Re: James A. Baker III

["Harry Veeder" <eo200@xxxxxxxxxxxxxxxxxxx>]

----------
>From: "Gunnar Tomasson" <tomasson@xxxxxxxx>
>To: "POST KEYNESIAN THOUGHT" <pkt@xxxxxxxxxxxxxxxx>
>Subject: Re: James A. Baker III
>Date: Thu, Dec 21, 2000, 2:41 pm
>

>In response to Geoffrey's point:
>
>>Not sure about that, Henry. Surely a slow growth of money reflects a low
>>demand for loans. Loans create money growth, not the other way round. No
>>power on earth can create money which is not already lent.
>
>Harry writes:
>
>As a matter of fact it happens routinely and is known as "interest".
>A borrower may spend credit and a lender may spend interest.
>
>Comment:
>
>Given
>
>(a) outstanding credit (money supply) of 100, and
>
>(b) loan interest rate of 10% per loan period, then
>
>(c) end-period repayment of principal and interest will total 100 + 10 =
>110.
>
>Absent NEW credit to the original debtor(s) in the amount of 10, accrued
>interest CANNOT be paid.
>
>Gunnar

This assumes money creation is a requisite for *all* wealth creation,
but this is untrue. The fact that we live in monetary economy did not
put an end to other ways of motivating wealth creation.

Harry Veeder