| Subject: | Re: [socialcredit] straw vote (Joe replies to Ken) | | Date: | Tuesday, November 15, 2005 20:42:10 (-0800) | | From: | Joe Thomson <thomsonhiyu @....ca>
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| In reply to: | Message 3075 (written by Kenneth Palmerton) |
(Ken Palmerton wrote:-) > Hi Joe.
> Though I would not wish to argue with you on this point, you must be right
> that a free citizen can "spend " their money any way they wish. If they
> DID in fact choose to so do there would have to be a mechanism to allow
> for the costs that such "investment" set in train.
(Joe replies:-) I believe under the Social Credit proposals there would be
such a mechanism, Ken. It involves having a proper set of national
accounts, and a means to credit consumers overall with the rate of
national 'capital appreciation' in excess of the rate of national 'capital
depreciation' in any given time period, and distribute that to all
individual consumers in 'debt-free' credit through the 'national dividend'
and the 'consumer price discount'.
>
(Ken continues:-) > I have not heard this compensation spelled out.
(Joe replies:-) 'Investment' leads to an increase in the rate of 'capital
appreciation' (if it's in new productive capacity), does it not?
(Ken continues:-) Just as I have heard few argue that such issued credit
needs to be kept
> out of the hands of our trading banks. They have a nasty habit of using
> ANY money they can lay their hands on to fuel the notion that they "only
> issue what is deposited with them ".
>
> But then that is maybe another issue :-)
(Joe replies:-) I don't think there's anything in Douglas to prevent the
recipient of a National Dividend from depositing his dividend in the trading
banks, or buying securities, giving it to charity, getting drunk on it, or
doing whatever he wants with it. And why should there be? It's HIS money,
and if converted to cash is indistinguisable from all other cash.
As far as the 'trading banks' relation to it all goes, the basic
proposition as I understand it is still , "Loans create deposits", not the
other way about. It's a 'creditary' concept.
But 'banking', as has been said on here often, has a similarity to
'insurance'. Just because Lloyd's of London, say, may have 'insured' the
'Titanic' against sinking or other specified perils, that didn't mean they
'owned' the 'Titanic', (at least while it was afloat), did it?
Yet when it hit the berg and went to its watery grave the loss was Lloyd's.
To the extent they'd contracted to cover it. Not the White Star Line's,
who'd paid them to assume most of the risk.
So it also seems to be with 'banking'. Douglas said the actions of the
banker were "...probably the only known instance of the possibility of
lending something without parting with anything, and making a profit on the
transaction, obtaining in the first instance his commodity free."
Now if we look carefully at the wording of that, notice Douglas says
"without parting with anything", which I think precludes that the banker is
loaning something that has previously been deposited with him. If the
banker were actually loaning his customers deposits, he would be parting
with 'something', would he not? And since he (still) pays interest on those
deposits, that wouldn't exactly be "obtaining his commodity free" if those
'deposits' were what he was loaning, would it? So, if Douglas is correct,
and he is, the banker isn't 'parting' with anything, is he? It's entirely
'creditary'. Note, however, that Douglas doesn't say, ''without RISKING
anything'', does he?
The bank, while it most definitely DOES NOT OWN the credit it 'lends',
(note Don Bethune, for what must be at least the sixth or seventh time now,
from me), nor lending its 'liabilities', (its customer's deposits), IS most
definitely on the hook for it if the borrower defaults. The financial
'loss' in that eventuality, like that to Lloyd's when the "Titanic" sank, IS
the bank's. And reduces the shareholder's equity in the bank the same way
Lloyd's 'names' would have their personal equity reduced paying out claims.
Less, of course, whatever can be recovered from the borrower through
collateral pledged or by other means, in the case of the bank. Or, in that
of Lloyd's, whatever can be salvaged from the hulk on the bottom.
A large enough loss could 'bankrupt' the bank, and it wouldn't be able to
meet its 'liabilities', i.e. pay back all the money it held from its
customers on deposit. And before it's said, "Oh, that couldn't happen.", let
me ask, "Why, then, do banks in this country, and I suspect most others,
advertise they carry 'deposit insurance'?" It CAN happen, it has happened
in the past, and could again in the future.
Joe
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