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Sapiens
03-27-07, 11:48 PM
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Paul Grignon's 47-minute animated presentation of "Money as Debt" tells in very simple and effective graphic terms what money is and how it ... all » is being created. It is an entertaining way to get the message out. The Cowichan Citizens Coalition and its "Duncan Initiative" received high praise from those who previewed it. I recommend it as a painless but hard-hitting educational tool and encourage the widest distribution and use by all groups concerned with the present unsustainable monetary system in Canada and the United States.

grapejelly
03-28-07, 10:27 AM
this is a great video when it describes how the world works. But the prescription for a better way are quite flawed. The usual big government if-only-government-issued-money-without-paying-interest-to-the-big-banks bogus garbage. If this prescription were followed and worked, then the USSR and China would have been glorious workers paradises for sure and we'd all be happy little communists.

Tet
03-28-07, 11:00 AM
this is a great video when it describes how the world works. But the prescription for a better way are quite flawed. The usual big government if-only-government-issued-money-without-paying-interest-to-the-big-banks bogus garbage. If this prescription were followed and worked, then the USSR and China would have been glorious workers paradises for sure and we'd all be happy little communists.
The USSR and China both had Bolsheviks running the show who believed in Central Banks creating money through debt until recently. Who do you think overthrew the Romanov's? It takes a lot of money to start and forment a revolution, where do you think this money came from? Lenin had $25 million in gold, a sizeable fund to work with during the time period, did Lenin's writings earn him this kind of cash? New York, London and Frankfurt banks funded the Bolsheviks, for what purpose? After the revolution Lenin choses White Russia's banking system. I think the banks would have won no matter which side won. This all had nothing to do with creating a workers paradise and everything to do with taking over Russia's Central Bank from the Czar's. Today it looks like the Russian's are trying to take their Central Bank back. In the next few years we'll see if they had any success in doing so.

grapejelly
03-28-07, 11:22 AM
My point is that government printing money in a controlled fashion consistent with the growth of the underlying economy, and communism, are both pipe dreams.

Central banks are under government control anyhow. They are subject to the political will of those in power. There is no reason for the governments to eliminate central banks because the central banks are instruments of the political will of those who are in power.

ThinkBig
03-29-07, 02:48 PM
Thought provoking.

Hope this stays up for a while. I'm trying to get others to look at it.

Spartacus
03-29-07, 04:12 PM
Hmmm ... I've not read a lot about Lenin's funding - are you suggesting that Karensky's provisional government was anti-Central Banking and the British/US/German/French (the 4 biggest at the time - maybe the Dutch too?) financial system wanted him gone?


The USSR and China both had Bolsheviks running the show who believed in Central Banks creating money through debt until recently. Who do you think overthrew the Romanov's? It takes a lot of money to start and forment a revolution, where do you think this money came from? Lenin had $25 million in gold, a sizeable fund to work with during the time period, did Lenin's writings earn him this kind of cash? New York, London and Frankfurt banks funded the Bolsheviks, for what purpose? After the revolution Lenin choses White Russia's banking system. I think the banks would have won no matter which side won. This all had nothing to do with creating a workers paradise and everything to do with taking over Russia's Central Bank from the Czar's. Today it looks like the Russian's are trying to take their Central Bank back. In the next few years we'll see if they had any success in doing so.

worksg
03-29-07, 04:35 PM
This is an excellent description of our predicament, but it does not deal with the much more difficult question of how to get from here to there. Must we wait for the exponential growth to hit a limit and the system to collapse, or is there some way to transition to a sustainable system?

bart
03-29-07, 04:54 PM
Paul Grignon's 47-minute animated presentation of "Money as Debt" tells in very simple and effective graphic terms what money is and how it ... all » is being created. It is an entertaining way to get the message out. The Cowichan Citizens Coalition and its "Duncan Initiative" received high praise from those who previewed it. I recommend it as a painless but hard-hitting educational tool and encourage the widest distribution and use by all groups concerned with the present unsustainable monetary system in Canada and the United States.



Good video as far as it goes... but does anyone else notice the two major problems with the data presented?


1. The solution if inflation occurs with "no interest government created money" is more taxes. In other words, the government and bureaucrats win if inflation occurs, which builds in an automatic inflation bias - just exactly like we have now.

2. The statement that all money will go away if all debts are paid off is a logical fallacy. Of course money will be "destroyed" but the issuance of credit is not the only way money is created. The printing of money via a printing press is one, and a central bank directly creating it (like they do now) is another.


Does anyone know who funded the production of the video?
Perhaps I'm too cynical but "Citizen's Coalition" sounds like a front for some group with an unknown vested interest. It's the unknown nature of that likely vested interest that's of concern to me.

Sapiens
03-29-07, 05:33 PM
2. The statement that all money will go away if all debts are paid off is a logical fallacy. Of course money will be "destroyed" but the issuance of credit is not the only way money is created. The printing of money via a printing press is one, and a central bank directly creating it (like they do now) is another.


Please help me out, how is it a logical fallacy if the basis of our money is only created by a debt instrument? For example a gov. bond or a promissory note?

bart
03-29-07, 06:18 PM
Please help me out, how is it a logical fallacy if the basis of our money is only created by a debt instrument? For example a gov. bond or a promissory note?

A debt instrument is not the only way to create money. There are many others, a printing press being one.

Yes, the current world economy is based more on credit and debt than anything else but that doesn't mean that all or most money will disappear if all or most debt goes away. There's a leap of faith and assumption in that video that in my opinion is unjustified, the main fallacious assumption being that nothing else would happen while debt was being liquidated.

Sapiens
03-29-07, 06:23 PM
A debt instrument is not the only way to create money. There are many others, a printing press being one.

Yes, the current world economy is based more on credit and debt than anything else but that doesn't mean that all or most money will disappear if all or most debt goes away. There's a leap of faith and assumption in that video that in my opinion is unjustified, the main fallacious assumption being that nothing else would happen while debt was being liquidated.

Bart, Ok; given our current system once you "print" the currency how do you get it into circulation? Do you give it away?

bart
03-29-07, 06:29 PM
Bart, Ok; given our current system once you "print" the currency how do you get it into circulation? Do you give it away?

I don't understand what you're driving at.

In our current system, the Treasury prints on order of the Fed and then the Fed distributes it to the banks.

Sapiens
03-29-07, 06:45 PM
I don't understand what you're driving at.

In our current system, the Treasury prints on order of the Fed and then the Fed distributes it to the banks.

Mmm, yes, then how do the banks get the currency out to the people? Do they just give it away?

bart
03-29-07, 06:56 PM
Mmm, yes, then how do the banks get the currency out to the people? Do they just give it away?

If you want to believe that all or most money will go away if all or most debt goes away, that there are no other alternate possibilities and that everything in that video is true, be my guest - seriously.

I believe it's significantly flawed in at least the two points that I made above, although most of it also has good data.

Sapiens
03-29-07, 07:05 PM
If you want to believe that all or most money will go away if all or most debt goes away, that there are no other alternate possibilities and that everything in that video is true, be my guest - seriously.

I believe it's significantly flawed in at least the two points that I made above, although most of it also has good data.

You still didn't answer the question. Now, of course people would find alternatives to trade, Silver or Gold would come to be used. Bart, I understand money, the problems is with those that don't. Yet, my safety depends on keeping those that don't understand money docile and productive, if the greed of those that are in control gets totally out of hand, it is chaos for us all.

bart
03-29-07, 07:36 PM
You still didn't answer the question. Now, of course people would find alternatives to trade, Silver or Gold would come to be used. Bart, I understand money, the problems is with those that don't. Yet, my safety depends on keeping those that don't understand money docile and productive, if the greed of those that are in control gets totally out of hand, it is chaos for us all.

Then answer it yourself by just substituting credit in the basic equation. Nobody is forcing anyone to go into debt.

I've also made no agreement nor am I under obligation to answer what appears to me to be an invalid or leading question. As I noted in my first answer, I have little idea where you're headed with that currency question and until I do there's little point in pursuing it.
I've been involved in three other long threads on two different boards over the years about the general "money = debt" concept and they stayed unresolved... for whatever reasons.

This is not about whether silver and gold would be a wise answer or not, nor about whether they would come to be used either - just in case.

The die is pretty much cast on the greed, etc. of those in control, and greed has also been around since dirt. I submit it's a matter of effectively dealing with that, and ways to prevent the "scum" from gaining control again with some type of new system.

My point, besides the two issues noted above, is that I don't know who backed that video and I'm not a terribly trusting soul when it comes to money and banking.

I most definitely agree that education about money and our existing system is sorely lacking (indeed, my whole site is about that area and also general investing and trading), and that's why I posted those points.

Sapiens
03-29-07, 08:32 PM
I've also made no agreement nor am I under obligation to answer what appears to me to be an invalid or leading question. As I noted in my first answer, I have little idea where you're headed with that currency question and until I do there's little point in pursuing it.
I've been involved in three other long threads on two different boards over the years about the general "money = debt" concept and they stayed unresolved... for whatever reasons.


Bart, please excuse and give some latitude to my forward and manipulate manners, since they are a consequence of a rapacious environment. I have yet to master the intricacies and protocols of these forums, it is not my intent to offend your sensibilities.

bart
03-29-07, 09:04 PM
Bart, please excuse and give some latitude to my forward and manipulate manners, since they are a consequence of a rapacious environment. I have yet to master the intricacies and protocols of these forums, it is not my intent to offend your sensibilities.

Cool and wilco - written communication is so subject to wild interpretation, and 'net boards can be "special" sometimes. iTulip is the mildest and most mannerly one I'm on and I can easily come across as overbearing sometimes.

To your point though, I truly and honestly don't know where you're going with the currency distribution issue. I thought what we were discussing was the creation and destruction of money, and thought I'd answered the alternate methods of creation issue with those two examples.

Sapiens
03-29-07, 09:57 PM
To your point though, I truly and honestly don't know where you're going with the currency distribution issue. I thought what we were discussing was the creation and destruction of money, and thought I'd answered the alternate methods of creation issue with those two examples.

Bart,

The current system is very ingenious, pioneered through the establishment of the Bank of England.

The printed pieces of paper or bank notes do not become currency until they are collaterized. Collaterized in this instance means that the notes are not currency until someone borrows them, be it the gov. or an individual.

http://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html

Virtually all of currency notes in use are Federal Reserve notes. Each Federal Reserve Bank is required by law to pledge collateral at least equal to the amount of currency it has issued into circulation. The bulk of the collateral pledged is in the form of U.S. Government securities and gold certificates owned by the Federal Reserve Banks.



(Emphasis mine)

Sapiens
03-29-07, 10:11 PM
The emergence of a National Bank in England and a funded National Debt

http://www.dmo.gov.uk/index.aspx?page=About/BOE_History


In England the argument for a form of bank gathered support after the “Glorious Revolution” of 1688 when William of Orange and Queen Mary ascended to the throne of England. However, it took a London-based Scottish entrepreneur, named William Paterson to propose an idea that eventually found support. Patterson's proposal for a “Bank of England” and a “fund for perpetual Interest” (without mention of bills) was eventually passed by Parliament. Patterson was supported by two powerful personalities - Charles Montagu, Chancellor of the Exchequer and Michael Godfrey a leading merchant from the City. The public were invited to invest in the new project and it was these subscriptions totalling £1.2 million that were to form the initial capital stock of the Bank of England and were lent on to the Government in return for a Royal Charter.

In the beginning the Bank was the Government's banker; managing the Government's accounts and providing and arranging loans to the Government. It was also a commercial bank, dealing in bills - the then total equivalent of overdraft finance, furnishing finance for trade and took deposits and issued notes. The concept “credit” or “imaginary money” emerged during this period also. It was realised that money could take on new forms, possess no intrinsic value and yet still retain qualities to fulfil payment obligations. Therefore at the same time that the National Debt was born, paper money came into existence.


(emphasis mine)

Charles Mackay
03-30-07, 12:40 AM
Terrific video! People are so brainwashed and ignorant that it takes a Canadian artist to present the problem in a way people can understand it. Russo tried but it didn't get any traction. Catherine Austin Fitts is trying also.

The video was more valuable in presenting the problem rather than offering a solution. I like Antal Fekete's solution of gold with "real bills" circulating as the ultimate solution to freeing men from the shackles of the elite banksters.

My favorite part was when he talked of interviewing college educated economists and businessmen who didn't have a clue about how money was created. No they wouldn't.. the banksters have blinders on the media and the education system.

bart
03-30-07, 01:18 AM
Bart,

The current system is very ingenious, pioneered through the establishment of the Bank of England.

The printed pieces of paper or bank notes do not become currency until they are collaterized. Collaterized in this instance means that the notes are not currency until someone borrows them, be it the gov. or an individual.


Virtually all of currency notes in use are Federal Reserve notes. Each Federal Reserve Bank is required by law to pledge collateral at least equal to the amount of currency it has issued into circulation. The bulk of the collateral pledged is in the form of U.S. Government securities and gold certificates owned by the Federal Reserve Banks.

http://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html


(Emphasis mine)


Yes, that's all technically true if a bit dated.

In actual practice though and regardless of any laws or history, money is both what people say it is and is an idea backed by confidence.
If the Fed prints it and the banks and people accept it, it's still created money. If you want to call that debt just because of the double entry book keeping in between, then we're dealing with theory and not practice.

bart
03-30-07, 01:27 AM
The emergence of a National Bank in England and a funded National Debt

http://www.dmo.gov.uk/index.aspx?page=About/BOE_History

In England the argument for a form of bank gathered support after the “Glorious Revolution” of 1688 when William of Orange and Queen Mary ascended to the throne of England. However, it took a London-based Scottish entrepreneur, named William Paterson to propose an idea that eventually found support. Patterson's proposal for a “Bank of England” and a “fund for perpetual Interest” (without mention of bills) was eventually passed by Parliament. Patterson was supported by two powerful personalities - Charles Montagu, Chancellor of the Exchequer and Michael Godfrey a leading merchant from the City. The public were invited to invest in the new project and it was these subscriptions totalling £1.2 million that were to form the initial capital stock of the Bank of England and were lent on to the Government in return for a Royal Charter.


In the beginning the Bank was the Government's banker; managing the Government's accounts and providing and arranging loans to the Government. It was also a commercial bank, dealing in bills - the then total equivalent of overdraft finance, furnishing finance for trade and took deposits and issued notes. The concept “credit” or “imaginary money” emerged during this period also. It was realised that money could take on new forms, possess no intrinsic value and yet still retain qualities to fulfil payment obligations. Therefore at the same time that the National Debt was born, paper money came into existence.

(emphasis mine)

Again all pretty much true, although I could make lots of points about the Roman Empire and others being very similar. Credit also existed way before that period in England. The Bank of England and its structure is not unique and similar entities existed BCE.

I have little clue what that has to do with "money = debt" and especially that all money would disappear if all debt did.

bart
03-30-07, 01:37 AM
The video was more valuable in presenting the problem rather than offering a solution.

Watch the last 10 minutes or so of the video called "Money Masters" for one solution.

Sapiens
03-30-07, 08:10 AM
Yes, that's all technically true if a bit dated.

In actual practice though and regardless of any laws or history, money is both what people say it is and is an idea backed by confidence.
If the Fed prints it and the banks and people accept it, it's still created money. If you want to call that debt just because of the double entry book keeping in between, then we're dealing with theory and not practice.

Are you serious? A bit dated perhaps to you, yet if you have not noticed, the system is presently in full effect. To make it clear, if the notes are not “collaterized” before putting them in circulation, then it is pure counterfeiting. A nuanced distinction, but a fundamentally essential concept. So is not theoretical.



I have little clue what that has to do with "money = debt" and especially that all money would disappear if all debt did.



That’s the ingenious part. Most people have no clue what to do with it, therefore they are the most victimized. Those of us that understand it, pass most of the burden we can to those that don’t understand it.

The point is that the system is not sustainable.

bart
03-30-07, 12:29 PM
Are you serious? A bit dated perhaps to you, yet if you have not noticed, the system is presently in full effect. To make it clear, if the notes are not “collaterized” before putting them in circulation, then it is pure counterfeiting. A nuanced distinction, but a fundamentally essential concept. So is not theoretical.

Yes - I'm serious... and you seem to have little clue what I'm driving at.

The previous three times I've participated in discussions like these have degraded into sarcastic and similar comments, and almost a religious or proselytizing fervor.

The basic point being missed, although there are others, is that money can exist and has existed without debt.
"Money = debt" is incomplete at best.



That’s the ingenious part. Most people have no clue what to do with it, therefore they are the most victimized. Those of us that understand it, pass most of the burden we can to those that don’t understand it.

The point is that the system is not sustainable.

I note that sustainability is not the topic, and even you bringing it up is odd at least partially because it implies that somehow I think it is (I don't).

Rajiv
03-30-07, 09:15 PM
Sapiens,

another site to look at is <a href="http://appropriate-economics.org/">Complementary Currency Systems.</a> From its introduction <a href="http://appropriate-economics.org/introduction.html">Introduction to the foundation and
practice of appropriate economics</a>

Forming an economic network in which all are included, which has both values and ethics embedded in the core concept makes it possible to devise systems which work towards economic solutions to social and environmental challenges. Appropriate economics is therefore a process of applying broad-based community determined values through an ethical system that has an impact on the economic lives of people. Unlike conventional economic thinking which divorces social concerns from economic thinking, appropriate economics sees economic relations fundamentally as social relations. It provides a means for people to relate economically with each other as they would want to relate with each other socially. In this way, money is seen as media, a form of communication between people. One can use money that talks down to people, or one can use money that speaks on even terms with people.

Such systems naturally encourage cooperation, which means sharing and working together at the same time, and reciprocation, which means taking turns sharing and working together over time. In addition, these networks must encourage both self-reliance, which means helping oneself and one’s kin, as well as mutual aid, which means helping people that we do not personally know. These four elements are the foundation of social interdependence and socio-economic solidarity. The identification of local human and natural assets in improving the local economy helps local resources to meet local needs, building social capital and socio-economic solidarity in the process by narrowing the gap between those who have more than they need and those whose needs go unmet, to ensure that everyone has enough.

Appropriate economics means a decentralized, bottom-up process, and must therefore be founded on a wide variety of local assets. This includes community input, choice, and collaboration, in the identification of issues that concern the community most. By encouraging community participation in identifying social and economic issues and setting goals, people come back to the center of the economy again, which is why in Asia the movement for an appropriate economics is called a People’s Economy movement. Starting from the bottom level, it is possible to design systems which achieve the social, economic and environmental goals of the community. When people’s needs are met at the local level, the regional and national economies are also likely to be much stronger.



Also there is <a href="http://www.complementarycurrency.org/materials.php">a large library of documents</a> including Michael Hudson's articles.

Paul Grignon
04-04-07, 05:42 PM
hello

I am Paul Grignon, artist and animator, sole creator of the movie, Money as Debt.

http://www.paulgrignon.com

No specific funding was required as I did everything myself except the final voiceover, which was provided by a neighbour. Of course I do have to maintain my extensive computer hardare and software and pay my living expenses so if you watched it online please BUY a copy! I am currently working on a 94-minute sequel that will answer many of the questions posed in this thread and I need the income to make it possible.

http://moneyasdebt.net/

For the history of why, when and how it was created see:

http://paulgrignon.netfirms.com/MoneyasDebt/ProducersComments.html

See my promotional brochure attached.

23

For those of you who have watched the movie online I urge you to support my work (living expenses) by buying a copy or better yet a wholesale box of 10 which entitles you to hold public showings and sell the DVD's to support your monetary reform activism.

Money as Debt 1 took an estimated 3600 hours of my arthritis-pained work to produce of which 2200 hours of actual final production was put in Jan-June 2006.

Thanks to Charles for his appreciative comments. A friend of Aaron Russo will be showing it to him shortly. Catherine Austin Fitts contacted me just today for a copy.

It was shown at the Bromsgove Conference last year and has been adopted as the core of a new political campaign by the Money Reform Party of the UK (see below)

"The miracle we needed"

"Money as Debt is a masterpiece. Brilliant and of infinite value to mankind."

Dr. Edward Hamlyn, Chairman British Association for Monetary Reform http://www.monetaryreform.org/

---------------------------------------

Anne Belsey, Leader Money Reform Party, UK
OPERATION MONEYASDEBT
Dear Money Reformers,

Paul Grignon’s Money As Debt DVD is probably the best tool for promoting money reform yet to be produced. I hope that you have all watched it, or get the chance to in the near future.

Since starting the Money Reform Party in September 2005 as a vehicle for taking the message of money reform to the British public and their politicians, I have learnt why so many money reformers are daunted by the matter of publicising money reform, which effectively means trying to educate people about the origins of our money supply. It is very difficult. It is incredible, involved and incommensurable.
---

So now we have this DVD. At 47 minutes, it is long enough to get over the salient facts, without being too long, and it involves watching amusing animated graphics rather than listening to a talking head. Best of all, it has a nice gentle Canadian voice-over. Everyone trusts the Canadians. They are both serious-minded and well-intentioned.

Ever since I first watched the DVD at the CCMJ AGM in October, I have been thinking of ways in which the DVD could be used to greatest effect, but it was another Party member, Craig Embleton, who came up with the breakthrough idea of sending one to every MP in the country. I approached Paul Grignon with the idea of producing them under license in this country. He was happy enough, providing the quality could be maintained (for the technically minded, this involves replication rather than duplication).

I want to get a Money As Debt DVD into as many of their hands as possible between now and the next general election, which is probably just over 2 years away. How many DVDs can we afford to produce and distribute in that time? I do not know, but I think that I do now know just how Valerie Singleton and John Noakes used to feel just before Christmas each year.

Let’s crunch some numbers. How many existing money reformers are there in Britain? 200? 300? 400? This email is going to about 200 people, most of whom, I believe, live in Britain. Let’s assume that 100 become interested in Operation MoneyAsDebt and each are prepared to donate an average of £60 to the Fund. There’s our initial £6000.

For our next £6000 I would look to get it from amongst the 5000 individuals who get one of the first batch of DVDs. Besides ourselves, there must be thousands of potential supporters of money reform who just need to learn about the subject. We only need 2% of them to donate an average of £60 each. Thus we can expect to create a self-perpetuating process, educating thousands, then tens of thousands and then hundreds of thousands of people. At some stage we will reach the critical mass that turns an obscure interest into a mainstream subject. My wild and totally uneducated guess is that the figure will be around the 100,000 mark.

If the DVD has the effect that I imagine, then each one will be passed around and watched by many other people. It is reasonable to assume that 100,000 copies in the right hands will be seen by 1 million people. This million will be the nation’s most thoughtful and influential. The people who decide elections.

I want each mailout (of however many 1000s we can afford) to be An Event. When we send out a DVD to the trades unions, for example, I want every national official in every union to get one. I want it to be something that they discuss amongst themselves. I want to do a mailout to every head-teacher in the country, every health centre, every Chamber of Commerce, every local Greenpeace, FoE, and Amnesty International group, every British Legion club. every Women’s Institute, every Townswomen’s Guild, every Lion’s Club, every Round Table and every Rotary group. And I daresay that there are other significant groups and individuals who should be alerted - satirists and comedians come to mind, what a rich seam for material!

A variation on the above theme is that people actually get something for their donation. So let’s say that for every £5 donated to Operation MoneyAsDebt, the donor receives one Money As Debt DVD. So a donation of £50 will ‘buy’ 10 DVDs for the donor to give/lend/sell to their own acquaintances. This will reduce the size of the ‘national campaign’, but will enable more people to be involved in spreading the word in their own locality.

There is no doubt that what I am proposing is ambitious, but then the whole idea of money reform, if we are serious and not just playing around with nice academic ideas, is ambitious. It’s called history, and we are fortunate to be able to push it in the direction we wish without risking life and limb.

The chance to overturn 300 hundred years of injustice, wholesale embezzlement, widespread misery, poverty, corruption, war and all the other symptoms of debt for the cost of a mere (what?) £100,000 strikes me as being the bargain of the millennium.

This is the sort of moment when people decide whether they are serious in their efforts or mere dabblers. I do not want to be campaigning for money reform in 10 year’s time, nor in 5 year’s time, if I do not have to be.

So, who’s up for it? Who wants to help get Operation MoneyAsDebt rolling?

Anne Belsey

Leader of the Money Reform Party


IT SHOULD BE NOTED:
The original impetus to make this finished movie came from a very senior and very respected member of the American Monetary Institute (http://www.monetary.org) who wanted to give a copy of the original version to every member of the US Senate & Congress. He also was one of 3 primary personal consultants for MAD 1. See also the References page at http://www.moneyasdebt.net

The main reference for the movie is Modern Money Mechanics by the Federal Reserve Bank of Chicago.

For MAD 2 I have a wide array of highly knowledgeable and longtime monetary reformers, volunteering to review the script. If anyone on this forum fits that description just send me a request.

Many of the questions raised in this thread have to do with semantics. In my movies I am attempting to speak to the MAINSTREAM who have never given the topic a moment's thought. Please take that into account when calling me to task for perceived "inaccuracies".

The money solution I propose is not limited to big or federal government. Any entity with the ability to spend money into existence and tax it out of existence could create interest and debt free money and create a stable inflation resistant money supply. I personally believe that local currencies on the scale of the city-state would be the most promising revolutionary direction to go at this time. So does Cesar Chavez.

http://www.venezuelanalysis.com/news.php?newsno=2256



One final comment (this post)

Before continuing to argue any of the points raised in this thread, I strongly urge you all to read

Modern Money Mechanics and The Nature of Money which are downloadable from http://www.moneyasdebt.net

pgrignon@island.net

~Paul

ORIGINAL VERSION: <http://www.paulgrignon.netfirms.com/MoonfireStudio/MoneyasDebt/Money_as_Debt.html

Charles Mackay
04-04-07, 06:30 PM
hello

I am Paul Grignon, artist and animator, sole creator of the movie, Money as Debt.


Paul, as I stated above your elucidation of the problem was fabulous. Many thanks for that! Your solution was not exactly what I would agree on. Read Fekete's treatise on "real bills"

Do you view the Canadian Fed just as profligate as the US Fed?

Thanks again .. you are a lucky bastard to be able to live on Gabriola! :)

I go to to SaltSpring Island every summer.

Regards,
Charles

bart
04-04-07, 07:07 PM
I am Paul Grignon, artist and animator, sole creator of the movie, Money as Debt.

....

Before continuing to argue any of the points raised in this thread, I strongly urge you all to read

Modern Money Mechanics and The Nature of Money which are downloadable from http://www.moneyasdebt.net

pgrignon@island.net

~Paul

ORIGINAL VERSION: <http://www.paulgrignon.netfirms.com/MoonfireStudio/MoneyasDebt/Money_as_Debt.html


Thanks very much for your input and also for your very good money treatment in the video and on your site. It and your site contain so much more truth about money than is generally understood, as well as good suggestions about where we should go, that these comments of mine are actually a large understatement.

That said however, I still strongly disagree with the "Money as Debt" statement. As I noted above, the basic point being missed and underplayed, although there are others, is that money can exist and has existed without debt.

If it were stated as "Money as mostly debt today" and most especially if it were made much more clear that "money = debt" is a false idea, I would not disagree. But the statement is just simply too broad as well as being historically inaccurate. The idea that all money would disappear if all debt did, while apparently sound mathematically, would not stand up to reality or human nature and also has no significant historical precedent.

Note too that I almost didn't respond initially with my objections since your work does have so much truth and obviously many have benefited from your understanding and "labor of love".

I did actually read the 120+ page doc by Mr. Kutyn and I find little to even quibble with (although there are a few small areas) and was also happy to see that, like myself, he also finds fault with the limited nature of the Real Bills Doctrine. However, where it falls down in the full universe of defining money and its nature, is that it only starts in the Middle Ages and also only covers Western economies and philosophies of money.

The Fed publication you cite (Modern Money Mechanics), and that I also have read, suffers from a much more extreme short focus view... and again, I also find little with which to quibble in it.

Lastly, I will not comment on the political party or any issues surrounding it.

grapejelly
04-04-07, 07:10 PM
It's a remarkable video, Paul. Remarkable for your effort and for the result.

I do stand by my comments, though. The solution is the weak part. I believe in privatizing money, letting anyone issue their own money so long as it is redeemable in an honest way.

The fault of today's money is 1) monopoly by the government, 2) legal tender laws, 3) irredeemability. I don't think your solution addresses any of these adequately.

That said, great work.

Paul Grignon
04-05-07, 12:42 AM
Thank you all for the appreciation. I am however somewhat taken aback by your interpretations of what you watched.

"I believe in privatizing money, letting anyone issue their own money so long as it is redeemable in an honest way."

That was shown in the movie, with an example of Tommy "usury-free" Kennedy personal picture money right after the LETS system part. I recommended establishing private community currency as "an emergency preparation for any community".

If it really worked, the principle of issuing personal interest-free debt money would soon be adopted by businesses and local gov't don't you think?

Once you have an entity that can spend money into existence for the public good (local gov't) and tax it out of existence to prevent inflation, you can implement the system I suggested. it would be the natural evolution of a private debt-money system.

And...
There was never any suggestion that money could ONLY be debt. Where does anyone get that impression? The story goes from gold which is not debt, to fractional reserve on gold to fractional reserve on debt itself. The whole point of the movie was get people to understand the difference and that it doesn't have to be that way.

Thanks for the appreciation but frankly you have shaken my confidence more than boosting it.

bart
04-05-07, 01:27 AM
Thank you all for the appreciation. I am however somewhat taken aback by your interpretations of what you watched.

...

There was never any suggestion that money could ONLY be debt. Where does anyone get that impression? The story goes from gold which is not debt, to fractional reserve on gold to fractional reserve on debt itself. The whole point of the movie was get people to understand the difference and that it doesn't have to be that way.

Thanks for the appreciation but frankly you have shaken my confidence more than boosting it.


My intention was to point out that by not covering the area explicitly, it's left open to interpretation - and this thread and some of the comments are simply an example of it and how easily monetary concepts can be misunderstood. I have little clue myself how or where the concept that all money would disappear if all debt disappeared originated, but it sure does exist.

I do understand your shaken confidence too - my own charts and experiences and posts and efforts on my own free web site and elsewhere have been both "educational" and sometimes during darker moments a source of frustration and even despair too.

Overall, I've gotten many more kudos than the other side... and have also learned how much less real understanding exists of basic economics than I ever thought, and how much false data is also out there.

Hang in there - I think you're unquestionably on the right track as witness the large interest.

Charles Mackay
04-05-07, 11:44 AM
Here's a list of Antal Fekete's articles on Finansial Sense in case anyone wants to review his work or is unfamiliar with it.

http://www.financialsense.com/editorials/fekete/main.html

Charles Mackay
04-05-07, 07:34 PM
Mmm, yes, then how do the banks get the currency out to the people? Do they just give it away?

Sapiens, the point you are making is correct... I think Bart is only making the distinction that it CAN come into being thru a printing press too. Although this is rare.. they just did it in Iraq with the hellicpoter drop of serveral tons of cash. Literally.

The great overwhelming increase in the money supply however is thru debt.

grapejelly
04-05-07, 11:51 PM
I only watched it once, but I recall that the video suggests that a fundamental trouble with current "money" is that interest is paid on it by government. The solution as I recall is direct issue of government money. To me this is not a solution at all. The real solution is competitive issues of money all fully redeemable.

That said, I loved most of the video.

bart
04-06-07, 11:13 AM
Sapiens, the point you are making is correct... I think Bart is only making the distinction that it CAN come into being thru a printing press too. Although this is rare.. they just did it in Iraq with the hellicpoter drop of serveral tons of cash. Literally.

The great overwhelming increase in the money supply however is thru debt.

Agreed, and not only are there many other ways to create money than via a printing press (and of course most "money" is created through credit/debt today), but also it has not always been so.

Paul's video does a very good job of addressing the last few hundred years and the various heinous credit and fractional reserve games, but it does not fully address "money" throughout history and therefore can be misunderstood... leading to broad incorrect conclusions being drawn.

grapejelly
04-06-07, 12:18 PM
The most successful money from a long term standpoint that can provide the best lessons today are, I think, English tallies. They lasted 600 years and although a stick of wood (or half of one, really) has no intrinsic value, they were redeemable for payment of taxes and issued in a reasonable way for government services. I think the solutions proposed in the video are more in this direction.

Privately issued money could compete with public money. Public money would be backed by, say, already assessed but not yet paid for tax receipts. Private money would be backed by goods and services, almost exactly like retail gift cards work today. This is the solution I would like to see and think we will see in any event after the current government monopoly irredeemable regime expires.

The other money that has been reasonably successful in history of course is commodity money, especially gold and silver.

The fundamental problem with gold and silver as money was government monopoly on coinage and the use of money based upon tale rather than weight.

If you think about it, you soon realize that there is a fiat component to all gold and silver coinage since ancient times. The money is exchanged for goods and services by tale, and this encourages debasement through alloy dilution and coin clipping, just another way to depreciate the hardest of hard currencies.

If we instead have competing private and public monies all redeemable, then we will have some of it that resembles Goldmoney, tokens exchanged through digital means, fully backed 100% allocated gold somewhere.

This is the end of banks because with the Internet there is no need for banks anymore. If we removed their government monopoly, we could use brokerages and never borrow or lend to banks ever again. This would remove the whole inflation problem, pretty much.

bart
04-06-07, 12:42 PM
...
The fundamental problem with gold and silver as money was government monopoly on coinage and the use of money based upon tale rather than weight.
...


It appears at first glance that locking a currency value to an amount of gold is a great way to limit the ability of government or central banks to print too much money and create inflation, and of course there's some truth to that... and a partial truth can be very dangerous.

1. The primary economic point, and based on the definition of inflation and deflation is since there's a very limited total amount of gold on Earth and there's virtually no limit to how much man can produce (as witness the huge standard of living increase in the last 100 years), the amount of production would either have to be limited to the amount of gold available OR the value of gold would have to increase every year to keep up with production levels.
2. The idea of course is to keep the dollar or any currency at a stable value.... and guess who own 25-50% of the gold on Earth - central banks and world banking organizations. They would get rewarded for doing almost nothing, which isn't my idea of fair.
3. If nothing was done, and the currency increased in value on a regular basis, why would someone invest in something to raise the standard of living when by doing nothing and holding the currency, it gets more valuable every year? Sure, there would be some investing going on but it sure would severely lower the incentive if doing nothing paid well.

There's more too but that should be enough to make my point.



The biggest point that I believe most miss though is that no standard of money has worked over significant time periods, and *that* is the area that should be addressed.

grapejelly
04-06-07, 12:54 PM
3. If nothing was done, and the currency increased in value on a regular basis, why would someone invest in something to raise the standard of living when by doing nothing and holding the currency, it gets more valuable every year? Sure, there would be some investing going on but it sure would severely lower the incentive if doing nothing paid well.
It is quite possible that the supply of newly mined gold would make up for a good deal of that deflation you allude to. After all, deflation would only equal the difference between the real growth of the economy, and the new supply of gold.

I can't see how this deflation is a bad thing. It rewards savers. It makes people think twice or three times about borrowing money. It encourages thriftiness, which is a great way to get people to reduce consumption, increase productivity, and reduce pollution. It forces allocation of savings to high ROR purposes rather than frivilous ones such as, say, credit card debt.

And don't forget demurrage -- the costs of storing the gold offset the deflation to some extent also!

I don't feel we'll have another gold standard anyway, and I am not advocating it. But I don't think an appreciating currency is bad. I think it's good!



The biggest point that I believe most miss though is that no standard of money has worked over significant time periods, and *that* is the area that should be addressed.
What about tallies? Aren't they a counter-example?

Paul Grignon
04-06-07, 01:01 PM
The most successful money from a long term standpoint that can provide the best lessons today are, I think, English tallies. They lasted 600 years and although a stick of wood (or half of one, really) has no intrinsic value, they were redeemable for payment of taxes and issued in a reasonable way for government services. I think the solutions proposed in the video are more in this direction.


Exactly!!!!!!! Why not learn from success???

Even the well-known Continental's demise in runaway inflation was, as I understand it, caused by the British counterfeiting 8 times the supply the revolutionaries printed, not by bad management or structural flaw.

English Tally sticks and Colonial Scrip are both mentioned in the movie as the models upon which my "simplest money system" suggestion is based. Please remember this movie is designed to engage the uninformed public's interest in monetary matters and provide a very basic 47 min. education in monetary concepts that have never before entered most peoples' minds. For what it accompishes in 47 min. from a standing start I think it has proven very successful. But if the more thoroughly informed start examining it as a final scholarly treatise on money creation they are going to be disappointed.

Hopefully I am just getting started!!!

While it is just touched on in the first movie, here is the scenario I am trying to prepare people for:

My observation is that, throughout history, the elite have managed us by rather elementary psychology as nothing too sophisticated is required. The first place people instinctively go when the money system crashes is back to gold, the only concept of money the simple minded masses think they understand. Since very few of us have any we will be sold a whole new digital debt-money system that is "based" on gold. (it's just suggested in my movie) The elite central bankers know their system will collapse, the process has probably been planned for decades as this is the final crash before they turn us all into micro-chipped androids. The gold behind this new system will be as illusory as the gold in Fort Knox.

Thus gold bugs with all their honestly-held and mostly sensible arguments in favour of gold, are likely, in my opinion to find that all their hard work in promoting a return to gold will be turned upside down and used against them as the masses, most of whom have no gold and no understanding of money will have no choice but to accept the ostensibly gold-backed debt-money "mark of the beast".

The elite will try to close every escape route possible. By educating people into comprehending money at a fundamental level we can create more escape routes and more chance of escaping.

Charles Mackay...is this your quote I found?


"Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
- Charles Mackay

If we don't all end up in prison camps and gas chambers, the survivors may find themselves "on their own" in what I call "sudden re-localization". The ones who do best in this situation will be the ones who manage to organize city states (city + resource hinterland) around their own version of the tally-stick system. Any entity that can create money by spending it on public authority and can also tax that money OUT OF EXISTENCE as required, can run a stable money system.

I belive the most promising levels to work on are municipal and bio-regional (agricultural esp. as farmers understand money better than most). However, I have tried to make my movies equally useful to those trying to bring reform to Federal systems as the educational purpose is not lost in doing this.



Paul

Charles Mackay
04-06-07, 01:28 PM
Charles Mackay...is this your quote I found?

"Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
- Charles Mackay



Yes, that's my quote ....I"ve been reincarnated several times :) :rolleyes: :)

Another quote that's appropriate here is that "power currupts and absolute power corrupts absolutely"

We all have two eyes and can plainly see what happens when small groups of people have too much power. The central bankers, the globalists, the neo-cons, ad infinitum.

In the case of money, I think decentralization is the key. Centalized money will eventually always be corrupted. Look how Woodrow Wilson was corrupted in 1913 in a weak moment allowing the Federal Reserve to come into power. This will continue to happen when power and control is centralized.

So I think one tenet to consider should be decentralization.

bart
04-06-07, 01:28 PM
It is quite possible that the supply of newly mined gold would make up for a good deal of that deflation you allude to. After all, deflation would only equal the difference between the real growth of the economy, and the new supply of gold.

I can't see how this deflation is a bad thing. It rewards savers. It makes people think twice or three times about borrowing money. It encourages thriftiness, which is a great way to get people to reduce consumption, increase productivity, and reduce pollution. It forces allocation of savings to high ROR purposes rather than frivilous ones such as, say, credit card debt.

And don't forget demurrage -- the costs of storing the gold offset the deflation to some extent also!

I don't feel we'll have another gold standard anyway, and I am not advocating it. But I don't think an appreciating currency is bad. I think it's good!

You didn't address points 1 & 2, and if you think that rewarding non production is good for a culture on the long term, then I have some ocean front property in Idaho I'd like to sell you.

On a more serious note, of course there's nothing wrong with an appreciating currency but that's only one isolated factor, much like storage costs.
I also hope and think we will not get another gold standard.




What about tallies? Aren't they a counter-example?

If you think 600 or so years during a dark period where force was close to "king" is a counter example, it's fine with me... but it doesn't address my point.

bart
04-06-07, 01:30 PM
...

My observation is that, throughout history, the elite have managed us by rather elementary psychology as nothing too sophisticated is required. The first place people instinctively go when the money system crashes is back to gold, the only concept of money the simple minded masses think they understand. Since very few of us have any we will be sold a whole new digital debt-money system that is "based" on gold. (it's just suggested in my movie) The elite central bankers know their system will collapse, the process has probably been planned for decades as this is the final crash before they turn us all into micro-chipped androids. The gold behind this new system will be as illusory as the gold in Fort Knox.

Thus gold bugs with all their honestly-held and mostly sensible arguments in favour of gold, are likely, in my opinion to find that all their hard work in promoting a return to gold will be turned upside down and used against them as the masses, most of whom have no gold and no understanding of money will have no choice but to accept the ostensibly gold-backed debt-money "mark of the beast".

The elite will try to close every escape route possible. By educating people into comprehending money at a fundamental level we can create more escape routes and more chance of escaping.

...



I agree wholeheartedly.

Charles Mackay
04-06-07, 02:05 PM
FWIW, gold Holdings by the public are overtaking holdings by the Central Banks.



http://webpages.charter.net/bigboard/holdings.jpg

bart
04-06-07, 02:14 PM
FWIW, gold Holdings by the public are overtaking holdings by the Central Banks.



True, although do be a bit cautious since it reflects ETFs and non allocated accounts too. In other words, it does not reflect gold in hand and fully unencumbered.

Charles Mackay
04-06-07, 02:28 PM
True, although do be a bit cautious since it reflects ETFs and non allocated accounts too. In other words, it does not reflect gold in hand and fully unencumbered.

It would be nice to be able to track how much of ETF gold is real vaulted and allocated gold. CEF, GTU, and the digital gold like BullionValut and Turk's GoldMoney are real ounces bought and paid for but the big one GLD isn't. I'm not sure how India is handling their two new gold ETFs (Gold BeES and the other one)

Charles Mackay
04-10-07, 12:41 AM
Paul, take a look at these successful currency systems.

http://www.peakmoment.tv/conversations/49.html

http://www.4thcornerexchange.com/

wegorkie
08-22-07, 06:00 AM
Thanks guys, I watched the film carefully and read the whole discussion.

Well the film seems to answer my previous questions and the next I wanted to follow with. Looking at the rules of money creation it seemed like it was absurd process that has to lead to:

- grow overall debt to infinity
- steal goods from people that trust in saving the currency
- ... and some other more minor issues like mega-crisis somewhen in the future

Now the film clearly confirms these conclusions are correct. This is so strange to me that I want to have just one question more: is there any source that claims opposite? Is the film conclusion controversial in some way? I would like to know if it is really solid knowledge or a matter of faith in any way.

Rajiv
08-22-07, 09:14 AM
You can read up more about money at http://appropriate-economics.org/

Many resources at Complementary Currency Resource Center (http://www.complementarycurrency.org/materials.php)

From Introduction to the foundation and practice of appropriate economics (http://appropriate-economics.org/introduction.html)


Since the publication of “Small is Beautiful” by E.F. Schumacher in 1973, his presentation of the need for an intermediate and appropriate technology has grown to become a significant movement in development worldwide. Although his calls for an appropriate application of economics in development were equally revolutionary and realistic, only rarely have we seen them put into practice. Many microfinance programs still rely on external loans from big banks at high rates of interest rather than developing the capital from within through a program which encourages borrowers to also save their money. Many economic and technological development programs follow models of economic development that are inappropriate to their particular situation.

Some economists have begun to realize that resources are not being allocated properly. Herman Daly and Joseph Stiglitz, both former heads of the World Bank, have outlined[1] the destructive effects of the present economic system on cultures and environments around the world. Many join them in criticizing the negative impacts of economic globalization and the subjugation of third world economies to the global marketplace. Other renowned economists such as J.K. Galbraith along with philosophers Fritjof Capra and E.F. Schumacher show great concern for the impacts of economics on people, environment and culture. Meanwhile, all major religions have expressed their concern, in the strongest terms, about the effects of an interest-based economic system on a harmonious way of life, calling for the inclusion of values and ethics in economics, and their opposition to the charging of interest and usury in moneylending. It sounds good, but how do we put it into practice?

We have heard it many times already that some 1.3 billion people live on less than 1 US dollar a day, and many survive on no monetary income at all. This over-simplification of the issue of monetary poverty obscures many important questions. How do people get what they need without money? Can we get what we need without having to first have money? Is the lack of day-to-day pocket money the real problem, or is it a lack of access to capital, a lack caused by dependence on external money and the charging of interest on access to it which limits its supply?

From the Principles of Complementary Currency Systems (http://appropriate-economics.org/materials/principles_of_ccs/index.html)


Despite the rapid spread of democracy, and the corresponding political enfranchisement granted to more individuals than at any time in history, these gains are being undermined as the world descends into two camps, those who are economically enfranchised, and those who are not.

Economic instability has been a permanent feature of the global economic system in which we all live. Rather than deal with these problems before proceeding with the process of globalization, the very visible hands that control the global economy continue their breakneck pace of opening up domestic markets, and societies, to market penetration.

The democratic political systems that humans have created for the betterment of society have not yet been extended to the economic system. There is growing unease among a very large sector of society the world over that globalization is forcing us to live in an economy, rather than live in a society.

In order to develop appropriate responses to economic crises, and strategies for dealing with the process of economic globalization and the decentralization of government, we must begin to understand economics. Rather than subscribing to the dominant methodology and ideology of economists, with their formulas and abstract language, we must start from our communities, and from our own lives, using normal language to express what we know to be true.

The following is a brief, simple introduction to money and the economy, presented in a way we hope will help you to understand how it functions, what the problems are with it, and what we can do to change it.

You will also find the book "A History of Money and Banking in the United States (http://www.mises.org/rothbard/historyofmoney.pdf)" useful.

From its Introduction


In this volume, Murray Rothbard has given us a comprehensive history of money and banking in the United States, from colonial times to World War II, the first to explicitly use the interpretive framework of Austrian monetary theory. But even aside from the explicitly Austrian theoretical framework undergirding the historical narrative, this book does not “look” or “feel” like standard economic histories as they have been written during the past quarter of a century, under the influence of the positivistic “new economic history” or “cliometrics.” The focus of this latter approach to economic history, which today completely dominates this field of inquiry, is on the application of high-powered statistical methods to the analysis of quantitative economic data. What profoundly distinguishes Rothbard’s approach from the prevailing approach is his insistence upon treating economic quantities and processes as unique and complex historical events.

Contemptuous
08-22-07, 09:39 AM
Rajiv -

Thank you for bringing this thread back as I for one had never read it. This thread, and the sum of it's contributors is a jewel. This is the very best of iTulip by it's contributing readers / members. All regular contributors seem in rare form here.

quigleydoor
08-22-07, 04:30 PM
I think the credit is due to new member wegorkie for bringing this thread back to the top! And of course thanks to all the contributors. So much to learn from this one conversation.

Contemptuous
08-22-07, 06:01 PM
Ooops! Thanks must go to Wegorkie! (Sorry Rajiv - I'm evidently asleep here).

wegorkie
08-23-07, 05:46 AM
Answering to my own question, I have found the opposite view analysis. This is quite detailed and very interesting to read.

The author, Specialist in Macroeconomics, explains all conjectures and controversions about FED and monetary system, and as bottom line claims the system is correct and best of all possible.

I will try to dig into it, you guys can too if you are interested, we can talk it:

http://home.hiwaay.net/~becraft/FRS-myth.htm (http://home.hiwaay.net/%7Ebecraft/FRS-myth.htm)

wegorkie
08-23-07, 05:48 AM
Thanks guys! The topic is fundamental issue for many folks.

I am an investor and want to dig into it deeply as it affects the way we should consider our investment decisions I believe.

Rajiv
08-24-07, 12:27 AM
A good review (http://www.itulip.com/forums/showthread.php?t=1906) of the video by Carolyn Baker

Charles Mackay
08-24-07, 05:19 PM
You have to pay your taxes in FRNs. Nothing else is accepted.
The income tax is the mechanism by which the government creates artificial demand for an otherwise worthless currency. Is it a coincidence that the income tax and the Federal Reserve were both created in the same year - 1913? Emphatically I say, it is not. As Ron Paul says, '1913 was a bad year. We need to repeal that entire year!'

wegorkie
08-25-07, 04:14 PM
Ok guys, I rethinked the whole issue carefully many times, and I have to surprise you with the opinion that it seems to me that current system is ok (!!!)

I think I understand more and more about it. I can now answer myself for my own doubts, i.e.:



Looking at the rules of money creation it seemed like it was absurd process that has to lead to:

- grow overall debt to infinity


No, it has not to. With one assumption: that interests on debt certificates could be paid without currency. Or with currency that is not generated using debt. I am sure there is a way - this is only technical issue. For example I know that in the USA coins are not generated as debt instruments.



- steal goods from people that trust in saving the currency


Of course it has, but this is rather time that steals value if you keep currency without interest. The main point is that currency is for exchange not for keeping value.



- ... and some other more minor issues like mega-crisis somewhen in the

Not really. The debts can be paid if economic activity slows. Paying off all debts is possible if economy stops and currency can disappear. The baseline is that with working economy debt would rise together with exchange speed and volume (i.e. money supply), but it will not have to rise exponentially but together with economy activity and be not harmfull.


Now, to explain why I consider above statements true, please imagine the system that for me shows very clearly that monetary system has sense.

Imagine we have no currency at all and there is only barter. We have persons and one produces apples, second milk and third one cars. The apple producer goes to buy car he needs. The car producer wants something in exchange but the buyer has only 50kg apples which is to small. So car producer says: "You can take a car but have to promise me that you will in exchange bring me 50kg apples every year for ten following years". Then car producer wants to have milk. He gets milk the same way. He has an agreement that he can take milk for 5 years but has to give a car in exchange after 5 years.

So is the system ok? But this is exactly the monetary system based on debt-money. By exchanging goods with promises they generated debt - apple producer is in debt for car and car producer is getting more debt every year with milk. The current monetary system is just the same. You just get the same promises but in the form of banknotes - or cash.

We can notice important conclusions:
1. With increasing economic activity overall debt is growing - and it seems to be ok and logical.
2. Debt do not have to rise to infinity - is decreases as apple producer gives apples and car producer gives car to milkman. But then economic activity stops.
3. It is true that without debt, money disappears. Because promises disappear. What is wrong with that? It will never happen.
4. Keeping currency (i.e. promises) gives always loss, cause "time is money".
5. In real world - the gov and banks stockholders have some earning from issuing currency (seignorage?), but this is not so large - the money in circulation is not about whole national assets but only about what is needed for current trade.

So, iTulip experts - I am very interested in talking this out. Have I missed anything?

Rajiv
08-25-07, 04:39 PM
The primary flaw in this thought process is that continued real exponential growth is not possible. All scenarios that you outline lead either to hyperinflation, or the debt outstrips the capacity to pay and the declaration of bankruptcy by the debtor -- and a net transfer of assets from the debtor to creditor.

see Margrit Kennedy (http://www.margritkennedy.de/index.php?lang=EN)'s Why Do We Need Monetary Innovation? Three common Misconceptions - Three threatening Results - Three possible Solutions. (http://www.margritkennedy.de/pdf/PRE_moneypres.pdf)


1. The Growth Misconception

Money with interest and compound interest can grow forever

2. The Transparency Misconception

Interest is paid only when we borrow money

3. The Fairness Misconception

Everybody is treated equally in the system

bart
08-25-07, 04:44 PM
For example I know that in the USA coins are not generated as debt instruments.



There is no difference by the Fed or Treasury in their treatments of currency and coin, although coins do have an intrinsic value where paper has virtually zero.

I'll leave the rest of it up to others, other than to say we'll have to agree to disagree on your conclusions.

Pervilis Spurius
08-27-07, 10:59 AM
There is no difference by the Fed or Treasury in their treatments of currency and coin, although coins do have an intrinsic value where paper has virtually zero.

I'll leave the rest of it up to others, other than to say we'll have to agree to disagree on your conclusions.

Hi Bart,

This site seems to say that there is an accounting difference between currency(FRNs) and coin:

http://www.federalreserve.gov/paymentsystems/coin/

Specifically, the bottom of the page under the paragraph heading (reproduced below): Federal Reserve Accounting for Currency and Coin

In short, the FED treats FRNs as its liabilities and treats US Treasury Bills, Notes, Bonds AND COIN as its assets. Furthermore, regarding coin, the FED must pay face value and can receive no income on COIN assets whereas they do get income on the Bills, Notes and Bonds they hold.

This implies that COIN is a for profit enterprise of the US Treasury.

I have a question of my own: Since coin is an asset on the FED's books, does that mean it is prohibited from being counted as reserves for the purpose of fractional reserve lending? It would seem so.

Reproduced from the site:

Federal Reserve Accounting for Currency and Coin
Federal Reserve notes are liabilities on the Federal Reserve's balance sheet. The asset counterpart to the Federal Reserve liability takes the form of securities of the U.S. Treasury and government-approved enterprises (Treasury and federal agency securities represent the majority of the total collateral for currency in circulation). Because the value of currency in circulation changes daily, the Reserve Banks monitor and report changes in net payments to the Board. Net payments represent the difference between the amount of currency that the Reserve Banks pay to and receive from depository institutions. If net payments are positive, the Federal Reserve will typically purchase securities through open market operations in an amount equal to the net increase of currency in circulation to offset the monetary policy implications of the drain on depository institutions' balances held at the Reserve Banks. Similarly, if net payments are negative, the Federal Reserve will typically sell securities in an amount equal to the decrease in currency in circulation. When a Reserve Bank makes a currency payment to a depository institution, the Reserve Bank charges the depository institution's account (or the account of the bank that acts as the settlement agent) for the amount of the order. Similarly, when a depository institution returns excess currency to a Reserve Bank, it receives a corresponding credit to its account.

Coin, however, is an asset on the Federal Reserve's balance sheet, and is a direct obligation of the U.S. Treasury. As an asset, the Federal Reserve buys coin from the Mint at face value. When a depository institution orders and deposits coin, its Reserve Bank adjusts the institution's account accordingly.

bart
08-27-07, 11:20 AM
Hi Bart,

This site seems to say that there is an accounting difference between currency(FRNs) and coin:




Poor choice of words on my part - I should have said "There is no difference by the Fed and Treasury in their treatments of currency and coin, although coins do have an intrinsic value where paper has virtually zero."

When one nets the effects at both the Fed & Treasury, there is no difference in the treatment of currency & coin.

Finster
08-27-07, 02:24 PM
Poor choice of words on my part - I should have said "There is no difference by the Fed and Treasury in their treatments of currency and coin, although coins do have an intrinsic value where paper has virtually zero."

When one nets the effects at both the Fed & Treasury, there is no difference in the treatment of currency & coin.

Well this just goes to show what I mean by needing expert help trying to unravel the Fed's balance sheet! It's no small task even for those who have studied it for years. Can you imagine what it must be like for us relative naifs? ;)

Your point is clear enough, though, and backed up by the observation that only the paper bills bear the words "Federal Reserve Note". This implies they are obligations of the Federal Reserve. The absence of such an inscription on coins implies they are not. On the other hand, they are fungible, even if not immediately so, so in the run "no difference" is a good way to put it.

bart
08-27-07, 02:41 PM
Well this just goes to show what I mean by needing expert help trying to unravel the Fed's balance sheet! It's no small task even for those who have studied it for years. Can you imagine what it must be like for us relative naifs? ;)

Your point is clear enough, though, and backed up by the observation that only the paper bills bear the words "Federal Reserve Note". This implies they are obligations of the Federal Reserve. The absence of such an inscription on coins implies they are not. On the other hand, they are fungible, even if not immediately so, so in the run "no difference" is a good way to put it.


Thanks Fin, and agreed on the Fed's balance sheet and income statement too.


Here are two lines from the income statement for example, which net to zero - not exactly what one expects with a normal accounting background


Issuance and Redemption of Federal Reserve Notes
Assessments levied on Federal Reserve Banks
for currency costs............................................. .... $491,962,202
Expenses for currency printing, issuance,
retirement, and shipping .......................................... $491,962,202




One other "interesting" item - KPMG did the 2006 audit... and noted 3 pages of "significant deficiencies".

zoog
08-27-07, 03:03 PM
One other "interesting" item - KPMG did the 2006 audit... and noted 3 pages of "significant deficiencies".

Care to elaborate/explain that one?

Pervilis Spurius
08-27-07, 03:19 PM
thanks for the gentle slap-down, bart.:o

bart
08-27-07, 03:25 PM
Care to elaborate/explain that one?

They're all under the headline "Improvement is needed in Internal Controls over Financial Reporting" and include things like misclassifying 2006 expenses and not recording them in the proper year. The amounts were not very large, the largest one being about $160,000... but one would hope that a Central Bank would be a bit better on their accounting controls and practices. They were busted in 2005 for similar things, and most of them were fixed per KPMG.


Start at page 311 in the link I provided earlier for more details.

bart
08-27-07, 03:28 PM
thanks for the gentle slap-down, bart.:o

Be gentle with me when I inevitably blow it... Finster will razz me unmercifully anyhow... ;)

Finster
08-27-07, 08:35 PM
Thanks Fin, and agreed on the Fed's balance sheet and income statement too.

Here are two lines from the income statement for example, which net to zero - not exactly what one expects with a normal accounting background

One other "interesting" item - KPMG did the 2006 audit... and noted 3 pages of "significant deficiencies"...

...The amounts were not very large, the largest one being about $160,000... but one would hope that a Central Bank would be a bit better on their accounting controls and practices. They were busted in 2005 for similar things, and most of them were fixed per KPMG.


Yikes!

On the other hand, those deficiencies pale in comparison to central banks' free pass on a commandment the rest of us must obey ... thou shalt not print thine own money!

bart
08-27-07, 08:46 PM
Yikes!

On the other hand, those deficiencies pale in comparison to central banks' free pass on a commandment the rest of us must obey ... thou shalt not print thine own money!

There goes that plan... *sigh*...


http://www.nowandfutures.com/grins/100k_dollar_gold_cert.jpg

Finster
08-28-07, 12:56 PM
There goes that plan... *sigh*...

http://www.nowandfutures.com/grins/100k_dollar_gold_cert.jpg

Ironic that such a bill would have Wilson's image on it! :rolleyes:

bart
08-28-07, 01:13 PM
Ironic that such a bill would have Wilson's image on it! :rolleyes:

Your father didn't call you sun because you're not bright... :eek: :D

santafe2
08-23-08, 08:23 PM
I don't have anything to add to this thread, but I wanted to thank Rajiv for posting this link to "The Crash Course" thread and thank the posters here for their thoughtful discourse. There's a lot of meat on this bone. Especially for those of us who've never taken the time to dig into the banking industry.

Wild Style
08-24-08, 08:14 AM
Terrific video! People are so brainwashed and ignorant that it takes a Canadian artist to present the problem in a way people can understand it. Russo tried but it didn't get any traction. Catherine Austin Fitts is trying also.

The video was more valuable in presenting the problem rather than offering a solution. I like Antal Fekete's solution of gold with "real bills" circulating as the ultimate solution to freeing men from the shackles of the elite banksters.

My favorite part was when he talked of interviewing college educated economists and businessmen who didn't have a clue about how money was created. No they wouldn't.. the banksters have blinders on the media and the education system.
One of my degrees is in International Economics. I studied under economists from the IMF and other well established organizations. In our studies we were taught about the gold standard and its eventual demise. However, as you pointed out, we were never told how this stuff was actually created as pointed out in this video. It is a eye opener, that's for darn sure.