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

["John Gelles" <indexed-savings@xxxxxxxxxxxxx>]

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
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