|Subject:||Re: [socialcredit] The State Theory of Money|
|Date:||Saturday, May 12, 2007 11:43:06 (-0600)|
|From:||Martin Hattersley <hattersleyjm @.........com>
|In reply to:||Message 4735 (written by Richard Cook)|
Niall Ferguson - who has published a well documented history of the house of
Rothschild and some interesting studies on world politics from the economic
point of view, makes a comment in "The cash nexus - money and power in the
modern world" that it is the nations with the biggest national debts that
have shown the greatest economic development.
Not that National Debts are a good thing, but they do provide the liquidity
that keeps the economy moving!
If you're not familiar with Ferguson, I do recommend him as a good read.
5929 - 189 St.,
EDMONTON AB CANADA T6M 2J1
----- Original Message -----
From: "Richard Cook" <email@example.com>
Sent: Saturday, May 12, 2007 7:09 AM
Subject: Re: [socialcredit] The State Theory of Money
> Re: Wally's analysis, this is exactly what happened with the U.S. economy
> during the 1990s with the Clinton balanced budgets coming at the end of
> the decade. "Fiscal austerity" pushed the federal government cost burdens
> down to the states which gained tax revenues from the "dot.com" bubble.
> But when that burst, the U.S. economy went into recession after January
> 2000. What suffered the most was state and local infrastructure which has
> deteriorated sharply even to the point of starting to sell off public
> highway systems to private investors as in Indiana.
>>From: Wallace Klinck <firstname.lastname@example.org>
>>Subject: Re: [socialcredit] The State Theory of Money
>>Date: Sat, 12 May 2007 00:34:14 -0600
>>In Canada the Federal Government in recent years has attempted, in
>>compliance with misguided ideological notions and technical
>>misunderstandings regarding the virtue of "balanced budgets" to curtail
>>and even to reduce its debt. This has put a further financial burden
>>upon the Provinces which, in turn, have attempted to download financial
>>responsibilities upon the municipalities--which have been attempting to
>>pass this burden on to individual citizens by way of increased property
>>taxation, multifarious user fees, decreased social benefits and services,
>>neglect of infrastructure needs, etc. This has naturally and inevitably
>>led to general resentment and discord. I refer the reader to Major
>>Douglas's article, "The Fallacy of a Balanced Budget" where he points out
>>that, within the limits of orthodox financial cost-accountancy
>>conventions, a "balanced budget" means: 1) that the economy is static,
>>2) that the financial implications are that we consume our real capital
>>concurrently whereas, in fact, it depletes or depreciates slowly over the
>>future, and 3) that all capital is actually, in final analysis, owned by
>>the issuer of credit, i.e., the banking system. Because of the growing
>>deficiency of purchasing-power in the context of our faulty orthodox
>>monetary system, central governments tend to accept increasing long- term
>>debt in order to facilitate the operations of lesser governments but the
>>central governments meet opposition when spending programs and debt
>>service charges result in increasing tax burdens. Without central
>>government assistance, the private sector is increasingly unable safely
>>to meet the necessity to accept expanding debt on its own without
>>becoming increasingly insolvent. That is the dilemma presented by
>>orthodox financial policy and practice. It is the reason that an
>>external flow of consumer income is required to be injected into the
>>economy, without being registered as new costs, in order to make the
>>system self-liquidating and allow it to function in a viable manner.
>>On 11-May-07, at 3:19 PM, email@example.com wrote:
>>>"Money (dollars in bank accounts of the Treasury) is
>>>CREATED when the government spends money into
>>>Money is created when any transactor deficit spends
>>>with bank credit. The theorem is that loans create
>>>deposits; the repayment of loans cancel deposits. This
>>>theorem is very significant in an economy where most
>>>transactions are conducted by the transfer of bank
>>>This is true whether the transactors are private or
>>>governmental institutions or individuals.
>>>If you'll look at the diagram archived at
>>>from my good friend, Bud Conrad, you'll see that the
>>>largest amount of bank credit is represented by
>>>consumer debt, the second largest is federal
>>>government debt, the third largest is business debt,
>>>and the smallest is state and local government debt.
>>>The theory that you outline is very close to the State
>>>Theory of Money concept that has recently been revived
>>>by the multi-millionaire Warren Mosler. The term was
>>>originated by the German economist Georg Friedrich
>>>Knapp, a favorite of the Nazi's, who experimentally
>>>tested the theory at Theresienstadt, in prototype of
>>>their plans to control conquered peoples and races.
>>>In point of fact, the Fed holds only a relatively
>>>small percentage of federal government securities. The
>>>large majority are held by domestic and foreign
>>>commercial banking institutions.
>>>On May 10, 1:14 pm, "The Trucker" <mik...@verizon.net>
>>>For years I have been trying to explain this stuff in
>>>a way that even the minimally aware can understand it.
>>>Perhaps the best way to look at it is to (in you mind)
>>>coalesce the Fed and the Treasury into a single
>>>harmonious group. That is the reality anyway. These
>>>two institutions work hand in hand to do the job of
>>>government finance and monetary control.
>>>Money (dollars in bank accounts of the Treasury) is
>>>CREATED when the government spends money into
>>>existence. The Treasury accounts in the central bank
>>>(spelled Fed) are NEVER overdrawn or insufficient.
>>>The problem then becomes the control of all this money
>>>that has been created and thrown into the helicopter
>>>blades of government to come to rest we know not
>>>where. If the money is allowed to slosh around in the
>>>economy for too long then the amount of actual dollars
>>>will grow too large and the value of the dollars will
>>>erode. That is why we have taxes and the sales of
>>>various types of "interest" bearing mattresses called
>>>government bonds. What else will the rich people who
>>>already have all the money they could ever use do with
>>>this extra money but to put it into bonds?
>>>That is what keeps dollars scarce and keeps them worth
>>>something; this sale of bonds and this taxation. If
>>>interest rates on the bonds are very low and there is
>>>inadequate tax revenue then the amount of real live
>>>spendable money increases and the currency is
>>>devalued. That is what has been happening since 2000.
>>>And if short term rates are kept low and government
>>>borrows on the sort term (lots of 6 month bonds) then
>>>both money and bonds continue to lose value. Over time
>>>this _SHOULD_ attend to trade imbalances.
>>>The time of reckoning is put off by the current bond
>>>holders. If they refuse to buy more bonds at low
>>>interest rates then the value of the bonds they
>>>already own at low interest rates will deteriorate
>>>even more than that value has currently deteriorated.
>>>You must always remember that the only thing you can
>>>get for a bond is money. And if the value of the money
>>>has eroded then so too has the value of the bond.
>>>I keep using the word "value" and it is time to
>>>address what it means. Value is measured in one's
>>>control of labor and natural resources. Money buys
>>>both land and resources. As these prices rise we are
>>>actually witnessing the decline of the value of the
>>>dollar. The apparent stock market rise is also a part
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