| Subject: | [socialcredit] Re: 100 percent reserve system | | Date: | Monday, June 1, 2009 12:14:25 (-0500) | | From: | Brock Moore <brock_moore @..........com>
|
You said, "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."
As you know, Bill, my business is calculating profit and loss. This is a matter
that greatly interests me. I would like a bit of elaboration on what is meant by
this. Anyone who knows or questions Bill's argument feel free to jump in. I
would welcome your input to the discussion.
Brock
--------------------original message---------------------
Re: 100 percent reserve system
Tuesday, May 19, 2009 1:08 PM
From: "william_b_ryan@yahoo.com" <william_b_ryan@yahoo.com>
To: socialcredit@elistas.com
Message contains attachments
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"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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Okay, John, here's your reply to Bill McGunnigle:
"It is still a Fractional Reserve system,
"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:
"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."
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.
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.
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.
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.
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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