Re: [WDDM] Economics and Change

[Joseph Hammer <parrhesiajoe(at)gmail.com>]

> There must, of couse, be rationing... there is already rationing, and they
> still say not enough money is out there. So, who decides on the rationing?

It is a political decision how much money per money to funnel through
individual retirement accounts.

Political decisions are never fair. They are political. There were countless committees to "fairly" ration food in the Soviet Union. People starved. People with connections got rich.

Because the quantity of a commodity is inelastic. The amount of gold (or
whatever) is fixed and cannot expand to discount the future value of new
investments.

Misleading. The percentage of available capital that must be loaned is a small percentage of the total capital. For example, a trillion dollars worth of commerce can occur with a money supply of a billion dollars. This depends on the "velocity of money". Imagine that everyone's house and car were made available to the money supply, which is entirely possible. This is orders of magnitude TOO MUCH MONEY in circulation. Money, strictly speaking, is usually capital taken out of useful circulation. Gold coins cannot simultaneously be used to make a gold ring. Goods go into circulation when there is a reason for the owner of those goods to liquidate or convert. This could be for an investment or for an emergency.

Tomorrow, we could collateralize half of the national parks as currency and double the national money supply. That land, as well as the land that we occupy is ALWAYS available as a base for currency and loans. It is not put into circulation because it is not needed... (and it is currenly forbidden by non-competing currency laws). The amount of assets we loan and put into production depends on the availability of investments, but there is always PLENTY of collateral for any money supply. If you cannot supply your country with liquidity using a percentage of your total land... someone else already owns your country.

The supply of land is fixed, but the amount of land, gold, cars, stocks traded as liquid assets is VERY malleable. If there is a project offering a 10% return on investment, and no "money" is available, any number of money substitutes can be used... Bonds, stocks, metals, grain... anything. If there is a 10% investment and no more can be converted... that is a Glorious day indeed. That means that every person, every machine and every ferret is employed in turning 10 into 11 or more... It means that the lowest return from any investment is 10%, and that is the minimum... not the average.

There are 200 billion man hours to dispose of next year in America. The amount of money you print has little effect on this number. The best you can hope for is that everyone is employed in the way that benefits them the most. That will not be in a job that returns 1% a year... or even loses money.

We want everyone working at the 20% return job. We want to favor that job... that industry. When we have to choose who to give those 200 billion hours, we will have no chance if there is no auctioning mechanism for liquid assets. Interest is crucial to this task.

And remember, in a sound economy, the bank is an agent... it does not own the capital it directs. The vast majority of the profits go to those who simply chose not to consume as much... to set a bit aside.

Anyone can quickly get to a comfortable retirement with a 10% compound interest rate, and it is repeatable indefinately.

Benjamin Franklin was a big supporter of Compound Interest :).

On Mon, Jan 17, 2011 at 2:33 PM, <Joshua N Pritikin> wrote:

On Mon, Jan 17, 2011 at 02:19:20PM -0800, Joseph Hammer wrote:
> So, I see some wierd stuff here.
>
> So, we have Zero percent loans, and at the same time, we are going to move
> to 100% reserves for money. So, we are going to increase the demand for
> loans dramatically (0% interest) while we decrease the supply of money
> dramatically (Increased reserve ratios). There has to be a third factor, or
> magic pixie dust... or this simply will not work.

Yes, correct. We are getting somewhere...

> There must, of couse, be rationing... there is already rationing, and they
> still say not enough money is out there. So, who decides on the rationing?

It is a political decision how much money per money to funnel through
individual retirement accounts.

> And, of course, Arbitrage. No one watches for arbitrage, but it is always
> there. Someone will buy a 0% loan and then they will resell it at it's
> natural value, pocketing the difference.

You can't use the money for any purpose. There would be restrictions on
use similar to how the Chilean pension system works:

 http://en.wikipedia.org/wiki/Chile_pension_system

> We are welcoming price fixing (0% interest is price fixing), and so we
> should expect smuggling in its many forms... Arbitrage, imbezzlement,
> etcetera.

Granted, but we have these defects in the present system. Let's talk
about how to structure a system to minimize fraud, etc.

> If I have an investment that has a 20% return, I will get the funds,
> even if they don't come to me through traditional channels. If I am
> forced to repay all profits, there will be mysteriously few profits.
> If there is a committee that decides who gets the money, I will try to
> get on that committee... or buy someone friendly on it.

What do you mean? What is the larger context?

> This "reform" looks like it was written as a parachute for the banking
> industry... another way to squeeze us incase we wise up to the current
> scheme.

?

> NO central banks. We should take the advice of Thomas Paine, George
> Washington, Thomas Jefferson and the rest. A central bank with zero percent
> loans is still a central bank. If you elect fiat money in any form, you
> invite all the attendant ills. To start with, it is theft. To make things
> worse, it destroys the wealth of a society.
>
> But, WHY? Why not go to a commodity standard and let citizens choose their
> currency.

Because the quantity of a commodity is inelastic. The amount of gold (or
whatever) is fixed and cannot expand to discount the future value of new
investments.

> You can have a central bank as long as you allow competition, because
> the central bank cannot survive in that environment. I'd be happy to
> see them try and pass off a money that goes down in value every year
> when any natural currency has the tendency to increase in value.
> Central banks require compulsion... even one with "For the People"
> scrawled over the door.

Distrust is healthy, but I would not encourage you to dismiss new ideas
without weighing carefully.