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Subject:[socialcredit] Re: Shakespeare's theory
Date:Tuesday, March 25, 2008  08:05:25 (-0700)
From:Peter Hogwood <p_t_hogwood @.....com>

Rodney, the concept is very simple and is in full
accord with the principles of double entry accounting.
 Inasmuch as most transactions in today's economy are
conducted through the tender of bank deposits, we
define bank deposits as being money.  It is a
colloquial term since there are many definitions of
money.

The theorem is that loans create deposits, which does
not mean that deposits derive only from loans.  When
banks net credit deposit accounts for any purpose, for
loans or whatever, money in the hands of the public is
therefore being created.  The accounts are liabilities
of the banks, which are credited not only when banks
grant loans, but when banks write checks or their
electronic equivalent for ordinary business expenses,
also when banks write checks for dividends to their
stockholders, which makes it possible for the more
general community to pay interest to the banks.  It is
reciprocal economic activity in which the banks play
an essential role.

As a statistical matter, in terms of cash flow in a
growing economy, firms are always disbursing more than
they are receiving back through sales, yet are
continually booking a profit.  See the diagram at
http://geocities.com/socredus/compendium/accounting_profit.gif
This is done through accommodation by the banks, whose
primary function in this system is to exchange their
generally recognizable promissory notes in the form of
deposits for the poorly recognized individual notes of
their borrowers, making the competitive market in mass
production possible.

Since the banks are banks, accommodation by the banks
is not necessary for the banks.

Peter


--- Rodney Shakespeare
<rodney.shakespeare1@btinternet.com> wrote:

> Peter,
> 
> Your response is an amazing development. You have
> flabbergasted me -- knocked me clean off my bicycle
> -- a full boxing point to you!!
> 
> But please explain exactly what you are saying.  On
> the face of things you are alleging false accounting
> or worse by the banks.  
> 
> You say the banks are creating money to pay for
> their expenses and salaries.  
> 
> 1.    Do you mean that the money is interest-bearing
> money so that when an employee is paid he has to pay
> it back again -- plus interest?  I am not joking but
> am astounded by your statement that  the banks
create
> money to pay their employees.
> 
> 2.    Or do you mean that the banks create debt-free
> (non-repayable money) with which to pay their
> employees?  
> 
> 3.    Is your  view one that is generally accepted
> in some school of economics/finance?
> 
> I greatly look forward to your explanation because
> it will give some clue as to the basic position from
> which you criticise others.
> 
> Rodney Shakespeare
> 
> 
> ----- Original Message ----- 
> From: "Peter Hogwood" <p_t_hogwood@yahoo.com>
> To: <discussion@globaljusticemovement.net>
> Sent: Tuesday, March 25, 2008 12:41 PM
> Subject: Re: Shakespeare's theory
> 
> 
> > "...it is a matter of simple mathematics that if
> $1000
> > is created at, say, 10% over five years, that
> means up
> > to $500 interest is paid, and the total to be
> repaid
> > up to $1,500 but only $1,000 has been created."
> >
>
-------------------------------------------------------
> > 
> > Rodney, the banks are also creating money when
> they
> > spend for ordinary business expenses and pay
> salaries,
> > wages and dividends.  Why do you think that the
> money
> > the banks create for these purposes is
> insufficient
> > for the more general community to pay interest
> back to
> > the banks? 
> > 
> > Peter
> > 
> > 
> > --- Rodney Shakespeare
> > <rodney.shakespeare1@btinternet.com> wrote:
> > 
> >> Peter,
> >> 
> >> 1.  Home loans -- $100,000 to $300,000 
> >> 
> >> a)    You naturally assume inflation because you
> >> have to.  Inflation is caused by the present
> banking
> >> system which has to create more and more
> >> interest-bearing money if the system is not to
> >> collapse (which it eventually does).
> >> 
> >> However, even if there is no inflation,  the
> >> repayment would (depending on the precise terms
> etc)
> >> still be about $200,000.  That's at least $80,000
> >> too much ($20,000, for administration).   
> >> 
> >> b)   You say that  people should own their own
> homes
> >> (agreed) yet when binary economics  (at
> >> www.binaryeconomics.net) proposes interest-free
> >> loans for homes (which would allow more and more
> >> people to own   homes) your inherent tendency to
> >> wild language causes you to allege that my 
> "crank
> >> theory" (the 0% loan) is aimed at disparaging
> home
> >> ownership.
> >> 
> >> A little quiet reflection will enable you to
> realise
> >> that 0% home loans would increase home ownership
> and
> >> it will be helpful  if you specifically
> acknowledge
> >> that.
> >> 
> >> 2..  My "sublime ignorance"
> >> Goodness me, that inherent tendency to wild
> language
> >> is appearing again.   Not only are you accusing
> me
> >> of  "sublime ignorance" but you are revealing
> your
> >> own ignorance ignorance of the Soviet system --
> they
> >> certainly did not want people owning their homes.
> 
> >> Worse,  you are being deliberately ignorant about
> >> binary economics which (as everybody knows,
> except
> >> you) wants home ownership and productive capital
> >> ownership for everybody.  Yes, everybody. 
> However,
> >> in your book,  no doubt, that is communism. 
> Please
> >> confirm.
> >> 
> >> 3.    Margrit Kennedy
> >> Margrit Kennedy, Interest and Inflation Free
> Money
> >> (1995) points out that interest affects virtually
> >> everything in a large way (I think she says
> >> something about 50% of the cost of goods and
> >> services) and that 80% of the population,
> overall, 
> >> lose from interest; 10% are even; and 10% gain.
> >> 
> >> I mention these figures to encourage you to
> re-think
> >> your idolatry of the institution of interest.
> >> 
> >> 4.  Creation of interest-bearing money
> insufficient
> >> to repay principal and interest becasue only
> >> principal created.
> >> 
> >> Many authors (e.g.,  Ellen Brown, Web of Debt;
> >> Bernard Lietaer who helped design the Euro) refer
> to
> >> this.  Since 97%+ of the new money supply is
> created
> >> as debt by the banks (and there are plenty of
> quotes
> >> to support that including the Reserve Bank of
> >> Chicago which also makes it clear that banks do
> not
> >> lend deposits) it is a matter of  simple
> mathematics
> >> that if $1000 is created at, say, 10% over five
> >> years, that means up to $500 interest is paid,
> and 
> >> the total to be repaid up to $1,500 but only
> $1,000
> >> has been created.   So repayment of the $500 is
> >> impossible without further creation of
> >> interest-bearing money and so on..........The
> >> impossibility results from the combination of the
> >> 97% figure and the addition of interest but no
> >> creation for interest. Have you, as a responsible
> >> USA citizen, noticed the present (and sharply
> >> rising) levels of USA debt?  Who do you blame? 
> The
> >> fairies?   
> >> 
> >> Rodney Shakespeare. 
> >> 
> >> 
> >> ----- Original Message ----- 
> >> From: "Peter Hogwood" <p_t_hogwood@yahoo.com>
> >> To: <discussion@globaljusticemovement.net>
> >> Sent: Monday, March 24, 2008 7:35 PM
> >> Subject: Shakespeare's theory
> >> 
> >> 
> >> > Rodney, some brief replies below [Reply]:
> >> > 
> >> > "3.    Home loan -- $100,000 to $300,000 You
> have
> 
=== message truncated ===



     
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