[GJM] interest-free loans for public capital -- Kucinich and the AMI

Fri Aug 10 13:24:07 MDT 2007

Steve,

1.    I am really only trying to make one straightforward point in respect of Kucinich -- he has a consistent record of promoting the use of interest-free loans for public capital investment and so he is potentially somebody with whom co-operation can be made.  I am not particularly interested in his alleged "crimes" and the like.  I tried to get cesj in Washington to talk to Kucinich because Kucinich at the very least has some understanding of the use of interest-free loans and cesj certainly has a lot.  But, alas, cesj gave me a long list of Kucinich's "crimes" and would not move an inch to talk to him (or those around him). 

I am trying to tell everybody that the use of interest-free loans (particularly for public capital) is the one thing that is practicable now, implementable now, and can provide the unifying force among all monetary reformers.  And please don't think that 'monetary reformers' is just the people in a few groups.  There are big forces (e.g. in Islam) wanting to do things anew  and I am picking up information about non-Islamic countries, too.  Very generally, they understand interest-free loans which halve the cost of investment.  If you want to build co-operation you have to find (and then persuade) the thing people can agree on (and,. of course, stop nit-picking about all the things you  and they disagree on)

2.    You appear to be saying (and rather despondently saying) that all economics is a zero-sum game.  That's just not true. Since the beginning of the industrial revolution (say, circa 1750) there's been an absolutely huge increase in output per head and that increase, percentage-wise, is largely due to the input of technology in various forms.  It's human institutions, practices and mindsets that prevent solutions to poverty and lead to authoritarianism etc. 

3.    The  purpose of lending and requiring payment is ultimately a matter of ensuring physical efficiency. If you don't have the efficiency the standard of living will be low.  So you lend for what is desired (i.e. people will pay for it in some way, either directly as payment for goods and services, or indirectly via fees and taxes as in some, but not all, forms of public capital).  

However, at the same time you also want to lend so as to develop and spread productive capacity (and so, at the same time, spread the associated consuming power).  This is not just a matter of deepening democracy.  Say's Theorem -- 'Theorem' because 'Law' suggests that it works and is implemented in practice at present -- but that isn't so) requires that producers and consumers be the same people.  BInary economics implements Say's Theorem -- and with only one lot of financing (simulfinancing).

4.  I am sorry to be a bore and mention two websites again but please visit either of the following two websites to read the short section as to how Binary economics addresses environmental issues.  www.binaryeconomics.net and the b.e. page at Wikipedia.  (I had better say now that there's going to be more from me on websites  in the next few hours or day or so as I deal with the publication of The Modern Universal Paradigm and The Universal Paradigm and Islamic Worldsystems)

5.  You mention interest-free loans for 'real estate'.  Binary economics has certainly considered and written about this subject as a part of capital investment that can pay an income.  And if you mean 'houses/homes' there has also been binary writing but my present view is that, until there has been a move somewhere to 100% banking reserves, it would be unwise to use interest-free loans for people's homes because that use would accentuate the huge wall  of money which is going, and has gone, worldwide,  into house prices (now about to be one of the factors which will probably  crash the world financial system).  So if you look at the loans diagram at those websites you will see that it does not mention at the moment loans for houses.

You also rightly refer to house prices distorting the economy but  I do not clearly understand your reference to a property valuation check of .005% per year.  If, for any reason, the housing market rises to an average house price of $1,000,000 and, for years, there has been a rising price market, the valuer will value at $1,000,000 (and if he prudently says $900,000 his advice will be ignored -- that is the present situation).  I think much better would be deposit requirement and vetted ratio between reasonable assessment of income and payment of amount outstanding.  But, in any case, once the fractional reserve system is allowed to get out of hand, as now, all this prudent stuff is just ignored -- until the crash, that is.

6.  I do not understand your last sentence about president/King controlling land values but not the wisdom.

Rodney Shakespeare

  ----- Original Message ----- 
  From: Steve Consilvio 
  To: discussion at globaljusticemovement.net 
  Sent: Friday, August 10, 2007 1:56 AM
  Subject: [GJM] interest-free loans for public capital -- Kucinich and the AMI

  Hi Rodney,

  You may be following the twists and turns of AMI, BE and Kucinich closer than I have been, but I think the point still stands.  In any case, if Kucinich isn't saying everything he believes, then that just makes him another gutless wonder.  However, I think he does say what he believes, the same as everyone else, for better and worse.

  There are a great many "regressive progressives" in the world today.  That is the nature of the Orwellian knot.  People have compassion, a sense of who or what to blame, but it does not necessarily form a consistent whole.  For example, when a large union-labor supermarket closed recently in Ohio, Kucinich went on a rage about lost jobs and lost services to the community, but he didn't say anything that indicated that he understood why the supermarket closed.  The business closed for a simple economic reason: 5=2+2.  The bust must follow the boom (2+2=5).

  We can all argue theory until the cows come home, but the reality is that economics is the study of numbers, not of human behavior.  Numbers have no mercy, and it is the desire to create merciful numbers that is an exercise in futility.  Only people have mercy.  And 2+2=4 must be the basis for any economic system to work.  

  We cannot invent our own math.  If the union employee is going to be paid more, then that puts a burden on the price the customer pays.  If the company and stockholders are going to be paid more, then that puts a burden on the employees and the vendors.  It doesn't matter what we call it, AMI, BE, TFE, surplus value, socialism, capitalism, charitable giving, endowments, proceeds, profits, capital gain, dividends, interest, etc., it is all cost-shifting or number shifting.  The economy is a zero-sum game, but everybody believes in "growth."  Every gain must be offset by a loss somewhere.  All profit is somebody else's expense.

  I think the central problem in all economic theories is that consumption and creation are not accounted for.  Only the middle of the process is being studied.  It's kind of like evolution.  Evolution is a great theory, and is probably true, but it still doesn't explain creation or death.

  Kucinich is one of 500 people that rule the world.  Now he wants to be President.  If he couldn't build a consensus with the other 499 people that he is right, then what are the odds of his convincing others, with or without more power?  Democracy is a farce, but it is the only farce we have.

  Everybody is sure that money is real and that profits are good and that growth is the solution.  I'm not, obviously.  I see people chasing numbers that cannot be caught, landfills  filling up with wasted labor and wasted lives, and people believing a delusion.  Of course, everybody at the GJM probably sees the same thing, but as far as I know, I am the only one with a mathematical formula to explain it.

  I wish you or someone here would try to refute my theory.  I've tried to destroy it, but I can't.  Whereas I did destroy my previous theory about interest-free money.  Once you get to the political situation where you can lend money by fiat, what is the point of collecting it back?  It would make more sense just to give everyone capital as a birthright. All lending is based on a surplus, but how did the surplus form in a "working" system?  

  If a surplus exists then poverty must exist, too.  If a system is based on 2+2=5 (profit) then nothing that follows can work.  It is mathematically impossible.  The best you can do is stretch out the geometric progression over a number of years, but eventually the pace and size of the compounding quickens.  That is where we are now.  The collapse is a mathematical phenomenon, too.  The poor can't afford to be poor and the rich can't afford to stay rich.  The contradiction swallows everyone up, usually in a state of Civil War.

  Economics is the study of numbers.  History is the story of how people respond to the numbers.  Religion is the story of conquering the numbers, which is the thing that everyone wants to do.

  In any case, interest-free loans for real estate would go a long way to solving most of our problems, IF (huge if) it were also tied to some type of property valuation check, like .005% per year.  Ultimately it is the inflation in land values that is distorting everything in the economy.  The President/King still has the power to control land value, but not the wisdom.

  peace,
  steve consilvio
  www.behappyandfree.com

  On Aug 9, 2007, at 3:09 PM, discussion-request at globaljusticemovement.net wrote:

    Dear Steve,

    1.    Are you joking?   Kucinich follows Zarlenga?  Kucinich is behoven to Zarlenga because he married Zarlengas's researcher ? Purleez.  

    Forgive me for being so blunt, but you've got things back to front.  Yes, Elizabeth Kucinich was Zarlenga's researcher but if you listen to Kucinich's speech to the AMI last year there is nothing about debt-free issuance.  Kucinich has had years of fighting for interest-free loan issuance (he's doing it at this very moment since the failure of that USA bridge),  he's done everything (legislation etc) for interest-free loans for public capital projects and I am not aware of him ever supporting debt-free issuance.  Any American politician who did that would be shot to pieces by opponents as being an inflation-monger and Funny Money specialist.  Get real.

    The truth is that if the AMI wants to have Kucinich's continued, public support it will not be allowed to compromise Kucinich's political positions (and the Democratic party won't allow it either).  I am not aware of any evidence that Kuciinich supports anything except interest-free loans issuance -- the same as binary economics for public capital (but binary economics also supports the much wider use of such loans).

     Have a look at the speakers at last year's AMI conference -- all the main political and intellectual power there was for interest-free issuance --  Kucinich and Ken Bohnsack, in particular.  The AMI is now having to straddle two horses -- debt-free (its previous position) and interest-free (the impact of Kucinich, Bohnsack and colleagues).  My guess is that the situation will soon be out in the open because Kucinich (as Democratic Chairman of the key committee overseeing all USA domestic legislation) is not going to risk everything for something he has never (as far as I am aware) indicated support for.  Even more relevantly, he does not need to do anything except continue with interest-free loans -- since Katrina, and now that recent  bridge etc he's on a winner and he knows it.  Why stick a knife into your own winning horse?

    I  think there has been a big change in the AMI's underlying position simply because Kucinich is refusing to be identified with debt-free issuance.  At some point this matter will break out into the open -- most likely at this year's AMI conference in Chicago. So time will tell and we shall see.

    Of course, as soon as I say this Zarlenga will jump in to deny it. (And isn't it strange -- he did a Manhattan Neighbourhood tv program with me in which he gave solid support to  interest-free loans for public capital -- and explained the Grade D that the American Society of Engineers is giving to public infrastructure. Harold Channer and I would certainly have noticed if he was saying anything else.).

    2.   I hear a rumour that Zarlenga and Michael Hudson will be attacking binary economics-- again.  The interesting thing is -- why?  It's very odd.  You cannot accuse binary economics of supporting inflation; it is focussed on the development and spreading of productive (and the associated consuming) power to all individuals in the population. It balances supply and demand.  In other words, it is fundamentally economically sound and that, presumably, is what Zarlenga and Hudson don't like.  Hudson also has a record of not having read the main binary book (in his possession) which explains why he does not know basic basic things like binary economics uses interest-free loans.

    Yes, Robert Searle naturally (and understandably given his intellectual position) thinks that binary economics does not go far enough but that is an entirely different matter.

    Rodney Shakespeare.

    PS.  In other emails I shall be informing the GJM of the publication of The Modern Universal Paradigm and other news about The Universal Paradigm and website information.

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