TRANSFINANCIAL ECONOMICS, THE NEW EMERGING PARADIGM…….
Searle’s supercomputers were used to prevent the economy from correcting its imbalances, thereby setting the stage for the perfect worldwide economic collapse. Government in Hoover’s and Roosevelt’s day had no where near the power to do economic damage as today. I’m estimating (not predicting) something at least doubly worse than the 30s.
It seems like I’m in Alice in Wonderland and I’ve fallen through the looking glass. Nothing makes sense anymore!
That’s the way government bean counters want it.
As I mentioned in an earlier post, I’m jealous of "Matrix’s" ability to
disconnect and become self-sufficient. Not being able to see a logical
path forward is quite disconcerting for me. As an engineer, I’m used to
dealing with things logically.
I’m an engineer too. Matrix’s lifestyle doesn’t interest me in the least. He’ll still be dependent on the market in some way for things he can’t produce for himself. If he lives in a remote area, he’s vulnerable to being cut off from those supplies. If he has no gold or silver, he has little of value to trade with. In a remote area, he better have a shotgun to defend his family and his garden. In bad times, gardens have a way of attracting pests, the human kind. Maybe he has this thought out. I don’t know.
I take the view that goods have a magnetic attraction to real money when the fake money is worthless. I’ll take my chances in the suburbs outside NYC.
The concepts that I offered are separate from MPE or any final solution. My point is that I think it is important that we explore the huge benefits of a free (interest free) national currency. Why should those who want to trade or to save wealth be subjected to due interest on what is essentially a token of exchange?
I do not offer this as a novel idea as there are many economists and business experts who suggest the same goal and concern – including Chris Martenson (exponential growth of interest CC 4, 7 & 8). I still question why anyone should profit from the issuance of a national currency.
It goes back to incentives. A profit seeking enterprise is dependent on
the trust of its customers. If word gets out that it’s cheating,
customers would withdraw their business fairly quick and the managers
would be liable for criminal penalties. There are many cases in
business history to support that assertion.
Secondly, the profit incentive creates competition, a decentralized
banking system. This is especially important because if one bank fails,
losses are limited to savers and investors. In a free competitive
society, monopolies are practically impossible. As soon as their
profits get too high, they draw competitors who undersell them.
Why shouldn’t the citizens expect their government to provide a free and fair currency? Would you suggest that hundreds (as many as competition would allow) or more private banks issue multiple currencies? How would our nation conduct international trade or travel – would Forex (or some other established foreign currency exchanges) post the currency exchange rates from hundreds or thousands of separate US banks?
[quote=hewittr]Then there would be no incentive, political or private. Early Christians were against usury, but they couldn't stamp it out. Lenders found ways to collect interest without appearing to collect interest, and Jews were willing lenders. At the heart of the problem is that the supply of real money (gold & silver) has to be bought and paid for. Interest makes it possible. [/quote]
The government should serve and protect the people - especially through the use of a dependable and free currency. It is the sole authority of the people, through their government, to create and guarantee a national currency.
[quote=hewittr]Value is subjective; it cannot be calculated. Because production causes price deflation, Mr. Montagne's solution would require just enough monetary inflation to offset the price deflation caused by production. That's about what central bankers have been doing for almost a hundred years. [/quote]
The value of services, consumption and depreceation are constantly calculated. Please take another look at Mike Montagne's thesis.
I am not saying that MPE is THE solution, but I'm suggesting that a critical look is worth our discussion.
So, you think the present pseudo-capitalist system or your brand of ( laissez-faire?) capitalism is perfect? Then why has it not achieved plenty for everyone. Incidently, this is not socialist concept but something called ethics. This may be difficult to grasp. In a real capitalism system there is a fairer distribution of financial, and real wealth. In such a free society people can create wealth as business people, or alternatively work for them for wages as opposed to profit.
As to your idea of inflation it is flawed to a certain extent. Ofcourse, too much money can lead to inflation, and even hyperinflation in time. This is true but in TFE the amount is created, and transmitted in a measured way with little, or even zero inflation after checks have been made on the inflation risk factor. It would essentially be a scientific process to a certain extent, and moreover it can be spent where necessary debt-free for a number of social, economic, and political projects in which intelligent planning, and relevant resources exist. In other words, the real economy.
Why then does this not lead to serious inflation, and hyperinflation. The answer is simple the whole economic system is moving largely at the same rate of growth, and thus, the supply, and demand is hence reasonably balanced. If however, a small part of the economy were overstimulated with capital then this would ofcourse lead to problems. In other words, this could lead to serious imbalances in supply, and demand for certain products, and services. This could then affect much of the economy.
Yes, you are right inflation adjustment of money in banks does occur to a certain extent. With TFE the whole process can be far more comprehensive, and dynamic as never before ensuring that capital retains most of its value in any point of time.
And yes, again there are no objective means as such which determine what is priced correctly, or is overpriced. However, with TFE we can get a better, and more objective picture of what is going on because transactions would be tracked electronically, and can be compared to see any price changes.
Maybe you can come up with a better idea than TFE but please not the same old stuff which was repeated earlier on by another poster.
Thank you all for your participation. I was suprised by the number of new posts on TFE, and relevant subjects. I hope this will continue.
I will try to answer some of the points raised probably tommorrow at the latest. But please keep up the good work, as this is a VITAL SUBJECT which is at the basis of Global Justice itself.
Montagne’s ideas have already been explored at great depth. It is just that he is not aware of them.
I still question why anyone should profit from the issuance of a national currency.
Because no one would do it unless there is profit. To think that government officials would do it out of some kind of benevolence ignores the nature of government institutions. They are inherently coercive, attracting people wedded to the power of coercion.
Why shouldn’t the citizens expect their government to provide a free and fair currency?
Because there would be no constraints on the supply of a currency. The present crisis does not stem from usury – (the dictionary defines usury as exorbitant interest, i.e. interest rates above the market clearing price). It stems from the opposite: interest rates below the market clearing price. So I would argue that the current crises stems from money being offered by government at close to interest-free rates. If currency was provided for free, the supply could be theoretically infinite.
How would our nation conduct international trade or travel – would
Forex (or some other established foreign currency exchanges) post the
currency exchange rates from hundreds or thousands of separate US
Every currency would be redeemable for a named commodity. Gold, silver and copper have been the historical metals of choice, but it need not be limited to those three. If a bank issued a currency redeemable for, say corn, it would have to find a market. In a competitive marketplace these things tend to work themselves out to a practical end.
The government should serve and protect the people – especially through
the use of a dependable and free currency. It is the sole authority of
the people, through their government, to create and guarantee a
That ideal has proven not to work in practice. Government does create and guarantee a national currency, a currency redeemable for nothing. So we are right back to where we started.
Please take another look at Mike Montagne’s thesis.
I am not saying that MPE is THE solution, but I’m suggesting that a critical look is worth our discussion.
I’ve explained the flaws in Mike Montagne’s thesis. Why not invite him here to read them? Or feel free to pass this on to him. If he is receptive, he can always continue this discussion by registering here.
Global Justice? Methinks Searle is connected somehow with the one-world-order crowd.
Wouldn’t you know. He picks a day when grunts like me have to go to work. My money says when or if he comes back, he’ll ignore my rebuttals.
[quote=hewittr]Because there would be no constraints on the supply of a currency. The present crisis does not stem from usury - (the dictionary defines usury as exorbitant interest, i.e. interest rates above the market clearing price). It stems from the opposite: interest rates below the market clearing price. So I would argue that the current crises stems from money being offered by government at close to interest-free rates. If currency was provided for free, the supply could be theoretically infinite. [/quote]
You make a very valid point in your first sentence, our government
NEEDS restraint in spending.This is part of the allure of having a
private central bank – politicians are free to borrow what they want
without the restraints of maintaining a balanced budget. I can’t answer
this question but will look into via a question to Mike.
I have to disagree with your statement that "The present crisis does
not stem from usury." Usury, or interest, is indeed what makes the
life span of the system finite – and we are close to the end. Again, I
point to Chris Martenson and others who support the notion that debt
interest "grows at an exponential rate" which establishes a finite
lifespan – the "hockey stick" graph. Regardless of whether you agree with Mike’s solution, I think he, and others, are correct in stating that the key problem is interest.
[quote=hewittr]Every currency would be redeemable for a named commodity. Gold, silver
and copper have been the historical metals of choice, but it need not
be limited to those three.[/quote]
What would you do with the over $2 trillion US dollars held in foreign reserves? Would you allow them to redeem this money in precious metals? Just to back our foreign held dollars we would need over 60,000 Tonnes of gold (priced at $1,000/Troy Ounce). And what about the interest on our national debt which in 2007 was over
$400 billion dollars? This alone would require over 15,000 Tonnes of
gold every year – and the amount is growing fast. Our trade deficit, if it continues as it is, would require almost 30,000 Tonnes of gold…lost every year.
The historical global gold supply is around 4,000 Tonnes (mined +
scrap + central bank sales). And, remember that China has announced
they are buying 4,000 Tonnes of gold. Discussions of gold and silver being viable to our national monetary
system have long lost relevance. But, rest assured that you are free to
buy as much private gold as you want – and I think that is what you are intending through the private issuance of coins.
A similar model is already available through E-Gold, GoldMoney and there may be others. For example, you can own allocated gold and trade through "goldgrams" or PayPal. I think this model is growing as an alternative to paper currencies. This might be suitable for individuals but it does not address large scale international trade and the tremendous amount of government spending – even if it is reduced to the bare essentials.
Thanks for the interesting discussion
I have to disagree with your statement that "The present crisis does
not stem from usury." Usury, or interest, is indeed what makes the
life span of the system finite – and we are close to the end.
I see what I haven’t explained. Under the current system, every dollar in circulation represents a dollar of debt, debt that comes with compound interest. Every time someone takes out a loan (consumers, business and government), they expand the money supply. When there is no tangible limit on the money supply, this process of creating money out of debt is limited by the exponential curve. This is the root cause of inflation. Think of it as an open system of money creation.
Now suppose the money supply was limited by the gold supply. In this case, we’ve cut off that open spigot of money from nothing. Then the quantity of debt is limited by the supply of savings and profits. Understand that without surplus production there can be no savings and profits. This creates a recirculating loop that can go on indefinitely: Surplus goes into savings. Savings goes into investment. Investment goes into production. Production creates surplus. Surplus goes into savings and so on. This is a closed system in which prices go down and money becomes more valuable.
To summarize: we’re discussing the differences between a self limiting open system verses a non-limiting closed loop system. Interest is problematic only in the open system. In the closed system, the debt is extinguished by surplus wealth. I’ve left out other details to drive those points.
What would you do with the over $2 trillion US dollars held in foreign reserves?
I think it is more like $7 trillion circulating in all foreign accounts. I’m concerned about what others will do with it. If that money is repriated, we’ll be seeing some serious hyperinflation.
The following link migth of some interest.
Incidently, I am not a Marxist!