| Subject: | RE: [socialcredit] Replying to Bob Taft: The quiet coup...Simon Johnson - Atlantic Monthly | | Date: | Tuesday, March 31, 2009 19:04:23 (+0000) | | From: | John G Rawson <johngrawson @.......com>
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| In reply to: | Message 6523 (written by william_b_ryan) |
Also replying o Bob Taft.
Put another way, Bob, loans create deposits. Cancelling the loans would not cancel the corresponding liabilities of the banks, the resulting deposits lodged with them.
Regards.
John R.
> Date: Mon, 30 Mar 2009 12:03:57 -0700
> From: william_b_ryan@yahoo.com
> To: socialcredit@elistas.com
> Subject: [socialcredit] Replying to Bob Taft: The quiet coup...Simon Johnson - Atlantic Monthly
>
>
> Bob, I approved your message for distribution to our list because I wanted to address an assertion in your first paragraph. Also, because you must have really wanted it distributed since you posted the same message four times in succession. So you must think the point is important.
>
> The assertion that I wanted to address is this:
>
> "Forgive all existing mortgages, freeing up such payments for other purchases and the economy will boom. The banks will lose nothing as they loaned nothing of intrinsic value."
>
> I am questioning the assertion that "the banks will lose nothing."
>
> Bank deposits are liabilities of the banks. Canceling the assets held by the banks in the form of mortgages or other promissory notes of the borrowers does not commensurately cancel the liabilities that are represented by the deposits that are "out there" in the transaction accounts throughout the economy with positive balances. So canceling their assets will be a loss to the banks unless their liabilities are commensurately cancelled. But that would absolutely collapse trade and commerce.
>
> The fact that there is no "intrinsic value" is not relevant. The deposits represent contracts for future performance. Contracts are always written on paper with no intrinsic value, but are nevertheless valuable to the parties involved.
>
> According to A. Mitchell Innes, the economy has been contractual (or creditary) for forty thousand years, in which the predominant forms of money have been circulating instruments of debt. See the Innes papers at
> http://www.geocities.com/new_economics/innes/
>
> The major innovation came in the seventeenth century, with the introduction of fractional reserve banking. Banks would exchange the individual promissory notes of the entrepreneurs for the generally recognized and accepted notes of the banks. What you then received in your pay voucher could be spent at any store, not just the company store. The utility of the competitive market was greatly enhanced.
>
> I suggest, Bob, that you read the materials in this list's compendium, at
> http://www.geocities.com/socredus/compendium'
>
>
>
>
>
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