| Subject: | Re: [socialcredit] Re: [chdouglas] Public-spirited Banking (was: Re: The Abolition of Interest on Loans) | | Date: | Tuesday, March 18, 2008 19:57:54 (+1100) | | From: | Jim Inness <drjiminness @.....com>
|
| In reply to: | Message 5286 (written by keith wilde) |
C.H.Douglas dealt with the problem of time in cycles of production,
and purchasing power made available at the time of each cycle. Whilst
the concept is a little difficult to visualise, a close reading of
Douglas' "The Monopoly of Credit' makes it quite understandable. And
please remember, Douglas was a double qualified engineer, used to
exact interpretation of what figures mean, and where a miscalculation
easily resulted in disaster. He was NOT an orthodox economist who
tries to explain away a disaster when the invalidity of his
indoctrination becomes visible for all to see.
On 18/03/2008, keith wilde <kwilde@tc-biodiversity.org> wrote:
> Hi Peter,
>
> You say below that
> "the theorem that loans create deposits which function as money...is
> contradictory to the quantity theory that there is inherently a scarcity or
> limited quantity of money."
>
> I find that a very strange statement of the quantity theory. Can you
> explain or cite an easily accessible exposition, please?
>
> Keith Wilde
>
> Peter Hogwood <p_t_hogwood@yahoo.com> wrote:
> "Peter, You only left out two components--the time
> value of money and opportunity for other
> investments..."
> ---------------------------------------------------
>
> Then, I take it, you do agree with the three
> components that I listed.
>
> The time value of money theory is related to the
> quantity theory. The concept of opportunity cost to
> loans advanced is also related to the quantity theory.
>
> The more modern position is expressed by the theorem
> that loans create deposits which function as money,
> which is contradictory to the quantity theory that
> there is inherently a scarcity or limited quantity of
> money.
>
> In the more modern view interest is fully explained by
> the three components that I listed, which are payments
> for financial services rendered by banks to the more
> general economy.
>
> I would value your reply.
>
> Peter Hogwood
>
>
>
> --- Claudette Konola wrote:
>
> > Peter,
> > You only left out two components--the time value of
> > money and opportunity for
> > other investments...
> >
> >
> > On Mon, 17 Mar 2008 09:43:13 -0700 (PDT)
> > Peter Hogwood wrote:
> > > There is a significant false premise to your
> > argument,
> > > Ardeshir.
> > >
> > > "So what would be reasonable in your view, given
> > that
> > > it takes your people at most an hour to do the
> > > paperwork, and after that, there's nothing more
> > for
> > > you to do but collect my monthly payments?"
> > >
> > > The false premise here is that the administrative
> > > expense in granting loans is the only expense
> > incurred
> > > in granting loans. The components of interest are
> > 1)
> > > the insurance premium to cover loan defaults,
> > which is
> > > by far the largest component of interest received
> > by
> > > the banks; 2) the administrative expense, salaries
> > and
> > > wages paid by banks, etc. and other ordinary
> > business
> > > expenses; and the final and least component: 3)
> > the
> > > net profit from banking.
> > >
> > > The default or risk premium varies by borrower
> > risk
> > > category. In every risk category the borrowers
> > pay to
> > > compensate the banks for defaulted loans within
> > the
> > > risk category. Therefore, higher credit risk
> > > borrowers pay higher interest rates than lower
> > risk
> > > borrowers.
> > >
> > > Peter Hogwood
> > >
> > >
> > >
> > >> On Sun, 16 Mar 2008 13:58:25 -0400 Ardeshir Mehta
> > > wrote:
> > >>
> > >>> On 16-Mar-08, at 8:31 AM, Claudette Konola
> > wrote:
> > >>>
> > >>>> So, if nobody pays interest on loans, what is
> > > going to motivate those who have money to let
> > > somebody who needs money use it?
> > >>>
> > >>> WHY WOULD BANKS LEND MONEY TO ANYONE IF THEY
> > COULD
> > > NOT CHARGE INTEREST?
> > >>>
> > >>> Well, I am not against banks making a reasonable
> > > amount of money for taking the trouble to issue a
> > loan
> > > to us. Call it a "reasonable profit on a
> > transaction"
> > > , for example. If the bank that lends us $25,000
> > to
> > > buy a car were to say: "We are willing to lend you
> > > this money, but we would have to make a reasonable
> > > amount of profit out of the transaction" , I'd
> > say:
> > > "Okay, fine. So what would be reasonable in your
> > view,
> > > given that it takes your people at most an hour to
> > do
> > > the paperwork, and after that, there's nothing
> > more
> > > for you to do but collect my monthly payments? A
> > law
> > > firm might charge me, let's say, $500 per hour at
> > the
> > > outside: so, does $500 seem reasonable to you?"
> > >>>
> > >>> It sure does to me. Does it not to YOU?
> > >>>
> > >>> But does TEN TIMES as much sound reasonable to
> > you?
> > > WHICH law firm, no matter how prestigious, will
> > charge
> > > you five GRAND an hour? And yet banks get away
> > with
> > > this, and more, every day of the week!
> > >>>
> > >>> However, there's another way banks can make
> > money
> > > on loans: they can look upon it as an investment,
> > and
> > > share in the profits of that investment. If a bank
> > > issues a loan to a company, that company will, of
> > > course, use that money to expand its operations,
> > and
> > > thereby make profits. The banks can stipulate, in
> > the
> > > loan contract, that they will get a share of the
> > > profits.
> > >>>
> > >>> The same thing can apply to a mortgage. If you
> > buy
> > > a house today for $200,000, and in order to buy
> > it,
> > > borrow $100,000 from the bank, and if after a
> > year,
> > > because of market forces, the value of your house
> > > increases by, say, 3%, the bank can stipulate that
> > it
> > > will get a 3% increase on the next year's monthly
> > > payments. That seems fair enough, because it isn't
> > as
> > > if you did something yourself to cause the value
> > of
> > > the house to rise. It was just your good luck.
> > >>>
> > >>> Of course if that's the way the bank wants to
> > > structure the loan, then if the value of the house
> > >FALLS by 3%, the bank must also agree to take a 3%
> > CUT
> > > in the next year's monthly payments. Sharing in
> > > profits means also sharing in losses.
> > >>>
> > >>> But a bank could make MUCH bigger profits by
> > > investing in really promising ideas than it would
> > by
> > > charging interest. For instance, had any bank
> > invested
> > > in Tesla's idea of alternating current at a time
> > when
> > > Edison was promoting direct current, that bank
> > might
> > > soon have become the biggest bank in the world!
> > >>>
> > >>> Of course this idea would make it imperative for
> > > the banks to make sure that the money they are
> > loaning
> > > (more correctly, investing) is not going to all go
> > > down the drain: they would have to scrutinise
> > every
> > > application for a loan carefully, to see if the
> > > activity the loan was going to be used for had a
> > > chance to render a profit down the road. But
> > what's
> > > wrong with THAT?
>
>
>
> ____________________________________________________________________________________
> Never miss a thing. Make Yahoo your home page.
> http://www.yahoo.com/r/hs
> ---------------------------------------------------------------------
> Some introductory materials to the discussion topic of this list are at
> http://www.geocities.com/socredus/compendium
> You're subscribed to this list with the email kwilde@tc-biodiversity.org
> For more information, visit
> http://www.eListas.com/list/socialcredit
>
>
>
>
>
> ---------------------------------------------------------------------
> Some introductory materials to the discussion topic of this list are at
> http://www.geocities.com/socredus/compendium
> You're subscribed to this list with the email drjiminness@gmail.com
> For more information, visit
> http://www.eListas.com/list/socialcredit
>
>
>
>
>
>
>
>
|
Re: [socialcredit]
Reply to this message