Close your accounts at large commercial banks

Posted by Bill Yancey on December 21, 2011, 06:21 PM | #

No kidding?

Posted by J Richards on December 21, 2011, 07:11 PM | #

@Bill Yancey

Why would I be kidding?

There might be some confusion due to an improper sentence that originally read

You can do your part to retard the negative effects and counter the trend by closing your accounts at large banks and using credit unions or small/community banks instead.

This has now been corrected to

You can do your part to slow down the bankers and counter the trend by closing your accounts at large banks, using credit unions or small/community banks instead.

Posted by danielj on December 21, 2011, 08:42 PM | #

jrich my nig nog,

I think he meant seriously like inza no shit fuck head kinda ways.

Posted by Leon Haller on December 22, 2011, 03:43 AM | #

Good critique by Gary North (someone I am not otherwise particularly fond of) of the “Greenbackers”, a group or tradition which sounds suspiciously like JRichards’s Money Masters:

http://lewrockwell.com/north/north1075.html

Don’t be fooled, people! You don’t need to subscribe to raceless, baseless libertarianism in order to understand correct economics.

Posted by John on December 22, 2011, 11:21 AM | #

Leon:
“Don’t be fooled, people! You don’t need to subscribe to raceless, baseless libertarianism in order to understand correct economics.”

Should there in your opinion be a free market in money where no buyer and seller is required to accept any particular currency but instead, competing currencies circulate and buyers and sellers use, don’t use, accept or reject them according to how well they hold their value, how liquid they are and the transaction costs associated with them.

Posted by J Richards on December 22, 2011, 07:54 PM | #

@Haller

What part of thou shall not promote the Austrian School here without justifying its most fundamental premise, for starters, do you not understand?

You made a deal that you’d stop commenting here if I provided you with all your comments posted at MR, which I did up to the point you made the request.  But you came back… I didn’t say anything.  And now you’re back to promoting the Austrian School without justifying its fundamental premise!

Do this one more time and your future comments will end up in trash.

John has twice asked you about whether you support the free market making a choice as to what form of money is used.  You better answer him, too.

Now, to the substance of what you’ve posted.

Your comment doesn’t address the post.  Your implication is clearly that the post or the monetary policy I’ve been promoting isn’t correct economics.  There’s no justification for this argument in your comment or Gary North’s article.

Gary North dismisses straw men about the greenbackers or people who want debt-free money created by the government, which includes me.  Because of the straw men, I’m going to describe my stances on the money issue as those of the greenbackers because I know my views are the mainstream among greenbackers.

He says that we see privately-owned banking as an economic evil, which is completely false.  We believe that banks should be private and that the government shouldn’t get into banking.  He says, we “trust Congress to set up a government-owned bank with the legal right to print however much fiat money that the government-protected, monopolistic bankers decide,” which is false as we don’t want a government bank to print money but the Treasury (not exactly a bank) to do so, as directed to by Congress, which the Constitution mandates, and since Congress is elected, accountable to the public, removable by the public and comprises of non-hereditary appointees, there’s no way they will create an arbitrary amount of fiat money but will create as much as needed, and if you look back to the exchanges we’ve had, the mechanism’s clearly described, to which you never responded.

North criticizes the greenbacker position on interest, which is presumably an undeserved payment to bankers.  I don’t have a problem with interest [as long as it isn’t excessive] and have argued why it isn’t a problem: http://www.majorityrights.com/weblog/comments/money [see the part where I address Kerry Bolton in the article].

North dismisses as ludicrous Keynes noting “there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital,” because North defines capital as “the product of land plus labor over time.”  What’s the trick here?  North’s associating capital with commodities that are existing and those that result from labor, whereas the greenbackers conceptualize capital as an abstract legal concept that provides legal tender for the exchange of goods and services, by virtue of which there should be no reason for capital to fall short of what’s needed for commerce [assuming that the money supply is in the hands of a non-malicious group].

North describes the error, ‘People call the price of capital “interest”’ which is B.S., unrelated to my argument.

North says that the greenbackers have no answer to “If interest is a payment of something for nothing, why doesn’t competition drive the interest rate to zero?”  But we never made the statement about interest and hence don’t have to answer this question.

Then North comes up with a working example of a 100% reserves gold-based money standard, which’s laughable.  He starts with a banking system having 100 million ounces of gold on deposit where the depositors have lent the gold to the bank.

Let’s see.  Most people don’t possess gold and many among those who do possess small amounts.  On top of it, in America alone the national debt is around $15 trillion and this doesn’t include personal debt.  Americans alone should have a debt obligation over $50 trillion.  On top this, most gold is in the possession of bankers and their broader community because of a millennium of fractional reserve banking and other frauds.  So how in the world do we even start with North’s scenario?

Then North assumes that depositors will allow bankers to loan their gold if they want to earn interest off of the deposits.  There’s a risk here and not all people will want to do it as default plus bankruptcy protection means losses in a number of cases.  So some will just want their gold savings stored and pay a fee for it, and stored gold doesn’t go into facilitating the exchange of goods and services.

In his example, the bank lends 100 million ounces of gold, expecting 105 million ounces in return.  What’s the trick here?  North assumes that all depositors agree to the bank lending their gold deposits, which can’t be true because some would consider the risk unacceptable. 

And where do the extra 5 million ounces of gold come from?  Apparently, people will be selling to those with gold coins outside the banking system.  But there’s a finite amount of gold out there.  History shows that it has never been possible to match the existing gold supply to increases in population size and commerce.

North notes that the production of goods and services has been increasing.  Obviously, the purchasing power of gold cannot be held constant because it’s not possible to ensure that the rate of increase in goods and services is matched by the rate of increase in the gold supply [and increases are part accidental discovery and part targeting some geographic areas].  So the purchasing power of gold has to vary, which opens the door for bankers, who own most of the gold, to manipulate the purchasing power of gold in their favor: http://www.majorityrights.com/weblog/comments/money#c117949

Notice that North claims that debt-free money created by the government will be more disastrous than the present system, but doesn’t show how.  If he compared his system with the greenbackers’ system, he’d note that the government is fully able to match the amount of fiat money to the need for commerce.  If the government doesn’t match the money supply to the need for commerce [it has no reasons to cause a mismatch because of non-hereditary appointment, term limits, accountability, etc.], it can be voted out and replaced with officials who do, but bankers can’t be voted out.  So which system is fairer?

Basically, North proposes a scenario which can’t get started and even if started, the same bankers remain in power, and this is supposed to be a better solution!  Notice it isn’t possible to comment on the page where North’s article is reproduced, but you can reply here and so can North, and I’d like to see you try.