] Re: Ryan's debt virus bogey | | Date: | Sunday, May 1, 2005 05:17:29 (-0700) | | From: | William B. Ryan <w_b_ryan @.....com>
|
This is debt virus, John, because you
differentiate the failure to spend
interest income from the failure to
spend ANY income, whatever its source.
By failure I mean the failure to spend
the totality of one's income on goods
and services, but saving or investing a
portion of it instead. The general
theorem regarding the reinvestment of
income was stated by Douglas. You
apparently think the effects are
different between the two. It's this
fixation on interest that makes it debt
virus. The implication is exactly what
I mean--it's nutty. You reject the
term because of its implication.
Your final statement appended below is
pure debt virus, and complete nonsense.
I don't think Jacques Jaikaran would
find a word in it with which he would
disagree.
-
--- John Hermann <hermann@picknowl.com.au> wrote:
> At 11:55 PM 30/04/2005 -0700, Bill Ryan wrote:
>
> [Ryan] How is this not debt virus, John?
>
> Answer: It is not debt virus for the following
> reasons:
>
> 1. As I understand it, the debt-virus explanation of
> banking assumes that interest payments
> disappear
> into an economic void or black hole -- never to
> be
> seen again. It also ignores the existence and
> role
> of the central bank. I have already mentioned
> on this
> list (were you paying attention?) that part of
> a lender's
> income derived from interest and other charges
> is
> SPENT back into the transactive economy.
>
> 2. The debt virus hypothesis also seems to lead to
> the
> conclusion that debt must grow in an
> unrestrained
> manner in relation to the money supply. I did
> not say
> or imply such a thing - because I believe it to
> be false.
> What I DID say is that the growth of money is
> locked
> into the growth of debt. That's a different
> statement.
> There are good theoretical reasons - supported
> by
> empirical evidence - for believing that
> aggregate debt
> cannot grow faster than does the money supply,
> at
> least in regard to the long-term (secular)
> trend. And
> also for believing that the volume of aggregate
> "debt
> to deposit-taking institutions" cannot exceed
> twice
> the volume of broad money.
>
> [Ryan] And how is it not the pinheaded alternative
> to A+B?
>
> Answer: It is not an alternative to A+B, and is not
> directly related to A+B. I have also explained
> this
> point to you previously. You seem to be
> suffering
> from a (selectively?) poor memory Bill. The
> flaw in
> the modus operandi of the financial system that
> I
> have been discussing exacerbates the existing
> A+B effects.
>
>
> -- John Hermann <hermann@picknowl.com.au> wrote:
> Only the loan principal is created when a
> deposit-
> taking institution implements a new loan. Of course
> the interest needed to repay the loan in full also
> needs
> to be created, however under the present arrangement
> interest must be created continuously into the
> future -
> as an integral part of the debt-driven process of
> monetary growth.
> At every point in time the transactive part of
> the money
> supply (ie, M1) is quite insufficient to pay off the
> aggregate of principal and interest due on all
> loans,
> because a significant part of the interest income
> received from previous loans was not spent back into
> the transactive part of the economy, but instead was
> absorbed into the investment sector. A significant
> part
> of interest income is always transformed into the
> general reserves of lending institutions. This
> dynamic
> translates to a tendency for a shortfall of money
> required
> by the production and consumption sectors alike.
> And
> the ongoing deficiency can only be made up for under
> current arrangements by an ongoing and
> ever-increasing
> level of borrowing by producers and consumers - that
> is,
> an upward spiral in the growth of debt and money.
> The
> growth of the money supply is locked into the growth
> of
> debt. -- John H.
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