Re: [gang8] More on I promise to pay

["William B. Ryan" <william_b_ryan@xxxxxxxxxx>]

The central bank is a bank that makes loans that also functions as the
clearing bank for the members of the clearing system, therefore it itself
is not constrained by reserve or credit limitations.  The banking system
as a whole must therefore act in concert directed by the central bank.
 Conceptually, it would work the same if there were only one bank with
many branches.  The branches are constrained by central bank policy even
if the branches are independently owned.  The monopoly of credit is a
natural monopoly.

Chartalism in the historical context, as opposed to the Moslerian sense
- in the historical sense, "chartal", "ticket" and "contract" are synonyms.
 It is not important in what form the banker will technically redeem
it*, that is of direct concern only to financiers and the relations between
financiers, it is redeemable in the market place for goods and services.
 That is what is of concern to producers and consumers.

Money in this sense is a generalized form of contract and not a quantifiable
"thing."  What is important is to put into the hands of consumers enough
tickets to call fully upon the productive capacity or potential capacity
of the industrial system.  This means working around, or supplementing,
the monopoly of credit.

Consumers must also have the right, without deleterious effect upon the
continued incentive to produce and improve the productive mechanism,
to refrain from utilizing their tickets if they so choose.  That is to
say, saving should not be discouraged or made a criminal act.  We would
expect that the "propensity to consume" from wealth will decrease as
wealth increases.  Super production in an increasingly productive world
is folly.  This means compensation is required to cover the costs of
production - as a matter of bookkeeping adjustment - to entrepreneurs
as less and less of increasing productive capacity is utilized, which
also requires working around the monopoly of credit.

*It derives its functional value from the goods and services it will
purchase, not merely the taxes it will pay.  It is presently issued almost
exclusively through loans to productive enterprise, not through government
fiat. Government itself borrows to enable it to spend more than it is
collecting in taxes.  The presumption is that government is an element
of productive, and necessary, enterprise--that the services it provides
are required for the continued social well-being of the community as
a whole.  That government supplies its services through non-market mechanisms
does not negate this fact.
--

On Sun, 28 Apr 2002 09:55:40
 Wray, Randall wrote:
>
>sorry chris, you've got it only half right. yes when i bring a bank
check to my bank, it credits my bank account. and yes i can use a bank
check to retire my own liability to the bank. but the difference between
the central bank and the privat bank is the pyramiding and the promise
of my private bank to allow me to convert my checking account to central
bank liabilities.
>the central bank of course makes no promise to convert to anything other
than its own liabilities.
>so, nice try, but you've got to keep going.
>randy
>


--
William B. Ryan
william_b_ryan@xxxxxxxxxx - email
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