| Subject: | [socialcredit] The State Theory of Money | | Date: | Friday, May 11, 2007 14:19:30 (-0700) | | From: | william_b_ryan <william_b_ryan @.....com>
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"Money (dollars in bank accounts of the Treasury) is
CREATED when the government spends money into
existence."
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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
deposits.
This is true whether the transactors are private or
governmental institutions or individuals.
If you'll look at the diagram archived at
http://www.geocities.com/new_economics/conrad-borrowing-2005.gif
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>
wrote:
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
of that.
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