| Subject: | Re: [socialcredit] Replying to John Rawson 1 | | Date: | Friday, October 21, 2005 16:44:51 (-0700) | | From: | William B. Ryan <w_b_ryan @.....com>
|
| In reply to: | Message 2980 (written by Joe Thomson) |
Yes, to control inflation, you would increase reserve
requirements and lower permissible interest rates.
Presently, they attempt to manipulate interest rates
up or down "competitively" in accordance to the
quantity theory of money, by what are called "open
market" operations--the purchase and sale of
government securities by the central bank. (In the
old days it was supposedly the purchase and sale of
gold bullion.) In reality, the central bank (meaning
the United States Federal Reserve) now purchases and
sells securities the banks create between themselves,
called "repos." The technical formality of having to
deal with U.S. government securities was dispensed
with some time ago, though the news of that
development has not yet reached the textbooks.
We are told that the net purchase of securities by the
central bank, while undoubtedly driving up the price
of the securities and therefore the income of the
banks and their colleagues on Wall Street, actually
introduces reserves into the system, thereby driving
down the rate of interest to the ordinary customers of
bank services. At any rate that is the propaganda
line.
I'm talking about something completely different,
regulating interest the old-fashioned way, by issuing
a directive from above: Thou shall not charge
interest above a certain amount.
Remember that there is a substantial actuarially
determined insurance component to interest that must
be collected to cover bad debt; the lower the
permissible interest rate, the smaller is the
potential "credit worthy" customer base for bank
credit.
Both measures would have the effect of reducing
credit, inducing economic contraction if not utter
collapse, if it were not for the fact that the
dividend would be commensurately increased.
And it would be increased even more, in compensation
for labor displacement.
-
----------original message----------
Subject: Re: [socialcredit] Replying to John Rawson 1
Date: Friday, October 21, 2005 13:06:08 (-0700)
From: Joe Thomson <thomsonhiyu@shaw.ca>
(Bill Ryan wrote:-) "The exponential increase to costs
is addressed most efficiently by increasing bank
reserve requirements and lowering permissible interest
rates, since both measures would have the effect of
reducing the flow of bank credit in respect to the
flow of goods and services** (** Inasmuch as the
scope for "credit-worthy" customers for bank credit is
reduced). (which will work wihout economic contraction
or collapse if and only if effective demand is
concurrently augmented to allow the increase to the
rate of profit available for investment to compensate
for the decrease in available bank credit.)
-----------------------------------------------------
Bill, could you please elaborate a little more on
this. You are tightening bank 'reserve requirements'
and at the same time 'lowering' permissable interest
rates? You want 'credit' to be more difficult to
obtain when costs are rising exponentially, but for
what it is 'low risk' (production that is essential),
the cost of borrowing will fall? Is that what you
mean?
Joe
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