| Subject: | [socialcredit] In response to Tim Carpenter | | Date: | Friday, April 15, 2005 08:53:01 (-0700) | | From: | William B. Ryan <w_b_ryan @.....com>
|
| In reply to: | Message 925 (written by Timothy Carpenter) |
"I find this an astonishing statement. Wall Street is
not issued debt securities 'debt free', institutions
have to buy them."
-----------------------
------------------------
You missed the point. They do not have to purchase
the checks they receive from the Fed. The checks are
issued when purchasing securities (not from Treasury
but from the dealers) by the Fed effectively "debt-
free" to itself, which will redeem them only with
another form of its own debt--Federal Reserve Notes.
Moreover, the Fed does not acquire the securities
from the brokers as a prudent investor, but purely to
further its monetary policy. There is a great deal
of "churning" involved in the process, the necessity
for which they have not rationally justified, a
matter commented on some years ago by Nobel winner in
economics, Milton Friedman:
http://www.geocities.com/socredus/friedman-81.txt
These transactions by the Fed, whether buying or
selling, are highly profitable to the select group of
Wall Street brokers who deal with the Fed (its "Open
Market" committee). Please note that the profit
(seignorage) does not go to the government through
its Treasury. It goes directly to the brokers,
without passing Go. Unlike the case with ordinary
transactions with the public (at any rate in theory),
there is no speculative risk to the brokers
whatsoever in these transactions in government
securities, nor to their client, the Fed. Their
profit is guaranteed to them, and represents money
injected "debt-free" by the Fed into the economy
through Wall Street. Perversely, it is one reason
the economy works as well as it does, as explainable
through the Douglas theory, particularly A+B.
Social Credit policy would redirect that "new" credit
directly to the benefit of final consumers, so that
it percolates up from the bottom, rather than
trickling down from the top.
I have not seen an argument why the reform should not
be accomplished, beyond fear of change, or loss of
privileged position.
Perhaps you will supply another one.
Inasmuch as you start from a patently false premise,
it is not necessary for me to comment further on your
post.
-
--- Timothy Carpenter <timbeau_hk@yahoo.co.uk> wrote:
> Dear Bill
>
> On 15/4/05 6:10 am, "William B. Ryan"
> <w_b_ryan@yahoo.com> wrote:
>
> > "In addition, it seems to me that one cannot have
> > 'debt-free' money. One cannot have an economic
> > instrument which the 'holder' (for cash money)
> > considers to be an asset but which the 'issuer'
> > denies as a liability!"
> > ------------------------
> > -------------------------
> >
> > During the era of "free coinage" of gold and
> silver,
> > one had the right to take gold and silver bullion
> in
> > any quantity in his possession to the mint for
> > stamping into coins, which were legal tender for
> "all
> > debts, public or private." When he spent them he
> was
> > not incurring debt, but rather, canceling it.
> >
> > Now, in the era of central banking, the central
> bank
> > issues checks that are redeemable in only another
> > form of the bank's own credit instruments, Federal
> > Reserve Notes, which are likewise legal tender for
> > "all debts." So while technically the notes and
> > member bank deposits are carried on the its books
> as
> > "liabilities," the bank is not required to part
> with
> > anything of value when "redeemed" other than
> exchange
> > for another form of the bank's own credit
> > instruments. That makes its credit instruments
> > effectively "debt-free" to their issuer.
> >
> > All Social Credit would do is have the central
> bank
> > issue checks representing "debt-free money" to
> final
> > consumers equitably, rather than to privileged
> Wall
> > Street insiders, as at present.
>
> I find this an astonishing statement. Wall Street is
> not issued debt
> securities 'debt free', institutions have to buy
> them. They are not 'given'
> with no need to pay and thus are not 'debt free' in
> the real sense. Net
> money in the economy does not increase with their
> sale and indeed they can
> often be used by governments to reduce the money
> supply. For the consumers
> to get these cheques in the same way that Wall St
> gets its debt securities
> the consumer would have to pay for them, thus making
> their issuance worse
> than useless!
>
> SC appears to require the 'creation' of money, truly
> 'debt free', being
> known by many as 'printing'. There is the point now
> being (always being?)
> discussed that this money supply is intended to be
> used to match the growth
> in economic wealth and/or be cancelled in the
> repayment of bank credit
> issued to pay/fund this increase in productive
> capacity or the capital
> equipment to enable same.
>
> The point is if you create 'debt free' money that is
> used to cancel a bank
> credit, IT disappears but you have removed the
> ability for the original
> 'created' money to be cancelled, so it will remain
> in the economy. By proxy,
> the SC discount is creating money 'debt free'. The
> issue is if the effect is
> to sustain and reflect growth or if it is
> inflationary. To compare its
> issuance with standard Government Debt is to make
> the SC movement sound
> uninformed/naīve.
>
> Tim Carpenter
>
> > It is not, in the final analysis, a radical
> departure
> > from present practice, with the following
> > qualification:
> >
> > The economic stimulus from the new money would
> > percolate up, rather than trickle down.
> >
> > That would have profound effect in terms of
> > empowering the consumer.
> > -
> >
> > "Surely, the only economically-significant factor
> > here is the net owed-wealth position of each
> economic
> > agent (i.e. assets minus liabilities). The grand
> > total (of course) is zero."
> > ------------------------
> > -------------------------
> >
> > Apparently, you think the accounting concept of
> net-
> > worth is equivalent to your idea of "net owed-
> > wealth." You state it is a "zero sum game."
> >
> > But surely the real economy is not zero sum. In
> the
> > real economy wealth is increasing, or at the very
> > least we hope it is increasing. Certainly it is
> > greater than it was in the somewhat distant past.
> It
> > is not unreasonable to expect that trend to
> continue
> > into the future.
> >
> > You are thinking of debits equaling credits as
> being
> > the essence of double entry accounting, but they
> are
> > credited or debited to THREE fundamentally
> different
> > kinds of accounts: Assets, Liabilities AND
> Capital--
> > allowing the accounting for profit or loss. No
> other
> > conceivable method of accounting can do this.
> >
> > Double entry accounting, unlike your zero sum
> game,
> > accounts for increasing wealth through the capital
> > account. I suppose you believe that when one
> > transactor has made a dollar profit, it
> necessarily
> > means that some other transactor has suffered a
> > dollar loss.
> >
> > Correct?
> > -
> >
> > Tim, I suggest you read some introductory
> materials
> > we have made available at
> > http://www.geocities.com/compendium to learn more
> > about the subject heading of this list.
> >
> > Then get back to us with further questions.
> > -
> >
> >
> >
> >
> > --- Tim Knight <Tim_Knight@NTLWorld.Com> wrote:
> >
> >> John G Rawson kindly replied to my original note
> >> requesting help in getting a grip on what Social
> >> Credit people mean by very basic expressions such
> as
> >> 'money', 'issuing money', 'credit' and 'issuing
> >> credit'.
> >>
> >> Thanks for your response John. Hoever, the
> >> definitions of M1 - M5 merely illustrate my
> plight.
> >> Each of M1 - M5 defines a subset of the global
> >> zero-sum network of 'owed-wealth'. For example,
> it
> >> seems to me that each item of cash/M0 reflects a
> >> debt owed by the issuer to the bearer. However,
> the
> >> distinctions are purely-administrative. I cannot
> >> see any economically-significant characteristic
> to
> >> distinguish between M1 - M5 and all of the other
> >> owed-wealth administered in the form of gilts,
> >> bonds, payables, receivables, bank current
> accounts,
> >> bank deposit accounts, bank mortgage accounts,
> >> credit card debts, personal loans, etc., etc.,
> etc..
> >> In particular:
> >> 1.. Banks do not 'create money' or 'create
> credit'
> >> 'out of thin air' when they process a payment
> >> transaction. A typical non-cash payment results
> in
> >> a closed circle of zero-sum double-entry
> postings:
> >> 1.. The bank credits the payee and debits the
> >> payer.
>
=== message truncated ===
__________________________________________________
Do You Yahoo!?
Tired of spam? Yahoo! Mail has the best spam protection around
http://mail.yahoo.com
|
In response to Tim
Reply to this message