[GJM] Shakespeare's theory

[Steve Nieman]

I've copied Chris Cook's March 23, 2008 email below this latest one  
from Rodney Shakespeare.

Somehow, Binary Economics has got to join forces with Open Capital.   
They are complementary, and would help capital finance for a lot more  
people NOW.  We wouldn't have to wait years for federal legislation  
like the Capital Homesteading Act in the U.S. or Britain (other parts  
of the globe; Canada, Australia, etc.) to politically succeed in  
order to help millions of people to begin to earn equity in  
productive capital assets they use everyday at corps (or LLCs) that  
they work at.

Old-style, bank debt financing of assets will go the way of the  
dinosaurs.  It's extremely expensive, unproductive and puts WAY to  
much power in the hands of bankers, other lenders and government  
bureaucrats.

Just because you have disposable money doesn't mean you have the  
right to own (and control all stakeholders) when you bring your money  
to a capital venture.  Money is just one tool that a successful  
economic enterprise needs to function properly at creating wealth.

I know it's ironic, the awful word –– rent –– being properly and  
justly applied to anyone or thing.  In the case of money people, it's  
proper.  But all the other stakeholders –– workers, customers,  
vendors, etc., would NOT be rented, and would be full partners in  
building equity ownership stakes, and sharing power proportionately.

If I can ever find the time, I'll start trying to hammer out a white  
paper juxtaposing the two models to show how compatible I believe  
they are.

Regards,
Steve Nieman
~~~~~~~~~~~~~~~~~~
On Mar 24, 2008, at 2:43 PM, Rodney Shakespeare wrote:

> Peter,
>
> 1.  Home loans -- $100,000 to $300,000
>
> a)    You naturally assume inflation because you have to.   
> Inflation is caused by the present banking system which has to  
> create more and more interest-bearing money if the system is not to  
> collapse (which it eventually does).
>
> However, even if there is no inflation,  the repayment would  
> (depending on the precise terms etc) still be about $200,000.   
> That's at least $80,000 too much ($20,000, for administration).
>
> b)   You say that  people should own their own homes (agreed) yet  
> when binary economics  (at www.binaryeconomics.net) proposes  
> interest-free loans for homes (which would allow more and more  
> people to own   homes) your inherent tendency to wild language  
> causes you to allege that my  "crank theory" (the 0% loan) is aimed  
> at disparaging home ownership.
>
> A little quiet reflection will enable you to realise that 0% home  
> loans would increase home ownership and it will be helpful  if you  
> specifically acknowledge that.
>
> 2..  My "sublime ignorance"
> Goodness me, that inherent tendency to wild language is appearing  
> again.   Not only are you accusing me of  "sublime ignorance" but  
> you are revealing your own ignorance ignorance of the Soviet system  
> -- they certainly did not want people owning their homes.  Worse,   
> you are being deliberately ignorant about binary economics which  
> (as everybody knows, except you) wants home ownership and  
> productive capital ownership for everybody.  Yes, everybody.   
> However, in your book,  no doubt, that is communism.  Please confirm.
>
> 3.    Margrit Kennedy
> Margrit Kennedy, Interest and Inflation Free Money (1995) points  
> out that interest affects virtually everything in a large way (I  
> think she says something about 50% of the cost of goods and  
> services) and that 80% of the population, overall,  lose from  
> interest; 10% are even; and 10% gain.
>
> I mention these figures to encourage you to re-think your idolatry  
> of the institution of interest.
>
> 4.  Creation of interest-bearing money insufficient to repay  
> principal and interest becasue only principal created.
>
> Many authors (e.g.,  Ellen Brown, Web of Debt; Bernard Lietaer who  
> helped design the Euro) refer to this.  Since 97%+ of the new money  
> supply is created as debt by the banks (and there are plenty of  
> quotes to support that including the Reserve Bank of Chicago which  
> also makes it clear that banks do not lend deposits) it is a matter  
> of  simple mathematics that if $1000 is created at, say, 10% over  
> five years, that means up to $500 interest is paid, and  the total  
> to be repaid up to $1,500 but only $1,000 has been created.   So  
> repayment of the $500 is impossible without further creation of  
> interest-bearing money and so on..........The impossibility results  
> from the combination of the 97% figure and the addition of interest  
> but no creation for interest. Have you, as a responsible USA  
> citizen, noticed the present (and sharply rising) levels of USA  
> debt?  Who do you blame?  The fairies?
>
> Rodney Shakespeare.
~~~~~~~~~~~~~~~~~~~~~

Begin forwarded message:
> From: chris cook <cojock at hotmail.com>
> Date: March 23, 2008 5:34:32 PM PDT
> To: Discussion Forum for Global Justice  
> <discussion at globaljusticemovement.net>
> Subject: Re: [GJM] William Ryan
> Reply-To: Discussion Forum for Global Justice  
> <discussion at globaljusticemovement.net>
>
> William
>
> > Fine. But what you're saying, Janos, is that posts containing ad  
> hominem attacks against me will be
> > accepted. There have been several in rapid  succession.
>
> Janos has, I am sure, drawn the same conclusion as everyone else as  
> to the identity of Peter Hogwood after reading Peter Hogwood's  
> first post on IJCCR immediately following the rejection by the  
> moderator of all three of William Ryan's three existing IJCCR   
> email addresses
>
> > > As for myself, this is my final posting.
> > >
> > > I depart the loony bin.
>
> Your "final" posting, when Peter Hogwood had never made a previous  
> IJCCR post? I rest my case.
>
> All of this detracts from the first rate response you just made to  
> Rodney.
>
> I agree with your analysis of the existing system: however, I  
> differ from both you and Rodney in terms of your assumptions and  
> the consequences of them.
>
> Your assumption appears to be that Credit is Money; ie Money is an  
> Object or Token. As I understand Social Credit such was Colonel  
> Douglas's assumption.
>
> In my view Money is a Relationship, not an Object, and  Credit - or  
> "time to pay" - is implicit in this relationship, which also  
> requires an abstract Value Unit.
>
> Wherever there is a barter network, such as the WIR, or proprietary  
> systems such as Bartercard, where credit is granted bilaterally  
> from seller to buyer, then the result is a monetary system  
> requiring a Value Unit.  This is essentially the "Clearing Union"  
> as advocated by Keynes at Bretton Woods.
>
> So while Credit may be Money, created privately by credit  
> institutions/Banks, or publicly by Treasuries, it need not be Money.
>
> Such "Money as Debt" (whether created by Private Banks, Central  
> Banks or Treasuries) is only one of the financial claims that  
> together comprise "Financial Capital".
>
> The other financial claim is "Equity" typically that comprised in  
> shares with Par Value (eg £1.00) in a Joint Stock Limited Liability  
> Company - the "Corporation".
>
> This entity is so engrained in our consciousness that the very  
> distinction between "Public" and "Private" assumes the latter to  
> mean "owned by a Corporation".
>
> But that need not be the case.
>
> There is no reason at all why  public assets  should not remain in  
> public ownership  and  rights to the production or use value of  
> these assets sold to investors by "unitising" them through the use  
> of trust or partnership-based vehicles instead of Corporations.  
> Indeed Canada's capital market - as you will know - is now divided  
> between conventional listed shares in Corporations, and listed  
> "units" in gross Corporate revenues through "Income Trusts".
>
> This opens up the possibility of  "unitisation" into redeemable  
> units of production/ use value denominated not in "Money as Debt"  
> but in (say) kilowatt hours, or square metre days.
>
> I believe that this technique of "asset-based" financing (based  
> upon ownership as opposed to a "deficit-based" claim over someone  
> else's ownership) opens up new forms of "fungible" "money's worth"  
> with a value in exchange, and that this exchange will take place on  
> a "Clearing Union" platform.
>
> Banks as Guarantors
> Credit is a necessary part of the Monetary process, and credit or  
> "time to pay" has no cost in itself. The true economic function of  
> a credit intermediary - aka a Bank - is in fact its implicit  
> guarantee of the borrower's credit.
>
> A Bank's "interest" charge covers - as you accurately analyse - the  
> "interest" it pays to (equal and opposite) depositors, its  
> operating "costs" (in "money's worth" of labour, energy, goods,  
> whatever), and any default costs. It then hopes to make a "Profit"  
> for the benefit of its rentier shareholders.
>
> A Bank's implicit guarantee is backed by regulatory capital set by  
> the Bank of International Settlements in Basel.
>
> The problem has been that Banks have been routinely outsourcing  
> this guarantee:
>
> (a) permanently - through "securitisation";
>
> (b) temporarily - through credit derivatives; and
>
> (c) partially - through credit insurance by "monoline" insurers;
>
> resulting, when mixed into toxic cocktails of structured products,  
> in the current "Credit Crash".
>
> An Alternative Financial System
> The solution I advocate, and am working to introduce, comprises two  
> mechanisms, neither of which requires legislation.
>
> Firstly, a mutualised guarantee of bilateral credit.  This  
> guarantee would be  backed by  provisions made  by both Buyer and  
> Seller (analogous to Keynes' proposal that payments be made in  
> respect of positive and negative trade balances of "Bancors") of  
> "money's worth" into a "Default Pool".
>
> A Service Provider (ie a bank) would no longer put its proprietary  
> capital at risk, but would manage credit creation (by setting  
> guarantee limits) and also manage defaults, and operate the  
> accounting system of this "Guarantee Society". It would be paid for  
> this service, of course.
>
> Secondly, conventional secured credit would be replaced by  
> investment in land, energy assets, and other productive assets by  
> "unitising" and selling forward the production into redeemable  
> units, and these would be shared proportionally between the  
> financiers and the users of the finance in what I call a "Capital  
> Partnership".
>
> A bank's role here is that of an "Investment Bank", bringing  
> investors together with investments - a "service provider" , again  
> neither creating credit nor putting capital at risk to do so.
>
> In the case of a Guarantee Society, the accounting requirement is  
> for a "Shared Transaction Repository", or database of Accounts  
> Receivable and Accounts Payable: in the case of a Capital  
> Partnership, the requirement is for a "Shared Title Repository".
>
> In neither case is there any "profit" or "loss".
>
> A Guarantee Society is therefore banking without the bank as  
> intermediary, and operating on a "Not for Loss" basis.
>
> Capital Partnerships allow the possibility of direct investment in  
> productive assets, with the possibility of the creation of a  
> "National Equity" consisting of the networked pool of productive  
> assets, and a "National Debt" consisting of the networked pool of  
> mutualised credit.
>
> Such is my analysis. You may consider it "wacky" and that is your  
> privilege, but it based upon actual knowledge and experience, up to  
> and including the highest level, of global market operations, for  
> what that's worth.
>
> Best Regards
>
> Chris Cook



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