| Subject: | Re: [socialcredit] Richard C. Cook: Monetary Crank | | Date: | Friday, September 5, 2008 14:11:35 (-0700) | | From: | william_b_ryan <william_b_ryan @.....com>
|
"It would be helpful if, for once, Stephen Zarlenga and Richard Cook (and, yes
please, other members of this list) state specifically whether they do, or do
not, agree with national bank-issued interest-free loans (administered by the
banking system which may make an administration charge)..."
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I am unclear what you mean by "administration charge," you've never really
defined it that I have seen, but presumably, it is charged to the borrower.
At present there are three components of interest collected from the borrower:
1. The default premium that contributes to what is in effect an insurance fund to
cover defaulted loans. This premium is rated by credit risk category, so that
poorer risk borrowers pay more than better risk borrowers. Security pledged
against loans is also a factor, which is why secured loans like mortgages have
substantially lower interest rates than unsecured credit like credit cards. But
across all loans the default premium is the largest component of interest
collected; 2. The component that covers ordinary banking business expenses,
including salaries and wages. This is the second largest component of interest
collected; and 3. An amount to cover the banks' profit. This is the smallest
component of interest collected.
I suppose that what you call "administrative expense' is equivalent to category
2 above which you will continue to charge to the borrower, so in this regard he
will pay what he pays today.
You leave open who will pay the banks' profit, but we will assume for the moment
that it is paid by the central bank as a fee to the private banks for initiating
and administering the loans.
That leaves the default risk which does not go away in your proposed system. In
the present system it is paid for in the form of a premium included in the
borrower's interest payments rated by his personal credit risk, and whether or he
he has pledged security.
You have not stated who will pay for this in your proposed system.
In the system of private enterprise generally the direct beneficiaries of goods
and services pay for them rather than the more general community.
If the risk is absorbed by the central bank, then poor credit risk borrowers
will pay exactly the same as good credit risk borrowers.
This doesn't seem fair, does it? And would not this distort the relationship
between supply and demand for financial services?
--- On Fri, 9/5/08, Rodney Shakespeare <rodney.shakespeare1@btopenworld.com>
wrote:
> From: Rodney Shakespeare <rodney.shakespeare1@btopenworld.com>
> Subject: Re: [socialcredit] Richard C. Cook: Monetary Crank
> To: socialcredit@elistas.com
> Date: Friday, September 5, 2008, 10:42 AM
> Dear Alan,
>
> The situation is a complete dog's breakfast.
>
> 1. a) It would be helpful if, for once, Stephen
> Zarlenga and Richard
> Cooke (and, yes please, other members of this list) state
> specifically
> whether they do, or do not, agree with national bank-issued
> interest-free
> loans (administered by the banking system which may make an
> administration
> charge) for:--
> a.. public capital projects -- bridges, sewage works,
> hospitals
> b.. environmental capital projects (including clean
> electricity
> generation)
> c.. micro-credit
> d.. student loans
> e.. medium and large businesses (IF thereby wider
> ownership is furthered
> and productive capacity spread)
> f.. small business/farms
> g.. homes (when banking system not able to create money
> and, say, 80%
> loans
> NB All such loans are repayable and cancellable. The
> issuance is for the
> purposes of developing and spreading productive (and the
> associated
> purchasing) capacity so as to achieve a Say's Theorem
> balance of supply and
> demand and also forwarding social and economic justice.
>
> b) They might then like to state specifically if they
> agree with
> debt-free issuance, (roughly) to what amounts, for what
> purposes and in what
> circumstances (e.g. restriction of banking system ability
> to create money).
>
> c) They might then further wish to say specifically
> whether the AMI
> Monetary Act does, or does not, contain a National Dividend
> (defined as a
> reasonable basic income). Bill Ryan is right -- it
> doesn't.
>
> It is about time that both Stephen and Richard clearly said
> where they stand
> and did not hide behind general phrases like "we must
> spend and lend" which
> phrases have no meaning until given specificity and, in
> any case, allow
> enemies of monetary reform to claim that large-scale
> inflationary funny
> money is being proposed.
>
> I would like to add that I greatly admire Richard's
> spirited analyses of the
> overall situation and his understanding of the corrosive
> effects of interest
> but, being opposed to interest, should result in
> understanding of
> interest-free loans yet, in his case, this does not appear
> to be the case
> (I could be wrong).
>
> 2. Bill can quote Calvin to his heart's content but
> the real issue is
> whether interest is necessary when the issuance is for the
> purposes of
> developing and spreading productive (and the associated
> purchasing) capacity
> so as to achieve a Say's Theorem balance of supply and
> demand and also
> forwarding social and economic justice. In these
> circumstances, interest is
> not necessary because the money comes from the national
> bank (and is
> administered by the banking system which may make an
> administration charge).
>
> There is no objection to Bill and his colleagues (and the
> banks) lending
> their own money and charging interest -- they have the
> money and if you want
> it you will have to pay their demand. BUT that is a
> completely different
> matter from the supply emanating from the national bank for
> the
> above-mentioned purposes.
>
> Rodney Shakespeare.
>
> ----- Original Message -----
> From: Adavans@aol.com
> To: socialcredit@elistas.com
> Sent: Wednesday, September 03, 2008 3:46 PM
> Subject: Re: [socialcredit] Richard C. Cook: Monetary
> Crank
>
>
> I ran across Zarlenga a number of months ago and was
> impressed with his vehement rejection of Social Credit
> principles. My guess is that Richard Cook's involvement
> with Zarlenga is kind of an uneasy dance that involves
> compromise and reduction of principles to almost the least
> common denominator.
>
> With that in mind I can see why Richard Cook might
> promote something that isn't 100 percent what he wants
> but comes the closest to addressing the issues he is
> concerned with, even if he is only getting 50 percent of
> what he really wants as an advocate of Social Credit.
>
> Regards
> Alan
>
> In a message dated 9/3/2008 9:31:23 A.M. Central Daylight
> Time, johngrawson@hotmail.com writes:
> You appear to have missed a lot of Richard's
> material.
> His policies are identical with Douglas, including the
> "price discount" which I consider unworkable, but
> with two exceptions: One the immediate cash payment to
> consumers. We could not do that here, but I think perhaps
> your economy is so strong and so depressed that it might be
> practicable and perhaps necesary. The other is use of the
> nation's credit for infrastructure. I believe that the
> debt structure has grown so much since Douglas' time
> that this is absolutely necessary. It certainly worked here
> when our first NZ Labour govt. was applying monetary reform
> principles.
> I believe it is no accident that deep thought over the
> years here by our movement coincides almost exactly with
> that of a man of Cook's stature.
> He appears to have a more complete grasp of the
> situation than Zarlenga.
> Your term "crank" is very familiar here. It
> has invariably come from orthodox opponents who dared not
> counter us with reason.
> John R.
>
>
> > Date: Tue, 2 Sep 2008 08:42:12 -0700
> > From: william_b_ryan@yahoo.com
> > To: socialcredit@elistas.com
> > CC: rickycook21@hotmail.com; ami@taconic.net
> > Subject: [socialcredit] Richard C. Cook: Monetary
> Crank
> >
> > 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 citizens’ 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:
> >
> > “Loans 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.”
> >
> > 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.
> >
> > As to the religious argument, I have as the
> authority John Calvin's letter of 1545, as related by
> Norman Jones of Utah State University, that two quite
> different words in the Semitic languages were
> inappropriately translated as "usury" into the
> European languages.
> >
> http://www.geocities.com/new_economics/Calvin-usury.txt
> >
> > This is supported in modern Islam.
> >
> http://www.geocities.com/new_economics/Quran-usury.txt
> >
> -------------------------------------------------------------
> >
> > FAIR_USE_CLAIMED
> >
> > Democrats in Denver Should Skip One of Their
> Parties & Read the American Monetary Act
> >
> > by Richard C. Cook
> > Aug. 27, 2008
> >
> > How are things going at the Democratic Party
> National Convention in Denver this week?
> >
> > Are they talking about the fact that the Western
> world is run by an international financial elite
> headquartered in London, the financial capitals of mainland
> Europe (such as Frankfurt, Hamburg, Amsterdam, Paris, and
> Milan), and, of course, New York City?
> >
> > Are they mentioning at their cocktail parties that
> the financial elite exert control over the world’s
> population through the cartels that make up the world’s
> producing economies and through the civilian and military
> bureaucracies who work for the governments that kow-tow to
> them?
> >
> > Of course they know that the most important
> cartels are those which control energy resources. And that
> of these, the commodity of central importance is oil. But is
> any of this helping them draw conclusions regarding the
> doubling of oil prices during the last year or about the
> largest oil company profits in history?
> >
> > Also, they should be drawing the right conclusions
> from the fact that every private and pubic enterprise
> operates on the basis of a money economy, though it would be
> more accurate to call it a credit economy. This means that
> whoever controls the issuance of money and credit controls
> the world. And the world’s monetary systems function on
> the basis of money and credit being introduced into
> circulation through loans from the banking system, loans for
> which interest is charged. So what should that tell them?
> >
> > In fact, they should be pointing out to each other
> and their TV viewers that the charging of interest for the
> use of money is a chain around the neck of everyone on
> earth. Further, that these cumulative interest charges are
> built into the price of every product that is manufactured
> or consumed. And that growth of debt means price increases
> too.
> >
> > They should be honest in making it clear that the
> world is a master-slave society, that the slaves are those
> who borrow and pay interest, that the masters are those who
> collect the interest, and that this unjust system has
> existed in one form or another for thousands of years.
> >
> > The candidates and delegates are talking about the
> aspirations of the American people and how everyone should
> have an opportunity to achieve their dreams. But if the
> United States were a free nation, they would also be talking
> about a financial system that destroys people’s dreams.
> >
> > Unfortunately, the highest rung the candidates and
> delegates have been able to reach on the ladder of
> modern-day slavery is the need for more jobs—but they fail
> to note that jobs are not only the means by which people
> live, but also the instruments for them to pay the heavy
> burden of interest the masters of finance require.
> >
> > What they won’t say is that the world economy is
> based on usury, something religions used to consider a crime
> (and which Islam still does). Usury is the charging of
> interest for the use of money. As the religions backed off
> from their prohibitions of interest, usury became just
> excess interest. But that’s not what the word really
> means.
> >
> > So what have over two centuries of usury done to
> the United States?
> >
> > The best answer ever given to that question was
> contained in a paper entitled “Revisiting U.S. Public and
> Private Debt” published in January 2005 by Dr. Bob Blain,
> Emeritus Professor of Sociology at Southern Illinois
> University. The paper updated an earlier study by Dr. Blain
> published for the United Nations Educational, Scientific,
> and Cultural Organization (UNESCO) in the International
> Social Science Journal, November, 1987, Paris, pages
> 577-591.
> >
> > In his paper, Dr. Blain examined the growth of
> total public and private debt in the U.S. Total debt
> includes “the debts of governments (federal, state, and
> local), corporations, farmers, home mortgages, and consumer,
> commercial, and financial debts.”
> >
> > In his analysis, Dr. Blain began with data from
> the Bureau of Economic Analyses of the United States
> Department of Commerce which covered the years 1916-1976.
> After that year the Bureau stopped publishing the data.
> >
> > The figures showed that from 1916-1976, total U.S.
> debt grew from $82 billion to $3,800 billion ($3.8
> trillion). But most of that growth was during the last 21
> years, from 1955-1976, when it began to grow exponentially.
> Dr. Blain wrote, “The consistency of the pattern suggests
> that some imperative is at work, something that requires
> debt to increase.”
> >
> > Dr. Blain found the answer by researching American
> history. He wrote: “Then I read G.R. Taylor’s 1950 book,
> Hamilton and the National Debt, which described the debate
> over Alexander Hamilton’s plan to fund the new economy
> with borrowed money.” He continued:
> >
> > “The most revealing account was a speech by the
> first congressman from Georgia, James Jackson, on February
> 9, 1790, in which he predicted that adoption of Hamilton’s
> funding plan would lead to the explosive growth of debt.
> Jackson said, ‘Though our present debt be but a few
> millions, in the course of a single century it may be
> multiplied to an extent we dare not think of.’” (Annals
> of Congress, Vol. I, February 1790, pp. 1141-2)
> >
> > From the very beginning, the U.S. had a monetary
> system based on borrowing and debt. First came the thousands
> of state chartered banks that began operating late in the
> Revolutionary War period and continued in one form or
> another until today. Then there were the two early central
> banks: the First Bank of the United States (1791-1811) and
> the Second Bank of the United States (1816-1836). Today’s
> national banking system began during the Civil War with the
> National Banking Acts of 1863-64. Then there is the system
> we are living under today, the Federal Reserve, chartered by
> Congress in 1913. Even during the times when the government
> has sold its debt directly to the public, as with war bonds,
> savings bonds, and Treasury notes and bills, that too has
> been money borrowed at interest.
> >
> > Although there have been times in history when
> money entered into circulation other than through debt, such
> as with coinage and the Civil War greenbacks, those were
> exceptions and today are of little importance.
> >
> > Dr. Blain estimated that from the time Alexander
> Hamilton placed the U.S. under a debt-based monetary system
> until today, the debt has compounded at 5.8 percent
> annually. The big problem with this system, he said, was
> “that no money was created to pay interest.” He
> continued:
> >
> > “Loans 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.”
> >
> > Dr. Blain concluded, “As long as the money
> supply of a nation is created as debt costing interest, debt
> must grow by compound interest.” From a longer-range view,
> it’s a system that is constantly collapsing and that must
> constantly be bailed out.
> >
> > Dr. Blain next sought to update his figures past
> the 1976 data from the Bureau of Economic Analyses. Turning
> to the Federal Reserve’s series on “Total Credit Market
> Debt Outstanding,” he found remarkably similar indicators.
> >
> > He found that adding data from the Federal Reserve
> from 1945 to 2003 showed the “debt explosion”
> continuing. In 1945 total debt was $463.4 billion. In 2003
> it was $44,967.7 billion ($45.0 trillion). When he projected
> the debt level for 2010, he arrived at a figure of $74.9
> trillion. By this time the debt curve was climbing so
> steeply there would be almost a doubling of the amount of
> total debt in only nine years.
> >
> > It might be argued that these figures do not take
> into account inflation. This is because lending at interest
> is the cause of inflation. The dollars still have to be
> repaid with interest. The problem occurs when economic
> growth, measured by GDP, does not keep up.
> >
> > Looking at the growth of GDP from 1945 to 2003,
> the increase was from $223.1 billion to $10,987.9 billion, a
> factor of 49. But the debt ($463.4 billion vs. $44,967.7
> billion) grew by a factor of 97, almost twice the rate of
> GDP growth. Thus the total debt burden on the economy has
> doubled from a ratio of 2:1 to more than 4:1 (though it was
> much less than that during the early days of the nation).
> >
> > But with continued compound growth of debt and a
> slow- or no-growth state of the economy as we head into a
> recession, we are starting to see what Dr. Blain called an
> “acceleration to meltdown.” He wrote:
> >
> > “We are buying more and more in the same amount
> of time. Witness the efforts of people to get rid of their
> excess through yard sales, storage units, and big trash
> pickup days, and the massive size of what are
> euphemistically called landfills. While two billion people
> in the world lack basics such as clean water, food, and
> shelter, Americans throw away their microwave ovens,
> televisions, computers, refrigerators, furniture, and cars.
> Meanwhile, acceleration is applauded as increasing
> productivity. It’s like arguing that cancer is good
> because it grows.”
> >
> > These are the things the Democrats in Denver
> should be talking about, instead of going to so many
> parties. They should be making note that the U.S., to quote
> economists close to the Federal Reserve, is “functionally
> bankrupt.”
> >
> > In fact, the debt this nation owes to the banks,
> to foreign creditors, and to each other can never be paid
> off. Further, one big reason for all of our fruitless
> military endeavors overseas may simply be to escape
> unpleasant economic realities at home. But this is
> pointless. Nothing creates more debt than war, as the
> bankers have always known.
> >
> > The only solution is to adopt a monetary system
> that is not based on debt. Dr. Blain makes a couple of
> specific recommendations: 1) “Stop using percentage rates
> to calculate charges for the use of money”; and 2)
> “Congress must supply the economy with a money base that
> is debt-free and interest-free.”
> >
> > The second point is a call for a new monetary
> system, not one based solely on lending by the banks or on
> government borrowing. One organization that has developed a
> blueprint for such a system is the American Monetary
> Institute (AMI), headquartered in Chicago. The director of
> the AMI is Stephen Zarlenga, author of a massive,
> groundbreaking work: The Lost Science of Money (AMI, 2002).
> Zarlenga’s assistant is Jamie Walton, a monetary reformer
> from New Zealand.
> >
> > AMI will be holding its fourth annual conference
> in Chicago on September 25-28. Expected as keynote speaker
> is Congressman Dennis Kucinich, whose wife Elizabeth once
> worked as an intern at AMI. Dr. Bob Blain will be a featured
> speaker.
> >
> > On the AMI website at www.monetary.org is a
> remarkable document, the American Monetary Act [.pdf] The
> product of several years of work by Zarlenga and his
> network, which now includes a number of local chapters
> around the country, the American Monetary Act would replace
> today’s debt-based monetary system with one where the
> government spends or loans money directly into circulation.
> >
> > Under the Act, the Federal Reserve would be
> retained as a national financial clearinghouse but would no
> longer be a bank of issue. The system would be overseen by a
> Monetary Control Board within the U.S. Treasury Department.
> The Act also includes a provision for a citizens’
> 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.
> >
> > Also promoting a citizens’ dividend, by the way,
> is Stephen Shafarman in his important new book, Peaceful,
> Positive Revolution. (Tendril Press, 2008)
> >
> > It’s the American Monetary Act the candidates
> and delegates in Denver should skip one of their parties to
> read, because it’s the only way any of their hopes for
> America can ever be realized. Says AMI’s Jamie Walton:
> >
> > “This is a crucial time. Things are happening.
> We have got some key media people talking and writing about
> our kind of reforms. The inertia is starting to yield.
> Things are starting to roll. The worsening conditions in
> 2009 will give us a once-in-a-lifetime chance to be heard
> above the propaganda.”
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