Money as Debt

[grapejelly]

Re: Money as Debt

It's a remarkable video, Paul. Remarkable for your effort and for the result.

I do stand by my comments, though. The solution is the weak part. I believe in privatizing money, letting anyone issue their own money so long as it is redeemable in an honest way.

The fault of today's money is 1) monopoly by the government, 2) legal tender laws, 3) irredeemability. I don't think your solution addresses any of these adequately.

That said, great work.

[Paul Grignon]

Re: Money as Debt

Thank you all for the appreciation. I am however somewhat taken aback by your interpretations of what you watched.

"I believe in privatizing money, letting anyone issue their own money so long as it is redeemable in an honest way."

That was shown in the movie, with an example of Tommy "usury-free" Kennedy personal picture money right after the LETS system part. I recommended establishing private community currency as "an emergency preparation for any community".

If it really worked, the principle of issuing personal interest-free debt money would soon be adopted by businesses and local gov't don't you think?

Once you have an entity that can spend money into existence for the public good (local gov't) and tax it out of existence to prevent inflation, you can implement the system I suggested. it would be the natural evolution of a private debt-money system.

And...
There was never any suggestion that money could ONLY be debt. Where does anyone get that impression? The story goes from gold which is not debt, to fractional reserve on gold to fractional reserve on debt itself. The whole point of the movie was get people to understand the difference and that it doesn't have to be that way.

Thanks for the appreciation but frankly you have shaken my confidence more than boosting it.

[bart]

Re: Money as Debt

Thank you all for the appreciation. I am however somewhat taken aback by your interpretations of what you watched.

...

There was never any suggestion that money could ONLY be debt. Where does anyone get that impression? The story goes from gold which is not debt, to fractional reserve on gold to fractional reserve on debt itself. The whole point of the movie was get people to understand the difference and that it doesn't have to be that way.

Thanks for the appreciation but frankly you have shaken my confidence more than boosting it.

My intention was to point out that by not covering the area explicitly, it's left open to interpretation - and this thread and some of the comments are simply an example of it and how easily monetary concepts can be misunderstood. I have little clue myself how or where the concept that all money would disappear if all debt disappeared originated, but it sure does exist.

I do understand your shaken confidence too - my own charts and experiences and posts and efforts on my own free web site and elsewhere have been both "educational" and sometimes during darker moments a source of frustration and even despair too.

Overall, I've gotten many more kudos than the other side... and have also learned how much less real understanding exists of basic economics than I ever thought, and how much false data is also out there.

Hang in there - I think you're unquestionably on the right track as witness the large interest.

[Charles Mackay]

Re: Money as Debt

Here's a list of Antal Fekete's articles on Finansial Sense in case anyone wants to review his work or is unfamiliar with it.

http://www.financialsense.com/editor...kete/main.html

[Charles Mackay]

Re: Money as Debt

Mmm, yes, then how do the banks get the currency out to the people? Do they just give it away?

Sapiens, the point you are making is correct... I think Bart is only making the distinction that it CAN come into being thru a printing press too. Although this is rare.. they just did it in Iraq with the hellicpoter drop of serveral tons of cash. Literally.

The great overwhelming increase in the money supply however is thru debt.

[grapejelly]

Re: Money as Debt

I only watched it once, but I recall that the video suggests that a fundamental trouble with current "money" is that interest is paid on it by government. The solution as I recall is direct issue of government money. To me this is not a solution at all. The real solution is competitive issues of money all fully redeemable.

That said, I loved most of the video.

[bart]

Re: Money as Debt

Sapiens, the point you are making is correct... I think Bart is only making the distinction that it CAN come into being thru a printing press too. Although this is rare.. they just did it in Iraq with the hellicpoter drop of serveral tons of cash. Literally.

The great overwhelming increase in the money supply however is thru debt.

Agreed, and not only are there many other ways to create money than via a printing press (and of course most "money" is created through credit/debt today), but also it has not always been so.

Paul's video does a very good job of addressing the last few hundred years and the various heinous credit and fractional reserve games, but it does not fully address "money" throughout history and therefore can be misunderstood... leading to broad incorrect conclusions being drawn.

[grapejelly]

Re: Money as Debt

The most successful money from a long term standpoint that can provide the best lessons today are, I think, English tallies. They lasted 600 years and although a stick of wood (or half of one, really) has no intrinsic value, they were redeemable for payment of taxes and issued in a reasonable way for government services. I think the solutions proposed in the video are more in this direction.

Privately issued money could compete with public money. Public money would be backed by, say, already assessed but not yet paid for tax receipts. Private money would be backed by goods and services, almost exactly like retail gift cards work today. This is the solution I would like to see and think we will see in any event after the current government monopoly irredeemable regime expires.

The other money that has been reasonably successful in history of course is commodity money, especially gold and silver.

The fundamental problem with gold and silver as money was government monopoly on coinage and the use of money based upon tale rather than weight.

If you think about it, you soon realize that there is a fiat component to all gold and silver coinage since ancient times. The money is exchanged for goods and services by tale, and this encourages debasement through alloy dilution and coin clipping, just another way to depreciate the hardest of hard currencies.

If we instead have competing private and public monies all redeemable, then we will have some of it that resembles Goldmoney, tokens exchanged through digital means, fully backed 100% allocated gold somewhere.

This is the end of banks because with the Internet there is no need for banks anymore. If we removed their government monopoly, we could use brokerages and never borrow or lend to banks ever again. This would remove the whole inflation problem, pretty much.

[bart]

Re: Money as Debt

...
The fundamental problem with gold and silver as money was government monopoly on coinage and the use of money based upon tale rather than weight.
...

It appears at first glance that locking a currency value to an amount of gold is a great way to limit the ability of government or central banks to print too much money and create inflation, and of course there's some truth to that... and a partial truth can be very dangerous.

1. The primary economic point, and based on the definition of inflation and deflation is since there's a very limited total amount of gold on Earth and there's virtually no limit to how much man can produce (as witness the huge standard of living increase in the last 100 years), the amount of production would either have to be limited to the amount of gold available OR the value of gold would have to increase every year to keep up with production levels.
2. The idea of course is to keep the dollar or any currency at a stable value.... and guess who own 25-50% of the gold on Earth - central banks and world banking organizations. They would get rewarded for doing almost nothing, which isn't my idea of fair.
3. If nothing was done, and the currency increased in value on a regular basis, why would someone invest in something to raise the standard of living when by doing nothing and holding the currency, it gets more valuable every year? Sure, there would be some investing going on but it sure would severely lower the incentive if doing nothing paid well.

There's more too but that should be enough to make my point.



The biggest point that I believe most miss though is that no standard of money has worked over significant time periods, and *that* is the area that should be addressed.

[grapejelly]

Re: Money as Debt

3. If nothing was done, and the currency increased in value on a regular basis, why would someone invest in something to raise the standard of living when by doing nothing and holding the currency, it gets more valuable every year? Sure, there would be some investing going on but it sure would severely lower the incentive if doing nothing paid well.

It is quite possible that the supply of newly mined gold would make up for a good deal of that deflation you allude to. After all, deflation would only equal the difference between the real growth of the economy, and the new supply of gold.

I can't see how this deflation is a bad thing. It rewards savers. It makes people think twice or three times about borrowing money. It encourages thriftiness, which is a great way to get people to reduce consumption, increase productivity, and reduce pollution. It forces allocation of savings to high ROR purposes rather than frivilous ones such as, say, credit card debt.

And don't forget demurrage -- the costs of storing the gold offset the deflation to some extent also!

I don't feel we'll have another gold standard anyway, and I am not advocating it. But I don't think an appreciating currency is bad. I think it's good!

The biggest point that I believe most miss though is that no standard of money has worked over significant time periods, and *that* is the area that should be addressed.

What about tallies? Aren't they a counter-example?

[Paul Grignon]

Re: Money as Debt

The most successful money from a long term standpoint that can provide the best lessons today are, I think, English tallies. They lasted 600 years and although a stick of wood (or half of one, really) has no intrinsic value, they were redeemable for payment of taxes and issued in a reasonable way for government services. I think the solutions proposed in the video are more in this direction.

Exactly!!!!!!! Why not learn from success???

Even the well-known Continental's demise in runaway inflation was, as I understand it, caused by the British counterfeiting 8 times the supply the revolutionaries printed, not by bad management or structural flaw.

English Tally sticks and Colonial Scrip are both mentioned in the movie as the models upon which my "simplest money system" suggestion is based. Please remember this movie is designed to engage the uninformed public's interest in monetary matters and provide a very basic 47 min. education in monetary concepts that have never before entered most peoples' minds. For what it accompishes in 47 min. from a standing start I think it has proven very successful. But if the more thoroughly informed start examining it as a final scholarly treatise on money creation they are going to be disappointed.

Hopefully I am just getting started!!!

While it is just touched on in the first movie, here is the scenario I am trying to prepare people for:

My observation is that, throughout history, the elite have managed us by rather elementary psychology as nothing too sophisticated is required. The first place people instinctively go when the money system crashes is back to gold, the only concept of money the simple minded masses think they understand. Since very few of us have any we will be sold a whole new digital debt-money system that is "based" on gold. (it's just suggested in my movie) The elite central bankers know their system will collapse, the process has probably been planned for decades as this is the final crash before they turn us all into micro-chipped androids. The gold behind this new system will be as illusory as the gold in Fort Knox.

Thus gold bugs with all their honestly-held and mostly sensible arguments in favour of gold, are likely, in my opinion to find that all their hard work in promoting a return to gold will be turned upside down and used against them as the masses, most of whom have no gold and no understanding of money will have no choice but to accept the ostensibly gold-backed debt-money "mark of the beast".

The elite will try to close every escape route possible. By educating people into comprehending money at a fundamental level we can create more escape routes and more chance of escaping.

Charles Mackay...is this your quote I found?


"Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
- Charles Mackay

If we don't all end up in prison camps and gas chambers, the survivors may find themselves "on their own" in what I call "sudden re-localization". The ones who do best in this situation will be the ones who manage to organize city states (city + resource hinterland) around their own version of the tally-stick system. Any entity that can create money by spending it on public authority and can also tax that money OUT OF EXISTENCE as required, can run a stable money system.

I belive the most promising levels to work on are municipal and bio-regional (agricultural esp. as farmers understand money better than most). However, I have tried to make my movies equally useful to those trying to bring reform to Federal systems as the educational purpose is not lost in doing this.



Paul

[Charles Mackay]

Re: Money as Debt

Charles Mackay...is this your quote I found?

"Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
- Charles Mackay

Yes, that's my quote ....I"ve been reincarnated several times :rolleyes:

Another quote that's appropriate here is that "power currupts and absolute power corrupts absolutely"

We all have two eyes and can plainly see what happens when small groups of people have too much power. The central bankers, the globalists, the neo-cons, ad infinitum.

In the case of money, I think decentralization is the key. Centalized money will eventually always be corrupted. Look how Woodrow Wilson was corrupted in 1913 in a weak moment allowing the Federal Reserve to come into power. This will continue to happen when power and control is centralized.

So I think one tenet to consider should be decentralization.

[bart]

Re: Money as Debt

It is quite possible that the supply of newly mined gold would make up for a good deal of that deflation you allude to. After all, deflation would only equal the difference between the real growth of the economy, and the new supply of gold.

I can't see how this deflation is a bad thing. It rewards savers. It makes people think twice or three times about borrowing money. It encourages thriftiness, which is a great way to get people to reduce consumption, increase productivity, and reduce pollution. It forces allocation of savings to high ROR purposes rather than frivilous ones such as, say, credit card debt.

And don't forget demurrage -- the costs of storing the gold offset the deflation to some extent also!

I don't feel we'll have another gold standard anyway, and I am not advocating it. But I don't think an appreciating currency is bad. I think it's good!

You didn't address points 1 & 2, and if you think that rewarding non production is good for a culture on the long term, then I have some ocean front property in Idaho I'd like to sell you.

On a more serious note, of course there's nothing wrong with an appreciating currency but that's only one isolated factor, much like storage costs.
I also hope and think we will not get another gold standard.

What about tallies? Aren't they a counter-example?

If you think 600 or so years during a dark period where force was close to "king" is a counter example, it's fine with me... but it doesn't address my point.

[bart]

Re: Money as Debt

...

My observation is that, throughout history, the elite have managed us by rather elementary psychology as nothing too sophisticated is required. The first place people instinctively go when the money system crashes is back to gold, the only concept of money the simple minded masses think they understand. Since very few of us have any we will be sold a whole new digital debt-money system that is "based" on gold. (it's just suggested in my movie) The elite central bankers know their system will collapse, the process has probably been planned for decades as this is the final crash before they turn us all into micro-chipped androids. The gold behind this new system will be as illusory as the gold in Fort Knox.

Thus gold bugs with all their honestly-held and mostly sensible arguments in favour of gold, are likely, in my opinion to find that all their hard work in promoting a return to gold will be turned upside down and used against them as the masses, most of whom have no gold and no understanding of money will have no choice but to accept the ostensibly gold-backed debt-money "mark of the beast".

The elite will try to close every escape route possible. By educating people into comprehending money at a fundamental level we can create more escape routes and more chance of escaping.

...

I agree wholeheartedly.

[Charles Mackay]

Re: Money as Debt

FWIW, gold Holdings by the public are overtaking holdings by the Central Banks.