| Subject: | Re: [socialcredit] The State Theory of Money | | Date: | Saturday, May 12, 2007 00:34:14 (-0600) | | From: | Wallace Klinck <wmklinck @....ca>
|
| In reply to: | Message 4733 (written by william_b_ryan) |
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.
Wally
On 11-May-07, at 3:19 PM, william_b_ryan@yahoo.com wrote:
> "Money (dollars in bank accounts of the Treasury) is
> CREATED when the government spends money into
> existence."
> ------------------------------------------
> -------------------------------------------
>
> 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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