On Ron Paul as controlled opposition and why he would be best for President of the United States

Posted by Robert Reis on January 03, 2012, 02:32 AM | #

Quote of the Year:

Ben N Indiana said…

What we DON’T see is black flight escaping White racism. There is no underground railroad terminating in Zimbabwe.

January 2, 2012 9:32 PM

Posted by Papa Luigi on January 03, 2012, 04:06 AM | #

I think what we need to realise here is that in the video clip provided Ron Paul was responding to questions fired at him from the mass media, a medium that is not conducive to long, technically precise answers of the sort that might feature in an academic treatise. Given those conditions, he gave brief answers that very closely point to the kind of policies that are needed to bring the Fed under control, but which also provide the kind of ‘lively’, ‘sound bite’ friendly noises that a politician needs to make if they are to appear both knowledgeable and engaging on American TV.

Making people aware that the action of ‘creating money out of thin air’ is at the root of our financial problems and that this is what current legislation allows the Fed to do, is a big step forward. The fact that Ron Paul did not have the opportunity to explain in full or in detail the difference between the creation of money through fractional reserve banking and the creation of money by government through fiat currency is not evidence that Ron Paul is a tool of the bankers. He did state clearly that there should be full reserve banking, i.e. that $100 deposited should be $100 dollars available to loan rather than the $190 that fractional reserve banking permits, and in the context that I have already described, it would have been difficult for Ron Paul to do much more.

It would be interesting to see what would happen if he was indeed given 2 hours to lecture the American people on banking reform in the way that the TV presenters jokingly suggested at the end of the video clip. That would be a defining moment.

Posted by Bill Yancey on January 03, 2012, 10:03 AM | #

First of all, the banksters are going to do what they want about monetary policy whether Ron Paul is president of the US or not.

More importantly, Paul is a thousand times more likely than anyone else to shake things up, even if he doesn’t accomplish his stated goals. Imagine the firestorm that would erupt just at the consideration of ending foreign aid and bringing the US military home. The Jews would go ballistic! The yahoos would be confronted with the question of loyalty!

Imagine the direction of Paul’s attempts to eliminate whole government departments. This can only empower the states. And that ain’t a bad thing.

Just consider all of the likely side effects of nothing more than the possibility of implementing some of his proposals! It’d be like lighting a match under an atomic device.

Paul is the only man I have voted for in the past 40 years, only because he’s the only man likely to shake things up at least a little bit.

Posted by anon 7 on January 03, 2012, 10:26 AM | #

I’m beginning to think ‘J Richards’ is controlled opposition.

Posted by Savrola on January 03, 2012, 10:35 AM | #

My first reaction would be the same.

Anyone who describes banksters as part of the “free-market"certainly sounds like controlled opposition.

Or he could just be really dumb. That’s a distinct possibility, of course….

Posted by CS on January 03, 2012, 10:41 AM | #

I would vote Ron Paul simply to piss off the kikes.

Posted by Leon Haller on January 03, 2012, 11:45 AM | #

In contrast, here’s an example of money created out of nothing that isn’t money created as debt. Suppose a government needs to build a highway. It takes paper, cuts it into small rectangular pieces and stamps values of $5, $10, $100, etc. The cost of production of each of these rectangular pieces is a few cents per piece, and since the value stamped is arbitrary, the money is essentially created out of nothing. Now the government pays contractors with this money to build the highway. Since this money is legal tender, the contractors can purchase equipment and raw materials with it, and they can pay their workers with it. The workers can use their earnings to buy food, clothes, supplies, etc. In short, the government-created money is spread in circulation as legal tender and no one’s under debt related to the cost of creating the highway.

There’s an obvious advantage to creating money out of nothing in the government example above, aside from it being free of debt. Since the money can be created in arbitrary amounts, it’s an easy matter to create as much money as needed, whereas if money is tied to a commodity, one is limited by the amount of the commodity available. Another advantage is that those who possess the most commodities/wealth don’t get to control the money supply as money isn’t tied to a commodity. A potential disadvantage of money creation in this manner is that an arbitrary amount of money may be created, i.e., it may exceed the need or fall short. But why would an arbitrary amount be created? The government is elected, the appointees aren’t based on heredity, public officials are accountable and removable, there are term limits, and the Constitution limits what laws can be passed. Thus, debt-free money, created out of nothing, is exactly what’s needed.

This is just mind-bogglingly stupid. I evade pointing out the errors because there are so many it would take paragraphs and paragraphs. (I mean this. Literally every sentence bespeaks a total lack of even rudimentary economic understanding.)

How is rational economic calculation even possible under this scenario?!!!!!

Look, people. Do you want to be buffoons, or would you like to understand “money”?

Here are your resources (from simple to complex):

Ron Paul

End the Fed

The Case for Gold

Murray Rothbard

What Has Government Done to Our Money?

A History of Money and Banking in the United States

William Graham Sumner

A History of American Currency

Ludwig von Mises

The Theory of Money and Credit

Milton Shapiro

Foundations of the Market Price System

Joseph Salerno

Money: Sound and Unsound

Jesus Huerta de Soto 

Money, Bank Credit and Economic Cycles (the best book ever written on these subjects)

For Americans:

1. Abolish Federal Reserve

2. Outlaw fractional reserve banking (as fraudulent)

3. Define dollar as a unit weight of gold

4. Allow for convertibility of paper money into gold (disgorge govt gold supplies)

5. Repeal legal tender laws, thereby allowing pure free market in money (as in other commodities).

Posted by Leon Haller on January 03, 2012, 11:59 AM | #

Coincidentally, look what is posted at the Mises Institute today!

The reason for the enthusiasm of Mises and other Austrian economists for the gold standard, the purer and less diluted the better, should now be crystal clear. It is not that this “barbaric relic” has any fetishistic attraction. The reason is that a money under the control of the government and its banking system is subject to inexorable pressures toward continuing monetary inflation. In contrast, the supply of gold cannot be manufactured ad libitum by the monetary authorities; it must be extracted from the ground, by the same costly process as governs the supply of any other commodities on the market. Essentially the choice is: gold or government. The choice of gold rather than other market commodities is the historical experience of centuries that gold (as well as silver) is uniquely suitable as a monetary commodity — for reasons once set forth in the first chapter of every money-and-banking textbook.

The criticism might be made that gold, too, can increase in quantity, and that this rise in supply, however limited, would also confer no benefit upon society. Apart from the gold versus government choice, however, there is another important consideration: an increase in the supply of gold improves its availability for nonmonetary uses, an advantage scarcely conferred by the fiat currencies of government or the deposits of the banking system.

In contrast to the Misesian “monetary overinvestment” theory of business cycles, on which considerable work has been done by F.A. Hayek and other Austrian economists, almost nothing has been done on the theory of money proper except by Mises himself. There are three cloudy and interrelated areas that need further elaboration. One is the route by which money can be released from government control. Of primary importance would be the return to a pure gold standard. To do so would involve, first, raising the “price of gold” (actually, lowering the definition of the weight of the dollar) drastically above the current pseudo-price of $42.22 an ounce and, second, a deflationary transformation of current bank deposits into nonmonetary savings certificates or certificates of deposit. What the precise price or the precise mix should be is a matter for research. Initially, the Mises proposal for a return to gold at a market price and the proposal of such Austrian monetary theorists as Jacques Rueff and Michael Heilperin for a return at a deliberately doubled price of $70 an ounce seemed far apart. But the current (1975) market price of approximately $160 an ounce brings the routes of a deliberately higher price and the market price much closer together.[23]

A second area for research is the matter of free banking as against 100 percent reserve requirements for bank deposits in relation to gold. Mises’s Theory of Money and Credit was one of the first works to develop systematically the way in which the banks create money through an expansion of credit. It was followed by Austrian economist C.A. Phillips’s famous distinction between the expansionary powers of individual banks and those of the banking system as a whole. However, one of Mises’s arguments has remained neglected: that under a regime of free banking, that is, where banks are unregulated but held strictly to account for honoring their obligations to redeem notes or deposits in standard money, the operations of the market check monetary expansion by the banks. The threat of bank runs, combined with the impossibility of one bank’s expanding more than a competitor, keeps credit expansion at a minimum. Perhaps Mises underestimated the possibility of a successful bank cartel for the promotion of credit expansion; it seems clear, however, that there is less chance for bank-credit expansion in the absence of a central bank to supply reserves and to be a lender of last resort.[24]

http://mises.org/daily/5188/The-Austrian-Theory-of-Money

Please educate yourselves (and then let’s move away from money on a nationalist site back to the important issues of racial conflict and survival).

Posted by Eumaios on January 03, 2012, 11:59 AM | #

I would add Hoppe’s Democracy:  The God that Failed

Posted by Leon Haller on January 03, 2012, 12:07 PM | #

Eumaios,

The Hoppe book deals with sociological and political themes, as well as economic ones. My list (which is hardly exhaustive) was kept strictly to monetary matters.

Posted by Jimmy Marr on January 03, 2012, 12:17 PM | #

I evade…

Excellent verb choice, “Leon”. I couldn’t agree more. Freudian Slip?

Posted by Jimmy Marr on January 03, 2012, 12:22 PM | #

e·vade (-vd)
v. e·vad·ed, e·vad·ing, e·vades
v.tr.
1. To escape or avoid by cleverness or deceit: evade arrest.
2.
a. To avoid fulfilling, answering, or performing: evade responsibility. See Synonyms at escape.
b. To fail to make payment of (taxes).
3. To avoid giving a direct answer to.
4. To baffle or elude: The accident evades explanation.
v.intr.
1. To practice evasion.
2. To use cleverness or deceit in avoiding or escaping.

Posted by The Man from S.M.U.S.H. on January 03, 2012, 02:15 PM | #

Reality check: the housing bubble and its busting was caused by the bankers a.k.a. the “free market”:

Sorry JRichards, this is horsecrap. In fact, the exact same thing was said by…Barney Frank. Does that make you controlled opposition?

The “housing bubble” was caused by the government telling banks “you have to approve X percent of nonwhites for housing loans. You can no longer turn them down based on credit scores unless X percent have been approved”.

The housing collapse was another example of why Leftism doesn’t work in real life. Not sure why you are trying to drag Ron Paul into it. No, he’s not pro-White but he sure beats the hell out of anything the White Genocide parties offer.

This site works much better when focused on White survival rather than up to the minute conspiracy theories.

Posted by FB on January 03, 2012, 02:15 PM | #

Jew Richards is controlled opposition. How else would you describe somebody who is out to portray WNs as kooky paranoid skizophrenics? According to Jew Richards even Zundel is controlled opposition. Any expression of doubt is further proof of the extent of the conspiracy. Yawn. Jew Richards used to be good for a little chuckle as a caricature, now he’s just annoying.

Posted by Guest Lurker on January 03, 2012, 04:47 PM | #

@ The Man from SMUSH #13.

The “housing bubble” was caused by the government telling banks “you have to approve X percent of nonwhites for housing loans. You can no longer turn them down based on credit scores unless X percent have been approved”.

The housing collapse was another example of why Leftism doesn’t work in real life. Not sure why you are trying to drag Ron Paul into it. No, he’s not pro-White but he sure beats the hell out of anything the White Genocide parties offer.

Bingo! That was short and sweet.

Posted by Guest Lurker on January 03, 2012, 05:08 PM | #

Leon said:

This is just mind-bogglingly stupid. I evade pointing out the errors because there are so many it would take paragraphs and paragraphs. (I mean this. Literally every sentence bespeaks a total lack of even rudimentary economic understanding.)

You give him too much credit, Leon. I doubt Richards is merely an innocuous dunderhead. He’s certainly no fool, so the only alternative explanation is he’s a malignant agent spreading disinfo and demoralization. In the other Cameron thread he wrote:

What really needs to be targeted is fractional reserve banking, and the resulting system left such that bankers neither create money nor control its supply.  If you can show that Ron Paul is working toward the latter, you have a point, otherwise not.

In reply I provided the above video clip of Paul plainly stating that the Fed creating money out of nothing is exacerbated by what he calls “fraudulent” fractional reserve banking. Yet Richards persists in employing the big lie technique that somehow Paul is controlled opposition because he doesn’t prioritize attacking fractional reserve banking, or is not vehement enough in his attacks for Richards’ tastes, over that of attacking the Fed. Like a manipulative sophist kike trying to manage our perceptions, he’s trying to convince us that what we’re seeing and hearing isn’t real, and that all resistance is futile since everything and everybody is compromised.

Posted by Revolution Harry on January 03, 2012, 05:59 PM | #

“Anyone who describes banksters as part of the “free-market"certainly sounds like controlled opposition”

Why? Of course we don’t really have anything like a truly free market which is why I assume the author put the term in quote marks. They are certainly perceived as being part of what purports to be the ‘free market’.

“First of all, the banksters are going to do what they want about monetary policy whether Ron Paul is president of the US or not.”

He won’t get to be the President without the support of the ‘banksters’, or more correctly those who own and control the banks and other major corporations.

“This is just mind-bogglingly stupid. I evade pointing out the errors because there are so many it would take paragraphs and paragraphs.”

Please give me just a few examples as to why then. I’d be interested to read them.

I think Sir Arthur Bryant, in February 1983, in an article in the London Illustrated News, put it slightly better when he wrote:

“What seems required is a public body removed and divorced from political pressure, staffed by Treasury officials, invested by Parliament with the duty of creating, free of interest, as much money for necessary government purposes as the country at any given time should, in their considered judgment, need to ensure the maximum possible employment of its productive resources”.

He went on to say: “The exercise of the right inherent in every sovereign state of creating and issuing a sufficiency of money to make financially possible what is physically possible and morally desirable, would enable as much real wealth to be brought into existence as, with its immense inventive and scientific potential, it is capable of making”.

“The “housing bubble” was caused by the government telling banks….”

Both are controlled by the same ruling oligarchical ‘elite’.

Posted by Captainchaos on January 03, 2012, 06:05 PM | #

Leon,

Please educate yourselves (and then let’s move away from money on a nationalist site back to the important issues of racial conflict and survival).

If you did not think that money was an important issue then you would not post so much material regarding nor become so exercised by the subject.  It is clearly important to you that those here adopt the viewpoint of your favored experts regarding money; so not a subject which should as you apparently suggest be so blithely swept aside from further consideration, wouldn’t you say?

And what is the expert view of monetary theory of your alleged experts?

almost nothing has been done on the theory of money proper except by Mises himself. There are three cloudy and interrelated areas that need further elaboration.

Essentially: “Get back to us when we figure that one out for ourselves, but for now, trust what we say.”  LOL

Posted by Captainchaos on January 03, 2012, 06:46 PM | #

How is rational economic calculation even possible under this scenario?!!!!!

Obviously something would be needed to index the amount of money in circulation against to ensure that a contextually optimal amount of money was in circulation.  The Mises Institue article you post is not convincing that this chosen index should even be a readily tradable, traditional commodity at all, much less that it should be gold.  Why not index money with the percentage of work-capable citizens actually employed at a given time?  This would have the benefit of tying the money supply to something that is of visceral and immediate importance to average people - their ability to make a living - and hence ensure accountablility of the persons tasked with issuing money.

Posted by dc on January 03, 2012, 07:19 PM | #

ad J Richards Congralulations on your good fight against the heathen. I wish you would add a reading list to your money articles, Chris. Hollis and Gottfried Frege need to be mentioned.
Has anyone worked out a percentage contribution to MR for Haller? Mr I’m leaving now, and ‘no time to write;.
The excellence of your articles is evidenced by the croaking of the frogs which follows. Please don’t let up.

In any event, I offer my very great thanks for your efforts

Posted by Rusty on January 03, 2012, 07:38 PM | #

Posted by anon 7 on January 03, 2012, 10:26 AM | #
I’m beginning to think ‘J Richards’ is controlled opposition.

Ha! Or is he perhaps John Jay Ray or Constantin von Huffmeister incognito?

Anyway, Leon Haller made an good post at January 03, 2012, 11:45 AM of resources for those interested in what Ron Paul really says and believes.

Posted by danielj on January 03, 2012, 09:43 PM | #

Looks like Ronald has a shot. Then the bankers will shoot him.

Posted by Ivan on January 03, 2012, 10:27 PM | #

Thomas Edison and Henry Ford: On Government Created Debt-Free Money

The following quotes are from: FOR RESEARCH INTO THE DECEPTION IN OUR MONEY SYSTEM

SIR ARTHUR KITSON - The Bankers Conspiracy, Which Started the World Crisis, Elliot Stock, London, 1933; and A Fraudulent Standard, first published in 1917, reprinted by Omni in 1972. Mr. Kitson, after having won fame as an inventor and holder of some 500 patents, abandoned a lucrative business career to devote the last 40 years of his life to lecturing, writing and crusading on money reform. In his very first book, A Scientific Solution of the Money Question, Boston, 1894, he “called attention to the fraudulent character of the so-called ‘Gold Standard’ of Value, and to the impossibility of any commodity functioning in its commodity capacity, as either a just measure or an honest expression of exchange-values.” He declared the gold standard to be “legalized fraud, a delusion and a snare.” (See A Fraudulent Standard, Omni, pp. v, viii.) Prof. Soddy recommends five of Mr. Kitson’s books, whom he calls “the doyen of British Monetary Reformers.”

FREDERICK SODDY - Wealth, Virtual Wealth and Debt, Dutton, 1933. A reprint may be available from Omni. Prof. Soddy was a Professor of Chemistry at Oxford University, “father of nuclear fission,” a Nobel Prize laureate, and a Fellow of the Royal Society, England’s highest scientific honorary body. Stuart Chase, in reviewing his book, said that it might prove to be “one of the most important books ever written.” Having come to feel that he must reach an understanding of our money system, Soddy spent two years studying what its proponents had to say for it, only at last to find himself facing the fact that he “could make nothing of it.” And “then one day,” he went on to say, “the truth dawned on me. What I was studying was not a system but a confidence trick.” Basically, the whole thing was a swindle, dependent for its successful operation on keeping people deceived.

Thus was brought home to him the necessity of making his approach to the problem independently of all orthodox authorities. Out of the ensuing research came his book, and by the time he had reached page 14 he stated bluntly that our money system “has become easily the most powerful tyranny and the most universal conspiracy against the economic freedom of individuals and the autonomy of nations that the world has ever known.” By the time he finished his book he had made his case, and was stating it in terms even more extreme and severe. He also declared, let me add, that “the solution [to which his searching investigation of the Money Question led him], as was to be expected, . . . proved to be most ordinary incontrovertible common sense, requiring nothing more than that to prove it” (p. 22).

I have found two other books by Prof. Soddy very valuable. Money Versus Man he himself describes as “a succinct account of [his] Wealth, Virtual Wealth And Debt.” Also, it is much easier to understand, and in it Soddy seems more deeply involved, personally, than in his larger work. The other book, The Role of Money (Harcourt, 1935), on pp. 213-4, contains a valuable list of recommended books on the Money Question.

You are in good company, J Richards. Keep up the good work.

Posted by Ivan on January 03, 2012, 11:16 PM | #

A White Iraq War Vet Stands Up to Three Black Bullies on Bus and Beats the Shit Out of them:

http://www.wvwnews.net/story.php?id=10789

Posted by Leon Haller on January 03, 2012, 11:40 PM | #

Chaos et al,

Start by reading the Rothbard article on today’s Mises website. Here’s the link again:

http://mises.org/daily/5188/The-Austrian-Theory-of-Money

I will be happy to answer questions, if any, later or in the next day or so.

BTW, those links by Ivan were very useful to me in one way. NOW I understand where Richards is coming from on money. This is the old right-wing “money crank” tradition, updated a bit by the Money Masters outfit. Two decades ago I asked Rothbard about these people. I recall him laughing, and saying he actually liked a lot of them (eg, Mullins) for their exposures of the Fed fraud as well as general bankster conspiracies, esp wrt war profiteering (note Rothbard also approved of certain leftist conspiracists, eg, Domhoff, who unmasked ties between the wealthy and the State, and once also noted in a lecture I attended that the only value that the Marxist tradition had was likewise in its unmasking of State/capitalist machinations). But, of course, he went on to add, none of them fundamentally understood the nature of money itself, considered economically (ie, its purpose in alerting entrepreneurs to unmet consumer wants).

Posted by Leon Haller on January 03, 2012, 11:53 PM | #

Rev Harry,

Reread this paragraph from Richards I excerpted in #7:

In contrast, here’s an example of money created out of nothing that isn’t money created as debt. Suppose a government needs to build a highway. It takes paper, cuts it into small rectangular pieces and stamps values of $5, $10, $100, etc. The cost of production of each of these rectangular pieces is a few cents per piece, and since the value stamped is arbitrary, the money is essentially created out of nothing. Now the government pays contractors with this money to build the highway. Since this money is legal tender, the contractors can purchase equipment and raw materials with it, and they can pay their workers with it. The workers can use their earnings to buy food, clothes, supplies, etc. In short, the government-created money is spread in circulation as legal tender and no one’s under debt related to the cost of creating the highway.

Do you not sense anything suspicious about it? Anyone else? (Sorry for being coy, but once I start writing on this, I won’t be able to stop myself, and I’m kind of busy through Friday. Any Austrians out there? If Richards won’t stop this nonsense, I’m going to have to post an entire essay. I don’t care what he believes personally, but he keeps injecting this issue, and his fallacious understanding of it, into a chat space for white nationalists, as well as then insisting that this is the most important issue for white nationalists (of course, the money system is exceptionally important for people, as are public quarantine laws, nuclear weapons issues, abortion for CHristians, etc - but how are these matters relevant for racialists qua racialists?).

I completely agreed with now-AWOL GW’s earlier call for discussion on a nationalist economic agenda. Developing a correct theoretical understanding of how an economy should be reshaped in order best to aid white EGI is absolutely a vital task. Certainly, neoliberalism is not optimal from our biological and normative perspective.

But we have to build what we want on a foundation of correct theory. 

Posted by Jimmy Marr on January 03, 2012, 11:55 PM | #

I will be happy to answer questions, if any, later or in the next day or so.

Why are you on the lam from your pro-White kameraden?

Posted by Ivan on January 03, 2012, 11:57 PM | #

Rothbard laughing about old right-wing “money cranks” like Thomas Edison, Henry Ford, Frederick Soddy ... That’s mature.

The defense has no further questions for this witness, Your Honor.

Posted by danielj on January 04, 2012, 12:20 AM | #

If Richards won’t stop this nonsense, I’m going to have to post an entire essay.

As you should. Your own thoughts. No fucking recycling.

Why are you on the lam from your pro-White kameraden?

Because he is a 25 year old 1/4 kike fake.

Posted by danielj on January 04, 2012, 12:22 AM | #

MONEY IS A SOCIAL CONSTRUCT.

NOBODY “UNDERSTANDS” MONEY.

Posted by Ivan on January 04, 2012, 12:35 AM | #

To paraphrase Joseph Goebbels who allegedly said: When I hear the word ‘culture’, I reach for my gun (Another Jewish slender about the good Nazi, I guess. What do you think Jimmy?)

When I see the words ‘Leon’ and ‘Haller’ next to each other, I reach for my gun.

I’m getting a vague impression that subtle danielj feels the same way

Posted by Jimmy Marr on January 04, 2012, 01:02 AM | #

Another Jewish slander about the good Nazi, I guess. What do you think Jimmy?

I think it’s very strange that I’ve had sit-downs with local Rabbis and the presidents of the local Jewish Federation and Jewish Community Relations Council, but the very mention of such a thing with “Leon Haller”, pro-White activist extrordiniare, sends him scurrying underground.

I boggles the mind.

Posted by Captainchaos on January 04, 2012, 01:21 AM | #

Leon,

I did read your linked article.  I am not at this time interested in conspiracy theories, shadow histories or ascriptions of Jewishness to the alleged string-pullers of “controlled opposition”, but, as you say, “build[ing] what we want on a foundation of correct theory.”  I am interested in discussing the pure theory.  First, though, do me the courtesy of responding directly to my previous comments in this thread, which are certainly germane to the issue I suspect you wish to discuss as well.  After all, how many times can you exhort us to “Stop immigration! and “Form White Zion!” without yourself becoming bored.  (Let’s see if you’re really as smart as you think you are.)

Posted by CS on January 04, 2012, 01:28 AM | #

So Ron Paul came in third in Iowa giving more evidence as if any was needed that we will never win via the ballot box.

Posted by john on January 04, 2012, 01:32 AM | #

The housing crash was caused by outside interference, not by the free market.  The loans to dodgy borrowers
would not have happened in a free market. Would you lend money to a low IQ negro or Mexican with no job or
marketable skills? Neither would free market lenders.

Posted by J Richards on January 04, 2012, 01:51 AM | #

Papa Luigi @2

Even Haller and Guest Lurker will tell you that the video accurately summarizes Ron Paul’s stance on the money issue.

Speaking of sound bites and limited time, there was plenty of time for the following soundbite.

Our money woes have this one main cause, which is that almost all of our money is created by banks, and they create this money as debt.  This debt can’t be paid off because banks create the money for loans out of nothing.  If the banks can create money out of nothing, so can the government.  So why should the government borrow money from banks or tax people when it can create money, just like banks, out of nothing?  There you have the solution: let only the government create money, which it will do without debt and in the amount needed for commerce.

Posted by J Richards on January 04, 2012, 01:53 AM | #

@ Savrola

Anyone who describes banksters as part of the “free-market"certainly sounds like controlled opposition.
Or he could just be really dumb. That’s a distinct possibility, of course….

Tell this to these guys:

J.B. Glattfelder, S. Battiston. Backbone of complex networks
 of corporations: The flow of control. Phys. Rev. E 80, 036104 (2009)

http://arxiv.org/abs/0902.0878

That’s a network analysis for you that reveals what the “free market” really is.

Posted by J Richards on January 04, 2012, 01:55 AM | #

The Man from S.M.U.S.H. @13

[the housing bubble and its busting was caused by the bankers a.k.a. the “free market”]... is horsecrap…
The “housing bubble” was caused by the government telling banks “you have to approve X percent of nonwhites for housing loans…  The housing collapse was another example of why Leftism doesn’t work in real life

As I’ve documented before, you can verify that banks create the money for loans out of nothing; see Federal Reserve Act of 1913 §19(2)(A)(i&ii).

So what does it matter to banks whether they “loan” to someone who makes 25k/year or 250k/year?  The banks have nothing to lose as they’re not giving away their money, and in both cases they make money off of interest, more so in the case of the debtor with greater income, in which case they’re also able to extend the period during which they sell debt obligations, etc. to investors.  You can learn the truth about the housing bubble and bust here: http://www.majorityrights.com/money#economists

Posted by J Richards on January 04, 2012, 01:59 AM | #

@Guest Lurker

Richards persists in employing the big lie technique that somehow Paul is controlled opposition because he doesn’t prioritize attacking fractional reserve banking, or is not vehement enough in his attacks for Richards’ tastes, over that of attacking the Fed.

I believe Ron Paul is controlled opposition for many reasons, aside from the money issue that’s the topic of the post.  On the money issue, I don’t believe he’s controlled opposition because he doesn’t prioritize attacking fractional reserve banking but because of the disinformation he espouses [numerous examples in the post] and the trick he uses to identify the root of the problem, a conflation that I’ve elaborated on in the post; it takes deliberate intent to come up with this conflation, not ignorance.

Posted by J Richards on January 04, 2012, 02:06 AM | #

@Haller

but he keeps injecting this [money] issue, and his fallacious understanding of it, into a chat space for white nationalists, as well as then insisting that this is the most important issue for white nationalists

MR isn’t chat space for white nationalists.  If it were you’d have been banned, along with any newer aliases you came up with, and all your postings after the first ban deleted… this would’ve happened a long time ago.

Technically you’ve violated my final warning that you may not promote the Austrian School here without justifying its most fundamental premise for starters.  But I’m in a good mood and will let it pass.  But I advise you not to push your luck.

The substance in your comment @7 is insults… mind-bogglingly stupid, so many errors, every sentence bespeaks a total lack of even rudimentary economic understanding, do you want to be buffoons…

The substance in your comment @8 is an excerpt that begins with the following fundamental premise of the Austrian School:

The reason is that a money under the control of the government and its banking system is subject to inexorable pressures toward continuing monetary inflation.

This is the key to understanding the Austrian School.  When Rothbard wrote the article, the government only issued coins as money [as it still does], i.e., almost all money was created and controlled by bankers.  The Austrian School starts from a big lie.

My post pre-emptively points to numerous problems associated with using a commodity to back money, including problems associated with expanding the money supply to match increases in commerce and population size when money is backed by a commodity under a 100% reserves requirement, which neither you nor your cited articles address.

Haller, you’ve had your chances to come up with the justification, but all you do is repeatedly come up with insults, cite books and cite articles [which I’ve taken the pain to criticize, to which you don’t respond].  An argument by authority isn’t appropriate here.

Remember your final warning.  I’ve given it a pass this time; there may not be a second time.

Posted by the Narrator... on January 04, 2012, 04:23 AM | #

If we didn’t know an election was held every four years, would we really be able to tell the difference?

As for Ron Paul,

it would pay to keep in mind that he is a successful career politician who found success in a ghettoized thirdworld border-state that has, in his time, been successfully annexed by Mexico.

And he seems okay with that.

Politics is sport for the rich and entertainment for the poor.

...

Posted by Lurker on January 04, 2012, 05:10 AM | #

Ivan - I thought it was Goering and it was something like “When I hear the word culture, I reach for my Browning.”. ironically a semi-automatic, not a revolver.

And now I feel I have to look it up - seems it wasnt either of them that said it and even the quote isnt quite right.

See here.

Mission of Burma and then this cover by Moby have helped popularize the revolver meme.

FYI.

Posted by Listy on January 04, 2012, 07:07 AM | #

John Searle has an interesting section on what money is philosophically for those that might be interested. I’m not really sure that the definitions so far given in comments here are either suitably subtle enough nor robust enough…but just my idiosyncratic so-called mind for you.

“The Construction of Social Reality” (Searle)

http://www.amazon.com/Construction-Social-Reality-John-Searle/dp/0684831791

Posted by Ivan on January 04, 2012, 09:42 AM | #

@Lurker,

Thank you for confirming my guess that attributing the famous line “when I hear the word culture, I reach for my gun” to the good Nazi Goebbels (see http://www.historyguide.org/europe/lecture9.html ) was indeed a Jewish slender.

@J Richards

Remember your final warning. I’ve given it a pass this time; there may not be a second time.

Thank God - J Richards is finally “releasing the safety catch of his Browning!” I will, probably, miss the poster boy a bit though. On the other hand, chameLeon undoubtedly will be back under a different color. It is impossible to get rid of the parasites with just one Browning shot. They need to be reeducated in labor camps, just like Bobby had suggested:  http://www.youtube.com/watch?v=-D7APJ4dr78

Posted by danielj on January 04, 2012, 09:58 AM | #

Mission of Burma and then this cover by Moby have helped popularize the revolver meme.

It’s the Pegboy cover of the song that did it in America.

Posted by Revolution Harry on January 04, 2012, 12:15 PM | #

Ok Leon, perhaps I should say what I think JR is trying to say. That is, a sovereign government can create its own money rather than having to borrow it from private banking interests. Interests who themselves do have the ‘right’ to create money. How is what JR wrote fundamentally different from the quote I gave from Sir Arthur Bryant?

The reason this is important for, not just white nationalists, but everyone is that control of the money supply results in control of the economy and essentially the broader political agenda. Surely you can see that?

Posted by danielj on January 04, 2012, 12:25 PM | #

Leon is opposed to fiat currency on principle. He doesn’t care if it is debt-free money created with the best interests of the race in mind.

Posted by Lurker on January 04, 2012, 02:38 PM | #

Dan, thanks for the Pegboy clarification, must check them out.

Posted by Jimmy Marr on January 04, 2012, 03:26 PM | #

As long as we’re temporarily on the topic of music, here’s a documentary about a song that I’m interested in adapting to the pipes for the S. Africa Project.

De la Rey by Bok van Blerk

Posted by danielj on January 04, 2012, 03:42 PM | #

We should always be on the topic.

The Ancient Regime wasn’t overthrown by a petit bourgeoisie humming The Funeral March…

Hey Leon, could you one up Slayer?

http://www.google.com/url?sa=t&source=web&cd=6&ved=0CEAQtwIwBQ&url=http://www.youtube.com/watch?v=cxQk3DC3gL0&ei=H7kET6DeOcbXiQKIt9yqDg&usg=AFQjCNFme089MmTPSEwLqhlxvbDzyBclHQ

The Push starts in a beer hall and not at a “sound money” for Babylon conference.

Posted by danielj on January 04, 2012, 04:19 PM | #

Actually that is Phil of Pantera… My bad. Not a metal guy.

Posted by Revolution Harry on January 04, 2012, 04:35 PM | #

Ron Paul’s ‘Austrian’ Jewish economics

http://www.henrymakow.com/austrian_economics_is_jewish_e.html

Posted by danielj on January 04, 2012, 05:45 PM | #

Pull quote from the Save the Males article:

All this has become relevant because of Ron Paul, of course. But Paul is not the man patriots think he is. In 2001, he said, “There’s nothing to fear from globalism, free trade and a single worldwide currency…. The effort in recent decades to unify government surveillance over all world trade and international financial transactions through the UN, IMF, World Bank, WTO, ICC, the OECD, and the Bank of International Settlements can never substitute for a peaceful world based on true free trade, freedom of movement, a single but sound market currency, and voluntary contracts with private property rights…. The ultimate solution will only come with the rejection of fiat money worldwide, and a restoration of commodity money. Commodity money if voluntarily and universally accepted could give us a single world currency requiring no money managers, no manipulators orchestrating a man-made business cycle with rampant price inflation.”—Ron Paul, Congressional Record, March 13, 2001

Posted by Papa Luigi on January 04, 2012, 06:37 PM | #

As I have already stated, Ron Pauls’s public responses when questioned in a live interview are not going to be as thoroughly considered as they might otherwise be and will be limited in terms of depth by the need to compose any answer from short, ‘sexy’ sound bites.

While I do not hail Ron Paul as the answer to our prayers, I do not think that his performance in the video above is indicative of subservience to Jewish money power.

The solution to our monetary problems is twofold; that we must move away from Fractional Reserve Banking (FrRB) and adopt a system of Full Reserve Banking (FuRB); and secondly that we end the power of central banks such as the the Fed, to create money out of nothing and lend it into the economy in the form of government debt.

With regard to this second issue, it is vital that government alone controls the money supply and if the government need more money then it should be created out of nothing, i.e. printed by the exchequer as fiat money and spent into the economy debt free.

The only problematical aspect regarding fiat money is that the amount printed must be carefully regulated to ensure that the relationship between the volume of money in circulation and the volume of goods and services available for purchase remains stable. If this is accomplished then fiat money will provide a stable currency, if not, and too much fiat money is printed, then it will cause inflation.

Under a fiat money, FuRB system, all that is required is that government departments and banking institutions have in place systems to measure money flows at certain key points and in the same way that an engine management system regulates the flow of petrol and air into the engine of your car, so the volume of currency in circulation can be similarly regulated. If insufficient money is circulating such that a recession is likely, then government can print more money and spend it/lend it into the economy, whereas if too much money is in circulation, then government can withdraw from circulation some of the currency collected through taxation.

To facilitate these reforms, investment banking should be separated from clearing banking and the clearing banks should either be nationalised or else closely regulated such that they work effectively with the exchequer in controlling the money supply as I have suggested. This will leave investment bankers free to take risks and to either make money or go bust without any of this impacting severely on the rest of the economy.

Posted by Mason on January 05, 2012, 07:21 PM | #

Actually, there is no fractional reserve banking in place; the money multiplier theory is a myth. In fact, commercial banks lend credit as a supply-and-demand instrument irrespective of there being any “seed” money to do so.

As for the monetarist QTM being valid, that’s also untrue.

Posted by J Richards on January 05, 2012, 08:19 PM | #

@Mason

Actually, there is no fractional reserve banking in place; the money multiplier theory is a myth. In fact, commercial banks lend credit as a supply-and-demand instrument irrespective of there being any “seed” money to do so.

I’m supposed to take your word for it?  I can read and here’s what the law says [American context].

Federal Reserve Act of 1913, SECTION 19: Bank Reserves

[(2)(A)(iⅈ) below, authorizes fractional reserve banking]

Reserve Requirements

(2) Reserve requirements.

(A) Each depository institution shall maintain reserves against its transaction accounts as the Board may prescribe by regulation solely for the purpose of implementing monetary policy;

(i) in the ratio of 3 per centum for that portion of its total transaction accounts of $25,000,000 or less, subject to subparagraph (C); and

(ii) in the ratio of 12 per centum, or in such other ratio as the Board may prescribe not greater than 14 per centum and not less than 8 per centum, for that portion of its total transaction accounts in excess of $25,000,000, subject to subparagraph (C).

There are exceptions that you can look up yourself, but there are very few cases for commercial banks where no reserves are required.

Posted by Nuge on January 05, 2012, 08:28 PM | #

Actually, there is no fractional reserve banking in place; the money multiplier theory is a myth. In fact, commercial banks lend credit as a supply-and-demand instrument irrespective of there being any “seed” money to do so.

This doesn’t mean there’s no fractional reserve banking per se. It’s just that the process of money creation isn’t necessarily the same as it’s described in textbooks.

The textbook explanation is that banks first take in deposits, and then loan them out.

Based on empirical analysis of how banks actually operate, many heterodox economists argue that this isn’t really the case. Banks will make loans (which become deposits in other banks) first, and then the banks will borrow funds to meet their reserve requirements.

Banking is monopolistic. When you establish a bank, you are granted certain legal privileges by the state such as the privilege to create money, borrow from the central bank, deal in certain securities, etc. There’s nothing really “free market” or “private” about it, except for the profits and interest garnered from it.

Posted by J Richards on January 05, 2012, 08:54 PM | #

@Papa Luigi

See if you can find an essay or a video made by Ron Paul that suggests that my portrayal of his stance on money is partially correct at best.

The solution to our monetary problems is twofold; that we must move away from Fractional Reserve Banking (FrRB) and adopt a system of Full Reserve Banking (FuRB); and secondly that we end the power of central banks such as the the Fed, to create money out of nothing and lend it into the economy in the form of government debt.

This can’t be the solution because it doesn’t mention where money must comes from [although later you say that it should come from the government].  Second, keep in the mind that the central bank only creates a small percentage of the money that passes for a nation’s money or ends up borrowed by the government.  In the U.S., the central bank creates about 2% of American money.

The twofold solution is replacing money as debt with debt-free money issued by the Treasury, and prohibiting banks from creating money [your sentence only references the latter].

The only problematical aspect regarding fiat money is that the amount printed must be carefully regulated to ensure that the relationship between the volume of money in circulation and the volume of goods and services available for purchase remains stable. If this is accomplished then fiat money will provide a stable currency, if not, and too much fiat money is printed, then it will cause inflation.

The matter is hardly a problem.  The amount of money as debt is known and debt-free money needs to be created in the same amount to replace it [prohibiting banks from creating money is required in this case].  A replacement process maintains the amount of money in circulation.  The other issue is expanding the money supply in the future, but as in the illustration of the government using debt-free money to build a highway, how would a government end up issuing excess money?  Creating [paper] money beyond what’s needed will simply sit in a vault and not end up in circulation unless the government were to distribute it to people for free, without valid reasons, but why would it do this, especially since it’s accountable to the public? 

To facilitate these reforms, investment banking should be separated from clearing banking and the clearing banks should either be nationalised or else closely regulated such that they work effectively with the exchequer in controlling the money supply as I have suggested.

A separation of investment banking from commercial banking is not required under 100% reserves banking.  There’s also no need to nationalize banks as random audits of banks and heavy penalties for creating money can take care of malicious individuals.

Posted by GenoType on January 05, 2012, 09:52 PM | #

Good work, J Richards.

Posted by danielj on January 05, 2012, 10:22 PM | #

He isn’t real opposition anyway. We already knew that.

The question is, as it always is, which evil is the best evil for us?

Posted by anon on January 05, 2012, 11:39 PM | #

The “housing bubble” was caused by the government telling banks “you have to approve X percent of nonwhites for housing loans. You can no longer turn them down based on credit scores unless X percent have been approved”. The housing collapse was another example of why Leftism doesn’t work in real life.

The housing crash was caused by outside interference, not by the free market.  The loans to dodgy borrowers would not have happened in a free market. Would you lend money to a low IQ negro or Mexican with no job or marketable skills? Neither would free market lenders.

There were three acts.

First act was the government telling the banks they had to make bad loans for PC reasons.

Second Act was the banks wondering how not to lose money on all these bad loans they were forced to make. They figuring out a way (securitisation) to bundle bad loans and good loans together and get the combined package accepted as good loans based on mathematical probablities. On top of this the banks created a way (derivatives) of insuring themselves against the loans going bad i.e. the government directive gave the banks an incentive to figure out a way of making money from bad loans and in theory making more money on bad loans than good ones.

So what do banks who think they have a way of making a lot of money on bad loans do? They make trillions in bad loans over the space of ten years.

Third Act was the realisation that the mathematical models they were using didn’t work if the trillions in bad loans all went bad at once thus crashing the entire planet.

Posted by anon on January 06, 2012, 12:22 AM | #

I think Sir Arthur Bryant, in February 1983, in an article in the London Illustrated News, put it slightly better when he wrote:

“What seems required is a public body removed and divorced from political pressure, staffed by Treasury officials, invested by Parliament with the duty of creating, free of interest, as much money for necessary government purposes as the country at any given time should, in their considered judgment, need to ensure the maximum possible employment of its productive resources”.

He went on to say: “The exercise of the right inherent in every sovereign state of creating and issuing a sufficiency of money to make financially possible what is physically possible and morally desirable, would enable as much real wealth to be brought into existence as, with its immense inventive and scientific potential, it is capable of making”.

Exactly.

Capn

Obviously something would be needed to index the amount of money in circulation against to ensure that a contextually optimal amount of money was in circulation.  The Mises Institue article you post is not convincing that this chosen index should even be a readily tradable, traditional commodity at all, much less that it should be gold.  Why not index money with the percentage of work-capable citizens actually employed at a given time?  This would have the benefit of tying the money supply to something that is of visceral and immediate importance to average people - their ability to make a living - and hence ensure accountablility of the persons tasked with issuing money.

Yup. You don’t want too little as that restricts maximum production. Too much i.e. inflation, is viable as a metric because it’s visible.. The scam with a private central banking cartel is their 2% yearly inflation target transfers wealth from the people to the banksters whereas with a public body it’s simply an extra 2% extra on the tax rate. Or rather it’s a 2% tax in both cases but in one case the people are paying it to the banksters and in the other they are paying it into “their” treasury so at it’s potentially beneficial to them if some sewers or something get built with it.

Ideally there’d be both a more efficient metric which didn’t require deliberately over-shooting to see (i.e. 2% inflation) and one somehow rooted in flesh and blood like the one you mention. I’ve no doubt something like that could be figured out.

The private central bank is the foundation imo. The rest of the system is built on top.

~~~

Putting back the split between investment and retail banking that was repealed in 1999 is critical but mostly separate from the issue of the supply of money imo.

Retail banking has taxpayer backing and limits on what activities it can pursue which makes it low profit and low risk. Investment banking has no limits and no taxpayer backing making it high profit and high risk.

Combining the two creates investment banking which is still high profit but now low risk because the investment side of the business can now take advantage of the taxpayer protection from the retail side i.e. privatize the profits, socialize the losses.

So
1) Creating high profit, low risk investment banking greatly incentivizes gambling.
2) If you have high profit, low risk investment banking and low profit, low risk retail banking in the same business model there’s no reason to fund the retail side. It’s only there to provide the taxpayer safety net. Starving the retail banking sector of funds is like not putting oil in an engine.

For the banks it’s win-win short-term, for the people (and even the banks long-term as the lower tiers of the economy seize up) it’s lose-lose.

Posted by J Richards on January 06, 2012, 12:25 AM | #

anon @61

[housing bubble]... First act was the government telling the banks they had to make bad loans for PC reasons.

What are bad loans?  Banks don’t give out their own money and have nothing to lose.  The “bad loans” are those where the banks stand to gain less in interest earnings.

Second Act was the banks wondering how not to lose money on all these bad loans they were forced to make.

Banks don’t lose money on loans as they create the money for loans out of nothing. 

They figuring out a way [to minimize their losses]...

There were no losses and hence no need to minimize them.  Selling the debts to investors, selling insurance against defaults and gambling on the likelihood of defaults were instances of the scamsters making more money out of naive individuals.

Third Act was the realisation that the mathematical models they were using didn’t work if the trillions in bad loans all went bad at once thus crashing the entire planet.

They knew what the mathematical models were describing.  What happened was that they started loaning less and contracted the money supply, now getting to acquire foreclosed houses for pennies on the dollar.

Posted by Lurker on January 06, 2012, 12:28 AM | #

The question is, as it always is, which evil is the best evil for us?

Good point. RP may be not be real opposition but I dont think they are pretending not to like him, they really dont. The emergence of someone like RP seems to me a sign of being on the back foot. They are falling back to a position where they still hold the high ground - banking etc but they are having to grit their teeth and accept developments like RP. Abandoning one set of trenches and falling back to a new one.

Developments like SBDL and its Black Run America meme - they are in the process of throwing blacks under the bus. Surely they didnt want to do that, they wanted to maintain the seemimg alliance of minorites vs whitey, that they seem to be in the process of throwing one set of ‘allies’ over the side means they are on the defensive. Similar with muslims in Europe.

Just my thoughts.

Posted by J Richards on January 06, 2012, 01:19 AM | #

anon @62

The scam with a private central banking cartel is their 2% yearly inflation target transfers wealth from the people to the banksters whereas with a public body it’s simply an extra 2% extra on the tax rate. Or rather it’s a 2% tax in both cases but in one case the people are paying it to the banksters and in the other they are paying it into “their” treasury so at it’s potentially beneficial to them if some sewers or something get built with it.

If only the Treasury creates the nation’s money, in a debt-free manner, then there’s no need for the government to tax the public.

Posted by anon on January 06, 2012, 02:27 AM | #

The point being answered was

What are bad loans?  Banks don’t give out their own money and have nothing to lose.  The “bad loans” are those where the banks stand to gain less in interest earnings.

You answer your own question. Even if you’re conjuring money out of thin air and lending it you still need to accrue enough interest to pay the bills.

If a bank opens its doors and no-one comes in to take out a loan how much money do they make? None, they go bust.

If a bank makes too many bad loans i.e. loans where they don’t get enough interest back to pay the bills, then they go bust.

If a bank makes lots of good loans i.e. loans where they get enough interest back to pay the bills, then they’re fine.

Banks don’t lose money on loans as they create the money for loans out of nothing.

They don’t get anything for creating money out of nothing. They could do that all day every day and still starve. They only get money for loaning it out at interest and getting the interest back.

I guess technically you could say it’s only a loss if the bad loans didn’t pay their share of the bank’s bills but if the bank has a reserve ratio and they are forced to lend out a proportion of that ratio on loans that are guaranteed to go bad then it’s a loss relative to what they were earning previously - so a reduction in profits rather than a loss maybe more accurate as their incentive.

There were no losses and hence no need to minimize them.

Reduction in profits then, and yes there was.

Selling the debts to investors, selling insurance against defaults and gambling on the likelihood of defaults were instances of the scamsters making more money out of naive individuals.

After the fact. They developed these methods as a reaction to being forced to give out subprime loans and then realised they could use them to scam people.

~~~

Either way the original point which was in answer to

Would you lend money to a low IQ negro or Mexican with no job or marketable skills? Neither would free market lenders.

where the answer is obviously yes, if you think you have figured out a way to make as much or more money off bad loans as good ones.

~~~

If only the Treasury creates the nation’s money, in a debt-free manner, then there’s no need for the government to tax the public.

Well transfer payments for a start or to reduce money supply if needed for some reason, but again the original point had nothing to do with taxation. The point was how you decide how much money is created via treasury created money. One method is to aim for slight inflation on the basis that it is a visible metric and that (slightly) too much is better than too little. In that context i.e. the actual context, treasury created money with a 2% inflation target would effectively be a tax.

Posted by Nuge on January 06, 2012, 02:39 AM | #

Isn’t a bad loan simply one that doesn’t get paid back?

Posted by anon on January 06, 2012, 03:26 AM | #

Nuge

Isn’t a bad loan simply one that doesn’t get paid back?

That’s what people think but it’s based on the idea that the bank has money which it lends and can therefore lose. Generally the loan comes from nothing so technically the banks can’t lose anything. If you walk into a bank and take out a $1000 dollar loan generally what the bank is doing is not lending you money that already exists it’s creating an extra $1000 of money supply which goes back to zero if the loan is repaid.

If you could create money out of thin air and someone asked you for a $1000 loan and you said yes if they agree to pay you back the $1000 plus $200 interest but then they default and only pay you back $400 then you haven’t actually lost $800 - you just didn’t gain it like you thought you would.

The *real* transaction is the interest you pay them on the loan versus their business costs.

So a bad loan in those terms is a loan that doesn’t accrue enough interest to pay its share of the business costs or a loan that is bad relative to another i.e. the ratio of interest accrued to cost is lower.

Also practically speaking, although the system is a scam it still needs to have rules for ease of organization. The balance sheets need to balance to maintain the illusion. So at one level bad loans are exactly what you say.

Posted by Nuge on January 06, 2012, 04:59 AM | #

That’s what people think but it’s based on the idea that the bank has money which it lends and can therefore lose. Generally the loan comes from nothing so technically the banks can’t lose anything. If you walk into a bank and take out a $1000 dollar loan generally what the bank is doing is not lending you money that already exists it’s creating an extra $1000 of money supply which goes back to zero if the loan is repaid.

If you could create money out of thin air and someone asked you for a $1000 loan and you said yes if they agree to pay you back the $1000 plus $200 interest but then they default and only pay you back $400 then you haven’t actually lost $800 - you just didn’t gain it like you thought you would.

Yes, but if they default and can only pay back $400, that means that $600 has been spent and so is out there somewhere in the economy. So the bank has created $1000 but has given most of it away to someone else.

If you have the privilege to create money via loans, you want to do so in a way that more of the money ends up coming back to you.

Posted by Captainchaos on January 06, 2012, 05:31 AM | #

Anon,

As was hopefully adumbrated in my comment #19 is my desire to see the Money Power placed in the hands of a nationalist state, then used as a lever to achieve a full-employment economy with an emphasis on the manufacture of high-quality, low-cost-to-the-consumer consumer goods.  We shall make ourselves that which we need.  A tad more ‘socialism’ than I suspect JR would like to see in his economy, yet opinions can and will vary.

Posted by danielj on January 06, 2012, 08:11 AM | #

Obviously something would be needed to index the amount of money in circulation against to ensure that a contextually optimal amount of money was in circulation.

Captain,

Look up interest free (that’ll piss the kikes off) Mutual Credit Banking.

Posted by anon on January 06, 2012, 01:16 PM | #

Nuge

Yes, but if they default and can only pay back $400, that means that $600 has been spent and so is out there somewhere in the economy. So the bank has created $1000 but has given most of it away to someone else. If you have the privilege to create money via loans, you want to do so in a way that more of the money ends up coming back to you.

Yes. Creating the loan is like creating bait. It’s what you catch with it that matters. A bad loan is like losing your bait without catching a fish. The bait might not cost much for the banker-fisherman to create but all the ancillary costs of the business of selling loans to people i.e. buildings, salaries, advertising etc need to be paid for in landed fish not the ones that got away.

(At least that was the case until ninja loans, securitisation, derivatives made bad loans as profitable as good ones - in theory.)

Capn

A tad more ‘socialism’ than I suspect JR would like to see in his economy, yet opinions can and will vary.

Understood. I pitch at the neutral version purely for compromise reasons.

Posted by J Richards on January 07, 2012, 10:05 AM | #

anon @66

Even if you’re conjuring money out of thin air and lending it you still need to accrue enough interest to pay the bills.

What is this?  People who get to create money don’t have to worry about paying bills!

In the case of the housing crisis, even the worst people they “loaned” to ended up paying thousands before defaulting, not bad for bankers creating the money for the loans out of nothing.

If a bank opens its doors and no-one comes in to take out a loan how much money do they make? None, they go bust.

Banks create nearly all the money.  How is it possible for no one to come to them for loans?  Do people not have a need for exchanging goods and services?  Commercial banks don’t go bust because they can’t pay rent, utilities and their Tellers but because too many of their customers attempt to withdraw too much of the money they deposited in the bank, which isn’t an example of being unable to pay bills.  The scamsters have most of the money circulating as debt, in the form of bits and bytes on a computer.  When enough people all of a sudden demand their money in paper form, they go bust, even if the interests are being paid in a timely manner!

And notice that the bank going bust isn’t the bankers going bankrupt but the depositors who lose their money. 

They don’t get anything for creating money out of nothing. They could do that all day every day and still starve. They only get money for loaning it out at interest and getting the interest back.

Wrong!  When you get to create money, you also get to buy things with it.  The top international bankers do this, not needing to bother with reserves.  Reserves are simply a limit for ordinary commercial banks, limiting the amount of money [as debt] they can create.

If an ordinary commercial bank lends $1,000 to someone and gets zero cents in return [an extreme and rare case], it suffers no loss as it never lent its money unless you insist on the cost of processing and approving the “loan,” which is very small and more than compensated for by the killing the bank makes overall, but this $1,000 goes to other bank accounts in the service of debt or as a deposit… the banking system overall gets its utility out of it via service charges, interest payments toward the service of a different debt, reserves for creating new debt, etc.   

I guess technically you could say it’s only a loss if the bad loans didn’t pay their share of the bank’s bills but if the bank has a reserve ratio and they are forced to lend out a proportion of that ratio on loans that are guaranteed to go bad then it’s a loss relative to what they were earning previously - so a reduction in profits rather than a loss maybe more accurate as their incentive.

This reveals the problem you have understanding it… “if the bank has a reserve ratio and they are forced to lend out a proportion of that ratio”... again, they don’t “lend” their money, they create out of nothing what they “lend.”

Selling the debts to investors, selling insurance against defaults and gambling on the likelihood of defaults were instances of the scamsters making more money out of naive individuals.

After the fact. They developed these methods as a reaction to being forced to give out subprime loans and then realised they could use them to scam people.

For the love of God!  The hand that gives rules over the hand that receives.  A government that borrows the money it needs, ultimately from bankers who create it out of nothing, could very well create this money out of nothing but doesn’t and couldn’t because it’s subservient to the international bankers and hence isn’t in a position to/can’t force bankers to lend to certain individuals or groups.  You’re promoting one of the two forms of banker propaganda on the housing crisis, specifically that banks were forced to lend to unqualified people; the other propaganda is insufficient regulation of unscrupulous lenders. 

Get it right: It’s the bankers who caused the boom and deliberately caused the bust by shrinking the money supply to accelerate defaults and acquire houses for pennies on the dollar.

The point was how you decide how much money is created via treasury created money. One method is to aim for slight inflation… In that context i.e. the actual context, treasury created money with a 2% inflation target would effectively be a tax.

Read the comments above.  Why would the Treasury be causing inflation?  Why would it print excess money, how would this excess end up in circulation, and why wouldn’t it remove some money from circulation if there’s an excess?

Posted by anon on January 08, 2012, 11:10 PM | #

What is this?  People who get to create money don’t have to worry about paying bills!

Yes they do, obviously. Only the central bank can create money out of thin air. The rest can only do it as loans.

Which you say youself a few lines later.

Wrong!  When you get to create money, you also get to buy things with it.  The top international bankers do this, not needing to bother with reserves.  Reserves are simply a limit for ordinary commercial banks, limiting the amount of money [as debt] they can create.

and yet just a few lines later you’re failing to understand what obviously follows from the bolded part

“if the bank has a reserve ratio and they are forced to lend out a proportion of that ratio”... again, they don’t “lend” their money, they create out of nothing what they “lend.”

if a commercial bank has a limit on the money they can create then the proportion of bad loans they make matters - obviously.

I’m not bothering with you any more. From now on i’ll just repeat the critical points so you don’t confuse the issue too much.

1) The international network of private central banks are the foundation of the problem.
2) The main part of the banking scam is the slow debasement of a currency through inflation which transfers wealth from the people to those with the monopoly on creating money - the banking cartel. This would still be the case even if the FRB or boom and bust parts of the fraud didn’t exist.

Posted by J Richards on January 09, 2012, 12:24 AM | #

anon @74

Yes they do [those who create money have to worry about paying bills], obviously. Only the central bank can create money out of thin air. The rest can only do it as loans.

Guess what?  Creating money as loans is creating money out of thin air!  Most of the money being created out of thin air is not by central banks.

Which you say youself a few lines later.

I said that ordinary commercial banks have an upper limit to how much money they can create as debt, which means creating money out of thin air.

if a commercial bank has a limit on the money they can create then the proportion of bad loans they make matters - obviously.

“Bad loans” matter, but to whom?  Not the bankers as the loans don’t comprise of the bankers’ own money.  When banks fail, the depositors, not the bankers end up losing their money.  When the stock market goes down, ordinary investors lose; those at the top gain overall.  Your original point was about bankers having to pay their bills, which is the one thing that doesn’t matter to the bankers.

Posted by anon on January 09, 2012, 05:32 PM | #

The Banking Fraud

1. It is literally a fraud - a bunch of clever crooks figured this out some time in the past.
2. It’s a long-con not a smash and grab robbery. It has to be slow and subtle or people notice.

Part 1.

A cartel of private banks with the collusion of the local political authority create a central bank with a monopoly on creating base money.

(It’s not a complete monopoly as the government still creates notes and coins but that’s a small percentage of the total. The vast majority is electronic and simply created on ledgers.)

On its own this is exactly the same as legalized counterfeiting. All else being equal the value of everyone else’s money declines a little because there’s more of it in circulation (inflation) while the counterfeiters use the newly created money to pay their living expenses and buy assets. 50 years of increasing the money supply by 2% a year would lead to a pretty substantial transfer of wealth to the banksters.

(It’s no different to the royal mint fraud of earlier times where the percentage of gold or silver in coins was gradually reduced.)

There’s no physical limit to how much base money they could create but there is a very strong practical limit if they don’t want people to notice the inflation.

(If the money supply needed to be increased in a treasury system they could do it by starting a major road repair program for example and paying for it in the new money or even just giving everyone $500 at Christmas.)

Part 2.

However the central bank doesn’t just create money and spend it because people would notice. Instead they create the new base money on the books of the commercial banks that make up the cartel. The commercial banks don’t spend it either they use the invented money as the basis for loans with interest. The payoff is in the interest paid on the loans of invented money.

(Fractional reserve banking can and did exist separately from the central bank fraud and has other independent aspects to it but in terms of the “royal mint” fraud it doesn’t matter if the central bank creates $100 million on the books of the commerical banks and only allows them to loan out that $100 million or the central bank creates $10 million and allows the commercial banks to loan out ten times the amount i.e. $100 million. It comes to the same thing. The root of the fraud is the base money created by the central bank.)

Part 3.

So the banking cartels could make money from
- monopoly on money creation aka legalized counterfeiting aka the royal mint fraud
- FRB
independently if they wanted. The current system combines the two because passing the created money as loans and only pocketing the interest disguises the process. The loans are the bait. The interest is the fish they catch with the bait.

On top of these two there’s the boom and bust fraud. Simply put they lure people into debt with cheap loans then tighten up suddenly, bankrupt people and buy their assets at firesale prices. It’s equivalent to pouring a load of fish food onto the surface of a lake and then when enough fish have gathered throwing a stick of dynamite into the centre and collecting all the dead fish.

Conclusion

- central bank creates base money out of thin air in the form of potential to create loans
- commercial banks create the loans as bait to fish for interest
- the interest is the payoff from the initial money creation
- the negative consequences of the fraud have to be slow and gradual so people don’t notice
- the boom and bust fraud can be used as a top-up but it can’t be too frequent or people will notice

In terms of persuading people then all you need is for them to get the legalized counterfeiting analogy first and once they have that show that the loan mechanism is simply a way of disguising the legalized counterfeiting.

Posted by J Richards on January 09, 2012, 11:15 PM | #

anon @76

That isn’t a bad attempt, but it could use some improvement.

It’s not a complete monopoly as the government still creates notes and coins but that’s a small percentage of the total.

You should add that whereas the government creates coins and notes, it issues the coins but not the notes.  A $50 bill costs a few cents for the government to print, and this is the cost at which it’s sold to the Fed.  So it’s a private bank that issues this $50 bill as debt. 

Anyway, considering the exchange we’ve had, my own summary of the issue isn’t clear or else, apart from the malicious individuals factor, I wouldn’t have to be clarifying so many things.  This means that the Money FAQ needs to be overhauled, which I’ll do later.

Posted by Money Power @JRichards on January 11, 2012, 07:14 AM | #

@J Richards

Article discussing US trends in monetary reform with a guiding Jewish background that you may find of interest.

In latest JSPES publication, written by Dwight Murphey

http://dwightmurphey-collectedwritings.info/JSPES-DDM-MonetaryArticle(4).htm

“Capitalism’s Deepening Crisis: The Imperative of Monetary Reconstruction - Dwight D. Murphey

A leading economist of that time, Irving Fisher, wrote that “an underlying cause (or precondition) of great booms and depressions is the 10% system [by which he meant fractional reserve banking] itself.”  He was one of six economists centered at the University of Chicago who in 1939 drafted “the Chicago Plan” called “A Program for Monetary Reform.”  In the Plan, it is said that “a chief loose screw in our present American money and banking system is the requirement of only fractional reserves behind demand deposits.  Fractional reserves give our thousands of commercial banks power to increase or decrease the volume of our circulating medium by increasing or decreasing bank loans and investments.”  It went on to say, in unison with Fisher, that “this situation is a most important factor in booms and depressions.”

The alternative favored by Fisher, by the Chicago Plan and others, is “full reserve banking.” 

Time deposits, which are those that don’t give the depositor an ability to spend the money until an agreed term has expired.

The Chicago Plan and that set forth recently by the American Monetary Institute consist of three main elements:

1.  Abolishing fractional reserve banking and installing a full reserve system in its place.
2.  Establishing an independent governmental Monetary Authority (Fisher called this a “Currency Commission”) which will be the sole source of money-creation, acting under a legally defined standard about the extent of monetary issuance.  The creation of money will be done as an act of sovereignty, with the money defined by law as legal tender.  The banking system will no longer be the vehicle for money’s creation.
3.  Putting the money into circulation through governmental expenditures and loans for a number of purposes that are thought to be desirable. 

(It is here that the author of this article will have a suggestion that is more market- and individual choice-oriented than the expenditures,  many of which are highly desirable, proposed in the American Monetary Institute’s plan now before the U.S. Congress.  The latter plan of how the money is used would lead to an enormously active federal government and perhaps through that to a planned economy.)

The concept was first put forward in a 6-page memorandum issued by six University of Chicago economists in March 1933.  This memo, signed by economist Frank Knight, was followed by a second memo, signed by economist Henry Simons, that November.  These beginnings came to more complete fruition in the draft proposal “A Program for Monetary Reform” that was circulated in July 1939.  The authors of this fleshed-out draft were economists Paul Douglas, Irving Fisher, Frank Graham, Earl Hamilton, Willford King and Charles Whittlesey.  The proposal was well received in the economics profession, with 235 economists from 157 universities and colleges approving it. 

Just the same, the Program was never published and did not result in legislation. 

More recently, the main impetus behind the plan has come from a dynamic advocate, Stephen Zarlenga, the author of an extended review of world monetary history, The Lost Science of Money, and founder of the American Monetary Institute, which has put the proposal into the form of “the American Monetary and Financial Security Act” (which, despite the word “Act,” is not intended to suggest that it has thus far been enacted into law).[7]  For simplicity’s sake, it is sometimes referred to as simply “The American Monetary Act.”  U.S. Congressman Dennis Kucinich (D-Ohio) has offered a “16-point plan for economic recovery” which incorporates the American Monetary Act as one of its central features.”

The article then discusses this plan.

Posted by Critique of Ron Paul’s Austerity Plan on January 12, 2012, 09:20 PM | #

Critique of Ron Paul’s Austerity Plan

Tarpley

http://www.kpfa.org/archive/id/76422

Posted by anon on January 16, 2012, 06:20 AM | #

J. Richards

Anyway, considering the exchange we’ve had

Yes, i get tetchy but it is useful to hone clarity.

Reading back i think the main source of disagreement is tactical. There’s a lot of different aspects to banking and more than one scam but i find the central banking strand to be the easiest to get across so i start from that point. It’s not that i don’t consider fractional reserve banking important just that it’s not critical for the understanding of the strand i focus on politically.

Posted by john thames on April 12, 2012, 02:04 AM | #

The fundamental error of all the errors being committed here is the failure to understand the ratio between prices as the basis of profit in a market economy. Our well meaning but ignorant blogger believes that the medium of exchange is wealth and that increasing the medium of exchange increases wealth. It does not. Prices inevitably decline in a 100% gold standard system. However, all this means is that money becomes more valuable and that more goods can be purchased with fewer dollars.

The rest of his arguments are John Law style sophistries. Law taught in 18th century France that printing more assignats would ensure French prosperity; the authority of the king would give the money value. It led to a hyper inflation instead. If our good blogger will read Andrew Dickson White’s history of same, he shall recognize his own arguments before his time.