[GJM] The Modern Universal Paradigm

[Rodney Shakespeare]

John, 

1.    Yes, well done in finding the Islamic Endogenous Loans article in "Articles" on the GJM.net website.

But look again at the list in Articles -- at the March 2006 top article just above the one you have identified.  The title starts "Integrating Islamic Finance................"  That one is now the key article.

2.    I take great pleasure in announcing that I feel no immediate need to read your articles Debt and the Financial Growth ImperativeI and How would a 100% reserves financial system actually work?  I have already read them!!  And put some things in the book!!   Here is a little quote with which you may be familiar:--
"Some people suppose that the operation of a 100% reserve system would simply entail the on-lending of all deposited money at a greater average rate of interest than the average rate offered to the depositor, thus allowing the bank to realise a profit from the interest margin.  This concept is fundamentally flawed, and reveals a misunderstanding of the nature of banking.  It is certainly true that non-depository financial entities - such as finance companies - realise profits in this manner.  But banks cannot do so.  That's because a bank deposit is not a borrowed entity - in legal language it is a bailment. That simply means that it is money that has been entrusted to the bank by the customer for safekeeping.  It must be held in trust by the bank.  Only the customer can withdraw or authorise the transfer of the deposit - the bank itself cannot do so.  Thus, as presently constituted, banks are not entitled to on-lend any of their customers' deposits.  Finance companies borrow in order to lend (at interest).  Banks do not - they create new money."  John Hermann, How would a 100% reserves financial system actually work?

That's brilliantly clear -- which is why I have quoted it.

3.    I am also writing to you personally.



Rodney
  ----- Original Message ----- 
  From: John Hermann 
  To: Discussion Forum for Global Justice 
  Sent: Friday, September 08, 2006 8:55 AM
  Subject: [GJM] The Modern Universal Paradigm


  Re: Previous email from Rodney Shakespeare  [ was Re: [GJM] Public apology  ]

  Hi Rodney,

  I could not find the draft article "The Modern Universal Paradigm" that you mentioned, however did find on the GJM website your paper entitled "The Universal Paradigm & Islamic Endogenous Loans". This is a very well written paper, and from a cursory reading I find myself in complete agreement with its thrust. 

  For some time I have recognised that the primary economic problem is unearned income. Two big manifestations of this tendency are land speculation (a subject which preoccupies the followers of Henry George) and monetary saving for the sole purpose of acquiring ever more interest income (the destructive effects of which have been recognised by the many varieties of monetary reform). These two cancers within our economic system are inextricably linked. 

  Attached is my recent short article "Debt and the Growth Imperative", which might be of interest. I have also recently developed a mathematical model of debt growth, and a paper outlining this model may be accessed from the ERA web site [ era.org.au ].

  Best regards,
  John
  --





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