Hi Ed and Ray,
At 17:30 07/05/01 -0400, you wrote:
<<<<
(EW)
> Since it uses a part of itself to satisfy the interest, it, like a pyramid
> scheme, cannot all be repaid. The system works because the new issue is
> always a little greater than the amount needed to satisfy the previous
> contracts. which is made possible by the increased value of production
> (technology) by an increasing work force
(REH)
I'm afraid you've lost me here, Ed.
>>>>
Yes, money is like a pyramid, and it can certainly all be repaid -- and
with interest paid for out of productivity or (dirty word!) profits which
enables the bank (with the permission of the central bank) to issue more
money. If this is done sensibly then roughly the right amount of extra
money is issued so that there's no devaluation of the existing lot.
But, ever since central banks reneged on their obligation to repay paper
money with real value (such as gold) on demand, money has become
increasingly artificial and its perceived value depends upon arbitrary
decisions by politicians and/or central bankers -- and a credulous public
-- and on nothing else. Central banks were started in order to supply the
rapacious demands of governments wishing to fight wars, but nowadays are
little more than immense scams residing in marble portals which always
benefit the rich and the middle class at the expense of the poor. "To those
that hath shall be given."
Because money is at the mercy of the decisions of a small mumber of people
in developed countries, then it is always vulnerable. Fifteen years ago,
most of the largest banks in the western world lent immense sums to Third
world countries (or, in practice, to their dictators and cronies) on the
basis that "nations never go bankrupt" and when the latter were indeed in
danger of default, the world came close to a monetary collapse. It was only
rescued (thankfully) by yet another smooth scam by the IMF and the largest
countries. Despite this, several of the largest banks collapsed, and many
more were technically bankrupt and had to be nursed back to health over
several years -- at the expense of their shareholders.
This (a rescue) won't be able to happen again because, even in as short a
period as the last 15 years, the amount of investment money flowing around
the world has increased so enormously (due mainly, one might add, to the
drug mafias) that it dwarfs the assets of the central banks. This is why
governments, even the USA, have largely given up further futile attempts at
fiddling with exchange rates.
The present drama of Greenspan trying to rescue the economy of the USA by
means of "astute" changes in interest rates is probably the last time it
will be tried -- whether it is apparently successful or not. It's all part
of the scam that "we know what's good for you". In fact, the interest rate
has very little to do with the essential health of an economy. New
businesses can start whether the interest rate is 0% (as it is now in
Japan) or 7 or 8% (as it was in Europe a few years ago) or even higher.
What's important are much more subtle, and uncontrollable, factors like
inventiveness, hard work by entrepreneurs and public confidence and trust.
At the end of the day, all present-day cash money and cheques are tokens
and unless they are backed up by real assets then money will remain
artificial and vulnerable to disaster. The quicker we have real money and
real banks the better. Fortunately the tide is turning and more people and
economists are understanding the true nature of money -- as opposed to
politicians and governments. It will take another generation for the
fallacy of Keynesianism, central banks and all, to finally subside. The
prospect of electronic money will hopefully once again bring real money
into being in the future. (Because no-one will use electronic money unless
they feel absolutely certain that the issuing house has real assets on
which users can call if they wish.)
Keith H
___________________________________________________________________
Keith Hudson, General Editor, Calus <http://www.calus.org>
6 Upper Camden Place, Bath BA1 5HX, England
Tel: +44 1225 312622; Fax: +44 1225 447727;
mailto:[EMAIL PROTECTED]
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