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    (Original post by History98)
    There are such bodies, in the UK the body responsible for monetary policy is called the Bank Of England and in the US its called the Federal Reserve. Central banks set monetary policy by setting reserve ratios, interest rates e.t.c These measures help ensure there is enough money circulating in a economy to help the economy grow.
    My broader point has been missed. The creation of money by banks in the form of debt furnishes unproductive lending for the most part. While this could be reformed internally via the monetary kit of the central bank, I argue that a system that predicates money issuance on debt is an inherently unstable and irrational way by which to govern an economy, not to mention wholly unnecessary. A debt-based economy renders the government powerless to push forward a development agenda wherein money is no object; rather, it is simply a means to an end. To have a governing body borrow money, generated by private banks, from the private sector is to impose a constraint on government power that is artificial, and serves to exacerbate poverty, exploitation and regression in economic development.

    If I tutor you I am providing a service. Now, if the population grows and there are 5 million more students in the country and there are also 5 million more tutors in the country giving those students tuition, then those 5 million tutors are providing extra services in the economy. If the money supply does not increase to reflect that then there will be downward pressure on tuition costs.
    But I am finding it difficult to understand how a tuition service can occur in the absence of money to begin with. Of course, a pay packet must be guaranteed prior to any service being rendered.

    I believe you are simplifying a bit much, to the extent of creating a distortion in terms of how deflation arises in reality. It is only accurate to identify the ultimate source of deflation. If banks decide to reduce the amount by which they on-lend to the real economy, this in turn has a knock on effect in the economy as a whole. As a result, due to a substantial decrease in aggregate demand, prices fall but at the expense of prosperity and development. In this situation it is the haves who have a leverage over the have-nots.

    Under a system of money creation without debt by a public body, money can be issued directly for large-scale productive investment which would prevent both inflation and deflation. What this system achieves is that it renders kaput the deceptive notion of scarcity.
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    Government is force, it does not create, it only destroys, aim it wisely.
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    (Original post by otester)
    Government is force, it does not create, it only destroys, aim it wisely.
    Government is necessary. It has just as much the capacity to create and develop as it has to destroy. Elect wisely.

    Under a debt-free system of governance there is no force. There is only unending liberty.
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    (Original post by Polymath0)
    Government is necessary. It has just as much the capacity to create and develop as it has to destroy. Elect wisely.

    Under a debt-free system of governance there is no force. There is only unending liberty.
    If government destroys only bad things then it leaves only good things.
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    (Original post by Polymath0)
    Under a debt-free system of governance there is no force. There is only unending liberty.
    Alas, not necessarily true. Saudi Arabia is debt free but I doubt liberty is even a word they recognise right now. By contrast, Norway is also debt free and are a model society in terms of societal benefits and lifestyle.

    Wherever there is a rule there is an exception and when it comes to governance, there are no rules sadly.
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    (Original post by ByEeek)
    Alas, not necessarily true. Saudi Arabia is debt free but I doubt liberty is even a word they recognise right now. By contrast, Norway is also debt free and are a model society in terms of societal benefits and lifestyle.
    Neither country is debt-free. I don't believe you've understood the system on which this entire thread is based.

    When I speak about liberty I am referring to it in the context of a Western social democracy. My point is that the debt-based system that controls it only serves to curtail a bona fide manifestation of liberty. True liberty is only ensured in the absence of built-in exploitation and poverty.
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    I want to explore the purpose of the base interest rate in its effort to tackle inflation. It seems very sketchy and counterintuitive because the only thing that can cause inflation is the creation of money by banks. If the banks were strictly financing productive activity through their lending practices, how can inflation still occur?If the supply of goods is in excess to demand then inflation can not arise.
    Why would an increase in prices in one sector of the economy pose a problem? If supply is in constant excess to demand, slight price rises (due to the production of, say, valuable and scarce commodities) shouldn't need to be controlled.
    The only phenomenon of inflation which makes sense is that newly created bank money that goes to on-lend to inelastic property increases its price tag over time. This appears to be the only factor that fuels inflation throughout the economy.
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    (Original post by Polymath0)
    I want to explore the purpose of the base interest rate in its effort to tackle inflation. It seems very sketchy and counterintuitive because the only thing that can cause inflation is the creation of money by banks. If the banks were strictly financing productive activity through their lending practices, how can inflation still occur?If the supply of goods is in excess to demand then inflation can not arise.
    Why would an increase in prices in one sector of the economy pose a problem? If supply is in constant excess to demand, slight price rises (due to the production of, say, valuable and scarce commodities) shouldn't need to be controlled.
    The only phenomenon of inflation which makes sense is that newly created bank money that goes to on-lend to inelastic property increases its price tag over time. This appears to be the only factor that fuels inflation throughout the economy.
    Yes, you summed it up perfectly there, non GDP productive loans are the direct cause of inflation and bubbles and consequent crisis.
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    (Original post by kennyboy69.5)
    Yes, you summed it up perfectly there, non GDP productive loans are the direct cause of inflation and bubbles and consequent crisis.
    So do you agree that inflation would effectively be a non-issue if banks were rendered incapable to inflate asset prices by means of the creation of purchasing power? Would it not mean that the government could then create and issue money for GDP-enhancing investments in the absence of budgetary constraint?
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    (Original post by Polymath0)
    So do you agree that inflation would effectively be a non-issue if banks were rendered incapable to inflate asset prices by means of the creation of purchasing power? Would it not mean that the government could then create and issue money for GDP-enhancing investments in the absence of budgetary constraint?
    Yes and no I am not sure about the second half of your question. You are suggesting the government is the sole supplier of money and therefore can create it to finance GDP productive loans. If so then who holds consumers money, still the commercial banks? If that's the case they can still inflate whatever markets they please.
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    (Original post by kennyboy69.5)
    Yes and no I am not sure about the second half of your question. You are suggesting the government is the sole supplier of money and therefore can create it to finance GDP productive loans. If so then who holds consumers money, still the commercial banks? If that's the case they can still inflate whatever markets they please.
    No. The commercial bank would engage in the intermediation between savers and borrowers rather than actively creating the loan ex-nihlo. The government would create money without a corresponding debt and issue it into the economy for productive purposes, such as public projects and services, to cater to the development of society. The income generated from the public creation of money would flow into an investment account at the commercial bank and be used by the bank to on-lend to borrowers. Since the loan would be decoupled from the creation of money, to inflate the property or financial markets would become an impossibility.

    My question, in the given scenario, is what would be the limit on government spending if it is focused strictly on investment? Given the government would no longer have to borrow money and deal with an ever increasing interest rate on its debt, it appears to be that money would be no object. If there is a particular societal want or need, it can be funded immediately.
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    (Original post by Polymath0)
    No. The commercial bank would engage in the intermediation between savers and borrowers rather than actively creating the loan ex-nihlo. The government would create money without a corresponding debt and issue it into the economy for productive purposes, such as public projects and services, to cater to the development of society. The income generated from the public creation of money would flow into an investment account at the commercial bank and be used by the bank to on-lend to borrowers. Since the loan would be decoupled from the creation of money, to inflate the property or financial markets would become an impossibility.

    My question, in the given scenario, is what would be the limit on government spending if it is focused strictly on investment? Given the government would no longer have to borrow money and deal with an ever increasing interest rate on its debt, it appears to be that money would be no object. If there is a particular societal want or need, it can be funded immediately.
    Interesting, so you want commercial banks to have 100% reserve and leverage ratios?

    Enough for the investment to generate profits for the running of the public sector would be a start.

    One question how would you stop the same bunch of corrupt elites on top of the current system, taking over that one?
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    (Original post by kennyboy69.5)
    Interesting, so you want commercial banks to have 100% reserve and leverage ratios?
    Yes.

    One question how would you stop the same bunch of corrupt elites on top of the current system, taking over that one?
    It requires the general public to have a basic understanding of the sham and systemic flaw at play within fiscal / monetary policy so as to elect to power a political party that will implement the debt-free sovereign money system.
    By having the money supply nationalised the banking elite are automatically rendered powerless; especially in light of the fact that the system would address most, if not all, economic woes.
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    http://positivemoney.org/2016/06/a-h...eople-summary/
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    I would just like to inform all readers of this thread that I will be writing a detailed dissertation on this very subject. I look forward to sharing it with you all for the betterment of humanity.
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    I am happy to announce that I submitted my dissertation on this subject matter last month. I hope to have it published in an academic journal for all of you to refer to.

    In the meantime, if you have any questions about this new monetary system please ask.
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    (Original post by Polymath0)
    I am happy to announce that I submitted my dissertation on this subject matter last month. I hope to have it published in an academic journal for all of you to refer to.

    In the meantime, if you have any questions about this new monetary system please ask.
    Did you, perchance, invent fiat money which is independant of a gold/silver standard? Because that's what we've been using for the last century.
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    (Original post by Tootles)
    Did you, perchance, invent fiat money which is independant of a gold/silver standard? Because that's what we've been using for the last century.
    No. I'm not clear on what your point is.
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    (Original post by Polymath0)
    No. I'm not clear on what your point is.
    Oh. Judging by your OP and the posts since then that I've read, it sounds very much like you didn't know how money works.
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    (Original post by Tootles)
    Oh. Judging by your OP and the posts since then that I've read, it sounds very much like you didn't know how money works.
    Would you like to add some value by offering your understanding of how it works?
 
 
 
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