| Subject: | [socialcredit] Jessop's question restated | | Date: | Wednesday, June 1, 2005 08:30:53 (+0200) | | From: | Jessop Sutton <sutton @...........za>
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I previously wrote: "I will come back later with a
clearer question (if I can make it any clearer)."
Jessop.
==========================
I will try again. If I don't succeed this time, it will be time for me to give
up completely.
Let's stop the clock and take a look at the 'stanstill position' of an
economy. There is an amount of 'money' in the system consisting predominantly
in credit but supported by an amount of cash in a defined ratio. Every bit of
the 'money' is owned by someone -- some person, some business, some entity,
including the 'people' administered through the governement. Tim Knight has
been trying to tell us this for some months. There is no free money in the
system. When credit is passed from one entity to another, an adjustment is
made at the central bank between banks' reserve accounts to reflect the
change. If money is temporarily taken out of the system, the new possessor of
the bank notes has pieces of paper which are bearer cheques drawn on the
Reserve Bank -- "I promise to pay the bearer on demand at Pretoria Five Rand"
(I still have in my possession and old R5 note with that inscription). [see
Note below]
Forgetting for the moment about the way the money in the system increases (we
are looking at a standstill position), as ownership passes from one ownership
to another, credit is cancelled in one place and established in another. It
is kept in balance.
Now we introduce movement, and advance from the standstill position: The
National Credit Authority instructs the Reserve bank to establish a credit
balance in my account at my bank without at the same time 'creating' new cash
to support the new credit in the system. The rule is violated: the economy is
out of balance.
If we can admit that there is a problem, we could then start to discuss
possible ways past it in a Social Credit economy. I have suggested previously
that to print new notes for the Reserve Bank to hold in the NCA's account may
be possible, but it does violate the manner in which the volume of 'money'
available in the system is normally allowed to grow and could have
undesirable consequences.
Another possibility is that all pretence at a legal reserve requirement be
abolished, but that could send an economy out of control. New Zealanders on
this forum say that NZ has done away with the legal reserve. Perhaps if they
could explain exactly how their banking sytem now works in the conomy, it
would give us (at least me) something to work on. At the moment I have little
hope.
Bill, now I confess that I do not understand your explanation given in your
reply of 28/05/2005: - "The central bank is the central bank, Jessop. It is
concert master to the orchestra. The $1000 doesn't come from anywhere when
the central bank creates it ex nihilo. It is a credit applied through
bookkeeping entry to the depositing bank's account when the central bank's
check clears. Inasmuch as the check was drawn against the central bank
itself, the credit is not debited against any other bank in the system."
Maybe this does give the answer to my question, but I don't see it. Without
the introduction of additional new bank notes to maintain a relationship
between credits and backing-cash in the available 'money' supply, the problem
remains exactly as I outline it above. Can you show me differently?
Kind regards to all,
Jessop.
=====================
[Note] I still have in my possession an old Reserve Bank note with a nominal
value of R5. It is inscribed above the signature ot the Goverenor of the
Reserve Bank: "I promise to pay the bearer on demand at Pretoria Five Rand".
This was later ommitted from bank notes because it became meaningless in the
sense that if I did go there, they could only give me another bank note to
the same value in exchange. I might just as well keep the R5 note that I
have. The "I promise to pay ..." clause was valid in the days when we still
had the gold standard when gold to the value of the note would have been
expected -- not that many people made any use of that facility just before
the end of the gold standard in our country which I vaguely remember was
either just before or just after the Second World War. I remember grown-ups at
the time speaking about it.
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Jessop's question 
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