Jon Irenicus:I suggest you give Rothbard's Man, Economy and State a read. I think it'll explain these concepts in more depth than I am willing to go into here and should give you an understanding of some of the problems in prohibiting interest or visualizing it as being created "out of nothing".
Maybe I will do that, but I am just an engineer, trying to solve problems. It is not that I am not interested, but discussing things with people just gives more insight than reading books. I never have read the complete works of Gesell also. Too boring. Maybe if I had time to read books... but there is so much to do. And the situation is urgent right now with the credit crisis. Anyway, it is an interesting discussion.
It's 1000 pages or so, and it is worth taking the time to read, even if just 50 pages a day.
-Jon
Freedom of markets is positively correlated with the degree of evolution in any society...
Trying to wake you up because you seem asleep and are not noticing what is going to happen.....
The fundamental soundness of natural moneyA goverment issuing natural money might be tempted to issue additional currency. But this is not a rational thing to do. First of all, tax income should increase because there is no inflation and money is circulating faster. So there is no rational reason to destroy the system that is bringing wealth. It simply does not make sense. Should the economy slow, and tax income diminish, which probably will not happen, the economy can be revitalised by raising the money tax. This has the same effect as issuing additional currency. Furthermore, if loans are guaranteed as a percentage of money supply, nobody can be harmed. Therefore, from a logical point of view, natural money is the most fundamentally sound money that can exist in the real world.
Will it work?From an engineering viewpoint, using systems theory, a natural money economy seems to be the most efficient market economy possible in the real world. If this is true, this has far reaching consequences. Societies implementing this system will not destroy capital but build capital constantly at maximum speed using full employment. Also those societies do not waste resources on financial activity or government intervention. Therefore those societies should be far more wealthy. As a result the military options of those societies also increase, and therefore natural money systems will replace all other money systems, maybe just because they are only natural. If this is true, banking interests will never succeed in preventing natural money systems from being introduced worldwide.Natural money can be choosen by a group of people deliberately. It can be selected in an unconscious process, like in ancient Egypt. It can be enforced by a rulers, like in Europe in the middle ages. Natural money can be used on a small scale, a large scale, or even worldwide. Natural money can be used in a democracy but it can also be used in a totalitarian state. Natural money assumes only economic freedom but it does not assume political freedom. Even though government intervention in the economy is not needed, it does not require a specific size of government. The extra wealth created by natural money can flow to the citizens, but it can also flow to the state, which may use it for its own purposes. Therefore, natural money is not "good" or "bad" in itself, but only a very powerful concept.
www.naturalmoney.org
I tend to like this idea, although it has a few bugs. Please correct me if I'm wrong, I am trying to understand this concept.
What a lot of people don't seem to get, is that the incentive to lend at no interest comes from the increased value of the principle when paid back. ( you did say that the quantity AND value of money will stay constant, which I'm not sure is possible) So banks, because they will be loaning out their profits from administration and not lending their deposits will be much more careful of who they loan to. The business model, I suspect will be very different from the current one.
If the value of money is going up and the supply is constant; then prices and wages will fall, meaning that the there will still develop a divide between those that have the actual cash and those that don't. The person that paints houses will earn less per hour, and still be able to buy the same amount of goods, while the excess cash flows into the hands of a small group of people. If by storing it in a bank, the money is exempt from the tax, then won't everyone do that? That way hoarding will be possible. this leads to the next question.
I'm not sure I can fully visualize how this tax will be collected. If I understand, the money expires and becomes worthless after a certain date. Or it starts to depreciate quickly, more likely. This would prompt people to get rid of it as soon as possible, which is the intention. However, the person that ends up with all the notes at the end of the month will lose a great deal of money, that otherwise was well earned. how does this system apportion this tax so that everyone will pay their due?
Is the idea that the value increase of the money will offset the 1% a month of tax charged? This would provide an incentive to save, and would offset the frantic dash to spend all of the money. Which again leads to the situation of hoarding.
It's a good idea to limit government intervention explicitly. To make an Economic bill of Rights so to speak. Forbidding the charge of interest. Forbidding the tampering of the money tax or linking the rate of tax to the value of the notes. An interesting idea. This would severely curb the governments ability to increase its own power.
The charge of interest will be like the law against gambling. People will still do it, but not in any official capacity, i.e. as a business. No interest charged is IMO the foundation for any sustainable monetary system.
I'm not an expert at economics, so I may not have understood everything about this idea. I am however very interested in the possibilities of this system. Thank you for posting your article.
Thank you for waking up this thread. I knew this was going to happen sometime.
PrincipedeGatos:What a lot of people don't seem to get, is that the incentive to lend at no interest comes from the increased value of the principle when paid back. ( you did say that the quantity AND value of money will stay constant, which I'm not sure is possible) So banks, because they will be loaning out their profits from administration and not lending their deposits will be much more careful of who they loan to. The business model, I suspect will be very different from the current one.
The value of money is not constant but will rise with economic growth. Only the supply of money should be constant. If you are holding cash, it is subject to the tax, so there is a strong incentive to spend it on investment, consumption or lending out. Even though some people will be far more wealthy than others, the money is spread across the economy, so everybody has an opportunity to become active in the economy and earn money. Differences in wealth now come from differences in economic achievement and not from the possession of money (speculation). If people want to hoard value, they can use gold or silver. They are excellent mediums for doing that. Economic freedom therefore, is not affected in any serious way.
PrincipedeGatos:If the value of money is going up and the supply is constant; then prices and wages will fall, meaning that the there will still develop a divide between those that have the actual cash and those that don't. The person that paints houses will earn less per hour, and still be able to buy the same amount of goods, while the excess cash flows into the hands of a small group of people.
Because everybody is inclined to spend the money, there is not one person ending up with all the money.
PrincipedeGatos:If by storing it in a bank, the money is exempt from the tax, then won't everyone do that? That way hoarding will be possible. this leads to the next question.
On the current account, money is still subject to the tax. The bank must never lend out the money in the current account. In a savings account you can evade the tax. The more restrictive the savings account is, the more tax you can evade, because banks have more possibilities to lend out money that is locked up for a longer period of time.
PrincipedeGatos:I'm not sure I can fully visualize how this tax will be collected. If I understand, the money expires and becomes worthless after a certain date. Or it starts to depreciate quickly, more likely. This would prompt people to get rid of it as soon as possible, which is the intention. However, the person that ends up with all the notes at the end of the month will lose a great deal of money, that otherwise was well earned. how does this system apportion this tax so that everyone will pay their due?
This is quite simple in the digital age. All the money can be in accounts and taxing the money is an easy computer algorithm. You can tax the money every day with 0,035% to make the taxing more evenly distributed. If there is paper money around, it can be issued like stamp scrip, just like in Wörgl. Because everybody is inclined to spend the money, there is not one person ending up with all the money in the first place.
PrincipedeGatos:Is the idea that the value increase of the money will offset the 1% a month of tax charged? This would provide an incentive to save, and would offset the frantic dash to spend all of the money. Which again leads to the situation of hoarding.
The rising value of money is an incentive to save and lend out at 0% interest by evading the tax. If economic growth is higher than 12%, you might have the problem of hoarding. I think this will not happen. If it does, you can raise the money tax (to for example to 2% a month). If economic growth then surpasses 24%, you have the same problem again. I do not think this will happen, but if it does, you have found a method to push economic growth into infinity.
PrincipedeGatos:It's a good idea to limit government intervention explicitly. To make an Economic bill of Rights so to speak. Forbidding the charge of interest. Forbidding the tampering of the money tax or linking the rate of tax to the value of the notes. An interesting idea. This would severely curb the governments ability to increase its own power. The charge of interest will be like the law against gambling. People will still do it, but not in any official capacity, i.e. as a business. No interest charged is IMO the foundation for any sustainable monetary system. I'm not an expert at economics, so I may not have understood everything about this idea. I am however very interested in the possibilities of this system. Thank you for posting your article.
Being an expert in economics is a handicap I think, because much of economic theory is fatally flawed. Governments should leave money alone. On those points the Austrians and the Free Economy do agree. According to Free Economy, making gold and silver money, is the root of all problems because gold and silver can be hoarded. This is because people may be hoarding money for a rainy day. When more people do this simultaneously, money is removed from circulation, weakening the economy. When this happens, even more people will start hoarding money, because they expect times getting worse. This is the beginning of an economic crisis. Many people will lose their income, and if they do not have money, they must borrow money against interest for unavoidable expenses such as food. As a result, the situation becomes even worse.Abolition of interest is the way to freedom. Free people are more productive than slaves. Abolition of interest will therefore lead to greater prosperity.
Maybe you have read the story about the pharaohs. The real secret is that controlling money supply does not lead to wealth of government or the people. Wörgl shows this. History also proves this. Pharaohs never issued a currency, but they were the richest rulers the world has ever seen. Have you ever head of a coin with a picture of a pharao on it? Probably not. I googled on it and I found none.
Yes, price control is the way to freedom.
I hope the discussion can be more constructive.
There is no price control, except for the 0% interest on money. All other markets can be 100% free. Government does not have to interfere with the economy, except for enforcing 0% interest and collecting the money tax.
You may still use gold and lend it out at interest. It is not prohibited, but it is self destructive.
If this method leads to constant economic growth of 5-7% in the US and Europe, you may think again about your ideological principles. 0% interest will then be a 5-7% real return!
That is still a price control, and the tax is still harmful, not to mention theft.
We are NOT doomed! A tribute to the Mogambo Guru. A far more efficient economic system is possible 12 steps to freedom and wealth If an economic system is more efficient, it does not matter what I think or what anyone else thinks. It will be implemented as soon as the knowledge is there. Competion and market forces will then replace the current system. The only question is: Is this theory correct or is it not? The theory is based on The Natural Economic Order of Silvio Gesell. Related subjects are free economy (Freiwirtschaft), free money (Freigeld). Summary We live in an economic system that is very inefficient. The consequences of these inefficiencies are clearly visible in the form of the credit crisis. Many companies will go bankrupt because of lack of demand, even though they make useful products. Many people will become unemployed, so demand falls back even further. Governments and central banks are intervening, which disturbs the functioning of markets. This enables inefficient companies to remain in business when they benefit from government intervention and the intervention in the financial system by central banks. Now we are at the point that the authorities have taken over most banks. In the future the state will place banks under strict supervision, so that the state will decide who gets money and who does not. This is the global communist revolution of October 2008. It is possible to achieve a much greater prosperity, with maximum capital growth without inflation, large debts, economic crises, unproductive government intervention and the unproductive part of the financial sector. Natural selection will ultimately determine the most efficient economic system, despite the political power structures that still exist at this moment. The investigation of alternatives and dissemination of knowledge will accelerate this process, but the ultimate outcome will not change. The most efficient economic system is, I believe, a variant of the economy of the natural order, which was first described by Silvio Gesell. In this article I will show in 12 short steps how the economy of the natural order will work. Then I will give a real world example of the economy of the natural order, showing that it works as described. Then I will illustrate the strength of the economy of the natural order, using examples from history. On www.naturalmoney.org the theory is described in detail. The charging of interest is the way to slavery. This is because people may be hoarding money for a rainy day. When more people do this simultaneously, money is removed from circulation, weakening the economy. When this happens, even more people will start hoarding money, because they expect times getting worse. This is the beginning of an economic crisis. Many people will lose their income, and if they do not have money, they must borrow money against interest for unavoidable expenses such as food. As a result, the situation becomes even worse. Abolition of interest is the way to freedom. Free people are more productive than slaves. Abolition of interest will therefore lead to greater prosperity. The 12 steps 1. Interest on money should be banned. This is the only prohibition. Return on capital is a good thing, and should not be abolished. 2. Raise a tax on money, for example, one percent per month. This is not a tax on wealth, so shares, real estate and money lent, are not taxed. 3. Do not print more money, so there will be no inflation. 4. Because there is a tax on money, people will soon use the money to: - to invest; - to consume; - to lend without interest. 5. Because on money lent, no interest may be charged: - money will not be lent to unreliable individuals, businesses and structures. - less money will lent and more money will be directly invested in equities and real estate. - money will only be lent to reliable people, people with collateral and well-financed companies can borrow without interest. 6. Therefore there will never be an economic crisis, because money is spent directly and there are no bad loans. 7. Because all money is directly used for investment or consumption, everyone is at work and the economy grows steadily at maximum speed. 8. The financial sector is largely superfluous, and that is a good thing, because this sector produces nothing and destabilises the economy. People working in financial services will get another job quickly, because the economy grows steadily at maximum speed. 9. Governments also need much less to interfere with the economy. The people who did this work, will get another job quickly. 10. As the economy grows constantly at maximum speed, and because no more money is printed, prices will fall. Therefore loans with zero percent interest will have a return that is probably higher than the interest rate you will get at the bank now. The money you lent will be worth more when the loan matures. 11. If one country chooses to apply this system, it will attract capital from other countries since the return of loans with zero percent interest rate is higher than the yield on interest in other countries (bizarre but true!). Therefore, all other countries will need to do this, if one country has changed its money system in this way. 12. Now everyone is free. There is no fear in the economy. There will always be work for employees and there will always be customers for viable businesses. Nobody is deeply in debt. If you do think this will not work, you are wrong. It has been tried and it worked very well. The miracle of Wörgl On July 5th 1932, in the middle of the Great Depression, the Austrian town of Wörgl made economic history by introducing a remarkable complimentary currency. Wörgl was in trouble, and was prepared to try anything. Of its population of 4,500, a total of 1,500 people were without a job, and 200 families were penniless. The mayor, Michael Unterguggenberger, had a long list of projects he wanted to accomplish, but there was hardly any money with which to carry them out. These included repaving the roads, streetlights, extending water distribution across the whole town, and planting trees along the streets. Rather than spending the 40,000 Austrian schillings in the town’s coffers to start these projects off, he deposited them in a local savings bank as a guarantee to back the issue of a type of complimentary currency known as 'stamp scrip'. This requires a monthly stamp to be stuck on all the circulating notes for them to remain valid, and in Wörgl, the stamp amounted 1% of the each note’s value. The money raised was used to run a soup kitchen that fed 220 families. Because nobody wanted to pay what was effectively a hoarding fee, everyone receiving the notes would spend them as fast as possible. The 40,000 schilling deposit allowed anyone to exchange scrip for 98 per cent of its value in schillings. This offer was rarely taken up though. Of all the business in town, only the railway station and the post office refused to accept the local money. When people ran out of spending ideas, they would pay their taxes early using scrip, resulting in a huge increase in town revenues. Over the 13-month period the project ran, the council not only carried out all the intended works projects, but also built new houses, a reservoir, a ski jump, and a bridge. The people also used scrip to replant forests, in anticipation of the future cash flow they would receive from the trees. The key to its success was the fast circulation of scrip within the local economy, 14 times higher than the schilling. This in turn increased trade, creating extra employment. At the time of the project, Wörgl was the only Austrian town to achieve full employment. Six neighbouring villages copied the system successfully. The French Prime Minister, Eduoard Dalladier, made a special visit to see the 'miracle of Wörgl'. In January 1933, the project was replicated in the neighbouring city of Kirchbuhl, and in June 1933, Unterguggenburger addressed a meeting with representatives from 170 different towns and villages. Two hundred Austrian townships were interested in adopting the idea. At this point, the central bank panicked, and decided to assert its monopoly rights by banning complimentary currencies. The people unsuccessfully sued the bank, and later lost in the Austrian Supreme Court. It then became a criminal offence to issue 'emergency currency'. The town went back to 30% unemployment. In 1934, social unrest exploded across Austria. In 1938, when Hitler annexed Austria, he was welcomed by many people as their economic and political saviour. Natural Money in history Using the concept of natural money, I will try to explain some historic facts, which puzzled historians for a long time. Some intriguing historic questions are: 1. How could Western Europe become so powerful during the Middle Ages? They were backwards at the beginning, annihilated by Black Death, and still came out on top. 2. How could the Egyptians build pyramids? This required a great wealth and a great organisation. 3. Why did Rome collapse? They had the greatest civilisation and military organisation at the time. Although the explanation is speculative, and not proven, there is some logic in it. The rise of Europe When the Roman Empire collapsed, Europe fell back into a dark period, called the Middle Ages. Money ceased to exist, because gold and silver disappeared out of circulation. Europe was very fragmented and in general there was no central power structure. Some local lords issued scrip currencies. Those currencies were valid for a limited period of time. After that period, the people holding the currency, had to return it to the ruler and a tax was levied. Those new units were also valid for a limited period of time. The actual value of the unit decreased slowly during the period and was the lowest just before the tax was due. Not much is known about money in the Middle Ages. What is known however, is that the people of the Middle Ages were deeply aware of the temporality of human life. Memento mori was the motto of the people in the Middle Ages. This means: remember the day that you will die. The charging of interest was strictly forbidden and people felt morally obliged not to do this. Therefore, the people of the Middle Ages were inclined to spend their money fast. If we assume this worked like in Wörgl, we may assume that Europe was building capital at maximum speed using full employment. Europe had to start at a very low level. Also, the local lords waged many wars that were destroying capital. But wealth steadily increased, faster than on any other part of the planet. When the crusades started, there was so much wealth to spend on a useless war, that Europeans could battle the Muslims for centuries on their own ground, keeping long supply lines, while the conquered land was not profitable. After that, Black Death annihilated about one third of the population, but only one century later, the exploration and exploitation of the rest of the world by Europe had begun. The building of the pyramids In the bible there is a story about a pharaoh having a bad dream about seven fat cows being eaten by seven lean cows. This dream was explained to the pharaoh. He was told seven good years would come and after that seven bad years would follow. Joseph advised the Egyptians to store food on a large scale. They built storehouses for food. Farmers bringing in the food, got receipts for corn. Bakers who wanted to make bread, brought in the receipts, which could be exchanged for corn. It did not take long before the receipts where generally accepted as money. Because of the degradation of the corn and mice eating it, the value of the receipts was steadily decreasing. This enticed people to spend the money fast. The grain receipt system lasted for many centuries. It made sense to store food to provide for hard times. If we assume this this worked like in Wörgl, we can assume that also Egypt was building capital at maximum speed using full employment. At some point, irrigation systems were in place, houses were built, and there was nothing left to do. Because there was no limit on the ego of pharaohs, and they were worshipped like gods, the pharaohs could use this wealth to build pyramids. The people building the pyramids were probably no slaves but economically free men. The Egyptian civilisation lasted for more than 2000 years, far longer than any civilisation ever. The fall of Rome Rome lasted only 700 years. The money system was based on gold and silver. In the beginning Rome was able to expand, and therefore capital could grow faster than interest charges. But after 400 years the expansion was over, and slowly growing debt was becoming a drag on the economy. The government was permanently short of funds. The value of money was constantly devaluated. The military was also badly funded, and therefore other people could invade Roman lands. Debt was destroying Rome.
How the current monetary system works (and how it came into existence)
http://video.google.com/videoplay?docid=-9050474362583451279
I think you still believe in the goodness of human nature, just like socialists do.
February 17 - 1600 - Giordano Bruno is burnt alive by the catholic church. Aquinas : "much more reason is there for heretics, as soon as they are convicted of heresy, to be not only excommunicated but even put to death."
Juan:niphtrique, you said a couple of times something like I think you still believe in the goodness of human nature, just like socialists do. So, what are your views on the subject ? You think people are naturally malevolent, but good plans (like yours...) can overcome flaws in human nature ?
I do not think people are good or bad. There are good people and there are bad people, but in general you cannot say people are good or bad. Maybe there are flaws in human nature, but humans are just the way they are. You cannot change that. Some part of Austrian theory assumes the goodness of human nature. If you think the government is completely not needed, you assume that people are good, and will not take advantage of such a situation. In reality such a place will be much like Somalia or Afghanistan.
I think the economic system is not natural when things are going wrong as they do now. Some people think that if government does not interfere with the economy, everything will be all right. Such a situation cannot completely be achieved, but you can come close. You only have to apply the correct rules for the game. Only government can provide for those rules. Money should not be a tool of power. Money in itself is not productive in the way capital is. Money should therefore not earn interest in the way capital does. If money is not a tool of power, only true economic achievement will be rewarded.
Natural economy will of course not eliminate crime or bad behaviour. It will eliminate instability in the financial system, inflation, crisis, destruction of the middle class, unemployment, destruction of useful capital, improductive government intervention, the need for central banks and many more crap. So the plan has some good features, to say the least.
Great minds in history do agree, see http://www.free-economy.com:
I thoroughly enjoyed Silvio Gesell's brilliant style. The creation of money that cannot be hoarded will lead to a different and more real kind of property.Professor Albert Einstein, Nobel Prize WinnerGesell's name will be a leading name in history once it has been disentangled.H.G. WellsThe application of Gesell's principle of circulation of money will lead the nation out of the depression within two to three weeks.I am a humble student of this German-Argentine businessman.Professor Irving Fisher, Yale University, America's greatest economistGesell's work will initiate a new epoch in the history of mankind.Prof. Dr. B. UhlemayrGesell's discoveries and proposals are of the greatest importance for centuries to come.Dr. Theophil Christen, eminent mathematician and physicist, Berne
If you think the government is completely not needed, you assume that people are good, and will not take advantage of such a situation.
In reality such a place will be much like Somalia or Afghanistan.
I think the economic system is not natural when things are going wrong as they do now.
Some people think that if government does not interfere with the economy, everything will be all right.
You only have to apply the correct rules for the game. Only government can provide for those rules.
Money should not be a tool of power.
Money in itself is not productive in the way capital is.
Ok. That is fine with me. Everybody has the right to opinions.
Anyway, if some type of economy is the most efficient, and the knowledge is spread, it will become the dominant type of economy. Markets will enforce that.
The natural economy will force government into a positive role by facilitating the money system in the optimal way. If they mess with it, it will be their own demise. Govenment therefore has no power over money. This is the theory.
The only question is: Is this true or is this not? The rest does not matter.
If government forced interest rates to be 0% it would create a black market for lending money at interest.
A dutch libertarian just made the same remark.
I will try to explain why there will be a ban on interest. I say, "wil be" and not "must be". Eventually people will opt for a ban on interest. Maybe it seems that I want to impose such a ban, but that's not true. What I did was try to describe what an optimal economic order is.
Silvio Gesell did not propose a ban on interest. So in principle, it is no problem not to ban interest. But now is already known that economic growth will be higher and the financial system will be more stable, when the charging of interest is forbidden. So when two economies have to compete with each other, and one prohibits interest and the other does not, there will be capital flight from the interest economy to the free economy.
Why this is so, I have already explained. It is further explained in detail on the site www.naturalmoney.org.
Although this is against the feeling of most people, I am 100 percent convinced that it will work this way. There will be a black market but that is a dubious market of bad borrowers and lenders. After all: individuals and companies who are credit worthy, can borrow at zero percent. The population of a country with a natural economy will opt for banning interest and punish violations, because interest harms the prosperity of the vast majority by instability of the financial system and lower economic growth.
So ultimately a ban on interest will be created by free choice and market forces. If you can determine in advance what the optimal situation will be, you can better do it the right way from the beginning.
It is better not te engage in endless argument. If you state that Silvio Gesell is a socialist, I know enough. He was a businessman to begin with.
These are the words of Silvio Gesell:
The choice lies between private control and State control of economic life; there is no third possibility. Those who refuse to make this choice may, to inspire confidence, invent for the order they propose attractive names such as co-operation or guild-socialism, or nationalisation, but the fact cannot be disguised that all these amount to the same thing, the same abominable rule of officials, the death of personal freedom, personal responsibility and independence.The proposals made in this book bring us to the cross-roads. We are confronted with a new choice and must now make our decision. No people has hitherto had an opportunity of making this choice, but the facts now force us to take action, for economic life cannot continue to develop as it has hitherto developed. We must either repair the defects in the old economic structure or accept communism, community of property. There is no other possibility.It is immensely important that the choice should be made with care. This is no question of detail such as, for example, whether autocratic government is preferable to government by the people, or whether the efficiency of labour is greater in a State enterprise than in a private enterprise. We are here on a higher plane. We are confronted with the problem, to whom is the further evolution of the human race to be entrusted ? Shall nature, with iron logic, carry out the process by natural selection, or shall the feeble reason of man - present - day, degenerate man - take over this function from nature ? That is what we have to decide.
Private individuals in their personal freedom lend money at interest.
So for the record: Silvio Gesell was an businessman, a firm believer in free markets, a firm believer in natural selection and also strongly opposed to communism.
This is just for the record. I know many people do not believe the facts.
scineram:Private individuals in their personal freedom lend money at interest.
This is just an assumption. It does not have to be.
Certainly not when money is taxed, and if you don't like taxes, when money is backed by food supplies. If wealth of the majority increases by banning interest, and the majority sees that, they will enforce it, because it is considered harmfull.
I cannot get a loan if I cannot pay interest. The majority is too smart to miss this.
You do not want to go all the way, and question everything.
Your believes will be shattered as were mine.
If you have a tax on money, and you have deflation, zero interest is very attractive.
Now you go to the bank and get 3% while the FED screws you by adding money supply 15%
So where do you want to invest?
A. economic growth 0%, interest 3%, inflation 15%B. economic growth 5%, interest 0%, deflation 5%
I will take the B option, just being a dirty capitalist myself
niphtrique:It is better not te engage in endless argument. If you state that Silvio Gesell is a socialist, I know enough
niphtrique:..But now is already known that economic growth will be higher and the financial system will be more stable, when the charging of interest is forbidden..
If no one can charge interest then no one will want to lend money. The economic impact would be devestating.
CaptainMurphy:If no one can charge interest then no one will want to lend money. The economic impact would be devestating.
I do not agree and i already explained why.
Your country has been destroyed by debt and interest, and so is mine.
The current system is dead. There is no spirit left.
If you examine the Wörgl case, you may see how strong it is. It started with 1 village, 6 villages followed, after that a town started, and then the whole of Austria wanted to implement this. Only the government blocked the experiment, threatening to use the military.
If Austria had implemented this and it also was a succes like it was in Wörgl, the rest of the world would have done the same within a few years.
Juan:No you don't. You made a lot of nonsensical assertions which you can't back up. Claims such as "In reality such a place will be much like Somalia or Afghanistan", when referring to anarchy, show that you don't know what you're talking about.Just like you don't know what you're talking about with your cranky theories about money and interest.Whether you realize, or want to admit that Gesell was a socialist is irrelevant anyway."In 1919, [Gesell] was called to take part in the Bavarian Soviet Republic by Ernst Niekisch. The republic offered him a seat in the Socialization Commission and then appointed him to the People's Representative for Finances."
You may accept this as my opinion. Gesell was a practical man. If socialists gave him an opportunity, he would surely take it.
It is true that he wrote things about redistributing wealth and land reform, so i can understand you are calling him a socialist. But his words i posted here are also indicating that he was not.
Land reform and redistributing wealth are left out in the monetary theory of the Natural Economic Order. Land reform and wealth distribution are political questions, i do not like to debate.
Political debate is impractical. I do like to talk about efficiency, because it can be objectively calculated and tested. It all comes down to the question: Is the theory correct or is it not?
Why don't we have no tax on money, 5% growth, 3% interest, and 1% deflation.
scineram:Why don't we have no tax on money, 5% growth, 3% interest, and 1% deflation.
If you were a math student or graduate, you could calculate it. It can not happen in the long run. Interest can only be paid for by expanding money supply and debt in the current system.
But math geniuses can make entertaining instructive videos too. If you take the time to watch this, you will get the point:http://video.google.com/videoplay?docid=-9050474362583451279
niphtrique: It is true that he wrote things about redistributing wealth and land reform, so i can understand you are calling him a socialist. But his words i posted here are also indicating that he was not.
niphtrique: Jon Irenicus: No, I mean you can lend anything out, e.g. a car, and expect more (e.g. the car plus some corn) in repayment for what you lent out, given that you were deprived from using the good during the time it was lent out. As I have said before, capital should earn interest. That is only natural. A car is a form of capital. Jon Irenicus: Money is not unique in this regard, and in the case of commodity money there is no difference at all. If money is a commodity, it is a form of capital. But there is a twist. If you assume money to be a commodity, you assume money to be capital. As we have seen, money can be anything, even only an agreement. Natural money should therefore not be capital.
Jon Irenicus: No, I mean you can lend anything out, e.g. a car, and expect more (e.g. the car plus some corn) in repayment for what you lent out, given that you were deprived from using the good during the time it was lent out.
Jon Irenicus: Money is not unique in this regard, and in the case of commodity money there is no difference at all.
niphtrique: CaptainMurphy:If no one can charge interest then no one will want to lend money. The economic impact would be devestating. I do not agree and i already explained why.
Sorry I did not read the whole thread. Which post are you referring to?
I think the the monetary theory of natural money and Austrian theory have much in common. But that was what i wrote already somewhere in the beginning of the thread.
In principle we agree on: people should be free to choose and markets must determine the best form of money.
Only what the best form of money is, there is disagreement. But this is not a disagreement in principle, because we all think people must be free to choose and markets will decide.
Given the Wörgl experiment, and how explosive it was, i assume the money of choice will be some form of free money. If you examine the story, you can see that the existing system was just a hartbeat away from death in 1933. It was only the Austrian central bank blocking the introduction of scrip countrywide that was saving the system. If it was introduced in the rest of Austria, and it had the same kind of success, as it had in Wörgl, the 6 villages and the town, the rest of the world would have copied it within a few years.
A new Wörgl can happen again any moment now, because we are in the same type of crisis. What i did was trying to figure out wat the best form of free money will be. If we know in advance what the most efficient type of money is, or we have already thought about this, we are better prepared for the things that may come.
It was an experiment, historicaly unprecedented. Because the market never chose it.
In 1847 the London Communist League (Karl Marx and Frederick Engels) used Hegel's theory of the dialectic to back up their economic theory of communism. Now, in the 21st century, Hegelian-Marxist thinking affects our entire social and political structure. The Hegelian dialectic is the framework for guiding our thoughts and actions into conflicts that lead us to a predetermined solution. If we do not understand how the Hegelian dialectic shapes our perceptions of the world, then we do not know how we are helping to implement the vision. When we remain locked into dialectical thinking, we cannot see out of the box.Hegel's dialectic is the tool which manipulates us into a frenzied circular pattern of thought and action. Every time we fight for or defend against an ideology we are playing a necessary role in Marx and Engels' grand design to advance humanity into a dictatorship of the proletariat. The synthetic Hegelian solution to all these conflicts can't be introduced unless we all take a side that will advance the agenda. The Marxist's global agenda is moving along at breakneck speed. The only way to completely stop the privacy invasions, expanding domestic police powers, land grabs, insane wars against inanimate objects (and transient verbs), covert actions, and outright assaults on individual liberty, is to step outside the dialectic. This releases us from the limitations of controlled and guided thought.http://newworldrhinos.blogspot.com/2007/11/naomi-klien-shock-doctrine.html
niphtrique: scineram:Why don't we have no tax on money, 5% growth, 3% interest, and 1% deflation. If you were a math student or graduate, you could calculate it. It can not happen in the long run. Interest can only be paid for by expanding money supply and debt in the current system.
That's the problem with the current system - is that money is not free. Once people are free to choose their own money- there is no exhaustion of the supply of money because people will simply choose something else to use if theoretically all the gold in the world just dissapeared. If a lender makes a loan knowing the buyer cannot pay it back with interest- well the lender loses from his investment as he should.