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Message 6757
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| Subject: | RE: [socialcredit] Re: 100 percent reserve system | | Date: | Tuesday, May 19, 2009 21:42:46 (+0000) | | From: | John G Rawson <johngrawson @.......com>
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Bill, to avoid firing two barrels in one shot, this is in reply to another aspect of your recent messages: debt-free money for central government and cheap loans for local bodies. I think this again is more easily understood from our smaller and less complicated national structure in NZ.
First, we deviate from strict Douglas proposals in that we have always believed we had to set our house in order in relation to debt repayment and updating of infrastructure before we could pay much as dividend etc. Enzed Unlimited must show a profit first ... (This has been debated elsewhere and certainly will again, but it is only an explanation to the subject of this message.) There is not much point in trying to reduce national debt if we are going to incur more, so if the credit authority deems there is money available for national infrastructure, it will be used debt free.
In this country, all local bodies must gain approval of a central Loans Board before borrowing for any project. They are limited also in the proportion of income they can raise this way. Start saying Sieg Heil if you wish, but no political movement in this country, including ours, seeks to change what is regarded as necessary to keep some order in development.
We would like to give them debt free money too, but there is so much demand that, to cater fairly for their needs, we consider we would be forced to establish a revolving fund with loans from the central bank at administrative charge, perhaps 1%. That way, they would pay through rates (local taxes) once for their jobs instead of several times over. (Note that, without a fixed reserve system, this money should be no more demand-inflationary when issued than loans from commercial sources. It certainly would reduce cost inflation in future.)
Challenge this logic if you like, but it is thought out, not an emotional issue.
I am fascinated to note the similarities between both Stephem's and Richard's proposals and what we have painstakingly worked through with thought and hard debate over the decades since 1954.
Regards.
John R.
> Date: Tue, 19 May 2009 11:08:08 -0700
> From: william_b_ryan@yahoo.com
> To: socialcredit@elistas.com
> Subject: [socialcredit] Re: 100 percent reserve system
>
> "Like Bill McGunnigle, you have badly misinterpreted the proposed 100% reserve system. It is not a fractional reserve system. Read my latest reply to Bill, and it should become clearer."
>
> John Hermann
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> --------------------------------------------------------
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> Okay, John, here's your reply to Bill McGunnigle:
>
> "It is still a Fractional Reserve system,
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> "No it is not. In the proposed system, commercial banks would no longer exist. They would be transformed into commercial on-lending institutions, which would no longer have the power to create credit money."
> -------------------------------------------------------
> --------------------------------------------------------
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> But there is one bank in Hummel's system that is not required to keep one hundred percent backing for loans:
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> "Bank credit money would no longer exist. The money supply could change only as a result of open market operations or lending by the central bank."
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> The validity of Hummel's assertion depends on the peculiar logic that the central bank is not a bank, and that the term "credit money" does not include the "credit money" that is created by the central bank.
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> And at first blush this appears to be the opposite of what Zarlenga is proposing. He wants the central government through its Treasury to have the monopoly over money creation. So in his system the Treasury is acting like a bank in granting credits to the central and other governments, and extending "interest free" loans to the other governments. In Zarlenga's non-English terminology (It is non-English because he is using words in something other than the definitions found in ordinary dictionaries) the system is "one-hundred percent" because all the banks other than the monopoly Treasury bank is constrained by the one-hundred percent requirement. Zarlenga either does not understand the implications of his proposal, or is lying to us through his peculiar use of language.
>
> But they are simply not constrained in the way that he thinks or implies to us by that requirement. Banks are permitted to maintain "demand" and "savings" accounts in Zarlenga's (and also Hummel's) system. They are required to maintain one hundred percent reserves only against demand accounts. So if they are able to persuade their customers to transfer their deposits from demand to savings accounts, the banks are able to grant loans. Bank credit money is being created. The totality of deposits, which are obligations of the banks, will exceed the totality of their reserves.
>
> What we really have with these so-called one hundred percent reserve systems are fractional reserve systems with very centralized control. These true believers are promoting essentially the same banking system the Soviet Union had for seventy years.
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> And it is not just the banking system, but also the very system of free enterprise itself that is jeopardized by these proposals.
>
> Attached is a diagram from Bud Conrad. If you will notice, household debt exceeds that of government at all levels, followed by debt incurred by the business sector. That is to say, money is spent into circulation, with accommodation by the banks, by all economic sectors. In the so-called one hundred percent reserve system, most of that is shifted over to the central government.
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> The monetary flux-reflux mechanism is fundamentally altered. I haven't quite figured out how profit and loss could be calculated through double entry accounting in a system where money creation is entirely dependent on government deficit spending.
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> Very early on the Soviet Union outlawed double entry accounting, because it is the only known method for calculating profit and loss, and in their ideology there was no profit or loss in their Utopian state. But making double entry accounting impossible to work accomplishes the same thing. It makes free enterprise impossible to function. So double entry accounting becomes irrelevant.
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> ---------------------------------------------------------------------
> Some introductory materials to the discussion topic of this list are at
> http://www.geocities.com/socredus/compendium
> You're subscribed to this list with the email johngrawson@hotmail.com
> For more information, visit http://www.eListas.com/list/socialcredit
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