[GJM] Campaign for paying the Principal only...A Question of Interpretation?

Mon Sep 25 02:47:28 MDT 2006

Creation of money out of thin year through promisery notes and then charging usury for its borrowing are the critical functions of the monetary policy..I guess, we need to address these functions and allign with the demands for deletion of the usurious money that is creating havoc with the ecosystem and ecologgically sustaianble livelihoods..

robert searle <dharao4 at yahoo.co.uk> wrote:  Dear Mr. Hattersley, et al

You made the point that the principal is not
the profit. In a sense, this is perfectly correct
ofcourse. However, we can look at it differently. If
you have a reserve amount of money of say ?1,000 on
deposit(an "investment" on which you expect a return
so to speak) it may be possible depending on the rules
to create as much as ?9,000 "out of thin air". This
would ofcourse be a loan, but a huge "profit" (ie.
?9,OOO)has already been created in a way which is
highly unorthodox. It could have easily been done
without a customer. New unearned money for virtually
nothing.

However, in this case a borrower would exist, and
would have to pay back the principal using earned
money. This earned money could be reinterpreted as
being the "profit", and interest would be unnecessary.
The banks though ofcourse would make far more money
this way..

I know this is a bizarre interpretation, or rather a
mistinterpretation of the present system. It just
offers another way of seeing things. Whether it has
any practical value at all is quite another
matter!!!!!

Chris Cook makes the claim that as soon as the
principal is paid off it is destroyed. Only interest
on it makes the profit for the bank. However, if I
understand correctly the deposit would still exist but
only as a means of acting as the basis on which new
money could be created "out of thin air."It cannot be
used as profit.

All this has interesting implications. It may be
possible to change the law in which the principal
would be the profit. Thus, banks would be able to
create new unearned money "out of thin air" but NO
longer charge interest. The profit would come from the
principal being paid off by the borrower. If he, or
she seriously defaults then ofcourse any security, or
collateral could be forefeited by the bank. 

In other words, the transition from an interest based
economy to an interest free one may be alot easier to
achieve if the bank profited on the principal, and no
longer on the interest. However, it would horrify most
monetary reformers as these commercial institutions 
would still be very powerful as they would possibly
profit more than before!!!

I do not know whether any of the above makes sense!

R.Searle 

--- Muhammad Mukhtar Alam 
wrote:

> Robert and all,
> 
> We may initiate a campaign for paying the
> Principal only
> 
> robert searle wrote:
> 
> Dear All,
> 
> The following may be of interest..
> 
> R.Searle
> 
> --- Christensen tjn 
> wrote:
> 
> > Dear Colleagues,
> > 
> > The following email from Steve Mandel is relevant
> to
> > those with an interest in odious debt.
> > 
> > Best wishes,
> > 
> > John
> > 
> > ++++++
> > 
> > Dear John Christensen,
> > 
> > As the world bank meetings open in Singapore, I am
> > launching a new discussion document from nef (the
> > new economics foundation) saying that the time has
> > come to look again at foreign debts forced wrongly
> > on developing countries - so-called 'odious debt'
> -
> > and shift the spotlight onto the 'odious lenders'
> -
> > the bankers who made large loans to illegal
> regimes.
> > 
> > The nef research, Odious lending: debt relief as
> if
> > morals mattered, demonstrates the true scale of
> the
> > impact of debts that result from 'odious lending',
> > and how that impact continues to grow until the
> loan
> > is cancelled. Long after 'odious debts' are
> > technically off the books, subsequent generations
> > are still effectively paying for them. Taking 13
> > clear examples of odious lending, nef's new
> > calculations reveal that amongst the worst cases: 
> > 
> > * Indonesia has already 'overpaid' in the region
> of
> > US$151 billion relating to odious debts - twice
> the
> > level of recorded debt. This means that Indonesia
> > has made a cumulative net transfer to the North of
> > US$138 billion to date - or 90 per cent of
> > Indonesia's GDP. 
> > * Argentina has already 'overpaid' in the region
> of
> > US$77 billion relating to odious debts - 75 per
> cent
> > of the country's recorded debt. 
> > * Nicaragua has odious debt of over five times the
> > country's total GDP. 
> > 
> > The case for debt cancellation on the grounds that
> > the vast loans made to 'odious' regimes should not
> > be enforceable under international law, is gaining
> > momentum. But until now, no-one has tried to put a
> > price on the repercussions of odious debt that
> > reverberate for many decades - even after an
> > oppressive and corrupt borrower regime may have
> left
> > the scene.
> > 
> > The nef research reveals that for at least ten of
> > these countries, their total debt results from
> > 'odious lending'. For the ten countries identified
> > as having 100 per cent odious debt: Indonesia,
> > Argentina, Nigeria, Phillipines, Pakistan, Peru,
> > Sudan, South Africa, Democratic Republic of Congo
> > and Nicaragua, all debt servicing is
> inappropriate.
> > This means that they have, in fact, been
> > 'overpaying' and are owed not just a total
> > cancellation of all outstanding debt, but a
> > substantial repayment, currently amounting to US
> > $383 billion.
> > 
> > Not only are successor governments saddled with
> > paying off the loans - but because the borrowed
> > money was often not put to productive use, there
> are
> > inadequate funds to repay interest and capital.
> The
> > result is a vicious circle of debt in which new
> > loans have to be taken out by successive
> governments
> > to service the odious ones, effectively
> 'laundering'
> > the original loans. This can give a legitimate
> cloak
> > to debts that were originally the result of odious
> > lending. And, as the nef research reveals, the net
> > loss to these countries economies' often exceeds
> the
> > total outstanding debt.
> > 
> > nef proposes a new process for dealing with the
> > problem including a new independent body that
> would
> > assess the track record of regimes that incurred
> the
> > debts and declare whether it was odious or
> > legitimate. Loan contracts entered into by
> 'odious'
> > regimes would then be deemed unenforceable. And,
> for
> > the backlog of the past, debtor countries would be
> > able to apply to an independent arbitration panel
> > for a debt work-out. A moratorium would be
> declared
> > on all debt service while the case was examined.
> > Odious debts would be declared null and void
> before
> > debt service could be considered on the rest. The
> > key components of the nef proposal are: 
> > 
> > * an internationally recognised independent body
> to
> > decide on the odious nature, or otherwise of
> regimes
> > 
> > * on a country by country basis, arbitration
> panels
> > consisting of representatives of: creditors to
> > odious regimes (the 'odious lenders'), legitimate
> > creditors, present government and civil society
> with
> > a mutually agreed chair to decide on debt
> work-out,
> > designed to leave any country no worse off than
> they
> > would have been if there were no odious loans. 
> > 
> > As well as relieving legitimate governments of the
> > burden imposed on them by undemocratic
> predecessors,
> > this would make it much more difficult for future
> > dictators and other corrupt regimes to raise loan
> > finance, thus greatly strengthening the forces of
> > democracy and justice.
> > 
> > I attach a four-page summary, but for the full
> > document please go here
> >
> 
> > .
> > 
> > Yours,
> > 
> > Steve Mandel
> > 
> > > _
> > JPBerlin - Mailbox und Politischer Provider
> > intertax Mailingliste - Eine Mailingliste im
> Rahmen
> > von Attac
> > 
> > intertax at listen.attac.de
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> > http://listi.jpberlin.de/mailman/listinfo/intertax
> > ________________________________________
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> 
> 
> 
> 
>
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