| Subject: | Re: [socialcredit] the "effect" of interest | | Date: | Monday, May 1, 2006 09:42:50 (+0200) | | From: | Per Almgren <info @........se>
|
At 05:32 2006-04-29, you wrote:
>Hi everyone
> Amplifying the comments by Per Almgren.
> Fundamentally "Money" is placed in circulation by a
> authorisation from a government's Treasury Department. The mechnism
> is simple. Treasury issues bonds for specific quantities of finance
> which are purchased by the private banking system. The banks then
> issue funds to the quantity of the bond into circulation. These
> bonds have a time limit after which treasury redeems the bonds and
> issues another set. However the bonds have an interest component.
In Sweden, and I think that the situation is the same in most other
countries, the main part of the new money created is based upon new
bank credits to private persons and business firms.
Per Almgren
> The problem is always that treasury can only redeem the bonds
> from the funds in circulation. It follows therefore that the funds
> in circulation, required to redeem the bond always fall short of
> the necessary funds needed.
> The interest component makes it necessary for everyone to go
> into successively greater and greater debt in order to meet the shortfall.
> The quantity of funds in anybody's account is irrelevant. The
> problem is fundamentally that the authorised funds required to meet
> debts incurred by the central government through treasury bonds can
> never be met, because the mechnism that created the funds to meet
> the bond is a produdct of the bond issue in the first place. It is
> a snake eating its tale syndrome.
> Bill McG
>----- Original Message -----
>From: <mailto:info@nordspar.se>Per Almgren
>To: <mailto:socialcredit@elistas.com>socialcredit@elistas.com
>Sent: Saturday, April 29, 2006 4:26 AM
>Subject: Re: [socialcredit] the "effect" of interest
>
>My comments at the end.
>Per Almgren
>
>At 15:40 2006-04-28, you wrote:
>>"Some on this list might fall for the argument that
>>although interest [on] a loan is calculated using a an
>>exponential formula, which in the vast majority [sic]
>>of instances is the case, it is just a tranfer [sic]
>>of money from one account to another and has no effect
>>on the money supply balances..."
>>---------------------------------------------------------------
>>This misstates the argument. In double entry
>>accounting, the receipt of the principal on a loan is
>>not income; the repayment of principal is not an
>>expense. For the lender, the disbursement of
>>principal is not an expense; the receipt of principal
>>in repayment on a loan is not income.
>>
>>As regard to interest, the receipt of interest is
>>indeed income; the payment of interest is indeed
>>expense.
>>
>>The effect of accounting convention is that interest
>>represents the periodic transfer from one deposit
>>account to another for financial services rendered as
>>they are rendered in a system where deposit accounts
>>constitute the preponderance of the money supply, and
>>therefore has no effect on the quantity of money as
>>reflected in deposit account balances.
>>-
>>
>>"So, it is clear that the system boots up with an
>>action whereby a principal sum is created and
>>simultameously [sic] a debt is created that is greater
>>than the principal..."
>>---------------------------------------------------------------
>>No, because when it "boots up," assuming a
>>conventional loan that involves principal plus
>>interest as a FUNCTION OF TIME, the moment that a loan
>>is created the debt is EQUAL TO THE PRINCIPAL.
>>
>>So that everything that follows this false premise is
>>complete nonsense.
>
>The real problem arises when the interest paid/received is
>not completely used for purchase of goods and services.
>In that case the people/businesses who paid the interest
>doesn't get that money back as income. If people should
>not be laid off or have to accept lower wages, they, or the
>businesses, are forced to ask for new loans.
>In the real world a part of the interest income are used for
>"financial investments", the larger the income is, the larger is
>the part not used for direct purchasing.
>This is the way that interest upon money will indirectly cause
>a growing of the total debt in the society. The alternatives
>within the present form of the economy are increasing debt
>or unemployment, usually both appear simultanously.
>Per Almgren
>
>
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>
>
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>
>Some introductory materials to the discussion topic of this list are at
>
>http://www.geocities.com/socredus/compendium
>
>You're subscribed to this list with the email wmcgunn@maxnet.co.nz
>
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>
>
>---------------------------------------------------------------------
>Some introductory materials to the discussion topic of this list are at
>http://www.geocities.com/socredus/compendium
>You're subscribed to this list with the email info@nordspar.se
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