Re: [SOCIAL CREDIT] Canada' experiment with social credit

[Pat Gunning]

Janos Abel wrote:

The message of 15/11
from Pat Gunning contains these words:
 

Janos, you seem to be leaving out the fact that a bank may act only as 
   

an intermediary. In the U.S., there is a legal limit to how much money a 
single bank can lend.

My response related to the statement by Douglas-McLellan: *...The idea
that banks can give money to people, surely just causes inflation.*
What you say sounds correct but does not relate to my concluding
counter-statement (and justification, thereof)
that, *giving* (credit)money is no more inflationary than *lending* it
at interest.
 

If A lends his money to B, the amount of money is not increased. If a 
bank creates new money to lend or to give to A or B, new money is 
created. Other things equal, the former is not inflationary. The latter is.

The small matter of banks destroying credit(money) when a loan is
repaid, thereby ensuring that the quantity of money
is not inflated, is a very feeble justification for the privileged role
they wrested from society.
 

The destruction of money is a fact, not a justification. I'm waiting for 
economist Bill to agree with this.

You also seem to be somewhat complacent about banks having *the the
power to create and destroy money*.
Private institutions, striving for private profit, have *absolute power*
over a vital element that can make or break a nations economy !!??
Surely, there is something very wrong with this arrangement.
 

Not at all complacent. But the real problem is not that the banks create 
money. In a free society, it is practically impossible to prevent this. 
The real problem is the system of bank regulation. The power to create 
money with impunity was conferred by the government. The banks are not 
the culprits here at least not directly. Bankers, like other rent 
seekers, naturally seek special privileges from the government. To stop 
this, the people must be smart enough not to permit their government to 
give them these privileges.

The fact that a central bank controls this activity is neither her nor there.
 

I don't understand the basis for this remark. There is a lot of 
interesting work on free enterprise in banking. It might be worth taking 
a look at.

Indeed, one can argue that *loan sharks* operate the more honest
business of lending actual cash, not something
manufactured out of nothing at virtually no cost.
 

I agree with this, except that I don't particuarly like their collection 
methods.

Having said all this, I greatly respect your staying with this
discussion regardless of some irritated critics of some of your posts.
Best wishes,
Janos
-----
Evolution is happening here and now;
The capacity for foresight in the human species is its latest innovation.


 



--
Pat Gunning, Feng Chia University, Taiwan;
New book: UNDERSTANDING DEMOCRACY 
http://www.constitution.org/pd/gunning/votehtm/cove&buy.htm
Web pages on Praxeological Economics, Democracy, Taiwan, Ludwig von Mises, Austrian
Economics, and my University Classes; 
http://www.constitution.org/pd/gunning/welcome.htm
and
http://knight.fcu.edu.tw/~gunning/welcome.htm

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