You are on the right track. However there is more to it than just have the Reserve Bank issue new credit. Vic Bridger ----- Original Message ----- From: "Jessop Sutton" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]>; "Aart R de Lange" <[EMAIL PROTECTED]> Sent: Friday, February 07, 2003 1:04 AM Subject: Re: [SOCIAL CREDIT] various postings --- when is money, money?
<Quote:> "However, as soon as the new loan account is created, there is more money in the economy", is one with I cannot agree. It does not become money until it is used i.e. drawn upon and accepted in a transaction. It is at that point that new money enters the economy. Prior to that it is simply a bookkeeping record. <End Quote> --------------------------------------- Somebody has said previously that new credit should only be issued by the Reserve Bank. This makes sense, because after that no matter how much further the original 'credit' is extended outwards from there, it is 'money', having become that when the Commercial Bank or Lending Institution was credited with it in Reseve Bank's books. Reserve Bank creates one billion new credit on 'pressure' on money supply. It is not yet money (?) Commercial Bank C obtains credit of 1 million from Reserve Bank. Commercial Bank draws 100,000 from available credit of 1 Million to have it available for Producer P. It is now money Producer P requests 100,000 from Commercial Bank, and it is money. Producer P extends credit to Wholesaler W, it is money. It gets a bit complex when Producer P's debt to the Bank is reduced by income from sales, and he draws again on the available credit, but that is all 'old credit'. It would require that no Commercial Bank be allowed to 'create' credit -- any lendings would have to be backed by a credit from the Reserve Bank, or by cash held by itself (old credit.) The amount of money in the economy is therefore accurately known by the credit created over time by the Reserve Bank. This would lend itself to a simplified tax system that I would propose. Jessop. ------------------------------ On Wednesday 05 February 2003 23:42, you wrote: > At 06:39 PM 1/02/03 +1000, > > Victor Bridger <[EMAIL PROTECTED]> wrote: > >A debt is not money. > > Dr. Bruce M. McFarling replied: > > No, but credit can be. Of course, when credit is > extended a debt is created. > > Vic Bridger replied 3/02/03 1.44PM > > Credit given by a trader is not money. Credit extended by a bank in its > loan operations is not even money UNTIL IT HAS BEEN DRAWN UPON AND USED. > > > > Victor Bridger <[EMAIL PROTECTED]> wrote, > > on Monday, February 03, 2003 2:23 PM: > > Credit given by a trader is not money. > > Dr. Bruce M. McFarling replied 3.02.03 5.12PM > > True. I did not say all credit is money, just that most money is credit. > > I don't see any difference between the credit extended by > a bank in its loan operations sitting in a loan account and > the money I might have in a cheque account. In either > case, I can spend it, I can use it to buy financial assets, > or I might let it sit idle. > > The difference is not in what it is, but simply behavioural: > the account balance sitting in the loan account is almost > certainly going to be drawn in the near term future. > > However, as soon as the new loan account is created, > there is more money in the economy. > > > > Vic B. I feel that once again extraneous matters are being introduced to > the discussion. > > Note the reply in which you (Dr. McFarling) said referring to money, "No, > but credit can be". > > > > Vic B. I interpreted this to mean, as you were referring to money, that > credit can be money. But, Dr. Bruce M. McFarling replied 3.02.03 5.12PM > > "True. I did not say all credit is money, just that most money is credit." > > > > Vic B. I ask the question as to where I made the claim that Dr. McFarling > said that all credit is money? However, as I previously stated that all > money comes into existence as a debt there has to be a corresponding > credit. That is simply double entry bookkeeping. A new credit provided by a > bank is offset by the corresponding debt recorded in the loan account when > activated. Neither the credit or the debt are money. It is the use of the > loan when activated and paid to a third party that it becomes money. All > debts and all credits are a bookkeeping record. What makes money money is > its use, its acceptance. The essential point here is from whence did the > credit originate. Again I repeat it is from the loan operations of a bank. > > > > > > I have pointed out the two types of credit that exist. One is definitely > not money and the other becomes money ONLY AFTER IT HAS BEEN DRAWN UPON AND > USED AND ACCEPTED. To compare a new loan (which is what I referred to) > which can be money after it has been drawn upon and a balance in a cheque > account which is not the result of a new loan but the result of a transfer > of MONEY ALREADY IN EXISTENCE is misleading. Whether or not you decide to > spend what is your cheque account which is not the result of a new loan is > immaterial it is already money because you have accepted money in some > form, cash or cheque from someone else. It is simply a transfer of money > already in existence. > > > > If you spend from the balance in a cheque account, which has been > established as a new loan, it becomes money the moment it is accepted by > the recipient. > > > > It is interesting to note as I have pointed out in another posting that > even a counterfeit note passed from one person to another is money and > serves the purpose of money even though it may not be legal. It is the > usage and acceptance that defines it as money, no matter what form it > takes. > > > > Your statement, "However, as soon as the new loan account is created, there > is more money in the economy", is one with I cannot agree. It does not > become money until it is used i.e. drawn upon and accepted in a > transaction. It is at that point that new money enters the economy. Prior > to that it is simply a bookkeeping record. > > > > I do not know where all this is leading because there has been no argument > to negate the definition of money that I gave. It is still something that > can be unlimited (I am not saying that it should), it is still something > that must be accepted by all, and it does not matter what form it takes. > The important thing about the whole question of money is not so much as > what it is but whether there is sufficient to meet the requirement of > ensuring there is sufficient purchasing power to meet the cost of the > prices demanded. > > > > For just about fifty years I have witnessed arguments surrounding the > question of what constitutes money and the thing that intrigues me is that > it is not important. I care not what constitutes money. What I do consider > important is whether or not there is sufficient purchasing power in > whatever money is available to meet the prices to provide effective demand. > I state categorically that there is not and this is the reason that there > is escalating debt. We live in a debt system, which requires mortgaging > future incomes in order to pay for past production. Financially, the World > is living on drafts upon the future; Economically, it is living on the > products of the past. > > > ==^================================================================ This email was sent to: archive@mail-archive.com 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 ==^================================================================
