[GJM] Article 101 Maastricht Treaty
Rodney Shakespeare
rodney.shakespeare1 at btinternet.com
Tue Feb 12 02:54:50 MST 2008
Dear All,
I wrote to the Governor of the Bank of England asking about where the Bank's money for Northern Rock came from, and was it created out of nothing.
The reply (from an acolyte of the Governor -- the Bank cunningly uses this device so that, if necessary, it can say the response was not really authoritative) claims the money comes from " 'reserve balances which is money held by the banking system in accounts at the Bank....".
I suspect that this sentence is in effect a lie but, in any case, the next sentence from the acolyte starts like this:-- "These balances are a form of 'central bank money' and the Bank has taken steps to offset the creation of central bank money by lending less in its regular market operations than it would otherwise have done."
So, all in all, there is an admission that the money was created by the Bank and the fun really will come if the money gets lost by Northern Rock because I happen to know that somebody has written to the Bank asking how that loss would be written in the Bank's accounts..........Watch this space....--- but I expect that the Bank will never answer that question.
Anyway, in response to another question the acolyte says that Article 101 of the Maastricht Treaty makes it illegal for central banks to provide loans to governments.
Er hem -- except when it's Northern Rock, of course.
But I asked about lending to the government in the context of loans to governments for public capital projects (thereby halving or more the cost of the projects). So you can see how the banking system has worked to stitch up everything so that all lending is always done at interest -- even lending for hospitals.
And, of course, the acolyte, said that lending to a government "could be inflationary". NB The Bank does not think that banking system lending at interest is inflationary -- oh no -- and it does not occur to the Bank that if the banking system is restricted in its lending (the lending which is causing the present global financial crisis) it could then open up a supply of interest-free loans for the development and spreading of productive (and the associated consuming) capacity.
The Bank's letter is, in practice, an expositon of the mainstream economics definition of endogenous money which, it claims, always has to be bank-created interest-bearing money, such money, it is claimed, always being allocated for the efficiency purposes of a market economy.
Rodney Shakespeare.
----- Original Message -----
From: Zack Johnson
To: discussion at globaljusticemovement.net
Sent: Monday, February 11, 2008 3:45 PM
Subject: Re: [GJM] MORE CLEARER INFORMATION ON INFLATION CONTROLS IN TRANSFINANCIAL ECONOMICS (FEB 2008)
Robert, you again fail to explain how, in a modern industrial economy, where government spending is approaching half of all spending, if government stops taxing, but continues to spend, how the economy would not rapidly devolve into inflationary chaos.
Your apparent belief in magic is not ameliorated by this insipid little essay.
Zack
----- Original Message -----
From: "robert searle"
To: discussion at globaljusticemovement.net
Subject: [GJM] MORE CLEARER INFORMATION ON INFLATION CONTROLS IN TRANSFINANCIAL ECONOMICS (FEB 2008)
Date: Mon, 11 Feb 2008 13:53:21 +0000 (GMT)
Dear All,
The following comes from my present essay
(changed yet again to include more on inflation
data)on Transfinancial Economics. It is to do with
more light on super-flexible controls to control
inflation levels, and valuation of currency. I also
exclude from the data below my old idea of part
registration of products, and services which was the
outcome of woolley thinking unfortunately!!!
Regards,
Robert Searle
3.Advanced Computer Programming for the Direct
Super-Flexible Controls over Inflation.
In TFE there is the realization for the need to
develop advanced computer programming to directly
control levels in inflation. It is not our intention
to go into too much detail as this can be a somewhat
technical subject.
It must also be stressed that we are not discussing a
command economy but rather a capitalist one in which
there is little government intervention. What follows
is essentially "simplistic", and is only a brief
presentation on super-flexible electronic controls
over inflation.
Since money in the main exists as electronic data
transmitted from one bank account to another it can be
tracked, and controlled. This concept is central to
the proper understanding of Transfinancial Economics.
A.Mandatory Registration for Businesses instead of
Income Tax Declarations.
Most products,services, and indeed, "fixed" incomes
could be subjected to a mandatory super-flexible price
registration which is notably indexed linked
electronically to inflation for businesses. In other
words, most people running large, or small commercial
enterprises would have to declare the trade costs, and
retail prices of their products.Details about their
profits, and other sources of income would be
unnecessary unlike the present income tax regime.
The data concerned ofcourse goes onto authorized
computer systems that simultaneously deal with
transactions. Such work could be undertaken by banks,
or some other commercial body. Alternatively, an
independent public authority could be created possibly
working with the private sector. The tax authorities
themselves though could be replaced by a National
Inflation Control Authority.
Unlike the present income tax system there is no huge
bureaucracy, or much form filling (or online
registration ofcourse)and compliance on inflation
legislation using electronic techniques could be
directly used to ensure efficiency.
B.Comprehensive Electronic Price Index.
Anyway,a special comprehensive electronic National
Inflation Price Index (NIPI)notably listing the
average prices of cars, phones, books,and the like
would be necessary. This would also allow separate
registration for features that create added value to
goods which ofcourse, affect the overall retail price.
In such a special comprehensive Price Index services,
and "fixed" incomes (excluding profits) could be
included, and be part of the inflation control
legislation replacing income taxation. Ofcourse, this
special electronic Price Index, or NIPI would also
include charges for most kinds of services, and listed
data on "fixed" incomes.
C. Registered Products/Services, and the Price
Ceiling.
Registered prices of goods, and services would be
allowed to fall, and notably rise. In the latter
instance, prices can go up several times over in real
terms, and go beyond the inflation rate until the
Price Ceiling is reached. This is important to
understand.
If for whatever reason certain prices go beyond the
Price Ceiling they are automatically fined, and would
appear on a statement. Yet, this is extremely unlikely
because of the comprehensive nature of NIPI.
However, if the inflation pressures become such fines
could be waived, or if imposed for a time be
electronically re-created if there are genuine reasons
for doing so. This can be undertaken instantaneously
right across the country.
In other words, we have an example of electronic
super-flexibility unimaginable compared with incomes
policy, which can directly deal with any inflationary
problems at a touch of button..and even if things went
wrong this would be easily rectified electronically.
D. Electronic Inflation Adjustment (EINA), and
Self-Adjusting Prices of Registered Products/Services.
With modern technology the degree of elasticity, and
changes in prices of registered products, and services
would be possible.In other words, they would
self-adjust naturally. This is vital in a capitalist
system.
At first though NIPI would have to be successfully
instituted from central government but afterwards due
to the comprehensive nature of it (a point worth
repeating) it is unlikely that prices would go above
the Price Ceiling. Thus, prices can rise, and fall
freely with virtually no kind of state interference.
This brings us to another very important aspect of our
subject.How is the value of currency maintained during
a transaction? To understand this we could take a
simple example, if Mr. Z buys (without using cash)a
registered product B and if it is above a certain
amount of "inflation" say 10% (registered on computers
ofcourse)then this is balanced out when the bank
interprets it in monetary terms. In other words, after
an inflation check it electronically creates the 10%
with new non-repayable money. In other words, an
instant, and automatic Electronic Inflation
Adjustment, or EINA.
E.Coins, and Paper.
Anonymous cash transactions would still be possible,
as this now makes up a virtual non-existant portion of
the entire monetary supply. Thus, it would have
little, or no affect on inflation.
F.Possible Exemptions.
Certain products, and indeed, services could be exempt
from mandatory price registration (notably goods with
no obvious value). However, serious price distortions
may occur.If so, they could be subjected to a
temporary, or permanent price registration.
G. Other Methods for Electronic Super-Flexible
Controls over Inflation.
One method to control inflation using direct
electronic techniques is the use of subsidies made of
new non-repayable money (as opposed to earned money,
or tax ofcourse). This would mean that businesses
would be paid to keep their prices to certain levels
(similiar to the idea of Compensated Price found in
Social Credit "movement"). Ofcourse, something akin to
an unpopular inflation tax could be used if the price
starts to rise (ie. profits automatically, and
progressively deducted).
H. Excess Accounts.
These are bank accounts that have huge sums of money
indexed linked electronically to inflation.
However,the account holder be it a company, or
individual finds it increasingly difficult to spend
funds simply because there is a lack of the relevant
products, investment opportunities, services, and
other resources available. As such these accounts
develop excess monies (ie. electronic data ofcourse)
which do not loose their value but remain dormant.
I.A Tax, and Interest Free Economy desirable for a
Market Economy.
Though at first businesses might not like the
introduction of super-flexible inflation controls they
would be able to expand as never before because there
is NO taxation, and indeed, NO interest on loans.
Furthermore, it opens them up to the possibility of
commercial grants, and hence, greater profits. At the
same time, there would always be non-repayable finance
for them to become sustainable (ie. reduce waste,
re-cycling, and simple, and/or complex technologies
utilising clean renewable energies). This last aspect
could occur on a voluntary, or mandatory basis.
Please note that the above is subject to further
research, and development with the aid of specialist
economists, and computer experts...............
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