Re: [WDDM] Economics and Change

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

If you give me a loan to eat lunch, and then I pay you back the loan, it is self-liquidating. This is true whether I traded the loan for food, or if I invested it in Tennis Shoes and bought food with the profit. Perhaps I bought lunch and seventy pounds of ferret meat to sell in Elbonia. The particulars of what I do with the capital have nothing to do with whether the loan is self-liquidating.

If I borrow money and pay it to a worker who makes me a widget for my nightstand... and then he buys lunch with the money, and I sell my old widget to pay you back... self-liquidating. There are endless ways the money could bounce around once you loan it, but if I pay it back, it is self-liquidating... which is a fancy way to say, people have to pay you back. Jargon.

On Mon, Jan 17, 2011 at 2:19 PM, <Joshua N Pritikin> wrote:

On Mon, Jan 17, 2011 at 02:00:43PM -0800, Joseph Hammer wrote:
> The current position of the Fed on inflation is exactly what you are
> expounding.

Wrong.

Today's US dollar is backed by debt.

Binary economics posits money backed by present hard assets with a
present value and future hard assets with a future value.

> Central banks currently say that their money is non-inflationary. Why?

Because that's what people want to hear, even if it isn't true.

> All loans are "self-liquidating". All of them, fiat or non-fiat, gold
> standard or salt standard. That is the nature of a loan.

All loans are not self-liquidating. If I give you a loan to eat lunch,
that is not self-liquidating because it is consumed. You ate lunch and
the money is gone. When I say "self-liquidating," I am talking about
loans to purchase or develop capital assets with a substantial future
value.

In the future, I suggest you write shorter emails because it is of no
use to work out the implications of flawed initial assumptions.

Again, I recommend:

> > > > http://papers.ssrn.com/sol3/papers.cfm?abstract_id=928752