| Subject: | Re: [socialcredit] 10 can't pay 11 fallacy, again | | Date: | Monday, July 9, 2007 12:52:48 (+1200) | | From: | Peter <cymric @.......nz>
|
| In reply to: | Message 4906 (written by Martin Hattersley) |
Businesses may borrow on pay day, depending on their cash flows, but I dont
think banks need to borrow because of cashflow rates are slow or
intermittant.
Can anyone quote banking practice references that banks are so public
spirited as claimed?
I ask again, are banks the only businesses that dont pass on their costs as
all businesses do?
Peter
----- Original Message -----
From: "Martin Hattersley" <hattersleyjm@interbaun.com>
To: <socialcredit@elistas.com>
Sent: Monday, July 09, 2007 6:52 AM
Subject: Re: [socialcredit] 10 can't pay 11 fallacy, again
> Per -
>
> "A bank manufactures credit, just as a steel plant manufactures steel."
>
> So when payday is due for bank employees, the bank writes cheques on
> itself which are accepted by the employees as money. These are charged
> against its profit and loss account. That account is fed by the interest
> that is charged to borrowers from the bank. Hopefully, even after paying
> its staff and other overhead expenses, there will be enough surplus to pay
> dividends to its shareholders, as well as retaining earnings which can be
> used to increase
> the bank's holdings of physical assets.
>
> Those payments that it makes to staff and shareholders, and in acquiring
> physical assets, provide the dollars to the public which, after passing
> through the normal processes of business, enable the borrowers to pay
> interest to the bank on their loans.
>
> No great problem there. If you like to think of it in another way, the
> bank lends to itself by creating money to meet its payroll and other
> expenses, and repays that loan from the interest payments it receives as a
> result of the services of its staff in making loans.
>
> Martin Hattersley
> 5929 - 189 St., NW
> EDMONTON AB CANADA T6M 2J1
> (780)483-5442
> e-mail: jmartinh@shaw.ca
>
> ----- Original Message -----
> From: ""Per Almgren, Nordiska sparlån"" <info@nordspar.se>
> To: <socialcredit@elistas.com>
> Sent: Sunday, July 08, 2007 5:32 AM
> Subject: Re: [socialcredit] 10 can't pay 11 fallacy, again
>
>
>> At 12:50 2007-07-06, you wrote:
>>>"The money for the interest is not created, that's my
>>>beef. Sure, the debt for the interest is added to the
>>>debt for the money principle but you can't say the
>>>interest is 'created out of thin air' like the chips
>>>are created out of thin air."
>>>-----------------------------------
>>>------------------------------------
>>>
>>>Again, the word is spelled p_r_i_n_c_i_PAL when
>>>referring to the principal of loans. But sure it is,
>>>the money for the interest is most definitely created.
>>>Banking is a function of double entry accounting in a
>>>creditary economy. At the beginning of T1, 10 are
>>>lent, and 11 must be repaid at the beginning of T2 in
>>>loan amortization and interest payments. During T1 the banks spend
>>>thereby
>>>creating 1 into circulation for their salaries, wages,
>>>dividends and ordinary business expenses, so at the
>>>beginning of T2, 11 is in circulation.
>>
>> Can you explain, in detail, how this extra 1 is spent into
>> circulation without creating a corresponding debt?
>>
>>>The money that the banks spend is charged, as a matter of accounting,
>>>against their accrued profit accounts.
>>
>> If the borrowers debt accounts is charged daily with the daily
>> interest part of what they are supposed to pay in cash or from other
>> accounts at the end of the period, but they themselves are not
>> entitled to use that money at the corresponding credit accounts,
>> doesn't that mean that the bank is borrowing interest-free from the
>> credit accounts until the borrowers actually pay their accrued
>> interest amounts? ;-)
>> And what happens if the bank doesn't completely use the interest for
>> payments of expenses? It may prefer to increase its liquidity (cash
>> money) so it stays compatible with the increasing amounts on
>> different accounts. In that case the borrowers are forced to borrow
>> more to fill the difference, or they will experience a society with a
>> shrinking economy!
>>
>>>This is allowable because by the rules of accounting profit
>>>accrues contractually even if not yet received in cash receipts.
>>
>> But even the bank can't use money to pay with until they actually
>> have got them, either from inpayments from outside or by borrowing
>> internally from their customers accounts. So debt is created before
>> money can be spent. That means that interest is hard to pay if you
>> don't have anybody that borrows that money in advance.
>> Per Almgren
>>
>>
>>>
>>>____________________________________________________________________________________
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>>
>>
>> ---------------------------------------------------------------------
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>
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