| Subject: | Re: [socialcredit] land a scarce commodity. | | Date: | Sunday, September 12, 2004 23:07:32 (+0200) | | From: | Jessop Sutton <sutton @...........za>
|
Bill
I don't think we have pushed this one far enough yet.
In an e-mail on 05/09/2004 you wrote:
"A prudent banker would not extend a loan
to a small-incorporated proprietorship if the assets
of the business plus the assets of the guarantor were
insufficient to secure the loan. He would be crazy
to do so, and quite irresponsible, wouldn't you say?"
From this I take it (and would agree fully) that most credit in the system is
at some point underwritten by property to which a borrower cedes 'ownership'
to a lending bank until such time as the loan is repaid. This is true of
credit issued in respect of a business loan or a private loan, of a housing
loan, or for the purchase of a motorcar. In the case of a business borrowing
for production purpose, the credit (loan or overdraft facility) may appear to
be covered by the banks confidence in the borrower to produce goods and sell
them but, in the event of failure and liquidation, the bank still emerges as
a preferential creditor and winner of the property.
So the entire economy is underwritten by the property values in the country
mortgaged to the banking system. These property values may consist in land
only, or in land and improvements, but, as I contended previously, even if a
property is sold and the 'improvements' are to be demolished to make way for
new and better, the selling price is still at the improved value of the land,
ie., that becoming the current value of the erf only.
The second factor is that, whether changing hands or not, the property values
generally (some localities in the Earth may not conform) escalate all the
time due to those around them changing hands. Therefore everything with
financial implications connected with the property -- such as rates, taxes
and net 'rent' on the property -- also increases regularly, with the effect
of increasing the costs built into everything being produced in/on the
property.
But my point was that this escalation of values is primarily due to demand for
property, which is tantamount to 'scarcity'. So, though there is no scarcity
of goods which can be produced, the PRICES of all goods produced are
profoundly affected by this 'demand' for property (on land in the right
location).
Landed Property is thus the chief repository for capital, where it sits and
grows, and from time to time is risked in some other venture through the
agency of the banking system -- and then returned to sit and grow again.
It seems that the whole country is bonded to the banks, and there is a
never-ending circular movement within the banking system of credits based on
those same properties with the escalating values? And -- I suppose this is
what I am getting at -- while the 'demand' for space exists there is no
stopping the process. How far wrong can I be I in this?
Jessop.
----------------------------------
On Saturday 11 Sep 2004 8:16 pm, william_b_ryan@yahoo.com wrote:
> I have appended some comments below:
> [JESSOP] And it is the land more than the buildings
> erected on it that is the factor. Here in a CBD a
> multi-story building can sell for the full market
> price only to be demolished so that a new and bigger,
> posher, building can be erected.
> ----------------------------
> [COMMENT] That is one way the utility of land is
> continuously augmented. The operative term is
> "redevelopment" made possible through credit. I've
> appended a photograph of the South African Reserve
> Bank building also archived at
> http://www.geocities.com/socredus/compendium/sareservebank.jpg
> Surely it is the most impressive central bank
> building in the world, putting the headquarters
> building of the United States Federal Reserve to
> shame. The SA Reserve Bank is also probably the most
> orthodox and conservative central bank in the world.
> What the SA Reserve Bank can accomplish for itself -
> marshalling the credit at its command - is
> conceivably possible (in a general sense) for the
> economy as whole from realizable productive capacity.
> But that would require it to become something other
> than the most orthodox and conservative central bank
> in the world.
> From *Notes for Swanwick*:
> http://www.geocities.com/socredus/compendium/swanwick1924.txt
> ***But the essential point in the position of banks,
> which is so hard to explain, and which is grasped by
> so very few people, is that their true assets are not
> represented by anything actual at all, but are
> represented by the difference between a society
> functioning under centralised and restricted credit
> and a free society unfettered by financial
> restrictions. To bring that perhaps somewhat vague
> generalisation into a more concrete form, the true
> assets of banks collectively consist of the
> difference between the total amount of legal tender,
> or Government money, which exists, and the total
> amount of bank credit money, not only which does
> exist, but which might exist, and which is kept out
> of existence by the fiat of the banking executive.***
> --->
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