[GJM] Replying to Peter Challen -- debt-free issuance and Tower Number Seven

Sat Jan 19 16:04:52 MST 2008

Dear Myro,
This correspondence is quite extraordinary.  I deal here with the money-creation aspects but there are two  post-scripts.

1.  By avowing that the banks create money are you  saying they create interest-bearing (repayable)  money;  or debt-free  (non-repayable) money?  Or both?

You have stated that the banks create money to pay their stockholders.  That can only mean that you are saying they create debt-free, non-repayable money with which to do it.  Stock dividends are not repayable.

I am not aware that this particular creation of debt-free money is generally admitted.  Are you in agreement with others about this, or is this your own view (which does not necessarily mean it is wrong)?

2. I quoted President Obasanjo on compound interest (and , yes, did not supply the original contract).  It is astonishing that you deny the existence of compound interest and appear to be saying that all such references to compound interest are lies, fabrications, screw loose  etc.  I am gob-smacked by your evident belief that compound interest is never involved in these international transactions.

May I ask -- again --  if others agree with you on this?  Of course, being the only person to have such a view does not invalidate it but -- goodness me! -- your independent reasoning appears to be taking you into unusual territory.  

3.  As regards the meaning of the Arabic terms on riba etc, I am daily on Islamic lists where they argue endlessly about such things and, rather than get involved with Arabic translation, historical context and the like, I prefer to take the views of those who are  the most balanced and sensible and, in particular, those with whom I discuss face to face.

4.    Here is the Humber Bridge information you asked for.  Please do not bother asking if I have the original contracts.
The Humber Bridge

   A bridge over the river Humber (in the UK) was required.  The materials and expertise were available; the finance was by the UK government which provided interest-bearing loans; and construction was begun in 1972 at an estimated cost of £28,000,000.  Because of price inflation, difficult ground conditions, labour relations difficulties and adverse weather, the cost rose to £98,000,000 but, by the time the bridge opened to traffic in 1981, interest charges had taken the cost up to £151,000,000.

At which point an important fact should be noted ─ every year since being opened in 1981 the bridge has made an operating profit i.e., its running costs (basically, repair, maintenance and staff salaries) are exceeded by the fees it receives from travellers crossing the river Humber.  Put simply, it’s a money-maker.

With that fact in mind, now consider what happened in the years that followed.  In 1982, because of compound interest, the debt was up to £164,000,000.  However, by 1992 ─ only ten years later ─ it had shot up to an amazing £439,000,000!  Wow!!

Whereon, to stop the huge repayment burden falling on the Humberside residents, the UK government intervened to reduce the rates of interest, write off amounts and give grants of £40m per year so that the debt was effectively pegged for six years.  Further ‘re-structuring’ then took place to reduce the debt, i.e., a large proportion of it was cancelled.  Readers are advised not to even think of the horrific level the debt would be at today if the government had not ‘re-structured’ the debt by cancelling a large part of what was due. 

The story of the Humber Bridge then gets egregiously preposterous and completely outrageous.  The original money was lent, at interest, by the UK government, which had borrowed the money at interest!  Thus, today, the National Debt carries the burden and the UK public as a whole (as opposed to the residents of Humberside) will be eternally paying for the never-ending interest on the Humber Bridge!

Rodney Shakespeare.
PS
1. Myro, I consider my relationship with you to be something akin to the paternal one and so I come under an obligation to tell you when there comes to my notice what others are saying about you.  One email gives extensive detail of some of your activities and I suggest it is time to set boyish escapades behind you (we all behave badly at some time or another)  and move on to more positive activity.

2.  Please ask Bill Ryan your supervisor what is his view on the collapse of (9/11/2001) World Trade Center  tower Number Seven -- that's the building which collapsed (around 4.30 in the afternoon) into its own footprint without being hit by an aeroplane.  GJM members will be delighted to hear Bill's considered view on this matter.

----- Original Message ----- 
From: "Myro Ashenopolitus" <new_economics at yahoo.com>
To: "Discussion Forum for Global Justice" <discussion at globaljusticemovement.net>
Sent: Saturday, January 19, 2008 4:47 PM
Subject: Re: [GJM] Replying to Peter Challen

> [Shakespeare]  "You have made a most extraordinary
> statement.  If true, is there anything which stops the
> banks creating as much money as they like for any
> purpose they like?"
> ----------------------------------------------------
> 
> Individual banks are profit-loss institutions.  The
> money they create are their individual liabilities,
> which they are required to redeem in legal tender on
> demand.  An individual bank that is more profligate
> than its competitors in creating money for reckless
> purposes is thereby going to lose reserves to its
> competitors, and go out of business eventually.  But
> there is nothing whatsoever preventing the banking
> system as a whole from creating as much money as it
> likes for any purpose it likes.  This is why a
> dictatorship that gains absolute control over its
> nation's banking system has the power to utterly
> destroy its nation, like, for example, Zimbabwe, which
> got to the point where its money became so worthless
> that it couldn't even purchase the ink needed to print
> new bank notes.
> -
> 
> [Shakespeare] "As regards an international contract
> having compound interest (you deny such things exist
> and ask for an example) I refer to President Obasanjo
> of Nigeria in 2000.  Commenting on his country's debt
> to international creditors, he said:- 
> 
> 'All that we had borrowed up to 1985 or 1986 was
> around $5 billion and we have paid about $16 billion
> yet we are still being told that we owe about $28
> billion.  That $28 billion came about because of the
> injustice in the foreign creditors' interest rates. 
> If you ask me what is the worst thing in the world, I
> will say it is compound interest.'" 
> ----------------------------------------------------
> 
> This is a rather extraordinary statement.  It is
> either a fabrication, or Obasanjo had a screw loose
> when he made it.  I asked you to supply an actual
> contract for an international loan that specifies
> compound interest, which I take note you have not
> done.
> 
> There are about a half dozen instances of this
> supposed "quote" floating around crank sites on the
> Internet.  A couple of them say that it was made to
> reporters after the G8 meeting in Okinawa, but without
> citation to an original "report" from the time, so it
> is impossible to verify.
> 
> Nevertheless, Obasanjo was a competent enough leader
> to have secured a two-thirds forgiveness to his
> nation's foreign debt before he left office.
> -
> 
> [Shakespeare] "Myro, you are being very naughty on
> this Islamic fundamentalist business particularly
> because what you mean by modern 'reformists' is
> Islamic Banking which, as I have explained briefly, is
> only a version of conventional banking."
> ----------------------------------------------------
> 
> I take note that you continue to ignore and fail to
> respond to my original point about the difference
> between the Arabic words in the Quran, fa'eda, meaning
> interest, and reba, meaning usury in my initial
> posting to this thread:
> 
> http://www.submission.org/islam/interest-usury.html 
> 
> "The Quran forbids usury, not interest. Quite a few
> states in USA have laws against usury. Usury is
> defined as excessive interest. A Dictionary defines
> usury as 'an excessive or inordinate premium for the
> use of money borrowed',  'extortionate interest', or
> 'the practice of taking exorbitant or excessive
> interest.' The Arabic language also makes distinction
> between interest (Fa'eda) and usury (Reba). The Quran
> forbids Reba or usury."
> -
> 
> [Shakespeare] "I said halving the cost of capital
> projects.  That is wrong.  I should have said thirding
> or quartering and if you want me to raise the example
> of the Humber Bridge, I will."
> ----------------------------------------------------
> 
> Well, this is a whopper that's going to keep you
> permanently excluded from polite company, I think,
> because it's so easily demonstrated to be ridiculous. 
> Yes, please do tell me about the Humber Bridge.
> 
> Myro
> 
> 
> --- Rodney Shakespeare
> <rodney.shakespeare1 at btinternet.com> wrote:
> 
>> Dear Myro,
>> 
>> I am pleased to help progress your research.
>> 
>> 1.  You say that "some significant amount of the
>> money that the banks create 
>> is not interest-bearing, that which they create when
>> they write checks for 
>> expenditures in the ordinary course of business, 
>> including dividends to 
>> their stockholders......."
>> 
>> You say they create money to pay their stockholders?
>>  Really?  That is 
>> saying they create debt-free non-repayable money to
>> pay their stockholders 
>> because I am not aware that stockholders have to
>> repay their dividends the 
>> next day, or even ever.
>> 
>> You have made a most  extraordinary  statement.  If
>> true, is there anything 
>> which stops the banks creating as much money as they
>> like for any purpose 
>> they like?
>> 
>> What seems to be happening is that you are revealing
>> banking practice as 
>> much more corrupt than ever I thought it to be. 
>> Please do carry on.
>> 
>> 2.    You are a callow youth and have no respect 
>> for the wisdom which comes 
>> with age..   Do not try being abusive to me by
>> talking about a small clique 
>> of supporters and obscure and little watched
>> television channels.  You have 
>> the support merely of one person -- a slightly mad
>> supervisor called Bill 
>> Ryan who has multiple personalities -- one for each
>> day of the week, 
>> apparently.  Does he also wear different coloured
>> hats?
>> 
>> Moreover, we at GJM not only have an accurate
>> diagnosis of the global 
>> financial crisis but we have the solution.  In
>> short, events are moving our 
>> way  and they are not moving in the direction of
>> your supervisor and,  if 
>> they did, heaven help the events.
>> 
>> 3.  You say "when the banks spend for any purpose
>> whatsoever, the money 
>> supply is increased".   This is another remarkable
>> statement supporting the 
>> one above to the effect that the banks can create
>> debt-free money for any 
>> purpose they like.  Is this your idea or your
>> supervisor's?  Frankly, it can 
>> only be your supervisor's expressed on a day when he
>> had called himself 
>> Hieronymous Bosch or something and was wearing a
>> purple cap.
>> 
>> 4.  As regards an international contract having
>> compound interest (you deny 
>> such things exist and ask for an example) I refer to
>> President Obasanjo of Nigeria in 2000.  Commenting
>> on his country's debt to 
>> international creditors, he said:-
>> 
>> 
>> 
>> "All that we had borrowed up to 1985 or 1986 was
>> around $5 billion and we 
>> have paid about $16 billion yet we are still being
>> told that we owe about 
>> $28 billion.  That $28 billion came about because of
>> the injustice in the 
>> foreign creditors' interest rates.  If you ask me
>> what is the worst thing in 
>> the world, I will say it is compound interest."
>> 
>> 
>> 5.  Myro, you are being very naughty on this Islamic
>> fundamentalist business 
>> particularly  because what you mean by modern
>> "reformists" is Islamic 
>> Banking which, as I have explained briefly, is only
>> a version of 
>> conventional banking.  Kindly take your guidance
>> from me in this matter and 
>> not from your supervisor Bill Ryan,  particularly on
>> Fridays.
>> 
>> 6.  I am very glad to see you have had a look at the
>> diagram at 
>> www.binaryeconomics.net.  Unfortunately your
>> understanding of it is probably 
>> as bad as your supervisor's  and I just say there
>> are no boards of 
>> supervisors.  I suggest you do a little more proper
>> research --  that means 
>> reading big books, Myro, and not just pressing
>> computer buttons which you 
>> (and, believe me, your supervisor) are very good at.
>> 
>> 7.  I said halving the cost of capital projects. 
>> That is wrong.  I should 
>> have said thirding or quartering and if you want me
>> to raise the example of 
>> the Humber Bridge, I will.
>> 
>> 8.  I asked you to give my compliments to your
>> supervisor.  Did you do it? 
>> And what sort of hat was he wearing?
>> 
>> Rodney Shakespeare.
>> ----- Original Message ----- 
>> From: "Myro Ashenopolitus" <new_economics at yahoo.com>
>> To: "Rodney Shakespeare"
>> <rodney.shakespeare1 at btinternet.com>; "Discussion 
>> Forum for Global Justice"
>> <Discussion at globaljusticemovement.net>
>> Sent: Friday, January 18, 2008 10:36 PM
>> Subject: Re: [GJM] Replying to Peter Challen
>> 
>> 
>> > [Shakespeare] "There is no need to expand on this
>> any
>> > more.  The banks create huge amounts of money --
>> ALL
>> > of it is interest-bearing -- and the only way your
>> > reply makes sense is if the banks create more and
>> more
>> > such money and so there has to be more and more
>> debt."
>> >
>>
> ------------------------------------------------------
>> >
>> > In two previous postings I've demonstrated that
>> this
>> > is a false assertion.  Some significant amount of
>> the
>> > money that the banks create is not interest
>> bearing,
>> > that which they create when the write checks for
>> > expenditures in the ordinary course of business,
>> > including dividends to their stockholders, which
>> > becomes available to the general community to pay
>> > interest back to the banks.  It is not simply
>> rhetoric
>> > that the economy is a wheel of commerce, Rodney. 
>> This
>> > is generally accepted by most educated persons, so
>> > when you go beyond your small clique of supporters
>> to
>> > present your ideas outside of obscure and little
>> > watched cable channels, if you have the
>> opportunity,
>> > you're going to have a real problem.
>> >
>> > [Shakespeare] "Therefore there must be a continued
>> > creation of more and more (interest-bearing) money
>> if
>> > there is not to be a credit contraction overall."
>> >
>>
> ------------------------------------------------------
>> >
>> > This doesn't follow from what I said, which was
>> that
>> > the payment of interest cancels money, but when
>> banks
>> > spend for any purpose whatsoever, the money supply
>> is
>> > increased, enabling interest to be paid back to
>> the
>> > banks in reciprocal economic activity.  The
>> receipt of
>> > interest and the spending are going on
>> simultaneously.
>> > Again, it is a wheel of commerce.
>> >
>> > [Shakespeare] "I do not think you understand the
>> > effects of compound interest and, moreover, are
>> only
>> > thinking of interest at the branch of a local
>> bank.
>> > What about those huge international loans at
>> compound
>> > interest?"
>> >
>>
> ------------------------------------------------------
>> >
>> > It is impossible for you to supply even a single
>> > example of an international loan contract that
>> calls
>> > for compound interest, because it simply does not
>> > exist.
>> >
>> 
> === message truncated ===
> 
> 
> 
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