*Unless you can show how stamping paper creates real wealth, then you *are* too stupid to understand,*

Peter, its no different to you being able to understand that owning
a shovel will not make holes magically appear, you need to use it
to dig them. Clearly that is way beyond you, but I can't really
go any simpler then that, sorry.

Yabby

In other words, if you print money or money substitutes, but leave it in the cupboard, it won't be used to create wealth, and therefore won't create wealth. But if you use it to provide credit, then it can be used to create wealth, (if the enterprise succeeds). Yes? That's what you're saying?

So I understand what you're saying. But you don't understand what I'm saying.

The 'credit' is a credit *to* something. It's only useful because it gives a claim to that something - namely capital; otherwise it may as well be left in the cupboard.

If the stock of physical capital is 100 units, and the stock of money is 100 units, and you increase the stock of money to 110 units, that increases the ability to provide 'credit'. You have multiplied possible claims to the same underlying piece of capital. But you have not increased the underlying stock of physical capital.

When everyone is happy and busy on activities financed by the extra credit, this causes an artificial boom, which gives the appearance that everyone is better off. But *because* the underlying stock of capital is not increased, eventually the competing claims to the same physical capital, in effect, fall due simultaneously and something's gotta give - the bust. The total effect of the whole cycle, boom *and* bust, is not to increase net real wealth, but a big net real loss from destroying capital on a massive scale by diverting it from productive lines into lines that must eventually fail. It makes society as a whole poorer, not richer; and that's only looking at the end result in terms of physical productivity, to say nothing of the exploitation and injustice involved in the process.

So why do they do it? They do it because *some* people - the banksters and speculators and government, and of course economists to sprinkle holy water on it - benefit at the expense of everyone else.

The scam is simplicity itself - wealth transfer by diluting the currency - but you try getting people to understand it.

Yabby,"Owning a shovel does not make holes magically appear,you need to use it."

A shovel Yabby is a practical tool that can do work.You are equating money which has no intrinsic value,with things of real potential.Money is the medium of exchange.

The Wall St prostitutes have turned money into a commodity to be perverted into derivatives. ie expection of greed based upon more greed without effort.Where is the productivity? Aye, tis it not in China? We grew a bubble,while China grew the reality.

What ever the reason we come to OLO clearly observing human nature is one result.
The claims of Peter Hume and arjay are extraordinary.
But of all their conspiracy theory's the most out there thoughts can be seen most recently in Peter Hume but often in arjay, the insults to those who disagree.
The very idea that the world has got in wrong , and those of us who disagree, and only they know the truth.
Peter your insults are noted but you do nothing for your case by using them.

Ok, it's obviously the bee in your bonnet, and needs discussing, so let's discuss it, Peter Hume.

>>Unless you can show how stamping paper creates real wealth, then you *are* too stupid to understand, and there's no point my wasting time explaining anything more.<<

Let us first agree that the act of creating money does not in itself create wealth.

Can we agree on that? I thought so.

Let us also agree that if you create too much money, the entire system will collapse.

Ok so far? Good.

Let us also agree that money, of any kind, has no actual value until it is being used ("in circulation").

It may have a perceived value - and this applies to gold, printed paper-money or glass beads - but its real value as a medium of exchange cannot be accurately determined until it is offered in that role.

If there is anything that you disagree with so far, Peter Hume, perhaps you will let me know.

Then we will be able to get on to the more complicated part.

Ah Peter, perhaps people don't understand it, because your theory
is flawed.

What you are implying that by creating a credit squeeze, we would
be better off in permanent recession, which is hardly the case.

The thing is, as credit grows, so do assets. People build houses,
they create businesses, which have a value. Farmers produce more
crops, which are an asset. Crops that would not be grown without
credit.

Before credit came along, assets were mainly in the hands of the
very rich who inherited them. Somebody needs to own those houses
in which every day people live. It might as well be everyday
people, who live in them. All thanks to our banking system.