| Subject: | [socialcredit] Re: Worldwide Money Creation Tsunami | | Date: | Sunday, December 7, 2008 08:21:54 (-0800) | | From: | william_b_ryan <william_b_ryan @.....com>
|
Per, Martin is perfectly correct in his statement, so far as it goes, but, from
a different perspective, you are correct in yours. Yes, there is a left side and
a right side to a balance sheet. It so happens that assets are placed on the
left of the balance sheet customarily, and liabilities AND capital (or "net
worth" or "equity") are placed on the right. Liabilities and capital are not the same
thing, different rules of accounting apply to each, but in the following sense
they are the same. I have used the term "debt masquerading as equity" which puts
it into the Social Credit perspective. Firms receive money through sales; they
also receive money from lenders and the sale of stock. The effect is very much
the same in the Social Credit perspective between the assumption of debt by a
firm and the sale of stock. Banks, in extending credit, both lend and purchase
stock. Because of the legacy of Glass-Steagall the practice of purchasing stock
by
banks is more common in Europe, particularly in Germany, than it is in the
United States. The difference is in the details of the specific contract. Many
but not all loans come with amortization schedules. But all loans have actions
or inactions that will trigger default. There is generally no contractual
obligation to pay dividends to stockholders. That would be especially true for
common stock. "Equity" holders and creditors have a different precedence if a
firm is bankrupted or "liquidated." Often the creditors receive something from
the liquidation, the "owners" receive nothing, because there's nothing left after
paying the creditors.
-------------------original message---------------------
From: "Per Almgren" <almgren_per@telia.com>
To: socialcredit@elistas.com
Martin,
I think that you are aware of that the business share capital is not placed on
the assets side of the accounting scheme, it is placed among the liabilities
side.
The shares has in principle the same function as a loan. It is money brought
into the enterprise without being payment for any goods or services received, and
it is, on average, expected to give the holder an yearly income without any kind
of work performed for the business enterprise.
The only difference is that the shares are not usually bought back by the
business enterprise, but it sometimes happen. So, in fact, the share capital
functions as a credit without amortization.
When looking upon this from a societys viewpoint of the economy (money flows),
there is not much differens between a company that borrows money and and a
company that sells shares.
But we shall also remember that just bying shares on the market doesn't change
the situation of the enterprise, it is just like one lender buys the loan from
another lender.
Per Almgren
|
Re: Worldwide Mone
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