| Subject: | [socialcredit] Re: Extrapolating A+B Part 1 | | Date: | Monday, September 19, 2005 14:20:05 (-0700) | | From: | William B. Ryan <w_b_ryan @.....com>
|
Chris, I was hoping you would focus your attention on
and defend specifically this assertion you made in
your recent essay in Asia Times Online. It is a
common refrain of "monetary reformers" that I am
challenging, so please don't think I was picking on
you. In an earlier incarnation it was called the
"debt virus hypothesis." I was merely nominating you
for articulate sparring partner, should you choose to
take on the assignment:-
"...when credit institutions create money through a
loan, they do not create the money necessary to repay
the interest on that loan."
It is my contention that the assertion has no basis in
logic, and is in fact nonsensical. Moreover, it is so
obviously nonsensical to ordinary educated people, if
only intuitively, that it automatically labels the
person who propounds it as being a crank in their
eyes, to be politely ignored, as they usually are.
The hypothesis is however stated in the form of a
paradox that certainly does deserve an answer, I
think, like Zeno's paradox. It is something that I
myself wrestled with when I first began the study of
economics seven years ago, so I can feel their pain.
Also, you appear to be confused by what is meant by
'A' and 'B' as the terms are used in social credit
analysis.
They refer to the A+B theorem of C. H. Douglas, the
analytically correct alternative - which I intend to
demonstrate - to the debt virus hypothesis.
If you will address your reply to
socialcredit@elistas.com I will approve your message
for distribution to the list.
--- chris cook <cojock@hotmail.com> wrote:
William
All current and past analysis is based upon existing
forms of "equity" ie shares in "Joint Stock Limited
Liability Companies" and debt issued by central banks.
These in turn are based upon existing absolute forms
of property rights.
In fact it is possible to invest utilising other forms
of 'legal wrapper" eg trusts which are very popular in
Canada (Income and Royalty Trusts) and making fortunes
for the Australian Macquarie Bank elsewhere. As you
knoiw, I point out the emergence of what I believe to
be a new and "optimal" form of legal wrapper in the
form of the "Open Corporate" UK LLP.
ie a new form of Investment - I call this "Asset-based
Finance".
http://www.opencapital.net/papers/asset-based.htm
The other form of Finance I call "Deficit-based
Finance"
ie Credit or "Time to Pay"
This exists either as Trade Credit - and no-one knows
how much of this there is -or the form upon which our
monetary system is based.ie Credit created by "Credit
Institutions".
Bank-created Credit is either unsecured or secured by
a legal claim over assets eg a mortgage. Which makes
it what I call "Deficit-based" but "Asset-backed".
Two thirds of money in circulation in the UK is
deficit-based and property-backed.
We already see the disintermediation of Banks through
www.zopa.com
I point out that a multilateral guarantee of trade
credit through a "Guarantee Society" or "Clearing
Union" essentially monetises trade credit, again
disintermediating Banks.
The point I am getting to is that using these new
partnership-based tools we can actually distinguish A
from B when Banks cease to be "credit intermediaries"
- as they will -since disintermediation is an
inevitable consequence of the pervasive spread of the
Internet.
A being the sum of "Investments" see also
http://www.opencapital.net/co-ownership.htm
and B being the total of mutually guaranteed
(interest-free) trade credit in circulation.
I believe these new partnership-based tools will come
to replace the existing structure simply because they
work better and are sustainable.
Best Regards
Chris Cook
-
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