Those are pretty pointless questions, daggett.

>>why you think it was a bad idea for Lincoln not to have financed the war by borrowing from banks<<

I don't, particularly. Desperate times, desperate measures.

He was forced to borrow from the citizens themselves, instead, which would be somewhat less popular today.

It is also worth noting that Lincoln's banknotes were not backed by gold. A thoroughly modern approach.

>>...tell us why you think that North Dakota would be better off today without its state owned bank?<<

North Dakota has a population about the same as Tasmania. It is well suited to having a State-owned Bank. But I do notice that its loan book has doubled to $2.6 billion in the past five years. I thought you guys believe debt is something to avoid.

>>why you think the British Parliament was right... to force the American Colonies to borrow from private British banks instead of simply printing their own money?<<

I dunno. Maybe they were opponents of fiat money, fiercely opposed to deserting the gold standard or something. Or maybe it was political, to keep the dam' colonials in their place.

It was, after all, a long time ago, and much has been learned in the meantime. By some people, anyway.

>>These are concrete examples of how financial systems have worked vastly better when the power to create money has been placed in the hands of sovereign governments<<

I'd stop there if I were you. It wouldn't do to spoil the picture with boring stuff like the history of the Second Bank of the United States, would it?

>>As I already said, if all money in circulation originates as loans, then it is only possible the principle alone to be repaid by society as a whole. If both the principle and interest have to be repaid, then it is not possible for all that money to be repaid unless the economy expands forever<<

I know that you have said that, daggett, but where's your evidence?

And don't just point to some incomprehensible garbage on YouTube.

Explain it yourself, using your own words.

oh dear perculiour is back to demanding it in our own words,..tell me in your own words perculiour..how the assets would sell if there was no means to obtain fictions

we would be stuck with them selling for whatever cash we hold[or trading them for other assets we hold]..but instead everything becomes monetised...into inflating fiat dollars...dollars issued by a cartel of bankers...who are creating ever higher debt...ever more impossable to fully repay

look at the money you owe...it will read no doudt much like mine[or any others]....my debt binge became with a two thou loan..i repaid in full...next i asumed a 25 thou loan...paid off in 10 years...next 65 thou loan...now a 200 thou loan...there will be the same patern in any other loan bound personage

we have huge multinationals[their outstanding debt will reflect much the same thing...sure that debt is offset by assets...in my case about half a mil in assets...but as we all know iof we all liqidate our assets their value...will rapidly deflate to meet supply..[real supply..not the artificial supply were having with unlimited credit

every one of our credit...is subject to our collective debit...as we have recently seen with the bailouts...firms with book values being sold for one dollar...why?..because the botom line is they were valueing debt as value...

and valueing the value excluding the debt,..worse the debt keeps inflating..while a-holes are sukking commision on sale value including the debt...not real value...we have even got to the level where debt has been onsold as assets...called prime AAA securities...these are that bad debt..cleverly hidden as asetts in the plus side of the ledger

such is the fruit of allowing those with love of others money run the hen house

AUDIT THE FED
AUDIT THE FED

audit the damm fed...get greed and ursury out of banking
return the control of the fed to treasury/govt

Pericles

No one has said that we should not have debt. What we are talking about is the separation of debt and money. You fail to acknowledge that money can exist without debt.

It is not debt that is the problem. It is increasing the money supply through debt.

It is the ability of banks to increase the money supply through creating loans that is the problem and don't give me this red herring that money that banks create is not "real" money because the money "goes away" when it is repaid. That is a specious argument as the money is real enough when it is being spent.

To repeat, the problem is caused by the linking of the variation in money supply to loans. Loans are fine if you have the money to lend. It could be OK to create money with loans but we have seen time after time that it fails to give a stable money environment and we get wild fluctuations in exchange rates, in prices, in asset bubbles, and we get inflation.

The fundamental mechanism when loans are used to create extra money is flawed and is uncontrollable because an increase in demand causes more loans which creates more money which creates more demand because there is more money to lend which causes the price of money to drop which causes more demand.

If we separate money from loans then when demand increases interest rates will rise which will cause the government to issue more money. That is the way markets are supposed to work.

Alternatively increasing the money supply through zero interest loans will also work provided the loans from new money create new productive assets.

I think you may be slowly getting there, Fickle Pickle. There are some good signs, anyway...

>>don't give me this red herring that money that banks create is not "real" money because the money "goes away" when it is repaid. That is a specious argument as the money is real enough when it is being spent.<<

Hallelujah!

That certainly seems to settle the argument about Banks conjuring money from thin air.

The money doesn't "go away" Fickle Pickle, when it is used to pay off the debt. But the debt that was created for that individual certainly does disappear.

And in that sense, debt and money are fungible.

You have an IOU for $10 in one pocket, and a $10 note in the other. Put them both on the table at the same time and they cancel each other out.

In the bigger picture, if the central bank tips more money into the economy, it is basically taking an IOU on itself, which will at some point need to be repaid by the collection of taxes from you and me.

Which is of course why everyone is moaning that the current "fiscal stimulus" (borrowing from the future to put money into the economy now) will be a burden to future taxpayers.

And it will.

But the idea is to avoid a lurch into recession, which would be far more likely if the government simply let the Banks fold. Which of course they could have done, by not printing more money.

So yes, of course money can exist without debt.

But debt was invented, a long time ago, to grease the wheels of commerce and enable economies to grow more quickly. And our present system relies upon the government to manage the amount of debt within the system, by buying and selling it (via Treasury bills, notes, bonds etc.) into the economy itself when it thinks it is needed.

You don't have to agree with the politics.

But the mechanics are relatively straightforward.

Pericles wrote,

"I know that you have said that, daggett, but where's your evidence?

"And don't just point to some incomprehensible garbage on YouTube.

"Explain it yourself, using your own words."

Not for the first time on OLO, Pericles has demanded to be spoon-fed before acknowledging and responding to my argument.

Pericles, if all money in circulation (or in Australia, 97%) originates as a loan somewhere, then the loan can only be paid off by someone somewhere taking out a loan that would be sufficient to pay for both the principle and interest.

In turn, that loan has to be sufficient to pay for the principle and interest as well as interest on the combined principle and interest.

That loan can only be paid off by someone else taking out another loan.

In turn, that loan has to be sufficient to pay for the principle and interest as well as interest on the combined principle and interest as well as the interest on the principle and interest as well as interest on the combined principle and interest.

That loan can only be paid off by someone else taking out another loan.

etc, etc,

The loans can only be paid off if the economy expands indefinitely.

---

(I will have to return some other time day in order to shoot down in flames the rest of the nonsense, furthe above.)

Daggett,

I believe 100% of money in Australia originates as loans. Even bank notes are "loaned" into existence by Treasury lending to the Reserve Bank some money so the Reserve Bank can print the bank notes. A bank note says that the bearer has the right to exchange the note for something of the same value. That is, the bank note can be seen as a loan.

I think that this is at the core of the problem. We have become conditioned to thinking that we have to have an IOU for money to exist.

We don't. That is, money exists in its own right without there being a loan.

We have come to equate loans with money because that is how money originated. We left an asset (gold, grain) with a "bank" and they gave us a note saying we were entitled to retrieve it at some later stage.

However we found that the note was a convenient way of "trading" items of value and so the use of money as a medium of exchange was invented.

Thus we had money originally as a representation of value. Then we had money as a medium of exchange of value.

When money is used as a medium of exchange it should not "attract interest" as that is covered by transaction fees.

Interest should only be paid when money represents a productive asset. Interest is really rent on the asset that the money represents. When I take out a loan for a house the bank owns the house through the mortgage and the interest I pay on the money can be considered as rent on the house.

Taking this line of reasoning we have interest payable on money when the money represents an asset.

However, when the money is created and used just as a medium of exchange then we should not pay interest on it and only pay transaction fees.

One way to ensure this is not to charge interest on "new money" that does not yet represent an asset. This is what I am proposing at http://tinyurl.com/nxogdm