Modern economies are *creditary* not *monetary*. What we call money is merely some arbitrarily defined category of credit. What we typically think money is the form of credit we receive in our pay vouchers. In the broadest since, credit is trust and faith in the future.
The financial/banking system goes through the rigmarole of buying and selling defined instruments of the intangible credit, as if they were quantifiable tangibles, obeying the law of supply and demand. In reality, the mechanism of credit is no more tangible and subject to laws of nature than are the rules of civil procedure down at the courthouse. The rules can definitely be changed if there is compelling reason to do so. The big message is that there is latent productive capacity that is perpetually wasted so long as we restrict ourselves by the current rules. Financially calling on that capacity will result in the more efficient utilization (displacement) of finite resources and labor, as the ratio of inputs decreases to outputs with implementation of improving technology. For more than eighty years the Social Credit slogan has been: What is physically possible is financially possible! The keyword is financially--not through dictatorship or strong-arm command. Increasing dividends to the people, who, through their spending and saving decisions in free markets, determine the course and direction of production. Free people in a free society enjoying life. Economic Democracy. It is the essential analogue to political democracy: universal suffrage, free ballots and equality under the law. South Africa can do it. A continental nation bounded by three oceans with super-abundant gifts of nature and humanity. She can declare her financial independence and build a prosperous future on her own for all her people. By doing so she will become the beacon of light to the entire world. ---original message Date: Sat, 23 Aug 2003 16:07:39 +0200 From: [EMAIL PROTECTED] On Friday 22 Aug 2003 5:52 pm, Bill wrote: > A single bank in a multi-bank system does not create > net new deposits by itself when it grants loans. The > concept applies to the banking system acting in > unified whole as if it were one big bank with many > branches. ------------------------------ Thanks, Bill, for this. I have long been troubled by the fairly simplistic statement that ¨an individual loan creates money and the repayment of that individual loan cancels money.¨ Some little knowledge of our own South African Reserve Bank tells me that the matter is far mor complex than that. For the bulk of their liquidity requirements, individual banks (through their main branch) trade on the Money Market, and only when money is in short supply do the banks bid for credit at the the Reserve Bank auction. Meanwhile, the Reserve Bank employs all manner of instruments to regulate the liquidity in the system by taking money out when there is an over-supply and putting it back when there is a short supply, acting carefully to maintain the money supply at a level necessary to achieve interest rate targets, which in turn regulate the demand for cash, which circles back to interest rates. Very complex. What I am not clear on is where exactly the new money is created, and how it enters the money supply. I think, but I may be wrong, that it comes from Treasury bills, Land Bank bills, central government bonds and/or Reserve Bank debentures? Could this be correct? Anyway, thanks. I feel a bit more confident concerning this most fundamental concept in the SC argument. Jessop Sutton ____________________________________________________________ Get advanced SPAM filtering on Webmail or POP Mail ... Get Lycos Mail! http://login.mail.lycos.com/r/referral?aid=27005 --^---------------------------------------------------------------- This email was sent to: [EMAIL PROTECTED] EASY UNSUBSCRIBE click here: http://topica.com/u/?a84IaC.bcVIgP.YXJjaGl2 Or send an email to: [EMAIL PROTECTED] TOPICA - Start your own email discussion group. FREE! http://www.topica.com/partner/tag02/create/index2.html --^----------------------------------------------------------------