Subject: Re: TURMEL: The Third Way

From: [email-masked] (John Turmel)
Date: Wed, 12 Jul 1995 08:30:41 GMT

Subject: Re: TURMEL: The Third Way
 
     On Jul 10 16:44, 1995, [email-masked] (Frank Ch. Eigler) 
wrote: 
 
:John Turmel ([email-masked]) wrote:
:[...]
:: >Well, if I were playing with your proposed system, I could borrow
:: >money now against my entire lifetime's earnings, and spend it all.
:: >If others do the same, we'd have an explosion of the money
:: >supply, no?  Immediate inflation, no?  (And corporations have no
:: >lifetimes to limit them.)
::      Spend it all on what? If you buy a house, the house is the 
:: collateral for the chips issued. If you buy a car, it is too. All 
:: we ask is that you repay your loan as fast as the collateral 
:: depreciates.  [...]
:
:How about spending it on entertainment, going boating, going to the
:moon and back, hiring a dozen masseurs with accompanying
:belly-dancers.  In other words, *services*.  Or perhaps *renting*
:equipment or a home.  I'd own no more physical property than before
:the massive loans.  (Thus I don't have to repay the loan on the
:account of depreciation.)  But I could enjoy the value of the money
:regardless!  All for a loan that's given against my iffy future
:income. 
:
     So if you joined a Greendollar barter system where people 
trust that if you obtain services from them, you'll service them 
back, you're saying you'd enjoy the value of the money and not 
bother trying to pay those services back. 
     It's true that Greendollar systems have experienced problems 
from people who act like you say you would but they're quickly 
thrown out and people won't trade with them. But such welchers 
are very rare. Most people are quite prepared to repay work for 
work and that is the trust we count on. 
     But Greendollar systems don't allow people to have their 
whole life's potential earnings to blow so they can stiff the 
system for the maximum amount. 
     Yet, I think that liberating the industrial capacity of 
those who want to work will produce so much abundance that just 
as we won't mind golden-agers spending their twilight years or 
slower cousins living decent lives on an open credit line 
provided for by the youth, I don't even think many will mind the 
odd lazy drone who wants to end his life's score-card in the 
negatives with the slower cousins. 
 
::      Sure there would be an explosion on the money supply but all 
:: backed up with collateral or markers. 
:
:Not necessarily!
:
     And when the weaker members of society and the drones die, 
we can take their negatives and spread them throughout the whole 
database of producers deducting a small amount from each of the 
more worthwhile members. That's how we can take care of the old 
and the weak and the useless without getting in the way of the 
workers.  
 
:: >In other words, the borrow/owe relationship is inverted for a
:: >net lender when compared with a net borrower.
::
::      Of course, when I say that people borrow 100 and owe 110, it 
:: necessarily implies that the banker loaned out 100 and is owed 
:: 110.
:
:Yes, and your scenarios consistently exclude the banker as one
:of the players, leading to the seeming imbalance.
:
     I just don't know where you see balance between money and 
debt. Count up the debts of the world and count up the money and 
you'll see there's just no balance. 
     Besides, this is the most unheard of suggestion I've ever 
heard. 
 
::      But to say that because the person owes an extra 10 which 
:: was never issued into circulation and because the bank is to get 
:: an extra which was never issued into circulation doesn't mean 
:: the loans therefore balance.
:
:Why not?  It seems to exactly add up, if you agree that the
:bankers are just one of the bunch.
:
     Again, this is ridiculous. No one can possibly believe that 
because the bankers are owed what the borrowers don't have makes 
things balance. 
 
::      Besides, the banks do not lend out their depositors funds. 
:: [...] So if they're lending out new money, they're not lending
:: out their depositors old money. 
:
:Why does this matter?
:
     It matters because all new money coming into circulation is 
matched with a debt which grows beyond the original amount. 

     On Mon Jul 10 12:00, 1995, [email-masked] 
(Steve Salter) wrote: 
 
::      Besides, the banks do not lend out their depositors funds.
::
:: Each and every time a bank makes a new loan, new bank credit is
:: created, brand new money. (Graham Towers, Governor of the Bank of
:: Canada to the Banking Committee in 1939) Check any Economics
:: textbook on how banks create new money. So if they're lending out
:: new money, they're not lending out their depositors old money.
:: J.C. Turmel
:
:Banks don't lend out their depositors' funds?
:Read an annual report from any of the banks, then report back to 
:this newsgroup with your findings.   I notice that my bank has 
:this big old sock lying in the back of the employee coffee room.  
:I wonder.....!!!??
:
     If the banks are not lending out new money when they make 
loans, the money supply would not go up. I say that the money 
supply goes up when they make loans and hence, they're not 
lending out depositors funds.
     That they've made up a rule that says they can't lend out 
new money until new money has been deposited has fooled many 
people into thinking that they loans they are getting are the 
deposits the bankers were seeking in order to enable them to make 
the loans of new money. Quite a scam. 
     Since the newspapers regularly report that the money supply 
goes up and down, if you say it isn't when banks make loans, then 
tell us when the new money is authorized and where it comes from. 
     
:Back to school J.C.
:
     All you have to do is read any elementary Economics text-
book on how banks create new money making loans through the 
fractional reserve system. 
     Back to school, Steve. 
 
John "The Engineer" Turmel