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Bill,
Would you kindly do me a favour and:-
a) say where you stand on
national bank-issued interest-free loans and debt-free isssuance (as I have
requested of you)
b) stop your nit-picking.
Moreover, you have problems following what I
write because your mind is locked within the old paradigm (and its
vocabulary and concepts). In contrast, what I write is a reflection
of the new paradigm. The old/new paradigm conflict inevitably results
in intellectual and psychological problems for
you.
Alaska Permanent Fund
In the knol on binary economics, I wrote
one sentence making a brief reference to the Fund.
In your nit-picking frenzy you did not even manage to quote the whole
sentence. It was this:-
The Alaska Permanent
Fund takes the annual income from the Alaskan oil pipe line and
distributes it directly as income to each individual Alaskan citizen — somewhere
between $900 and $1800 per year (in 2005 dollars).
That is a reasonable one sentence summary of the
situation. Could you do better in the same number of
words?
I like the Fund because it provides citizens
with an income from a productive asset. You are fixated on destroying any
phenomena related to the spreading of ownership (or beneficial
income).
Adminstration cost
My last email to you discussed
administration cost fairly extensively and clearly but your old
paradigm mindset prevents you from understanding.
I fully explained the public capital and
micro-credit situations (which you have deliberately ignored) and that leaves
the private capital situation. Alas, everything you
say indicates that you hate wide ownership and, even if you are
right that the costs will work out the same as at present, the point is that the
ownership will become more widely distributed. .OK?
100% banking reserves.
Goodness me! You are out of date! And you
did not understand the meaning of the Present Developments section in the knol
-- a considerable number of post-Kelso developments (1999 onwards) are clearly
set out (and some others are not mentioned).
Get with it, Bill!
Productive capacity backing
currency
You think productive capacity backs the currency at
present? Heh, heh -- you must be joking or -- heh, heh -- perhaps you're
not. And you're obviously one of those who think that the great 'free
market' global economy is having a few temporary difficulties and that soon all
will be in back in equilibrium.
Public housing
That naughty old mindset is showing itself
again. Public housing (and private housing in particular circumstances)
can be cheaply financed but that does not stop competitive tendering etc for
construction. Low cost public housing has been done before (e.g., New
Zealand) and it can be done again.
Incidentally, nothing that you say ever seems to
relate in any way to the policies, critique and generous attitudes of the New
Zealand (Social Credit) Democratic Party. Please tell me, have you
heard of the New Zealand Democrats and what do you think of them?
I do not have any more time to reply to the rest
of your email but you are wrong on all points e.g.you do not seem to understand
that the Humber Bridge debt has been substantially written off because, due to
compound interest, the astronomical debt became
unrepayable.
I will be blunt -- I do not understand how you
can ever claim to be some form of Social Crediter. You support
interest and everything you say seems to end up as a defence of the status
quo.
Rodney Shakespeare.
----- Original Message -----
Sent: Saturday, September 06, 2008 7:04
PM
Subject: Re: [socialcredit] Richard C. Cook:
Monetary Crank
It is difficult to follow your arguments, Rodney, because of your odd
syntax and meanings of familiar words that are different from the definitions
found in standard dictionaries. But I'll attempt some brief replies to a
few of your points.
From your link is this statement:
"The Alaska
Permanent Fund takes the annual income from the Alaskan oil pipe line and
distributes it directly as income to each individual Alaskan
citizen."
http://knol.google.com/k/rodney-shakespeare/binary-economics/i2b1ciidsw5u/2#
This is not correct. The income to the fund is
not distributed directly to Alaskans, but is invested. Some of the income
from the investments is reinvested and the remainder is distributed to
Alaskans. The fund is described as permanent because the income from the
investments will continue indefinitely, while the income that is used to
purchase the investments in the first instance is from depleting
resources. And while some of the income may well be from the pipeline, it
includes other sources. You're fixated on the pipeline because of Mike
Gravel's proposal to purchase it that was rejected in referendum. From a
history of the fund:
"In 1976, the voters of Alaska passed a
Constitutional amendment establishing the Alaska Permanent Fund. The amendment
required the dedication of 25 percent of mineral bonuses, royalties and related
income to a special fund to be put into income-producing
investments."
http://www.apfc.org/home/Content/reportspublications/tp5-2.cfm
-
Also from your link:
"Binary economics
proposes that national bank-issued interest-free loans should be administered by
the banking system and that, while no interest would be charged, there would be
an administrative cost as well as capital credit insurance if
necessary."
I suppose you mean charged to the borrower. Why do you
believe that "administrative cost" plus "capital credit insurance" will be
substantially less that what the borrower pays today? The only thing
absent from the three components of interest, it seems to me, is the bankers'
profit. Presumably that is paid to the private bankers by the central bank
in your proposal as a fee for handling the loans. In which case it is
effectively paid by all of us rather than the direct beneficiaries of the
loans.
-
Also from your link:
"This supply of interest-free
loans for the spreading of productive capacity (and the associated consuming
capacity) as well as for environmental and public capital would take place in
circumstances of a gradual move to 100% banking reserves so that the banking
system would not be continually creating money (as happens today) but would be
confined to lending (with permission) depositors’ money and the bank’s own
capital. New, efficient productive capacity will be the backing of the
currency."
Correct me if I'm wrong, but I don't believe that the
requirement for 100% reserves was promoted by Louis Kelso. Isn't it just
something you've added to the theory? And what makes you think that
productive capacity does not now back the currency? It does so in any
conceivable system of money and credit.
-
Also from your
link:
"Interest-free loans would allow low-cost public housing,
hospitals, social housing, roads, bridges, waterworks, schools etc. to be built
for one half, one third, even one quarter of the present cost."
The costs
may well be greater than they are today because of inefficiencies introduced
into the system. The big difference is in who pays the costs. In
your proposal the direct beneficiary of the loans will not pay the totality of
the costs incurred in supplying those loans. The point is that interest
reimburses the costs of production of financial services, which do not go away
in your proposal.
-
Also from your link:
"Such loans have
undoubtedly been used by the English Channel Island of Guernsey over the years
but exact information as to the present position is difficult to
obtain."
Actually the information is quite easily obtained. The
banking system in Guernsey is quite conventional and has always been so.
You're too caught up in the crank literature with its mythical Guernsey magic
money story to know that.
From today's post:
"ii) Default
premium and security are not involved -- the effective collateral is the ability
of government to tax."
Yes, of course, we all will pay the costs rather
than the direct beneficiaries of the "interest free" loans.
Also from
today's post:
"iii) Profit is not involved."
I thought you
said that the private banks would administer the loans. These are profit
making institutions. Their profit will have to come from somewhere.
The question is who will pay for it.
-
Also from today's
post:
"iv) Since the cost is halved, more projects can be built or
the existing amount built at half the cost."
Not half the cost but half
the interest charged to the borrower. Do you not see the
difference?
Also from today's post:
"The mechanism has been used
very successfully in New Zealand, Australia and Canada in the past."
What
verifiable source do you have for this information?
-
Also from
today's post:
"In the case of loans for the spreading of ownership in the
private sector, the collateral may already exist but if it does not, the binary
proposal is for capital credit insurance. The usual estimate for
reasonable bank expenses and profit is two to three per cent."
Where do
you come up with your "usual estimate" of two or three percent? The actual
fact is that banks' profit is the smallest of the three components of
interest. Expenses greatly exceed profits. And the cost of defaults
exceed expenses. And I can assure you that their totality greatly exceeds
two or three percent. But of course you didn't actually state two or three
percent of what, so you've got some wiggle room.
-
And in conclusion,
also from today's post:
"You are invited to google the subject of the
financing of the UK Humber Bridge and then state if you do, or do not, approve
of many millions of pounds going to the financiers for doing
damn-all."
My understanding is the the bridge was financed by government
loans and not directly from "financiers," though presumably the loans
contributed to the government deficit. Much of the bridge debt has been
written off by the UK government.
The point is that there are real costs
in supplying financial services that do not go away in real terms if interest is
waived. All that happens in your proposal is that somebody other than the
direct beneficiaries of the loans will pay them. That may merely be
through the simple deflation in value of the money that they
hold.
-
--- On Sat, 9/6/08, Rodney Shakespeare <rodney.shakespeare1@btopenworld.com> wrote:
Re: [socialcredit] Richard C. Cook: Monetary
Crank
Saturday, September 6, 2008 1:58 AM
From: "Rodney Shakespeare"
<rodney.shakespeare1@btopenworld.com>
To: "Discussion Forum for Global Justice" <Discussion@globaljusticemovement.net>, socialcredit@elistas.com
Dear
Bill,
1. I invited Stephen Zarlenga, Richard Cook
and other members of this list (which includes you) to say where they stand on
national bank interest-free issuance and debt-free issuance. I am
continuing this correspondence on the assumption that you will soon be availing
yourself of the opportunity to do so. My own position is made clear
at
http://knol.google.com/k/rodney-shakespeare/binary-economics/i2b1ciidsw5u/2#
http://www.binaryeconomics.net/
2. Regarding your comments on interest, you are not taking into
account that loan money issued by a commercial bank and that issued by a
national bank are two very different things. For a start the purposes are
different (e.g.,.a commercial bank indulges in sub-prime and derivative
lending with consequences which may yet lead to a collapse of the global
financial system).
Secondly, a commercial bank is completely
heedless of the need to develop and spread the ownership of productive (and the
associated purchasing) capacity so as to achieve a Say's Theorem balance of
producers and consumers and the forwarding of efficiency and social and economic
justice.
Public capital
Furthermore, you are not
taking into account other important matters if, for example, the loan money is
created by the national bank for public capital.
i) the national bank's
administration cost is negligible and virtually all of the rest of the
administration is done by the governmental body (state, city, local). Thus
your point on administration cost is largely irrelevant.
ii)
Default premium and security are not involved -- the effective collateral is the
ability of government to tax.
iii) Profit is not
involved.
iv) Since the cost is halved, more projects can be
built or the existing amount built at half the cost.
The mechanism
has been used very successfully in New Zealand, Australia and Canada in the
past.
Micro-credit
With micro-credit (on Grameen and IIRD
lines)
a) the collateral is not conventional but
exists in practice -- the named organisations get 98%+ repayment. The 98%
repayment happens even though the interest rate is (very roughly)
34%.
b) unlike with conventional lending the purpose is to develop
and spread productive (and the associated purchasing)
capacity.
c) profit in the usual sense is not
involved because profit stays within the organisation -- and there is no intent
to batten onto the poor.
I have discussed the subject with twenty
five officers of IIRD and they said that, roughly, they charge around 34% on
loans (there is a big training and administration cost) but, with
interest-free loan money from the national bank, they could get that down to
around 17%. They had one request to me -- to ask that the Bangladesh
national bank issue interest-free loans to IIRD.
A few months ago
I also raised the subject with Dr Yunus of the Grameen Bank (which is not a
conventional bank). Yunus long ago discussed the subject with Norman
Macrae of The Times (London) and they both agreed the interest-free supply
(although Yunus has in effect given up on getting anywhere with the subject and
he has now settled for the present Grameen situation which is not using
interest-bearing money in the usual sense because, although interest is charged,
the repaid interest does NOT go to outsiders but, instead, forms the new capital
to lend to new borrowers. This is a vital point because interest generally
acts as a mechanism to transfer wealth from poor to rich for 80% of the
population, evens for 10% and very profitable for the last 10% (Magrit
Kennedy).
Spreading ownership in private sector
In the
case of loans for the spreading of ownership in the private sector, the
collateral may already exist but if it does not, the binary proposal is for
capital credit insurance. The usual estimate for reasonable bank expenses
and profit is two to three per cent. Please read Binary economics.-- the
new paradigm.
3. You are invited to google the subject of the
financing of the UK Humber Bridge and then state if you do, or do not, approve
of many millions of pounds going to the financiers for doing
damn-all.
Rodney
Shakespeare.
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