Money as debt (please watch x 100)

[jon galt]

Originally Posted by wake_up_bomb

There's no such thing as legal tender:

http://www.royalmint.com/corporate/p...uidelines.aspx

"Are Scottish & Northern Irish notes legal tender?

In short ‘No’ these notes are not legal tender; only Bank of England notes are legal tender but only in England and Wales...The term legal tender does not in itself govern the acceptability of banknotes in transactions...Whether or not notes have legal tender status, their acceptability as a means of payment is essentially a matter for agreement between the parties involved".

http://www.royalmint.com/corporate/p...uidelines.aspx

"Legal tender has a very narrow and technical meaning in the settlement of debts. It means that a debtor cannot successfully be sued for non-payment if he pays into court in legal tender. It does not mean that any ordinary transaction has to take place in legal tender or only within the amount denominated by the legislation. Both parties are free to agree to accept any form of payment whether legal tender or otherwise according to their wishes".

Banknotes are merely promissory notes transferring debt from one person to another.



However, the discussion of this is largely irrelevant as when the derivatives bubble bursts, the amount of government and private debt - which is nevertheless astronomical - will be completely irrelevant.

DERIVATIVES AND OUR FINANCIAL SLAVERY IN A NUTSHELL - YouTube

Scottish notes are an example of a credit money system, fe the bank of england promises to 'pay the barer on demand x sterling' as written on Scottish notes. English notes make no such promise (they say i promise to pay the bearer the sum of x pounds)as they are Stirling, legal tender. The only think that gives them value is that English banks will swap them for sterling. No other country exchanges Scottish notes, Ive tried, but have no problem accepting English ones. This is known, it says it on our notes.Yet serves the same purpose as English notes,enables transaction, and can be exchanged for legal tender (english notes) at any bank. whats the problem? Gold sovereigns are legal tender but it does not mean that shops have to accept them and give change.

[wake_up_bomb]

Originally Posted by jon galt

Scottish notes are an example of a credit money system, fe the bank of england promises to 'pay the barer on demand x sterling' as written on Scottish notes. English notes make no such promise (they say i promise to pay the bearer the sum of x pounds)as they are Stirling, legal tender. The only think that gives them value is that English banks will swap them for sterling. No other country exchanges Scottish notes, Ive tried, but have no problem accepting English ones. This is known, it says it on our notes.Yet serves the same purpose as English notes,enables transaction, and can be exchanged for legal tender (english notes) at any bank. whats the problem? Gold sovereigns are legal tender but it does not mean that shops have to accept them and give change.

Let me emphasise the following, as you seem to have missed it. Firstly, Bank of England:

"Whether or not notes have legal tender status, their acceptability as a means of payment is essentially a matter for agreement between the parties involved".

Secondly, Royal Mint:

"Both parties are free to agree to accept any form of payment whether legal tender or otherwise according to their wishes".

Thirdly, you seem to be rather confused about the meaning of "I promise to pay".

"The words “I promise to pay the bearer on demand the sum of five [ten/twenty/fifty] pounds” date from long ago when our notes represented deposits of gold. At that time, a member of the public could exchange one of our banknotes for gold to the same value. For example, a £5 note could be exchanged for five gold coins, called sovereigns. But the value of the pound has not been linked to gold for many years, so the meaning of the promise to pay has changed. Exchange into gold is no longer possible and Bank of England notes can only be exchanged for other Bank of England notes of the same face value. Public trust in the pound is now maintained by the operation of monetary policy, the objective of which is price stability".

Unfortunately, since Britain came off the gold standard, that didn't work out too well:



Fourthly, all British banknotes are merely promissory notes that are simply an agreement between two parties to pay a sum of money to the other in the future. As stated on the note itself:

Banknote - Wikipedia, the free encyclopedia

Banknote - Wikipedia, the free encyclopedia
Banknote - Wikipedia, the free encyclopedia

A banknote (often known as a bill, paper money or simply a note) is a kind of negotiable instrument, a promissory note made by a bank payable to the bearer on demand.

http://legal-dictionary.thefreedictionary.com/Bank+note

A bank note resembles a common promissory note, (q. v.) issued by a bank or corporation authorized to act as a bank. It is in fact a promissory note.

http://www.investopedia.com/terms/b/banknote.asp

A negotiable promissory note issued by a bank and payable to the bearer on demand. The amount payable is stated on the face of the note.

http://www.merriam-webster.com/dictionary/banknote

A promissory note issued by a bank payable to bearer on demand.

Just to give you one definition of promissory note, although you may look up others if you wish:

http://www.investopedia.com/terms/p/promissorynote.asp

A written, dated and signed two-party instrument containing an unconditional promise by the maker to pay a definite sum of money to a payee on demand or at a specified future date.

Ring any bells?



Fifthly, you seem to have completely ignored the most important part of the post, which relates to the derivatives bubble, which when it bursts will render this whole discussion largely irrelevant.

DERIVATIVES AND OUR FINANCIAL SLAVERY IN A NUTSHELL - YouTube

DERIVATIVES AND OUR FINANCIAL SLAVERY IN A NUTSHELL - YouTube

[jon galt]

The uk abolished the gold standard in the 60s or something , 5 pound is less than half a gram of gold, not much to make a coin from, how ever gold sellers will sell you gold if you wish to exchange your currency for it.

I understand perfectly what you say and what you quote, English notes however are legal tender in all the uk, regardless if they are backed by gold or not, the 'promise to pay 10 pounds' is not a reference to gold, else it would say gold it says pounds in stead tho. it just means that banks promise to accept it. that is the only thing giving any currency its value, for example, when the Zimbabwe currency crashed no bank out side the country would accept its currency giving it no value. currency only has value in relation to other currencies, ie the pound is strong against the dollar but could be week against another currency.

English currency is much different to Scottish, Scottish is credit based, similar to BOE IOUs, Scotland do not have the right nor powers to issue its own currency

why do you cut out part of the promise to pay quote? compare a Scottish note to an English note and you will realize the difference and intention for it.

Fifthly, you seem to have completely ignored the most important part of the post, which relates to the derivatives bubble, which when it bursts will render this whole discussion largely irrelevant.

maybe so but it is a separate issue, that why i suggest swapping the currency that you feel is an empty promise for gold

A bank note resembles a common promissory note, (q. v.) issued by a bank or corporation authorized to act as a bank. It is in fact a promissory note.

http://www.investopedia.com/terms/b/banknote.asp

A negotiable promissory note issued by a bank and payable to the bearer on demand. The amount payable is stated on the face of the note.

http://www.merriam-webster.com/dictionary/banknote

A promissory note issued by a bank payable to bearer on demand.

again you are cherry picking quotes from wiki to suit your argument

from the same paragraph.

National banknotes usually have legal tender status

you are deliberately misquoting

Legal tender has a very narrow and technical meaning in the settlement of debts. It means that a debtor cannot successfully be sued for non-payment if he pays into court in legal tender. It does not mean that any ordinary transaction has to take place in legal tender or only within the amount denominated by the legislation. Both parties are free to agree to accept any form of payment whether legal tender or otherwise according to their wishes. In order to comply with the very strict rules governing an actual legal tender it is necessary, for example, actually to offer the exact amount due because no change can be demanded.

The amounts for legal tender are stated below.

BANK OF ENGLAND NOTES:

In England and Wales the £5, £10, £20 and £50 notes are legal tender for payment of any amount. However, they are not legal tender in Scotland and Northern Ireland.

[wake_up_bomb]

Originally Posted by jon galt

The uk abolished the gold standard in the 60s or something.

I'm sorry I don't think there is any point in me continuing this discussion any further. It was 1931. I wish you well, my friend. We're all going to need a lot of luck over the next few years, I assure you.

[jon galt]

Originally Posted by wake_up_bomb

I'm sorry I don't think there is any point in me continuing this discussion any further. It was 1931. I wish you well, my friend. We're all going to need a lot of luck over the next few years, I assure you.

sorry my mistake, my fault really for not letting wiki form my opinion. 1931 further proves my point btw

[mpe_solution]

Originally Posted by micklemus

I've only skimmed the MPE stuff on these pages, so I apologise if this question has been addressed already. However, what about profit - is that to be eliminated too?

Also, are there rules relating to savings?

MPE is a true free market economy. Buyers and sellers determine the price of goods. Any profit in a transaction reflects the fair value of the good or service that both the buyer and the seller are happy with. If the buyer thinks the seller is asking for too much profit, he will shop somewhere else. If the seller cannot get enough profit to make a living wage he will have to find a new venture.

The people of each country that would implement MPE could determine if there is to be a mandatory savings (like social security). The difference with MPE is, with inflation/deflation eliminated, there is no need for your money to "grow".

[jon galt]

Originally Posted by mpe_solution

MPE is a true free market economy. Buyers and sellers determine the price of goods. Any profit in a transaction reflects the fair value of the good or service that both the buyer and the seller are happy with. If the buyer thinks the seller is asking for too much profit, he will shop somewhere else. If the seller cannot get enough profit to make a living wage he will have to find a new venture.

The people of each country that would implement MPE could determine if there is to be a mandatory savings (like social security). The difference with MPE is, with inflation/deflation eliminated, there is no need for your money to "grow".

is money lending not a service under this system?

[mpe_solution]

Originally Posted by jon galt

is money lending not a service under this system?

Sure, just like someone could sell ice to Eskimos or umbrellas to Bedouin.

[micklemus]

Originally Posted by mpe_solution

MPE is a true free market economy. Buyers and sellers determine the price of goods. Any profit in a transaction reflects the fair value of the good or service that both the buyer and the seller are happy with. If the buyer thinks the seller is asking for too much profit, he will shop somewhere else. If the seller cannot get enough profit to make a living wage he will have to find a new venture.

The people of each country that would implement MPE could determine if there is to be a mandatory savings (like social security). The difference with MPE is, with inflation/deflation eliminated, there is no need for your money to "grow".

I understand that, but I'm driving at more basic underlying principles.

This MPE stuff promotes what amounts to a "closed circuit" in terms of money supply (no interest). However, the profit motive will naturally put more money into the hands of entrepeneurs and big business. Savings take money out of circulation.

For what it's worth, I happen to agree in many respects with the point that interest and money supply have got out of control, so don't misunderstand me there. My point is that you will end up with fundamentally the same imbalances, just on a smaller monetary scale, because interest is only one of numerous factors which cause economic imbalance and/or fluctuations, as indeed are profit and savings.

I note your point about competition but it sounds like an echo of teaching perfect competition at school. The real world does not have perfect competition and never has.

Nice to be discussing issues which have a degree of depth for once though.

[jon galt]

Originally Posted by micklemus

I understand that, but I'm driving at more basic underlying principles.

This MPE stuff promotes what amounts to a "closed circuit" in terms of money supply (no interest). However, the profit motive will naturally put more money into the hands of entrepeneurs and big business. Savings take money out of circulation.

yes saving money would have to be banned under this system as the more saved the less in circulation, which leaves little room for business of any sort as well as saving to invest.

In a closed circuit economy as you describe mick, does that take in to account resources that are extracted, or would this have no effect?

Sure, just like someone could sell ice to Eskimos or umbrellas to Bedouin.

why? you have said that under this system banks would still provide mortgages and make a profit. is that not money lending that has the same effect as interest? perhaps i miss understood? I think AA likened it to higher purchase.

I am also of the opinion that interest does not create money, that in order to pay the interest (and the loan) the borrower needs to gain the money through his income, it is his labor that has created/ extra wealth, it would exist/be created regardless if he uses it to pay interest would it not? look at it this way if i borrowed ten apples from my neighbor and told him that i will give him 15 back when i grow some, his lending has not created the additional 5 apples rather they have been created by me growing them.

MPE is a true free market economy. Buyers and sellers determine the price of goods. Any profit in a transaction reflects the fair value of the good or service that both the buyer and the seller are happy with. If the buyer thinks the seller is asking for too much profit, he will shop somewhere else. If the seller cannot get enough profit to make a living wage he will have to find a new venture.

Supply and demand will always determine the price, but yes i agree if there is no demand for a service/product it is a bad business model.

[micklemus]

Originally Posted by jon galt

In a closed circuit economy as you describe mick, does that take in to account resources that are extracted, or would this have no effect?

It certainly would have an effect and that's exactly what I'm driving at. For this to work in the way the proponents want it to you would need to ban profit (how that could be done is beyond me) and/or have perfect competition (if you understand what perfect competition theory means, you will realise it's a pipe dream) and ban savings. Without addressing these factors, money will gravitate to the same businesses and individuals that it gravitates to now and the savings effect will be deflationary.

These are not the only considerations. Another obvious one that springs to my mind is public finances.

I won't even touch on the international element yet.

I'm not kicking this theory because I can see that it's well-intentioned. I'm just saying that it's appears to be something that looks interesting on paper but shaky on closer examination.

I'm going to be positive though and just say it needs work.

[jon galt]

Originally Posted by micklemus

It certainly would have an effect and that's exactly what I'm driving at. For this to work in the way the proponents want it to you would need to ban profit (how that could be done is beyond me) and/or have perfect competition (if you understand what perfect competition theory means, you will realise it's a pipe dream) and ban savings. Without addressing these factors, money will gravitate to the same businesses and individuals that it gravitates to now and the savings effect will be deflationary.

These are not the only considerations. Another obvious one that springs to my mind is public finances.

I won't even touch on the international element yet.

I'm not kicking this theory because I can see that it's well-intentioned. I'm just saying that it's appears to be something that looks interesting on paper but shaky on closer examination.

I'm going to be positive though and just say it needs work.

With out banning profit and personal saving i could see the nationalization of banks working, with profit going back into government infrastructure. Same with national resources and energy production. fe example I dont see how competition with energy suppliers can bring fairer prices when the energy from the same source. Although the government do have a habit of making a mess of things. In regards to banking tho nationalization seems to be doing ok for hina, from an economic perspective, ie their banks function effectively.

if you understand what perfect competition theory means, you will realise it's a pipe dream

is this to do with monopolies?

[mpe_solution]

It's nice to see this discussion progressing in terms of truly understanding what MPE is.

Savings would not be deflationary and this is why. The minute there is not enough money in circulation and there is a desire to purchase a good, new money can be created by the purchaser as a promissory obligation. Money can never become scarce in MPE and you can never have more money than represented goods. It's a perfect balance that eliminates inflation and deflation.

Jon galt, I never said banks would still provide mortgages and make a profit. There is no need for that. We can monetize our own promissory obligations without the need for banks to intervene. In the apple example you are using a barter transaction which makes it possible to repay with more production. In our current system this is not possible because we can only produce more money than there already is in total circulation by borrowing it. This new money is subject to interest which is not created along with the principal. True, if we work more we can earn more money but that does not increase the money supply.

Mick, there is a difference between earned profit and unearned exploiting profit. When I produce a good that cost me $5 in raw material and took me an hour to make and the market (determined by buyers and sellers) warrants a price of $15 the $10 profit is a fair wage. If the market warranted a $35 price, the $30 profit is still a fair wage. It's fair to the seller and fair to the buyer since thy were willing to pay it. Unearned profit like usury andmanipulating markets to exploit prices would and should be illegal.

Public financing is one of the best things about MPE. Let's say the citizens of a town wanted to build a new school, they could create a promissory obligation and pay back 1x the cost of the school over the lifespan of the school rather than 3x to 5x they would have to pay if interest was being charged.

MPE is only 1/2 of the equation. The other part is absolute consensual representation. This would hold government accountable. Politicians that made promises they didn't keep would be punished.

Jon, you are stuck in the banking paradigm. Banks merely publish evidence of our promissory obligations. They give no consideration. We create the money, they launder the asset to themselves and monetize our promissory note.

Keep asking questions guys. This is a good discussion.

[jon galt]

Jon galt, I never said banks would still provide mortgages and make a profit. There is no need for that. We can monetize our own promissory obligations without the need for banks to intervene. In the apple example you are using a barter transaction which makes it possible to repay with more production. In our current system this is not possible because we can only produce more money than there already is in total circulation by borrowing it. This new money is subject to interest which is not created along with the principal. True, if we work more we can earn more money but that does not increase the money supply.

Well this is what i am actually getting at. The only thing of true intrinsic value is raw materials, labor and finished goods, services would fall under labor. As any of these increase so does the money supply via central banks taking shares in industry. A loan or investment is paid back by future earnings, it is only payable back or created through production of sort. You can argue that money is abstract but this is what it represents does it not? In the overly simple apple scenario imagine for every apple grown a dollar was printed.

[mpe_solution]

Originally Posted by jon galt

Well this is what i am actually getting at. The only thing of true intrinsic value is raw materials, labor and finished goods, services would fall under labor. As any of these increase so does the money supply via central banks taking shares in industry. A loan or investment is paid back by future earnings, it is only payable back or created through production of sort. You can argue that money is abstract but this is what it represents does it not? In the overly simple apple scenario imagine for every apple grown a dollar was printed.

Jon, don't confuse things. Production doesn't create money, debt creates money. Production is what pays the debt back. The problem is with interest we end up paying back in 3x or more production than the value of the production we purchased. The producer that sold gets only 1x production and the bank get 2x or more what the actual producer got. All of this just because they have been given a monopoly to publish evidence of our promissory obligations.

[happy sheeple]

Originally Posted by wake_up_bomb

Ahahaha Really?

And what pray is the left hand scale?

[aulus agerius]

Originally Posted by happy sheeple

Ahahaha Really?

And what pray is the left hand scale?

It appears to be the Retail Prices Index, taking 1974 as 100.

Retail Price Index - Wikipedia, the free encyclopedia

Retail Price Index - Wikipedia, the free encyclopedia
Retail Price Index - Wikipedia, the free encyclopedia

It appears that RPI has only been around since 1947, so the dates earlier than that must have been derived by whoever created the graph. On what basis we can only guess...

[jon galt]

Jon, don't confuse things. Production doesn't create money, debt creates money. Production is what pays the debt back. The problem is with interest we end up paying back in 3x or more production than the value of the production we purchased. The producer that sold gets only 1x production and the bank get 2x or more what the actual producer got. All of this just because they have been given a monopoly to publish evidence of our promissory obligations.

you see no relationship between a countries production/industry/exports and its wealth?

[mpe_solution]

Originally Posted by jon galt

you see no relationship between a countries production/industry/exports and its wealth?

Jon we are talking about money that can only be created in two ways. The central bank creates it to buy debt or the people borrow it into existence. A countries production etc. is its wealth. But that doesn't mean money is created through production.

[ganjamonster]

read david graebers "debt: the first 5000 years"