Rohsty, as Kirby quite rightly says, a cashless society would see a huge increase in horse trading

As it is I can sell $800 worth of fillet steak to the washing machine man for $100 and he can sell me an $800 washing machine for $100.

The amusing part is if it was dome often enough one could claim benefits from the ATO for loss of income. In fact, manynin business today do quite well yet still claim benefits simply due to undeclared incomes.

A finical transaction tax is what's needed and it's coming I would say.

Just for Pericles by Murray Hunter 11/3/13 OLO. Major shareholders in Aussie Banks.
http://www.onlineopinion.com.au/view.asp?article=14777 The NAB was 34% owned by these banks. This does not include all the other minor foreign shareholders in our banks.

Thanks for the reference Arjay. Proving only, of course, that you were, as always, inventing numbers in the first place...

>>Our banks are 40% owned by HSBC, Citibank and JP Morgan<<

And Shann might not thank you for this endorsement, given that your understanding of financial issues has much in common with a vacuum...

>>Aidan you and Pericles can go and suck eggs. Shann agrees with me.<<

Neither of you has made a cogent case for government controlling money. A concept that has more in common with the worst blindnesses of Soviet command-and-control communism than being useful in today's economy.

Sorry, there is an error in my response to Shann's point 15. Regardless of our external balance, the government would still be able to run a deficit. However it is likely that higher interest rates would be needed to control inflation if it did.

_____________________________________________________________________________________________

Arjay, why do you think I'd want to suck eggs? Shann agreeing with you should be enough to set off alarm bells! The government does create money and loan it to the banks (although not to a sufficiently great extent IMO. The banks also lend and borrow money from their customers and each other.

And even if the big Aussie banks were 40% owned by HSBC, Citibank and JP Morgan, this would not make them any more susceptible to the collapse of HSBC, Citibank or JP Morgan than if HSBC, Citibank and JP Morgan didn't own any of their shares at all.

Aldan
Your statement "The government does create money and loan it to the banks" demonstrate that you do not understand that it is the other way around!

It why I describe the current financial system as being back to front, upside down and inside out in my article on Democratising Money" posted by a London think tank at http://www.longfinance".net/index.php?option=com_content&view=article&id=828

I must thank you for providing evidence of how difficult it is for folk to take aboard how the existing system works. Also how difficult it is for folk to adopt new ways of thinking about fundamental beliefs and providing me the opportunity to share with others who may be a similar position.

Below are my responses to your comments on my sixteen points as to why the nature of Australian money does not economically, efficiently or effectively assist in creating a sustainable equitable society:

1. You have missed the point raised in my article that the US government would have created a $40 billion asset by issuing negative interest rate money;

2. The value of money can no longer be defined by any one or more goods or service and so it has become self-referential no longer connected to reality. I cannot accept that it makes any sense to allow an invisible hand to use an invisible social construct to allocate real resources efficiently, effectively or sustainably. Lord Stern agrees!

3. You fail to identify any alternative policy options to support your claim. The RBA has agreed that is policy options have become less effective and that he government should look elsewhere for solutions.

4. Again you fail to identify a policy change by the bank that could justify its existence when as noted above it has admitted other means are required to promote the national interest;

5. The problem is that central banking is but part of a specialised form of central planning which you agree does not work. We need to become decentralist if we are to create a society that can best become compatible with the natural environment;

[To be continued]

6.Your statement is untrue as the value of $A follows unsustainable resources. My article at ssrn.com/abstract=2417826 proposes tethering, but not backing a currency to a sustainable service of nature. In this way we automatically obtain price signal feedback on the size and allocation of the plague of people on the planet.

7. It is inconsistent for money to be both a neutral medium of exchange and also a store of value, especially one that competes with productive investments that increase prosperity. Your concerns about inflation and fiscal policy become irrelevant with a currency tethered to a stable sustainable service of nature.

8. Your comment makes no sense.

9. I have more faith in controlling inflation by allowing renewable natural resources defining the value of money;

10. Your views are based on the existing system of fractional banking that would be replaced as described in my academic article.

11. Existing arrangements allow an untaxed black economy that if taxed would more than balance the budget.

12. Your response makes no sense as it is the banks that currently create over 95% of official money not the government as you state. But Quantitative Easing proves that the volume of money created is not related to the needs for a medium of exchange of real goods and services but to avoid the system failing.

13. The degree to which the Black economy can exist is reduced by eliminating the convenience of using notes and coins that you response does not consider.

14. Your response is wrong. Evidence was provided to the Senate Committee hearing on November 26 last year that Bitcoins are inherently traceable to ensure that they are not duplicated as stated in my article.

15. You make two errors in your response. One is that governments need to borrow that I am not proposing and the second is that money should be saved as a store of value that I am not proposing. I say in my article it is inconsistent for money to try and undertake both these textbook traditional functions.

[To be completed later]