Re: Re. Is money a credit or a debt?

[Gunnar Tómasson <gunnar.tomasson@xxxxxxxxxxx>]

John:

I don't "object" to "debt-free money".

I don't understand what it means.

For the very concept of "fiat money spent into circulation by a democratic
lawmaking body WITHOUT incurring debt to lenders or to an independent
central or private bank" makes no sense.

"Fiat money SPENT into circulation" means that such "democratic lawmaking
body" has acquired goods and services from the community in exchange for a
token of the body's indebtedness (IOU or "Fiat Money") in the amount of the
acquisition price of such goods and services.

The point at issue has nothing to do with the "democratic" (US) or
"dictatorial" (China) nature of the issuing authority.

Instead, as underscored by Keynes in 'Tract on Monetary Reform', it concerns
the State's use of the monetary mechanism as a means of acquiring goods and
services in lieu of (a) taxes imposed on, or (b) bonds sold to the
non-government sector.

Gunnar

----- Original Message -----
From: "John Gelles" <indexed-savings@xxxxxxxxxxxxx>
To: "Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>; "Gunnar Tómasson"
<gunnar.tomasson@xxxxxxxxxxx>; "Wray, Randall" <wrayr@xxxxxxxx>;
"Proceedings of PKT Forum" <pkt@xxxxxxxxxxxxxxxx>
Sent: Monday, July 21, 2003 9:02 PM
Subject: Re: Re. Is money a credit or a debt?


>
> Dear Gunnar,
>
> You object to the words "debt-free money".  They
> are the words common to the internet to describe
> fiat money spent into circulation by a democratic
> lawmaking body without incurring any debt to
> lenders or to an independent central or private bank.
>
> They were applicable to American greenbacks in
> the Civil War-- these were spent into circulation
> NOT borrowed from banks, not collected in taxes,
> and not received from buyers of US paper notes,
> bonds or other indebtedness.
>
> In WWII a similar debt-free money was spent, but
> the difference was that special bonds were printed in
> amounts equivalent to such spending: the special
> bonds were not for sale and not paid interest except
> back to the US treasury.
>
> The bonds were later sold to buyers for dollars
> received by the US Treasury:  the money was debt-
> free for many years -- until the bonds were finally
> sold to reduce money held by the buyers and any
> pressure it might have had on prices.
> (These later sales might better be explained by an
> expert I am relying on memory to tell of them.)
>
> You also object to "tax-free" money.  This would
> be money that could hold purchasing power within
> affordable limits in a tax free nation.  Such nation
> would offer inflation protected savings accounts.
> It would have contracts that assured affordable
> prices as people worked, saved and grew wealthy.
> If real assets did not get produced by automation
> and robots to ward off inflation, taxes might have
> to be imposed -- most likely on luxuries only.
>
> All of this money would motivate work in a free
> economy where private producers would compete
> with government contract producers and government
> owned factories.  Since the private producers would
> pay no taxes and receive producer-friendly treatment
> -- to encourage supply and hold down price -- the
> system would aim for the best of all possible balances
> between production for profit and production for
> strategic national need.
>
> As to doing better than the Washington consensus on
> effective money motivation of workers and managers,
> I would be pleased to do as well as the consensus.
>
> The consensus has a good handle on hard money.  The
> problem with the Washington consensus is it agrees
> on money too tight to favor workers and future
> generations.
>
> It's money works -- but it sweats and kills workers and
> poisons our wells.  Its money needs to be augmented by
> MORE money than expected traditional profit alone can
> create.
>
> Washington consensus money is all based on debt when
> supply, savings, and price are more important.
>
> Washington consensus money is similar to "casino"
> money.  When you play with casino money, all players
> lose to the bank in the end.  But if the casino paid out
> MORE money, players might win.
>
> Of course they could not win real items of value
> unless they worked to produce them -- or to
> produce robots to produce them.
>
> John Gelles
>
> P.S.  News item -- ex-communists are using
> low flat taxes to grow real wealth.  That's good,
> especially if it exempts all the poor.
>
>
> --------------------- In Reply to Message ------------------
> From: Gunnar Tómasson
> To: pkt@xxxxxxxxxxxxxxxx ; John Gelles
> Cc: Gang8
> Sent: Monday, July 21, 2003 6:11 PM
> Subject: Re. Is money a credit or a debt?
>
>
> Dear John:
>
> Re. your following lines:
>
>         "Liu and I may be thinking of debt-free money -- I'm
>           thinking, as well, of debt-free, tax-free money.
>
>         "What matters is what comes after our intitial thoughts."
>
>
> Comment by myself  [Gunnar Tómasson] :
>
> I truly don't understand the meaning of "debt-free money"
> and/or "tax-free money".
>
> If these concepts do not square with the proposition that
> "currency is nothing more than the government's liability",
> then they are untenable.
>
> And, as such, they are on par with the muddled monetary
> ideas which inform The Washington Consensus.
>
> Surely we can do better!
>
> Gunnar
> ------------------------------- end --------------------------------
>
>
>
>
>
>
>