Brief comments inserted: --
Date: Tue, 18 Nov 2003 09:19:36 +0800 From: Pat Gunning <[EMAIL PROTECTED]> Subject: Re: [SOCIAL CREDIT] farewell
Thanks, Bill. That is what I needed to hear. Of course, I said nothing about a money multiplier. ------------------------------ [Insert] You did not. I should have deleted that sentence before I hit the "send" button. --
What I said was clear and I said it more than once on the list. The Federal Reserve System (Fed) -- that is, the central bank of the U.S. -- regulates the banking system. ------------------------------ Of course it does. My post was in reply to an entirely different point that you made: "...[M]oney creation by one bank is ordinarily offset by money destruction by the same bank or by other banks unless the Federal Reserve Board deliberately chooses to make it otherwise." I dispute that assertion completely. --
By this power it can and does control money creation by the member banks. ------------------------------ [Insert] Only in the sense of the "concertmaster" that I described. Bank credit is the creation of the banking system including member banks and central bank acting in concert presumably in cooperation with the public. --
So far as I know, you are the only person claiming to be an economist who has denied this. ------------------------------ [Insert] Well, there are indeed a great number of persons who do claim to be economists who concur. Apparently, you are not conversant with developments in the field (regardless whether you agree with them) since the nineteenth century. See for example http://www.geocities.com/new_economics/lavoe-draft-10-03.txt I do not by the way endorse the views expressed in that paper. I object to many of them. --
The Fed is not chosen by the banks as a clearing bank, although it has occasionally acted as if it was. It was a creation of the Federal Reserve Act of 1913, which was passed by the legislature. The act was most likely the outcome of rent-seeking by some of the larger banks at the time. ------------------------------ [Insert] The Federal Reserve Act was the product of intense debate and power politics throughout the latter half of the nineteenth century and the early twentieth century. To describe it as merely the result of "rent seeking" by some of the "larger banks" is rather shallow. --
Nevertheless, it created a power to regulate which has evolved into the current system in which the Board can and does limit the amount of money creation by member banks. ------------------------------ [Insert] It definitely has regulatory powers. Whether it directly controls the "amount of money creation" by member banks is highly questionable. I believe it has broad power to determine the "upper limit." --
In this message, you deny that the ruling Board of Directors does or can effectively regulate the bank money creation. To me, that is like denying that the U.S. Internal Revenue Service can effectively impose an income tax. ------------------------------ [Insert] It can impose a tax but controlling the amount it actually collects is an entirely different matter. --
Moreover, your talk about upper and lower limits obfuscates. ------------------------------ [Insert] That may seem so because you don't understand the argument. I've offered to go through it point by point. Between zero and the shifting upper limit banks may increase credit without limit. --
You did not directly answer the question. ------------------------------ [Insert] I thought I did.
This gives readers the impression that you agree with those on the list who apparently don't recognize that the Federal Reserve Board can and does limit money creation by banks. ------------------------------ [Insert] I never said that the Fed can't "limit" money creation. I was addressing an entirely different point. --
Although this may seem like a legitimate debating tactic to you, I am not interested in debate for the sake of debate. ------------------------------ [Insert] Neither am I. --
Your claim is far away from the truth and your obfuscation merely makes the task of education ------------------------------ [Insert] The better word is "indoctrination." --
, a very hard one at best, more difficult. Further discussion on any issue related to money and inflation with you is a waste of my time. ------------------------------ [Insert] It probably is. But that would be due to your closed mind. I do not regard discussion on my part with you to have been a waste of time. --
Since the main practical argument against the "social creditors" is that their program to subsidize retailers with newly created money is inflationary ------------------------------ [Insert] Not if income is falling in respect to the costs of production. --
and since you are apparently the economic adviser to most of those who hold the erroneous view to the contrary, I do not intend to write any more about "social credit." ------------------------------ [Insert] I'm nobody's "adviser." I'm merely exercising my right to free speech. --
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