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Location: Economy
Discussion: The Issue & Regulation of Money
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Anonymous |
The Issue & Regulation of Money
Feb 21 2008, 10:36 PM EST Just as in the well documented historical cases of the war for American Independence and the Great Depression (among many others), the greatest economic difficulty for centuries now, has been the scarcity of money. Money is not wealth. It is the measured value of wealth, and is the major means of distribution of goods and services (the real wealth). It is a ticket system which enables all production to be distributed to all consumers. The spending power of the nation should not, as is currently the case, be restricted to wages, salaries & dividends - since all the money that Australia can earn is not enough to buy all that Australia produces! The refusal to address this fundamental issue results in what we see today - the chronic and pervasive lack of purchasing power and the subsequent need to prop up the economy with: 1) Exporting more than we import (to increase purchasing power inside Australia) 2) a. Expand production in an attempt to approach full employment and b. Increase productivity by maximising automation and efficiency. This is a paradox - you can't have both! 3) borrow out of future earnings for today's expenses (at interest - which merely forces us all - government included - into the debt cycle) My suggestion is this: The Government of Australia should resume its Constitutional and moral responsibility of issuing and regulating money which it abandoned to private banking institutions many years ago. This will enable government to make effective, manageable policy for the prosperity of the public of Australia without fattening the purses of the money lenders, or having to resort to the massively concentrated efforts on the props listed above. Then, and only then, will we be able to enjoy a sustainable, and containable economy - a position from which real progress can be made on issues like world poverty and environmental responsibility. Terence Holmes of Melbourne. 9 out of 40 found this valuable. Do you? |
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Anonymous |
RE: The Issue & Regulation of Money
Feb 25 2008, 7:22 PM EST This is an obscenity, government should have no role in tampering with the currency. The Reserve Bank of Australia already has far too much control in hindering markets. Since when is it the role of government to tell the entire economy whats its rate of time preference (interest rates) should be ? Why should the RBA force a single currency onto the entire population, and allow our banking cartel to recklessly expand the supply of money at 10%-15% every year ? This is the single cause of inflation, and it is destroying people's savings and transferring wealth from the poor and the savers to those who receive the newly created credit. We need a free and unregulated market in banking. It will result in a sound and stable currency with low or no inflation. 2 out of 6 found this valuable. Do you? |
 trgh |
RE: The Issue & Regulation of Money
Feb 26 2008, 12:58 AM EST YES, I agree - The RBA have far too much control, but you talk as if the RBA is a government department - they are NOT! Profit is their highest motive, not the well-being of the people. If they really served Australia's best interests, they would not issue money only and ever as a debt to be repaid with interest since this CAUSES INFLATION in the first place. They issue the loans, injecting money into circulation, but the interest component of the repayments comes out of circulation in addition to the principal (more going back than came out), guaranteeing for them, that money will always be in short supply, reducing in value, and will force the community to borrow more (the debt cycle). Australia is now more than $700 Billion in debt to International finance. This is not by accident my anonymous friend! When I suggest that the government take back their constitutional responsibility here, I am referring to the old model where the money which helps distribute the COMMON-WEALTH of the nation, should be in the hands of the people or, in this case, their accountable representatives (which, if they don't do a good job, we can vote them out). Refer Benjamin Franklin & Colonial Scrip, Abraham Lincoln & Greenbacks, Louis Even & Social Credit. As long as shareholders and profits are more important than distributing the wealth of the country for the sake of the citizens, then there will always be inflation, interest, and other methods of exploitation. The RBA have the monopoly. We are their fodder. Either the government doesn't understand, or they are unwilling to do anything about it. By the way, there's nothing wrong with expanding the money supply if money is the ONLY scarce thing in society. Actually, the situation is worse than that - it is criminal to artificially restrict the money supply - making money to be like a scarce commodity. This is how all civilizations are brought to their knees. 2 out of 4 found this valuable. Do you? |
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Anonymous |
RE: The Issue & Regulation of Money
Mar 4 2008, 9:20 AM EST This is proposterous. "Exporting more than we import" Why should we export more than we import? Some countries must have a trade deficit and they do so by choice. Not by the choice of government or you, but by the indiviual and free actions of the population. Countries produce goods which they have a comparative advantage in producing and import other goods. This is how wealth is maximized throughout the world. That we import more than we export simply means foreigners lend us money which we use to spend and produce. If you have a problem with importing goods or borrowing from overseas than that is a xenophobic nationalistic argument, not an economic one. Neither the RBA nor the fed prints money to make a profit. That is just retarded. Have a look at the RBA balance sheet (on their website). Are the profits going to the governor's private account? Inflation is not exploitation. Low, stable inflation is preferable to zero inflation and can be hedged against easily. If you keep your money under your bed than at worst it will be worth 3.6% less than this time last year - but that is your fault. Interest is not exploitation, it is the return for lending money over a period of time. People prefer money now rather than later so people demand a return on lending, and people are willing to pay to borrow. The money supply is not in the hands of the evil banks. Money is created via the money multiplier as people deposit money in banks and banks lend out more than people have depositied. But by and large the central bank has control of the money supply and ensures low, stable inflation. If you feel the need go to a first-year economics lecture at your nearest university. There will likely be over 500 students in the class so noone will notice your presence. 2 out of 4 found this valuable. Do you? |
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trgh |
RE: The Issue & Regulation of Money
Mar 4 2008, 6:28 PM EST I suspect that if I went to university to study economics, I would stand out like a sore thumb (and be expelled for not paying homage to the god of finance). 2 out of 2 found this valuable. Do you? |
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Anonymous |
RE: The Issue & Regulation of Money
Mar 4 2008, 10:48 PM EST You wouldn't necessarily have to enrol is my point, just sit in on the lectures. There will be hundreds of students including mature-aged ones. The following website is very well-written and should help people understand how monetary policy works and what the RBA hopes to achieve: http://www.rba.gov.au/Education/monetary_policy.html Granted, it is from the rba, so if you think they are conspiring to bring society down than you may not trust what they have to say. Especially useful is section 2, which explains why the bank aims for low inflation and why they view this as preferable to zero inflation. Section 6 discusses how monetary policy (the cash rate) influences the economy and inflation. These views are not rare. There is pretty much a consensus among central bankers and academic economists (professors, nobel prize winners) about the costs and benefits of inflation and how best to deal with it. 1 out of 3 found this valuable. Do you? |
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Anonymous |
RE: The Issue & Regulation of Money
Mar 5 2008, 7:50 PM EST I have read the RBA's website on Monetary Policy and I understand (to a reasonable extent) the reasons for their policies, and how interest adjustments interfere with "natural" market forces - hopefully having a stabilising effect. However, the entire philosophy behind all these policies, is concerned with stabilising an economic system of which its own fundamental premises are never called into question. This is the no-go zone. However, even MacFarlane in his speech (sited on the RBA website) admitted that we resolve to keep with the current system of attempting to control inflation by manipulating the "cost" of debt money, not because it is flawless, but because 1) everybody else is doing it, and 2) he knows of no better alternative with a record of success.. Early in the 20th Century, a Scottish Engineer called Clifford Hugh Douglas, who was commissioned to analyse the accounts of prominent war-time facilities, discovered some fundamentally erroneous economic principles which proliferated throughout the industrial world. Like an excited schoolboy he approached the leaders of his day - expecting that his proposals (which were irrefutable by any logical arguement) would be adopted to correct the flaws. However, he soon found that those in power were those who had the most to lose from correcting the system. So, MacFarlane was quite right in declaring that there is no alternative with a record of success, but only because all attempts to introduce practical alternatives, have never been tried, but have quickly been squashed and ridiculed by the entrenched authority - wishing to protect their position of power. Our economic system guarantees an opportunity for exploitation by the "money masters", and may be termed a "Social Debt" system, whereas Douglas' alternative is termed "Social Credit" - I think its more than just "another theory" and is worth your attention. 2 out of 2 found this valuable. Do you? |
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trgh |
RE: The Issue & Regulation of Money
Mar 5 2008, 7:54 PM EST Oops!, I forgot to sign in. That last comment was me :-) 2 out of 2 found this valuable. Do you? |
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Anonymous |
RE: The Issue & Regulation of Money
Mar 11 2008, 10:54 AM EDT I read about C.H. Douglas and was not impressed. Of course the wages earnt are not enough to purchase the goods produced. Otherwise they would not be produced in the first place. Marx also thought this was exploitation, though he was a terrible economist. Firstly, the worker doesn't need to purchase the goods he produced. If you lived in the desert on your own than you would need to produce everything yourself. This would be highly inefficient. But with specialization and the division of labour one person can produce many of one good quite efficiently. With this income he can purchase the range of goods he desires. The profit goes to the owner(s) as a reward for investing. Keeping with the old Scottish theme, I recommend the reading Adam Smith's 1776 The Wealth of Nations. http://en.wikisource.org/wiki/The_Wealth_of_Nations 0 out of 2 found this valuable. Do you? |
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trgh |
RE: The Issue & Regulation of Money
Mar 11 2008, 6:34 PM EDT "I read about C.H. Douglas and was not impressed. Of course the wages earnt are not enough to purchase the goods produced. Otherwise they would not be produced in the first place. Marx also thought this was exploitation, though he was a terrible economist.Reading "about" C.H. Douglas is a poor second to reading his work. You are right about the worker not needing to buy what he produces, but think of it in aggregate terms: The whole of Australia's population should have access to as much of the local production as it requires, don't you agree? This cannot happen if the only money available to the consumer comes through wages, salaries and dividends, since this only makes up a portion of the prices (ie. not everything can be sold). Adam Smith talks about this too (although Douglas cannot be surpassed in the understanding of its implications). I admit that Douglas can be hard to read. However, one of his students - Louis Even gives a brilliant treatment of the subject in layman's terms in his book "In This Age of Plenty". Its worth a determined read! 2 out of 2 found this valuable. Do you? |
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Anonymous |
RE: The Issue & Regulation of Money
Mar 14 2008, 5:53 AM EDT I do believe Australia has access to as much as it produces. Income is equal to production. Some of that income is profits, not wages, but I don't see that as a travesty. I also found that an Australian Social Credit Party, The Australian League of Rights, denies the holocaust occured and believes the world is secretly run by a society of Jews. Thanks, Wikipedia! 0 out of 2 found this valuable. Do you? |
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trgh |
RE: The Issue & Regulation of Money
Mar 16 2008, 8:27 PM EDT "I do believe Australia has access to as much as it produces. Income is equal to production. Some of that income is profits, not wages, but I don't see that as a travesty.Dear Anonymous, How can Australia have access to all it produces? The purchasing power (ie. money in circulation) is made up of wages, salaries & dividends. In aggregate terms, this is always less than the purchase prices for all the goods avaliable: There are other expenses than labour and profits in any business - Capital equipment, factory costs & overheads, advertising, storage, transport, etc. These costs must go into the purchase price of any article in order for the producer to make ends meet - and then give him an opportunity to make profit. But the money distributed in the process - to the consumer (including the profit making business owner) for spending, is only part of the purchase price. (see C.H.Douglas' A+B Theorum) To believe that "Income is equal to production" is to ignore the facts. This statement reminds me of that "principle" proclaimed by Karl Marx that "Labour produces all wealth"! He claims it is axiomatic - but evidence proves in logical and economic terms - it is the opposite - a self-evident falsity. Regarding your second comment - That came way out of left field ! What has that got to do with this current discussion? You can't validate truth based upon the popularity or reputation of the person who is saying it (although it is good grounds for being suspicious). Besides, whatever ELSE you believe, the ALOR have some very interesting material on the fundamental nature and purpose of economics. Don't be too quick to take up the gossip, or dismiss the evidence. For the true nature of money to become a common undertanding of the public, is NOT in the best interest of the banks! By the way, I think it is a dangerous thing to rely on Wikipedia as your only source, and to make judgements on that basis. 2 out of 2 found this valuable. Do you? |
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Anonymous |
RE: The Issue & Regulation of Money
Mar 17 2008, 9:14 AM EDT I am not making any judgements based on Wikipedia. Besides, the wikipedia entry references a scholarly paper. Reading the website is also a bit of a giveaway. My arguments are based purely on economics, not philosophy or race. The idea that the ALOR is extremely anti-semite confirms in my mind that many people hold these strange views for racial reasons. There is a small but loud group on the internet that are anti-banks and anti-central banks because they believe both are operated by a secret society of Jews (who run the world) to make money. Sometimes the group are proud of their hatred for Jews, while others seek to persuade people without disclosing their motives. Many of these groups believe that the a few bankers engineered a financial crisis in the US in order to justify the creation of the Fed Reserve. I am not surprised that a social credit party, the ALOR holds these racist views, therefore. At first I was astounded at how wrong the economics of the theory of social credit is. I am finding it hard to firstly comprehend your assertions and then secondly to correct them. Economics may not be an exact 'physical' science. Further, many claim that all economists contradict each other and have opposing views. But almost all economists agree on almost all important issues - the differences in opinions are very minor. What you are saying does not stand up to even the most basic analysis. It is very dangerous when people profess theories as 'truths' based on philosophy (and in some cases race). I am all for free speech, but some mistakes have to be pointed out. The theory of social credit is a joke. 0 out of 2 found this valuable. Do you? |
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trgh |
RE: The Issue & Regulation of Money
Mar 17 2008, 5:36 PM EDT "The theory of social credit is a joke."Have you read this "scholarly paper"? Have you read any of Douglas' works? What really "astounds" you about social credit? - How wrong it is, or how unconventional it is? Have you really taken the time to evaluate it? The reason why most economists agree on the "important issues" is because they have mostly come out of the same educational institutions. And we can see where they have brought us. Can you qualify your judgement that "The theory of social credit is a joke" - without basing your views upon popular orthodox opinion? This ozideas site is here to promote ideas, not slander them for being associated with "racist" organizations, as you suppose. One more thing; how can you hold to any policies at all, without a philosophy? All policies are based upon an underlying philosophy. Each person deems something to be correct or helpful, based upon their philosophy of life. If you have no aim, or morals, then you have no purpose. There IS NO Economics without purpose. For instance, if your theory of life is one of "the accumulation of power and control over the individual" then your economic policies will reflect that, but if your theory of life is one of "maximum freedom and economic security of each individual without expense to anybody else's right of the same", then your economic theory will be quite significantly different. Douglas' philosophy is of the latter, and is beyond the entrenched confines of the current system. With respect, Terence 2 out of 2 found this valuable. Do you? |
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Anonymous |
RE: The Issue & Regulation of Money
Mar 17 2008, 11:14 PM EDT The ALOR is clearly racist and that is obvious to anyone who visits the website. Yes I have read the paper in the Australian Journal of Human Rights: http://www.austlii.edu.au/au/other/ahric/ajhr/V1N1/ajhr1110.html I am not writing to slander the ideas of yourself or the ALOR. Nor am I suggesting that you hold racist views. But this site is here to promote ideas and I think it is important to debate ideas rather than just accepting them. The economic ideas expressed by the ALOR and by you are in my opinion not correct. You have a lot to say on different threads on this website and I disagree with most of it. Not because I look on wikipedia and read what economists have to say but because I feel I am educated enough on the subject to express my own opinion. In many cases (not always) my opinion is consistent with that of other economists because we arrive at conclusions (simultaneously and independently) based on logic and maths. The only way to arrive at different opinions is to throw away both of those and to introduce a highly philosophical argument. Economics is about the efficient distribution of scarce resources. In almost all cases this requires individual freedom be upheld. I am not sure who promotes 'accumulation of power and control'. If you think that this is sought by corrupt bankers and central bankers than I can't argue with an idea that silly. 0 out of 2 found this valuable. Do you? |
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trgh |
RE: The Issue & Regulation of Money
Mar 18 2008, 12:18 AM EDT You say "Economics is about the efficient distribution of scarce resources." The only scarcity today is money itself (as in 1929) - and that situation is brought about by a false understanding of the nature of money, and the financier's exploitation of that ignorance. Money is a measure of available wealth and a method for the distribution of wealth, It is not wealth itself (as I have said on numerous occasions - sorry to repeat). Until this is clearly understood - especially by economists - then we will continue to flounder. Do you understand and/or agree with my statement regarding the nature of money?, or do you believe the latest propagandist fallacy that "at the moment - money is expensive"? If it IS expensive, it is only because those who regulate it, have made it so. They have treated money as if it is wealth itself, and just like a commodity - they have made it scarce by making it hard to get hold of. This is the blunt instrument of the RBA - the power to prevent spending. What kind of free market is it in which the only method for distributing the ABUNDANT wealth, is artificially restricted? Ask yourself the question "What is money?" From what I read in the papers these days, I believe that most economists don't even know. Sorry - Eco's - I suppose you think I am mad. All that training !, All that hard work at Uni ! What a tragedy of human effort. The orthodox economist has the greatest potential to understand, but they have also had the greatest wall erected before their minds. Oh, in my opinion of course! 1 out of 1 found this valuable. Do you? |
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Anonymous |
RE: The Issue & Regulation of Money
Mar 19 2008, 9:57 AM EDT Nobody believes that money is wealth. Real GDP and income are measures of wealth. I don't believe money is a method for the distribution of wealth. Weatlh is created by the efficient production of goods and services. Money serves as a common currency to exchange for goods and services. This is an efficient way to buy goods. Without money, you would have to trade goods for goods, or provide services for someone in order to trade. This is highly inefficient because it requires people find others with aligned wants. "What kind of free market is it in which the only method for distributing the ABUNDANT wealth, is artificially restricted?" So money is wealth? And the RBA can distribute wealth (money) with no consequences? Firstly as you point out yourself, money is not wealth. Secondly, if the RBA did issue more money, wealth would not increase. The money supply would increase (clearly), however this would lead to a one-for-one increase in prices. Unemployment would not fall and wealth would not increase. The only consequence would be higher prices. Milton Friedman won a nobel prize for proving so: http://nobelprize.org/nobel_prizes/economics/laureates/1976/friedman-lecture.pdf I urge you to read this carefully. If you can prove that he is wrong than you will win a nobel prize. However, you will not. Finally, in what way is money scarce? How can you judge by how much the money supply should grow each year? If money is scarce relative to goods, wouldn't prices fall rather than increase? What is this 'wall' that makes you think you're correct and 200 years of economists and mathematicians are wrong about pretty much everything? 0 out of 2 found this valuable. Do you? |
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trgh |
RE: The Issue & Regulation of Money
Mar 19 2008, 6:31 PM EDT Hi Anon, How, on the one hand, can you say that you "don't believe money is a method for the distribution of wealth", yet in the same paragraph say "Money serves as a common currency to exchange for goods and services."? This is the same statement of fact using different words! We are in agreeance on this point. I agree also that money is a marvelous invention which enables efficient trade! I also agree that if the RBA were to issue more money, wealth would not increase. But can you see with me that, if a portion of that additional issue of money were distributed fairly among the citizens of Australia, without means testing, and without the demands to pay it back at interest, then the general ACCESS to that wealth WOULD increase. The subsequent impacts on prices and unemployment which you suggest are well known and are inevitable issues UNDER THE CURRENT SYSTEM. However, forget the CURRENT SYSTEM - if the RBA was to issue new money - not as a debt, but as a dividend, and only so much as to reasonably reflect the REAL wealth available in goods and services (adjusted perhaps quaterly), then this would not be inflationary. On the contrary - it would provide a stability of the value of the Dollar which far surpasses anything we have seen for the last 100 years! The main cause of the devaluing of the Dollar, and the creeping loss of purchasing power (and thus the need to "expand or die") is the practice of only issuing money as a debt, and the charging of interest on that sum. When these two practices are taken out of the picture, all these other negative impacts and financial pressures on the economy will cease to have such a severe impact. As for your last question; The "wall" is a stubborn view of social life with finance firmly fixed at the apex - remembering PLEASE, that any economic system is only as good as the social stability and security that it engenders. 2 out of 2 found this valuable. Do you? |
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Anonymous |
RE: The Issue & Regulation of Money
Mar 30 2008, 3:01 AM EDT "I also agree that if the RBA were to issue more money, wealth would not increase. But can you see with me that, if a portion of that additional issue of money were distributed fairly among the citizens of Australia, without means testing, and without the demands to pay it back at interest, then the general ACCESS to that wealth WOULD increase." Let me get this straight. Currently, money is leant to banks who have to pay it back plus interest. People work for money, sell things for money, or borrow it (voluntarily). All of this is exploitation and inflationary (how?). You suggest the rba simply issue money and give it to people free of charge, without any work or effort. This is fairer and not inflationary? And giving money away would increase access to wealth, but it wouldn't increase wealth? Wow, you've totally changed my view of how the economy works! How would issuing money ensure social stability and security? The rise in prices would be proportional to the increase in the money supply (I would argue that if people realized this was occuring, they would minimise their real money holdings, seeing prices rise faster than the money supply). It would not increase wealth at all. If some people did think that they had become richer ("money illusion"), then they would work less - harming the economy and themselves. 0 out of 2 found this valuable. Do you? |
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Anonymous |
RE: The Issue & Regulation of Money
Apr 13 2008, 12:32 AM EDT All new money is created as debt. Consequently there is never an adequate supply of cash money to repay the debt plus the interest generated by the aforementioned debt created money. Which is all very well for a while and is why we all spend our lives on a mini treadmill like so many white mice. It all continues merrily for a while and the problems only become clear when something hits the wall as is currently happening in the USA. There are suggestions that compound interest only compounds the problem and and that debt created money should be described as malignant money. 3 out of 3 found this valuable. Do you? |