Grim's grand theory: - the explanation of economic phenomena is that they are determined by "assholes".

Yep.

Excuse me, Peter Hume. Where did I say that?

>>If it were really true that the value of capital comes from the value of all the labour that goes into it, as you and Pericles have suggested<<

Please don't put words into my mouth, and then extrapolate an argument from an imaginary position.

What I did point out that capital surpluses - of the kind that you would like to constitute the entire borrowing/lending bandwagon - are derived principally from the surplus created by "the workers".

This has been a bone of contention for several centuries.

Personally, I think that the different contributions of capital and workers have now found quite a reasonable balance, so there's little need any longer for a peasants' revolt. But that does not disguise the fact that capital surpluses don't just "happen"; there are contributing factors.

>>Are you making an argument in favour of fractional reserve banking and fiat currency? If so, why?<<

I hold the view that the ability to borrow in order to build a business that creates new wealth for the working population has contributed a great deal to the stability that now exists between capital and labour.

The two sides - business borrowing to grow the supply of goods and services, and consumer credit to soak them up - have grown synergistically.

Without the ability to extend credit beyond that which is secured in the bank's vaults, economic growth would have been far, far slower.

Admittedly, we would have been spared the GFC, which was caused - if there can be said to be a single underlying cause - by an over-enthusiastic expansion of credit lines, in all sorts of directions.

But that has always been a matter of degree, not principle as you like to suggest.

To destroy the world economy simply to rebuild it without credit would seem just a little extreme, and more than a little perverse.

Grim

“The only way to achieve a sustainable economy is for money to be reduced to a means of exchange, instead of an end in itself.”

So when you acquire money, or withdraw it from the bank, you do it as an end in itself do you, not as a means of later exchanges?

You are opposed to fractional reserve banking, but think the cure is more governmental meddling with the money supply. What makes you think they’re going to do any better job of it in the future, than they have in the past?

And where is the evidence that government represents society at all, let alone more and better than the voluntary transactions of “the People” themselves?

Voting is compulsory; you cannot build any theory of consent on that. People get one vote for government every three years; but every dollar is a vote in the market, and people vote multiple times every day. It is true that people in market relations transact on unequal terms; however the greatest inequality in market relations, is still less than the least inequality between the state and one of the subjects of its power. Some market actors may come near to monopolistic, though almost all market actors do not; however all political states are based on their monopoly of violent force. You have the right to enter, or not enter, every single market transaction; try withholding payment from the state and you’ll be locked in a cage. Policies are always presented for electoral vote in a bundle; you can’t separate out policies you want from those you don’t. There is in fact no way of knowing whether a majority voted for a given policy or not. All acts of government apply to you whether or not a majority wanted them in fact, and whether or not you wanted them. The laws against fraud and deceptive conduct do not apply to politicians, and you have no legal remedy for damages for breach of promise. Much of politics consists of trying to bribe vested interests in marginal seats at everyone else's expense.

(cont.)
What is your evidence that government represents the people more or better than the people represent themselves and the greater social good through their voluntary transactions?

Pericles
In producing the capital goods that are then devoted to increasing productivity, the relevant comparison is between the productivity of workers working with capital equipment – tools, machines, factors etc. – supplied by capitalists, and the productivity of workers without them – ie with their bare hands, or with self-supplied capital goods.

I don’t know how one concludes that the difference in productivity and product is “principally” derived from the workers rather than from their use of the capital equipment, unless one reasons that without the workers there would be no product, but in that case, surely the conclusion must be that *all* the product and all the productivity is derived from the workers, and you are back to the Marxian fallacy of labour theory of value.

For the fourth time, I am explicitly not arguing that there should be “no credit”. To use your own expression: Please don't put words into my mouth, and then extrapolate an argument from an imaginary position.

Why do you oppose the Austrian view when you don’t even understand it?

“Without the ability to extend credit beyond that which is secured in the bank's vaults, economic growth would have been far, far slower… Admittedly, we would have been spared the GFC…”

In that case, we have found a way to create real net wealth by multiplying money substitutes, haven’t we? Haven't we?

So why not just keep printing money substitutes until everyone is rich and no-one has to do any work?

The appearance of wealth generated by FRB is from capital consumption. It’s like burning the furniture in a party to celebrate how clever we are in discovering a way to make wealth out of thin air.

The deep structure of these beliefs is the same as with the Aboriginal belief in the Dreamtime, and the Christian belief in Genesis. It is superstitious creationism.