| Subject: | Re: [socialcredit] the "effect" of interest | | Date: | Tuesday, May 2, 2006 10:26:55 (+0100) | | From: | Timothy Carpenter <timbeau_hk @........uk>
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| In reply to: | Message 3871 (written by W. McGunnigle) |
Re: [socialcredit] the "effect" of interest
Just a small point on interest. Many talk as if they do not realise that the FIRST thing repaid is interest. Only once ALL interest is repaid to the bank then principal is then repaid and destroyed. Thus, interest payments do not mount up as some ever-growing ‘hole’ AFTER the principle is destroyed, but it DOES mount up as a transfer of wealth from the economy as a whole to the banking sector in particular, just as any profit making service does. Interest payments remain in the economy (paying bonuses, smart offices, high salaries and first class flights) at all times. Thus, there is no ever growing liquidity “gap” caused by interest, per se.
Tim.
On 1/5/06 15:51, "W. McGunnigle" <wmcgunn@maxnet.co.nz> wrote:
Well said Marc and welcome to our group.
I have been trying to get that point across in a different way. Our financial system is inherently unstable. Even worse the actions of single individuals in control of a large Reserve bank can bring about a stock market crash overnight, simply by refusing to allow "call loans" on the stock exchange. That is how The Federal Reserve of the USA engineered the stock market crash of 1929. It then contracted the money supply to the US economy by 40% between 1929 and 1934, that is what createed the great depression of the early 1930's. Only Rousevelt's actions in 1934 that threatened their stranglehold on the US economy caused a relaxation in that contraction.
I contend that the indeptedness of governments to their Reserve Bank mean that all the major political parties of whatever persuation are forced to follow policies that are dictated to them by their respective Reserve Banks. Political parties are powerless because they have allowed the control of the money supply to fall into private hands, and are happy to leave the situation as is. What is not common knowledge is that the indeptedness of countries is not to each other, but to the private banking system. Very few countries have no debt at all. Those involved with the IMF and World Bank have become trhe most debt ridden of ALL.
Bill McGunnigle
----- Original Message -----
From: Marc Gauvin <mailto:gauvin@wanadoo.es>
To: socialcredit@elistas.com
Sent: Monday, May 01, 2006 10:50 AM
Subject: Re: [socialcredit] the "effect" of interest
All,
The question of feedback is important because it creates a level of dynamism in the system that needs to be managed.
My view is that there is no need for interest as I cannot see any value to the system as a system, on the contrary I claim that it causes instability because it creates a demand for repayment in the future of money that has not been created. The system boots up with a loan that as time continues the total amount to be repaid grows beyond what was physically received by the system, unless the aggragate of banks in the system maintain an exact knowledge and control of all for all points in the system of all required interest payments, all available monies available to pay the interest and act in concert to remedy such by providing the lending required to keep the system in balance. This is not only unlikely but practically impossible, because it assumes that people can be coerced in real time to, for example, prod people to borrow. It is clear that the interest system was not designed with the aim of making it possible for everyone to be able to pay in time.
So and in conclusion, if interest provides no valuable service to the system as a whole it should be removed.
Furthermore, as some have tried to deny by claiming that the future will pay yesterday's interest and principal, it remains a fact that the exponential nature of modern banking is positive feedback period. Some who are incapable of distinguishing being the square function and an exponential will vehemently deny this truth but the proof is in the pudding. The only management of finance we have has brought us a world of increasing cycles of instability in price levels, increasing social turmoil, increased unemployment, increase in debt levels etc. all indicative of positive feedack based instability.
To say that usury has nothing to do with the stability of the system is to make evident a complete lack of scientific rigour, as anyone who has studied systems knows, the faster moving curves of a system are the most indicative of the overall state of a system. To say that interest on money has no effect on the system and that it is just a transfer of payment like any other is foolish and irresponsible.
Best,
Marc
----- Original Message -----
From: thomsonhiyu <mailto:thomsonhiyu@shaw.ca>
To: socialcredit@elistas.com
Sent: Sunday, April 30, 2006 8:47 AM
Subject: RE: [socialcredit] the "effect" of interest
.
(Peter:- ) If the fundamental flaw is in the accounting side the perspective of the accounting side isnt eligible to expalin to us how to look at things, is it?
(Joe replies:- ) Just because the ‘accounting side’ is currently incomplete, doesn’t mean it isn’t ‘‘eligible to explain how to look at things’’. The ‘flaw’ lies not with the ‘accounting’ system itself, which continues to serve us well, but what it currently lacks at the macro-economic level.
There is no ‘National’ equivalent to the ‘capital account’ found in the Balance Sheet of every business operating under the conventions of double-entry accountancy. Were there, the overall relationship between the Banks and the rest of the economy could finally be rationally established. Something that’s currently irrationally established, and the ‘cause’ of our problems.
If such a device were created as part of a properly constituted “National Balance Sheet”, then as the account balance in the ‘National Capital Account’ increased, appropriate debt-free CONSUMER distributions could be made periodically to the Nation’s ‘shareholder-citizens’. In the form of the ‘national dividend’ and/or the ‘compensated price discount’.
‘Consumers’, all of us, for we’re all ‘consumers’, could thereby be credited with the overall and ongoing national ‘capital appreciation’ which is rightfully ours. And something generally larger than the ‘capital depreciation’ we are currently expected to pay in prices.
By augmenting as necessary overall CONSUMER ‘effective demand’, through the ‘discount’ and the ‘dividend’ each entire, overall ‘business cycle’ could become ‘financially’ fully self-liquidating, regardless of the extent of ‘labour displacement’.
(Peter:- ) I think this has also made it easier to see why Douglas didnt concern himself with interest inside the theorem. It is another matter outside.
(Joe replies:- ) ‘Interest’ is simply another ‘B’ payment. So there was no need for Douglas to concern himself with ‘interest’ separately inside A+B. And he didn’t seem to concern himself much with it outside it either. For good reason. It’s just a ‘transfer’ from the account balance of a ‘Firm’ to that of its ‘Bank’. Same as a ‘transfer’ from one ‘Firm’ to another ‘Firm’ for anything else. It’s exactly the same as any other ‘cost’ that’s going to end up in the final price of its product. It will NOT increase overall debt, as Bill McGunnigle and many others infer, (unless loans are not being serviced). The ‘problem’ with the Banks not ‘spending’ all the interest they receive and re-investing some of it, as Per mentioned, can easily be dealt with through adjustments to the ‘dividend’ and ‘compensated price discount’. We are not concerned with what’s in “anybody’s” account balances, but what is accumulating in the overall ‘flow’ into and out of account balances over time is relevant.
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