| Subject: | Re: [socialcredit] Richard C. Cook: Monetary Crank | | Date: | Thursday, September 4, 2008 21:43:16 (+0200) | | From: | Swieto Radosci <radosc @........pl>
|
| In reply to: | Message 5511 (written by John Hermann) |
Banks are limited in debt-money creation up to 25 percent of their
overall income, so the risk that their additional debt-money issuance
will not cover 1-2 percent of income retained as new capital is very small.
For me interesting is not a theory but a practice shown in statistical
data presented by dr Bob Blain (are there any doubts about their
accuracy?), namely that debts grow two times faster than production,
making burden on each production unit higher and higher.
Interesting is also a question how it is possible that in such
restricted rules of new debt-money creation designed for US banks, new
debt-money comes to the market in such huge amounts - on average some $4
trillion yearly, according to dr Blain. Are US banking incomes so great
that guarantee $16 trillion yearly and maximum efficiency?
Kristof Levandovski
John Hermann pisze:
>
> William Ryan is correct in saying that bank interest income is spent
> back into the economy. And I agree that Bob Blain's argument is
> completely wrong. However it also should be recognized that around one
> to two percent of that income is retained by banks as "retained
> earnings". That retained fraction of income, although small, is
> significant because it represents an increase in bank capital. And the
> 8 percent capital adequacy requirement (which translates as bank
> capital supporting up to 12.5 times its magnitude in risk-weighted
> assets) allows banks to create new loan assets of magnitude up to 25
> percent of their overall income, if we assume that two percent of bank
> interest income is held back from the economy at large.
>
> John Hermann
>
>
>
> At 01:12 AM 3/09/2008, you wrote:
>> Appended below is Richard Cook's recent Internet posting. It is a
>> great disappointment to me in many respects. Gone is even the
>> pretense of Social Credit theory. It is heavily influenced by Stephen
>> Zarlenga, a Georgist who argues that Henry George was a Greenbacker!
>>
>> The A + B theorem is replaced by the fallacious "debt virus" theory
>> that we have discussed previously. The "usury" argument is an Islamic
>> fundamentalist slam against modern informed Christianity, which we
>> have also discussed previously, so I'll just briefly outline the
>> arguments now.
>>
>> In Zarlenga's "American Monetary Act" is a provision for a so-called
>> "citizens' dividend." Says Cook: "The Act also includes a provision
>> for a citizensâ dividend, similar in some respects to the Alaska
>> Permanent Fund, which would inject desperately needed purchasing
>> power into the economy without additional government debt or taxation."
>>
>> Lest anyone think that this "citizens' dividend" is similar to the
>> Social Credit proposal for a dividend, read this from the act itself,
>> as posted on Zarlenga's website:
>>
>> "SEC. 506 INITIAL MONETARY DIVIDEND TO CITIZENS Not later than 90
>> days from the effective date of this section, the Secretary, in
>> cooperation with the Monetary Authority shall provide recommendations
>> to Congress for payment of a Citizens Dividend as a tax-free grant to
>> all U.S. citizens residing in the U.S. in order to provide liquidity
>> to the banking system at the commencement of this act, before
>> governmental infrastructure expenditures have had a chance to work
>> into circulation."
>>
>> Please note that in Zarlenga's plan the dividend is not continuing,
>> as in Social Credit, but paid only once at the beginning of the
>> plan's implementation "before governmental infrastructure
>> expenditures have had a chance to work into circulation."
>>
>> As to the "debt virus" argument, Cook quotes Bob Blain:
>>
>> âLoans created only the principal. Interest had to be paid out of
>> principal. So payment of interest reduced the money supply and slowed
>> economic activity. Recovery could come only when new loans were taken
>> out at least equal to interest paid.â
>>
>> The second sentence is simply a false statement of fact. Banks create
>> customer deposits not only through the principal of loans, but when
>> they spend, through reciprocal economic activity, salaries, wages,
>> dividends and ordinary business expenses into the community, which
>> become available to pay interest back to the banks.
>
>
> ---------------------------------------------------------------------
> 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 radosc@waw.pdi.net
> For more information, visit http://www.eListas.com/list/socialcredit
>
>
|
Re: [socialcredit]
Reply to this message