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Subject:[socialcredit] Re: the credit theory of money
Date:Friday, November 26, 2004  09:21:06 (-0800)
From:william_b_ryan <william_b_ryan @.....com>

>[RESPONSE]  And here we have the absurdity that
>"mortgages, consumer loans and rent seeking" are
>"unproductive" ipso facto.
No, just that contrary to your claims, they are not
ipso facto productive, and in fact are often not
[11-26] I didn't say they are "productive" ipso
facto.  I disputed the assertion they are
"unproductive" ipso facto.  Perhaps you should look
up the meaning of "ipso facto."
>>[REJOINDER] Duh?  Are you really so clueless?  Of
>>course they pay less than the rate they charge. 
>>Banking is a business.
>It is a rent seeking "business," not a productive
>one.  You evidently do not know the difference.
>[RESPONSE]  But entrepreneurs "seek rent."  That's
>what they do.
No.  Some seek to produce.
[11-26] Evidently, in your peculiar jargon, "seeking
rent" is ipso facto "unproductive" and a form of
theft.  Again, you need to look up the meaning of
"ipso facto" to know what I just said.
In the English language, I am informing you, the
terms "rent," "profit," "dividends," "interest"
relate to different aspects of the same phenomenon. 
Economists use the terms pretty much interchangeably
depending on the context.  It would be helpful if you
would learn the conventions of the English language
rather than relying on "definitions" from money
cranks and extremists.  In the free economy, "rent
seeking" simply means entrepreneurial initiative. 
They attain "rent" through innovation that increases
the quantity, variety and quality of the goods and
services they supply from the perspective of final
consumers in competitive markets.  In respect to
bankers, it is their share of the increasing wealth
they help create through the financial services they
supply.  That is at any rate the theory as opposed to
the "statist" theory you seem to espouse.
>>>>Sales of goods and services to consumers
>>>>commence the "reflux" back to the banks in the
>>>>lending-investing-amortization cycle.  The
>>>>informational feedback mechanism from consumers to
>>>>entrepreneurs and their financiers is profit-loss.
>>>That would be true for investment banks that created
>>>no money and effectively just acted as agents to
>>>their depositors, like mutual funds.
>>>[REPLY]  It is true for all banks.
>>Wrong.  There is a difference between lending money
>>as an agent for its owner and creating money ex
>>nihilo in order to obtain interest on it.
>>[REJOINDER] Again, assertion without argument.
>???  What "argument" is needed to support a self-
>evident fact?
>[RESPONSE]  It is "self-evident" to a self-educated
>ideologue too stubborn to learn or even to listen.  I
>say "self-educated" because you couldn't have picked
>up the peculiar jargon you are exhibiting from the
>formal economics curriculum at any school that I am
>aware of, or at any rate any school with
>accreditation.  I suppose there are unaccredited
>"Marxist" or "Georgist" "schools" that spout such
So in your view, there is no difference whatever
between creating money in order to charge interest on
it and acting on commission as agent for the owner of
pre-existing money???  In the context of the history
of banking and currency, such a view is plainly
[11-26] You should look at the Innes papers for a
different perspective on the historical narrative,
which Hummel very tersely summarized in the
initiation to this thread.  The papers are archived
and elsewhere on the Internet.  My argument is
consistent with Innes's thesis, which is certainly
not "plainly idiotic."  It may be disputed, but it is
not idiotic.  Innes makes a persuasive case that
takes more than simplistic assertion like yours to
As to the answer to your question, there is division
of labor in the financial sector.  That division
could in concept be under one roof called a "bank,"
or under two roofs called "bank" and "savings and
loan," etc.  The "banks" could in principle be
prohibited from keeping anything but "checking"
accounts for depositors, and the "savings and loans"
could be prohibited from keeping anything but
"savings" accounts for their depositors.  Such an
arbitrary demarcation would not change the
fundamental creditary nature of market economies. 
All bankers no matter what they are called
intermediate between creditors and debtors by
becoming creditors and debtors to their customers.
The modern concept of money is broader than the
specific form of money that people receive in their
pay vouchers.  Poorly informed people think in terms
that what they receive in their pay vouchers is the
quasi-commodity "medium of exchange."  In reality
they are mere "tickets" redeemable in the retail
market.  General fungibility (without which
competitive markets could not exist) requires that
bankers cooperate among themselves; making banking a
natural monopoly that is most efficient in supplying
the service it provides to the extent it is a
monopoly.  Being a monopoly, it must be regulated by
an independent authority so its privileged but
necessary position is not abused.  Modern industrial
civilization does not operate through a "medium of
Transactions between producers supplying the retail
market overwhelmingly involve offsetting balances
involving debits and credits in the books of the
banks following the rules of double-entry (accrual)
Profit (rent, interest) in double-entry accounting is
not the measure of the net gain of some arbitrarily
specified commodity (like gold coins) or quasi-
commodity (like Treasury notes), but the operational
increase in the differential between assets of all
types and liabilities. 

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