Posted by:: "Quirk" Date: 10 Mar 2005 08:12:14 -0800
--------
Hello, I am currently working on the proposed Monetary system for my
Venture Communist investment model, and I have been looking at the
various theories regarding community issued currencies, particularly
those like LETS, which are issued by //mutual credit.//
If anybody has done any study of these, or has experience with them, I
have a few questions regarding these systems:
1- Investment.
As these systems generally discourage saving via no interest or
demurrage, and since investment starts with abstaining from
consumption, how does capital form in these models?
2- Credit limits.
How are credit limits set? How is bad debt dealt with?
3- Liquidity crisis.
Even with low savings, they still are not zero, and even with free
credit, the limits are not necessarily high enough to match savings, so
how is a liquidity crisis avoided?
Or is it assumed that negative balances will simply raise high enough
to match positive balances? Wouldn't this end up with a lot of bad debt
and abandoned negative accounts?
Or is it assumed that no-interest or demurrage will keep total savings
equal to or below total credit?
4- Capital Flight.
If no-interest and/or demurrage is indeed expected to be sufficient to
discourage a liquidity crisis, what would prevent Capital Flight via a
community currency being used to purchase commodities that are then in
turn sold for an external currency that pays interest or at least has
no demurrage.
5- Public Goods.
How is it proposed that Public Goods be furnished. Taxes? Controlled
Money Supply Inflation? Or is is left to external institutions (i.e.
the State)?
--------
I've added ARG to the crosspost, as there are posters there who have
expressed interest in this topic before. My own experience is narrow,
limited to Ithica Hours: about 15 years ago, I was travelling thru upstate
NY and made a special sidetrip to Ithica to investigate the IH in use.
Although I did find a few businesses with Ithica Hours stickers on their
doors, the vast majority didn't accept them, and of the half-dozen or so
that did, I found only one that seemed enthusiastic about the project. The
other owners told me that it was a pain, and in a couple the clerk at the
counter didn't seem to know what I was talking about when I asked how many
Ithica Hours they recieved on a weekly basis.
-JD
"Quirk" wrote in message
news:1110471134.437822.284150@o13g2000cwo.googlegroups.com...
>
> Hello, I am currently working on the proposed Monetary system for my
> Venture Communist investment model, and I have been looking at the
> various theories regarding community issued currencies, particularly
> those like LETS, which are issued by //mutual credit.//
>
> If anybody has done any study of these, or has experience with them, I
> have a few questions regarding these systems:
>
>
> 1- Investment.
>
> As these systems generally discourage saving via no interest or
> demurrage, and since investment starts with abstaining from
> consumption, how does capital form in these models?
>
>
> 2- Credit limits.
>
> How are credit limits set? How is bad debt dealt with?
>
>
> 3- Liquidity crisis.
>
> Even with low savings, they still are not zero, and even with free
> credit, the limits are not necessarily high enough to match savings, so
> how is a liquidity crisis avoided?
>
> Or is it assumed that negative balances will simply raise high enough
> to match positive balances? Wouldn't this end up with a lot of bad debt
> and abandoned negative accounts?
>
> Or is it assumed that no-interest or demurrage will keep total savings
> equal to or below total credit?
>
>
> 4- Capital Flight.
>
> If no-interest and/or demurrage is indeed expected to be sufficient to
> discourage a liquidity crisis, what would prevent Capital Flight via a
> community currency being used to purchase commodities that are then in
> turn sold for an external currency that pays interest or at least has
> no demurrage.
>
>
> 5- Public Goods.
>
> How is it proposed that Public Goods be furnished. Taxes? Controlled
> Money Supply Inflation? Or is is left to external institutions (i.e.
> the State)?
>
>
> Any comments would be greatly appreciated.
>
Posted by:: BananaRepublican Date: Thu, 10 Mar 2005 09:08:01 -0800
--------
In article <1110472070.347791@Virginia.BMTS.Com>,
"John D" wrote:
> I've added ARG to the crosspost, as there are posters there who have
> expressed interest in this topic before. My own experience is narrow,
> limited to Ithica Hours: about 15 years ago, I was travelling thru upstate
> NY and made a special sidetrip to Ithica to investigate the IH in use.
> Although I did find a few businesses with Ithica Hours stickers on their
> doors, the vast majority didn't accept them, and of the half-dozen or so
> that did, I found only one that seemed enthusiastic about the project. The
> other owners told me that it was a pain, and in a couple the clerk at the
> counter didn't seem to know what I was talking about when I asked how many
> Ithica Hours they recieved on a weekly basis.
>
> -JD
and of course one can always go to the IthacaHours web-site.
fo mo.
>
g adds;
"Pay no attention to the naked gay conservative male prostitute
sitting in the "family values" white house"
Posted by:: _@_._
Date: Thu, 10 Mar 2005 23:23:29 +0000
--------
John D wrote:
>I've added ARG to the crosspost, as there are posters there who have
>expressed interest in this topic before.
Please remove soc.religion.quaker.
That group does not welcome crossposts.
Posted by:: William F Hummel Date: Thu, 10 Mar 2005 09:46:30 -0800
--------
On 10 Mar 2005 08:12:14 -0800, "Quirk" wrote:
>
>Hello, I am currently working on the proposed Monetary system for my
>Venture Communist investment model, and I have been looking at the
>various theories regarding community issued currencies, particularly
>those like LETS, which are issued by //mutual credit.//
The viability of an inconvertible fiat currency, as distinct from a
commodity-backed currency, depends on control of the quantity of that
fiat currency by some authority. That control is normally effected
through taxation, which implies a government authority with the power
to impose penalties, such as the confiscation of property in lieu of
taxes. Note that modern governments recapture their own spending
through taxes, and the sale of interest-earning debt securities in the
case of deficit spending. The expansion of the money supply is mainly
the result of bank credit expansion, driven by the demand for credit
rather than by government initiative.
Aside from very primitive societies, all local fiat currencies without
such control are viable only to the extent that they can ride piggy
back on a national currency. Trade in a local currency implies trade
in the national currency because much of what the local currency zone
needs is not produced under the local currency regime. That means
members of the local currency group must have sources of income in the
national currency. It also means there must be a positive and
reasonably stable exchange value of the local currency in terms of the
national currency. Credit in local currency ultimately rests on the
net income of local zone members in the national currency. If that
income dries up, the local currency will wither and die.
>
>If anybody has done any study of these, or has experience with them, I
>have a few questions regarding these systems:
>
>
>1- Investment.
>
>As these systems generally discourage saving via no interest or
>demurrage, and since investment starts with abstaining from
>consumption, how does capital form in these models?
>
>
>2- Credit limits.
>
>How are credit limits set? How is bad debt dealt with?
>
>
>3- Liquidity crisis.
>
>Even with low savings, they still are not zero, and even with free
>credit, the limits are not necessarily high enough to match savings, so
>how is a liquidity crisis avoided?
>
>Or is it assumed that negative balances will simply raise high enough
>to match positive balances? Wouldn't this end up with a lot of bad debt
>and abandoned negative accounts?
>
>Or is it assumed that no-interest or demurrage will keep total savings
>equal to or below total credit?
>
>
>4- Capital Flight.
>
>If no-interest and/or demurrage is indeed expected to be sufficient to
>discourage a liquidity crisis, what would prevent Capital Flight via a
>community currency being used to purchase commodities that are then in
>turn sold for an external currency that pays interest or at least has
>no demurrage.
>
>
>5- Public Goods.
>
>How is it proposed that Public Goods be furnished. Taxes? Controlled
>Money Supply Inflation? Or is is left to external institutions (i.e.
>the State)?
>
>
>Any comments would be greatly appreciated.
Posted by:: invalid@example.com
Date: Thu, 10 Mar 2005 23:52:36 +0000
--------
Dominus Rex wrote:
>
>X-posting asshole.
Indeed he is. Quirk, you are on my shit list.
Posting to five unrelated groups just because that's where the
post you reply to happened to be posted is like shitting in your
pants because that's where your ass happened to be.
Posted by:: invalid@example.com
Date: Thu, 10 Mar 2005 23:28:29 +0000
--------
William F Hummel wrote:
>The viability of an inconvertible fiat currency, as distinct from a
[snip]
You make some very good points, but alas, they are off-topic
in soc.religion.quaker. Please trim the newsgroups line when
replying. Thanks!
Posted by:: "Quirk" Date: 11 Mar 2005 02:55:59 -0800
--------
invalid@example.com wrote:
> [snip]
> You make some very good points, but alas, they are off-topic
> in soc.religion.quaker. Please trim the newsgroups line when
> replying. Thanks!
However, when searching usenet looking for references to community
currencies such as LETS, it is in soc.religion.quaker that is where
many of them are. Do a search on LETSystem and see for yourself.
Given the Quaker's long history of community building, this is not
really surprising.
>The expansion of the money supply is mainly
> the result of bank credit expansion, driven by the demand for credit
> rather than by government initiative.
about halfway down the page, paragraph starting with:
"I think we all suffer from trying to analyze the highly complex
contemporary financial world through concepts that were developed back
when the banking system was basically the credit system, and bank
deposit expansion was the key component of money supply growth."
HTH
pb
Posted by:: William F Hummel Date: Fri, 11 Mar 2005 09:30:34 -0800
--------
On Fri, 11 Mar 2005 00:52:09 -0800, polar bear wrote:
>In article , William F
>Hummel wrote:
>
>
>
>>The expansion of the money supply is mainly
>> the result of bank credit expansion, driven by the demand for credit
>> rather than by government initiative.
>
>You should probably read this:
>http://www.safehaven.com/article-187.htm
>
>about halfway down the page, paragraph starting with:
>
>"I think we all suffer from trying to analyze the highly complex
>contemporary financial world through concepts that were developed back
>when the banking system was basically the credit system, and bank
>deposit expansion was the key component of money supply growth."
>
An interesting article, and I fully agree with the observation that
the credit system has expanded far beyond the banking system. However
money supply growth is still largely a function of bank lending. The
main exception is the money market mutual funds which now serve as a
money proxy. There is some confusion about the meaning of the term
"money supply." The usual meaning is that which we use in purchasing,
paying bills, or investing, in other words liquid financial assets
(LFAs). That should be contrasted with non-liquid financial assets
(NLFAs) such as credit issued by non-bank financial institutions.
The amount of credit far exceeds the money supply. In fact
bank-issued credit, which comprises the main part of the money supply,
now accounts for less than 20% of the total credit market debt. NLFAs
normally expand and contract without affecting the money supply. For
example, investor A lends $1M to finance company B, who then lends it
to business C. The result is that $1M in A's bank account has
transferred to C's bank account. The money supply remains the same,
but the total credit market debt has increased by $2M.
The author of the article presents an obsolete version of how the
money supply expands through bank lending, the so-called money
multiplier concept. He starts with an injection of reserves into the
banking system by central bank, whereupon the banking system issues
credit money equal to a multiple of those reserves, depending on the
required reserve ratio. This version has not applied for many
decades. Central banks now target the interest rate on money market
funds, and respond to the demand for reserves as required by the
banking system. In Canada and several other countries, where banks
hold little or no reserves since there is no reserve requirement, the
money multiplier concept obviously has no meaning.
Posted by:: invalid@example.com
Date: Fri, 11 Mar 2005 19:24:11 +0000
--------
William F Hummel wrote:
>money supply growth is still largely a function of bank lending.
All banks, or just the Federal Reserve?
Posted by:: William F Hummel Date: Fri, 11 Mar 2005 12:36:13 -0800
--------
On Fri, 11 Mar 2005 19:24:11 +0000, invalid@example.com wrote:
>William F Hummel wrote:
>
>>money supply growth is still largely a function of bank lending.
>
>All banks, or just the Federal Reserve?
I mean all depositories (banks and thrifts) and NOT the Federal
Reserve. The amount of lending by the Fed is trivial. Banks borrow
from the Fed only when they have a problem with clearing balances, and
not to back further lending. It costs banks 100 basis more than the
Fed funds rate to borrow from the Fed.
The Fed adds reserves via open market operations as needed to balance
supply and demand at it target Fed funds rate. It cannot inject or
withhold reserves on its own initiative without giving up control of
the Fed funds rate. Since the Fed has sole responsibility for
ensuring the liquidity of the payment system, it must respond to the
demand for reserves from depositories as the need arises. Note that
this is quite a different story from the textbook money multiplier
concept.
Posted by:: invalid@example.com
Date: Fri, 11 Mar 2005 23:17:54 +0000
--------
Content-Transfer-Encoding: 8Bit
William F Hummel wrote:
>
>On Fri, 11 Mar 2005 19:24:11 +0000, invalid@example.com wrote:
>
>>William F Hummel wrote:
>>
>>>money supply growth is still largely a function of bank lending.
>>
>>All banks, or just the Federal Reserve?
>
>I mean all depositories (banks and thrifts) and NOT the Federal
>Reserve. The amount of lending by the Fed is trivial. Banks borrow
>from the Fed only when they have a problem with clearing balances, and
>not to back further lending. It costs banks 100 basis more than the
>Fed funds rate to borrow from the Fed.
>
>The Fed adds reserves via open market operations as needed to balance
>supply and demand at it target Fed funds rate. It cannot inject or
>withhold reserves on its own initiative without giving up control of
>the Fed funds rate. Since the Fed has sole responsibility for
>ensuring the liquidity of the payment system, it must respond to the
>demand for reserves from depositories as the need arises. Note that
>this is quite a different story from the textbook money multiplier
>concept.
Excellent point. One must, however, keep in mind the other function
of the The Fed - printing money to compensate for deficit spending
The key question is this; The Federal Reserve System prints $100
bills at a cost of 6¢. So who pockets the $99.94 profit?
.
Since 1913 when the Fed was created, there has been inflation in 68
of the past 82 years. Compare this with the 80 years preceding the
Fed we had a rough balance between inflationary years ad deflationary
ones. Perhaps we don't need the Fed as much as we think we do...
wrote in message news:11349ph7jt9bsab@corp.supernews.com...
>
> Content-Transfer-Encoding: 8Bit
>
>
> William F Hummel wrote:
> >
> >On Fri, 11 Mar 2005 19:24:11 +0000, invalid@example.com wrote:
> >
> >>William F Hummel wrote:
> >>
> >>>money supply growth is still largely a function of bank lending.
> >>
> >>All banks, or just the Federal Reserve?
> >
> >I mean all depositories (banks and thrifts) and NOT the Federal
> >Reserve. The amount of lending by the Fed is trivial. Banks borrow
> >from the Fed only when they have a problem with clearing balances, and
> >not to back further lending. It costs banks 100 basis more than the
> >Fed funds rate to borrow from the Fed.
> >
> >The Fed adds reserves via open market operations as needed to balance
> >supply and demand at it target Fed funds rate. It cannot inject or
> >withhold reserves on its own initiative without giving up control of
> >the Fed funds rate. Since the Fed has sole responsibility for
> >ensuring the liquidity of the payment system, it must respond to the
> >demand for reserves from depositories as the need arises. Note that
> >this is quite a different story from the textbook money multiplier
> >concept.
>
> Excellent point. One must, however, keep in mind the other function
> of the The Fed - printing money to compensate for deficit spending
> The key question is this; The Federal Reserve System prints $100
> bills at a cost of 6¢. So who pockets the $99.94 profit?
> .
>
> Since 1913 when the Fed was created, there has been inflation in 68
> of the past 82 years. Compare this with the 80 years preceding the
> Fed we had a rough balance between inflationary years ad deflationary
> ones. Perhaps we don't need the Fed as much as we think we do...
We don't need the Fed the way it is set up. Money issue and regulation is the
proper business of central government. There is no good reason why the government
can't issue money directly to the people on a per capita basis as required to
maintain stable overall prices. The Fed scheme including public debt and much of
how banks operate is simply a way for parasites to get production without producing.
MM
Posted by:: William F Hummel Date: Fri, 11 Mar 2005 16:29:26 -0800
--------
On Fri, 11 Mar 2005 23:17:54 +0000, invalid@example.com wrote:
>
>William F Hummel wrote:
>>
>>On Fri, 11 Mar 2005 19:24:11 +0000, invalid@example.com wrote:
>>
>>>William F Hummel wrote:
>>>
>>>>money supply growth is still largely a function of bank lending.
>>>
>>>All banks, or just the Federal Reserve?
>>
>>I mean all depositories (banks and thrifts) and NOT the Federal
>>Reserve. The amount of lending by the Fed is trivial. Banks borrow
>>from the Fed only when they have a problem with clearing balances, and
>>not to back further lending. It costs banks 100 basis more than the
>>Fed funds rate to borrow from the Fed.
>>
>>The Fed adds reserves via open market operations as needed to balance
>>supply and demand at it target Fed funds rate. It cannot inject or
>>withhold reserves on its own initiative without giving up control of
>>the Fed funds rate. Since the Fed has sole responsibility for
>>ensuring the liquidity of the payment system, it must respond to the
>>demand for reserves from depositories as the need arises. Note that
>>this is quite a different story from the textbook money multiplier
>>concept.
>
>Excellent point. One must, however, keep in mind the other function
>of the The Fed - printing money to compensate for deficit spending
The Fed plays no role with respect to deficit spending other than to
act as the fiscal agent of the Treasury in selling bonds to recapture
the deficit spending. The Fed "prints money" only as required to
maintain control of the Fed funds rate.
>The key question is this; The Federal Reserve System prints $100
>bills at a cost of 6¢. So who pockets the $99.94 profit?
>.
The seigniorage benefit from issuing notes at 6 cents a copy flows
right back to the public. Neither the Fed nor the Treasury needs the
seigniorage, nor can they keep it in any case -- as explained in
http://wfhummel.net/seigniorage.html
>
>Since 1913 when the Fed was created, there has been inflation in 68
>of the past 82 years. Compare this with the 80 years preceding the
>Fed we had a rough balance between inflationary years ad deflationary
>ones. Perhaps we don't need the Fed as much as we think we do...
>
In a fiat money system, the central bank or its equivalent is
indispensable.
It's true that the average price level remained relatively flat before
the Fed was created. But you should look closely at the financial
crises and serious depressions that occurred in that era. Since World
War II, there has been no depression comparable to the Great
Depression or to the several depressions in the 19th century which are
now largely forgotten.
--------
In article <78d431d6ldchqpqudnk12uv6tsoosmj64m@4ax.com>, William F
Hummel wrote:
> On Fri, 11 Mar 2005 23:17:54 +0000, invalid@example.com wrote:
> >
> >William F Hummel wrote:
> >>
> >>On Fri, 11 Mar 2005 19:24:11 +0000, invalid@example.com wrote:
> >>
> >>>William F Hummel wrote:
> >>>
> >>>>money supply growth is still largely a function of bank lending.
> >>>
> >>>All banks, or just the Federal Reserve?
> >>
> >>I mean all depositories (banks and thrifts) and NOT the Federal
> >>Reserve. The amount of lending by the Fed is trivial. Banks borrow
> >>from the Fed only when they have a problem with clearing balances, and
> >>not to back further lending. It costs banks 100 basis more than the
> >>Fed funds rate to borrow from the Fed.
> >>
> >>The Fed adds reserves via open market operations as needed to balance
> >>supply and demand at it target Fed funds rate. It cannot inject or
> >>withhold reserves on its own initiative without giving up control of
> >>the Fed funds rate. Since the Fed has sole responsibility for
> >>ensuring the liquidity of the payment system, it must respond to the
> >>demand for reserves from depositories as the need arises. Note that
> >>this is quite a different story from the textbook money multiplier
> >>concept.
> >
> >Excellent point. One must, however, keep in mind the other function
> >of the The Fed - printing money to compensate for deficit spending
>
> The Fed plays no role with respect to deficit spending other than to
> act as the fiscal agent of the Treasury in selling bonds to recapture
> the deficit spending. The Fed "prints money" only as required to
> maintain control of the Fed funds rate.
>
> >The key question is this; The Federal Reserve System prints $100
> >bills at a cost of 6¢. So who pockets the $99.94 profit?
> >.
> The seigniorage benefit from issuing notes at 6 cents a copy flows
> right back to the public. Neither the Fed nor the Treasury needs the
> seigniorage, nor can they keep it in any case -- as explained in
> http://wfhummel.net/seigniorage.html
> >
> >Since 1913 when the Fed was created, there has been inflation in 68
> >of the past 82 years. Compare this with the 80 years preceding the
> >Fed we had a rough balance between inflationary years ad deflationary
> >ones. Perhaps we don't need the Fed as much as we think we do...
> >
> In a fiat money system, the central bank or its equivalent is
> indispensable.
>
> It's true that the average price level remained relatively flat before
> the Fed was created. But you should look closely at the financial
> crises and serious depressions that occurred in that era. Since World
> War II, there has been no depression comparable to the Great
> Depression or to the several depressions in the 19th century which are
> now largely forgotten.
This is the same argument the Fed uses. Basically it amounts to
distributing risk amongst the whole society. Sounds good in theory,
but in practice it's a lie. When I can leverage MY portfolio 50 to 1,
as their implicit agents the GSE's do, then I'll consider it a level
field. Until then, I'd prefer the occasional "crisis" to the general
collapse we now face, even if it meant a few Morgan Stanleys and
Citibanks went up in smoke.
Besides, a little adversity is good for the soul. It fosters prudence
and sound judgement.
pb
Posted by:: William F Hummel Date: Sat, 12 Mar 2005 09:13:04 -0800
--------
On Sat, 12 Mar 2005 02:03:52 -0800, polar bear wrote:
>In article <78d431d6ldchqpqudnk12uv6tsoosmj64m@4ax.com>, William F
>Hummel wrote:
>
>> On Fri, 11 Mar 2005 23:17:54 +0000, invalid@example.com wrote:
>> >
>> >William F Hummel wrote:
>> >>
>> >>On Fri, 11 Mar 2005 19:24:11 +0000, invalid@example.com wrote:
>> >>
>> >>>William F Hummel wrote:
>> >>>
>> >>>>money supply growth is still largely a function of bank lending.
>> >>>
>> >>>All banks, or just the Federal Reserve?
>> >>
>> >>I mean all depositories (banks and thrifts) and NOT the Federal
>> >>Reserve. The amount of lending by the Fed is trivial. Banks borrow
>> >>from the Fed only when they have a problem with clearing balances, and
>> >>not to back further lending. It costs banks 100 basis more than the
>> >>Fed funds rate to borrow from the Fed.
>> >>
>> >>The Fed adds reserves via open market operations as needed to balance
>> >>supply and demand at it target Fed funds rate. It cannot inject or
>> >>withhold reserves on its own initiative without giving up control of
>> >>the Fed funds rate. Since the Fed has sole responsibility for
>> >>ensuring the liquidity of the payment system, it must respond to the
>> >>demand for reserves from depositories as the need arises. Note that
>> >>this is quite a different story from the textbook money multiplier
>> >>concept.
>> >
>> >Excellent point. One must, however, keep in mind the other function
>> >of the The Fed - printing money to compensate for deficit spending
>>
>> The Fed plays no role with respect to deficit spending other than to
>> act as the fiscal agent of the Treasury in selling bonds to recapture
>> the deficit spending. The Fed "prints money" only as required to
>> maintain control of the Fed funds rate.
>>
>> >The key question is this; The Federal Reserve System prints $100
>> >bills at a cost of 6¢. So who pockets the $99.94 profit?
>> >.
>> The seigniorage benefit from issuing notes at 6 cents a copy flows
>> right back to the public. Neither the Fed nor the Treasury needs the
>> seigniorage, nor can they keep it in any case -- as explained in
>> http://wfhummel.net/seigniorage.html
>> >
>> >Since 1913 when the Fed was created, there has been inflation in 68
>> >of the past 82 years. Compare this with the 80 years preceding the
>> >Fed we had a rough balance between inflationary years ad deflationary
>> >ones. Perhaps we don't need the Fed as much as we think we do...
>> >
>> In a fiat money system, the central bank or its equivalent is
>> indispensable.
>>
>> It's true that the average price level remained relatively flat before
>> the Fed was created. But you should look closely at the financial
>> crises and serious depressions that occurred in that era. Since World
>> War II, there has been no depression comparable to the Great
>> Depression or to the several depressions in the 19th century which are
>> now largely forgotten.
>
>This is the same argument the Fed uses.
Cite the reference.
>Basically it amounts to
>distributing risk amongst the whole society. Sounds good in theory,
>but in practice it's a lie. When I can leverage MY portfolio 50 to 1,
>as their implicit agents the GSE's do, then I'll consider it a level
>field. Until then, I'd prefer the occasional "crisis" to the general
>collapse we now face, even if it meant a few Morgan Stanleys and
>Citibanks went up in smoke.
>
>Besides, a little adversity is good for the soul. It fosters prudence
>and sound judgement.
>
Spoken like someone who has never experienced such adversity as the
Great Depression. Ah the innocence of youth!
> On Sat, 12 Mar 2005 02:03:52 -0800, polar bear wrote:
>
> >In article <78d431d6ldchqpqudnk12uv6tsoosmj64m@4ax.com>, William F
> >Hummel wrote:
> >
> >> On Fri, 11 Mar 2005 23:17:54 +0000, invalid@example.com wrote:
> >> >
> >> >William F Hummel wrote:
> >> >>
> >> >>On Fri, 11 Mar 2005 19:24:11 +0000, invalid@example.com wrote:
> >> >>
> >> >>>William F Hummel wrote:
> >> >>>
> >> >>>>money supply growth is still largely a function of bank lending.
> >> >>>
> >> >>>All banks, or just the Federal Reserve?
> >> >>
> >> >>I mean all depositories (banks and thrifts) and NOT the Federal
> >> >>Reserve. The amount of lending by the Fed is trivial. Banks borrow
> >> >>from the Fed only when they have a problem with clearing balances, and
> >> >>not to back further lending. It costs banks 100 basis more than the
> >> >>Fed funds rate to borrow from the Fed.
> >> >>
> >> >>The Fed adds reserves via open market operations as needed to balance
> >> >>supply and demand at it target Fed funds rate. It cannot inject or
> >> >>withhold reserves on its own initiative without giving up control of
> >> >>the Fed funds rate. Since the Fed has sole responsibility for
> >> >>ensuring the liquidity of the payment system, it must respond to the
> >> >>demand for reserves from depositories as the need arises. Note that
> >> >>this is quite a different story from the textbook money multiplier
> >> >>concept.
> >> >
> >> >Excellent point. One must, however, keep in mind the other function
> >> >of the The Fed - printing money to compensate for deficit spending
> >>
> >> The Fed plays no role with respect to deficit spending other than to
> >> act as the fiscal agent of the Treasury in selling bonds to recapture
> >> the deficit spending. The Fed "prints money" only as required to
> >> maintain control of the Fed funds rate.
> >>
> >> >The key question is this; The Federal Reserve System prints $100
> >> >bills at a cost of 6¢. So who pockets the $99.94 profit?
> >> >.
> >> The seigniorage benefit from issuing notes at 6 cents a copy flows
> >> right back to the public. Neither the Fed nor the Treasury needs the
> >> seigniorage, nor can they keep it in any case -- as explained in
> >> http://wfhummel.net/seigniorage.html
> >> >
> >> >Since 1913 when the Fed was created, there has been inflation in 68
> >> >of the past 82 years. Compare this with the 80 years preceding the
> >> >Fed we had a rough balance between inflationary years ad deflationary
> >> >ones. Perhaps we don't need the Fed as much as we think we do...
> >> >
> >> In a fiat money system, the central bank or its equivalent is
> >> indispensable.
> >>
> >> It's true that the average price level remained relatively flat before
> >> the Fed was created. But you should look closely at the financial
> >> crises and serious depressions that occurred in that era. Since World
> >> War II, there has been no depression comparable to the Great
> >> Depression or to the several depressions in the 19th century which are
> >> now largely forgotten.
> >
> >This is the same argument the Fed uses.
>
> Cite the reference.
Pick any Greenspan speech. He's always talking about what a marvelous
job the Fed does at smoothing out the "bumps" in the economy.
Actually, my comment was a throwaway. To expect a central banker to
say anything else would be ridiculous. Central banking is like any
other bureaucracy. It always finds justification for it's existence.
>
> >Basically it amounts to
> >distributing risk amongst the whole society. Sounds good in theory,
> >but in practice it's a lie. When I can leverage MY portfolio 50 to 1,
> >as their implicit agents the GSE's do, then I'll consider it a level
> >field. Until then, I'd prefer the occasional "crisis" to the general
> >collapse we now face, even if it meant a few Morgan Stanleys and
> >Citibanks went up in smoke.
> >
> >Besides, a little adversity is good for the soul. It fosters prudence
> >and sound judgement.
> >
> Spoken like someone who has never experienced such adversity as the
> Great Depression. Ah the innocence of youth!
I wish. I wasn't around for the Great Depression, but I certainly
remember the inflation of the 70's and the Volcker Fed. I also know
what a bear market looks like, which most people on Wall St today have
never experienced, and unlike Alan Greenspan, I also know a bubble when
I see one.
pb
Posted by:: William F Hummel Date: Sun, 13 Mar 2005 07:16:20 -0800
--------
On Sun, 13 Mar 2005 05:52:52 -0800, polar bear wrote:
>In article , William F
>Hummel wrote:
>
>> On Sat, 12 Mar 2005 02:03:52 -0800, polar bear wrote:
>>
>> >> It's true that the average price level remained relatively flat before
>> >> the Fed was created. But you should look closely at the financial
>> >> crises and serious depressions that occurred in that era. Since World
>> >> War II, there has been no depression comparable to the Great
>> >> Depression or to the several depressions in the 19th century which are
>> >> now largely forgotten.
>> >
>> >This is the same argument the Fed uses.
>>
>> Cite the reference.
>
>Pick any Greenspan speech. He's always talking about what a marvelous
>job the Fed does at smoothing out the "bumps" in the economy.
>Actually, my comment was a throwaway. To expect a central banker to
>say anything else would be ridiculous. Central banking is like any
>other bureaucracy. It always finds justification for it's existence.
OK, show us one Greenspan speech where he said what you claim he said,
or it will be evident that you are just blowing smoke.
--------
In article <92m831hus7k7qivs6glm4ni0r67vuthpst@4ax.com>, William F
Hummel wrote:
> On Sun, 13 Mar 2005 05:52:52 -0800, polar bear wrote:
>
> >In article , William F
> >Hummel wrote:
> >
> >> On Sat, 12 Mar 2005 02:03:52 -0800, polar bear wrote:
> >>
> >> >> It's true that the average price level remained relatively flat before
> >> >> the Fed was created. But you should look closely at the financial
> >> >> crises and serious depressions that occurred in that era. Since World
> >> >> War II, there has been no depression comparable to the Great
> >> >> Depression or to the several depressions in the 19th century which are
> >> >> now largely forgotten.
> >> >
> >> >This is the same argument the Fed uses.
> >>
> >> Cite the reference.
> >
> >Pick any Greenspan speech. He's always talking about what a marvelous
> >job the Fed does at smoothing out the "bumps" in the economy.
> >Actually, my comment was a throwaway. To expect a central banker to
> >say anything else would be ridiculous. Central banking is like any
> >other bureaucracy. It always finds justification for it's existence.
>
> OK, show us one Greenspan speech where he said what you claim he said,
> or it will be evident that you are just blowing smoke.
I think you're confusing smoke with the frosty breath of a mighty polar
bear. Besides.....I didn't say it, YOU said it. I merely commented
that the fed used the same arguments. What else are they there for if
not to smooth out the bumps? That's their entire game.
Heh... Tried to get me to wade through a bunch of Greenspan speeches
looking for where he says "marvelous job I did smoothing out the bumps"
didn't you? Nice trick, but it won't work. If I've learned anything
from Alan Greenspan it's that you can just make it up as you go along.
pb
PS. I trimmed the Quakers out of this post. They must be getting
tired of this stuff. I know I sure am.
Posted by:: invalid@example.com
Date: Mon, 14 Mar 2005 05:43:11 +0000
--------
polar bear wrote:
>PS. I trimmed the Quakers out of this post. They must be getting
>tired of this stuff. I know I sure am.
You, sir, are a gentleman and a scholar.
Posted by:: invalid@example.com
Date: Mon, 14 Mar 2005 05:25:27 +0000
--------
polar bear wrote:
>unlike Alan Greenspan, I also know a bubble when I see one.
It does make you wonder how he got the job, doesn't it?
--------
In article <59l331lkr1rdcf3sn3o375dcb77k8em44a@4ax.com>, William F
Hummel wrote:
> On Fri, 11 Mar 2005 00:52:09 -0800, polar bear wrote:
>
> >In article , William F
> >Hummel wrote:
> >
> >
> >
> >>The expansion of the money supply is mainly
> >> the result of bank credit expansion, driven by the demand for credit
> >> rather than by government initiative.
> >
> >You should probably read this:
> >http://www.safehaven.com/article-187.htm
> >
> >about halfway down the page, paragraph starting with:
> >
> >"I think we all suffer from trying to analyze the highly complex
> >contemporary financial world through concepts that were developed back
> >when the banking system was basically the credit system, and bank
> >deposit expansion was the key component of money supply growth."
> >
> An interesting article, and I fully agree with the observation that
> the credit system has expanded far beyond the banking system. However
> money supply growth is still largely a function of bank lending. The
> main exception is the money market mutual funds which now serve as a
> money proxy. There is some confusion about the meaning of the term
> "money supply." The usual meaning is that which we use in purchasing,
> paying bills, or investing, in other words liquid financial assets
> (LFAs). That should be contrasted with non-liquid financial assets
> (NLFAs) such as credit issued by non-bank financial institutions.
>
> The amount of credit far exceeds the money supply. In fact
> bank-issued credit, which comprises the main part of the money supply,
> now accounts for less than 20% of the total credit market debt. NLFAs
> normally expand and contract without affecting the money supply. For
> example, investor A lends $1M to finance company B, who then lends it
> to business C. The result is that $1M in A's bank account has
> transferred to C's bank account. The money supply remains the same,
> but the total credit market debt has increased by $2M.
>
> The author of the article presents an obsolete version of how the
> money supply expands through bank lending, the so-called money
> multiplier concept. He starts with an injection of reserves into the
> banking system by central bank, whereupon the banking system issues
> credit money equal to a multiple of those reserves, depending on the
> required reserve ratio. This version has not applied for many
> decades. Central banks now target the interest rate on money market
> funds, and respond to the demand for reserves as required by the
> banking system. In Canada and several other countries, where banks
> hold little or no reserves since there is no reserve requirement, the
> money multiplier concept obviously has no meaning.
As far as I'm aware, open market operations are the tool of choice with
this Fed. Who they trade with makes little difference however, since
the bulk of money created ends up in inflating financial assets, which
are then leveraged to buy more inflating assets - same as happened in
Japan, and it will end just as badly. Doug's main point stands. The
Fed may target money supply, but that's not where the action is.
They know it, and they also know there's nothing they can do about it,
short of collapsing the system. All they can do is jawbone, and try to
push it out past Greenspan's retirement. After that, all bets are off.
pb
Posted by:: William F Hummel Date: Sat, 12 Mar 2005 07:37:20 -0800
--------
On Sat, 12 Mar 2005 01:28:59 -0800, polar bear wrote:
>In article <59l331lkr1rdcf3sn3o375dcb77k8em44a@4ax.com>, William F
>Hummel wrote:
>
>> On Fri, 11 Mar 2005 00:52:09 -0800, polar bear wrote:
>>
>> >In article , William F
>> >Hummel wrote:
>> >
>> >
>> >
>> >>The expansion of the money supply is mainly
>> >> the result of bank credit expansion, driven by the demand for credit
>> >> rather than by government initiative.
>> >
>> >You should probably read this:
>> >http://www.safehaven.com/article-187.htm
>> >
>> >about halfway down the page, paragraph starting with:
>> >
>> >"I think we all suffer from trying to analyze the highly complex
>> >contemporary financial world through concepts that were developed back
>> >when the banking system was basically the credit system, and bank
>> >deposit expansion was the key component of money supply growth."
>> >
>> An interesting article, and I fully agree with the observation that
>> the credit system has expanded far beyond the banking system. However
>> money supply growth is still largely a function of bank lending. The
>> main exception is the money market mutual funds which now serve as a
>> money proxy. There is some confusion about the meaning of the term
>> "money supply." The usual meaning is that which we use in purchasing,
>> paying bills, or investing, in other words liquid financial assets
>> (LFAs). That should be contrasted with non-liquid financial assets
>> (NLFAs) such as credit issued by non-bank financial institutions.
>>
>> The amount of credit far exceeds the money supply. In fact
>> bank-issued credit, which comprises the main part of the money supply,
>> now accounts for less than 20% of the total credit market debt. NLFAs
>> normally expand and contract without affecting the money supply. For
>> example, investor A lends $1M to finance company B, who then lends it
>> to business C. The result is that $1M in A's bank account has
>> transferred to C's bank account. The money supply remains the same,
>> but the total credit market debt has increased by $2M.
>>
>> The author of the article presents an obsolete version of how the
>> money supply expands through bank lending, the so-called money
>> multiplier concept. He starts with an injection of reserves into the
>> banking system by central bank, whereupon the banking system issues
>> credit money equal to a multiple of those reserves, depending on the
>> required reserve ratio. This version has not applied for many
>> decades. Central banks now target the interest rate on money market
>> funds, and respond to the demand for reserves as required by the
>> banking system. In Canada and several other countries, where banks
>> hold little or no reserves since there is no reserve requirement, the
>> money multiplier concept obviously has no meaning.
>
>As far as I'm aware, open market operations are the tool of choice with
>this Fed. Who they trade with makes little difference however, since
>the bulk of money created ends up in inflating financial assets, which
>are then leveraged to buy more inflating assets - same as happened in
>Japan, and it will end just as badly.
As explained in some detail, open market operations are used simply to
control the overnight interest rate on banking system reserves. They
are not used to create money except as required to balance supply and
demand for reserves at the Fed's target rate. Private bank-issued
credit is the main source of money used in the economy. The Fed can
only influence the amount of bank credit issued by its selection of
the target rate, which affects demand for credit.
>Doug's main point stands. The
>Fed may target money supply, but that's not where the action is.
Wrong. The Fed does not target the money supply. It targets the
price of money.
--------
In article <6i2631l0on229dotvd2v4fdvtjj553oovg@4ax.com>, William F
Hummel wrote:
> On Sat, 12 Mar 2005 01:28:59 -0800, polar bear wrote:
>
> >In article <59l331lkr1rdcf3sn3o375dcb77k8em44a@4ax.com>, William F
> >Hummel wrote:
> >
> >> On Fri, 11 Mar 2005 00:52:09 -0800, polar bear wrote:
> >>
> >> >In article , William F
> >> >Hummel wrote:
> >> >
> >> >
> >> >
> >> >>The expansion of the money supply is mainly
> >> >> the result of bank credit expansion, driven by the demand for credit
> >> >> rather than by government initiative.
> >> >
> >> >You should probably read this:
> >> >http://www.safehaven.com/article-187.htm
> >> >
> >> >about halfway down the page, paragraph starting with:
> >> >
> >> >"I think we all suffer from trying to analyze the highly complex
> >> >contemporary financial world through concepts that were developed back
> >> >when the banking system was basically the credit system, and bank
> >> >deposit expansion was the key component of money supply growth."
> >> >
> >> An interesting article, and I fully agree with the observation that
> >> the credit system has expanded far beyond the banking system. However
> >> money supply growth is still largely a function of bank lending. The
> >> main exception is the money market mutual funds which now serve as a
> >> money proxy. There is some confusion about the meaning of the term
> >> "money supply." The usual meaning is that which we use in purchasing,
> >> paying bills, or investing, in other words liquid financial assets
> >> (LFAs). That should be contrasted with non-liquid financial assets
> >> (NLFAs) such as credit issued by non-bank financial institutions.
> >>
> >> The amount of credit far exceeds the money supply. In fact
> >> bank-issued credit, which comprises the main part of the money supply,
> >> now accounts for less than 20% of the total credit market debt. NLFAs
> >> normally expand and contract without affecting the money supply. For
> >> example, investor A lends $1M to finance company B, who then lends it
> >> to business C. The result is that $1M in A's bank account has
> >> transferred to C's bank account. The money supply remains the same,
> >> but the total credit market debt has increased by $2M.
> >>
> >> The author of the article presents an obsolete version of how the
> >> money supply expands through bank lending, the so-called money
> >> multiplier concept. He starts with an injection of reserves into the
> >> banking system by central bank, whereupon the banking system issues
> >> credit money equal to a multiple of those reserves, depending on the
> >> required reserve ratio. This version has not applied for many
> >> decades. Central banks now target the interest rate on money market
> >> funds, and respond to the demand for reserves as required by the
> >> banking system. In Canada and several other countries, where banks
> >> hold little or no reserves since there is no reserve requirement, the
> >> money multiplier concept obviously has no meaning.
> >
> >As far as I'm aware, open market operations are the tool of choice with
> >this Fed. Who they trade with makes little difference however, since
> >the bulk of money created ends up in inflating financial assets, which
> >are then leveraged to buy more inflating assets - same as happened in
> >Japan, and it will end just as badly.
>
> As explained in some detail, open market operations are used simply to
> control the overnight interest rate on banking system reserves. They
> are not used to create money except as required to balance supply and
> demand for reserves at the Fed's target rate. Private bank-issued
> credit is the main source of money used in the economy. The Fed can
> only influence the amount of bank credit issued by its selection of
> the target rate, which affects demand for credit.
>
> >Doug's main point stands. The
> >Fed may target money supply, but that's not where the action is.
>
> Wrong. The Fed does not target the money supply. It targets the
> price of money.
Is this what you're refering to?
http://www.ny.frb.org/aboutthefed/fedpoint/fed49.html
In 2000, when the Humphrey-Hawkins legislation requiring the Fed to set
target ranges for money supply growth expired, the Fed announced that
it was no longer setting such targets, because money supply growth does
not provide a useful benchmark for the conduct of monetary policy.
However, the Fed said, too, that "Šthe FOMC believes that the behavior
of money and credit will continue to have value for gauging economic
and financial conditions." Moreover, M2, adjusted for changes in the
price level, remains a component of the Index of Leading Economic
Indicators, which some market analysts use to forecast economic
recessions and recoveries.
The fact that they don't set targets anymore is a side issue. All it
means is they've granted themselves more latitude to respond because
their basic metrics have broken down. Not a very reassuring thought.
"the FOMC believes that the behavior of money and credit will continue
to have value for gauging economic and financial conditions."
Well, Duh!
pb
Posted by:: William F Hummel Date: Sun, 13 Mar 2005 07:34:09 -0800
--------
On Sun, 13 Mar 2005 06:32:01 -0800, polar bear wrote:
>In article <6i2631l0on229dotvd2v4fdvtjj553oovg@4ax.com>, William F
>Hummel wrote:
>
>> As explained in some detail, open market operations are used simply to
>> control the overnight interest rate on banking system reserves. They
>> are not used to create money except as required to balance supply and
>> demand for reserves at the Fed's target rate. Private bank-issued
>> credit is the main source of money used in the economy. The Fed can
>> only influence the amount of bank credit issued by its selection of
>> the target rate, which affects demand for credit.
>>
>> >Doug's main point stands. The
>> >Fed may target money supply, but that's not where the action is.
>>
>> Wrong. The Fed does not target the money supply. It targets the
>> price of money.
>
>Is this what you're refering to?
>http://www.ny.frb.org/aboutthefed/fedpoint/fed49.html
>In 2000, when the Humphrey-Hawkins legislation requiring the Fed to set
>target ranges for money supply growth expired, the Fed announced that
>it was no longer setting such targets, because money supply growth does
>not provide a useful benchmark for the conduct of monetary policy.
>However, the Fed said, too, that "Šthe FOMC believes that the behavior
>of money and credit will continue to have value for gauging economic
>and financial conditions." Moreover, M2, adjusted for changes in the
>price level, remains a component of the Index of Leading Economic
>Indicators, which some market analysts use to forecast economic
>recessions and recoveries.
Looking at economic indicators is not the same thing as targeting the
money supply.
>
>The fact that they don't set targets anymore is a side issue. All it
>means is they've granted themselves more latitude to respond because
>their basic metrics have broken down. Not a very reassuring thought.
OK, so you mis-spoke.
>
>"the FOMC believes that the behavior of money and credit will continue
>to have value for gauging economic and financial conditions."
The Fed has essentially ignored its own monetary measures since the
early 1980s, even though it gave lip service to the notion that it was
monitoring them -- because it was obliged to do so by Congress. Of
all the economic indicators the Fed uses to set monetary policy, the
monetary measures rate very low. Why? Because they show essentially
no correlation with any of the Fed's primary targets -- inflation and
unemployment.
The fact is that there is no meaningful measure of the "money supply."
For example, every time you use a credit card, you increase the Fed's
M1 money aggregate until you pay off the credit card loan. Consumers
on their own initiative have increased the money supply through
revolving credit card loans by hundreds of billions of dollars.
That's a sizable fraction of M1, which neither banks nor the Fed
controls.
> On Sun, 13 Mar 2005 06:32:01 -0800, polar bear wrote:
>
> >In article <6i2631l0on229dotvd2v4fdvtjj553oovg@4ax.com>, William F
> >Hummel wrote:
> >
> >> As explained in some detail, open market operations are used simply to
> >> control the overnight interest rate on banking system reserves. They
> >> are not used to create money except as required to balance supply and
> >> demand for reserves at the Fed's target rate. Private bank-issued
> >> credit is the main source of money used in the economy. The Fed can
> >> only influence the amount of bank credit issued by its selection of
> >> the target rate, which affects demand for credit.
> >>
> >> >Doug's main point stands. The
> >> >Fed may target money supply, but that's not where the action is.
> >>
> >> Wrong. The Fed does not target the money supply. It targets the
> >> price of money.
> >
> >Is this what you're refering to?
> >http://www.ny.frb.org/aboutthefed/fedpoint/fed49.html
> >In 2000, when the Humphrey-Hawkins legislation requiring the Fed to set
> >target ranges for money supply growth expired, the Fed announced that
> >it was no longer setting such targets, because money supply growth does
> >not provide a useful benchmark for the conduct of monetary policy.
> >However, the Fed said, too, that "Šthe FOMC believes that the behavior
> >of money and credit will continue to have value for gauging economic
> >and financial conditions." Moreover, M2, adjusted for changes in the
> >price level, remains a component of the Index of Leading Economic
> >Indicators, which some market analysts use to forecast economic
> >recessions and recoveries.
>
> Looking at economic indicators is not the same thing as targeting the
> money supply.
> >
> >The fact that they don't set targets anymore is a side issue. All it
> >means is they've granted themselves more latitude to respond because
> >their basic metrics have broken down. Not a very reassuring thought.
>
> OK, so you mis-spoke.
> >
> >"the FOMC believes that the behavior of money and credit will continue
> >to have value for gauging economic and financial conditions."
>
>
> The Fed has essentially ignored its own monetary measures since the
> early 1980s, even though it gave lip service to the notion that it was
> monitoring them -- because it was obliged to do so by Congress. Of
> all the economic indicators the Fed uses to set monetary policy, the
> monetary measures rate very low. Why? Because they show essentially
> no correlation with any of the Fed's primary targets -- inflation and
> unemployment.
>
> The fact is that there is no meaningful measure of the "money supply."
> For example, every time you use a credit card, you increase the Fed's
> M1 money aggregate until you pay off the credit card loan. Consumers
> on their own initiative have increased the money supply through
> revolving credit card loans by hundreds of billions of dollars.
> That's a sizable fraction of M1, which neither banks nor the Fed
> controls.
Basically I agree. My particular concern is not with the mechanics
per se, but with the effect they have. The central issue for me is a
Federal Reserve which set rates so low it's led to a situation that can
only be described as a debt trap. Sure, everyone had a role to play,
but as the purported guardian of financial stability, the Fed has done
far less than it claims. That people talk about a "Greenspan Put" is
just one indication.
The game, under this Fed, has mutated from a market in productive
investment to a market of pure speculation in which the guy with the
most leverage wins, while at the same time receiving assurances that if
anything goes wrong, the Fed will be there to bail him out, just so
long as he's "too big to fail." With this Fed, the only thing that's
not too big to fail is the corner grocery store.
The helicopters are warming their engines as we speak.
pb
Posted by:: William F Hummel Date: Sun, 13 Mar 2005 16:59:34 -0800
--------
On Sun, 13 Mar 2005 15:01:56 -0800, polar bear wrote:
>William F Hummel wrote:
>>
>> The fact is that there is no meaningful measure of the "money supply."
>> For example, every time you use a credit card, you increase the Fed's
>> M1 money aggregate until you pay off the credit card loan. Consumers
>> on their own initiative have increased the money supply through
>> revolving credit card loans by hundreds of billions of dollars.
>> That's a sizable fraction of M1, which neither banks nor the Fed
>> controls.
>
>Basically I agree. My particular concern is not with the mechanics
>per se, but with the effect they have. The central issue for me is a
>Federal Reserve which set rates so low it's led to a situation that can
>only be described as a debt trap. Sure, everyone had a role to play,
>but as the purported guardian of financial stability, the Fed has done
>far less than it claims. That people talk about a "Greenspan Put" is
>just one indication.
>
>The game, under this Fed, has mutated from a market in productive
>investment to a market of pure speculation in which the guy with the
>most leverage wins, while at the same time receiving assurances that if
>anything goes wrong, the Fed will be there to bail him out, just so
>long as he's "too big to fail." With this Fed, the only thing that's
>not too big to fail is the corner grocery store.
I agree the Fed could be more aggressive in setting rules to limit
lending for speculative purposes. But that is much easier said than
done. All lending is speculative in some degree. Defining what is
"overly speculative lending" is difficult at best. Financial
institutions have been gaming the system from day one, and bank
regulators find they are always a step behind playing catch up.
The truth is, Congress bears the real responsibility for most of the
problems you are concerned about. The Fed is a creature of Congress
and must follow its rules. The banking committees set the rules,
which are largely driven by special interests (read lobbyists with
plenty of favors to dispense). The notion that the Fed is independent
of those pressures is naive.
The "too big to fail" problem exists in all major countries, and none
have yet found a way of avoiding it. No one in his right mind would
argue for letting a major financial institution to crash because the
economy would soon find itself in danger of a melt down. So the Fed,
as lender of last resort, must come to the rescue. Central banks have
been working hard to deal with the problem, and generally have done a
good job of it. The next generation of capital adequacy requirements
(Basel II) should do an even better job.
Posted by:: invalid@example.com
Date: Mon, 14 Mar 2005 05:39:20 +0000
--------
polar bear wrote:
>Basically I agree. My particular concern is not with the mechanics
>per se, but with the effect they have. The central issue for me is a
>Federal Reserve which set rates so low it's led to a situation that can
>only be described as a debt trap.
And when those rates go back up, disaster.
--
Trim your newsgroups line; it annoys Quirk.
Posted by:: "Quirk" Date: 14 Mar 2005 04:01:58 -0800
--------
invalid@example.com wrote:
> Trim your newsgroups line; it annoys Quirk.
No, trim your newsgroup line when you feel your reply is not relevant
to any group it contains, what I disapprove of is other people trying
to make this decision for you. Annoying me takes far more than a
newsreader.
--------
On Mon, 14 Mar 2005 05:39:20 +0000, invalid@example.com wrote:
>
>
>
>polar bear wrote:
>
>>Basically I agree. My particular concern is not with the mechanics
>>per se, but with the effect they have. The central issue for me is a
>>Federal Reserve which set rates so low it's led to a situation that can
>>only be described as a debt trap.
>
>And when those rates go back up, disaster.
Mmmm, it can be avoided. But the major money movers in NY and
Washington may not know how to avoid it.
It can be avoided as follows;
Step #1 quickly amend the FRA to deem FRNs as "currency" instead of
banknotes so all the new ones printed go to the gov't and don't match
debt.
Step #2 is do one last printing, the amount being 50% of what was
printed the previous year. After that, no more printing. We use what
we have.
Step #3 is use that last printing of money to resolve a serious
problem overseas.
Everyone is happy. :)
> On Sun, 13 Mar 2005 06:32:01 -0800, polar bear wrote:
>
snip
> The Fed has essentially ignored its own monetary measures since the
> early 1980s, even though it gave lip service to the notion that it was
> monitoring them -- because it was obliged to do so by Congress. Of
> all the economic indicators the Fed uses to set monetary policy, the
> monetary measures rate very low. Why? Because they show essentially
> no correlation with any of the Fed's primary targets -- inflation and
> unemployment.
>
It's rather disingenous to say the Fed targets inflation, when the main
indicator they use systematically understates it. The BLS, which I
fondly refer to as the Bureau of Lying Sycophants distorts CPI through
hedonic adjustment, substitution, rent-equivalence and leaving out
things it just doesn't like, such as oil and food.
My wife does a better job of calculating inflation than they do. Alan
Greenspan should talk to her. According to her figures it's running
about 7-8 percent, although she's a very careful shopper, so my guess
is most folks are seeing 10-12..
As for employment. More lies. Hamburger chefs are NOT manufacturers,
part-time jobs do not support families, and people who've given up
looking for work are still unemployed, whether or not you count them.
pb
Posted by:: "Doktor Dark" Date: 13 Mar 2005 15:49:40 -0800
--------
I agree with this post.
Posted by:: William F Hummel Date: Sun, 13 Mar 2005 17:16:56 -0800
--------
On Sun, 13 Mar 2005 15:44:01 -0800, polar bear wrote:
>In article , William F
>Hummel wrote:
>
>> On Sun, 13 Mar 2005 06:32:01 -0800, polar bear wrote:
>>
>snip
>> The Fed has essentially ignored its own monetary measures since the
>> early 1980s, even though it gave lip service to the notion that it was
>> monitoring them -- because it was obliged to do so by Congress. Of
>> all the economic indicators the Fed uses to set monetary policy, the
>> monetary measures rate very low. Why? Because they show essentially
>> no correlation with any of the Fed's primary targets -- inflation and
>> unemployment.
>>
>It's rather disingenous to say the Fed targets inflation, when the main
>indicator they use systematically understates it. The BLS, which I
>fondly refer to as the Bureau of Lying Sycophants distorts CPI through
>hedonic adjustment, substitution, rent-equivalence and leaving out
>things it just doesn't like, such as oil and food.
>
>My wife does a better job of calculating inflation than they do. Alan
>Greenspan should talk to her. According to her figures it's running
>about 7-8 percent, although she's a very careful shopper, so my guess
>is most folks are seeing 10-12..
Some prices are rising, some or dropping. Food and energy have been
rising without doubt. Relative to what functions they perform,
computer and other consumer electronics prices have been dropping
steadily for years. How this all averages out depends on what model
we use for the cost of living general price level. One thing is clear
however, those with jobs are living better today than they were 25
years ago, in spite of the price inflation over that period.
>
>As for employment. More lies. Hamburger chefs are NOT manufacturers,
>part-time jobs do not support families, and people who've given up
>looking for work are still unemployed, whether or not you count them.
>
It's easy to complain, but I don't see any constructive proposals.
The Fed has only one basic tool at its disposal. Should the Fed raise
rates, lower rates, or leave them at their present levels?
Raising rates may cause prices to rise because of the increased
borrowing costs to firms. It may also cause more businesses to fail,
throwing more people out of work. Lowering rates may cause more asset
price inflation, especially in the housing market. It's not an easy
> On Sun, 13 Mar 2005 15:44:01 -0800, polar bear wrote:
>
> >In article , William F
> >Hummel wrote:
> >
> >> On Sun, 13 Mar 2005 06:32:01 -0800, polar bear wrote:
> >>
> >snip
> >> The Fed has essentially ignored its own monetary measures since the
> >> early 1980s, even though it gave lip service to the notion that it was
> >> monitoring them -- because it was obliged to do so by Congress. Of
> >> all the economic indicators the Fed uses to set monetary policy, the
> >> monetary measures rate very low. Why? Because they show essentially
> >> no correlation with any of the Fed's primary targets -- inflation and
> >> unemployment.
> >>
> >It's rather disingenous to say the Fed targets inflation, when the main
> >indicator they use systematically understates it. The BLS, which I
> >fondly refer to as the Bureau of Lying Sycophants distorts CPI through
> >hedonic adjustment, substitution, rent-equivalence and leaving out
> >things it just doesn't like, such as oil and food.
> >
> >My wife does a better job of calculating inflation than they do. Alan
> >Greenspan should talk to her. According to her figures it's running
> >about 7-8 percent, although she's a very careful shopper, so my guess
> >is most folks are seeing 10-12..
>
> Some prices are rising, some or dropping. Food and energy have been
> rising without doubt. Relative to what functions they perform,
> computer and other consumer electronics prices have been dropping
> steadily for years. How this all averages out depends on what model
> we use for the cost of living general price level. One thing is clear
> however, those with jobs are living better today than they were 25
> years ago, in spite of the price inflation over that period.
Dude, you're starting to sound like Larry Kudlow! 25 years ago I was
paying half what I do now for the same stuff. No way the work I did
then (trucking) pays double today. Add to that the loss of benefits
and increased workload and you're waaaaay behind if you stuck with it,
which is why I got the hell out. I'm only further ahead today because
I figured things out and applied myself. Go further back, and things
were better still. I come from a two parent family where my mom stayed
home and raised her kids. Try doing that today on a trucker's wage.
The things we need have been constantly rising: Housing, clothes,
food, fuel, insurance, medical care, tuition, golf clubs. The things
we don't need have been falling: TV's, Hello Kitty toasters, IPODS,
Beanie Babies, Internet stocks. As for computers, the bulk of them are
used for mundane tasks. My old Starmax, at $1000 did just as good a
job word processing as my current G4 at twice the price. Hedonic
adjustments make absolutely no sense if the increased performance is
never used. Likewise, my present car can go 200 km/hr without flying
apart. Does that make it twice as good as my old Duster, which barely
made 120? Granted the ride's more comfortable, but nothing has
functionally changed. It's still just a car.
> >
> >As for employment. More lies. Hamburger chefs are NOT manufacturers,
> >part-time jobs do not support families, and people who've given up
> >looking for work are still unemployed, whether or not you count them.
> >
> It's easy to complain, but I don't see any constructive proposals.
> The Fed has only one basic tool at its disposal. Should the Fed raise
> rates, lower rates, or leave them at their present levels?
I don't suppose it really matters at this point. Actually, this Fed
has been rather good to me. I've been a trader for 15 years and I
never had a better run than in 98/99. I hit all my stops and was out
by april 2000. Still, i'd rather have made it the hard way, a-la Ben
Graham. At least I'd feel like I contributed something, rather than
just taking it out. But hey, when fixed income runs well below the
inflation rate, what's a bear to do? My next move will be shorting
the stuff that's gone up a whole lot: builders, semis, sub-prime
lenders, REIT's. I hate to say it, but it's like shooting fish in a
barrel. That's NOT how it's supposed to work. I should be working
hard at this. They make it way too easy.
I don't really hate the Fed. After all, they're just a symptom.of the
disease, and I have every confidence a cure will be forthcoming.
Nature has an uncanny way of correcting it's mistakes.
>
> Raising rates may cause prices to rise because of the increased
> borrowing costs to firms. It may also cause more businesses to fail,
> throwing more people out of work. Lowering rates may cause more asset
> price inflation, especially in the housing market. It's not an easy
--------
In article , William F
Hummel wrote:
snip
> Raising rates may cause prices to rise because of the increased
> borrowing costs to firms. It may also cause more businesses to fail,
> throwing more people out of work. Lowering rates may cause more asset
> price inflation, especially in the housing market. It's not an easy
Your post got cut off, but I think I see where you're going. These
things are all true, but they're just symptoms. Under gold, excess was
nipped in the bud. It hurt for a while, but folks got over it. In a
fiat system the CB has to get tough BEFORE things start running away.
That's hard to do when the same people you're dumping on are your Alma
Mater. At some point they stop calling you for lunch. So, if the
banks don't have discipline, and the Fed doesn't either, then the
ultimate arbiter is the currency market, which is why the dollar is
getting trashed.
Believing you can run a fiat system with all the attendant pressures
and special interests vying for your attention is the ultimate hubris.
Believing you can "control" the markets is yet more sublime folly.
I look out over the landscape and I see manipulation everywhere. Fake
'earnings", gold loans, the ten-year, S&P futures, carry trades.
Everyone's playing the spread, but no one is actually making anything,
save the Chinese.
At some point confidence WILL be lost. Even now, those other guys are
working out what a post US consumer global economy will look like.
Deals are being struck in back rooms that will cut the USA out of the
equation. That's how markets work. They are bigger than any nation,
central bank, or axis of bullshit. When the dead branch starts
sucking life from the living tree, it will get lopped off.
Every empire that ever was has foundered. This time will be no
different. We are going to see a depression in our time that will
make the 30's look like a trip to Disneyland. And all because a bunch
of economists thought they could make a science out of managing human
greed and stupidity. But hey - why worry? It's not like we can
actually DO anything about it. That point was passed a long time ago.
pb
Posted by:: William F Hummel Date: Mon, 14 Mar 2005 10:02:47 -0800
--------
On Mon, 14 Mar 2005 05:50:41 -0800, polar bear wrote:
>In article , William F
>Hummel wrote:
>snip
>> Raising rates may cause prices to rise because of the increased
>> borrowing costs to firms. It may also cause more businesses to fail,
>> throwing more people out of work. Lowering rates may cause more asset
>> price inflation, especially in the housing market. It's not an easy
>
>Your post got cut off, but I think I see where you're going. These
>things are all true, but they're just symptoms. Under gold, excess was
>nipped in the bud. It hurt for a while, but folks got over it. In a
>fiat system the CB has to get tough BEFORE things start running away.
>That's hard to do when the same people you're dumping on are your Alma
>Mater. At some point they stop calling you for lunch. So, if the
>banks don't have discipline, and the Fed doesn't either, then the
>ultimate arbiter is the currency market, which is why the dollar is
>getting trashed.
>
>Believing you can run a fiat system with all the attendant pressures
>and special interests vying for your attention is the ultimate hubris.
>Believing you can "control" the markets is yet more sublime folly.
>I look out over the landscape and I see manipulation everywhere. Fake
>'earnings", gold loans, the ten-year, S&P futures, carry trades.
>Everyone's playing the spread, but no one is actually making anything,
>save the Chinese.
Manipulation and such has existed since the dawn of money. Some of
the finest practitioners were operating in the late 19th and early
20th century at the height of the gold-backed era. Manipulation and
fraud has little to do with the money system per se, fiat money or
commodity money. Anyone who thinks gold-backed money was a joy ride
compared to fiat money should read a little history. A good starting
point is "The Power of Gold, The History of an Obsession" by Peter
Bernstein.
>
>At some point confidence WILL be lost. Even now, those other guys are
>working out what a post US consumer global economy will look like.
>Deals are being struck in back rooms that will cut the USA out of the
>equation. That's how markets work. They are bigger than any nation,
>central bank, or axis of bullshit. When the dead branch starts
>sucking life from the living tree, it will get lopped off.
>
>Every empire that ever was has foundered. This time will be no
>different.
Indeed, nothing is forever. But the US will not founder simply
because it operates on fiat money rather than gold.
>We are going to see a depression in our time that will
>make the 30's look like a trip to Disneyland.
Great depressions are a phenomenon of the "hard money" era when
government were small and there were no safety nets in place to help
maintain aggregate demand. The only thing that would cause another
such depression would be a man-made or natural environmental disaster.
Ultimately we will perish from a natural disaster, in which case the
GDP growth rate won't even be a footnote. However we may all be on
the path of a man-made environmental disaster, but that has nothing to
do with the fiat money system.
> On Mon, 14 Mar 2005 05:50:41 -0800, polar bear wrote:
>
> >In article , William F
> >Hummel wrote:
> >snip
> >> Raising rates may cause prices to rise because of the increased
> >> borrowing costs to firms. It may also cause more businesses to fail,
> >> throwing more people out of work. Lowering rates may cause more asset
> >> price inflation, especially in the housing market. It's not an easy
> >
> >Your post got cut off, but I think I see where you're going. These
> >things are all true, but they're just symptoms. Under gold, excess was
> >nipped in the bud. It hurt for a while, but folks got over it. In a
> >fiat system the CB has to get tough BEFORE things start running away.
> >That's hard to do when the same people you're dumping on are your Alma
> >Mater. At some point they stop calling you for lunch. So, if the
> >banks don't have discipline, and the Fed doesn't either, then the
> >ultimate arbiter is the currency market, which is why the dollar is
> >getting trashed.
> >
> >Believing you can run a fiat system with all the attendant pressures
> >and special interests vying for your attention is the ultimate hubris.
> >Believing you can "control" the markets is yet more sublime folly.
> >I look out over the landscape and I see manipulation everywhere. Fake
> >'earnings", gold loans, the ten-year, S&P futures, carry trades.
> >Everyone's playing the spread, but no one is actually making anything,
> >save the Chinese.
>
> Manipulation and such has existed since the dawn of money. Some of
> the finest practitioners were operating in the late 19th and early
> 20th century at the height of the gold-backed era. Manipulation and
> fraud has little to do with the money system per se, fiat money or
> commodity money. Anyone who thinks gold-backed money was a joy ride
> compared to fiat money should read a little history. A good starting
> point is "The Power of Gold, The History of an Obsession" by Peter
> Bernstein.
> >
> >At some point confidence WILL be lost. Even now, those other guys are
> >working out what a post US consumer global economy will look like.
> >Deals are being struck in back rooms that will cut the USA out of the
> >equation. That's how markets work. They are bigger than any nation,
> >central bank, or axis of bullshit. When the dead branch starts
> >sucking life from the living tree, it will get lopped off.
> >
> >Every empire that ever was has foundered. This time will be no
> >different.
>
> Indeed, nothing is forever. But the US will not founder simply
> because it operates on fiat money rather than gold.
>
> >We are going to see a depression in our time that will
> >make the 30's look like a trip to Disneyland.
>
> Great depressions are a phenomenon of the "hard money" era when
> government were small and there were no safety nets in place to help
> maintain aggregate demand. The only thing that would cause another
> such depression would be a man-made or natural environmental disaster.
> Ultimately we will perish from a natural disaster, in which case the
> GDP growth rate won't even be a footnote. However we may all be on
> the path of a man-made environmental disaster, but that has nothing to
> do with the fiat money system.
No, but it makes a good rant.
pb
Posted by:: invalid@example.com
Date: Mon, 14 Mar 2005 04:39:28 +0000
--------
William F Hummel wrote:
>The fact is that there is no meaningful measure of the "money supply."
>For example, every time you use a credit card, you increase the Fed's
>M1 money aggregate until you pay off the credit card loan. Consumers
>on their own initiative have increased the money supply through
>revolving credit card loans by hundreds of billions of dollars.
>That's a sizable fraction of M1, which neither banks nor the Fed
>controls.
Good point. Not only can't they control M1, they have a hard time
measuring M1.
Perhaps we should go back to the way we did things before the Fed
existed.
--
Please don't crosspost economics discussions into religion newsgroups.
Posted by:: invalid@example.com
Date: Mon, 14 Mar 2005 04:34:46 +0000
--------
Content-Transfer-Encoding: 8Bit
polar bear wrote:
>> Wrong. The Fed does not target the money supply. It targets the
>> price of money.
>
>Is this what you're refering to?
>http://www.ny.frb.org/aboutthefed/fedpoint/fed49.html
>In 2000, when the Humphrey-Hawkins legislation requiring the Fed to set
>target ranges for money supply growth expired, the Fed announced that
>it was no longer setting such targets, because money supply growth does
>not provide a useful benchmark for the conduct of monetary policy.
>However, the Fed said, too, that "Šthe FOMC believes that the behavior
>of money and credit will continue to have value for gauging economic
>and financial conditions." Moreover, M2, adjusted for changes in the
>price level, remains a component of the Index of Leading Economic
>Indicators, which some market analysts use to forecast economic
>recessions and recoveries.
>
>The fact that they don't set targets anymore is a side issue. All it
>means is they've granted themselves more latitude to respond because
>their basic metrics have broken down. Not a very reassuring thought.
You make a very good point. "Does not provide a useful benchmark"
and "continues to have value for gauging" are incompatible.
In addition, what they *say* they are doing may not be what they
actually *are* doing....
--
Please don't crosspost economics discussions to religion newsgroups.
Posted by:: invalid@example.com
Date: Fri, 11 Mar 2005 18:56:41 +0000
--------
polar bear wrote:
[snip]
Please stop crossposting off-topic economics comments to religion newsgroups.
Posted by:: "Quirk" Date: 11 Mar 2005 11:00:24 -0800
--------
inva...@example.com wrote:
> polar bear wrote:
> Please stop crossposting off-topic economics comments to religion
newsgroups.
Please show us your badge, Sheriff.
Quakers have a history of community currency, and it is a frequently
discussed topic in the group.
Posted by:: invalid@example.com
Date: Fri, 11 Mar 2005 22:57:18 +0000
--------
Quirk wrote:
>
>inva...@example.com wrote:
>
>> polar bear wrote:
>
>> Please stop crossposting off-topic economics comments to religion
>newsgroups.
>
>Please show us your badge, Sheriff.
You seem to be confusing "please don't do X" with "You are ordered
to not do X." Making a polite request is generally considered to
be acceptable behavior in polite society.
>Quakers have a history of community currency, and it is a frequently
>discussed topic in the group.
But only when not crossposted. Many years of bad experience with
crossposting has resulted in a newsgroup where crossposts simply
don't result in discussions that the SRQ users participate in.
Too many bad experiences. If you go to SRQ and post only there
you will get replies. If you crosspost there you will not.
Are you aware that several religion groups have been destroyed
- all active users gone - and are now filled with nothing but
off-topic crossposts? Go read a dozen posts picked at random
in alt.christnet.bible to see one such smoking ruin.
You are a guest in SRQ, and polite guests take the trouble to find
out what the rules of the house are. They ceratinaly don't argue
when someone who lives in the hous makes a polite request that
they follow one of the house rules.
Posted by:: "Quirk" Date: 13 Mar 2005 06:38:32 -0800
--------
invalid@example.com wrote:
> >Please show us your badge, Sheriff.
> You seem to be confusing "please don't do X" with "You are ordered
> to not do X." Making a polite request is generally considered to
> be acceptable behavior in polite society.
OK. Then I politely ask you to stop poluttiong this thread with your
endless requests that people not use an important design feature of
usenet, namemly crossposting.
> >Quakers have a history of community currency, and it is a frequently
> >discussed topic in the group.
> But only when not crossposted.
Then those that do not like the functionality of usenet should take
their discusions to a medium they prefer, such as mailing lists.
Crossposting is a part of the FUNCTIONALITY of usenet, and SHOULD BE
USED.
It the same as the aristocrats that enclosed the commons for sheep
farming. Leave our commons alone, if you want private space, get your
own.
Posted by:: invalid@example.com
Date: Mon, 14 Mar 2005 05:03:21 +0000
--------
Quirk wrote:
>Crossposting is a part of the FUNCTIONALITY of usenet, and SHOULD BE
>USED.
The fact that I can cancel your posts without your consent is also
part of the "FUNCTIONALITY of usenet." That doesn't mean that it
is functionality that should be used.
Posted by:: "Paul Casino" Date: 11 Mar 2005 01:51:15 -0800
--------
>Hello, I am currently working on the proposed Monetary system for my
>Venture Communist investment model
What the hell are you doing spending your time on something like that?
Posted by:: "Quirk" Date: 11 Mar 2005 05:07:25 -0800
--------
Paul Casino wrote:
> >Hello, I am currently working on the proposed Monetary system for my
> >Venture Communist investment model
> What the hell are you doing spending your time on something like
that?
Well, I'm not mechanicly inclined enough for the perpetual motion
machine, my math is insufficient to take a crack at the unified field
theory, the GNU General Public License already exists, I'm a little too
accident prone for the Alchemic pursuits of the Philospher's Stone or
the Elixer of Life, I'm not outdoorsy enough to track down Sasquatch or
prove that ancient transpacific trade existed. What else is there to do
but DESTROY CAPITALISM?
Regards.
Posted by:: invalid@example.com
Date: Fri, 11 Mar 2005 19:20:48 +0000
--------
Quirk wrote:
>Well, I'm not mechanicly inclined enough for the perpetual motion
>machine, my math is insufficient to take a crack at the unified field
>theory, the GNU General Public License already exists, I'm a little too
>accident prone for the Alchemic pursuits of the Philospher's Stone or
>the Elixer of Life, I'm not outdoorsy enough to track down Sasquatch or
>prove that ancient transpacific trade existed. What else is there to do
>but DESTROY CAPITALISM?
--------
Quirk wrote:
...What
|| else is there to do but DESTROY CAPITALISM?
Good fortune on your endeavour.
--
fare thee well in christ,
eric
Posted by:: invalid@example.com
Date: Thu, 10 Mar 2005 23:13:10 +0000
--------
Quirk wrote:
>...community issued currencies, particularly those like LETS...
>If anybody has done any study of these...
| 2003 update on the Westport LETS, by Richard Douthwaite
|
| In 2003, ten years after it began, the Westport LETS system had
| withered away to just two members, the one trading with the other.
| Almost every other Irish system had either disappeared entirely or
| was in a similar state. This was due to two things. One was a boom
| in the Irish economy that made it much easier for people to find
| work and meet their needs without having to resort to 'funny money'.
|
| Two serious design faults common to all LETS systems are the other
| reason. One fault is easy to explain. It is that a tremendous amount
| of work is required to run a LETS system because every transaction,
| no matter how small, has to be recorded twice, once as a debit on
| the buyer's account, once as a credit on the vendor's. A simpler
| payment method is needed and it is a pity that the tokens introduced
| by Westport LETS never went into general use. It is significant that
| the Argentinean LETS systems quickly abandoned the use of cheques
| and moved over to paper notes called creditos when the collapse of
| that country's mainstream economy meant that thousands of people
| wanted to become LETS members and trade.
|
| The other fault is more serious and less easy to correct. It is that
| LETS currency is created in the same way as conventional currency -
| by someone going into debt - but that, unlike conventional currency,
| LETS systems have no effective way of ensuring that debts are ever
| repaid. Even the term 'debt' is avoided., with the much more
| positive sounding phrase 'on commitment' being used instead. Most
| people who borrow conventional money repay their debts as quickly as
| possible to minimise the interest charges but as LETS systems don't
| charge interest, their members are not under this pressure. Instead,
| the standard LETS design is based on the assumption that, if the
| state of everyone's account is made public, moral pressure from
| other members of the system will be enough to force indebted
| participants to honour the trust placed in them and get back into
| credit in a reasonable time. Unfortunately, experience has shown
| that this does not work well even in small systems and becomes
| totally inadequate when membership numbers grow and the average
| member is known personally by a declining proportion of the other
| participants.
|
| When a new LETS starts, the system is small and the group pressure
| to get out of debt fairly quickly works reasonably well, especially
| as most members know each other and are enthusiastic about the
| trading network they are starting. A honeymoon period of 18 months
| or two years results. However, as time goes by, two types of member
| become apparent. One type regards the LETS currency in the same way
| as conventional money. Their gung-ho attitude is: "Great. Let's earn
| and spend as much of this new money as we can" And they do. They
| pour enormous energy into the system, working for, or selling to,
| everyone they can and spending their earnings with panache. The
| second group, however, is much less energetic. Sure, they like
| having keen people coming to do things for them, but actually
| earning the LETS units to pay the system back, well, that's not so
| good. Working off their growing debts would mean inconveniencing
| themselves and, as there is insufficient pressure from anyone in the
| system to force them to do so, they increasingly don't. And so the
| enthusiastic members inevitably find that they have large credit
| balances in their accounts that they would like to spend if only
| they could find anything desirable to use them on while the more
| laid-back characters who should be meeting the enthusiasts' demands
| to discharge their heavy debts are not sufficiently motivated to do
| so. Accordingly, with more LETS units than they know what to do
| with, the one-time enthusiasts cease to trade. This deprives the
| system of most of the energy that was driving it along.
| Consequently, as they are set up at present without any adequate
| means of ensuring that debts are honoured, LETS operate as
| near-perfect mechanisms for eliminating their most active and
| valuable members and devaluing their own currencies.
Posted by:: invalid@example.com
Date: Thu, 10 Mar 2005 23:18:52 +0000
--------
Quirk wrote:
>As these systems generally discourage saving via no interest or
>demurrage, and since investment starts with abstaining from
>consumption, how does capital form in these models?
By wishful thinking.
>2- Credit limits.
>
>How are credit limits set? How is bad debt dealt with?
By trusting in theb goodness of strangers.
>3- Liquidity crisis.
>
>Even with low savings, they still are not zero, and even with free
>credit, the limits are not necessarily high enough to match savings, so
>how is a liquidity crisis avoided?
There will never be a liquidity crises, because it is so very, very
easy for a few buyers and sellers to get together and manufacture
fake credits, thus causing runaway inflation.
>Or is it assumed that negative balances will simply raise high enough
>to match positive balances? Wouldn't this end up with a lot of bad debt
>and abandoned negative accounts?
There will *always* be a lot of bad debt and abandoned negative accounts.
This is a system that loans money to strangers with no way to compel
them to pay it back.
>Or is it assumed (snip)
LOTS of things are assumed.
Posted by:: Wm James Date: 11 Mar 2005 10:19:03 -0600
--------
On Thu, 10 Mar 2005 23:18:52 +0000, invalid@example.com wrote:
>
>
>Quirk wrote:
>
>>As these systems generally discourage saving via no interest or
>>demurrage, and since investment starts with abstaining from
>>consumption, how does capital form in these models?
>
>By wishful thinking.
>
>>2- Credit limits.
>>
>>How are credit limits set? How is bad debt dealt with?
>
>By trusting in theb goodness of strangers.
>
>>3- Liquidity crisis.
>>
>>Even with low savings, they still are not zero, and even with free
>>credit, the limits are not necessarily high enough to match savings, so
>>how is a liquidity crisis avoided?
>
>There will never be a liquidity crises, because it is so very, very
>easy for a few buyers and sellers to get together and manufacture
>fake credits, thus causing runaway inflation.
>
>>Or is it assumed that negative balances will simply raise high enough
>>to match positive balances? Wouldn't this end up with a lot of bad debt
>>and abandoned negative accounts?
>
>There will *always* be a lot of bad debt and abandoned negative accounts.
>This is a system that loans money to strangers with no way to compel
>them to pay it back.
>
>>Or is it assumed (snip)
>
>LOTS of things are assumed.
Well put.
A curency is only as valuabe as those with it can trade it for what
they want. That's only of value to the party trading for it if they
find it more valuable than what they are trading AND they trust the
currency to keep it's value for trading later. Government IOU backed
currencies have no value of their own, and are worthless unless the
government backing them is trusted. Any society which doesn't respect
property rights, and system which doesn't recognize ownership of
property, cannot be trusted. Even communist dictatorships like cuba
find their own slaves using US dollars for trade instead of their own
for that reason.
Want a "community currency"? Try gold and silver coins. Their value
is not dependent on any IOUs or anyone's credit.
William R. James
Posted by:: invalid@example.com
Date: Fri, 11 Mar 2005 22:33:35 +0000
--------
Wm James wrote:
>Want a "community currency"? Try gold and silver coins. Their value
>is not dependent on any IOUs or anyone's credit.
*Excellent* advice!
I see nothing about any Community Currency that makes it better than
gold and silver coins, and many things about them that are worse.
Posted by:: Wm James Date: 15 Mar 2005 12:28:02 -0600
--------
On Fri, 11 Mar 2005 22:33:35 +0000, invalid@example.com wrote:
>
>
>
>Wm James wrote:
>
>>Want a "community currency"? Try gold and silver coins. Their value
>>is not dependent on any IOUs or anyone's credit.
>
>*Excellent* advice!
>
>I see nothing about any Community Currency that makes it better than
>gold and silver coins, and many things about them that are worse.
>
There is no legitimate "Community Currency" but that like gold which
has it's own value. What the socialists want is a curency with value
which they can control as a means of hidden taxation. If you have a
million dollars and they want to buy votes from bums, they don't have
to take it from you if the currency is just paper. They can just
print another million and give it to bums which reduces the value of
your million. They transfer your wealth without taking a nickle from
you. With real money, they can't do that. They can't print more
gold. When people talk about the value of gold fluctuating, they are
thinking backwards. Whether gold is $250 an oz or $500 and oz, the
gold hasn't changed value, the currency has. Inflation isn't about
value of the things you buy goin up, but the value of the currency
going down. Before the Federal Reserve, inflation wasn't an issue
except for given items in given situations. From 1800 to 1900 prices
of things didn't really change much. Gold was likeanything else
bartered for, it was just in the form of coins or certificates. But
since the money was replaced with the notes, government canplay with
the values to redistribute wealth and raise taxes by forced bracket
creep.
--------
On 10 Mar 2005 08:12:14 -0800
"Quirk" wrote:
>
> Hello, I am currently working on the proposed Monetary system for my
> Venture Communist investment model, and I have been looking at the
> various theories regarding community issued currencies, particularly
> those like LETS, which are issued by //mutual credit.//
>
Don't attempt to reinvent wheels. Start with the financial landscape
as it is and figure out how to construct what you want from extant
features.
Dhu
> If anybody has done any study of these, or has experience with them, I
> have a few questions regarding these systems:
>
>
> 1- Investment.
>
> As these systems generally discourage saving via no interest or
> demurrage, and since investment starts with abstaining from
> consumption, how does capital form in these models?
>
>
> 2- Credit limits.
>
> How are credit limits set? How is bad debt dealt with?
>
>
> 3- Liquidity crisis.
>
> Even with low savings, they still are not zero, and even with free
> credit, the limits are not necessarily high enough to match savings, so
> how is a liquidity crisis avoided?
>
> Or is it assumed that negative balances will simply raise high enough
> to match positive balances? Wouldn't this end up with a lot of bad debt
> and abandoned negative accounts?
>
> Or is it assumed that no-interest or demurrage will keep total savings
> equal to or below total credit?
>
>
> 4- Capital Flight.
>
> If no-interest and/or demurrage is indeed expected to be sufficient to
> discourage a liquidity crisis, what would prevent Capital Flight via a
> community currency being used to purchase commodities that are then in
> turn sold for an external currency that pays interest or at least has
> no demurrage.
>
>
> 5- Public Goods.
>
> How is it proposed that Public Goods be furnished. Taxes? Controlled
> Money Supply Inflation? Or is is left to external institutions (i.e.
> the State)?
>
>
> Any comments would be greatly appreciated.
>
--
???????????????????????????????????????
All persons named herein are purely fictional victims
of the Canidian Bagle Breeder's Association.
Save the Bagle!
Sun Ðhu
???????????????????????????????????????
Posted by:: invalid@example.com
Date: Fri, 11 Mar 2005 06:09:44 +0000
--------
Duncan Patton wrote:
>
>"Quirk" wrote:
>
>>
>> Hello, I am currently working on the proposed Monetary system for my
>> Venture Communist investment model, and I have been looking at the
>> various theories regarding community issued currencies, particularly
>> those like LETS, which are issued by //mutual credit.//
>>
>
>Don't attempt to reinvent wheels. Start with the financial landscape
>as it is and figure out how to construct what you want from extant
>features.
Ain't gonna happen. There are two classes of people who think that
these alternatives to money will work; those who want a very large
increase in the power of government (which they see as all-wise and
benificial) and those who engage in magical thinking. The latter
group has NO answer to the common problem of there being only 10
items but 20 people wanting to own one. In a free market, we find
out which 10 want the item the most by the feedback that prices give.
In a USSR-style market the commisars decide which 10 get the items.
In these new systems there is no way to make that decision; the
proponents just wave their hands and hope that you won't notice this.
--------
On Fri, 11 Mar 2005 06:09:44 +0000
invalid@example.com wrote:
>
>
>
> Duncan Patton wrote:
> >
> >"Quirk" wrote:
> >
> >>
> >> Hello, I am currently working on the proposed Monetary system for my
> >> Venture Communist investment model, and I have been looking at the
> >> various theories regarding community issued currencies, particularly
> >> those like LETS, which are issued by //mutual credit.//
> >>
> >
> >Don't attempt to reinvent wheels. Start with the financial landscape
> >as it is and figure out how to construct what you want from extant
> >features.
>
> Ain't gonna happen. There are two classes of people who think that
> these alternatives to money will work; those who want a very large
> increase in the power of government (which they see as all-wise and
> benificial) and those who engage in magical thinking. The latter
> group has NO answer to the common problem of there being only 10
> items but 20 people wanting to own one. In a free market, we find
> out which 10 want the item the most by the feedback that prices give.
> In a USSR-style market the commisars decide which 10 get the items.
> In these new systems there is no way to make that decision; the
> proponents just wave their hands and hope that you won't notice this.
>
>
Good eye. Robots or Magicians. But I think that the conceptual structures
of what we call "money" are rapidly evolving.
Dhu
--
???????????????????????????????????????
All persons named herein are purely fictional victims
of the Canidian Bagle Breeder's Association.
Save the Bagle!
Sun Ðhu
???????????????????????????????????????
Posted by:: "Quirk" Date: 11 Mar 2005 03:05:26 -0800
--------
Duncan Patton wrote:
> On 10 Mar 2005 08:12:14 -0800
> > Hello, I am currently working on the proposed Monetary system for
my
> > Venture Communist investment model, and I have been looking at the
> > various theories regarding community issued currencies,
particularly
> > those like LETS, which are issued by //mutual credit.//
> Don't attempt to reinvent wheels.
Yes, I agree, that is why I am looking closely and trying to understand
all the alternative models, so that I can attach the best wheels to my
wagon.
> Start with the financial landscape
> as it is and figure out how to construct what you want from extant
> features.
Yup. I have to start by understanding the financial landscape as it is,
no small task.
If you have any suggestions, that would be helpful.
--------
On 11 Mar 2005 03:05:26 -0800
"Quirk" wrote:
>
> Duncan Patton wrote:
>
> > On 10 Mar 2005 08:12:14 -0800
>
> > > Hello, I am currently working on the proposed Monetary system for
> my
> > > Venture Communist investment model, and I have been looking at the
> > > various theories regarding community issued currencies,
> particularly
> > > those like LETS, which are issued by //mutual credit.//
>
> > Don't attempt to reinvent wheels.
>
> Yes, I agree, that is why I am looking closely and trying to understand
> all the alternative models, so that I can attach the best wheels to my
> wagon.
>
> > Start with the financial landscape
> > as it is and figure out how to construct what you want from extant
> > features.
>
> Yup. I have to start by understanding the financial landscape as it is,
> no small task.
>
> If you have any suggestions, that would be helpful.
>
Various mid-layer economic models are structured unlike the traditional
corporation/nation-state. Coops, kibbutz and Kingdoms are just examples.
Understanding the origins and mechanisms of representative organizations
is also of some potential use. Mostly, tho' I think most gain will come
from systemically examining what we claim to do and what we really do
when we act in concert as humans: lots of useless simon-sez goes on
when what you want is more like a game of catch.
Just remember that whole-cloth is difficult to integrate. It's better to
blend new threads in, letting friction and entropy determine which colors
predominate.
Dhu
--
???????????????????????????????????????
All persons named herein are purely fictional victims
of the Canidian Bagle Breeder's Association.
Save the Bagle!
Sun Ðhu
???????????????????????????????????????
Posted by:: "Quirk" Date: 11 Mar 2005 05:49:14 -0800
--------
Duncan Patton wrote:
> Various mid-layer economic models are structured unlike the
traditional
> corporation/nation-state. Coops, kibbutz and Kingdoms are just
examples.
Duncan, after already replying to Polar Bear's post with various
different ways to say "I agree," I have run fresh out ways to express
agreement, so forgive me if I short change you and simply say "I agree
with this post."
However, I did surf through your website, and I have a question.
Know anybody who could put together example Venture Communist Articles
of Incorporation and Terms of Investment?
--------
On 11 Mar 2005 05:49:14 -0800
"Quirk" wrote:
>
> Duncan Patton wrote:
>
> > Various mid-layer economic models are structured unlike the
> traditional
> > corporation/nation-state. Coops, kibbutz and Kingdoms are just
> examples.
>
> Duncan, after already replying to Polar Bear's post with various
> different ways to say "I agree," I have run fresh out ways to express
> agreement, so forgive me if I short change you and simply say "I agree
> with this post."
>
> However, I did surf through your website, and I have a question.
>
> Know anybody who could put together example Venture Communist Articles
> of Incorporation and Terms of Investment?
>
Yes. You need to talk with the GPL/Freesoftware guys. As well, it might
be worth speaking with Jesuits or Franciscans: don't get too close there
or you'll be servering other purposes than your own good intent.
Dhu
> Regards.
>
--
???????????????????????????????????????
All persons named herein are purely fictional victims
of the Canidian Bagle Breeder's Association.
Save the Bagle!
Sun Ðhu
???????????????????????????????????????
Posted by:: invalid@example.com
Date: Fri, 11 Mar 2005 22:19:24 +0000
--------
Duncan Patton wrote:
>Yes. You need to talk with the GPL/Freesoftware guys. As well, it might
>be worth speaking with Jesuits or Franciscans: don't get too close there
>or you'll be servering other purposes than your own good intent.
Or he could just start right off with the communist manifesto.
Posted by:: invalid@example.com
Date: Fri, 11 Mar 2005 23:22:29 +0000
--------
Duncan Patton wrote:
>Yes. You need to talk with the GPL/Freesoftware guys. As well, it might
>be worth speaking with Jesuits or Franciscans: don't get too close there
>or you'll be servering other purposes than your own good intent.
Don't forget the Freemasons and the Scientologists! :)
--------
On Fri, 11 Mar 2005 23:22:29 +0000
invalid@example.com wrote:
>
>
>
> Duncan Patton wrote:
>
> >Yes. You need to talk with the GPL/Freesoftware guys. As well, it might
> >be worth speaking with Jesuits or Franciscans: don't get too close there
> >or you'll be servering other purposes than your own good intent.
>
> Don't forget the Freemasons and the Scientologists! :)
>
From what I've seen these don't exactly qualify in the "non-greed-oriented" spectrum
of socio-economic philosophies.
I would recommend reading some of J.K. Galbraith's economic writings as a basis for
understanding the situation.
Dhu
--
???????????????????????????????????????
All persons named herein are purely fictional victims
of the Canidian Bagle Breeder's Association.
Save the Bagle!
Sun Ðhu
???????????????????????????????????????
Posted by:: "Quirk" Date: 13 Mar 2005 06:45:18 -0800
--------
Duncan Patton wrote:
> Yes. You need to talk with the GPL/Freesoftware guys.
Sure, Eben Moglen would be my first choice to author the articles, but
I have not been so bold as of yet as to ask him directly.
> As well, it might
> be worth speaking with Jesuits or Franciscans: don't get too close
there
> or you'll be servering other purposes than your own good intent.
A little too scary for me, the only religious groups that I would touch
with a ten foot pole at this point are ones like the Quakers and the
Church of the SubGenius :)
Posted by:: invalid@example.com
Date: Mon, 14 Mar 2005 05:07:47 +0000
--------
Quirk wrote:
>A little too scary for me, the only religious groups that I would touch
>with a ten foot pole at this point are ones like the Quakers and the
>Church of the SubGenius :)
Followers of Bob aren't as rude as you are. They don't barge in
where they are guests and tell the people who live there that
their house rules are stupid.
Have you gone and looked at the smoking wrecks of newsgroups that
used to be thriving religious communities yet? Or don't you care?
Posted by:: "Quirk" Date: 14 Mar 2005 03:54:15 -0800
--------
invalid@example.com wrote:
> Quirk wrote:
> Followers of Bob aren't as rude as you are.
Now that's funny.
And it is you being rude, I am politely discussing an issue, you are
rudely telling people which groups they are allowed to use and how.
And you calling me rude, when we are politely discussing a difference
of opinion is, well, rude.
> They don't barge in
> where they are guests and tell the people who live there that
> their house rules are stupid.
I am not telling any "them," I am telling you. You are the one trying
to impose rules. These are not "house rules." they are YOUR rules.
"House rules" in unmoderated forums are invariable implemented by
despots who like to speak for the rest of the group. If these are
legitimate house rules, then go through some sort of diligent charter
process and publish them regularly. Then, instead of insisting, you
could point to the Charter instead of alluding to "House rules" that
can not be read.
Nor did I call anyone or anything stupid, this is just more rudeness on
your part representing what I said that way.
> Have you gone and looked at the smoking wrecks of newsgroups that
> used to be thriving religious communities yet? Or don't you care?
Slippery slope fallacy.
Respectfull, multiple newsgroup discussions do not make "smoking
wrecks" of newsgroups," you are just FEAR MONGERING inorder to impose
your rules.
I think it is obvious to everyone that I posted my questions to
soc.religion.quaker, respectfully, because I felt, for good reason,
that there might be people who could answer them there.
All you have done is litter this thread with your endless attempts to
play usenet traffic cop, and these contributions are not relevant to
ANY of the newsgroups you are crossposting them too, nor the thread
itself.
Further, I am not even interested in discusing this issue with you
anymore, as it will does not contribute to the topic of the thread, so
I will ignore any more comments you make on this topic, and encourage
others to as well.
--------
On 13 Mar 2005 06:45:18 -0800
"Quirk" wrote:
>
> Duncan Patton wrote:
>
> > Yes. You need to talk with the GPL/Freesoftware guys.
>
> Sure, Eben Moglen would be my first choice to author the articles, but
> I have not been so bold as of yet as to ask him directly.
>
Well, do. Go read their site first, because they are trying to do
similar things. It is quite possible they have material you can
use already.
> > As well, it might
> > be worth speaking with Jesuits or Franciscans: don't get too close
> there
> > or you'll be servering other purposes than your own good intent.
>
> A little too scary for me, the only religious groups that I would touch
> with a ten foot pole at this point are ones like the Quakers and the
> Church of the SubGenius :)
>
Yes, well, that's why I was xposting there, but we got snarked at so..
Read some Of J.K. Galbraith's stuff. He's a Covenanter/Congregationalist,
which is a similar lot of Scotch puritans (Quakers are more anglo).
Dhu
--
???????????????????????????????????????
All persons named herein are purely fictional victims
of the Canidian Bagle Breeder's Association.
Save the Bagle!
Sun Ðhu
???????????????????????????????????????
Posted by:: "Quirk" Date: 14 Mar 2005 04:22:55 -0800
--------
Duncan Patton wrote:
> On 13 Mar 2005 06:45:18 -0800
> > > Yes. You need to talk with the GPL/Freesoftware guys.
> > Sure, Eben Moglen would be my first choice to author the articles,
but
> > I have not been so bold as of yet as to ask him directly.
> Well, do.
Maybe after a few more drafts :)
> Go read their site first, because they are trying to do
> similar things. It is quite possible they have material you can
> use already.
Yes, you might be interested in the article I co-wrote for community
bandwidth:
It is based on an earlier article I wrote for the Non Profit Times.
Not really part of the current topic, but would love your feedback non
the less.
> Yes, well, that's why I was xposting there, but we got snarked at
so..
I might take the snarking more seriously if it was backed with a
Charter that was a result of diligent collaborative effort, not a
self-appointed net.cop with a penchant for pitching any fallacy at the
wall that may stick.
> Read some Of J.K. Galbraith's stuff. He's a
Covenanter/Congregationalist,
> which is a similar lot of Scotch puritans (Quakers are more anglo).
I have a passing familiarity with Galbraith, but have yet to read one
of his books, I was thinking about "The Affluent Society," is there one
you would recommend?
--------
On 14 Mar 2005 04:22:55 -0800
"Quirk" wrote:
> Duncan Patton wrote:
>
> > On 13 Mar 2005 06:45:18 -0800
> > > > Yes. You need to talk with the GPL/Freesoftware guys.
>
> > > Sure, Eben Moglen would be my first choice to author the articles,
> but
> > > I have not been so bold as of yet as to ask him directly.
>
> > Well, do.
>
> Maybe after a few more drafts :)
>
> > Go read their site first, because they are trying to do
> > similar things. It is quite possible they have material you can
> > use already.
>
> Yes, you might be interested in the article I co-wrote for community
> bandwidth:
>
> http://www.communitybandwidth.ca/articles/free_software
>
> It is based on an earlier article I wrote for the Non Profit Times.
>
You need to reconsider the use of the term "Non Profit", for a variety
of reasons:
1. there is no use in undertaking something from which no profit, or
human benefit, can be derived.
2. division and utilization of the profit from an endevour are at issue:
who benefits and how.
3. "non profit" organizations are specifically forced to be uneconomic
and fairly inefficient operations under our current corporate laws.
Basically, you need to provide for making money because money is like
the internet. You can have your own network, but unless it connects
to the rest of the 'net, it is not on the inter-net. Money is an
antique economic internetwork of exchange mechanisms for providing
economic valuation and risk abatement. So you don't need to use
money internally to your system, but then you must provide an interface
to "money" that is consistent with other valuations or exchanges.
> Not really part of the current topic, but would love your feedback non
> the less.
>
> > Yes, well, that's why I was xposting there, but we got snarked at
> so..
>
> I might take the snarking more seriously if it was backed with a
> Charter that was a result of diligent collaborative effort, not a
> self-appointed net.cop with a penchant for pitching any fallacy at the
> wall that may stick.
>
Truly. Too many Tannis, and no party. Just the same, if we'd seen
disagreement with him from that newsgroup, it would have been apropriate
to continue xposting there. As it stands, we should consider them without
interest in the subject and move on. This is ancient netiquitte: because
of the way the systems/comms logic works, if you throw it at the wall
and it sticks, it is _a_ right place, and mebbe there isn't _the_ right
place at all.
> > Read some Of J.K. Galbraith's stuff. He's a
> Covenanter/Congregationalist,
> > which is a similar lot of Scotch puritans (Quakers are more anglo).
>
> I have a passing familiarity with Galbraith, but have yet to read one
> of his books, I was thinking about "The Affluent Society," is there one
> you would recommend?
>
"A History of Economics" might be useful. The Affluent Society is his
most well known and will give you more common ground to talk with others
about. If you want to know who he is, read "The Scotch" ;-)
Dhu
--
???????????????????????????????????????
All persons named herein are purely fictional victims
of the Canidian Bagle Breeder's Association.
--------
In article <20050314173939.569a4f93@babayaga.neotext.ca>, Duncan Patton
wrote:
> On 14 Mar 2005 04:22:55 -0800
> "Quirk" wrote:
>
> > Duncan Patton wrote:
> >
> > > On 13 Mar 2005 06:45:18 -0800
> > > > > Yes. You need to talk with the GPL/Freesoftware guys.
> >
> > > > Sure, Eben Moglen would be my first choice to author the articles,
> > but
> > > > I have not been so bold as of yet as to ask him directly.
> >
> > > Well, do.
> >
> > Maybe after a few more drafts :)
> >
> > > Go read their site first, because they are trying to do
> > > similar things. It is quite possible they have material you can
> > > use already.
> >
> > Yes, you might be interested in the article I co-wrote for community
> > bandwidth:
> >
> > http://www.communitybandwidth.ca/articles/free_software
> >
> > It is based on an earlier article I wrote for the Non Profit Times.
> >
>
> You need to reconsider the use of the term "Non Profit", for a variety
> of reasons:
>
> 1. there is no use in undertaking something from which no profit, or
> human benefit, can be derived.
>
> 2. division and utilization of the profit from an endevour are at issue:
> who benefits and how.
>
> 3. "non profit" organizations are specifically forced to be uneconomic
> and fairly inefficient operations under our current corporate laws.
>
All your profit are belong to us!
pb
Posted by:: "Quirk" Date: 15 Mar 2005 05:37:47 -0800
--------
Duncan Patton wrote:
> > http://www.communitybandwidth.ca/articles/free_software
> >
> > It is based on an earlier article I wrote for the Non Profit Times.
> You need to reconsider the use of the term "Non Profit", for a
variety
> of reasons:
First off, I was asked to write the article for the non profit times,
it is not non profit that it advocates, but rather free software.
> 1. there is no use in undertaking something from which no profit, or
> human benefit, can be derived.
Well, profit is a composite of wages, rent, and interest, so since
Venture Communism removes the Rent and Interest anyway, all that is
left to the Enterprises is basicly Wages. Therefore this distinction is
not to important for me, it may or may not have some tax advantages in
dealing with the macro economy.
> 2. division and utilization of the profit from an endevour are at
issue:
> who benefits and how.
Exactly. The goal of venture communism is to mutualize the portion of
profit that is derived from Rent and Interest, while leaving wages
private.
> 3. "non profit" organizations are specifically forced to be
uneconomic
> and fairly inefficient operations under our current corporate
laws.
Perhaps, but in a venture communist context it makes little difference.
> Basically, you need to provide for making money because money is like
> the internet. You can have your own network, but unless it connects
> to the rest of the 'net, it is not on the inter-net. Money is an
> antique economic internetwork of exchange mechanisms for providing
> economic valuation and risk abatement. So you don't need to use
> money internally to your system, but then you must provide an
interface
> to "money" that is consistent with other valuations or exchanges.
Of course Venture Communist Scrip or "mesomoney" must be convertable to
national currencies, or any form of wealth, however there is a great
advantage to the use of Scrip inside the mesoeconomy: No liquidity
crisis. This is what enables the commune to buy the land and capital
from its Enterprises.
And the ability to pay the Rent on land and capital in Scrip is what
gives the Scrip value.
Scrip solves currency scarcity in a similar way that NAT solves IP
address scarcity.
> "A History of Economics" might be useful.
Sure, I have ready several similar texts already, but each one always
offers a bit more insight, and Galbraith's certainly would be welcome.
> The Affluent Society is his
> most well known and will give you more common ground to talk with
others
> about. If you want to know who he is, read "The Scotch" ;-)
Thanks for the recommendations, I'll be in Canada at the end of the
month for a few days, I'll stock up on English language books :)
Posted by:: "Kibo Lite" Date: 18 Mar 2005 12:12:12 -0500
--------
"Duncan Patton" says...
>"Quirk" wrote:
>
>> I might take the snarking more seriously if it was backed with a
>> Charter that was a result of diligent collaborative effort, not a
>> self-appointed net.cop with a penchant for pitching any fallacy at the
>> wall that may stick.
>
> Truly. Too many Tannis, and no party. Just the same, if we'd seen
> disagreement with him from that newsgroup, it would have been apropriate
> to continue xposting there. As it stands, we should consider them without
> interest in the subject and move on. This is ancient netiquitte: because
> of the way the systems/comms logic works, if you throw it at the wall
> and it sticks, it is _a_ right place, and mebbe there isn't _the_ right
> place at all.
But how do you discover that there is no interest? For example,
let's assume for the sake of argument that nobody in can.politics
is interested in the present discussion and that all the posts are
from sci.econ, alt.slack, and alt.activism users. Some would say
that netiquette calls for not posting off-topic, and the current
discussion certainly has nothing to do with Canadian politics, but
that isn't stopping anyone from xposting to can.politics. As can
be seen above, someone from can.politics asking you to stop the
crossposts won't be taken seriously, especially if that person has
deficiencies in his arguments that are unrelated to whether or not
he is accurately conveying the desires of the can.politics users.
Newsgroup Charters cannot be changed once the newsgroup is created,
and maybe whoever created can.politics wasn't able to foresee a
future xposting problem, so "a Charter that was a result of diligent
collaborative effort" is not a viable option. So even if every single
can.politics user doesn't want you to xpost and no can.politics user
has ever replied to this thread, there appears to be no way for them
to convey that desire to you in a way that you would find acceptable.
In the hypothetical situation described, How would you suggest that
they proceed?
--------
In article <113m61f445vcu84@corp.supernews.com>, "Kibo Lite"
wrote:
> "Duncan Patton" says...
>
> >"Quirk" wrote:
> >
> >> I might take the snarking more seriously if it was backed with a
> >> Charter that was a result of diligent collaborative effort, not a
> >> self-appointed net.cop with a penchant for pitching any fallacy at the
> >> wall that may stick.
> >
> > Truly. Too many Tannis, and no party. Just the same, if we'd seen
> > disagreement with him from that newsgroup, it would have been apropriate
> > to continue xposting there. As it stands, we should consider them without
> > interest in the subject and move on. This is ancient netiquitte: because
> > of the way the systems/comms logic works, if you throw it at the wall
> > and it sticks, it is _a_ right place, and mebbe there isn't _the_ right
> > place at all.
>
> But how do you discover that there is no interest? For example,
> let's assume for the sake of argument that nobody in can.politics
> is interested in the present discussion and that all the posts are
> from sci.econ, alt.slack, and alt.activism users. Some would say
> that netiquette calls for not posting off-topic, and the current
> discussion certainly has nothing to do with Canadian politics, but
> that isn't stopping anyone from xposting to can.politics. As can
> be seen above, someone from can.politics asking you to stop the
> crossposts won't be taken seriously, especially if that person has
> deficiencies in his arguments that are unrelated to whether or not
> he is accurately conveying the desires of the can.politics users.
> Newsgroup Charters cannot be changed once the newsgroup is created,
> and maybe whoever created can.politics wasn't able to foresee a
> future xposting problem, so "a Charter that was a result of diligent
> collaborative effort" is not a viable option. So even if every single
> can.politics user doesn't want you to xpost and no can.politics user
> has ever replied to this thread, there appears to be no way for them
> to convey that desire to you in a way that you would find acceptable.
> In the hypothetical situation described, How would you suggest that
> they proceed?
I don't see what the problem is. Every newsreader has a kill author
and kill thread function, no? Isn't it easier to use these than to
post "please don't crosspost" messages all over the place?
pb
Posted by:: Zapanaz Date: Fri, 18 Mar 2005 13:45:16 -0800
--------
On Fri, 18 Mar 2005 13:15:51 -0800, polar bear wrote:
>In article <113m61f445vcu84@corp.supernews.com>, "Kibo Lite"
> wrote:
>
>> "Duncan Patton" says...
>>
>> >"Quirk" wrote:
>> >
>> >> I might take the snarking more seriously if it was backed with a
>> >> Charter that was a result of diligent collaborative effort, not a
>> >> self-appointed net.cop with a penchant for pitching any fallacy at the
>> >> wall that may stick.
>> >
>> > Truly. Too many Tannis, and no party. Just the same, if we'd seen
>> > disagreement with him from that newsgroup, it would have been apropriate
>> > to continue xposting there. As it stands, we should consider them without
>> > interest in the subject and move on. This is ancient netiquitte: because
>> > of the way the systems/comms logic works, if you throw it at the wall
>> > and it sticks, it is _a_ right place, and mebbe there isn't _the_ right
>> > place at all.
>>
>> But how do you discover that there is no interest? For example,
>> let's assume for the sake of argument that nobody in can.politics
>> is interested in the present discussion and that all the posts are
>> from sci.econ, alt.slack, and alt.activism users. Some would say
>> that netiquette calls for not posting off-topic, and the current
>> discussion certainly has nothing to do with Canadian politics, but
>> that isn't stopping anyone from xposting to can.politics. As can
>> be seen above, someone from can.politics asking you to stop the
>> crossposts won't be taken seriously, especially if that person has
>> deficiencies in his arguments that are unrelated to whether or not
>> he is accurately conveying the desires of the can.politics users.
>> Newsgroup Charters cannot be changed once the newsgroup is created,
>> and maybe whoever created can.politics wasn't able to foresee a
>> future xposting problem, so "a Charter that was a result of diligent
>> collaborative effort" is not a viable option. So even if every single
>> can.politics user doesn't want you to xpost and no can.politics user
>> has ever replied to this thread, there appears to be no way for them
>> to convey that desire to you in a way that you would find acceptable.
>> In the hypothetical situation described, How would you suggest that
>> they proceed?
>
>I don't see what the problem is. Every newsreader has a kill author
>and kill thread function, no? Isn't it easier to use these than to
>post "please don't crosspost" messages all over the place?
>
>pb
It's kind of like if you have people running around farting and they
say "just plug your nose". It's futile to try to prevent others from
farting, but it doesn't seem like a fair answer somehow.
--
Zapanaz
International Satanic Conspiracy
Customer Support Specialist
http://joecosby.com/
"Jenna Bush's Federally Protected Wetlands Now Open For Public Drilling ."
_The Onion_
6/20/01
Posted by:: "Kibo Lite" Date: 18 Mar 2005 16:16:16 -0500
--------
"Zapanaz" says...
>On Fri, 18 Mar 2005 13:15:51 -0800, polar bear wrote:
>
>>In article <113m61f445vcu84@corp.supernews.com>, "Kibo Lite"
>> wrote:
>>
>>> "Duncan Patton" says...
>>>
>>> >"Quirk" wrote:
>>> >
>>> >> I might take the snarking more seriously if it was backed with a
>>> >> Charter that was a result of diligent collaborative effort, not a
>>> >> self-appointed net.cop with a penchant for pitching any fallacy at the
>>> >> wall that may stick.
>>> >
>>> > Truly. Too many Tannis, and no party. Just the same, if we'd seen
>>> > disagreement with him from that newsgroup, it would have been apropriate
>>> > to continue xposting there. As it stands, we should consider them without
>>> > interest in the subject and move on. This is ancient netiquitte: because
>>> > of the way the systems/comms logic works, if you throw it at the wall
>>> > and it sticks, it is _a_ right place, and mebbe there isn't _the_ right
>>> > place at all.
>>>
>>> But how do you discover that there is no interest? For example,
>>> let's assume for the sake of argument that nobody in can.politics
>>> is interested in the present discussion and that all the posts are
>>> from sci.econ, alt.slack, and alt.activism users. Some would say
>>> that netiquette calls for not posting off-topic, and the current
>>> discussion certainly has nothing to do with Canadian politics, but
>>> that isn't stopping anyone from xposting to can.politics. As can
>>> be seen above, someone from can.politics asking you to stop the
>>> crossposts won't be taken seriously, especially if that person has
>>> deficiencies in his arguments that are unrelated to whether or not
>>> he is accurately conveying the desires of the can.politics users.
>>> Newsgroup Charters cannot be changed once the newsgroup is created,
>>> and maybe whoever created can.politics wasn't able to foresee a
>>> future xposting problem, so "a Charter that was a result of diligent
>>> collaborative effort" is not a viable option. So even if every single
>>> can.politics user doesn't want you to xpost and no can.politics user
>>> has ever replied to this thread, there appears to be no way for them
>>> to convey that desire to you in a way that you would find acceptable.
>>> In the hypothetical situation described, How would you suggest that
>>> they proceed?
>>
>>I don't see what the problem is. Every newsreader has a kill author
>>and kill thread function, no? Isn't it easier to use these than to
>>post "please don't crosspost" messages all over the place?
Are you agreeing that you have left for them to convey to you a
desire that you stop crossposting in a way that you would find
acceptable?
> It's kind of like if you have people running around farting and they
> say "just plug your nose". It's futile to try to prevent others from
> farting, but it doesn't seem like a fair answer somehow.
Not every newsreader has kill functions. Those using Google groups
or WebTV cannot kill authors or threads. Little old ladies have
trouble figuring out how to do it. But a larger problem is that a
newsgroup needs fresh blood - new members to replace those that
leave. Someone looking at can.politics for the first time hoping
for a place to discuss Canadian politics won't set up killfiles.
He simply won't join the discussion. And some of those who wish
to talk about economics issues will find that can.politics has the
kind of posts they like. In the long run that will kill the
newsgroup for discussion of Canadian politics.
In my opinion this is a netiquette problem; someone who understands
what "Off-Topic" means but insists on posting off-topic anyway.
With a crosspost between sci.econ, alt.slack, can.politics and
alt.activism, even if the first post was carefully crafted to be
on-topic in all four groups, thread drift will soon make the thread
off-topic in some or most of those groups.
There are quite a few newsgroups that have no posts on the topic
that is in the newsgroup name, and no participants. All they have
is crossposted threads and singleposted spam. Once this happens to
a newsgroup, it's hard to see how it could ever again become a place
to discuss the topic listed in the newsgroup name.
Look at can.politics. I just looked at the last 100 posts and saw:
"5-Year-Old Girl Handcuffed, Arrested At Fla. Elementary School"
crossposted to fl.politics, miami.general, can.politics,
tacoma.politics and talk.politics.guns.
"Domino Theory and the Denial of Evolution by the Stupid Left"
crossposted to seattle.politics, az.politics, wash.politics,
can.politics, bc.politics
"Guns for Women, Now" crossposted to alt.support.divorce,
can.politics, soc.men
"Secret US plans for Iraq's oil - BBC" crossposted to can.politics,'
alt.politics, soc.culture.iraq
"Will The USA Invade Cuba?" crossposted to alt.politics.bush,
alt.politics.republicans, alt.politics.british, can.politics
and, of course, "Questions about Community Currency", crossposted to
sci.econ, alt.slack, can.politics, alt.activism.
There is also discussion about Canadian politics, but half of the
post are crossposted and off-topic.
That's just plain rude to those who wish to discuss Canadian politics.
I find myself having sympathy for those who ask the off-topic
crossposters to stop (one or two requests; more is not better!),
but I don't advise them to do it, because eventually they will
trigger a sociopath who will then flood the group with crossposts.
Still, there is no reason why we can't be good example and not engage
in off-topic crossposting.
Posted by:: Zapanaz Date: Fri, 18 Mar 2005 16:21:11 -0800
--------
On 18 Mar 2005 16:16:16 -0500, "Kibo Lite" wrote:
>
>
>
>"Zapanaz" says...
>
>>On Fri, 18 Mar 2005 13:15:51 -0800, polar bear wrote:
>>
>>>In article <113m61f445vcu84@corp.supernews.com>, "Kibo Lite"
>>> wrote:
>>>
>>>> "Duncan Patton" says...
>>>>
>>>> >"Quirk" wrote:
>>>> >
>>>> >> I might take the snarking more seriously if it was backed with a
>>>> >> Charter that was a result of diligent collaborative effort, not a
>>>> >> self-appointed net.cop with a penchant for pitching any fallacy at the
>>>> >> wall that may stick.
>>>> >
>>>> > Truly. Too many Tannis, and no party. Just the same, if we'd seen
>>>> > disagreement with him from that newsgroup, it would have been apropriate
>>>> > to continue xposting there. As it stands, we should consider them without
>>>> > interest in the subject and move on. This is ancient netiquitte: because
>>>> > of the way the systems/comms logic works, if you throw it at the wall
>>>> > and it sticks, it is _a_ right place, and mebbe there isn't _the_ right
>>>> > place at all.
>>>>
>>>> But how do you discover that there is no interest? For example,
>>>> let's assume for the sake of argument that nobody in can.politics
>>>> is interested in the present discussion and that all the posts are
>>>> from sci.econ, alt.slack, and alt.activism users. Some would say
>>>> that netiquette calls for not posting off-topic, and the current
>>>> discussion certainly has nothing to do with Canadian politics, but
>>>> that isn't stopping anyone from xposting to can.politics. As can
>>>> be seen above, someone from can.politics asking you to stop the
>>>> crossposts won't be taken seriously, especially if that person has
>>>> deficiencies in his arguments that are unrelated to whether or not
>>>> he is accurately conveying the desires of the can.politics users.
>>>> Newsgroup Charters cannot be changed once the newsgroup is created,
>>>> and maybe whoever created can.politics wasn't able to foresee a
>>>> future xposting problem, so "a Charter that was a result of diligent
>>>> collaborative effort" is not a viable option. So even if every single
>>>> can.politics user doesn't want you to xpost and no can.politics user
>>>> has ever replied to this thread, there appears to be no way for them
>>>> to convey that desire to you in a way that you would find acceptable.
>>>> In the hypothetical situation described, How would you suggest that
>>>> they proceed?
>>>
>>>I don't see what the problem is. Every newsreader has a kill author
>>>and kill thread function, no? Isn't it easier to use these than to
>>>post "please don't crosspost" messages all over the place?
>
>Are you agreeing that you have left for them to convey to you a
>desire that you stop crossposting in a way that you would find
>acceptable?
>
>> It's kind of like if you have people running around farting and they
>> say "just plug your nose". It's futile to try to prevent others from
>> farting, but it doesn't seem like a fair answer somehow.
>
>Not every newsreader has kill functions. Those using Google groups
>or WebTV cannot kill authors or threads. Little old ladies have
>trouble figuring out how to do it. But a larger problem is that a
>newsgroup needs fresh blood - new members to replace those that
>leave. Someone looking at can.politics for the first time hoping
>for a place to discuss Canadian politics won't set up killfiles.
>He simply won't join the discussion. And some of those who wish
>to talk about economics issues will find that can.politics has the
>kind of posts they like. In the long run that will kill the
>newsgroup for discussion of Canadian politics.
>
>In my opinion this is a netiquette problem; someone who understands
>what "Off-Topic" means but insists on posting off-topic anyway.
>With a crosspost between sci.econ, alt.slack, can.politics and
>alt.activism, even if the first post was carefully crafted to be
>on-topic in all four groups, thread drift will soon make the thread
>off-topic in some or most of those groups.
>
>There are quite a few newsgroups that have no posts on the topic
>that is in the newsgroup name, and no participants. All they have
>is crossposted threads and singleposted spam. Once this happens to
>a newsgroup, it's hard to see how it could ever again become a place
>to discuss the topic listed in the newsgroup name.
>
>Look at can.politics. I just looked at the last 100 posts and saw:
>
>"5-Year-Old Girl Handcuffed, Arrested At Fla. Elementary School"
>crossposted to fl.politics, miami.general, can.politics,
>tacoma.politics and talk.politics.guns.
>
>"Domino Theory and the Denial of Evolution by the Stupid Left"
>crossposted to seattle.politics, az.politics, wash.politics,
>can.politics, bc.politics
>
>"Guns for Women, Now" crossposted to alt.support.divorce,
>can.politics, soc.men
>
>"Secret US plans for Iraq's oil - BBC" crossposted to can.politics,'
>alt.politics, soc.culture.iraq
>
>"Will The USA Invade Cuba?" crossposted to alt.politics.bush,
>alt.politics.republicans, alt.politics.british, can.politics
>
>and, of course, "Questions about Community Currency", crossposted to
>sci.econ, alt.slack, can.politics, alt.activism.
>
>There is also discussion about Canadian politics, but half of the
>post are crossposted and off-topic.
>
>That's just plain rude to those who wish to discuss Canadian politics.
>
>I find myself having sympathy for those who ask the off-topic
>crossposters to stop (one or two requests; more is not better!),
>but I don't advise them to do it, because eventually they will
>trigger a sociopath who will then flood the group with crossposts.
>
>Still, there is no reason why we can't be good example and not engage
>in off-topic crossposting.
roger all that. but stopping somebody from crosspsotting is like
stopping somebody from farting. you can ask them to, but you can't
make them. unless you have a really big cork and big forearms.
--
Zapanaz
International Satanic Conspiracy
Customer Support Specialist
http://joecosby.com/
"So what if a piece of wood discovers it's a violin?"
-A.Rimbaud
Posted by:: invalid@example.com
Date: Fri, 11 Mar 2005 18:58:17 +0000
--------
Quirk wrote:
[snip]
Please stop crossposting off-topic economics comments to religion newsgroups.
Hmm, I assumed that soc.religion.quaker would be a reasonable place to
make inquiries about non-greed-oriented economic models. Profit is,
in fact, a Puritan religious concept, into which the society of
friends might have some deep insight.
Dhu
--
???????????????????????????????????????
All persons named herein are purely fictional victims
of the Canidian Bagle Breeder's Association.
Save the Bagle!
Sun Ðhu
???????????????????????????????????????
Posted by:: invalid@example.com
Date: Fri, 11 Mar 2005 22:29:51 +0000
--------
Duncan Patton wrote:
>Hmm, I assumed that soc.religion.quaker would be a reasonable place to
>make inquiries about non-greed-oriented economic models. Profit is,
>in fact, a Puritan religious concept, into which the society of
>friends might have some deep insight.
soc.religion.quaker would be a great place for such inquiries, It's the
crossposting that Quakers object to. Experience has shown that such
threads experience topic drift, and soon yiou see a fellow in alt.slack
and another fellow in alt.activism flaming each other over the usual
subjects (politics, religion, gun control, abortion, top posting,
microsoft) - all crossposted to soc.religion.quaker.
Case in point: You were asked to please stop crossposting to
soc.religion.quaker, yet you decided to add soc.religion.quaker
to your reply anyway, without even bothering to find out why
doing that is very much frowned on. Quakers wouldn't do such a
thing - it woulkd be considered rude. Quakers tend to be nice
and polite; attributes not normally associated with alt.slack or
alt.activism.
Please feel free to come over to soc.religion.quaker and discuss
whatever you wish. Please stop crossposting to soc.religion.quaker;
please either post to soc.religion.quaker only or not at all.
you write:
"
soc.religion.quaker would be a great place for such inquiries, It's the
crossposting that Quakers object to. Experience has shown that such
threads experience topic drift, and soon yiou see a fellow in alt.slack
and another fellow in alt.activism flaming each other over the usual
subjects (politics, religion, gun control, abortion, top posting,
microsoft) - all crossposted to soc.religion.quaker.
Case in point: You were asked to please stop crossposting to
soc.religion.quaker, yet you decided to add soc.religion.quaker
to your reply anyway, without even bothering to find out why
doing that is very much frowned on. Quakers wouldn't do such a
thing - it woulkd be considered rude. Quakers tend to be nice
and polite; attributes not normally associated with alt.slack or
alt.activism.
Please feel free to come over to soc.religion.quaker and discuss
whatever you wish. Please stop crossposting to soc.religion.quaker;
please either post to soc.religion.quaker only or not at all.
"
And I reply that you are missing the point of newsgroups entirely
and you should take any "quakers-only-stuff" only discourse to a
private venue. There is a reason for cross-posting here, in
particular wrt non-greed oriented economics, which was what
the original poster was on about.
Dhu
On Fri, 11 Mar 2005 22:05:14 GMT
Duncan Patton wrote:
> On Fri, 11 Mar 2005 18:58:17 +0000
> invalid@example.com wrote:
>
> >
> >
> >
> > Quirk wrote:
> >
> > [snip]
> >
> > Please stop crossposting off-topic economics comments to religion newsgroups.
> >
>
> Hmm, I assumed that soc.religion.quaker would be a reasonable place to
> make inquiries about non-greed-oriented economic models. Profit is,
> in fact, a Puritan religious concept, into which the society of
> friends might have some deep insight.
>
> Dhu
>
>
>
> --
> ???????????????????????????????????????
>
> All persons named herein are purely fictional victims
> of the Canidian Bagle Breeder's Association.
>
> Save the Bagle!
>
> Sun Ðhu
>
> ???????????????????????????????????????
>
>
--
???????????????????????????????????????
All persons named herein are purely fictional victims
of the Canidian Bagle Breeder's Association.
Save the Bagle!
Sun Ðhu
???????????????????????????????????????
Posted by:: invalid@example.com
Date: Fri, 11 Mar 2005 19:05:35 +0000
--------
Quirk wrote:
>Yup. I have to start by understanding the financial landscape as it is,
>no small task.
>
>If you have any suggestions, that would be helpful.
Get a copy of _Basic Economics: A Citizen's Guide to the
Economy_ by Thomas Sowell
--------
In article <1110471134.437822.284150@o13g2000cwo.googlegroups.com>,
"Quirk" wrote:
> Hello, I am currently working on the proposed Monetary system for my
> Venture Communist investment model, and I have been looking at the
> various theories regarding community issued currencies, particularly
> those like LETS, which are issued by //mutual credit.//
Keeping it simple:
With your initial joint capital, buy investment grade silver rounds and
have them struck with your mark. Establish a relationship with a
dealer for converting to outside currencies.
Circulate the silver amongst yourselves, and sell/buy it through your
dealer (treasury) as needed for outside transactions (foreign
exchange). All outside earnings should be converted to newly struck
rounds, or to old ones re-purchased out of dealer inventory.
Eventually, after you have a large enough capital stock, you can hold
'reserves" in other currencies and develop methods for managing these.
This is not meant as a complete solution, just an idea on how to get
started. For the new currency to be accepted, it will have to have
intrinsic value. A mere promise is insufficient, unless backed by
credible force, of which you presently have none. Establish a hard
currency FIRST, and many subsequent issues will resolve themselves,
especially if the price of silver continues to rise.
Consider:
For you idea to take root, it needs a method for surviving massive
inflation and widespread default. Paper won't help much here. Any
system based on contracts to deliver a commodity, rather than the
commodity itself, will ultimately depend on the liquidity of markets
and agents. In other words, the only 'agent" you should trust is one
with an allocated hoard in a secure vault you can inspect, preferably
outside the USA, and preferably in a producer nation where the impulse
to confiscate is overuled by national interest. Canada, Australia and
South Africa spring to mind.
It's going to happen anyway, so you may as well be part of it.
pb
Posted by:: "Quirk" Date: 11 Mar 2005 03:39:23 -0800
--------
polar bear wrote:
> In article <1110471134.437822.284150@o13g2000cwo.googlegroups.com>,
> "Quirk" wrote:
> Keeping it simple:
Yeah. At this point I *not* inclined to consider a mutual credit
monetary model for venture communism, because of the issues I raise in
my Questions, however as a lot of people seem to believe in the
concept, I am interested in responses to my issues, perhaps I can
include aspects of it in my model, so I ask my questions with an open
mind.
However, my current thinking is that Venture Communes will issue simple
scrip for internal transactions and the value of the scrip will be
based on the land and capital the Commune holds, plus the value of new
labour investments. And that that scrip would be issued as (non-debt)
investment in new or existing Enterprises, based on figures from the
previous fiscal cycle. Holders would use scrip to pay rent on land and
capital to the Commune, for wages, and for transactions with the
Communes other enterprises. In other words, for mesoeconomic
transactions.
This amounts to a variation on the State Theory of Money, with Rent
taking the place of Taxes and the Commune instead of the State.
> With your initial joint capital, buy investment grade silver rounds
and
> have them struck with your mark.
Good advise, and basicly the idea, but focusing on a more diverse
basket of land and capital as is needed for the operation of the
Enterprises.
So our "mark" would be an asset tag :) and scrip would be used for
trade.
However, surpluses could certainly use silver as a store of value.
You might be interested in e-gold or "the liberty dollar" too.
> Establish a relationship with a
> dealer for converting to outside currencies.
Since the Venture Commune is fundamentally an investment bank, this is
a service it would provide for its Enterprises.
> Circulate the silver amongst yourselves, and sell/buy it through your
> dealer (treasury) as needed for outside transactions (foreign
> exchange). All outside earnings should be converted to newly struck
> rounds, or to old ones re-purchased out of dealer inventory.
You're right on target, Polar. Except as I said, instead of silver, I
plan to focus on land, and because land is hard to lug around, use
scrip instead for trade. One big advantage with land over silver is you
Rent land, so you can "spend" it over and over again.
> Eventually, after you have a large enough capital stock, you can hold
> 'reserves" in other currencies and develop methods for managing
these.
Exactly. And for providing for external trade and investment.
> This is not meant as a complete solution, just an idea on how to get
> started. For the new currency to be accepted, it will have to have
> intrinsic value. A mere promise is insufficient, unless backed by
> credible force, of which you presently have none. Establish a hard
> currency FIRST, and many subsequent issues will resolve themselves,
> especially if the price of silver continues to rise.
Thanks for your comments Polar. I agree with the basics of what you are
suggesting, but think that land itself is an even better basis for the
backing of a currency than silver.
> Consider:
> For you idea to take root, it needs a method for surviving massive
> inflation and widespread default. Paper won't help much here. Any
> system based on contracts to deliver a commodity, rather than the
> commodity itself, will ultimately depend on the liquidity of markets
> and agents. In other words, the only 'agent" you should trust is one
> with an allocated hoard in a secure vault you can inspect, preferably
> outside the USA, and preferably in a producer nation where the
impulse
> to confiscate is overuled by national interest. Canada, Australia
and
> South Africa spring to mind.
>
> It's going to happen anyway, so you may as well be part of it.
I completely agree. I've agreed so often in this response, I'm getting
the urge to take issue with some random detail just to keep up usenet
norms.
"Dollar Down. Gold Up in mixed trading" or "Dollar falls against Euro"
have become such regular headlines in the news wires that it looks like
they're stuck on a broken proxy somewhere.
TRADE DEFICIT FIGURES COME OUT TODAY. Will the dollar drop bellow
0.74€? Below December's Low? How low will it go?
Looking forward to your comments regarding the use of Rent instead of
Silver as a basis for currency value.
Regards.
Posted by:: invalid@example.com
Date: Fri, 11 Mar 2005 19:18:02 +0000
--------
Quirk wrote:
>However, my current thinking is that Venture Communes will issue simple
>scrip for internal transactions and the value of the scrip will be
>based on the land and capital the Commune holds, plus the value of new
>labour investments. And that that scrip would be issued as (non-debt)
>investment in new or existing Enterprises, based on figures from the
>previous fiscal cycle. Holders would use scrip to pay rent on land and
>capital to the Commune, for wages, and for transactions with the
>Communes other enterprises. In other words, for mesoeconomic
>transactions.
Communes or communism?
(You join a commune and can quit it. Communism is forced upon you and
there are walls to prevent escape.)
--------
On Fri, 11 Mar 2005 19:18:02 +0000
invalid@example.com wrote:
>
>
> Quirk wrote:
>
> >However, my current thinking is that Venture Communes will issue simple
> >scrip for internal transactions and the value of the scrip will be
> >based on the land and capital the Commune holds, plus the value of new
> >labour investments. And that that scrip would be issued as (non-debt)
> >investment in new or existing Enterprises, based on figures from the
> >previous fiscal cycle. Holders would use scrip to pay rent on land and
> >capital to the Commune, for wages, and for transactions with the
> >Communes other enterprises. In other words, for mesoeconomic
> >transactions.
>
> Communes or communism?
>
> (You join a commune and can quit it. Communism is forced upon you and
> there are walls to prevent escape.)
>
>
I expect he means communes in the voluntary sense. We have reams of
evidence to show that trying to force people to "do the right thing"
is The Wrong Thing.
Models that are workeable might be include some forms of religious
orders. But the real problem is that without some higher social ideal
to serve, Capitalism is no more than an amok machine.
Dhu
--
???????????????????????????????????????
All persons named herein are purely fictional victims
of the Canidian Bagle Breeder's Association.
Save the Bagle!
Sun Ðhu
???????????????????????????????????????
Posted by:: invalid@example.com
Date: Mon, 14 Mar 2005 05:22:54 +0000
--------
Duncan Patton wrote:
>
>invalid@example.com wrote:
>
>> Communes or communism?
>>
>> (You join a commune and can quit it. Communism is forced upon you and
>> there are walls to prevent escape.)
>
>I expect he means communes in the voluntary sense. We have reams of
>evidence to show that trying to force people to "do the right thing"
>is The Wrong Thing.
>
>Models that are workeable might be include some forms of religious
>orders.
I wish I could believe that he means communes in the voluntary sense,
but his behavior (repeated crossposting to a newsgroup that asks not
to be crossposted to) makes me think that he is in favor of force in
other areas as well.
--------
On Mon, 14 Mar 2005 05:22:54 +0000
invalid@example.com wrote:
>
>
>
> Duncan Patton wrote:
> >
> >invalid@example.com wrote:
> >
> >> Communes or communism?
> >>
> >> (You join a commune and can quit it. Communism is forced upon you and
> >> there are walls to prevent escape.)
> >
> >I expect he means communes in the voluntary sense. We have reams of
> >evidence to show that trying to force people to "do the right thing"
> >is The Wrong Thing.
> >
> >Models that are workeable might be include some forms of religious
> >orders.
>
> I wish I could believe that he means communes in the voluntary sense,
> but his behavior (repeated crossposting to a newsgroup that asks not
> to be crossposted to) makes me think that he is in favor of force in
> other areas as well.
>
I regularly cross post. Usually by accident, but this *is* the News:
press N for next or whatever your reader does, eh?
In fact, I find it difficult to see such a statement as your comparison
of the violence of forced communalism with cross-posting in a good light
at all: you do grave disservice to this community as well as real victims
of ideologically justified violence by this.
> Communes can work very well. Communism never has.
>
Yes.
All businessess/private corporations are private economic communes. And the
constitution of those communes is dictated by the commercial laws of the
land, ERGO involuntary communism IS slavery. Slave societies do work,
sortof, just not very well.
Dhu
>
>
>
>
--
???????????????????????????????????????
All persons named herein are purely fictional victims
of the Canidian Bagle Breeder's Association.
Save the Bagle!
Sun Ðhu
???????????????????????????????????????
Posted by:: invalid@example.com
Date: Mon, 14 Mar 2005 20:00:14 +0000
--------
Duncan Patton wrote:
>In fact, I find it difficult to see such a statement as your comparison
>of the violence
Force. Not violence. Violence is a subset of force.
>of forced communalism
>All businessess/private corporations are private economic communes.
That's an interesting thought. Not a bad way of looking at it.
Posted by:: "Quirk" Date: 13 Mar 2005 06:40:43 -0800
--------
invalid@example.com wrote:
> Communes or communism?
If you are intrested, you can find the latest draft of my venture
comminst proposal here:
Posted by:: invalid@example.com
Date: Mon, 14 Mar 2005 05:34:47 +0000
--------
Quirk wrote:
>If you are intrested, you can find the latest draft of my venture
>comminst proposal here:
>
>http://www.sparwasserhq.de/Index/HTMLjan5/jesper1.htm
It starts out with an error:
"Wealth and Poverty describe the extremes of entitlement to the
productivity of the economy, if your share is large, you are
wealthy, if your share is small, you are poor."
This definition does not allow for the basic truth that it is
possible for everyone to become richer or for everyone to become
poorer. It confuses absolute wealth with relative wealth.
it goes on with another error:
"All productive capacity of the economy is the result of the
application of the three factors of production: Land, Labour
and Capital."
This definition does not allow for the basic truth that iy is
possible to work hard, burn through capital, and occupy land,
all without being the least bit productive.
Posted by:: "Quirk" Date: 14 Mar 2005 04:09:12 -0800
--------
invalid@example.com wrote:
> It starts out with an error:
> "Wealth and Poverty describe the extremes of entitlement to the
> productivity of the economy, if your share is large, you are
> wealthy, if your share is small, you are poor."
> This definition does not allow for the basic truth that it is
> possible for everyone to become richer or for everyone to become
> poorer.
Yes it does.
> It confuses absolute wealth with relative wealth.
The concepts of "being" wealthy and poor are relative. This is why, HDI
poverty statistics, for instance, are calculated against median income.
> it goes on with another error:
>
> "All productive capacity of the economy is the result of the
> application of the three factors of production: Land, Labour
> and Capital."
> This definition does not allow for the basic truth that iy is
> possible to work hard, burn through capital, and occupy land,
> all without being the least bit productive.
It does not say that the application of land, labour and capital
invariably leads to production, but rather that all production is the
result of such application.
In anycase, I already said that Venture Communism is not the topic of
this thread, except in relation to currency.
If you are interested, we can discuss this when I post my next draft.
Posted by:: invalid@example.com
Date: Mon, 14 Mar 2005 20:16:09 +0000
--------
Quirk wrote:
>
>invalid@example.com wrote:
>
>> It starts out with an error:
>
>> "Wealth and Poverty describe the extremes of entitlement to the
>> productivity of the economy, if your share is large, you are
>> wealthy, if your share is small, you are poor."
>
>> This definition does not allow for the basic truth that it is
>> possible for everyone to become richer or for everyone to become
>> poorer.
>
>Yes it does.
Bare assertion makes a very unconvincing argument.
How can the above statement possibly be true? How can *everyone*
get a bigger share (your defintion of "rich")? How can *everyone*
get a smaller share (your defintion of "poor")? If everyone became
a hundred ten times richer, the exact same number of people would
fit your "if your share is small, you are poor" definition. Would
the poor become rich if they became a hundred time richer but ended
up with a smaller share because the rich got a thousand times
richer?
Posted by:: "Quirk" Date: 15 Mar 2005 05:44:15 -0800
--------
invalid@example.com wrote:
> Quirk wrote:
> >
> >invalid@example.com wrote:
> >
> >> It starts out with an error:
> >
> >> "Wealth and Poverty describe the extremes of entitlement to the
> >> productivity of the economy, if your share is large, you are
> >> wealthy, if your share is small, you are poor."
> >
> >> This definition does not allow for the basic truth that it is
> >> possible for everyone to become richer or for everyone to become
> >> poorer.
> >
> >Yes it does.
>
> Bare assertion makes a very unconvincing argument.
Striped bare by your ignoring the actual argument:
The concepts of "being" wealthy and poor are relative. This is why,
HDI
poverty statistics, for instance, are calculated against median
income.
> How can the above statement possibly be true? How can *everyone*
> get a bigger share (your defintion of "rich")? How can *everyone*
> get a smaller share (your defintion of "poor")?
Everybody can get a bigger or smaller share in the event of a general
increase or decrease in productive output.
What are you confused about?
> If everyone became
> a hundred ten times richer, the exact same number of people would
> fit your "if your share is small, you are poor" definition. Would
> the poor become rich if they became a hundred time richer but ended
> up with a smaller share because the rich got a thousand times
> richer?
I'll leave the rest of this babble for to meditate on on your own.
--------
In article <1110541163.464134.153110@o13g2000cwo.googlegroups.com>,
"Quirk" wrote:
> polar bear wrote:
>
> > In article <1110471134.437822.284150@o13g2000cwo.googlegroups.com>,
> > "Quirk" wrote:
>
> > Keeping it simple:
>
> Yeah. At this point I *not* inclined to consider a mutual credit
> monetary model for venture communism, because of the issues I raise in
> my Questions, however as a lot of people seem to believe in the
> concept, I am interested in responses to my issues, perhaps I can
> include aspects of it in my model, so I ask my questions with an open
> mind.
>
> However, my current thinking is that Venture Communes will issue simple
> scrip for internal transactions and the value of the scrip will be
> based on the land and capital the Commune holds, plus the value of new
> labour investments. And that that scrip would be issued as (non-debt)
> investment in new or existing Enterprises, based on figures from the
> previous fiscal cycle. Holders would use scrip to pay rent on land and
> capital to the Commune, for wages, and for transactions with the
> Communes other enterprises. In other words, for mesoeconomic
> transactions.
>
Well, by issuing script, you are essentially abstracting the value of
the land. No problem, as long as you don't use a fractional reserve
system. The question is then, how do you value the land? What
objective measure do you use? It's rent equivalent value? It's
productive output? It's external market value?
Once you've figured out a valuation method, you'd still be better off
issuing silver against it, rather than script. You open a whole can of
worms when you start issuing "shares" which is what script essentially
is. You're much better off paying out in silver. The fact that you
CAN is itself encouragement to remain in the group. It also eliminates
the problem of subdividing land should members decide to withdraw.
Convertability is the big issue here, especially at the outset. The
door has to swing both ways or you won't attract any serious interest.
pb
Posted by:: "Quirk" Date: 13 Mar 2005 07:06:57 -0800
--------
polar bear wrote:
> Well, by issuing script, you are essentially abstracting the value of
> the land. No problem, as long as you don't use a fractional reserve
> system. The question is then, how do you value the land? What
> objective measure do you use? It's rent equivalent value? It's
> productive output? It's external market value?
As a disclaimer, the reason I am asking these questions is that I am
still developing my thoughts on the matter.
But the value of the land is set at what the market feedback gives. For
instance, whenever a lease is up, it could be put up for auction, with
the current holder given a right to match the highest offer.
And any new bidder required to pay a certain deposit up front in order
to eliminate frivolous bids.
Volumes of scrip would based of the financial numbers from the previous
fiscal cycle. Thus only the initial issuance would be speculative, and
that could be based on the sale of bonds or somether form of external
debt.
> Once you've figured out a valuation method, you'd still be better off
> issuing silver against it, rather than script.
Except that land and capital are also inputs to production, silver
reserves are not. However I agree that when a store of value is needed,
silver would be great.
> You open a whole can of
> worms when you start issuing "shares" which is what script
essentially
> is.
Except that shares give ownership of the organization itself (the
actual land and capital), while scrip only provides a claim on its
productive output.
And, as you know, Venture Communism restricts the way in which shares
can be aquired.
> You're much better off paying out in silver. The fact that you
> CAN is itself encouragement to remain in the group. It also
eliminates
> the problem of subdividing land should members decide to withdraw.
Land can not be withdrawn, the scrip only pays Rent, it does not
provide ownership. Venture Communist scrip is a //RENT// backed
currency, land and captal, within the model, are owned mutually by all
the shareholders.
It only needs to be subdivided as needed by the tennents.
> Convertability is the big issue here, especially at the outset.
You can always sell scrip for a national currency or any other form of
wealth to those that wish to Rent land or capital from the Commune.
> The door has to swing both ways or you won't attract any serious
interest.
It does, but without allowing private sovereign property rights to any
of the commune's land.
--------
In article <1110726417.192681.295500@o13g2000cwo.googlegroups.com>,
"Quirk" wrote:
> polar bear wrote:
>
> > Well, by issuing script, you are essentially abstracting the value of
> > the land. No problem, as long as you don't use a fractional reserve
> > system. The question is then, how do you value the land? What
> > objective measure do you use? It's rent equivalent value? It's
> > productive output? It's external market value?
>
> As a disclaimer, the reason I am asking these questions is that I am
> still developing my thoughts on the matter.
>
> But the value of the land is set at what the market feedback gives. For
> instance, whenever a lease is up, it could be put up for auction, with
> the current holder given a right to match the highest offer.
>
> And any new bidder required to pay a certain deposit up front in order
> to eliminate frivolous bids.
>
> Volumes of scrip would based of the financial numbers from the previous
> fiscal cycle. Thus only the initial issuance would be speculative, and
> that could be based on the sale of bonds or somether form of external
> debt.
>
> > Once you've figured out a valuation method, you'd still be better off
> > issuing silver against it, rather than script.
>
> Except that land and capital are also inputs to production, silver
> reserves are not. However I agree that when a store of value is needed,
> silver would be great.
>
> Did you take a look at the liberty dollar?
>
> http://www.norfed.org
There's a few schemes like this afoot. If they're based offshore you
are essentially "out of the system" as well as being protected from
inflation. I wouldn't use a US based system though. They've
confiscated gold before and will do it again if it suits them. In
fact, the best way to protect yourself is to just leave. Move to
Canada or maybe Brazil.
http://freedom.orlingrabbe.com/money_laundering/money1.htm
>
> > You open a whole can of
> > worms when you start issuing "shares" which is what script
> essentially
> > is.
>
> Except that shares give ownership of the organization itself (the
> actual land and capital), while scrip only provides a claim on its
> productive output.
>
> And, as you know, Venture Communism restricts the way in which shares
> can be aquired.
>
> > You're much better off paying out in silver. The fact that you
> > CAN is itself encouragement to remain in the group. It also
> eliminates
> > the problem of subdividing land should members decide to withdraw.
>
> Land can not be withdrawn, the scrip only pays Rent, it does not
> provide ownership. Venture Communist scrip is a //RENT// backed
> currency, land and captal, within the model, are owned mutually by all
> the shareholders.
>
> It only needs to be subdivided as needed by the tennents.
>
> > Convertability is the big issue here, especially at the outset.
>
> You can always sell scrip for a national currency or any other form of
> wealth to those that wish to Rent land or capital from the Commune.
>
> > The door has to swing both ways or you won't attract any serious
> interest.
>
> It does, but without allowing private sovereign property rights to any
> of the commune's land.
I'm still struggling with this concept of communal land. It seems to
me that the land, while held jointly and with restrictions on private
use, still has to be alienated from the general pool of available land.
I'm thinking of Hutterites, Menonites and so on, who, while they have
no individual claims per se, all have joint ownership under the laws of
whatever country they live in. Ultimately someone holds title,
whether it's a corporation, a commune or an individual.
Also, what happens when population exceeds available land? Even the
early settlers had to displace the indians, whom one could argue had a
fairer system of allocation.
pb
(I've trimmed the Quakers from this reply - they don't seem to be
participating, and I certainly don't want to disturb their tranquility)
Posted by:: "Quirk" Date: 14 Mar 2005 05:38:31 -0800
--------
polar bear wrote:
> There's a few schemes like this afoot. If they're based offshore
you
> are essentially "out of the system" as well as being protected from
> inflation. I wouldn't use a US based system though. They've
> confiscated gold before and will do it again if it suits them.
Yes, I agree, I do not plan to really do much business with the US
system, however with the falling dollar, it does become more and more
attractive in areas such as internet hosting.
If the data is not confidential, and securely backed up somewhere else,
it should be safe enough to use cheap American labour and
telecommunications.
> In
> fact, the best way to protect yourself is to just leave. Move to
> Canada or maybe Brazil.
I am Canadian. I also lived briefly in Brazil. Currently I live in
Germany, which is my 8th country of residence. But a Venture Commune
doesn't really chose which land it buys, the private Enterprises it
invests in do. It just winds up owning the land as a part of the terms
of investment. Ideally the Communal land holdings would be diversified
across countries.
While I have lived and worked in the US on several occasions, and have
American friends and family, personally, I do not plan to spend any
significant time there until after the US dollar hegemony house of
cards callapses.
However, I would certainly not be against Venture Communes investing in
US based enterprises and acquiring US land, after all their are many
great Americans, who deserve our solidarity, we should not let the
neofascist US Regime make us forget that.
Thanks for the link. I 'm happy it was one of the "safe for work" ones.
> > It does, but without allowing private sovereign property rights to
any
> > of the commune's land.
> I'm still struggling with this concept of communal land.
I don't know why. You believe in freedom of association, why is it so
hard for you to consider an association of land owners who own some
land equally, and then Rent it to the highest bidder, for their mutual
benefit.
I would have thought that, of the properties of a Venture Commune, it
was not the communal ownership of land which you would struggle with,
but the fact that all shareholders are equal, and that money can not
buy shares.
> It seems to
> me that the land, while held jointly and with restrictions on private
> use, still has to be alienated from the general pool of available
land.
I'm not sure what you mean by alienated, the land is still available
for Rent to the market, it is just not available for sale.
> I'm thinking of Hutterites, Menonites and so on, who, while they have
> no individual claims per se, all have joint ownership under the laws
of
> whatever country they live in. Ultimately someone holds title,
> whether it's a corporation, a commune or an individual.
Yes, I agree. I am not making the argument that a title should not be
held, but rather that it should be held mutually, and suggesting three
distinct properties that make such holding in line with Anarchist
Philosophy and Economic theory.
> Also, what happens when population exceeds available land?
A Venture Commune is an investment organization that uses Rent as the
basis of the return on investment for its investors.
It is not a colony.
> (I've trimmed the Quakers from this reply - they don't seem to be
> participating, and I certainly don't want to disturb their
tranquility)
You are entitled to decide which groups you feel your comments should
be posted to. Personally I agree, since we seem to have drifted back
into talking about Venture Communism, and not Community Currency, which
is the intended subject of this tread :)
--------
In article <1110807511.850496.138120@f14g2000cwb.googlegroups.com>,
"Quirk" wrote:
> polar bear wrote:
>
snip some stuff
>
> You are entitled to decide which groups you feel your comments should
> be posted to. Personally I agree, since we seem to have drifted back
> into talking about Venture Communism, and not Community Currency, which
> is the intended subject of this tread :)
>
I know what the problem is. It's my natural aversion to working with
other people, or often just being around them, that accounts for my
hesitation. I am not a joiner, which is why I joined the CoSG.
The system itself can work. No doubt it would need dynamic adjustment,
but I've personally seen it happen. The Huterites in Alberta where I
grew up, for example, or the Menonites in Belize who basically run the
dairy industry. (All manner of dairy products can be safely consumed
in Belize, thanks to them)
But back to the currency. An item of interest regarding silver as
currency: http://tinyurl.com/5t42j
(I had to crunch it, it was a mile long)
key points are:
MEXICO CITY (Reuters) - An influential Mexican businessman wants to
reintroduce silver coins as legal currency -- as in Mexico's 16th
century heyday -- and, far-fetched as it may sound, the idea is winning
support.
*** the us$ is falling. Mexican business has been burned on both
sides. Looks like they've had enough. ***
The Senate has already passed the initiative, and the lower house is
expected to vote soon on the bill, which has struck a nerve in a
country where decades of financial crisis have fomented a deep distrust
of paper currency.
***2006 Mexicans go to the polls. both PRI and PAN have been trying to
derail a VERY popular PRD mayor who shows every sign of being a
front-runner. Needless to say, he is not popular in Washington:
http://www.marxist.com/Latinam/targets_venezuela_cuba.html
***
The central bank opposes the plan as anachronistic.
*** Well, duh. ***
snip
According to Price and advocate lawmakers interviewed by Reuters, the
new coins would be valued according to the price of silver as a
commodity, with the central bank, Banco de Mexico, managing coinage and
charging a 10 percent seigniorage.
*** The Muslims are working on their own plan, the Dinar, which I'm
sure you're aware of. All of this speaks to what comes next. If we
reach that point, and I'd say the odds are pretty good, you're going to
want to have some silver lying around. So much the better if it's
integral to your economy. Maybe your first commune should be a mining
venture. ***
pb
Posted by:: "Quirk" Date: 15 Mar 2005 06:09:38 -0800
--------
polar bear wrote:
> In article <1110807511.850496.138120@f14g2000cwb.googlegroups.com>,
> "Quirk" wrote:
> > polar bear wrote:
> I know what the problem is. It's my natural aversion to working with
> other people, or often just being around them, that accounts for my
> hesitation. I am not a joiner, which is why I joined the CoSG.
I don't think that is much of a problem, as I said, a Venture Commune
is an investment organization, not a colony, it doesn't place any
special requirement on being around other people.
> The system itself can work. No doubt it would need dynamic
adjustment,
> but I've personally seen it happen. The Huterites in Alberta where I
> grew up, for example, or the Menonites in Belize who basically run
the
> dairy industry. (All manner of dairy products can be safely consumed
> in Belize, thanks to them)
I think it can work too, but it is a little more abstracted a scheme
then the Menonites or the Huterites, as the Communards are only joint
shareholders in the assets of the Venture Commune, not necessarily
neighbours in a isolated colony.
> But back to the currency. An item of interest regarding silver as
> currency: http://tinyurl.com/5t42j
> (I had to crunch it, it was a mile long)
>
> key points are:
>
> MEXICO CITY (Reuters) - An influential Mexican businessman wants to
> reintroduce silver coins as legal currency -- as in Mexico's 16th
> century heyday -- and, far-fetched as it may sound, the idea is
winning
> support.
Yes, you might also be interested in the re-emergance of Islamic Dinar,
a gold coin in the middle east. Google it.
Its clear the era of US dollar hegemony is coming to a close, but I
don't think wealth-as-currency is the only thing that will emerge.
In fact, once the US balance of trade is more or less equal the
currency will probably be stable again, at a much lower value of
course.
And then I expect Gold and Silver to start dropping in value again.
Not land though.
Thanks for the links and information!
> ***2006 Mexicans go to the polls. both PRI and PAN have been trying
to
> derail a VERY popular PRD mayor who shows every sign of being a
> front-runner. Needless to say, he is not popular in Washington:
> http://www.marxist.com/Latinam/targets_venezuela_cuba.html
> ***
Needles indeed, if Mexico had oil, that would be enough to make them an
axis of evil candidate.
> *** The Muslims are working on their own plan, the Dinar, which I'm
> sure you're aware of.
Ummm. I guess I should read the whole post before responding huh? :)
> All of this speaks to what comes next. If we
> reach that point, and I'd say the odds are pretty good, you're going
to
> want to have some silver lying around. So much the better if it's
> integral to your economy. Maybe your first commune should be a
mining
> venture. ***
A point of clarification; the Commune is just an investment
organization, like a venture capital fund or an investment bank, the
first *Enterprise* (which are private ventures) could be a mining
venture, but that is too capital intensive, I think the first
Enterprises will be value-added internet services resellers. But, I
wont go into details. In principal any venture in which marginal
productivity of labour is high and capital requirements are low would
work, a promotions and entertainment company, or a temporary worker
agency would be among the early venture too, my crystal ball tells me.
However, eventually, Venture Communes would invest in mining, and
housing and other land-intensive Enterprises. You know. Buy the whole
world.
Regards.
Posted by:: brthrn@dangermedia.org
Date: 15 Mar 2005 06:28:53 -0800
--------
What a bunch of no-GODDAMN-fun-having bunch of ugly
know-nothing-at-alls bossy bitch-whore losers bitches guys like you
are.
HAHA!
I LAUGH at your MEASLEY existence. BEGGING FOR SCRAPS FROM THE GODDAMN
*POOPIE* TABLE!
AHAH!
MONDO RETARDO!
Posted by:: nospam@nospam.com
Date: Fri, 18 Mar 2005 16:34:57 +0000
--------
brthrn@dangermedia.org wrote:
>What a bunch of no-GODDAMN-fun-having bunch of ugly
>know-nothing-at-alls bossy bitch-whore losers bitches guys like you
>are.
>
>HAHA!
>
>I LAUGH at your MEASLEY existence. BEGGING FOR SCRAPS FROM THE GODDAMN
>*POOPIE* TABLE!
>
>AHAH!
>
>MONDO RETARDO!
I thought that university users were bad, then I saw AOL users.
I thought that AOL users were bad, then I saw WebTV users.
I thought that WebTV users were bad, then I saw Google groups users.
Posted by:: "Quirk" Date: 18 Mar 2005 09:15:05 -0800
--------
nospam@nospam.com wrote:
> I thought that university users were bad, then I saw AOL users.
> I thought that AOL users were bad, then I saw WebTV users.
> I thought that WebTV users were bad, then I saw Google groups users.
And supernews users worldwide are not impressed with your effort to
bring down their credibility.
Do you have an actual argument to make, or are you just here to
demonstrate how well you can talk out of your ass?
Posted by:: König Prüße, GfbAEV Date: Fri, 18 Mar 2005 17:41:26 GMT
--------
"Quirk" wrote:
>
>nospam@nospam.com wrote:
>
>> I thought that university users were bad, then I saw AOL users.
>
>> I thought that AOL users were bad, then I saw WebTV users.
>
>> I thought that WebTV users were bad, then I saw Google groups users.
>
>And supernews users worldwide are not impressed with your effort to
>bring down their credibility.
>
>Do you have an actual argument to make, or are you just here to
>demonstrate how well you can talk out of your ass?
>
Well, you certainly seem to be doing a good job of it!
snip
>
> > But back to the currency. An item of interest regarding silver as
> > currency: http://tinyurl.com/5t42j
> > (I had to crunch it, it was a mile long)
> >
> > key points are:
> >
> > MEXICO CITY (Reuters) - An influential Mexican businessman wants to
> > reintroduce silver coins as legal currency -- as in Mexico's 16th
> > century heyday -- and, far-fetched as it may sound, the idea is
> winning
> > support.
>
> Yes, you might also be interested in the re-emergance of Islamic Dinar,
> a gold coin in the middle east. Google it.
>
> Its clear the era of US dollar hegemony is coming to a close, but I
> don't think wealth-as-currency is the only thing that will emerge.
>
> In fact, once the US balance of trade is more or less equal the
> currency will probably be stable again, at a much lower value of
> course.
Well, the US$ index has fallen 32% since it's 2001 peak, and still the
trade deficit expands. The basic problem: nothing is made in the USA
anymore, and the major source of imports, China, pegs it's currency to
the dollar. It would take a few paragraphs to explore all the
ramifications, but the short answer is: I don't see a happy ending.
This won't be reconciled using the old textbook formula. It's gone way
too far for that.
>
> And then I expect Gold and Silver to start dropping in value again.
Gold is an interesting story. There's a massive implicit short
position in gold right now, thanks to the carry trade. If the yield
curve flattens, or inverts, those shorts will have to be covered. Long
story short , gold will come down, but from a much higher
level than today. Silver is another story. It has many industrial
uses, including some new applications that will increase demand far in
excess of the losses owing to digital photography. There's also a huge
supply deficit. If everyone holding contracts today demanded physical
delivery, the Comex would have to shut down. It runs something like
10 to 1. I've seen credible work that suggests we may ee a spot
market only in the near future.
>
> Not land though.
Productive farmland may rise, but I wouldn't hold my breath on the
residential side. Try heating a McMansion at $100 bbl oil. Try
finding a buyer when everyone already "owns" or is trying to sell
because their floating rate mortgage just took a trip to the moon.
And of course when THAT goes, it's bye-bye bond market.
>
> Thanks for the links and information!
not a problem.
>
> > ***2006 Mexicans go to the polls. both PRI and PAN have been trying
> to
> > derail a VERY popular PRD mayor who shows every sign of being a
> > front-runner. Needless to say, he is not popular in Washington:
> > http://www.marxist.com/Latinam/targets_venezuela_cuba.html
> > ***
>
> Needles indeed, if Mexico had oil, that would be enough to make them an
> axis of evil candidate.
You're joking here, right?
pb
Posted by:: König Prüße, GfbAEV Date: Wed, 16 Mar 2005 10:47:28 GMT
--------
polar bear wrote:
>In article <1110895778.916966.85510@f14g2000cwb.googlegroups.com>,
>"Quirk" wrote:
>> Needles indeed, if Mexico had oil, that would be enough to make them an
>> axis of evil candidate.
>
>You're joking here, right?
What, about Mexican oil?
Posted by:: "Quirk" Date: 16 Mar 2005 06:28:39 -0800
--------
polar bear wrote:
> > In fact, once the US balance of trade is more or less equal the
> > currency will probably be stable again, at a much lower value of
> > course.
> Well, the US$ index has fallen 32% since it's 2001 peak,
Yup, the peak that succumb to Saddam's secret weapon; converting his
oil trade to Euros. The US State Department said "Baghdad's recent
insistence on selling its oil in Euros rather than US dollars, which is
the worldwide industry standard, will likely result in Iraq losing $250
to $300 million yearly in conversion fees and lost interest." Didn't
work out that way. Bomb them!
> and still the trade deficit expands.
Yup, but what if you balance it against net inflows?
Could it be that America is balancing it's trade deficit by exporting
ownership of itself; it's land and capital?
Seems to me that the US dollar is being (barely) kept afloat by four
things, a) demand for dollars to buy oil, b) demand for dollars to
service foreign debt, c) demand for dollars to stock currency reserves,
and d) demand for dollars to buy America itself.
'a' depends on US dollar denomination of oil trade, cracks are showing
here as countries want to trade oil in other currencies. 'b' is also
weakening, with countries like Russia refusing to accept new US Dollar
debt and paying off what it has as quickly as possible, 'c' seems to be
drying up, with the Euro emerging as the reserve currency of choice,
that leaves d.
Rome was sacked by the Barbarians. America is just selling itself to
them.
> The basic problem: nothing is made in the USA
> anymore, and the major source of imports, China, pegs it's currency
to
> the dollar.
Yup, and what is made in the USA has inflated productivity numbers
because of undervalued foreign inputs.
> It would take a few paragraphs to explore all the
> ramifications, but the short answer is: I don't see a happy ending.
I would be interesting in the exploration, but I basicly agree, a happy
ending is unlikely, however, I do have hope that the new Asian owners
of America will pursue a gentle descent, not allow a sudden collapse.
> This won't be reconciled using the old textbook formula. It's gone
way
> too far for that.
How do you see it playing out then?
America does seem interested in increasing its productive capacity, by
importing more Latin American slaves for instance.
I think it may play out according to the old textbook formula, however
America seems headed for a Gilded Age with even more incredibly high
levels of poverty.
> Silver is another story. It has many industrial
> uses, including some new applications
Interesting, I was under the impression that Gold also had considerable
industrial application, I will take a closer look at this. Thanks.
> > Not land though.
>
> Productive farmland may rise, but I wouldn't hold my breath on the
> residential side.
Well, rise or fall, land alway has a productive use value that it makes
a very solid asset.
> > Needles indeed, if Mexico had oil, that would be enough to make
them an
> > axis of evil candidate.
>
> You're joking here, right?
No, just ignorant, I hadn't looked at Mexico's oil export figures, I
had no idea. In light of that, I can guarantee they will not be using a
silver-based currency any time soon for their oil trade.
Regards.
Posted by:: König Prüße, GfbAEV Date: Wed, 16 Mar 2005 15:12:22 GMT
--------
"Quirk" wrote:
>
>polar bear wrote:
>
>> > In fact, once the US balance of trade is more or less equal the
>> > currency will probably be stable again, at a much lower value of
>> > course.
>
>> Well, the US$ index has fallen 32% since it's 2001 peak,
>
>Yup, the peak that succumb to Saddam's secret weapon; converting his
>oil trade to Euros. The US State Department said "Baghdad's recent
>insistence on selling its oil in Euros rather than US dollars, which is
>the worldwide industry standard, will likely result in Iraq losing $250
>to $300 million yearly in conversion fees and lost interest." Didn't
>work out that way. Bomb them!
>
>> and still the trade deficit expands.
>
>Yup, but what if you balance it against net inflows?
>
>Could it be that America is balancing it's trade deficit by exporting
>ownership of itself; it's land and capital?
>
>Seems to me that the US dollar is being (barely) kept afloat by four
>things, a) demand for dollars to buy oil, b) demand for dollars to
>service foreign debt, c) demand for dollars to stock currency reserves,
>and d) demand for dollars to buy America itself.
>
>'a' depends on US dollar denomination of oil trade, cracks are showing
>here as countries want to trade oil in other currencies. 'b' is also
>weakening, with countries like Russia refusing to accept new US Dollar
>debt and paying off what it has as quickly as possible, 'c' seems to be
>drying up, with the Euro emerging as the reserve currency of choice,
>that leaves d.
>
>Rome was sacked by the Barbarians. America is just selling itself to
>them.
>
>> The basic problem: nothing is made in the USA
>> anymore, and the major source of imports, China, pegs it's currency
>to
>> the dollar.
>
>Yup, and what is made in the USA has inflated productivity numbers
>because of undervalued foreign inputs.
>
>> It would take a few paragraphs to explore all the
>> ramifications, but the short answer is: I don't see a happy ending.
>
>I would be interesting in the exploration, but I basicly agree, a happy
>ending is unlikely, however, I do have hope that the new Asian owners
>of America will pursue a gentle descent, not allow a sudden collapse.
>
>> This won't be reconciled using the old textbook formula. It's gone
>way
>> too far for that.
>
>How do you see it playing out then?
>
>America does seem interested in increasing its productive capacity, by
>importing more Latin American slaves for instance.
>
>I think it may play out according to the old textbook formula, however
>America seems headed for a Gilded Age with even more incredibly high
>levels of poverty.
>
>> Silver is another story. It has many industrial
>> uses, including some new applications
>
>Interesting, I was under the impression that Gold also had considerable
>industrial application, I will take a closer look at this. Thanks.
>
>> > Not land though.
>>
>> Productive farmland may rise, but I wouldn't hold my breath on the
>> residential side.
>
>Well, rise or fall, land alway has a productive use value that it makes
>a very solid asset.
>
>> > Needles indeed, if Mexico had oil, that would be enough to make
>them an
>> > axis of evil candidate.
>>
>> You're joking here, right?
>
>No, just ignorant, I hadn't looked at Mexico's oil export figures, I
>had no idea. In light of that, I can guarantee they will not be using a
>silver-based currency any time soon for their oil trade.
>
>Regards.
>
Well, Guanajuato is a beautiful city, and was the biggest silver mine
in the world for a while, back when Emperor Maximillian de vino y pan,
o Maximilliano de pan y vino, was the Big Honcho down yonder Mexico
way. Half the city looks very Old Europe with cobbled streets and
there are still French mining engineers and petro engineers there.
http://www.donquijote.org/guanajuato/info.history.asp
You know, I saw an estimate that there is maybe $15-20 trillion going on
in the world economy, and that half of it is "under the table"
My guess is that the off-the-books and illegal trade is a lot more than you
know about. Also, Mexico has a lot more silver and oil than you know about.
You'd be waaay better off being a pirate or a Mejicano Bandito
than trying to carry around that stupid briefcase and laptop.
You might try to get all of the pirates and banditos to play by your
rules, but they are a notoriously contrary bunch of motherfuckers.
So, good luck with that project.
Gruß,
König Prüße, GfbAEV
&
Emperor of Parts of New Jersey
Posted by:: "karl" Date: Wed, 16 Mar 2005 11:23:07 -0500
--------
"Quirk" wrote in message
news:1110983319.057262.225410@g14g2000cwa.googlegroups.com...
[...]
> Seems to me that the US dollar is being (barely) kept afloat by four
> things, a) demand for dollars to buy oil,
No. Oil is priced in US$. Their is no need to purchase US$ to buy oil. Part
of the rise of oil and gold prices is the depreciation of the US$.
> b) demand for dollars to service foreign debt,
?? Care to clarify? Who's foreign debt? The US's?
> c) demand for dollars to stock currency reserves,
> and d) demand for dollars to buy America itself.
> 'a' depends on US dollar denomination of oil trade, cracks are showing
> here as countries want to trade oil in other currencies.
Sorry. This is just wrong. Conduct a thought experiment:
Today: Germany buys a barrel of oil from Kuwait at the price of ~$55USD.
They remit to Kuwait, ~ 42 Euros at the current exchange rate.
Tomorrow: TSX, NYMEX, Nikkie, FTSE, Heng Seng, DAX, CAC, etc. start quoting
oil in Euros. So Germany buys a barrel of oil from Kuwait and remits 42
Euros.
q. How does this affect cross rates for the US$?
a. It doesn't.
What does affect the US$'s exchange rates is the US importing ever
increasing amounts of goods - oil being a major item - regardless of what
currency the good[s] are denominated in.
> 'b' is also weakening, with countries like Russia refusing to accept new
> US Dollar
> debt and paying off what it has as quickly as possible,
I'm still not sure what you are getting at here. US bond rates are
increasing. People are still buying treasury securities but are demanding a
higher return because of the US$'s weakness. This higher return makes US
bonds more attractive, causing capital inflows thus supporting the US$.
Nationalism might make some Yankees more fearful of bonds held by foreign
nationals instead good ol' yankee boys but it still represents how much is
being borrowed from future generations.
High equity returns also support the US$ as capital seeks the highest
return. In this case US equity returns must also cover currency depreciation
as well. This is part of your 'd', I guess.
> 'c' seems to be drying up, with the Euro emerging as the reserve currency
> of choice,
> that leaves
That is a bit of an overstatement. The Euro represents the first time since
WW2 that a currency exists that can be legitimately comparable to the US$ as
a reserve currency.
I would state it as; The US$ appears to be ending it's reign as the sole
primary reserve currency. I imagine that the Euro, the US$ and possibly in a
decade the Yuan will share the title of premier reserve currencies.
Posted by:: "Quirk" Date: 16 Mar 2005 09:37:06 -0800
--------
karl wrote:
> "Quirk" wrote in message
> news:1110983319.057262.225410@g14g2000cwa.googlegroups.com...
> [...]
> > Seems to me that the US dollar is being (barely) kept afloat by
four
> > things, a) demand for dollars to buy oil,
>
> No. Oil is priced in US$. Their is no need to purchase US$ to buy
oil.
This is wrong, it is sold in US$, not just priced, as the statement
from the State Department that I quoted in my last message shows.
How would selling oil in euros
> Part of the rise of oil and gold prices is the depreciation of the
US$.
You appear misinformed on this issue, here is a good article on the
subject.
US dollar hegemony has got to go
By Henry C K Liu
There is an economics-textbook myth that foreign-exchange rates are
determined by supply and demand based on market fundamentals. Economics
tends to dismiss socio-political factors that shape market fundamentals
that affect supply and demand.
The current international finance architecture is based on the US
dollar as the dominant reserve currency, which now accounts for 68
percent of global currency reserves, up from 51 percent a decade ago.
Yet in 2000, the US share of global exports (US$781.1 billon out of a
world total of $6.2 trillion) was only 12.3 percent and its share of
global imports ($1.257 trillion out of a world total of $6.65 trillion)
was 18.9 percent. World merchandise exports per capita amounted to
$1,094 in 2000, while 30 percent of the world's population lived on
less than $1 a day, about one-third of per capita export value.
Ever since 1971, when US president Richard Nixon took the dollar off
the gold standard (at $35 per ounce) that had been agreed to at the
Bretton Woods Conference at the end of World War II, the dollar has
been a global monetary instrument that the United States, and only the
United States, can produce by fiat. The dollar, now a fiat currency, is
at a 16-year trade-weighted high despite record US current-account
deficits and the status of the US as the leading debtor nation. The US
national debt as of April 4 was $6.021 trillion against a gross
domestic product (GDP) of $9 trillion.
World trade is now a game in which the US produces dollars and the
rest of the world produces things that dollars can buy. The world's
interlinked economies no longer trade to capture a comparative
advantage; they compete in exports to capture needed dollars to service
dollar-denominated foreign debts and to accumulate dollar reserves to
sustain the exchange value of their domestic currencies. To prevent
speculative and manipulative attacks on their currencies, the world's
central banks must acquire and hold dollar reserves in corresponding
amounts to their currencies in circulation. The higher the market
pressure to devalue a particular currency, the more dollar reserves its
central bank must hold. This creates a built-in support for a strong
dollar that in turn forces the world's central banks to acquire and
hold more dollar reserves, making it stronger. This phenomenon is known
as dollar hegemony, which is created by the geopolitically constructed
peculiarity that critical commodities, most notably oil, are
denominated in dollars. Everyone accepts dollars because dollars can
buy oil. The recycling of petro-dollars is the price the US has
extracted from oil-producing countries for US tolerance of the
oil-exporting cartel since 1973.
By definition, dollar reserves must be invested in US assets, creating
a capital-accounts surplus for the US economy. Even after a year of
sharp correction, US stock valuation is still at a 25-year high and
trading at a 56 percent premium compared with emerging markets.
The Quantity Theory of Money is clearly at work. US assets are not
growing at a pace on par with the growth of the quantity of dollars. US
companies still respresent 56 percent of global market capitalization
despite recent retrenchment in which entire sectors suffered some 80
percent a fall in value. The cumulative return of the Dow Jones
Industrial Average (DJIA) from 1990 through 2001 was 281 percent, while
the Morgan Stanley Capital International (MSCI) developed-country index
posted a return of only 12.4 percent even without counting Japan. The
MSCI emerging-market index posted a mere 7.7 percent return. The US
capital-account surplus in turn finances the US trade deficit.
Moreover, any asset, regardless of location, that is denominated in
dollars is a US asset in essence. When oil is denominated in dollars
through US state action and the dollar is a fiat currency, the US
essentially owns the world's oil for free. And the more the US prints
greenbacks, the higher the price of US assets will rise. Thus a
strong-dollar policy gives the US a double win.
Historically, the processes of globalization has always been the
result of state action, as opposed to the mere surrender of state
sovereignty to market forces. Currency monopoly of course is the most
fundamental trade restraint by one single government. Adam Smith
published Wealth of Nations in 1776, the year of US independence. By
the time the constitution was framed 11 years later, the US founding
fathers were deeply influenced by Smith's ideas, which constituted a
reasoned abhorrence of trade monopoly and government policy in
restricting trade. What Smith abhorred most was a policy known as
mercantilism, which was practiced by all the major powers of the time.
It is necessary to bear in mind that Smith's notion of the limitation
of government action was exclusively related to mercantilist issues of
trade restraint. Smith never advocated government tolerance of trade
restraint, whether by big business monopolies or by other governments.
A central aim of mercantilism was to ensure that a nation's exports
remained higher in value than its imports, the surplus in that era
being paid only in specie money (gold-backed as opposed to fiat money).
This trade surplus in gold permitted the surplus country, such as
England, to invest in more factories to manufacture more for export,
thus bringing home more gold. The importing regions, such as the
American colonies, not only found the gold reserves backing their
currency depleted, causing free-fall devaluation (not unlike that faced
today by many emerging-economy currencies), but also wanting in surplus
capital for building factories to produce for export. So despite
plentiful iron ore in America, only pig iron was exported to England in
return for English finished iron goods.
In 1795, when the Americans began finally to wake up to their
disadvantaged trade relationship and began to raise European (mostly
French and Dutch) capital to start a manufacturing industry, England
decreed the Iron Act, forbidding the manufacture of iron goods in
America, which caused great dissatisfaction among the prospering
colonials. Smith favored an opposite government policy toward promoting
domestic economic production and free foreign trade, a policy that came
to be known as "laissez faire" (because the English, having nothing to
do with such heretical ideas, refuse to give it an English name).
Laissez faire, notwithstanding its literal meaning of "leave alone",
meant nothing of the sort. It meant an activist government policy to
counteract mercantilism. Neo-liberal free-market economists are just
bad historians, among their other defective characteristics, when they
propagandize "laissez faire" as no government interference in trade
affairs.
A strong-dollar policy is in the US national interest because it keeps
US inflation low through low-cost imports and it makes US assets
expensive for foreign investors. This arrangement, which Federal
Reserve Board chairman Alan Greenspan proudly calls US financial
hegemony in congressional testimony, has kept the US economy booming in
the face of recurrent financial crises in the rest of the world. It has
distorted globalization into a "race to the bottom" process of
exploiting the lowest labor costs and the highest environmental abuse
worldwide to produce items and produce for export to US markets in a
quest for the almighty dollar, which has not been backed by gold since
1971, nor by economic fundamentals for more than a decade. The adverse
effect of this type of globalization on the developing economies are
obvious. It robs them of the meager fruits of their exports and keeps
their domestic economies starved for capital, as all surplus dollars
must be reinvested in US treasuries to prevent the collapse of their
own domestic currencies.
The adverse effect of this type of globalization on the US economy is
also becoming clear. In order to act as consumer of last resort for the
whole world, the US economy has been pushed into a debt bubble that
thrives on conspicuous consumption and fraudulent accounting. The
unsustainable and irrational rise of US equity prices, unsupported by
revenue or profit, had merely been a devaluation of the dollar.
Ironically, the current fall in US equity prices reflects a trend to an
even stronger dollar, as it can buy more deflated shares.
The world economy, through technological progress and non-regulated
markets, has entered a stage of overcapacity in which the management of
aggregate demand is the obvious solution. Yet we have a situation in
which the people producing the goods cannot afford to buy them and the
people receiving the profit from goods production cannot consume more
of these goods. The size of the US market, large as it is, is
insufficient to absorb the continuous growth of the world's new
productive power. For the world economy to grow, the whole population
of the world needs to be allowed to participate with its fair share of
consumption. Yet economic and monetary policy makers continue to view
full employment and rising fair wages as the direct cause of inflation,
which is deemed a threat to sound money.
The Keynesian starting point is that full employment is the basis of
good economics. It is through full employment at fair wages that all
other economic inefficiencies can best be handled, through an
accommodating monetary policy. Say's Law (supply creates its own
demand) turns this principle upside down with its bias toward
supply/production. Monetarists in support of Say's Law thus develop a
phobia against inflation, claiming unemployment to be a necessary tool
for fighting inflation and that in the long run, sound money produces
the highest possible employment level. They call that level a "natural"
rate of unemployment, the technical term being NAIRU (non-accelerating
inflation rate of unemployment).
It is hard to see how sound money can ever lead to full employment
when unemployment is necessary to maintain sound money. Within limits
and within reason, unemployment hurts people and inflation hurts money.
And if money exists to serve people, then the choice becomes obvious.
Without global full employment, the theory of comparative advantage in
world trade is merely Say's Law internationalized.
No single economy can profit for long at the expense of the rest of an
interdependent world. There is an urgent need to restructure the global
finance architecture to return to exchange rates based on
purchasing-power parity, and to reorient the world trading system
toward true comparative advantage based on global full employment with
rising wages and living standards. The key starting point is to focus
on the hegemony of the dollar.
To save the world from the path of impending disaster, we must:
promote an awareness among policy makers globally that excessive
dependence on exports merely to service dollar debt is self-destructive
to any economy;
promote a new global finance architecture away from a dollar hegemony
that forces the world to export not only goods but also dollar earnings
from trade to the US;
promote the application of the State Theory of Money (which asserts
that the value of money is ultimately backed by a government's
authority to levy taxes) to provide needed domestic credit for sound
economic development and to free developing economies from the tyranny
of dependence on foreign capital;
restructure international economic relations toward aggregate demand
management away from the current overemphasis on predatory supply
expansion through redundant competition; and
restructure world trade toward true comparative advantage in the
context of global full employment and global wage and environmental
standards.
This is easier done than imagined. The starting point is for the major
exporting nations each to unilaterally require that all its exports be
payable only in its currency, so that the global finance architecture
will turn into a multi-currency regime overnight. There would be no
need for reserve currencies and exchange rates would reflect market
fundamentals of world trade.
As for aggregate demand management, Asia leads the world in both
overcapacity and underconsumption. It is high time for Asia to realize
the potential of its market power. If the people of Asia are to be
compensated fairly for their labor, the global economy will see its
fastest growth ever.
Henry C K Liu is chairman of the New York-based Liu Investment Group.
((c)2002 Asia Times Online Co, Ltd. All rights reserved. Please
contact ads@atimes.com for information on our sales and syndication
policies.)
Posted by:: "karl" Date: Wed, 16 Mar 2005 13:24:31 -0500
--------
"Quirk" wrote in message
news:1110994626.091268.209190@g14g2000cwa.googlegroups.com...
>
> karl wrote:
>
>> "Quirk" wrote in message
>> news:1110983319.057262.225410@g14g2000cwa.googlegroups.com...
>> [...]
>> > Seems to me that the US dollar is being (barely) kept afloat by
> four
>> > things, a) demand for dollars to buy oil,
>>
>> No. Oil is priced in US$. Their is no need to purchase US$ to buy
> oil.
>
> This is wrong, it is sold in US$, not just priced, as the statement
> from the State Department that I quoted in my last message shows.
>
> How would selling oil in euros
>
>> Part of the rise of oil and gold prices is the depreciation of the
> US$.
>
> You appear misinformed on this issue, here is a good article on the
> subject.
>
> US dollar hegemony has got to go
> By Henry C K Liu
With all due respect to Mr. Lui and you. I disagree.
[...]
> The higher the market
> pressure to devalue a particular currency, the more dollar reserves its
> central bank must hold. This creates a built-in support for a strong
> dollar that in turn forces the world's central banks to acquire and
> hold more dollar reserves, making it stronger.
This is fine - simply the operation of a reserve currency. But:
> This phenomenon is known
> as dollar hegemony, which is created by the geopolitically constructed
> peculiarity that critical commodities, most notably oil, are
> denominated in dollars. Everyone accepts dollars because dollars can
> buy oil.
This is not.
You can buy oil in any floating currency you wish. If the seller wants to
convert his remittance in to US$ or Euros, that is another matter.
Assume for a moment Liu is accurate: Why isn't the high price of oil
bolstering the US$? The reverse is happening. The US$ is falling.
The US$ is falling because of it's twin budget and trade deficits.
Assume two more scenarios of Germany buying a barrel of Kuwaiti oil:
1] US denominated oil prices: where the transaction must be done in US$:
Germany trades 42 Euros for $55 USD and gives the $55 to Kuwait. Kuwait
does not like US$ so it converts it to 42 Euros. Oil is priced in US$ but
it is doing nothing to support the currency.
2] Euro denominated oil prices: where the transaction must be done in Euros:
Germany gives 42 Euros to Kuwait for a barrel of oil. The US$ is
unaffected.
The pertinent point is that what matters is not what currency the
transaction is made in but what currency the payee is willing to hold in its
reserves or equity.
Posted by:: "Quirk" Date: 16 Mar 2005 11:29:20 -0800
--------
karl wrote:
> With all due respect to Mr. Lui and you. I disagree.
With due respect, I will accept Mr. Lui's word over yours.
> You can buy oil in any floating currency you wish.
Not from OPEC, whose policy is to accept only US$ for oil, AFAIK.
> If the seller wants to
> convert his remittance in to US$ or Euros, that is another matter.
Other way around, the remittance is in US$, which then the seller can
convert as they please, accounting for the "conversion costs" warned of
by the State Department.
> Assume for a moment Liu is accurate: Why isn't the high price of oil
> bolstering the US$? The reverse is happening. The US$ is falling.
The remarkable thing about the US$ is that it is not falling as quickly
as balance of trade figures would indicate it should.
The US$ is falling, yes, but were it not for the items that I list,
including global oil trade, it would be collapsing, not merely falling.
> The US$ is falling because of it's twin budget and trade deficits.
Yes, however as Polar pints out, it has been falling since 2001, yet
both deficits have increased over the same period.
> Assume two more scenarios of Germany buying a barrel of Kuwaiti oil:
>
> 1] US denominated oil prices: where the transaction must be done in
US$:
>
> Germany trades 42 Euros for $55 USD and gives the $55 to Kuwait.
Kuwait
> does not like US$ so it converts it to 42 Euros. Oil is priced in
US$ but
> it is doing nothing to support the currency.
Notice that demand for USD is increased by Germany's purchase even
though the US is not involved in the transaction, and the second part
of your example assumes that Kuwait (and every other supplier) would
sell *all* of there US$, which is not the case.
OPEC countries have started to diversify their reserves, but they
remain predominately in US$, that they sell oil in US$ is a big reason
for this.
And buying oil from them also encourages oil consuming nations to have
ready supply of US$, creating demand for the currency.
> 2] Euro denominated oil prices: where the transaction must be done in
Euros:
> Germany gives 42 Euros to Kuwait for a barrel of oil. The US$ is
> unaffected.
Exactly, the US is unaffected until Germany, being able to buy oil in
Euros, now sends the Billions of US$ they have lying around for Oil
Trade to America to make inflationary demands on US goods. The Dollar
falls.
> The pertinent point is that what matters is not what currency the
> transaction is made in but what currency the payee is willing to hold
in its
> reserves or equity.
And the fact that the international Oil trade is denominated in USD is
among the reasons that countries do hold it in their reserves despite
the fact that any reasonable Central Banker would not be impressed by
the trade and budget deficit figures.
Another factor, besides oil, is development loans, such as those issued
by the IMF are denominated in USD.
So now, faced with larger then wanted US$ holding, foreign banks are
figuring a way out that would not collapse the US$, since that would
devalue there own reserves, so they are spending it in ways that do not
directly contribute to inflation: Buying America's land and capital
goods.
At least that's my take on it.
Regards.
Posted by:: "karl" Date: Wed, 16 Mar 2005 15:09:46 -0500
--------
"Quirk" wrote in message
news:1111001360.830639.150970@g14g2000cwa.googlegroups.com...
>
> karl wrote:
>
>> With all due respect to Mr. Lui and you. I disagree.
>
> With due respect, I will accept Mr. Lui's word over yours.
Fair enough.
> Other way around, the remittance is in US$, which then the seller can
> convert as they please, accounting for the "conversion costs" warned of
> by the State Department.
True. I admittedly neglected to consider conversion costs.
> The remarkable thing about the US$ is that it is not falling as quickly
> as balance of trade figures would indicate it should.
There are other factors; military and political power separate from
economic power.
[...]
> Notice that demand for USD is increased by Germany's purchase even
> though the US is not involved in the transaction, and the second part
> of your example assumes that Kuwait (and every other supplier) would
> sell *all* of there US$, which is not the case.
>
> OPEC countries have started to diversify their reserves, but they
> remain predominately in US$, that they sell oil in US$ is a big reason
> for this.
Which is my point: The US$ strength and postion as reserve currency rest
on the willingness of nations to hold it - not that certian commodities are
priced in it.
Posted by:: "Quirk" Date: 17 Mar 2005 06:58:53 -0800
--------
karl wrote:
> > OPEC countries have started to diversify their reserves, but they
> > remain predominately in US$, that they sell oil in US$ is a big
reason
> > for this.
> Which is my point: The US$ strength and postion as reserve currency
rest
> on the willingness of nations to hold it - not that certian
commodities are
> priced in it.
However you have the causality backwards, its status as a reserve
currency is strongly influenced by the fact that certain commodities
are priced in it.
Regards.
Posted by:: "karl" Date: Thu, 17 Mar 2005 10:09:57 -0500
--------
"Quirk" wrote in message
news:1111071533.421391.135850@o13g2000cwo.googlegroups.com...
>
> karl wrote:
>
>> > OPEC countries have started to diversify their reserves, but they
>> > remain predominately in US$, that they sell oil in US$ is a big
> reason
>> > for this.
>
>> Which is my point: The US$ strength and postion as reserve currency
> rest
>> on the willingness of nations to hold it - not that certian
> commodities are
>> priced in it.
>
> However you have the causality backwards, its status as a reserve
> currency is strongly influenced by the fact that certain commodities
> are priced in it.
Then that is our disagreement. My view: US$ pricing of commodities is an
effect of it being a [the] reserve currency.
Posted by:: "Quirk" Date: 17 Mar 2005 07:14:15 -0800
--------
karl wrote:
> > However you have the causality backwards, its status as a reserve
> > currency is strongly influenced by the fact that certain
commodities
> > are priced in it.
> Then that is our disagreement. My view: US$ pricing of commodities
is an
> effect of it being a [the] reserve currency.
Then test your thesis logicaly, what factors makes it the reserve
currency? How can you discount the issue of //what you can purchace for
it?//
Posted by:: "karl" Date: Thu, 17 Mar 2005 10:38:39 -0500
--------
"Quirk" wrote in message
news:1111072455.451378.236540@f14g2000cwb.googlegroups.com...
>
> karl wrote:
>
>> > However you have the causality backwards, its status as a reserve
>> > currency is strongly influenced by the fact that certain
> commodities
>> > are priced in it.
>
>> Then that is our disagreement. My view: US$ pricing of commodities
> is an
>> effect of it being a [the] reserve currency.
>
> Then test your thesis logicaly, what factors makes it the reserve
> currency?
1 Size and state of the economy.
[Which encompasses current account issues and convertibility]
2 Military strength
[Basically a gauge of the safety of one's assets]
3 Political strength.
[this would encompass political stability as well a budgetary issues.]
The Euro meets [1] It's size is comparable it's current account while not
ideal is much better than the US.
It falls short on [2]. Militarily the EU is weak compared to the US.
It is iffy on [3] While politically stable the loose nature of the
confederation of nations is a liability.
China meets [1] except for currency convertibility [I predict the Yuan will
be freely floating and convertible within 5 years] and a lack of
transparency in accounting, contract law and such.
[2] It falls short on [2] but it is gaining.
[3] is a mystery. It is stable politically of a sort but a rather
unpredictable form - if that makes any sense. It's budgetary situation is no
doubt better than the US but it suffers from the same lack of transparency
as in [1]
> How can you discount the issue of //what you can purchase for
> it?//
Because even if a commodity is priced in a particular currency you can
easily exchange it for another. Now if the US$ or any other presumptive
reserve currency did have draconian currency controls that did not allow
easy exchange it would not be a reserve currency.
Posted by:: "Quirk" Date: 17 Mar 2005 07:58:41 -0800
--------
karl wrote:
> > Then test your thesis logicaly, what factors makes it the reserve
> > currency?
>
> 1 Size and state of the economy.
> [Which encompasses current account issues and convertibility]
Given recent trends and deficits this seems to disqualify the US, as
Polar's point that the the current account and budget deficits
increased despite the falling dollar.
> 2 Military strength
> [Basically a gauge of the safety of one's assets]
China is not insecure about the the safety of its own assets, why use
US$?
> 3 Political strength.
> [this would encompass political stability as well a budgetary
issues.]
???
America has been blowing its political capital faster than a drunken
sailor empties his wallet, what, you think the Asians don't watch the
news?
Yet, the current account deficit continues to increase, how do you
account for this?
> The Euro meets [1] It's size is comparable it's current account
while not
> ideal is much better than the US.
>
> It falls short on [2]. Militarily the EU is weak compared to the US.
The difference is marginal, neither the EU nor the US can risk war with
Russia or China, or each other, either can defend against "Rogue
states," particularly in alliances that include at least two of them.
> It is iffy on [3] While politically stable the loose nature of the
> confederation of nations is a liability.
???
What does China care about the internal disputes within the EU over the
names of Cheeses, environmental regulations and immigration controls?
> China meets [1] except for currency convertibility [I predict the
Yuan will
> be freely floating and convertible within 5 years] and a lack of
> transparency in accounting, contract law and such.
However, it is China we are talking about. They are ones with the
account surplus with everyone else.
> [2] It falls short on [2] but it is gaining.
Nonsense. Mutual Assured Destruction. The difference between being able
to destroy the planet 5 times or 25 is immaterial, since we only have
one.
> [3] is a mystery. It is stable politically of a sort but a rather
> unpredictable form - if that makes any sense. It's budgetary
situation is no
> doubt better than the US but it suffers from the same lack of
transparency
> as in [1]
However, once again, this is only of interest to foreigners, it is
China that holds the surpluses. Why?
> > How can you discount the issue of //what you can purchase for
> > it?//
>
> Because even if a commodity is priced in a particular currency you
can
> easily exchange it for another.
You can, however, there are conversion expenses and price uncertainty
in doing so, and the trade still has significant demand implications on
the currency.
The value of the commodity also supports the value of the currency.
This is Quantity Theory 101.
> Now if the US$ or any other presumptive
> reserve currency did have draconian currency controls that did not
allow
> easy exchange it would not be a reserve currency.
How about these: Sell Oil in Euros = Get Bombed. Trade Oil for other
Commodities = Have a coup staged against you. Think about trading Oil
in Euros (or Islamic Dinars) = Be added to the "Axis of Evil" list.
Posted by:: "karl" Date: Thu, 17 Mar 2005 12:03:45 -0500
--------
"Quirk" wrote in message
news:1111075121.130198.188930@o13g2000cwo.googlegroups.com...
> karl wrote:
>> > Then test your thesis logicaly, what factors makes it the reserve
>> > currency?
>>
>> 1 Size and state of the economy.
>> [Which encompasses current account issues and convertibility]
>
> Given recent trends and deficits this seems to disqualify the US,
I agree.The CA deficit is acting against the tendency to use the US$ as a
reserve currency. I've never meant to imply to the contrary. It is still
the largest economy and has a fully convertible currency, though, and those
are considerable factors.
> as
> Polar's point that the the current account and budget deficits
> increased despite the falling dollar.
Again I think we differ on causality. The US$ is falling in part because of
the CA deficit. True, normally a falling currency will address the CA
deficit as imports become more expensive and exports become cheaper.
But the Yuan is _pegged_ to the US$. It is this US$/Yuan peg that is really
hurting the US.
As well may I point out that this circumstance exists independant of what
currency oil is priced in.
This may sound all in China's favour but it also means that they are paying
more for oil a than they would if the yuan floated.
>> 2 Military strength
>> [Basically a gauge of the safety of one's assets]
>
> China is not insecure about the the safety of its own assets, why use
> US$?
It's more grey than that. Consider the US's ability to seize strategic
assets like oilfeilds or garrison regions to ensure acceptable governments.
The EU could not do this. China would have a very limited ability to do so.
As well it enompasses the nations perceived ability to guard aginst,
withstand and react to
things like a Sept 11 or the Madrid or Bali bombings and such.
Because Sept 11 occurs it doesn't defeat the premise. If post-Sep
11/Madrid,/Bali, the US is seen as safest from and most able to deal with
such events [accurate or not] then that supports it as a reserve currency
>> 3 Political strength.
>> [this would encompass political stability as well a budgetary
> issues.]
>
> ???
>
> America has been blowing its political capital faster than a drunken
> sailor empties his wallet, what, you think the Asians don't watch the
> news?
Political capital is but one factor, and again I don't disagree that recent
US policy has acted against its' political strength.
But it also encompasses things like the possibility of a Tianamen Square,
or Russian coup. If the US is considered more stable politically [again
accurately or not] with respect to these types of incidence, that is another
factor in it's favour as a reserve currency.
> Yet, the current account deficit continues to increase, how do you
> account for this?
My turn to ????
The CA deficit increases because the US spends more on imports than it
earns in exports.
>> The Euro meets [1] It's size is comparable it's current account
> while not
>> ideal is much better than the US.
>>
>> It falls short on [2]. Militarily the EU is weak compared to the US.
>
> The difference is marginal, neither the EU nor the US can risk war with
> Russia or China, or each other, either can defend against "Rogue
> states," particularly in alliances that include at least two of them.
It isn't just the extreme case of war with a Russia or China but the
ability to project power vis a vis Afghanitan and Iraq - regardless of
whether or not one considers those uses prudent.
>> It is iffy on [3] While politically stable the loose nature of the
>> confederation of nations is a liability.
>
> ???
>
> What does China care about the internal disputes within the EU over the
> names of Cheeses, environmental regulations and immigration controls?
They [and everyone else who are considering what to hold as reserves] care
that while the supra-national bodies like the ECB & EP are saying one thing
and attempting a certain policy, the various national organs might be
working to frustrate that policy by happenstance or design.
>> China meets [1] except for currency convertibility [I predict the
> Yuan will
>> be freely floating and convertible within 5 years] and a lack of
>> transparency in accounting, contract law and such.
>
> However, it is China we are talking about. They are ones with the
> account surplus with everyone else.
>
>> [2] It falls short on [2] but it is gaining.
>
> Nonsense. Mutual Assured Destruction. The difference between being able
> to destroy the planet 5 times or 25 is immaterial, since we only have
> one.
I already covered this. It isn't just MAD and some scenario of total war.
It is the ability to project power and protect one's interests [assets
ultimately]. China's ability is limited especially compared to the US.
>> [3] is a mystery. It is stable politically of a sort but a rather
>> unpredictable form - if that makes any sense. It's budgetary
> situation is no
>> doubt better than the US but it suffers from the same lack of
> transparency
>> as in [1]
>
> However, once again, this is only of interest to foreigners, it is
> China that holds the surpluses.
Why wouldn't it be of interest to the Chinese? If I were a stockholder in
Enron I would be _most_ interested in a lack of transparency. China does
not assume that the Yuan is the best reserve currency because they are
Chinese any more than Canadians consider the C$ the best reserve currency
because they are Canadian.
China alone does not determine what is the reserve currency. Every nation
that holds reserves determines that by where they put their reserves. Yes
China is a major player and growing but it isn't the only one.
Yes China will probably place a nationalistic premium on its' own nation -
as will most other nations - especially the major states. The US will do so
as well and it is still the largest economy; hence a factor in it's favour.
>> > How can you discount the issue of //what you can purchase for
>> > it?//
>>
>> Because even if a commodity is priced in a particular currency you
> can
>> easily exchange it for another.
>
> You can, however, there are conversion expenses and price uncertainty
> in doing so, and the trade still has significant demand implications on
> the currency.
Some. How significant.... I think it is minor compared to the current
account and budgetary situation. I'm think this is the crux of our
difference. I place less weight on this factor than you do.
> The value of the commodity also supports the value of the currency.
> This is Quantity Theory 101.
>
>> Now if the US$ or any other presumptive
>> reserve currency did have draconian currency controls that did not
> allow
>> easy exchange it would not be a reserve currency.
>
> How about these: Sell Oil in Euros = Get Bombed.
> Trade Oil for other
> Commodities = Have a coup staged against you. Think about trading Oil
> in Euros (or Islamic Dinars) = Be added to the "Axis of Evil" list.
*shrug* I disagree with your stark portrayal. Not that the US has interests
and protects them but to go from that to 'Sell Oil in Euros = Get Bombed'
etc is a stretch I'm not willing to make.
To sum up: I do think the CA and budget deficits are the major concerns for
the US$ with respect to reserve currency status. Commodity pricing - less
so.
In addition to economic factors, military and political strength/stability
also affect which currencies are considered reserve currencies.
Or to sum up even more: Commodity pricing is an effect of reserve status -
not a determinant of it.