| Subject: | Re: [socialcredit] Replying to Janos -- Usury | | Date: | Saturday, August 27, 2005 16:25:40 (+0100) | | From: | Janos <abel @...........uk>
|
Bill,
Thank you for your detailed reply and apologies for the delay in
responding.
I have been agonising over a response and have decided to give up. I can
only say that you have provided a *justification* for the way new money is
provided for the economy.
This still leaves the fact that something is badly wrong with the private
creation of credit; that is, with the way the banks "make money" and charge
for it.
"...Mr. Jones only gets [money] from somebody else, but the banker *makes*
it." (Emphasis in the original).
I can only point to the trillion+ indebtedness of the British people and
the seven trillion with which US citizens are burdened, in order to have
the required amount of money available for the economy.
So please, it is a critique of the system that is needed, not a
justification of it.
On second thought, we have had the critique for decades but for some reason
have not taken the second step of acting on it:
"...you have an enormous vested interest possessing the most powerful
monopoly that the whole history of the world has ever known, the monopoly
as we call it, of credit, the monopoly of the creation and [destruction] of
money..." Oslo, 14 Feb, 1935
Janos
PS A (naive?) proposal.
Why not let the banks create credit, but instead of destroying it when it
is paid back, lodge it with the Treasury who then reduces taxes or spends
it on something useful like a school, or whatever?
----- Original Message -----
From: "William B. Ryan" <w_b_ryan@yahoo.com>
To: <socialcredit@elistas.com>
Sent: Friday, August 19, 2005 3:23 PM
Subject: [socialcredit] Replying to Janos -- Usury
> [Janos Abel] This should not to be conflated with
> interest on credit created (a very particular service,
> different from other ones performed by banks -- like
> finding a borrower for a client's surplus savings).
> ---------------------------------------
> -----------------------------------------
>
> Janos, when a bank grants a loan, the funds
> represented by the loan are the bank's liability,
> which doesn't go away if the borrower defaults or
> repudiates his debt to the bank. Think of a pure
> banknote system: if the borrower defaults, the
> banknotes are still out there representing claims on
> the bank. That is a cost to the bank that has to be
> paid by the borrowers who do not default. In this
> respect banking is a variation on the concept of
> insurance, regardless of whether a "client's" savings
> are involved. In the specific case of a "client's"
> savings, the savings represents the liability of the
> bank to the "client," which doesn't go away if the
> borrower of the "savings" defaults on his loan. When
> no "client" is involved, the savings represents the
> banker's equity in his business, which is reduced
> commensurately if the borrower defaults.
>
> Understanding what I just said requires familiarity
> with the conventions of double entry accounting.
> -
>
> [Janos Abel] Furthermore, the fact that a trader,
> let's say, does not know whether his payment is
> "saved" or "credit" money, cannot be a justification
> for ignoring the difference between usury and
> interest.
> ---------------------------------------
> -----------------------------------------
>
> It seems from this that you think interest is
> inherently "usurious" if collected from a loan from
> bank "credit," but "nonusurious" if collected from a
> loan made from "savings." No. Whether or not
> interest is usurious depends on whether or not it is
> reasonable to expect that the loan is productive
> regardless whether or not the particular loan is made
> from "credit" or "savings." By productive we mean
> that it will benefit all the parties involved --
> lender, borrower, and community -- not just the
> lender. It goes to the intent of the parties
> concerned as well as the practical reality of the
> mechanics of the process.
>
> As to the mechanics of the process, in a
> hypothetically pure commodity or quasi-commodity
> system with a fixed quantity of "money," net saving
> from income will impede the community's ability to
> trade and function economically; lending from that
> income at interest is the extortionate extraction of
> profit from the community.
>
> If we are to believe Innes
> http://www.geocities.com/new_economics/innes/
> it is doubtful that such an economy ever existed, even
> in the time of Aristotle, whose economics is the
> formulation of the theory that interest is the
> equivalent to usury.
> -
>
>
> --- Janos <abel@lightnet.co.uk> wrote:
>
> "William B. Ryan" <w_b_ryan@yahoo.com> wrote:
>
> [janos:]
> > You should ask instead "Why are you continuing to
> pay
> > them (the bankers) a FEE (usury) when it costs them
> > nothing to create the credit they lend to you?"
> > ----------------------------------->
> [Bill responding:]
> >> But the assumption that "it costs them nothing to
> >> create the credit they lend to you" is false.
> There
> >> are real costs to supplying financial services in
> any
> >> conceivable financial system.
>
> Bill you are referring to costs to do with
> administrative expenses of a banking establishment.
> This should not to be conflated with interest on
> credit created (a very particular service, different
> from other ones performed by banks--like finding a
> borrower for a client's surplus savings). They are
> more like fixed costs. 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".
>
> >> Moreover, the terms "usury" and "interest" are not
> >> synonyms--not morally, not legally.
>
> I fully agree here, and I think it is a bit of an
> intellectual disaster for monetary reformers to deny
> the difference. The difference lies in what the
> borrower gets in return for the interest. Is it
> someone else's hard earned savings, or just an
> authorisation to issue cheques up to a certain amount?
> Furthermore, the fact that a trader, lets say, does
> not know wether hes payment is "saved" or "credit"
> money, cannot be a justification for ignoring the
> difference between usury and interest.
> ...
> > --- Janos <abel@lightnet.co.uk> wrote:
> >
> > > I, also, read everything here but post rarely.
> > >
> > > There is a simple answer to your question:
> "because
> > > it is not accepted as payment for any of the
> > > essential bills". Indeed, if such alternative
> > > schemes threatened to become effective, they would
> > > be outlawed.
> > >
> > > You should ask instead "Why are you continuing to
> > > pay them (the bankers) a FEE (usury) when it costs
> > > them nothing to create the credit they lend to
> you?"
>
> > > ----- part of Original Message -----
> > > From: Tom Kennedy
> > > To: Social Credit
> > > Sent: Thursday, June 02, 2005 12:37 PM
> > > Subject: [socialcredit] Timely articles about
> the
> > > usuryfree community currency movement in a
> national,
> > > Financial magazine in Canada ...
> > >
> > > ... I simply ask people: Why are you continuing
> to
> > > use their money and paying them (the bankers) a
> FEE
> > > (usury) when you can now create and spend your own
> > > money for FREE? ...
> > >
>
>
>
>
>
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