On Friday 07 February 2003 03:53, "Dr. Bruce R. McFarling"
<[EMAIL PROTECTED]> wrote:
> At 05:04 PM 6/02/03 +0200, you wrote:
> >Reserve Bank creates one billion new credit on 'pressure' on money
> >supply. It is not yet money (?)
>
> How? If it buys a bond from a private holder, with the new reserves
> backed by the new asset ... obviously, that's money. If the Treasury
> writes a cheque, it is deposited by the recipient and the cheque
> clears, its actually money before the reserves are, strictly speaking,
> created (at least in Australia) since Treasury cheques are credited
> to your account immediately.
---------------------------------------------------
I don't want to be hot on the definition of the term 'money' here (but it is
important that common terminology be used), because what I am after is more
the idea of 'the people' being in control of the creation of new credit (or
new money, or currency?) rather than private commercial interests; with the
people exercising that control through one of the organs of State -- in this
case a Reserve Bank, or Central Bank. The trigger for the creation of new
credit (which is an increase in the money-supply) is a corresponding increase
in the 'National Capitalisation' which allows for more money to be put into
the system. From this growth in the money-supply, a sum is set aside for the
National Dividend and the Price-adjustment mechanism. Commercial Banks borrow
from this Credit amounts which become 'assets at the bank, [to] use to meet
demands for cash or interbank settlements.
I'm not sure, though, whether an increase in the 'National Capitalisation'
comes before an increase in the money-supply, or after it? It may require an
intelligent forecaste of an increased 'demand' which triggers the decision to
create more Credit (or money.) I confess I am a bit out of my depth here; I
came at this subject starting from a questioning of Democracy as practised,
stemming from an interest in the reasons why the Church split up into the
present thirty-thousand denominations ('Parties") when the Church is supposed
to be ONE "Theocracy"? It seems that 'democracy', developing under the
influence of Wester Christian Civilazation, followed the example of the
divided Church into 'party-parliamentry' systems -- which is wrong. Following
this line of enquiry, I see the parallel set-ups in all three -- Church,
State, and Economics. If we can find the way to convince our fellow-humans on
the one issue, we have achance of convincing them on the others.
For this reason, I find Wallace M. Klinck's recent posting of great interest
because he brings in the Christian 'Salvation through Grace' connection very
clearly.
Thanks, Bruce, for your response -- and thank you Wallace, for your e-mail.
Jessop.
-----------------------------------------------
> At 05:04 PM 6/02/03 +0200, you wrote:
> >Reserve Bank creates one billion new credit on 'pressure' on money
> >supply. It is not yet money (?)
>
> How? If it buys a bond from a private holder, with the new reserves
> backed by the new asset ... obviously, that's money. If the Treasury
> writes a cheque, it is deposited by the recipient and the cheque
> clears, its actually money before the reserves are, strictly speaking,
> created (at least in Australia) since Treasury cheques are credited
> to your account immediately.
>
> If it lends to a commercial bank, the reserves are assets at the
> bank, use to meet demands for cash or interbank settlements. If
> they are used to meet demands for cash, then they become money,
> and if they are used to meet demands for interbank settlements,
> they are part of the assets backing credit-money.
>
> On the functionalist definition, its money if its directly available
> to be used for exchange, to settle contracts for deferred payment, or
> as a store of value. Of course, every approach is free to define
> "money" any way they like, but if they depart from the above
> definition, then they need a substitute definition for the thing that
> does the above stuff.
>
> Under a 100% reserves system instead of a fractional reserves
> system, granting a loan would require a loan of reserves from
> the reserve bank. If that was two transactions you could say
> that the reserves are a seperate asset backing the money, and
> if it was one transaction with the bank simply intermediating
> loans from the reserve bank, then all reserves would be money
> directly. The difference would just be semantic, though, since
> there would be no change in liquidity in the system when money
> was withdrawn as cash or deposited on account.
>
> However, it would have to be a tap issue system, or otherwise
> near money substitutes would be developed that would play
> the role of money for some transactions, and eventually you
> would end straight back at a fractional reserves system.
>
==^^===============================================================
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
==^^===============================================================
