| Subject: | Re: [socialcredit] straw vote (Joe replies to Ken) | | Date: | Sunday, November 20, 2005 11:08:51 (-0800) | | From: | Joe Thomson <thomsonhiyu @....ca>
|
(Ken Palmerton wrote:-) As for "insurance" Joe. This is the land of Lloyds
remember. The most
> perfect gambling den ever invented :-)
>
> But I ask you. If you loose what it has cost you nothing to create, WHAT
> HAVE YOU LOST ?
>
(Joe replies:-) Well, if you lose something that DID cost you something to
create, i.e., the 'Titanic' in the case of the White Star Line, and the loss
is shouldered by the loser in its entirety, I'm pretty sure you've lost
'something'. In that particular instance, with its ship on the bottom and
probably a considerable sum owed its bankers for the finance of its
construction, perhaps the ability of White Star to remain in business.
'Insurance', like banking, spreads the risk for a fee received.
And in that case, if Lloyd's 'names' regarded what they were doing as
'gambling', it was a 'gamble they lost. Spread amongst enough 'names' the
loss to each might not have been financially fatal. But it still would've
meant they had to part with something more in money to meet the claims than
what they'd received from the insured by way of money for their part of the
premium.
Suppose we used this one unfortunate occurrence to look at 'banking', and
what was 'lost', or might have been, had the 'Titanic' not been insured.
And by whom. I would think that the 'Titanic' would have been built on
'borrowed money'. And White Star must have paid Harland & Wolfe for it that
way when they took delivery of it, don't you think? Not likely they'd have
enough spare change laying about to do the trick.
They would likely have had to finance it with a loan. Harland & Wolfe in
turn would have had to pay their suppliers and crew while the ship was being
built, and they most probably would've had to do so on 'borrowed money' as
well. We could go back further, to how all the steel, brass, wood, etc.
supplied, .was financed, and likely the production of each involved a bank
loan But lets cut it off at Harland & Wolfe for simplicity's sake.
They receive an order from White Star to construct the ship. They secure a
loan, a "creation of credit out of nothing" by their banker, to enable them
to purchase the necessary supplies and pay the people they need to get the
job underway.
Now the first question is, why did Harland & Wolfe have to 'borrow'
something ''created out of nothing" from their banker? And pay for the
priviledge? Why was the ''banker's credit" better than Harland & Wolfe's
credit? Why couldn't they just have written out ''IOU's" to their various
suppliers and crews, and those people in turn done the same thing for
whatever they purchased? And saved the expense of dealing with the bank?
The "IOU's" are as much created 'out of nothing' as the banker's credit, are
they not? They are all, in essence, simply 'contracts' calling for some
future performance on the part of the issuer. Yet the ''banker's credit''
will be 'acceptable', to everyone, everywhere, that's involved in the whole
process, but H & W's might not be? Why so?
The second question is, what would've happened if White Star had simply
witten an 'IOU' to Harland & Wolfe to pay for the ship, and then it had
sank? Who would take the loss?
Could the necessity of the 'banker's credit' instead of the producer's "IOU"
have a little something to do with 'RISK'? And how it's shared, and
minimized through its 'broadening'. The banker 'parts with nothing', true.
But when something goes wrong? The 'insurance', the shared risk for a fee,
minimized the loss to White Star. The 'banker's credit' instead of the
''producer's IOU'' saved the bacon of Harland & Wolfe, and all the suppliers
and employees right back down the line.
While the 'banker parts with nothing' in making the loan, every cheque drawn
upon the deposit that loan has created is a liability that must be borne by
the banker (as long as there's a 'positive balance' in that account.) If
the ship had not been insured, and White Star couldn't make the re-payments
on the loan that created the deposit it had used to pay Harland & Wolfe fro
m, the loss is not Harland & Wolfe's. It is the bank's. Harland & Wolfe
has been 'paid', and likewise, their suppliers and employees. There is no
comeback on any of them. And bank's, still, even with all their powers to
'create credit', can go bust.
Joe
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