>Subject: [ijccr] Money as Debt
>Posted by: "Silas A. Kline" s_a_kline@...
>Date: Tue Apr 3, 2007 9:33 am ((PDT))

SK: Todd, I will assume that the video was placed on Google
because they couldn't sell it, which is not surprising,
considering its poor quality. The animations are extremely
primitive. But my biggest complaint has to do with its
factual errors. So far, after watching about twenty minutes,
these are the errors that I've noted:

1. The fractional reserve process is not described
accurately at all. In the video, there is an initial deposit
in bank 1 in the amount of eleven hundred something by the
bank's proprietors. Off that base the bank lends ten
thousand dollars, which is deposited into bank 2. The video
says that this deposit into bank 2 becomes the basis for
further loans.

JCT: The movie was off by a factor of 10. Every economics
textbook and http://www.cyberclass.net/turmel/bankmath.htm
even explains how the $1000 deposit divided by the 10%
reserve ratio is the eventual monetary mass of $1000 / 0.1 =
$10,000. The movie ends up with $100,000.

It's elementary. Bank 1 cannot lend out 10 times the
original $1000 deposit, it can only create and lend out the
reserve ratio, 90%, of the deposit, $900 new dollars. Then
that $900 goes into bank 2 as basis for another 90% of $900,
then into another bank for 90% of $810, then another 90% of
729, etc. to multiply up to $10,000. It's a sad elementary
error because it it presumes the multiplier's x10 increase
occurs in bank 1 before going on to the real x10 multiplier
effect that occurs through deposits in other banks. There
was no multiplier effect in the first bank. Simple
unimportant error. So how did Silas Kline, aka, William B
Ryan, explain the mistake:

SK: The reality is that bank 1's proprietors will have to
come up with the difference between the ten thousand dollars
transferred into bank 2, and its own reserve deposit of
eleven hundred something, which must be transferred into
bank 2's account by the reserve bank.

JCT: They won't have to come up with the other $9,000
transfered into bank 2 because they had to have already come
up with it before they could make the deposit to bank 2. But
if they did make the deposit, it's because they did use
their own $9000 rather than any created money, not that they
"will have to come up with it" in the future.

Kline/Ryan fails to identify the real problem, the erroneous
x10 in bank 1 that could not have happened! But the movie
got it wrong even though I did the very same 10% example in
my bankmath analysis. I told Tom Kennedy that was the reason
I couldn't promote a flawed and easily critiqued production.
Hey, if Ryan can successfully critique it, it had to be
easy.

SK: 2. The video declares that the borrower's promissory
note tendered to the bank for his loan is "money."

JCT: Of course, the "IOU" is not the token.

SK: But if general acceptability is a criterion for a
negotiable instrument to be "money," then the
borrower's promissory note is definitely not money by
that definition.

JCT: It definitely is in any town with a LETS. That's what
LETS is all about, empowering each individual to get credit
for what he needs now in exchange for his promise to return
value later. In LETS, everyone's promissory note is money.

SK: Deposit balances in checking accounts are money, being
the liabilities of the banks to the general public, are
money by the criterion of general acceptability.

JCT: And time liabilities of the LETS members, commitments
they're often called, are also money by the criterion of
general acceptability. But yes, again, the video does
confuse the "IOU" with the "monetary chip" so even Ryan can
beat it.

SK: 3. The video repeats the falsehood that interest on
loans cannot be paid because the banks create only the
principal on loans, not the interest, so for that reason
debt must compound exponentially. We've had lengthy
conversations on this list refuting that lie. Silas

JCT: Here the video is right and Ryan/Kline's wrong again.
Marc Gauvin defeated Kline in this debate but in esoteric
analysis most others couldn't or couldn't be bothered to
follow. But I can defeat you, as I've defeated you as Bill
Ryan in other debates, in terms most others do understand.

"Put your money where your mouth is."

You said a $1000 loan amortized at 10% could be paid off if
we're the only two on the island. I bet US$100 you can't
provide a simple quarterly payment schedule without recourse
to outside money.

Amortization is a neat word. Amoral means no morals. Amort
means no death. Amortizing your "mort-gage" means lessening
your death-gamble.

I will do anything necessary to repay my debt so on Jan 1 my
cash account goes up $1000 and my IOU account goes up $1000.
Go ahead and explain how I'll get the wherewithal to make my
Apr 1, Jul 1, Oct 1 and Jan 1 payments.

And if anyone else wants to bet on Ryan/Kline coming up with
a way to survive the "mort-gage" death-gamble, there's
another $100 to the first one who'll bet on Ryan against The
Engineer. Har har har har.

Anyone want to bet on Ryan? Har har har har. This is the guy
who has become so demented by his failure to be able to take
my taunting bets that he has been defacing every one of my
USENET posts with his piss-possessed graffiti responses for
the past year. No one in sci.engineering and sci.economics
or can.politics will fail to fondly remember piss-post Ryan.
Not.

By the way, I disagreed when they banned Ryan from the IJCCR
for his foul language which is why he had to change his ID
to Silas Kline. He only brought disgrace onto himself by his
uncouth speech, not the group, but he was always on topic no
matter how disagreeably. And admit it, the group's been
pretty boring without our resident "wrongo" challenging us
with his constant mistakes.

But http://www.cyberclass.net/turmel/ryan00x.htm details my
many earlier posts where I kept beating up on his mistakes
and betting be was wrong. He could never take one bet but
simply moved on to his next loser position. I enjoyed using
him as my foil. To see him always back down had a certain
reassuring value to me and back in our days in the early
1980s when we picketed the Bank of Canada every "change the
interest" Thursday, Marc and I used to most cherish having a
gnurd willing to argue with us and get beaten up in public.

So, the movie makes small technical errors on the
malfunctioning system but is right on the money for the vast
vision of a well-functioning LETS social credits system.

Finally, there is nothing wrong with "money as debt." Money
doesn't have to be based on positive asset, it can be based
on negative IOU, like LETS. The the Subject implies the
wrong problem, money as debt, rather than feedback on money.

Overall, I give "Money as Debt" a C. The overall time spent
on viewing it is worthwhile. Ryan gets up a notch from his
constant F for failing to see the big UNILETS picture to a
D-minus for catching the elementary error.


--
Abolitionist Debt Slave Leader John C."The Banking Systems Engineer"
Turmel for UNILETS interest-free time-based currency in U.N. resolution
C6 to Governments in the http://www.un.org/millennium/declaration.htm
http://www.cyberclass.net/turmel USENET blog: alt.fan.john-turmel