More on Inflation, the Value of Money and Money as Part of the Commons
A lively discussion ensued after the article on MPE’s take on inflation. But the basic issue remains: a misunderstanding about what determines the value of money.
I realize it’s all unpleasant.
I want to thank all who participated for the level of discussion on the previous article, both in term of content and tone of voice.
A Recap
The whole discussion focused on price stability in MPE, with the MPE advocates maintaining prices will remain stable.
Whereas I stated that people could spend as many promissory notes as they had assets to back them with, this was nuanced, by the explanation that there is an organization (CMI, Common Monetary Infrastructure) that manages some issues, including checking whether people will have sufficient income to service the promissory note.
So people can spend promissory notes that they can both service and back with assets. Also, no asset can be used more than once to back a new promissory note, this is also useful to add.
What it all comes down to is this: MPE believes that the value of money is dependent on the underlying asset.
But the value of money is simply a matter of supply and demand in the economy. That’s the whole crux.
MPE implicitly assumes that there is always demand for asset backed paper. But the problem is that this paper is not very liquid. For instance: a promissory note spent to buy a new house can be paid off over the life span of the house, which could be a hundred years or even much longer.
What is the cash value of a paper asset nominally worth 100 that will mature over the coming century? 10? 20? 30 maybe?
Meanwhile, a great deal of this paper would flood the market, because in an interest-free economy people would have vastly improved creditability.
The value of money is not the underlying asset. Simple proof of that is basic debt free money. Just paper spent into circulation. There is no underlying asset. Still it has value. Why? Because we agree to use it as money and there is a certain demand for money in the economy. How much demand? It depends on how much is needed, how much is available and its price.
More money in circulation means a lower price for it and higher prices for all other assets. This is what MPE simply denies. This is also why its take on inflation is important. Interestingly, nobody addressed my basic critique that both growing volume and usury cause higher prices, not just usury. But failing to correctly address pure inflation in the economies of the West in the last few millennia, including Zimbabwe, is the basis for too many promissory notes in MPE.
While we create the money as credit, once it’s spent into circulation, it is ruled by the laws of money, not credit.
The Promissory Note versus Money as Part of the Commons
The promissory note is MPE’s answer to how the bank usurps our credit. MPE correctly concludes the bank doesn’t lend anything and that ‘their’ credit by bookkeeping is in fact our credit. The bank in fact creates the credit for us on the basis of our promise to pay. But if our promise to pay is all it takes, why do we need a bank? Let alone indentured servitude (usury) in return for exercising our right to promise to pay??
And since sovereigns and the opulent have forever paid with promises to pay, then perhaps so should we. That’s basically MPE’s take. We don’t need to go to a bank, we don’t need permission, there are just some basic rules, there must be assets and there must be enough income to service the promise.
In this way, MPE also avoids the annoying notion of debt. When using a promissory note, we are not going in debt, we are exercising our right to pay later.
Personally I believe MPE takes it too far here. Money does not exist in a vacuum. Why is money so difficult to reform? Because we need each other to make it work. My promissory note is dependent on your acceptance and vice versa. Money is an interplay of individuals. Of individuals and the ‘community’, whatever that may be.
To end the bank’s obfuscation (usurpation), we cannot just say, it’s not yours, it’s mine. Because it is ours too.
MPE, like so many, including myself, wants to avoid having to go someplace and face some technocrat and be dependent on him having a good day for you to get what you basically have a right to.
But the bottom line is: our promise to pay does imply a debt. To the community at large, who allows us to buy now and pay later. All individuals (‘the community’) allow each other this, this is the essential nature of mutual credit.
So I think it’s difficult to avoid: we will need some sort of credit facilities (not banks) who will have to manage it all. They should have clear charters and the understanding should be that within in certain rules we have a right to the credit and not because the credit facility is so good to us, but because it is our right and the credit facility only represents the community and does nothing but keeping the books for us.
But the credit facility is necessary, to make sure the assets are there, and that there is indeed the income to service the debt and, yes, to make sure the volume is managed properly.
We will have a right to credit, but not to as much credit as we like. Money is a part of the commons and it’s not unlike land and reforming land also does not mean that we just say go out there and take what you want. Simply because there is a limited supply of it.
How to manage volume?
The simple fact is: 2000 years of monetary theory and practice does not provide a clear cut formula in the sense that we can mathematically say ‘this economy needs so much money’.
But there are basic pointers. If both the volume of money and prices are rising, than most likely inflation is the cause and rising prices the effect. Deflation will cause economic contraction. Money scarcity will cause permanent depression. If money is scarce, adding money will not lead to rising prices, but to more activity.
Velocity of money is equally important to volume and the real volume of money is nominal value of the money supply times velocity of circulation. Usury slows down the velocity of money. A demurrage accelerates it.
The Money Power always makes sure money is scarce and Usury always causes money scarcity, there is never enough money to pay off interest + debt.
To manage volume, we must monitor economic activity and price levels. If activity is sluggish, money scarcity might be the problem. Add money until prices rise. If activity is still below par, there are other economic problems.
We must create as much money as stable prices allow and no less to avoid money scarcity. If economic activity grows, more money must be added to finance the extra activity, otherwise money scarcity will return and the economy will grow less than it naturally would.
This can be reasonably managed by a competent currency board. It’s not rocket science. If sufficient people in society realize what is going on, this can be managed transparently.
Conclusion
A Usury Free economy will see great abundance. The living standards of the many will rise several times over. But this abundance does not show by endless credit. It shows through lower prices, shorter working weeks, higher wages, self-employment, co-ownership, high levels of home ownership and low rents.
Mathematically Perfected Economy provides a high level appreciation of many monetary issues. There is great merit in Mike Montagne’s long standing efforts to address the most crucial issue of Usury, not just by analyzing the problem, but also by providing an attempt at an integral solution.
But the outright denial of the importance of ‘circular inflation’ for price levels is simply not substantiated with a real case and does nothing to address the clear and present evidence of the historical record. This shows in its management of volume of promissory notes.
This mistaken analysis of volume is quite prevalent in the wider interest-free credit community and will really have to be solved if the community is going to move on to the next level and make a real difference in the struggle against Usury.
Related:
Mutual Credit and Inflation
Interest-Free Credit (including MPE!) and the Management of Volume
How to manage the Volume of Money in Mutual CreditThe Cult of Mathematically Perfected Economy and its Ridiculous Stance on Inflation
PLease?? Money is not and cannot be paper spent into circulation. Money is mutual credit expressed in paper.
“Money is mutual credit expressed in paper.”
and finally you circulate papers, but looked through pink glasses it looks like credit.
Currency is not a commodity so there should be no profit or interest on it.
Currency is only meant to purchase the goods not currency to currency or charging even on deferred payment.
Banks should only be for keeping money at safe hands and return on demand, no business allowed to them, may charge a nominal service charges. For any business, proposals may come to bank and bank publicize the details to account holders, the account holders those agreed may form a cooperative and advise their bank as per their mutual agreement, memorandum of understanding.
You cannot just forbid interest. You cannot put a gun to the head of people and say “spent that money, or put them into a bank, to be at my disposal”. If you want to make interest go away naturally you have to change the system and use demurrage currency.
Oh you really are too much.
So you can’t ‘put a gun’ to peoples heads regarding usury (no one would need to ‘borrow’ under MPE – A mute point)
But you CAN put a gun to my head to extract demurrage? Even though ‘hoarding is a product of a scarce metal currency controlled by banks and issued at interest?
Utter garbage yet again.
“‘hoarding is a product of a scarce metal currency controlled by banks and issued at interest”
Is this some kind of matra that you repeat to hold your brain of falling apart ?
If it can be hoarded, I will be hoarded. No matters it is paper, or gold or digits in computer. I will ask an payment of other people to use it.
So anything held in my account is ‘hoarding’?
My earnings are hoarding?
Any unspent money left in my account is ‘hoarding’?
demurrage was created under a COMPLETELY DIFFERENT system when money was scare gold backed and hoarded. People could NOT issue their own promissory obligations free of the banks. The BANKS were hoarding the money/gold. They were hoarding it to either attain greater interest or deflate the money supply.
You’ve taken a 100 year old proposal to a completely different problem and tried shoe-horning it into a completely different monetary system.
Why not demurrage my FOOD supply as well? How about oil?
Yes lets TAKE AWAY money from people in order to PREVENT DEFLATION…by deflating their bank accounts.
The utter stupidity to suggest this in a free interest free economy is hard to comprehend.
The funny thing is 100 years ago this might be a valid point; to keep pushing it now is insanity.
Actually, the Chinese are charging a tax on savings accounts now. Even despite the demurrage the people are still saving too much. There is not enough consumption in the domestic economy, and it is still export driven. Some Chinese economists are suggesting that they need social programs so people don’t have so much fear of the future.
I think demurrage is not insanity. Personally, I wouldn’t tax money already in circulation, because it is already doing its job. But, a light tax on savings will help lower interest rates toward zero. People will be more apt to loan out their savings, allowing us to get to zero interest rates. The Chinese example also suggests that the economy is really political economy – but we already knew that (even if most economists don’t.)
It’s just too bad the interest-free crediters (including MPE’ers) often have this tunnelvision.
I don’t see how you can be against Usury and against demurrage too.
Seriously Anthony?
Interest is an unjust/unnecessary artificial cost imposed on our money supply by banks who first steal our promissory contracts.
Demeruge was designed for a system where precious metals backed currencies are being horded
Where people are DENIED the ability to issue promissory obligations (The horders cut the money supply as its commodity based)
Where the horded rocks/metals acquire compound interest sucking up the wealth towards the banks/plutocrats
What you advocate in demeruge under an MPE system is literally stealing EVERYONE’S (poor, middle income included) wealth in order to fix a problem that has been resolved.
Under MPE I CAN spend. I WANT to spend. I have NO desire to horde. There is no benefit to horde. The money is just sitting there it’s not artificially growing with compound interest. It’s not commodity money so why the heck are you even raising such an irrelevant point??
Again there is NO REASON to ‘horde’. Even under the usury system people spend it’s what we call and ECONOMY. Demeruge is a completely unnecessary arbitrary TAX on our wealth. I WORK for my money Anthony. Despite my posting i DO HAVE A 9-5 and work damn hard for what I earn. I make a living from it and so do millions of others.
Having some academics decide my money must be taken from me to ‘help’ me spend is the kind of asinine BS that will kill this movement.
This is the problem. You ignore the root of money (our promissory obligation). You ignore the fact we are NOT under a scarce metal system any more. You ignore that the money supply is CREATED by the obligors, not a scarce rock to be divied up as the bankers/state see fit. You talk like an Austrian, create a totally false straw-man to knock down and tell us TAKING our money will prevent deflation. Its certifiably nuts.
“promissory obligations” are just “promissory obligations”. They are not money. You have that kind of financial invention available today and actually they or very old invention. They are some kind of 400 years old. Have you watched “Money as debt documentary” ? They claim that your “promissory obligations” are invented somewhen in the middle ages.
“Demeruge was designed for a system where precious metals backed currencies are being horded”
That sentence is just a lie. In the first chapters of his book, Silvio Gesell explains that why we DO NOT NEED metal backed currency. But you have never read that book, and make up claims as you go.
Where did I say Giselle advocated it?
Demeruge was designed to HELP relieve the symptoms in a monetary system that was artiicially constrained by scarce metals usury based currency controlled by the banks.
Im telling you we dont have precious metals currency today, and under MPE (or other interest free systems) people have plentiful purchasing power, higher incomes and lower costs of production and living.
To tell me you’ll implement a blanket confiscation of my income ( I don’t care what %) to satisfy your obsession with demeruge is as stupid as you can get. I have no desire to ‘horde’ money. I don’t know anyone who does. And if someone has a weird obsession watching their money sit doing NOTHING (there is no interest in MPE) it wont benefit them one jot unless its spent anyway. Money is after all means of transaction, a record of entitlement. Its what we are PAID for WORKING. If it’s not spent whats even the point?
People would have MORE income and likely spend more in an interest free economy you have no clue what your talking about.
I’m not advocating demurrage on interest-free credit greenbacker, although I’m contemplating it.
Demurrage is NOT exclusive to metal, it can also be viably combined with debt-free money, that’s a blind spot of the interest-free crediters.
Money is NOT wealth, it’s a means of exchange. It’s NOT a big tax: the cost of demurrage is infinitely smaller than usury (because the money supply would be very much smaller because of higher circulation) and can be easily circumvented by doing what the system wants: keeping low balances. So there is no need for high minded preaches.
I’m not so strongly worried about hoarding as Dark Dirk is, but he most certainly has a point, which is also overlooked by the interest-free crediters. You must remember that what you hoard is the debt of another. There is an eternal conflict between savers and debtors in a credit based money supply.
But I do agree with you that hoarding will be much less of an issue in interest-free credit. However, it’s not a given that it will not be an issue at all.
I am not worried about hoarding very much. Silvio Gesell proposed demurrage tax of near 5% per year, Chiemgauer has 8% tax per year. You CAN save money to future use, because that tax it not much. BUT you, because of that tax, you have incentive to put your money into a saving account, not in metallic safe, where they will be available to be used by other people who will pay the demurrage tax instead of you. That is the Silvo Gesell’s idea. And demurrage tax is negative feedback to the system. With demurrage you can shrink the money supply (simple example is dead person who leaves extra money in existence) and if you combine demurrage system with full reserve banking (forbid bankers to create money) you can have stable and controllable money supply. Money will become real means of exchange, and saver will be wiling to make them available to other people at lower cost. There always have to be some cost to cover dead person case, maintenance cost or disaster cost. That is well described in Silvo Gesell’s book in chapter about compounds of interest tax.
The idea of demurrage is to tax all money especialy that in circulation. The idea is NOT to tax savings accounts. In demurrage money system you put your money in savings account to be available to other people who will use them and they will pay the dumurrage tax. So at the end of the loan period they will return the money to the saver and they will be the same amount or amount + interest, or amount – tax smaller that demurrage. That depends on what is written in the contract.
Silvio was weak on credit theory, as expected of that era. He explained it as another river that works when money gets blocked. But, in my opinion, credit as money has a high drain rate, which is a form of forced velocity. This forced velocity on credit, the payback rate, is both velocity and makes volume disappear. Any real money system will need some credit, probably about 40 percent to my estimation, This credit will be required to flex money supply across seasons, and also as competition to keep the price of money low. Credit acts as money when it is circulating, so it definitely impacts the money supply.
I’ve struggled with the issue of demmurage on every unit type and currency path, and think it is not necessary, and impractical. If you have a lot of credit as money in your system, then a form of demurrage already exists.
The physical form of money i.e. currency, is not easily taxed and the tax is in steps, or increments, especially with Silvios stickers. This step function is a very real logistical problem which will create perverse behaviors, based on when the sticker expires. Quick get rid of it before the time stamp expires!
The physical form of money is vanishing today , and currency is becoming digital. Digital money is already accelerated to almost maximum and is doing its exchange function. If we want the physical form of money to behave, then high carry costs are the more practical solution; make physical money annoying by recalling it periodically, or making coins big and impractical.
Taxing savings prods users to loan out their money. High interest rates prod savers to loan out their money. To get interest rates around zero, there needs to be both prodding (pushing) and compelling (attractive/positive) forces. Zero interest rates are in the positive direction when the tax is considered as a negative. I think pavlovian conditioning, and the changed nature of the economic environment, suggests that low demurrage rates on savings will be enough.
I totally get that people need to save for the future, and to make them secure. But, if their savings have been converted to productive assets, meaning they are part of the economy and commons, then some of the unsaid fears of people are no longer part of the equation. In other words, people will both have real assets (ownership in the commons) as savings, and some money as savings. Their real assets can be easily converted to money if/when necessary.
Remember, we are talking about a different world , where many of our current paradigms are shattered. Commons money, or sovereign debt free money, matches the entire spectrum of goods and services. If we also have sovereign credit, risk is spread also across all goods and services. This means that all forms of labor will be paid for properly.
By contrast, today’s FIRE sector and oil are used to create banker credit as money. One small sector to make money for the entire economy is a mismatch of types, and ignores the ‘social credit’ aspect of money as part of the commons.
That is all implemented in chiemgauer system witch is working today. I am very curios how they implemented it.
Ren,
I dont live in China and i dont see them as any social example to follow (state/corporate fascism not unlike us)
China has a usury central banking system JUST like the west.
It has a one party communist state that kills the opposition
It enacts euthenasia and one child policy.
The people are saving out of FEAR, crazy price inflation and diminished purchasing power (again..caused by banks controlling their supply and imposing interest).
The ridiculousness of your stance is you point this out and then totally evade how MPE would eradicate baniking ,usury the theft of our money OUTRIGHT at a stroke.
What better ‘social programme’ than cancelling the bankers falsified debts and restoring the issuing power to the people??
You guys talk out of both sides of your mouth, point out the problems and direct people away from the only solution that will kill banking outright. We dont need ANY interest, we don’t need to ‘borrow’ from ‘banks’ your another charletan trying the preserve the very banking system robbing us blind.
China uses state banks (four of them) and then forgives loans. Therefore they use a form of debt free currency. No doubt they are fascist, but that doesn’t mean we should ignore aspects of their economy. It’s bad form to wave hands and dismiss theories because of some “other” negative aspect.
All of history is an example to us, and it is the laboratory that we study. Some things about money cannot be seen, except across the span of time.
MPE is claiming to issue its IOU’s into the money supply, and then claim those IOUs as part of the commons. MPE money formation is based on assets, in reality probably one class (land and possibly also business stocks or oil), which is a mismatch of types – especially when the money supply is used by everybody all for goods and services. MPE claims their IOU to be superior due to mathematically bounding it’s asset class, and then claims the social credit function, as the unit converts to be used as common good for all goods and services. The social credit function is the real secret, not discussed that MPE glosses over.
MPE promis notes are similar to hypothecation double entry debts to my view. The MPE note goes through a function machine to convert an asset ; in the hypothecation debt money banker scheme, the double entry ledger is the function machine. MPE claims their hypothecation is superior to bank hypothecation. Maybe, but so what? Credit of any sort must behave as money once it enters circulation, and that CANNOT be ignored. Volume of money matters.
Sovereign money converts banks to gyro,meaning banks can no longer loan new money into existence. This is very significantly different behavior. Banks in a sovereign world can only move around our money as accountants and as our paid for servants. This inverts banks, and they become another animal.
State banks, or any similar hypothecation bank, inserts themselves between creditor and debtor to create money. MPE is assuming creditor position, with altruistic feeling I’m sure, by using their MPE hypothecation machine.
Yes Ross, MPE talks about the promissory note, because they hate ‘bank obfuscation’ of what is indeed OUR credit. By the promissory note they hope to circumvent the annoying notion of ‘debt’, but I’m afraid it’s not really possible. There is debt, a bond, even with a promissory note.
And yes, I consider MPE interest free credit. Changing the terminology only serves to confuse hoards of people (as it does, many people have difficulty penetrating its jargon), not to change the underlying reality.
>>>It IS Obfuscation
It is fraud and a lie destroying our purchasing power and leading to the imposition of interest by a pretend lender
Do you now deny this? If not why not support us instead of telling us ‘cheap credit’ is the problem?
Why do you keep peddling the outright lie that we MUST borrow from banks??
‘By the promissory note they hope to circumvent the annoying notion of ‘debt’, but I’m afraid it’s not really possible. There is debt, a bond, even with a promissory note.’
Utter nonsense again. MPE is EXPLICITLY a debt based system. If you had bothered to read the site you’d know this, let alone the hundreds of hours Mike has committed to online tutorials.
MPE has been arguing for DECADES with plagiarists and pretenders telling us ‘debt alone’ is the problem. Those trying to hide the fact INTEREST is the problem and the theft of our promissory notes, giving banks the ability to interfere in our commerce (between buyers/sellers) and impose usury in the first place
Like who?
Positive MOney (Fraudsters claiming money is created from ‘thin air’ evading our own promissory notes and claiming we must borrow from banks at ‘full reserve’…AND interest
MOney as Debt – Fraudsters claiming debt alone is the issue when again it is INTEREST multipling debt to terminal sums. Paul Grigon is a clown, debt in its natural state (without banks laundering our contracts and imposing interest) is a perfectly natural part of any fuctioning economy
Ive NEVER seen you say a word against these far worse frauds one supporting full reserve usury, the other claiming debt alone is the issue.
‘And yes, I consider MPE interest free credit. Changing the terminology only serves to confuse hoards of people (as it does, many people have difficulty penetrating its jargon), not to change the underlying re’
>>>Funnily enough I managed to get through the ‘sea of jargon’ and understand it. I’m not a genius children can grasp the basic facts
Thousands of others understand it. Why do you think that is?
The problem is you WANT to KEEP the banks Anthony.
You want to keep us ‘borrowing’ our own contracts from a mere publisher and rather than man up and admit the absurdity of such a position, you now claim we need ‘full reserve’ lending…despite debunking that nonsense a few months ago yourself (!)
Why do you think someone like me who strongly supported SC/Demeruge was able to EDUCATE myself, understand the PRINCIPALS, and support a much stronger solution with greater freedom and purchasing power.
It’s ok to admit your wrong Anthony. It’s not a sign of weakness it’s a strength.
Again great article, Antony, I love to visit your blog and read your articles.
Yes please continue Dirk. Please inform us how having MORE DISPOSABLE INCOME will create DEFLATION..
I just make fun of you gays. It is fun to see that you have no logical thinking and cannot connect the parts of the money system together. You cannot think about limits, you cannot think about corner cases like “What is the total money supply in MPE and why” or “what happens to promissory notes of someone who dies”. You just repeat mantras and throws many words to grab attention of people. That is all.
What happens today if people dies before fulfilling a debt obligation?
Does that prevent us issuing money today?
Are you for real?
If person dies today, the not payed debt worsens the bank reserves, but created money remain in circulation. That is a cause of money inflation. In MPE created money will remain in positive account, but system will have to delete the dead participant and become unbalanced. How you intend to return the balance between credit and debit in MPE ? and the first question again: What is the total money supply in MPE and who will put value to my house ?
Do anybody are going to answer my question ? or you, MPE gays, just do not want to worry to think to much ?
Quote: What it all comes down to is this: MPE believes that the value of money is dependent on the underlying asset :unquote
In its vital eradication of monetary deprivation, mathematically perfected economy is indeed an absolute human right. Yet every right, however demonstrable, inheres only to such recognition as its assertion is inevitable. Thus a compulsory resolve hinges upon the relatively simple fundamental fact that an eradication of monetary deprivation is inherently to preserve immutable representation of entitlement (what you call money). Because entitlement is in turn sustained only by enforceable obligations to redeem, therefore mathematically perfected economy is itself, simply to retire the principal of promissory obligations as related property is consumed, because the life-cycle of money therefore inherently concludes with fulfillment.
A vital object of immutable representation further predicates that we are in fact the only actual issuers of money then — for only our fulfillment of the obligations we engage in imparts immutable representation; and only our commitments in turn, rightfully cause money to cease existence in our provision for its fulfillment. Furthermore then, by our acceptance of promissory obligations, we are likewise the only actual creditors in the entire inherent life cycle of money, for likewise, we alone give up property for the resultant representations of entitlement.
Finally then, these necessarily immutable representations of entitlement are therefore sustained strictly by a perpetual 1:1:1 relationship between remaining circulation, remaining value of represented property, and remaining obligation to pay for represented property — with this necessarily eternal condition alone sustaining the only truly free enterprise and commerce, even automatically then, simply by paying for consumption of related property as we consume of it.
The absolute right of mathematically perfected economy is therefore a vital freedom from monetary deprivation, in which representations of entitlement are sustained necessarily by a mathematic singularity, simply enabling us to pay for whatever we consume with the universal like of our own production.
Why would we settle for anything less?!
Yea, let’s use MPE. In MPE “we are in fact the only actual issuers of money”. I will issue as much money as I want and I will do not have to work anymore. I will just issue money. We should not be deprived of money anymore. Do MPE hang out a printing press to any new participant ?
Yes of course paying principal alone equates ‘FREE’ living and suddenly not requiring work.
Without interest everything suddenly becomes at ‘no cost’.
You really do make it up as you go along don’t you?
Without limit in MPE, I will issue as much promissory noted as I want. I will just back them with my house. It worths something like 1 000 000 000 000 000 credits. I they finish, I will just issue more backed by my shovel.
Where does MPE imply ‘free’ money issued at no limit?
Again your literally making sh** up as you go along.
Can I issue 1,00000000 in currency today? Nope
Why? Because I cant provide demonstration/proof of ability to pay such an astronomical sum.
Is the home I wish to purchase worth $1,000000 000000000? Is a car??
We have the technology to ascertain creditworthiness TODAY
It’s used TODAY, in every loan/mortgage taken out.
There is risk mitigation software used TODAY in the banking sector
Fraud detection software exists TODAY
You assume we’ll magically lose the power to do so without the banks?
Come on mate stop embarrassing yourself.
OK. What will be the credit limit in MPE ?
As much as you can service.
I can service 1 000 000 000 000 000. My house worth so much.
NO you cannot service that.
Is your house worth that much?
Can you really afford to pay sum of money back? How does that compare against your income/outgoing expenses?
Or are you just posting more BS that is quite obviously fraud even to a child
Yes, my house worth that much. Who else will value it in MPE ? And why I should repay that debt in MPE anyway ? and to who ? Who will force me to repay ?
Someone making 100k could service millions Jake.
It’s a recipe for disaster.
Dirk are you daft enough to believe there is a single magical pixie dust figure that can just be plucked from thin air?
What made up figure would YOU fix as the ‘right’ amount?
The volume of money circulating is as much as the host economy wishes to use to transact with each other based upon their ability to service the debt (Again covered in the 1:1:1 ratio).
Its a completely irrelevant question because as the economy contracts/grows the money issued into circulation can match production. Not too much, not to little just what we wish to issue and retire from circulation.
I cannot just issue 1 Trillion as I don’t have the income to pay it out of circulation, nor is any house worth that amount. Its basic fraud detection you can’t seem to get your head around. You think people can issue $100,000 for some skittles and were somehow powerless to prevent this?
“host economy” ?? Who is that person ? There is no such thing. There are just people. Every one of them, if have fredom, will issue as much money as he want. Who will stop them ?
More special questions from a special guy.
No one said an economy doesn’t consist of people, what else would it be monkeys?
As to who will ‘stop’ you how about you actually reading the material. Have you?
The problem is you don’t care, you create absurd scenarios of utter obvious fraud and claim there is no way to prevent it (while ignoring the CMI and creditworthiness). Stupid is as stupid does.
If you think MPE is a QE printing house without checks/limits/creditworthiness your as mentally challenged as I thought.
MPE is exactly. that. It is no more then big wording and happy talking. When you people have to think abount details, suddenly they are absurd scenarios. The only absurd thing here is MPE and mutual credit at a whole.
There is no gain by insulting people you disagree with; maybe you don’t understand the whole concept. I think it is fair to say that Government granting any license (favor) to certain friends or supporters is unethical and violates Constitutional principals. Granting charters to Banks that allow them to essentially create currency, and then charge interest on it, is wrong, by any standard of fairness. Why shouldn’t everyone have that power, whether they want to charge interest or not? The answer is “we can”, but we can’t make it “legal tender”. There is no law, however, that makes if illegal for people to use any currency they wish, so it is a function of a free market to limit the value of personal currencies.on the basis of its usefulness and integrity.
A workable currency is any that is accepted by users in commerce. Once inflation begins roaring out of control, the users will be alarmed and angered by its pain, and want to stop using that currency. Legal tender laws prevent that and protect the Government-endorsed currency.
Without getting too wordy, I only mean to suggest that there is a need that should be addressed, and discussion is healthy. I can see problems with MPE, but appreciate the concept.
Denis
Thanks Denis.
This whole blog is all about how we are going to get rid of the banks and get to a usury free economy. Of course the current system is outrageous.
The idea that inflation will end usage is only true when we reach the quadrillion level, because it’s only then that the Zimbabwean dollar was abandoned. I’d like to prevent that from happening.
Im sorry Anthony you cant say one thing and your actions be another.
You cant tell us your against banking and then advocate the VERY banks that steal our promissory notes. JAK Bank/Islamic bank give up no equal consideration of value they are not lenders just charlatans and faux creditors.
We can get rid of banks and usury overnight with MPE. I think you know this. I think you know that GIVEN A CHOICE no one would be stupid enough to walk into a bank to publish their contract and pay interest/service fees when the CMI would do it at no interest and simply act as a publisher of the evidence (not a third party parasite claiming to lend us our own money).
JAK banking is interest-free Greenbacker84 and in fact DOES lend real savings: it’s interest-free full reserve banking.
I’m not in favor of Islamic banking in its current form: it’s cost for capital is just usury.
First off all full reserve banking is not a solution.
Its another phony definition put out there to distract us from real monetary reform, abolishing usury and restoring the issuance to the people.
Its the same asinine proposal from ‘Positive Money’ a bunch of charlatans evading the issuance of our promissory obligations, claiming money is made from ‘thin air’ and that making banks the only way to get money will save us..
You did an article debunking it few months ago for goodness sake. Has Ron Paul hijacked your account?
As for Islamic Banking Ive lost count how many times you pitch them as suitable alternative to ‘help’ us in our ‘transition’ (along with the wonderful JAK BANK of course.
One of the points of this blog is that it discusses all the different systems. You can think only MPE and know only Mike’s arguments against other proposals. You think that every time I mention something, that that is what I propose. At the same time you maintain you have read my articles………..
Grow up man. The world is bigger than MPE, MPE is not perfect and thorough economic study requires absorbing as much as humanity has gathered throughout the ages as possible.
Believe it or not Anthony Ive been a BIG fan of this site. Your one of the very few people attacking usury online.
You have very interesting historical insight
You attacked the fraud that is Full Reserve banking
You took on the Ron Paulian Austrian ‘school’
Believe it or not, I HAVE looked at the options.
I was an Austrian :)(then I realized banks are faux creditors, money is created in every phoney loan)
Then I was a Green Backer/Social Credit guy. I STILL listen to alot of Dick Eastman/Bill Still (neither of whom will address MPE sadly)
Then I realized that WE are the true source of money (its our labour, time, and productivity backing it NOT any bank)
I realized its not thin air, that the Bank is just republishing OUR OWN contracts
I realized the issue is how to publish our promissory obligations (to each other) while avoiding circulatory inflation/deflation and asserting credit worthiness/
MPE does this. I did not just stumble upon it, that took YEARS of research and dead ends
I DO respect alot of what you’ve done
But for some reason, MPE is the ONE topic you will not accurately depict, and now vilify using outright fabrications and misrepresentations (MPE evades debt? Allows ‘unlimited free credit?)
I cant let that slide and I’ll call a spade a spade. Its YOUR blog. You can call me a cultist of you like but why do you even entertain discredited notions you know to be incorrect eg. Full reserve banking; telling us ‘cheap’ credit caused a crash (when any rate of interest is terminal…10% would collapse the economy faster).
Why not tell those nice people in Ireland that the debts the banks claim are all FRAUDULENT and MPE would cancel those debts outright and allow them to pay down their homes principal alone (all interest payments counted towards principal).
I want to unite on usury. I know we agree on 95% of what we say but we cant bring change claiming that full reserve banking, islamic banking or handing our promissory obligations to ‘banks’ is any solution. They are all dead ends. We cant give the banks a fig to hide behind, and telling people we MUST borrow form a faux creditor bank wont help anyone.
But I agree with this Greenbacker! The Bank doesn’t lend anything! It’s not the bank’s credit! That’s key! I think everybody that understands fractional reserve banking must come to that conclusion, I’ve mentioned it many times and continue to call it out. MPE makes a good case about this too, there is no doubt, I don’t deny that at all!
Ok, I am a little saddened that somebody would want to claim this simple fact as his own (Gotfried Feder’s Manifesto was based on the same idea).
The bank doesn’t lend, it’s our credit and the only question is: can we spend our own promissory notes ad infinitum, or do we need some sort of credit facility to manage it all properly, especially the volume.
In fairness, I think that this discussion has shown that MPE’s take on volume and inflation is simply not tenable. The value of money is not the underlying asset, but a function of demand and supply (price) in the market. More money means it will be worth less.
I’m open to being corrected, but it has not happened. No proof has been offered that historical asset bubbles were caused by usury. No real case has been provided to prove ‘circulatory inflation’ does not lead to higher prices. And this is the basis of MPE’s promissory notes.
However: I AM very much in favor of an interest-free credit based money supply. Except for the volume issue, I find no other issues with MPE. I have consistently maintained that it is in fact an interest-free credit derivative. I’ll be the first to admit many issues are well worked out and it is indeed very strong to focus on the obfuscation of our credit.
So please understand: my criticism is aimed at reinforcing monetary theory, awareness of the issues, not on attacking MPE. I realize it has come down to that a bit, but let’s be honest: it’s Mike that is giving everybody a hard time with his ‘eleventh hour pretender’ and ‘plagiarist’ nonsense.
People buy the idea that MPE is both very unique and the singular solution. I simply don’t agree and I think I offered a reasonable amount of evidence to back up that position.
I DO on the other hand submit happily that Mike has done a tremendous job in many respects and is a great teacher too. People representing MPE show great knowledge of the issues, there is no doubt about that, so hats off.
Btw, two minor points: in the current system, interest rates are used to manage demand for credit. If there are low interest rate, history shows demand for credit will be great. This will lead to asset bubbles. They use high interest rates to lower demand. I’m not promoting this, this is simply how the current system works. That’s what I mean when I say cheap credit causes bubbles, it’s simply a given Greenbacker84, it’s not something I like.
I agree automatically that interest is simply unsustainable and that a crash is ultimately unavoidable.
Because of the issue under discussion (a limit to the amount promissory notes), we will need additional methods to provide interest-free credit: there is a greater need for credit than for money, so we cannot provide all the credit as new money.
Hence I believe there is a future for interest-free full reserve banking.
Anthony, and Greenbacker, Sovereign money does not require full reserves. The money itself stands on its own power as money, and requires no reserves.
The 100 percent reserve requirement is for banks to continue to loan private credit as money into existence.
Sovereign money is more advanced thought than 100 percent reserves, and has advanced beyond primitive banker concepts. The banks can no longer create money, they are no longer banks of issue, and hence they do not need reserves.
http://sovereignmoney.eu/100-per-cent-banking-and-plain-sovereign-money
So, 100 percent reserves and Sovereign money (positive money as it is sometimes called) are two different things.
Ironically, Sovereign money most closely matches Greenbacks. So, I think Greenbacker needs to change his name.
Greenbacks were not credit, they were Treasury instruments issued debt free into the economy, and they functioned well. They were good for paying down debts (bank credit) and could be recalled with taxes.
MPE and others have a legitimate concern about having a currency issuing authority vested in the Government, especially the executive. A mutual credit system also should have all of the participants working together to control volume. Fiscal policy and Monetary policy must be separated in different institutions.
Huber on Sovereign money, which is part of the currency school of thought as is Social Credit (Douglas).
—————-
If one accepts that the state is not, and must not be, a monolithic homogeneous body, but a differentiated structure of manifold institutions with separation and balance of state powers (including budgets) under public law, then one will have to assess the concept of a ‘currency board’ under the roof of the treasury as PROBLEMATIC. The monetary prerogative should be in the hands of an independent monetary state authority outside the executive power, such as, for example, an independent nationalised central bank. This is all the more important since monetary and fiscal responsibilities must not be confused.
I will ask you again: Who in MPE will approve the amount of promissory notes that I want to issue ? and Who are going to force me to take them back ? What happens when a person dies without taking back his notes, or simply defaults and there is no asset to take from his ? How to are going to maintain the balance between debit and credit in your’s “perfect” MPE ?
of the “lenders” say that the “Bonded Promissory Notes” and “Bills of Exchange” are bogus documents and are worthless and fraudulent and they refuse to give credit for the amount of the “Note” they receive as payment of an alleged debt even though they are given specific instructions on how to negotiate the “Note”. Isn’t it interesting that THEY can take a “Note” that THEY print and put before you to sign at the closing table and deposit it in the bank and it is converted to money immediately, but the “Note” that YOU issue is worthless and fraudulent? The only difference is WHO PRINTS THE NOTE!!!! They are both signed by the same “borrower” and it is that person’s credit that backs that “Note”.
There seem to be two camps emerging regarding loan (credit) allocation;
______________________________________
Individuals should ultimately decide how much they want/need to borrow (assuming they have adequate credit ability and can at least fully collateralize the loan).
or
System managers should watch pricing levels (basket of goods) and throttle back on the amount of loans if the prices increase. The volume of money should be monitored to prevent price inflation.
______________________________________
I think that credit qualified individuals should decide how much they want/need to borrow free from government scrutiny. Gate keepers, bureaucratic brake-men and specially anointed arbiters are neither needed nor wanted.
Apparently, Alan Greenspan has done his job in warning people about the “irrational exuberance” that will occur when interest rates are too low. Fortunately, we have the Federal Reserve to “take away the punch bowl” if the party gets rolling. We’re lost without them, as we will borrow every penny that we can get our hands on – save us please!
After all, we’re the reason for bubbles, for example the recent real estate bubble. Never mind the fact that millions of unqualified borrowers were issued loans, down payments were eliminated and bad mortgages were guaranteed by the government eliminating lender risk.
The ever vigilant price inflation crusaders constantly remind us of the hyperinflation that took place in the Weimar Republic. This event is often used as evidence that we need agencies like the non-Federal Reserve to make sure we don’t create too much money. This ignores the fact that the German currency was attacked by international manipulators politely called speculators. If one checks they will find that all examples of hyperinflation are purposely created by the international manipulators.
(“Schacht’s 1967 book The Magic of Money, he “let the cat out of the bag, writing in German, with some truly remarkable admissions that shatter the ‘accepted wisdom’ the financial community has promulgated on the German hyperinflation.” What actually drove the wartime inflation into hyperinflation, said Schacht, was speculation by foreign investors, who would bet on the mark’s decreasing value by selling it short.”)
In reality, our all debt based money system is DEFLATIONARY – we should worry about reductions in the money supply (recessions and depressions). If new money is not created every day, the money supply will decrease as debt principal is repaid. Remember, all money is temporary – perishable like fruit. And interest charges are the prime reason for price inflation – eliminate interest, and you’ve eliminated the inflation bugaboo.
The MPE folks got this right! If they add some debt free money to circulation they’ll have a viable system.
hoho Larry!
I fully agree we are in deflation!! You know that. The deflation is caused by a derivatives going south and by (central) banking racketeering.
There is absolutely zero threat of deflation in an interest free credit based money supply. Nobody is worried about that in interest-free credit, other than maybe by hoarding, like Dark Dirk.
The fact is: there can never be too little money, because people will always have more than enough creditability to create all the money the economy needs for normal exchanging operations.
There will never be depressions, not in normal interest-free credit, nor in MPE.
I’m absolutely no inflation fear mongerer, I’ve done more than my fair bit in exposing the Austrian fearmongering, who manage to blather about inflation in usurious scarce money environment facing massive deflation and stagflation.
We’re now talking about a complete greenfield situation, where none of these worries would exist.
The only question remaining is: can we create all the credit everybody wants (MPE) or must we make sure we don’t go too far and create a hyperinflationary spiral (my take).
Larry,
Have you by any chance had a real thorough look at Mike Montagnes work?
Ive got some excellent links which break it down. Its really not the difficult if someone like me gets it.
australia4mpe site is probably a good place to start. I kid you not MPE is the ONE topic the so-called truth industry (its an industry now) evades like the plague. It would end this man made disaster overnight.
Hello Greenbacker84. I looked fairly closely at MPE back in 2008 and I learned a lot. As you may have noticed, in addition to ending usury (0% interest), I think that some amount of debt free money is required to support a vibrant economy.
I have to disagree and think that MV=PQ applies to interest free all debt money systems – like MPE. I think that such a system would bring prosperity which means two things:
1) People would save more of their hard earned money (hoarding is pejorative term for such a responsible endeavor)
2) People would start to borrow less
Simultaneously, the M & V variables would be reduced which means rising unemployment from a shrinking GDP. Yes, people could borrow more money into circulation but it would be far better to fix the problem instead by having some permanent money (debt free) spent into the economy.
An adequate MV supports a vibrant economy in which there is persistent labor shortages that push up wages to reduce overcapacity.
I suggest that MV=PQ applies to an interest free economy – why wouldn’t it?
I think the issue is that there is demand in the economy Larry. In our current system, we cannot get enough money in circulation to express this demand. Furthermore, demand is being pressured because of the interest drain.
But in an interest-free credit economy, demand would always allow expression (by going into debt). If people want to invest, they can invest.
Personally I’m not in favor of saving: it’s better to collect assets. In an abundant money environment, these can always be easily liquidated if needs be, or used to back new credit.
So MV=PQ doesn’t apply to interest free monetary systems?
If what you say is true, why didn’t the people simply borrow their way out of the great depression of the 1930’s?
because the core reason of deflation is racketeering: the banks are keeping credit tight. In the thirties the Fed and the banks decimated money, I think they brought it back to a third. So it’s not so much that the people don’t want, but with grim outlook, high rates and critical banks, it’s going to be difficult to get a loan.
This would not happen in an interest-free credit environment.
By the way: in the case of other economic problems leading to lack of confidence, no borrowing and crashing money, I’d be of course all for a (at least temporarily) infusion of debt free liquidity. But I don’t see its necessity, really.
Virtually all hyperinflations are caused by exchange rate difficulties. In the case of Germany, they could not trade their goods for dollars/pounds/francs, and hence couldn’t pay the Versaille debt. The German’s put their Mark under pressure by borrowing from Wall Street (at usury) to pay the Allies. The inter ally debt created a triangular flow from wall street (private bankers) to Germany municipalities (bonds issued for wall street credit dollars). From German cities, then to the Central Bank, then to the Allies, and then Allies pay their war debts to Washington. The flow was from one dollar private banker pocket at Wall Street to another dollar pocket in Washington. Yes, money flows.
In the meantime, under coercion from Wall Street, many German banks were privatized. These private banks made shorting Mark loans against the Mark. The dollar was the asset used to back up the short Mark position. Borrowed into existence dollars, by foreigners at private banks, is the main virus. The Mark then came under exchange rate pressure as too many Marks were being hypothecated into existence to cover the shorts, in a positive feedback loop. Also, foreign goods become more expensive, helping the spiral. The short position was taken due to the debt cycle beig exposed and financial predators then piled on.
Please explain to me how private controlled credit system, where things are done in private, and against society, is such a grand thing?
So, even with a deflationary system, like bank created credit, there can be inflations. These inflations are too much credit money creation per unit time. Credit creation is thus bounded in a short unit of time, and the excess money disturbs the price of goods in the market place. Over the long though term usury based credit is deflationary for the lower loop of labor. The upper loop gets its money path through the usury mechanism, deficit spending, and low taxes.
Also, all bank created credit, including MPE must have their unit circulate in the supply for a time. Some level of the money supply is used for transactions. This is a base level, something like base power (coal or nuclear) in a power system. It is best if the circulating medium for the base level of the economy is as cheap/efficient as possible. The unit best to serve this “base” function is money, not credit.
So, credit follows rules, but creditors do not want to explain what the rules are for some reason. Credit can come into being in heavy waves, causing inflation, but overall it is deflationary to labor due to usury. It also drains from the supply at a high rate disturbing the economic “base.” The wrong kind of credit as money is something that gets between debtor and creditors (savers) and distorts human relations…in fact society.
Money as an object of value is THE error see: http://bibocurrency.com/index.php/downloads-2/14-english-root/133-the-money-fallacy
Also money conventional or other does not circulate. Follow the logic not your impressions:
http://bibocurrency.com/index.php/downloads-2/14-english-root/117-money-does-not-circulate
I think I get the basic idea of your take Marc, but if I use my balance to pay you 10 bucks, I go -10, you go +10. Next you pay Mr C. 10, you’re back at 0, he goes to 10. That’s basically circulation, not?
No, the payment can’t be both the goods and services and the money. It is the goods and services that circulate not money. You don’t pay me with your balance, my payment are the goods and services of equivalent value that I will receive in the future. Money is just a record of the value of circulating wealth pending to be satisfied.
Read The Money PSYOP book, see the chapter titled “Putting it all Together”, it is impossible for money to be a circulating object of value and a measure. Note that measure is THE sine-qua-non function of money.
http://bibocurrency.com/index.php/money-psyop-2
The current money paradigm is a massive PSYOP and interest is not the root problem. The root problem is that we are trained to confuse real value with a worthless surrogate. This is achieved through
This is a fundamental point, because it is the foundation of charging interest. if money is an object of value of one’s property then you cannot stop people from doing commerce with it. But since that is not the case, then there is not logically consistent rationale for viewing money as an object of value. The following article details the semantic confusion between “store of value” and “record of value” and how such imprecision serves to inculcate the false notion that money is an object of value.
http://bibocurrency.com/index.php/downloads-2/14-english-root/147-diffuse-social-power-money-and-control-theory-2
Finally, all this is a direct result of a thorough application of formal stability and control theory, it is not an opinion it is science and the notion of money being equivalent value to that of the goods and services that bring it about is a scientifically impossible or absurd.
See: http://bibocurrency.com/index.php/downloads-2/14-english-root/105-passive-bibo-currency-distinguishing-claims
Anthony poses an important question in his article that I haven’t seen addressed about the duration of loans under MPE:
The popular MPE example: “Buy a house with no interest and pay it down only at the rate it depreciates e.g. a $100,000 home would cost $83.33 per month for a hundred years… (you can pay it down sooner if you wish)”
By greatly increasing the duration of mortgage contracts, you are inflating leverage which rightfully raises concerns that you will dramatically drive housing prices up. This is a huge market in the U.S. at close to $13 trillion.
30 Year mortgages are typical, and it looks like MPE would increase that to 100 years which would increase leverage by a factor of +3! If you qualified for a 100-k mortgage; MPE will allow you to borrow over $300-k.
This looks risky when you consider that:
a) Very few borrowers will live long enough to repay the loans.
b) The realistic service life of a home is closer to 30 years when you consider that HVAC equipment, roofing, flooring, paved ways, appliances, etc; are expected to last around 20 years.
c) Much of the housing stock will become non-viable as new homes will provide more efficient, more comfortable and healthier environments.
d) The financial deprecation of home is much different than the life expectancy.
And what about down-payments? Shouldn’t we expect new mortgage borrowers to put some skin in the game by providing a down payment? A down payment serves as hedge against possible price fluctuations – if the down payment is 10%, then the value of the home may go down that much without putting the note holder upside down (real estate worth less than outstanding principal).
But who in MPE or mutual credit system are going to value your house ? Who is going to approve the amount of promissory notes that you are wanting to write ? as I sad in example before I will value my house at 1 trillion, and I will do not worry at all to repay that debt. Who in MPE are going to force me to repay ? Nobody of MPE gays want to address such question, because they do not have that answer. They just dream of zero interest credit and think that they solved the whole economic problems with MPE.
A large network of commercial banks already exists and they have the expertise to assess risks while providing an important service. Given the opportunity, most would welcome a new model by which they would give up interest and in its stead, profit through fees and transaction services.
Under the current system, commercial banks are being wiped out by the few investment banks. Actually, commercial banks have already begun the transformation as the lions share of usury is with mortgages and credit cards – both are almost exclusively created by investment banks. In both of these markets, commercial banks are compensated through finding and processing fees.
People are far too quick in attacking banks as if they are some monolithic group. We should be more precise in understanding that it is the system that is bad, not the participants. And the system is entirely controlled by international banking cartel – investment banks.
I disagree Larry. ‘The issue that has swept through the ages is that of the People vs the Banks’ (Lord Acton)
All the major banks own each other, it IS one monolithic cartel. The few ‘independent’ banks that are still there are being consolidated as we speak.
All the ‘expertise’ you allude serves only one purpose: plunder.
I say: disband all the banks. People with relevant knowledge who pledge remorse for having worked with such systems can find jobs in newly formed credit facilities. But we will have to start all over.
You cannot reform an organization to the extent that it must do the opposite (serve) of what it was designed to do (rape, maim and plunder).
There is only one way to get rid of the banks: kill them all.
“how much money does an economy need?” is kind of like, “how much water does a farm need?” it all depends …. How big is the farm? What is it growing? How is the soil? What time of year is it? Etc. it is something we discover and calibrate as we go. So yes, for purposes of a “common” currency, we may need credit management organizations. These should be public and nonprofit, like the postal savings banks that are or used to be in some countries. Of course, there could be private options as well, just as one coukd have public water and power, or dig a well or use solar power etc.
To use a different analogy, we know that money is a way of transmitting energy and information from one hand to another (or one computer to another). It is an information medium in that it transmits people’s ideas about value (of their own labor and of product). In another sense, it is a kind of conduit, like a pipe or wire network. It’s common sense that the extent of the network must be determined by the current needs
I could see credit issuance being tied to some unit of production such as (the classic and simplest example) a basic agricultural commodity. Because, the major function of credit/money is to aid in the production, then efficient distribution, of useful goods.
I know that some currencies are labor-hour-based, which is simple, but inflexibly assumes all labor is of equal value. Unit of production seems a better measure, since after all, we work for what it produces, not simply for the sake of working. How does this work in your currency system?
1 Unit = 1 Euro in my system, in MPE it’s just ‘dollar’, I reckon.
I think we’re about on the same page regarding the volume/quantity issue!?
So, have you worked through the links I passed? It is key to debunking the control of circulation bullshit and it solves the supply of money issue you are discussing. Have you found a flaw in the reasoning? Remember that the root problem is not interest, it is the interpretation of money as both a unit of measure of “value” (abstract logical entity) and a commodity/object of variable value.
If you control the money supply in any way then money becomes an object of commerce just like any other and interest will no doubt arise legally or illegally, it does not matter. Logically, money cannot be an object of commercial value, what leads us to believe that it is, is afore mentioned fallacy, neither can it logically a so called “medium of exchange” , that we have been bamboozled into believing that doesn’t make it so. The only logical function that can be credibly attributed to money is that of an annotation of the “value” of goods and services.
Finally, the answer to the money question is to be found in science and math, forget skipping those subjects they are obligatory. But it is not complicated, although it is exact which is apparently hard for many. We will see who are the opportunists “revolutionaries” and who are the real deal, unfortunately the lives of so many weigh in the balance.
I simply don’t agree Marc.
Of course we are on the same page when it comes to the notion of money having value as being foundational.
But you are over focussed on ‘circulation’ not existing. I do understand your basic idea, but it cannot be denied that money circulates in the opposite direction of goods and services.
You are wrong to say we should not manage volume. You only offer deductionist ‘proof’ based on ‘logic’, but you cannot explain asset bubbles in a live credit based money supply.
Anthony,
Money is not an object therefore it cannot be a supply nor is there any need for it to circulate. Money is a purely logical construct that requires no supply. I gave you an example where goods and services move and money is nothing more than an annotation of the estimated value of these, there is zero need or requirement for any circulating object. The idea that money is a clever allegory nothing else.
Give me an example of what cannot be handled by that example unless there is a circulating object, there is none.
So, all through the metal era, when gold and silver would drain away from economies – I guess the money supply didn’t move? Therefore it couldn’t be circulatory? I guess all of those deflation’s and inflation’s throughout history were fantasy?
Intangible money is on a ledger and tangible money is a manifestation of what is intangible. Tangible money is an object and also a token. Sometimes, by law and connivance, the intangible is made to control the tangible (metal money controlling the abstract ledger).
If intangible numbers jump from ledger to ledger, they are moving. The numbers physically move in time and space. For example, credit money created on a double entry ledger, as it happens TODAY! must reflux back to the ledger of origin. Hence, private bankers have always had an incentive to link up with reserve paths.
IOU money, as in today’s credit money, must return to the ledger of origin. That we have made all of the IOU’s equivalent through the law, does not change the reality. Before banks linked to allow conversions and flow, their IOU power fell off by geographical distance. They called this RAG money in France.
Today, if you borrow in Peoria, and deposit in Dallas, the two banks will be out of balance. Peoria will need reserves to grow, and hence will borrow on the overnight market. The bank in Dallas will be happy to loan to Peoria, thus settling the imbalance as money moves across ledgers and geography – through the reserve channels.
Insisting that there are no channels of flow blinds people to the nature of complexity. MEFO bills are a perfect example of constrained path and flow. Additionally MEFO’s also had conversions of type from specific purchasing power to general purchasing power.
SAY’s law is a circulatory path. Understanding that the FIRE Sector (finance insurance and real estate) siphon away from this path is a key to understanding usury.
Gold and sliver are commodities they fail as measures of value over time because they can be hoarded, in doing so and assuming that they are required by law i.e.for coerced taxation the unit value can grow unboundedly as a function of hoarding.
The relative measure of value requires no necessary particular physical support to exist, and any number of physical stationary and mobile can be uses to record measures of value. The value of the support is independent and must be accounted for separately. Just as when you measure cloth you don’t add the measure of the wooden meter to the cloth’s measure.
As for the IOU ledgers jumping, they don’t. Just as each measure of cord corresponds to a particular cord so two each positive ledger corresponds to the value of a particular transaction and each generates a corresponding negative, each dependent on the value being transacted not on each other. The illusion that there is a token transfer arises from the fact that positive an negatives arise simultaneously. But as already pointed out here:
http://bibocurrency.com/index.php/downloads-2/14-english-root/133-the-money-fallacy ,
You seem to believe that stuff only exists if it can be touched Mark, but this is simply not the case. An archetype is an object. An idea is an object. One can have more or less information and the implications of more or less information are quite profound.
The idea of money represents purchasing power and it this purchasing power that can lead to inflating prices.
No Anthony, I don’t seem to believe what you think I must believe. It surprises me that you would make such a comment, you must know that I have spent over a decade developing international standards for representing abstract knowledge in decidable propositional and description logic as applied in the Ontology Web Language standard OWL-DL (re: semantic web).
Non physical objects exist our whole analysis is based on defining money as an abstract unit of measure. However, intangible abstract objects must be logically consistent to be valid. Physical objects obey physical laws that we observe and measure using abstract objects such as kilos, meters etc.. These are used as axioms to which logic can be applied. Such abstract objects do not possess the physical limitations of the physical phenomenon they only represent, they are solely confined by the rules of logic math etc..
To use logic you need logically consistent definitions as starting axioms, the notion that money is both a limited circulating object and a unit of measure is not logically consistent using the current formal definitions of measure, circulation and physical and logical objects. Such a definition confuses the properties of two independent classes of objects. Define circulating object and then define unit of measure you will then find that combining the two is like trying to cross elephants with mice. Try proving your definition of money using formal logic, you wont get very far.
I think you need to brush up on formal logic if you want to talk about formal definitions of something as important as money and money systems, it is not enough to pound on the apparent immorality of usury etc. you need to ground your arguments in standard object logic and science that any third party can evaluate independently otherwise you are just inventing another religion. Banker’s have not done that, economists have not done that, you are not doing it and most good and well meaning reformists are not doing it.
If money is a measure it cannot be a circulating object, if money is a circulating object it cannot be a measure. A circulating object can represent a record of a measure which is exactly what cash does i.e. cash represents a sum subtracted form an account ledger, but the definition of cash does not imply any limit on money you can have as much cash as you have money. Likewise money as a unit of measure cannot be itself limited and because it is a measure records of such measures (accounts) must correspond to specific real transactions. Since transactions are can involve new value then the measures of that new wealth cannot be based on existing records. Therefore money is not a circulating object it is just a record of value. Of course you can decide to forge such records on to temporary limited physical supports but to define the abstract entity in terms of the physical support is nonsense. Money is a number associated with a symbol that in turn represents an abstract unit of value, it has no necessary physical properties and there is no logical rationale for any fixed link between the logical entity known as money a measure with any particular physical support used to record that measure.
The only logical link is between money and “value” that in turn is delimited by goods and services, it is these and only these that determine the units recorded in the system, the other way round is utter nonsense i.e. cannot be logically supported.
Money “measure” vs money “property”.
http://bibocurrency.com/index.php/downloads-2/19-english-root/learn/166-money-measure-vs-money-property
Also, i’m happy to see that elsewhere in this blog, you deal with “Georgist” land reform. After opposing usury for several years, I only began to understand in 2004 that land rent is usury’s older (and possibly nastier) sister! It could be classed as the original usury. The third and more elderly member of the trio, chattel slavery, has been dead in the advanced nations for some time, but never mind — her younger sisters have carried on her work more quietly and slyly.
The need to use land is even more absolutely universal than the need to borrow or to exchange money. furthermore, without labor having access to land, there are no goods to exchange in the first place! So now, I look at the economy as having two stages: production and exchange. Land monopoly (and its reflection, land rent or price) acts to restrict production; and money usury, as a second state privilege, restricts exchange — and of course, insofar as exchange is part of production, usury restricts production as well. Both are tollbooths that allow Privilege to exact a “private tax” upon Productivity.
And then, of course, building on those, we have the realm of special grants, restrictions, exemptions, and protections that confer even more privilege, and constitute the bulk of “work” done by most governments, it seems!
I do have a simewhat more nuanced take on interest and usury, but will reply below your newer post.
Yes, land is very important and basically I’ve come to see it’s about the liberation of the Commons, which is entirely under threat or already privatized.
Money is key though, it’s not more fundamental than land, but solving money would already greatly reduce the land issue (interest-free mortgages!).
But, it’s basically all moot, like I said, it’s about the commons.
Hi
Could you or some other kind person here help me with this question I am grappling with? Why are rising stock prices not counted as inflation?
http://banksneedboundaries.wordpress.com/2014/02/11/inflation/ thanks
Yeah, good question…..dunno, really. To hide them blowing nice asset bubbles all the time, I guess?!
The stock exchange is one of Capitalism’s favorite playthings, so it’s not surprising different rules apply for it…….
Two very important questions: What is money and what determines the value of money.
Money is the credit and flow coming from sovereigns. Money is coined by the policies of those sovereigns and is experienced and used in the schemes provided by the prevailing economic leaders.
Under the final phase of liberalism, defined as freedom from the state, the democracies of the world and the speculative leveraged investment community set persons free to be investors, according to their use of credit and their risk profile to invest in fiat investments, that is in real estate, equities and credit. All had identity and experience in the Milton Friedman Free to Choose architecture of floating currencies; fiat money ruled in liberalism.
The price of money is determined by trust in the ability of the sovereigns to provide economic gain.
Now with the failure of Major Currencies, DBA, such as the Australian Dollar, FXA, and the British Pound Sterling, FXB, and the Emerging Market Currencies, CEW, such as the Indian Rupee, ICN, sinking in value, a new trust must, and will emerge.
New trust is already emerging; it is trust in the ability of regional sovereigns to provide economic security, stability, and sustainability; the diktat of the Troika in Greece is an example. The new money is diktat money.
Leaders will meet in summits to renounce national sovereignty, and to announce regional pooled sovereignty and regional framework agreements, which will be the constitution of economic experience. Diktat money rules in authoritarianism.
New sovereigns, that is regional leaders, will provide fascist mandates for people’s trust and thus regional fascism will rise to replace crony capitalism, European Socialism, Greek Socialism, and Chinese Communism.
All will have identity and experience in the required to comply architecture of diktat money.
The chart of the Bear Market ETF, HDGE, shows that it entered an Elliott Wave 3 Up on April 23,204; the bear market of a lifetime is underway on the failure of credit in the Eurozone and in China.
A portfolio of Inverse Market ETFs could serve as collateral; this might include STPP, XVZ, JGBS, GLD, PPLT, PALL, EUO, YCS, SAGG, DTYS, DNO, as well as HDGE, SBB, SBM, DDG, EFZ, YXI, SZK, SDP, KRS, REK.
One could sell a number of stocks short, such as the consumer staple stock Revlon, REV, which manifested an evening star candlestick in its chart pattern.
The problem with short selling is that all it produces is fiat money, which will forever be trading lower in value, and which will be increasingly worthless as confidence grows in diktat money.
Gold is both a commodity and a currency; it is the safe haven which bound higher and higher as investors derisk out of fiat investments.
One should not be invested in paper gold, such as the Gold ETF, GLD. One should take possession of the genuine article, that is gold bullion, as it will be trading awesomely higher, as in the age of the failure of credit, it and diktat of regional sovereigns, are the only two forms of sustainable economic activity.
All the Gold is owned by the same people that own the printing press. They are just selling you an ounce to get you on board. They will quickly regain it through usurious lending.
As long as we trust in gold we will not trust in God and as long as we hope for capital gains through speculation we will continue to be chained to materialism.