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Sent: Friday, August 19, 2005 12:06
PM
Subject: Re: [socialcredit] Timely
articles about the usuryfree community currency mov...
Abel@lightnet.co.uk wrote:"Once
the "factory" is built, equipped, and staffed; it costs no more to agree a
credit limit of 100,000 or 100,000,000 than of 100 pounds. There *is* a
limit to the size of credit, but it lies with the borrower, i.e her/his
willingness to take on the "debt"."
Actually the relative cost of lending increases as the size of the
loan goes down, particularly in business lending which is harder to
grade consistently for a sale on the secondary
market.
Interest rates vary from a few percent to over twenty at times, and
are not related to the administrative expenses incurred in creating a credit
account. Interest rate is used in attempts to regulate the money supply by
making the use of credit cheaper and attractive or vice versa.
There have been estimates of true average costs of between 1 and
1.5% of the amount. Unfortunately I cannot provide sources but my guess is that
it would be relatively easy to establish the "fixed costs" of creating credit
accounts if banks were willing to make their accounting transparent.
Banks in fact make a charge for each transaction on business
accounts as well as an interest charge on authorised overdraft.
A historical fact is involved here as well. Up until forty of
fifty years ago it was relatively easy to open a deposit account. But to
get a cheque book to go with it was a different matter, because the
bank was responsible if cheques bounced. The high street banks were mainly
engaged in handling people's deposit accounts and fee based services other than
credit creation.
Thanks for the comment,
Janos | 
Re: [socialcredit]
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