A synopsis of Social Credit thought

[socred]

Agreed. No other quality will convince a person to exchange something for something that is only a guarantee of future utility.

It's value is currently the cost of the ink and paper of which it is made.

Its value is not determined its composition. The value of a US$ is much more than the ink and paper that was used in its production. Its value is determined by the amount of goods and services it can command.

It used to be a binding contract of a promise to pay so it had value in that promise. It is now only an accounting tool and much of the "money supply", is as you say no more than an entry on a balance sheet and all "money" today is debt. Not only debt as in an individual's claim upon future goods and services but a debt to the central bank and a claim upon all goods and services by the "owners of the banking system".

It is still a contract and a promise to pay, that's why its a debt.

What faith do I have in it to trade it? As long as the government has a law that says everyone must accept it in trade and they can enforce that law then I have every confidence I can trade it for the things I need and want.

The government only enforces debts paid by cash and coin. The majority of transactions are paid by cheque or electronic transfer of funds. These transactions are not enforced by the government.

My confidence lies in the stability of the government.

Your confidence lies in the productive system and its ability to deliver goods and services when and where they are required (i.e. the real credit of the community).

The "money supply" is determined by the policies of the central bank and the taxing and spending policies of the government.

The Central Bank attempts to influence the money supply through open market operations, but their influence is extremely limited since they only control the amount of cash and coin in the economy.

They attempt to keep the money supply slightly inflationary. They don't want deflation and they don't want hyper-inflation both are contrary to confidence in, credibility or "belief" in the "dollar".

Actually banks are deflationists by nature since inflation devalues the value of the money they are repaid at a later date. Banks want to control inflation but cannot under their current methods because they erroneously believe that inflation is caused by too much money. In other words, they do not understand the systemic cause of inflation, which is the capitalization of industry and the resultant rise in B costs relative to A costs. Attempts at deflationary policies by the banks have devastating consequences because firms find their profit margins falling below the break even point and a recession/depression ensues. The only way to bring about falling prices which does not result in a devastating depression is to use new money to cancel costs to the consumer (i.e. the Social Credit price rebate).

[socred]

Because it is a debt to me? That is simply laughable. If it becomes valueless I hold no claim upon anyone. It is true the same could be said of gold or silver should that become valueless. Good luck on that ever happening, but even if it did, no owner of the banking system could in that eventuality claim all I owned was theirs. Because it was not a "debt" to them. It is simply something I had that was now worthless. The owner of the banking system does today indeed claim he owns everything I think I own and if he does not receive rent upon my use of his property he will seize said property. Why do you not believe CH Douglas?

I do believe Douglas. The value of money is not determined by the quantity of some arbitary commodity in existence. The value of money is determined by the real credit of the community, which is the ability of the community to deliver goods and services when and where they are required. Until money is based upon the real credit of the community, the banking system will always have control over our lives and the economy. Whether you live under a gold standard or a fiat standard, money is debt. A return to the gold standard is a retrogression, not progression.

[Pliny]

The value of money is not determined by the quantity of some arbitary commodity in existence.

Correct. The value of money is what it is. If it is an electronic credit or debit, it's value is zero. If it is a fiat currency it is the value of ink and paper. If it is specie it is the value of the metal of which it is made.

It's purchasing power is dependent upon the confidence in it as a medium of exchange and it's availability.

The value of money is determined by the real credit of the community, which is the ability of the community to deliver goods and services when and where they are required.

Value is in the goods and services of the community. If you wish to have a number to measure that value that number is not money. It is just a number. Using numbers to facilitate trade and thinking that those numbers are then money because it serves the same function is missing the other ingredient of money and that is confidence in future exchange. How is that guaranteed with just a number? It could be guaranteed by fiat as it is now. But then the governments ability to enforce that fiat is it's sole guarantee.

Until money is based upon the real credit of the community, the banking system will always have control over our lives and the economy.

What do you mean by money being based upon the real credit of the community?

Forget the banking system, who needs it. I can make a trade without a banking system. Banks used to have the primary purpose of safeguarding deposits of gold and silver and specie and keeping a record of them. All they do now is keep accounts.

I do not see how you consider gold to be a debt. If I had it it would be an asset. It's chances of becoming valueless are closer to nil than a fiat currency which, I agree, is a debt because it is in itself valueless.

Whether you live under a gold standard or a fiat standard, money is debt. A return to the gold standard is a retrogression, not progression.

It is a retrogression but not a regression.

I am getting a headache.

[socred]

Correct. The value of money is what it is. If it is an electronic credit or debit, it's value is zero. If it is a fiat currency it is the value of ink and paper. If it is specie it is the value of the metal of which it is made.

It's purchasing power is dependent upon the confidence in it as a medium of exchange and it's availability.

You contradict yourself here. First you say that its value is dependent on "what it is" (i.e. its composition), then you say its purchasing power (value) is dependent on it as a "medium of exchange and its availability" (not sure how the latter plays into it).

Money's value is not determined by its composition, and credits which are electronic blips on a computer do posess value (ask anyone who uses them to purchase goods and services).

Until this confusion of thought is cleared, we cannot continue. The value of a nickel is not determined by the world price of nickel (although if the value of the nickel as nickel exceeds its value as money, people may start to melt them and sell them as raw nickel, which is the case with pennies, where their value as copper is worth more than their value as money). The value of money is inversly proportional to prices, which determine how much that money can purchase. That is why a dollar's value decreases with inflation.

Value is in the goods and services of the community. If you wish to have a number to measure that value that number is not money. It is just a number. Using numbers to facilitate trade and thinking that those numbers are then money because it serves the same function is missing the other ingredient of money and that is confidence in future exchange. How is that guaranteed with just a number? It could be guaranteed by fiat as it is now. But then the governments ability to enforce that fiat is it's sole guarantee. What do you mean by money being based upon the real credit of the community?

Money itself never guarantees confidence in future exchange. Gold or any other commodity does not guarantee this either. Confidence in future exchange is determined by the real credit of the community, which is the ability of the community to deliver goods and services when and where they are required. People have confidence in the community in which they live to deliver goods and services at the date at which they choose to spend their money. The faith is not in the money itself, it is in the productive system, and that is where the "faith in money" derives. That and the faith that people will accept the money in exchange for goods and services. What people value is not money itself, and this is the mistake of many who believe in a gold, or any other commodity, standard. People don't value money because of its composition. Gold is worthless if there's no food to eat. They value money because of its ability to use it to purchase things they value. Money is just a means to facilitate trade, because it makes trade infinitely easier than barter. In a barter economy, if I have a TV and want fish, I have to find someone who is selling fish who also wants a TV; whereas in a monetary economy, we both exchange money, I sell the TV for money, buy fish, and the fish owner buys what he wants.

Forget the banking system, who needs it. I can make a trade without a banking system.

Without the banking system we'd revert to a barter economy, and would have the standard of living equivalent to the stone age.

Banks used to have the primary purpose of safeguarding deposits of gold and silver and specie and keeping a record of them. All they do now is keep accounts.

And the banks soon learned that all the people never demanded their gold at the same time, but merely directed the banks to deposit gold in other's accounts. This led to banks loaning out more gold than they had on deposit, and the creation of credit, which spawned unparalled economic growth.

I do not see how you consider gold to be a debt.

How do you think a bank buys your gold? I want you to explain it to me. Do you think that people are actually going to exchange gold coins in a gold standard? Even if they did, the government would print those coins (and of course distribute them through open market operations - i.e. through debt), but what would prevent the government from reducing the percentage of gold in the coins in order to increase the money supply?

If I had it it would be an asset. It's chances of becoming valueless are closer to nil than a fiat currency which, I agree, is a debt because it is in itself valueless.

It is a retrogression but not a regression.

A gold standard is both a retrogression and a regression, unfortunately, it is often most poorly understood by its own supporters.

[Pliny]

Money's value is not determined by its composition, and credits which are electronic blips on a computer do posess value (ask anyone who uses them to purchase goods and services).

Until this confusion of thought is cleared, we cannot continue.

True.

Gold is worthless if there's no food to eat.

You often say this but that could be said of any form of money. I would prefer, if food did become available in some limited quantity, taking my chances with a piece of gold rather than a piece of paper or an electronic entry on a computer. What do you feel would be the best option?

Without the banking system we'd revert to a barter economy, and would have the standard of living equivalent to the stone age.

You mean no system of money would develop?

How do you think a bank buys your gold? I want you to explain it to me. Do you think that people are actually going to exchange gold coins in a gold standard? Even if they did, the government would print those coins (and of course distribute them through open market operations - i.e. through debt), but what would prevent the government from reducing the percentage of gold in the coins in order to increase the money supply?

A bank doesn't "buy" my gold. It safekeeps it for me. No, it is not necessary to exchange coins in a gold standard market although that could be done. What would happen is exactly what did happen. Banks would issue notes of credit which could be used as currency. What also occurred is those notes of credit became though of as the actual deposit. The government would not have to manufacture the coins. All the role of government would be is to ensure the honesty of weights and measures.

A gold standard is both a retrogression and a regression, unfortunately, it is often most poorly understood by its own supporters.

I don't think it is misunderstood by it's supporters. The structure of any system of money to be stable and not collapse must be based upon something other than a law or a piece of paper or an electronic entry.

Yes. we temporarily have a high standard of living with a paper currency and lots of credit and I agree they are debt. I do not agree that all money is debt for who would place confidence in debt for any lengthy period of time. No one but the lender. We would not have the standard of living we do now had we stayed on the gold standard and banks and governments had honoured it. We would also not have had WW I, WWII and several other wars.

We would have maintained a higher moral standard where trust and honesty were the traits of trade and not debts and lawyers. But if one considers his leisure time and his creature comforts of more importance than by all means decree a fiat currency backed by nothing but debt. And put your confidence in debt that is a claim on all the "real credit of the community". A claim that Douglas did notice as being a debt to the issuers of the currency and thus the owners of all the production of society.

You contradict yourself here. First you say that its value is dependent on "what it is" (i.e. its composition), then you say its purchasing power (value) is dependent on it as a "medium of exchange and its availability" (not sure how the latter plays into it).

Purchasing power is not the same as value. Purchasing power is determined by other factors, one of them being confidence in future ability to trade and it's facility in trade. It is an added component to "value". The value of gold is it's market price and it's purchasing power is derived from that. Something not used as a currency could have value and could be traded but has no purchasing power.

The value of a fiat currency is the price of paper and ink. It's purchasing power is not derived from it's market price. It's purchasing power is entirely in the confidence of the banking system and the government to enforce it's monopolistic use. The "credit of the community", which per Douglas himself, is owned by the issuers of the currency and credit and not owned by the community as you claim it is.

[Pliny]

and further....

If the monopolistic enforcement of a currency is absent no one will use it but a system of money would evolve independent of government issue. So if you were going to issue credits in the form of tickets or even as electronic credits and there were no law saying you had to accept them in trade soon they would not be acceptable as trade because they are, as you rightly recognize, debt not backed by anything and no one would prefer to hold that over a commodity that may at least hold some value and trading properties. Once government stopped enforcing it's use there would be no assurance it would be accepted.

[socred]

You often say this but that could be said of any form of money. I would prefer, if food did become available in some limited quantity, taking my chances with a piece of gold rather than a piece of paper or an electronic entry on a computer. What do you feel would be the best option?

The electronic blip because it's more portable. You're assuming a collapse of the monetary system and a return to barter. If that was the case, and all money was useless, then I'd rather have the food than the gold.

\

A bank doesn't "buy" my gold. It safekeeps it for me. No, it is not necessary to exchange coins in a gold standard market although that could be done. What would happen is exactly what did happen. Banks would issue notes of credit which could be used as currency. What also occurred is those notes of credit became though of as the actual deposit. The government would not have to manufacture the coins. All the role of government would be is to ensure the honesty of weights and measures.

I want you to explain to me in detail what you're talking about here. First you say a bank does not buy your gold, it "safeguards it", which means that gold is actually used in exchange, then you say that the bank issues notes against that gold, which means it has now purchased your gold in exchange for notes, even though those notes can be used to buy back that gold.

I want you to explain to me exactly how this gold standard works, for I cannot comment on something that I'm uncertain of its mechanism. I'm referring to the gold standard that was in play prior to its dissolution, but you seem to have something different in mind, so why don't you explain it, and I will comment.

I don't think it is misunderstood by it's supporters.

I have yet to find one of its supporters who clearly understands it. Mosly because they are unclear as to how banks create money even in a gold standard. Once the fact is pointed out that banks still create the majority of money in a gold standard, and that money is just an "electronic blip" even in a gold standard, they either don't know how to respond, or come up with ludicrous suggestions of 100% reserve banking, which would collapse the entire economy for lack of money.

The structure of any system of money to be stable and not collapse must be based upon something other than a law or a piece of paper or an electronic entry.

It's based upon the real credit of the community, which is the only "stable" thing it can be based upon: the ability of the community to deliver goods and services where and when they are required. Money is "based" on nothing else. This is why I keep pointing out that gold is worthless if there's no food to eat. The "basis" of money is the food, shelter, clothing, luxury goods..... that the community is able to produce. Money is just a means of facilitating production and consumption.

Yes. we temporarily have a high standard of living with a paper currency and lots of credit and I agree they are debt. I do not agree that all money is debt for who would place confidence in debt for any lengthy period of time.

Whether you agree or not is irrelevant. All money is created as debt, including cash and coin which are put into circulation through government open market operations, or commercial banks borrowing from the central bank.

No one but the lender. We would not have the standard of living we do now had we stayed on the gold standard and banks and governments had honoured it. We would also not have had WW I, WWII and several other wars.

There never was a "gold standard" that you are talking about since the Middle Ages. Since the advent of fractional reserve banking, the majority of money has always been an entry in a leger, or an "electronic blip" since the use of computers. Even the "gold" itself was merely pieces of paper that supposedly represented a certain amount of gold. People did not actually exchange gold, they exchanged pieces of paper and "electronic blips".

We would have maintained a higher moral standard where trust and honesty were the traits of trade and not debts and lawyers. But if one considers his leisure time and his creature comforts of more importance than by all means decree a fiat currency backed by nothing but debt. And put your confidence in debt that is a claim on all the "real credit of the community". A claim that Douglas did notice as being a debt to the issuers of the currency and thus the owners of all the production of society.

The confidence is not on debt, the confidence is placed in the ability of the community to produce. And that is all the confidence that people can have in money. Without production, the money is valueless no matter what its made of. All the gold in the world will do you absolutely no good without food to eat, clothes to wear and shelter to protect you.

Purchasing power is not the same as value. Purchasing power is determined by other factors, one of them being confidence in future ability to trade and it's facility in trade. It is an added component to "value". The value of gold is it's market price and it's purchasing power is derived from that. Something not used as a currency could have value and could be traded but has no purchasing power.

Money has no intrinsic value (unless you're a collector of money). Money has no value except as a means to obtaining things that have value (i.e. food, shelter, clothing, luxury goods, services etc....). These are the things that people want and value. Money is just a MEANS of obtaining them. Money exists because it is more efficient than barter. Unfortunately, people confuse the role of money, and this is why things like the gold standard are advocated.

The value of a fiat currency is the price of paper and ink.

The value of money is not intrinsic!!!!!

I can obtain more for my dollar than the cost of the ink and the paper. The cost to produce a dollar is probably pennies, the amount that it can purchase is far more than that. It's "value" is what it can purchase, because money has no other use than purchasing goods and services. You don't eat money, you don't wear it.

I'll give you all the gold in the world, if I can have all the food, shelter and clothing. We'll soon see who comes to whom in order to live! And which you actually "value"???

[socred]

and further....

If the monopolistic enforcement of a currency is absent no one will use it but a system of money would evolve independent of government issue. So if you were going to issue credits in the form of tickets or even as electronic credits and there were no law saying you had to accept them in trade soon they would not be acceptable as trade because they are, as you rightly recognize, debt not backed by anything and no one would prefer to hold that over a commodity that may at least hold some value and trading properties. Once government stopped enforcing it's use there would be no assurance it would be accepted.

Again, this is typical of the confusion of thought by those who advocate a gold standard.

MOST MONEY (APPROXIMATELY 90%) IS BANK CREDIT. BANK CREDIT IS NOT ENFORCED IN TRADE BY THE GOVERNMENT. BANK CREDIT DEVELOPED AS A SOURCE OF MONEY INDEPENDENT OF THE GOVERNMENT, AND IS USED IN THE VAST MAJORITY OF TRADE.

Edited May 11, 2008 by socred

[Pliny]

Again, this is typical of the confusion of thought by those who advocate a gold standard.

MOST MONEY (APPROXIMATELY 90%) IS BANK CREDIT. BANK CREDIT IS NOT ENFORCED IN TRADE BY THE GOVERNMENT. BANK CREDIT DEVELOPED AS A SOURCE OF MONEY INDEPENDENT OF THE GOVERNMENT, AND IS USED IN THE VAST MAJORITY OF TRADE.

Ahhh.. I agree. Today all money is credit - even the currency itself.

Bank credit must, if offered, be accepted. It is a legal tender. I agree, the government does not enforce it's use in trade. It does back and enforce the acceptance of it if offered as a tender.

Bank credit is nothing more than bank credit. What gives it it's legitimacy as money? Why do people accept it as money? Your claim is they are the same thing and most people will agree with you. They see no difference, and even in reality there is no functional difference. The difference, as Douglas rightly states, lies in ownership of the goods and services, the total production and assets, by the issuer of the credit. That is all I am saying.

What occurs because of that is governments, in league with the central bank, have pretty much free reign over society in what they do. They pretend to be doing the will of society and operating for the common good but they then enter into wars with each other, all with our consent of course as the right thing to do. The magic is in getting us to agree that they are doing the right thing. Of course, if some policy is imperative they will just institute it and explain it later or hang some bureaucrat so that we feel better but the policy will generally remain in effect.

If there were economic restrictions on government and they couldn't just create credit when they wanted they would have to ask the people to pay first. You might argue they generally operate within the boundaries of the collective will and that may be true but the collective will has become the lobbying of special interests today and the will of the majority is really an unknown when you look at the fact that 50% turnout of the electorate at an election is considered high.

You are solving an accounting error in a system that is designed for governments and central banks to act without economic restraint and independently of the people.

We, all people, have to understand that governments should not have this ability to act with out economic restraints. They can ask if people want to have food, clothing and shelter supplied to them by government or healthcare and education which we already do and the people will all say yes, of course. But they have to realize they must pay for it. So it does no good to ask what people want from their government; they will want the sky.

You have to get them to pay first, not on credit. If they are willing to pay first then government can provide it.

Healthcare and education are runaway expenses now and we are not getting value for our dollar but there is no shortage of people who will defend the system and claim it's failure is just due to shortness of resources.

Remember, and I agree with you, that all money today is debt, so we don't pay for anything first, even if the government is running a surplus. Nothing is paid for. We don't get paid when we receive money. We get paid when we spend it. And we are not the owners of anything we buy since the bank issues the money.

If people understood that government should not have the ability to create debt or credit at will there would have been no Hitler and no 1917 Revolution. The American Constitution of freedom and liberty that granted sanctuary to the individual from the tyranny of government would not now be in tatters but an example of how all people could have freedom and liberty. The American civil war would not have occurred and perhaps America would have split over it's differences but no government could afford war unless the people realized they were the ones that were paying and suffering the losses. Now they just suck it up and suffer the losses and the next generation pays the bills or thinks they do.

It is critical that this be understood now. The advent of nuclear capabilities and starwars weaponry make people redundant, unnecessary to government and it's objectives, we are seen as wasteful "consumers" of their resources, not mere encumberances. Large armies are no longer necessary to protect the sovereignty of nations.

The fear of running out of resources, over-population and destruction of lands by expanded development is the message I am getting in the world. Not how do we feed ourselves and provide ourselves the necessities of life, increase our production and envision where we go from here. The message is stop. It isn't start and it isn't continue - it is stop. Stopping is fine but not on the level that I believe it is being planned.

Edited May 11, 2008 by Pliny

[Pliny]

I'll give you all the gold in the world, if I can have all the food, shelter and clothing. We'll soon see who comes to whom in order to live! And which you actually "value"???

You consider purchasing power as value. I see them as different. Purchasing power is in the agreed confidence of those using a money system. "Value" is in utility to the individual. Certainly gold has no value if it has no utility and if no purchasing power, i.e., confidence as a form of exchange, would be entirely useless. What would be your point?

Having credits or fiat currencies without purchasing power would be just as useless. At least there may always be some utility in gold so it will have some "value" - and that's the point besides the ability of government to create money from thin air if they claim they have that ability and enforce it.

[Pliny]

There never was a "gold standard" that you are talking about since the Middle Ages. Since the advent of fractional reserve banking, the majority of money has always been an entry in a leger, or an "electronic blip" since the use of computers. Even the "gold" itself was merely pieces of paper that supposedly represented a certain amount of gold. People did not actually exchange gold, they exchanged pieces of paper and "electronic blips".

So you do know what I mean when I am talking about the gold standard. I mean the one before the middle ages.

I merely like to make the distinction that gold was the "money" and entries in ledgers, electronic blips, fiat currencies and pieces of paper representing amounts of gold were money substitutes or just accounting entries. I agree money substitutes have the same function but once again banks used fractional reserve banking for their own advantage not to benefit the community. I wish I could loan money I didn't have just by writing a note or entering it on a ledger.

They did exchange gold by moving it from one bank to another and internally by recording the movement from one account to another. Specie did exist but it was risky carrying it around.

Edited May 11, 2008 by Pliny

[Pliny]

Mosly because they are unclear as to how banks create money even in a gold standard. Once the fact is pointed out that banks still create the majority of money in a gold standard, and that money is just an "electronic blip" even in a gold standard, they either don't know how to respond, or come up with ludicrous suggestions of 100% reserve banking, which would collapse the entire economy for lack of money.

Yes the whole economy, as we know it, would collapse.

A dollar originally was a weight. Today it's a measure of value. If an ounce of gold can buy a house then there is plenty of money. Right now it can buy anything valued at $900. 200 ounces of gold can buy a nice house in some places. If only half the amount of gold were available then an ounce would be worth $1800. I understand it would be difficult to move the gold around, couldn't we just issue notes, promises to pay as it were, instead of using the gold itself? If the banks could not write notes beyond their deposits then the notes would not be fraudulent and they would be proper claims upon goods if used in such a way. Also the value of the notes would increase over time if the value of an ounce of gold increased instead of inflation eating away at our dollars.

[Pliny]

I want you to explain to me in detail what you're talking about here. First you say a bank does not buy your gold, it "safeguards it", which means that gold is actually used in exchange, then you say that the bank issues notes against that gold, which means it has now purchased your gold in exchange for notes, even though those notes can be used to buy back that gold.

I want you to explain to me exactly how this gold standard works, for I cannot comment on something that I'm uncertain of its mechanism. I'm referring to the gold standard that was in play prior to its dissolution, but you seem to have something different in mind, so why don't you explain it, and I will comment.

"The bank does not buy your gold, it safeguards it."

Correct.

"which means that gold is actually used in exchange."

It may be used as a medium of exchange. In this case it is a deposit for safekeeping.

"then you say that the bank issues notes against the gold."

To the owner of the gold. Correct.

"which means it has now purchased your gold in exchange for your notes."

Incorrect. It has only issued a note that is a record of your account. It has purchased nothing. You own the deposit. The bank gives you a record of your deposit in the form of a note. Your deposit never belongs to the bank.

"even though those notes can be used to buy back that gold."

You are getting very close to the purpose of government. And that is the guarantee of the security of person and property. In your first paragraph there seems to be a struggle with the concept of property and ownership. You believe because a note has been issued to you that there is a transfer of ownership of the deposit. Under a gold standard this is not supposed to be true. The way you describe it must be the way bankers thought of it as well because they used the deposits as though they belonged to them and created fractional reserve banking for their benefit. Ownership, the safety of person and property, was however fraudulently infringed upon by the banker giving credit based upon someone else's deposit. People didn't "sell" their gold to banks they deposited it for safekeeping. The note is only a record of deposit and a contract between the depositer and the bank.

What has occurred is that there is no more claim upon the bank. The bank only deals in notes and electronic entries which it can easily provide. The issuer of the notes and the electronic entries, the central bank, having now eliminated any claim against it through the fact it can now create "money", which are in fact just IOUs, claims they have given you "money" and if you do not pay back this IOU they will seize all your assets. The sanctity of your person and property has now been broached in collusion with the very agency - government, charged with it's protection. The people have now been bilked of the ownership of wealth and governments lay claim upon the real property of the person. It is all held in place by the belief and acceptance that fiat currency and electronic entries on their bank statements are "money".

The main problem is not that these things are accepted as equivalent to money. The problem is, as Douglas points out, one of ownership, and in addition the security of person and property, the issuer now having the ability to claim ownership of all production and property.

Now I haven't seen any direct relation to any Social credit policy that deals with this issue. There seems to be a concern with a shortage of "money" in the current economic structure and the resolution of that seems to be to add more money to the supply and makeup that shortage. Well, if I understand, there is lots of credit available that adds to the money supply. Consumers borrow and that adds to the money supply, by creating electronic entries and also in the form of interest. This indicates to me that any shortage is covered by the banks in the form of credit. All goods that people wish to purchase then, can be purchased. And thus all production can be cleared if there is a desire to clear it. Undesirable, unnecessary and wasteful production or any miscalculation of demand will not clear.

Anyway, my conclusion is that, in confusing money substitutes, i.e., fiat currencies, paper currencies, Bank notes, bonds, electronic blips as "money" is where the problem lies. You may, and rightly so, claim these are not commodities, nor do they have any intrinsic value and they are all debts, I will agree but I would then say for those reasons they are not money.

[socred]

Yes the whole economy, as we know it, would collapse.

A dollar originally was a weight. Today it's a measure of value. If an ounce of gold can buy a house then there is plenty of money. Right now it can buy anything valued at $900. 200 ounces of gold can buy a nice house in some places. If only half the amount of gold were available then an ounce would be worth $1800. I understand it would be difficult to move the gold around, couldn't we just issue notes, promises to pay as it were, instead of using the gold itself? If the banks could not write notes beyond their deposits then the notes would not be fraudulent and they would be proper claims upon goods if used in such a way. Also the value of the notes would increase over time if the value of an ounce of gold increased instead of inflation eating away at our dollars.

This is the confusion of thought that I'm referring to by those who advocate a gold standard. You contradict yourself in the two bolded sentences.

First you agree that if the only money in the world was gold, the whole economy would collapse. Then you say that banks shouldn't be allowed to create money.

If banks were unable to create money, the banking system would collapse. The monetary system would collapse, and the economy would collapse.

Are you advocating 100% reserve banking?

You claim that the banks don't buy your gold, but merely are "safekeeping it". These are semantics, since in fact they have exchanged your gold for bills which are subsequently used as money. Since people wouldn't actually exchange gold, but bills, the gold would always be at the bank, and "paper currency" would circulate.

This of course would force businesses to pay their bills with currency, meaning they'd have to go to their supplier with millions of dollars and have them count it out. Or do you forsee the use of cheques? Banks would be unable to loan money, because of the 100% reserve ratio, which would force them out of business. How would banks make a profit? Businesses and individuals would be unable to loan money from banks, so they would have to come up with the money themselves, or try to borrow it from others. Credit cards would cease to exist, so we'd have to have the cash on us now in order to pay any bills.

Anything else you'd like to add?

[Pliny]

This is the confusion of thought that I'm referring to by those who advocate a gold standard. You contradict yourself in the two bolded sentences.

"Yes the whole economy, as we know it, would collapse."

"If the banks could not write notes beyond their deposits then the notes would not be fraudulent and they would be proper claims upon goods if used in such a way."

What's the contradiction? "As we know it", the economy would collapse.

First you agree that if the only money in the world was gold, the whole economy would collapse. Then you say that banks shouldn't be allowed to create money.

Yes...the economy "as we know it"....and?

If banks were unable to create money, the banking system would collapse. The monetary system would collapse, and the economy would collapse.

Yes.."as we know it"....Isn't that what I said?

Are you advocating 100% reserve banking?

I am advocating not making loans or creating credit out of thin air. And that is, I suppose you would call it, 100% reserve banking.

You claim that the banks don't buy your gold, but merely are "safekeeping it".

Yes.

These are semantics, since in fact they have exchanged your gold for bills which are subsequently used as money.

"Bills" subsequently used as currency and "a promise to pay" - not "money". Paper currencies and promises to pay are only half of a trade. The full trade is when you receive payment, not a "note" or paper currency. If an electronic entry meant "money" was transferred to your account that would be acceptable. The entry itself is not the money. It is not "semantics". It is a question of "ownership". If I put valuables in the bank I don't expect the bank to then claim ownership of my valuables. I think that is pretty simple to understand. In the case of our current economy, they have done exactly that. Because you think the note they give you is "money" you are happy to make the trade. I would like to keep ownership of the valuables unless I wish to trade them for something else I consider valuable. I do not consider paper currency valuable. Like you say, "you can't eat it".

But if the bank now owns my valuables because I have traded them for their "notes" then I think that is pretty stupid.

"Since people wouldn't actually exchange gold, but bills, the gold would always be at the bank, and "paper currency" would circulate.

Yes. It would. Paper currency are notes and promises to pay.

This of course would force businesses to pay their bills with currency, meaning they'd have to go to their supplier with millions of dollars and have them count it out. Or do you forsee the use of cheques?

A cheque is a promise to pay just as any currency, other than specie, is a promise to pay. It is a contract. If you do not have anything valuable to back your contract your cheque is fraudulent. Just as a bank issuing a note out backed by nothing is fraudulent.

Banks would be unable to loan money, because of the 100% reserve ratio, which would force them out of business.

Banks would have to become honest businesses.

How would banks make a profit?

Charging accounting and safekeeping fees.

Businesses and individuals would be unable to loan money from banks, so they would have to come up with the money themselves, or try to borrow it from others.

What a novel idea!

Credit cards would cease to exist, so we'd have to have the cash on us now in order to pay any bills.

There is nothing wrong with issuing cheques or promises to pay that are not fraudulent. Loans would have to be made from people who had the money not people who create credit out of thin air.

Anything else you'd like to add?

Yes. You never mention Douglas' claim of ownership of all production and goods by the issuer of the "money" as being a problem. Do you feel this is ok - you being a debtor and simple renter of property? A mere vassal of the State?

[socred]

What's the contradiction? "As we know it", the economy would collapse.

Perhaps you want to revert to the Dark Ages? I do not. There is not enough gold in existence to carry on trade in a modern economy, and reverting to a gold standard does not prevent inflation, as the Spanish and those who lived in areas of the "gold rush" in North America can testify.

A cheque is a promise to pay just as any currency, other than specie, is a promise to pay. It is a contract. If you do not have anything valuable to back your contract your cheque is fraudulent. Just as a bank issuing a note out backed by nothing is fraudulent.

Money is backed by the same thing it's always been backed: the ability of the community to deliver goods and services when and where they are needed (i.e. the real credit of the community). This is the backing of all money, whether that money be made of gold, silver, cowrie shells, paper or electronic blips.

Money is useless without goods and services to purchase. Goods and services are what "backs" money. The more goods and services that you can purchase with your money, the more "value" it has. Money's value is inversly proportional to prices.

Charging accounting and safekeeping fees.

You're now going to pay the bank to keep your money? Instead of the bank paying interest on your deposit as they do now, you're going to have to pay the bank for keeping your deposit?

What a novel idea!

Yes, and a very impractical one. Not only would this slow economic growth unnecessarily, it would create two, or more, cost for the same income that has the ability to only cancel one.

You never mention Douglas' claim of ownership of all production and goods by the issuer of the "money" as being a problem. Do you feel this is ok - you being a debtor and simple renter of property? A mere vassal of the State?

You obviously did not read what Douglas stated:

"The essence of the fraud is the claim that the money that they create is their own money, and the fraud differs in no respect in quality but only in its far greater magnitude, from the fraud of counterfeiting.

At the instigation of the banking system, barbarously severe penalties are imposed upon the counterfeiter of a ten-shilling note, but a peerage is conferred upon the counterfeiter by banking methods of sums running into hundreds of millions.

May I make this point clear beyond all doubt?

It is the claim to the ownership of money which is the core of the matter. Any person or any organization who can create practically at will sums of money equivalent to the price values of all the goods produced by the community is the virtual owner of those goods, and, therefore, the claim of the banking system to the ownership of the money which it creates is a claim to the ownership of the country."

The credit of the community belongs to the community. Not to the banks, not to the producers of gold, not to the state...... It belongs to all of us as individuals.

[Pliny]

Perhaps you want to revert to the Dark Ages? I do not. There is not enough gold in existence to carry on trade in a modern economy, and reverting to a gold standard does not prevent inflation, as the Spanish and those who lived in areas of the "gold rush" in North America can testify.

I do not understand why those that argue against a gold standard, or currency backed by precious metals, say there is not enough in existence to carry on trade. Obviously there will be an increase in purchasing power if there is a shortage. If gold falls in too short a supply, there is silver and platinum or even copper although copper is more useful as a commodity.

Your funny. Picking the gold rush in North America as an example of how gold does not prevent inflation. At the time of the gold rush Iwould think there was an increase in the amount of gold available and whenever there is an increase in the money supply there is a decrease in it's purchasing power - inflation. However, as there has been a shortage in the supply over the most of history the purchasing power would have generally increased over time - Deflation in other words.

A return to the dark ages? Really? Technologically we will not revert back. What we need is a stable economic foundation to build upon not the current house of cards ready to bring economic collapse and continuous wars.

Money is backed by the same thing it's always been backed: the ability of the community to deliver goods and services when and where they are needed (i.e. the real credit of the community). This is the backing of all money, whether that money be made of gold, silver, cowrie shells, paper or electronic blips.

Sorry. We will have to disagree. You see in my view "Money" today has been replaced by "money substitutes".

It is backed by the enforcement of governments. Admittedly, people are accustomed and comfortable with "money substitutes". Unfortunately, it is government who owns the "credit of the community" in the form of these money substitutes which are debt instruments. You may argue all money is a debt and ideologically it is if you consider it not fulfilling the essential purpose of a trade which is improvement, enhancement or advantage gained in one's existence. There is certainly no advantage in having money if one wishes a car. But money then must contain a confidence within it of future trade. So when we are talking about money we are talking about people's confidence in it's future purchasing power. If that confidence is in the fact money is a commodity, as you must admit gold is, or if it is in the strength of government as it is in paper currencies by fiat, that confidence best exists - in the money itself. This is easy to see if you compare the acceptance of a ruble or a remnimby. I would have less confidence it would be easily accepted here in Canada whereas in Russia or China, respectively I would have more confidence I could use it. I am not obligated to accept a ruble or remnimby here and doubt I would because of a lack of confidence in it's future ability to facilitate exchange for me personally, plus my knowledge of it's value. A gold coin, no matter what country it is from, would instill more confidence in me than any paper currency. I don't have to have confidence in the credit of the community to accept it. I just have to have confidence I can trade it in the future.

The credit of the community plays a role in the confidence placed in it's "currency" in that the society and it's government must be seen as stable, secure and productive. These are all things that contribute to that confidence placed in it's "currency". If the government of a country were going to nationalize industry there would be less confidence in its currency because a measure of instability is entered into the picture, security of investment is gone and the level of productivity is uncertain. The credit of the community is lowered and that would reflect in a lack of confidence in it's "currency". As I have said, I don't have to have confidence in a nation's government, it's productivity level, the credit of the community or anything except the medium I am using for exchange. The confidence in the government, the society, the credit of the community may even get me to accept worthless pieces of paper as a medium of exchange for awhile, but those factors are by no means more stable than the value of a "commodity" such as precious metals. Their purchasing power as a medium of exchange is independent of but relative to it's value as a commodity among other factors such as supply and demand and I need no other confidence in my money than it is exchangeable for the goods and services I need and want.

Money is useless without goods and services to purchase. Goods and services are what "backs" money.

Confidence in it's future ability to exchange it is what backs anything used as money.

Because you believe money to be simply an accounting tool you place no value in it at all and since you believe paper currencies and electronic entries are the same thing as money all value must then be in the goods and services. The "purchasing power" of currencies is entirely in the confidence placed within the currency itself as I have outlined above.

The more goods and services that you can purchase with your money, the more "value" it has. Money's value is inversly proportional to prices.

A five dollar bill has no more "value" today than it did in 1980. It's purchasing power did vary however. It buys a whole lot less today than it did in 1980. Mostly because the supply has been inflated.

You're now going to pay the bank to keep your money? Instead of the bank paying interest on your deposit as they do now, you're going to have to pay the bank for keeping your deposit?

If that service is desired yes. Isn't that how it used to work? The only reason I would get interest, and most accounts today don't pay interest without a minimum deposit kept in the account, another little rip off since they are using my balance at whatever level to calculate their fractional reserve base, would be if they were using my deposit to make loans, and so they do. the risk on their loans with respect to my deposit is minimal since they can cover any losses with an electronic entry.

Yes, and a very impractical one. Not only would this slow economic growth unnecessarily, it would create two, or more, cost for the same income that has the ability to only cancel one.

You obviously did not read what Douglas stated:

"The essence of the fraud is the claim that the money that they create is their own money, and the fraud differs in no respect in quality but only in its far greater magnitude, from the fraud of counterfeiting.

At the instigation of the banking system, barbarously severe penalties are imposed upon the counterfeiter of a ten-shilling note, but a peerage is conferred upon the counterfeiter by banking methods of sums running into hundreds of millions.

May I make this point clear beyond all doubt?

It is the claim to the ownership of money which is the core of the matter. Any person or any organization who can create practically at will sums of money equivalent to the price values of all the goods produced by the community is the virtual owner of those goods, and, therefore, the claim of the banking system to the ownership of the money which it creates is a claim to the ownership of the country."

The credit of the community belongs to the community. Not to the banks, not to the producers of gold, not to the state...... It belongs to all of us as individuals.

Any person or any organization who can create practically at will sums of money equivalent to the price of all goods produced is the virtual owner of those goods... It is fraud plain and simple. Nothing belongs to the individual under the current economic structure.

[Pliny]

In this synopsis of the thread we first find where our disagreements are.

Firstly on what "money" is.

I claim it is:

1) a commodity. Because it can earn interest and it can be traded against the strengths and weaknesses of other currencies I believe it is a commodity.

2) Something that does not need to be legislated as "A legal tender".

3) Is not created by an entry on a ledger or electronic entry.

4) It is not the sole right of one corporation to create.

5) not a claim on goods but a good in itself.

6) It is not a debt instrument.

Socred believes if I understand it, money is:

1) Not a commodity.

2) A debt instrument

3) A claim on goods

4) A ticket or token.

5) Can be created by an electronic entry.

6) Is the same thing as a note or bill issued by a bank.

Secondly on the function of money.

I believe it's function is to facilitate trade with the confidence it will hold it's value in the future.

Socred thinks that it can and should lose it's value over time yet still maintain the same level of confidence as something that doesn't lose value over time. We both agree it facilitates trade.

This is my understanding so far.