tag:blogger.com,1999:blog-1141932539860553199.post1140703621792994270..comments2024-03-05T10:52:24.691+00:00Comments on Mark Wadsworth: Yes, banking really is that simple.Mark Wadsworthhttp://www.blogger.com/profile/07733511175178098449noreply@blogger.comBlogger80125tag:blogger.com,1999:blog-1141932539860553199.post-40881641191161538282015-09-13T20:33:59.465+01:002015-09-13T20:33:59.465+01:00Cheers, Lola. I knew about Boulton and the private...Cheers, Lola. I knew about Boulton and the private coining but I haven't seen Selgin's book. I'll have to see if I can get hold of a copy.Derekhttps://www.blogger.com/profile/06296053477905542366noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-66590410557659671782015-09-13T14:50:10.990+01:002015-09-13T14:50:10.990+01:00"For some reason the operatives in the worker..."For some reason the operatives in the workers' paradise of 19th century British factories preferred to be paid in "coin of the realm" or a universally accepted State currency not tokens that local factory owners had stamped up themselves"<br /><br />I suspect that is a majority view, reflecting the fact that good employers, who didn't exploit their workers in that way, were in the minority, but who can tell, when social history tends to concentrate on the ones that conformed to the stereotype of the evil capitalist? As L points out, where employers didn't take the piss, their coin was widely acceptable outside the company store. Also, at this time, each bank would issue its own paper money, so there was very little of a state monopoly in currency creation and none in the creation of money. <br /><br />In the case of an employer paying an employee, money only serves as a medium of exchange so that the employer can pay his debt to the employee with something he has (money) and the employee can use that to buy something he needs, like food. It makes no difference to the employee if he is paid directly in food, so long as he is not cheated in the process, so it is the cheating that is the problem, not the process.Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-32699787114509204722015-09-13T10:26:17.946+01:002015-09-13T10:26:17.946+01:00This is all on the outer limits of laissez faire f...This is all on the outer limits of laissez faire fairyland: there is every reason for having the same units of measure of temperature and time and having the same laws applying to everybody. So I don't want different units of money: I don't want to be paid by some rich bastard who controls my life with tokens that don't have universal spendability . Universality= national currency.<br />( I imagine if a manufacturer stamped up coins in gold and silver at exactly the same weights and purity as ensure parity with the State currency then this might produce acceptability.But in the business world of competitive selfishness how and why should that happen?)<br />NB The Corbyn vote might indicate that a huge number of people have rumbled that Blatcherite business-commercial bank friendly policies don't work, having given them a long time to prove themselves. DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-78444378938295308222015-09-13T09:27:26.684+01:002015-09-13T09:27:26.684+01:00D, George Selgin's book and its research back...D, George Selgin's book and its research backs you up. The 'tokens' of good employers - Boulton for example - were universally acceptable as money. And it was precisely the failure of the Royal Mint to deliver sufficient 'change' (a contraction from exchange) the necessitated the making and issuing of these private tokens, aka 'money'.<br /><br />The point I am trying to make is that I cannot for the life of me see why money has to nationalised, as such.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-57646749006422119842015-09-12T20:56:53.394+01:002015-09-12T20:56:53.394+01:00@B
"There was nothing wrong with the truck sy...@B<br />"There was nothing wrong with the truck system per se" For some reason the operatives in the workers' paradise of 19th century British factories( which all BTW endeavoured to circulate insufficient money for the workers to buy all the products of their combined labour ) preferred to be paid in "coin of the realm" or a universally accepted State currency not tokens that local factory owners had stamped up themselves . And the general point applies: local businesses should not be interfering in the State or sovereign's prerogative to create money.<br />The climax came in the 1980's (not 60's as I guessed although I complained to my professional employer then about not being paid in cash!)when they had to amend the Truck Act to allow more general payment in Bank transfers. This sucked all workers into the ambit of banks with all the derivatives that they then invented to monetise the same deposits many times over.Result the phoney money system we have now.The British economy would have worked better with many more workers being paid in cash. DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-50729050320086792522015-09-12T19:46:56.102+01:002015-09-12T19:46:56.102+01:00"You see no problem with: people paying inter..."You see no problem with: people paying interest on advances made by banks when they are not lending savers' money but making it up?"<br /><br />I don't really see this. When a bank "splits the zero", it creates a loan account and a deposit account, so the loan is backed by a deposit. If the account holder than does nothing, everything is OK in your book, the bank has lent out the deposit-holder's money to the debtor. The fact that they are one and the same person does not matter. The problem appears to arise when the depositor empties his deposit account, leaving just the loan account. However, exactly the same problem would arise if the depositor and the debtor were different people. The depositor deposits the money in the bank. The bank lends it to someone else. The depositor then crashes his car and withdraws his deposit to buy himself a new one. we are now in exactly the same position as were when the bank "split the zero" with a loan unbacked by a deposit.<br /><br />"I am surprised you don't advocate the truck system by which those wonderful millowners of the nineteenth century we are all supposed to look up to as builders of modern Britain, issued tokens only redeemable at the company store"<br /><br />There is nothing wrong with that system per se. What was wrong, was the company cheating its employees by charging higher prices in the company store for goods bought with tokens than they charged for good bought with cash. They could have achieved exactly the same effect with considerably less effort by simply paying their workers less. In effect, they were devaluing their own currency. I suspect that the token system arose because of the shortage of currency and then was debauched by greedy (and stupid) employers. The Truck Act is a good example of legislation attacking the symptom, not the cause (as a mental exercise, consider whether it would have been brought in if exactly the same token system was used, but the tokens were worth more than cash in the company store).Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-21391047426467158402015-09-12T19:30:25.180+01:002015-09-12T19:30:25.180+01:00DBCR. The truck system is clearly not on. It's...DBCR. The truck system is clearly not on. It's actually not paying people. You don't actually need new laws to sort it out. And it has nothing to do with de-nationalised money. <br />As to the US experience, I seem to recall that silver dollars and gold coin were accepted universally. In any event it was quite reasonable for banks on the west coast not to accept notes from those on the east about which they knew nothing.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-70643748634699734952015-09-12T11:27:51.914+01:002015-09-12T11:27:51.914+01:00@L Yes and during the wild-cat banking era in the ...@L Yes and during the wild-cat banking era in the US, people would move West and find that the notes issued by Eastern banks were not accepted. I can remember having a Scottish banknote refused in an English pub.<br />I am surprised you don't advocate the truck system by which those wonderful millowners of the nineteenth century we are all supposed to look up to as builders of modern Britain, issued tokens only redeemable at the company store.They had to reform the Anti-truck legislation in the 1960's? to make it possible for people to be paid by direct credit into their bank accounts (which everybody then had to have).DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-56188675553654608132015-09-12T11:13:27.277+01:002015-09-12T11:13:27.277+01:00D. MW. See George Selgin - Private Money in Engla...D. MW. See George Selgin - Private Money in England 1750 to 1820. Essentially the Royal Mint failed to make enough small change so people like Boulton (Boulton and Watt fame) 'made' money. He set up the Soho mint. There was also an Anglesea based copper mine magnate whose name escapes me that also issued copper money. These were widely accepted and trusted and had the three key feature of money - a medium of exchange, a store of value and a unit of account. They issued pennies, halfpennies, farthings but not silver AFAIAA. I actually have an image of a coin made at about the same time by a hardware merchant in Ipswich. <br />It all worked very well.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-63370544010968250492015-09-11T15:40:04.893+01:002015-09-11T15:40:04.893+01:00D, interesting and agreed. Landownership and gover...D, interesting and agreed. Landownership and government are two sides of same coin and rent = tax.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-47415654032235783122015-09-11T15:30:12.416+01:002015-09-11T15:30:12.416+01:00Random said... "Money is a government IOU. A ...Random said... "Money is a government IOU. A govt debt.<br />It can be used to pay debts the govt imposes on us (Taxes)"<br /><br />This is almost always true. But not quite. The Somali shilling is an interesting exception. The Somali government has not levied taxes, nor issued new notes, for years. Yet the shilling continues to have value and to be used for trading purposes within Somalia. <br /><br />However new notes have been ordered and issued by at least one of the big Somali landowners. Which indicates either that landowners are "the government", or that rent is a private form of tax. Either of which interpretation I am quite comfortable with.Derekhttps://www.blogger.com/profile/06296053477905542366noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-56648731500609635912015-09-11T12:52:44.940+01:002015-09-11T12:52:44.940+01:00DBCR
Yes, Rothbard is 'right'; including ...DBCR<br /><br />Yes, Rothbard is 'right'; including the 'less state control' thingy. The problem is that it is the 'state control/regulation' bit that has largely driven them into the mess they are in. This is probably because - IMHO - the banks and the gummint and the landowners are all doing quite nicely thank you all in league against 'the people'; which is broadly Rothbard's point. And I agree that if it were any other business it would be a fraud.<br /><br />BTW there's a lot of him on youface. Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-78556084478778686052015-09-11T09:53:25.186+01:002015-09-11T09:53:25.186+01:00@MW
I am not trying to adduce Rothbard to play peo...@MW<br />I am not trying to adduce Rothbard to play people off against each other or confuse matters by saying there's lots of different opinions, lets all agree to differ.Despite coming from what we would call the right wing, Rothbard provides exactly the same analysis of the banking system as Positive Money, Coppola, Martin Wolf, the Bank of England,and lefties like me, except he calls it a swindle and a fraud.And explains himself magnificently clearly.<br />This analysis is so consensus and orthodox (except for the accusations of swindle and counterfeiting) that it should be hoisted up at the bannerhead of this blog as a point of reference.The flaws in his exposition of the problem are made up for by his marvellously robust language, which strangely I had never appreciated before especially in his attack on Land value Tax.<br />Rothbard goes on, after explaining the problem very clearly, to suggest solutions in the way of less state control of banks which strike me as stupid but make Lola's case for him.<br />Everybody should be able to agree with his definition of the problem: the differences of opinion come at the next stage:what to do about it. <br />DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-42672412013795499102015-09-10T21:45:43.902+01:002015-09-10T21:45:43.902+01:00B, yes of course, the whole government paper fiat ...B, yes of course, the whole government paper fiat money thing only came in once they realised that they didn't need gold to back their currency, the paper money works fine as long as it transfers wealth from taxpayers (who have to pay tax in paper money) to state employees (who are paid in paper money), Without wishing to cast either of those group as necessarily goodies or baddies.<br /><br />L, correct and agreed. To my mind, all these four groups* are all quite right, up to a point, and as long as we are just looking at one particular topic, or one aspect of a particular topic.<br /><br />* Whereby I tend to agree with what J M Keynes actually said, rather than what the Faux Libertarians claim that "Keynesians" say (a grouping which does not exist), which is just bogey man stuff.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-48588723821049076842015-09-10T21:32:14.561+01:002015-09-10T21:32:14.561+01:00MW. That's roughly the point I was trying to ...MW. That's roughly the point I was trying to make. There are different world views. You can see where they are all coming from but you cannot use the logic of one to defeat the other.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-42707586964284039112015-09-10T21:30:08.891+01:002015-09-10T21:30:08.891+01:00DBCR I am aware of Rothbard. I am pretty sure that...DBCR I am aware of Rothbard. I am pretty sure that I've read it.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-54318915866782195222015-09-10T21:29:22.515+01:002015-09-10T21:29:22.515+01:00"Anyone can issue IOUs though."
As evid..."Anyone can issue IOUs though."<br /><br />As evidenced by Local Exchange Trading Schemes many and various (do they still exist?)<br /><br />"It can be used to pay debts the govt imposes on us (Taxes)"<br /><br />According to the Beeb (Promises, Promises on R4, a cracking programme, still on iPlayer) money was invented in order that the state could pay its armies in something other than land and in order not to run out of the stuff, they made it possible to pay taxes, which up until then had been paid in kind, in the new money. So I would agree that money is government IOUs that we use as an exchange medium and denoter of debt becuase of its universal acceptability (or almost - try buying something in rural Dorset with a Scottish pound note).Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-82274367914413081052015-09-10T21:24:58.355+01:002015-09-10T21:24:58.355+01:00B, 9 September, 19.31, we were agreeing with each ...B, 9 September, 19.31, we were agreeing with each other, don't worry.<br /><br />R, L, DBC, you cannot compare and contrast or play off against each other "Austrians", "MMTers", "Georgists" or "Keynesians".<br /><br />They are all looking at different things are all right in their own ways and are not mutually exclusive. It's like car mechanics know about cars, biologists know about bacteria, and so on. you wouldn't want a car mechanic treating your wounds or biologist trying to change your tyres. Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-59416366987388272732015-09-10T19:23:44.569+01:002015-09-10T19:23:44.569+01:00@L "From my point of view the Austrians debun...@L "From my point of view the Austrians debunk MMT" <br />Are you outa your mind?<br /> Arch Austrian Murray Rothbard describes 'Fractional Reserve Banking" in a 1995 polemic on the Lew Rothwell site that makes all Banks Create Money proponents look wimpy and in two minds. Not only does he anticipate the Icelandic fashion of calling modern banking counterfeiting, he also bandies around "swindle" and "fraud" with invigorating abandon.<br />Rothbard is the foremost advocate of the banking is a fraud diagnosis: his prognosis that banking would right itself with the disappearance of government-backed cartel arrangements is not part of the consensus.Can you believe that in the US banks didn't form cartels of their own volition to protect their own interests? He seems to think the American State and Big Finance are not interlockedDBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-39396693893999144022015-09-10T17:37:10.685+01:002015-09-10T17:37:10.685+01:00@L
You are obviously unaware of Murray Rothbard...@L<br />You are obviously unaware of Murray Rothbard's paper on Fractional Reserve Banking. This amounts to a total demolition of FRB by the definitive modern Austrian.DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-36653329806071036602015-09-10T15:42:48.143+01:002015-09-10T15:42:48.143+01:00R. "Money is a government IOU. A govt debt.&...R. "<i>Money is a government IOU. A govt debt.</i>". Not necessarily isn't, no.<br />From my point of view the Austrian's debunk MMT.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-53951523777591663302015-09-09T20:01:06.869+01:002015-09-09T20:01:06.869+01:00L, read this to debunk Austrian arguments:
https:/...L, read this to debunk Austrian arguments:<br />https://originofspecious.wordpress.com/2014/08/02/austrian-economics-mmt-and-accounting/<br />Bayard,<br />Money is a government IOU. A govt debt.<br />It can be used to pay debts the govt imposes on us (Taxes)<br />Anyone can issue IOUs though. This comment can become a promise to pay £5 - there done.<br />A deposit is a bank promise to pay govt IOUs on demand.<br />When a bank makes a loan it issues a Bank IOU and swaps it for a borrower's IOU. Bank IOUs are widely accepted, especially by people who owe debts to the bank. They can write cheques on their account similar to how you can pay taxes with govt IOUs.<br />Assets and Liabilities expand.<br />Banks keep some govt IOUs in reserve and can borrow more at a "penalty rate" via the central bank (part of govt.)<br />That's the best I can explain it.Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-92015890691177545452015-09-09T19:31:38.477+01:002015-09-09T19:31:38.477+01:00""Money" for these purposes is NOT ...""Money" for these purposes is NOT A THING. It is a unit of measurement of indebtedness and whatever the opposite of indebtedness is."<br /><br />Increditedness? <br /><br />I think I was agreeing with you here. Debt is a thing, credit is a thing, but money is not a thing. The world worked fine on credit and debt for hundreds (thousands?) of years before money was invented. <br /><br />So limiting the banks' ability to create "money" is really limiting their ability to create debt (because it is bank lending that causes the "splitting the zero" not depositor lending and the creation of a corresponding credit is a side-effect) and that's what we are talking about here, isn't it?<br /><br />Just trying to put it simply so that I can get my head around it.Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-89238800923426739112015-09-09T14:49:22.675+01:002015-09-09T14:49:22.675+01:00DBCR Also, LVT would be a Very Good Thing for the ...DBCR Also, LVT would be a Very Good Thing for the vast majority of my clients - they might not know it - but it would be. Therefore as my job is to help my clients I consider lobbying for LVT is in their interests.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-5876206004409943272015-09-09T14:47:54.048+01:002015-09-09T14:47:54.048+01:00DBCR. Yes, I know 'the market' has lots a...DBCR. Yes, I know 'the market' has lots and lots of 'rent seekers'. That is precisely my point. It seems to me that by not having LVT and having all sorts of other taxes (and regulations), those other regulations (and taxes) have been precisely designed to aid rent seekers. Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.com