peter..quote..""what is the original problem..that is so bad,that a govt power..to inflate is the solution?""

the inflation of money supply?
or deflation of value?

but the question
of what problem could be so bad
it was people draining the coin cash/gold silver copper
out of country...

[it was this very fact
that saw our earlier govt import spanish 40,000 money..[punching a hole in the middle and making that very expensive collectable..'holey dollars and dumps..[the bit punched out]

of which less than 275 survive

they are so rare
the catologs actually name..where each one now is

and the huge british cartwheel/pennies
selling today..for between $50 to 600[each]

""What would be so bad
if the money supply..was not inflated in line with productivity?""

inflating the money supply too much
devalues the worth of the money actually held
as arjay has repeatedly said

allowing bankers..[via the fed]
to do it at whim is clearly insane

we should be voting on who has that power..!
not some for proffit bankers deciding it at whim

[if only to raise the govt borrowing rate..
its still we the people getting scammed to repay govt odious debt]

the banks have PROVED..they are abusing 'the system'
audit the fed..teach the truth in schools
take back the PRIVLEDGE to mint coin
restore the true values back into the coin face value

deflation has now made it to the absurd point
where there is more cost of metal to mINT
a one cent piece/2 cent piece/5 cent piece
[thus all the coin under 50 cent]
so as to give them a higher scrap value

this is what the flood of paper CREATED
by the fed reserve has brought us to

the measure of values
underpinning it has been stolen

add back in two..'0's
to represent the silver values STOLEN
lest we forget..the bankers STOLE our silver gold and copper

NOW they plan to STEAL our nickle
its two different purposes

noting that the AU/constitution
repeats that no state..''make anything but giold/silver coin..a legal tender for the payment of debt'[chap 5[115]

paper 'money'
falls underpart 5 51..[xvi][xii]

ARjay said;
It is mostly created by private central banks in their computers as debt

A quick response without reading everything, if the bank creates a debt
by granting a loan they have to be doing that against deposits of
customers or their own borrowings.
When someone comes in with a cheque drawn on that loan then cash may
have to be paid out. The banks do not have printing presses so they
would have to obtain cash and/or credit from the RBA.

I realise that they can generate loans that exceed their deposits and
this does seem to be a general practice.
However the books ultimately have to balance.
So does the RBA lend money to the bank ?
Of course the bank may have borrowed US dollars and could use those
funds to honor the incoming cheques. It could then avoid the RBA.

bazz..quote..""if the bank creates a debt
by granting a loan..they have to be doing that
against deposits of
customers""

correct
to create a bank.you need to lodge a cash deposit
with the fed..this underpins the fraction..that greates your credit limit

""or their own borrowings.""

had you read it all
you would know that is not on
[your required to be able to keep your money
sepperate from your business..]

allthough the fraud of which you speak
is how many banks were created..[often with empty promises
ie paying back the loan with your credit abtained by fraud

but to bankers...scum...any mean fair or foul to take YOUR money
look at the bank failures through time[every bank ever made has failed]
but we get so despirit to borrow..a new one opens
[and that was fine as long as govt controled coin/fiat paper money
but now banks are effectivly broke[but the fed can print any ammount of paper..to 'bail them out]

so the question is WHY DID GOVT BAIL THEM OUT?
[to add in a fresh cash fractional deposit with the fed..to create more credit out of thin air]

""When someone comes in with a cheque drawn on that loan then cash may
have to be paid out""

ahh chyecks an interesting topic
do you know...when you sign the check
you assume full responsability for the debt if its not honoured.

that bit of insurance..[a co signer]..is why you need to sign
the back of the check in cashing it in..[the co signer accepts full liability...this creates a security they can rate AAA+]

""The banks do not have printing presses so they
would have to obtain cash and/or credit from the RBA.""

yes egsactly
plus pay them rent..on any cash they hold
plus 'buy' the notes per note..yet repay it by face

read the bankers manuel

""I realise that they can generate loans
that exceed their deposits and
this does seem to be a general practice.""

see UNDER FRACTIONAL RESERVE
they only need 2% of actual value
cash held by the fed
to lend out 98%
in 'credit'

too darn clever by half

its our SIGNED* loan application[creates a 'security'
that underwrites the security value
of the credit..we borrow
through the banks
from the fed

its all by book entry
you give me a dollar
i give you a credit for $50

you loan out more
you need to deposit more cash with me
[see how easy it would be to scam more?

""However the books ultimately have to balance""

yes you lend..it goes into the books
you pay off..it leaves the books

cleverr aint it?

""So does the RBA lend money to the bank?""

no the bank is agent
it gets a commision

the rba lends credit
rents them bwankers,..the notes

""Of course the bank may have borrowed US dollars
and could use those
funds to honor the incoming cheques.""

only in us dollars[thats another fed]

""It could then avoid the RBA.""

yes maybe avoid lending from OURS
but is then lending from the other feds

this scam runs GLOBALLY
thery play with exchange rates as well

the thieves stole our gold silver and copper
jesus upturned their tables

wakeup folks
real and present danger

AUDIT THE FED
if they dont hold the gold silver WE KNOW we had
they stole it...!

thus they ned to underwrite the true value being restored to all coin

thus the nicle coins..will be worth their weight in silver
the gold coins will be worth their weight in gold

its only fair
bring back the coin-age
[see many previous posts]

Peter Hume,"what would be bad if the money supply was not inflated with the productivity?" If the money supply is not increased with commensurate productivity increases,then this means that the real producers won't be fully compensated as the value of everyone elses' currency increases since the supply will be static in a growing economy.Money that equals real productivity is not inflationary money.

GDP is a very arbitary thing.Just because we sell of resources to China cheaply,it does not really equal real productive capacity.The real wealth of China is in its' creativity in inventing new usable products and making products that we consume.

Once our resources run out,our economy is stuffed.We should be more innovative and get into manufacturing.Manufacturing is not a dinosaur activity.There is enormous room for creativity and innovation.

Just think how insane the US Fed and Govt relationship is.The US Govt creates a bond which is a promise to repay a loan;the Federal Res then creates money from nothing as debt and loans it to the Govt as debt.The Fed has $ trillions in off sheet balance transactions in which it creates US $ to loan out to other financial institutions/Govts.This is depreciating the US $ and they cannot be audited on where and whom the money has be loaned.

Private Central Banks should not own our productivity without accountability.In fact we do not need them.

There is no question that the whole Fed thing is a giant scam.

The issue is whether all the same problems would not still inhere in a system, such as you favour, in which the government granted its own bank, rather than someone else's, a license to print money;
or whether such a monopoly privilege to print money should be illegal for the government as well as for everyone else, as I maintain.

"If the money supply is not increased with commensurate productivity increases… is not inflationary money."

Okay I get that.

But that is still three steps from proving what you need to prove:
1. whether increased productivity makes necessary or desirable a commensurate increase in the money supply
2. if it does, whether the economic downside of that problem outweighs the upside of the solution
3. if it does, whether the political downside does, i.e. whether the power to create money could ever be kept safe from gross abuses worse than the original problem.

As fo4 1, suppose a farmer has a flock of sheep. The lambing rate is 100%. Then because of his skill as a farmer, he manages to increase the lambing rate to 110% - more twins.

Now there has been an increase in productivity, but no increase in the money supply.

He sells his lambs. Why can't be be "fully compensated" for his extra productivity just by selling them at the market rate? What's wrong with that?

"the value of everyone elses' currency increases since the supply will be static in a growing economy."

(We assume here that all other things are equal.) Yet he is part of that "everyone else". He participates equally with them in the increased value of the currency. But we are concerned here only with his increase in productivity.

Why does the general rise in the value of the currency, have the result of depriving him of full compensation for his increased productivity if he sells the extra lambs at the market rate? He is 10% more productive, and gets 10% per income. What's wrong with that?