| Subject: | Re: [socialcredit] What is the "debt virus" theory? | | Date: | Monday, March 7, 2005 00:32:26 (-0800) | | From: | william_b_ryan <william_b_ryan @.....com>
|
Again, John, you forget that the purpose of this list
is to discuss C. H. Douglas' theory, not John
Hermann's theory. At least Jim Schroeder is
attempting to interpret Douglas' theory. You don't
even bother. What Jim has done is put a debt virus
"spin" on his interpretation.
You engage in debt virus crankism when you infer
there is something special about interest that
differentiates it from the gross profit accruing to
any business, and identify that something special as
being the root cause of the economic problem. The
effects of what you call "excessive" interest would
apply to the "excessive" profits accruing to any
business that is accruing profit "excessively," which
is generally attributable to its monopoly position.
The appropriate response requires differentiation
between natural and ordinary monopolies, which you
deal with accordingly. You encourage but regulate
natural monopoly; you discourage ordinary monopoly.
Banking is a natural monopoly, as are power grids,
etc.
This mumbo jumbo is very much a variation of debt
virus:
John Hermann: "Even if one factors out the
inflationary effect of exponential monetary growth
from the interest aggregate, one is left with a
growing entity which might be called the latent
interest, LI(t). The precise manner in which LI(t)
grows depends upon the relative magnitudes of the
average interest rate and the rate of monetary
growth. It is only linear for the special case where
these rates are equal. When the interest rate is
larger than money growth, LI(t) grows in an
exponential manner. When the interest rate is
smaller, LI(t) grows in a sub-linear manner (not
unlike logarithmic growth)."
http://www.geocities.com/socredus/hermann-10-17-04.txt
Your half-baked hypothesis seems to be that, for
deleterious effects not to compound, the "interest
rate" must be equal or less than the rate of "money
growth," which presumably should equal the rate of
economic growth. It seems you've read superficially
the orthodox literature where it talks about
something called the "natural rate of interest," as
if the phenomenon actually does exist (it doesn't).
But what about the rate of interest paid as opposed
to received by the financial sector in respect to the
consuming sector? Interest received by consumers, as
consumers, are dividends--which we want to increase.
-
--- John Hermann <hermann@picknowl.com.au> wrote:
> Since Bill has a tendency to label some of those
> with whom he disagrees as
> advocates of "debt virus" theory - without defining
> precisely what he means
> by it - I thought there might be some interest in
> examining the views of
> orthodox economists. The following 1996 article is
> by Ed Flaherty. It seems
> that the "debt virus" idea was strongly promoted in
> a book - of the same
> name - by a certain Jacques Jaikaran. I happen to
> fully agree with
> Flaherty's views in regard to this matter, and with
> his assessment of
> Jaikaran's book. --John H.
>
>
> The Antidote to the Debt Virus
> by Edward Flaherty
[snipped]
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