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You misunderstand my comments John. I am
effectively objecting to govt itself ( a cabinet dictatorship) controlling the
money supply, not the using it to replace taxes. The national credit
office is supposed to be autonimous of govt, the basis of my objection to the
standard reformers desire and so it could be argued as to whether the 'office'
is in fact a public servant more than a govt servant, based on who benefits
the greatest.
I subscribe to new debt-free money being used to
retire taxing. A community can not rationally borrow from its own credit in
order to administer itself. The effectiveness of the adminstration as
assistent facilitor in the functioning of the full economic-social
enterprise is a factor in the credit of the community.
I would rate the un-necessary burdon of this
via taxes on Joe Citizen the equivalent of the consumer paying for the cost
of the 'real' economy in the price of its goods.
Peter.
----- Original Message -----
Sent: Tuesday, August 21, 2007 12:40
PM
Subject: RE: [socialcredit] more on
Michael Hudson's harangue of Richard Cook
Thanks for that.
I think this is a classical example of highly intelligent people stating
basically the same thing, but arguing because they are coming from different
definitions. For example Peter's comment on government controlling money.
Social Credit could not function unless some government agency, e.g. a credit
authority, took control of the issue of money. But of course, what he is
objecting to is Government using new money to replace taxation, which is
another matter.
Obviously, all stock exchange transactions involve credit, even if
actual money plays only a small part. We need to distinguish between
credit and money, and probably the best distinction was used by our 1950's
Royal Commission. I believe it is commonplace logic which did not
originate with them. Banks create credit when they authorise borrowing,
i.e. grant an overdraft authority. No definition of money of which I am aware
lists this as money. But when a borrower exercises his right by drawing a
cheque (or making any other transfer out of his account) and the money becomes
a credit, a deposit, in someone else's account, money is created.
This assumes that creditor's deposits with financial institutions are part
of the money supply, and this is used in every definition of the money
supply from M1 up. I doubt if any sane economist would define money as
only M0, notes and coins in circulation, since these days it is a very small
fraction of the total supply and decreasing.
So if money is taken from a credit account and paid into one in overdraft
to the equivalent value or more, that amount of money goes out of
existence. The amount of credit relating to the two accounts may remain
the same, if they retain the same overdraft limits as before. There is no
theorem (or hypothesis or theory) relating to this process. It is a
solid demonstrable fact. So if Michael Hudson confines his comments to
credit, he may even be right. But they are certainly not pertinent
to the functioning of the economy which is carried out by money transfers in
the final analysis.
That is not to say, of course, that a contraction of credit will not harm
the economy by causing a contraction of the money supply.
Regards. John R.
From: <william_b_ryan@yahoo.com>
Reply-To:
socialcredit@elistas.com
To:
socialcredit@elistas.com
Subject: [socialcredit] more on
Michael Hudson's harangue of Richard Cook
Date: Sun, 19 Aug 2007
23:45:59 -0700 (PDT)
>I invite commentary on this, what I believe
to be a
>Georgist absurdity, from Michael Hudson's posting
to
>gang8 yesterday:
>
>[Hudson] "I view 'the economy' as
divided into two
>sectors. The biggest sector as far as credit
is
>concerned over 99% is the market for
financial
>securities, mainly bonds, stocks and mortgage
loans
>and other packaged bank loans. Each day more than
an
>entire year's GNP passes through the New York
Clearing
>House and the Chicago Mercantile
Exchange."
>----------------------------------------------
>-----------------------------------------------
>
>Yes,
there's a tremendous amount of churning,
>speculative purchasing and
selling of various forms of
>financial securities. Buying and selling
and buying
>and selling.
>
>But that doesn't mean that
"over 99%" of credit
>CREATED in the overall economy--which the
fallacious
>argument infers--results in the inflationary run-up
of
>asset prices as a result of that credit creation, as
>the
Georgist argument alleges.
>
>Almost all of what Hudson is
talking about actually
>offsets (or nets substantially to zero in
terms of
>profits and losses so relatively little cash
changes
>hands) day by day in the books of the New
York
>Clearing House, the Chicago Mercantile Exchange,
etc.,
>indicating very little net creation (or for that
>matter
contraction) of credit in the activity, despite
>the huge volume of
transactions.
>
>But we would hope, should we not?, that the
long term
>trend is always capital gains, which is in
principle
>indicative of the long term strengthening of the
real
>economy.
>
>
>
>
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