Hi Keith:
You make some interesting points below, many of which are part of the
conventional wisdom.
Certainly I agree that for money to function as such it mist have the
confidence of the people it serves. I mentioned before that Gov issued fiat
money on the basis of trust and that private Banks issue it on the basis of
the collateral marketable value.
That is the real basis for the contest for ultimate or preeminent power. It
also falls in line with the propaganda effort to discredit democratic
politics and politicians. Yet they are the only people standing between us
and the dictatorship of the private interests.
The power to create a nations money is a sovereign power. Back in the 60's,
the banks were limited to creating $10 for every $1 of gov issue they had
on deposit. That ratio having risen to over $400 - $1 at the time of the
asian meltdown ('98) has now reduced to about $360 - $1.
That is a clear indicator of the division or exercise of soverign power by
the competing gov and private powers.
You excerpted Ed W's comment about what constitutes real value. If we are
materialists, as was Marx, then the (ultimate) real value is marketable
material. If however, you believe that the ultimate value lies in human
relationships, then the trust we ghave in each other must be the ultimate
value.
Those are competing values that lie at the root of our being. We delve here
into theology. The whole area of Marxism, God, atheism, Man the Superman,
and man's reconciliation with man and the means of obtaining that.
I personally think that life is about much more than being governed, or
governing myself, by way of an abstract accounting system.
The use of Gold as money is interesting. If I can control a substance and
get everyone to desire it I will have found another substitute for fiat
money. Also keep in mind that the dominant currency, being issued by the
dominant power, has no auditor. (Note the US today)
Equally enlightening is a 'very' short story by Jack London, "The Strength
Of the Strong"
The comment about a universal currency is precient! Most people do not know
about the BIS. That's Bank of International Settlements. Its a bankers bank
that allows only private bankers through its doors, no Gov allowed.
That is the same BIS that the Bretton Woods Agreement (1944) ordered
abolished because it was too eager to give Hitler the gold deposits of the
countries he invaded. (How soon can we send it to you?)
Most people also are unaware that the BIS has ruled that OECD countries do
not have to have any capital to substantiate their monetization of an OECD
countries' debt.
What that means is that, without substantiating capital, a bank can accept
Gov Bonds (that pay interest) and credit the Gov with an equal amount of
bank credit money. What a money making machine!!
Regarding other countries adopting the US as their currency, it exemplifies
the extent to which other countries are accepting US sovereignty. I repeat.
The issuing of money is a sovereign power. The dominant power is not audited.
Keith, I'm puzzeled by your concluding comment Governments have not had a
stranglehold on the issuing of money. That gov. (God-King) control was lost
back in the days of the Summerians (4000 B.C. ) when privately owned gold
was substituted for the fiat money issued by the monarch.
What governments have done in the past, and no longer do, is regulate the
private money issue in the interests of the people.
Regards
Ed G
===================
At 07:42 AM 09/05/2001 +0100, you wrote:
>Hi Arthur and Ed,
>
>At 14:12 08/05/01 -0400, you wrote:
>(AC)
>>As an economist (Ph.D., many years ago) all I would like to add to this is
>>what I used to teach in Economics 101. Money is what money does. Try
>>giving your corner grocer zlotys, then try giving dollars. Dollars does
>>something for you, zlotys does not.
>
>Yes, indeed. But the very example you've chosen (wherever zlotys come
>from!) shows that a particular currency or "token" depends on public
>confidence only and not on real value. It is possible to imagine that the
>dollar could be so badly issued at some stage in the future that it, too,
>would become as questionable as the zloty. It's happened before -- in fact,
>it's happened many times throughout history -- that major powers have
>devalued their own currency until it's worth only a fraction of what it was
>previously.
>
>(EW)
>>This raises a very interesting question, that of what comprises "real
>>value". Paper money has "value" because of political authority and social
>>convention. Despite the long pretense of Fort Knox, gold has "value"
>>largely by social convention. I recall when, a few decades ago, the price
>>of gold was at aprx. Cdn$800 and still going up. It is now far lower than
>>that, about $200(?). The value of diamonds and other precious stones is
>>based largely on market manipulation.
>
>Yes, I agree about gold and diamonds though, in practice, there's a great
>difference between them as regards perceived value. Gold has had perceived
>value going back to at least 4,000BC and most of its production is still
>hoarded by hundreds of millions of people. It's been de-throned by some
>central banks but we can be certain that it would gain instant universal
>value as a means of exchange if the major official currencies went down the
>pan together.
>
>The value of diamonds is an even more transparent scam because, as you say,
>they are rationed out by a commercial monopoly in order to raise their
>"value" above that of, say, rubies (a much rarer gemstone and much more
>valuable 150 years ago). Diamond's value in extremis is questionable
>because a substantial part of diamond production is withheld from the
>market and, in any case, can now be made artificially at a fraction of the
>cost of the present lot. (It's interesting as an aside that de Beers are
>now going "sideways" into companies producing other luxury products -- in
>my view because they realise they can't keep monopoly control over diamonds
>for much longer.)
>
>(EW)
>>A well to do Canadian's view of "real
>>value" would differ enormously from that of a Sub-Saharan refugee's.
>>Another day of life would be very important to the latter; an SUV to the
>>former. So, question, could there be a universal understanding of what
>>comprises "real value"? Perhaps pure water, clean air, basic food and
>>shelter, peace?
>>
>>I suppose we would all have to be stripped bare of everything we own to find
>>out. The refugee probably has a better understanding than the rest of us.
>
>Yes, well, this is why "real value" economists say that any decent sort of
>banking system ought to be able to exchange their paper money into a basket
>of staple food on demand. The prospect of banks having vast warehouses is
>impractical, of course, and that is why gold was such a useful material to
>use for money.
>
>But it doesn't need to come to that so long as any bank were able to
>exchange a particular national currency into any other. In extremis
>there'll always be some currency which is competently managed by
>officialdom. But even this is impractical because any bank can't possibly
>store enough currency of different varieties to satisfy demand in the case
>of meltdown. But banks could do so if they were able to draw on currencies
>by electronic means and instantly deliver a suitable document (or charge up
>a customer's smartcard -- see below). But this would need a central
>register or a bank of banks.
>
>This line of thought leads me to think that a universal currency is
>inevitable and there are, indeed, several pointers which are already
>leading strongly in this direction, including:
>
>1. In practice, many countries of substantial size (those of the former
>Soviet Union, for example) have huge circulations of the US$ and could not
>operate without it;
>
>2. In actuality, some countries (mainly in South America so far) are
>adopting the US$ as their official currency, and many more will probably
>follow in the coming years;
>
>3. Increasingly in the last decade or two, commercial investment is being
>financed by equities and not by banks. This means that money is
>increasingly not being created speculatively by banks (with very little
>real asset value) but supplied by pension and investment funds and ordinary
>people. The latter, of course, cannot create money by the stroke of a pen
>as banks presently do, but can only supply money that's based on real value
>(mostly property). This means that official control of money is declining;
>
>4. Despite delays so far, the widespread use of smartcards is inevitable,
>which will allow private transfer of funds between individuals. This will
>add enormously to the already-large amount of money which flows around the
>world (illegal drug money, for example, is already larger than the value of
>food production). When smartcards come into use, this will mean that
>transactions which escape governmental taxation will accelerate.
>
>So, in a curious way it looks as though money is escaping the artificial
>stranglehold that governments have had over it for the past 150 years or
>so, and is re-establishing itself as possessing real and independent value.
>
>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]
>________________________________________________________________________
>
>
