[GJM] Shakespeare's theory

[Peter Hogwood]

"...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."
-------------------------------------------------------

Rodney, the banks are also creating money when they
spend for ordinary business expenses and pay salaries,
wages and dividends.  Why do you think that the money
the banks create for these purposes is insufficient
for the more general community to pay interest back to
the banks? 

Peter


--- Rodney Shakespeare
<rodney.shakespeare1 at btinternet.com> 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. 
> 
> 
> ----- Original Message ----- 
> From: "Peter Hogwood" <p_t_hogwood at yahoo.com>
> To: <discussion at globaljusticemovement.net>
> Sent: Monday, March 24, 2008 7:35 PM
> Subject: Shakespeare's theory
> 
> 
> > Rodney, some brief replies below [Reply]:
> > 
> > "3.    Home loan -- $100,000 to $300,000 You have
> said
> > that the banks only lend liabilities to
> themselves. 
> > The original liability was $100,000.   Why should
> the
> > bank receive $300,000?  On your own argument you
> say
> > $200,000 is being repaid.  Well, that's $80,000
> too
> > much."
> >
>
------------------------------------------------------
> > 
> > [Reply]  In your example, $100 thousand is
> borrowed,
> > and $300 thousand is repaid over thirty years, a
> > difference of $200 thousand over principal.  But
> the
> > $300 thousand is not in terms of the value of
> dollars
> > when the loan was entered, but paid over thirty
> years
> > with ever cheapening dollars due to inflation.  So
> in
> > real terms the ratio is not anything like three to
> one
> > over principal.  Also, that would have to be at an
> > interest rate significantly higher than the rate
> > prevailing over the last serveral years. 
> Moreover,
> > during that thirty years the borrower gets to live
> in
> > the house at a significant savings over the rent
> he
> > would have paid if he had merely rented the house.
> 
> > So, again in real terms, the situation is not
> nearly
> > so dire as you present.  In the course of two or
> three
> > generations the availability of the long term
> mortgage
> > has enabled nearly three quarters of the
> population in
> > the Western democracies to transform from renters
> and
> > employee tenants to owners of their own homes.  A
> > magnificent achievement, I should say, that you
> > disparage through your crank theory.
> > -
> > 
> > "If you read the History page at
> > www.binaryeconomics.net you will see that Pravda
> > thought binary economics is extreme right-wing and
> > Friedman thought it extreme left-wing  (as you
> do). 
> > You mind is locked in old-paradigm thinking."
> >
>
------------------------------------------------------
> > 
> > [Reply]  I said nothing about right or left wing,
> but
> > that it was the Soviet system of finance that you
> wish
> > to emulate, in your sublime ignorance.
> > -
> > 
> > "6.  Fifty false assumptions You dispute that the
> > system creates money sufficient for the repayment
> of
> > the principal but not for the repayment of the
> > interest as well.  You say that the system
> disburses
> > loans plus salaries, dividends etc sufficient to
> repay
> > back the principal of loans and the interest. 
> > 
> > "That can only be true IF more and more
> > interest-bearing money is being created all the
> time
> > in an ever-expanding monetary boom with, at some
> > point, inevitable catastrophic results.  And THAT
> is a
> > major area where your comprehension of economic
> > reality profoundly fails."
> >
>
------------------------------------------------------
> > 
> > [Reply]  Then please explain why that has to be
> the
> > case.  Please explain why salaries, wages,
> dividends
> > plus ordinary business expenses being paid by the
> > banks to the more general community are not
> sufficient
> > for the more general community to pay interest
> back to
> > the banks for the financial services they are
> > receiving.
> > 
> > Peter Hogwood 
> > 
> > 
> > --- Rodney Shakespeare
> > <rodney.shakespeare1 at btinternet.com> wrote:
> > 
> >> Dear Peter,
> >> 
> >>   On interest being profit I suppose we are
> really
> >> arguing about whether or 
> 
=== message truncated ===



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