TITLES, POSSIBLE ONES, THAT CAME TO MY MIND SO FAR:
MONETARY FREEDOM, TERMS, DEFINITIONS, IDEAS, ARGUMENTS,
-COUNTER-ARGUMENTS, EXPERIMENTS, PROPOSALS, REFORMS, REVOLUTIONS,- THEORIES,
EXPLANATIONS, OBJECTIONS & PREJUDICES AGAINST IT, -STEPS TOWARDS ITS.
- An alphabetized notebook of words, ideas, -notions, definitions, explanations,
arguments, distinctions, facts, observations, predictions, beliefs, refutations,
dogmas, -economic laws, arguments, objections, etc., all helping to lead-
us towards full monetary and financial freedom.
--------------
Alphabetized notes on competitive paper monies
"as good as gold, which only monetary freedom could supply. --- SNIPPETS,
NOTES & QUOTES TOWARDS FULL MONETARY FREEDOM.
--------------
How to stop inflation and end mass -unemployment
and depressions from one day to the other. - Try to- refute this, if you
can. Otherwise, do act upon this information -and become monetarily emancipated,
too. - J. Z., n.d. & 29.5.97.
------------
A - Z of FREE BANKING. Attempts to define -and
explain aspects of monetary freedom and monetary despotism- alphabetically,
with some cross references. An open book, not- copyrighted, inviting and
welcoming corrections and supplements- from anyone. Also a list of literature
and addresses of interested individuals and organizations. To serve as
a handbook -and clearing centre for views on this subject. Ultimately,
to -include ideas, plans and projects on how to best and most easily -introduce
monetary freedom for all who desire it for themselves. -- J. Z., n.d.,
28.4.97.
--------------
PERSONAL NOTES & SOME QUOTES ON MONETARY AND
FINANCIAL FREEDOM. I do usually prefer rather to talk to myself and write
for my own benefit than trying to talk to or write to people who do not
share my interest in such subjects. Moreover, I have come to rather let
them seek me out and my offers on monetary and financial freedom and other
rights and liberty and peace writings than try to seek them out. I am quite
willing to let whatever there is already of the information revolution
work for them and for me, without any extra effort by me. - J. Z., 24.5.97.
(Well, since then I have tried to push, also largely in vain, not only
the microfiche self-publishing and reading option for libertarian writings
but also the floppy disk and CD-ROM publishing and reading options for
such literature. - J.Z., 16.9.02.
-------------
Talking to myself and to imaginary -discussion
partners about monetary freedom in attempts to clarify- doubtful points
and counteract popular errors, absorbing as much -wisdom as possible from
others on this, through quoting them-e extensively and ordering this compilation
merely by- alphabetisation under catchwords.
----------
Alphabetical Entries, rough notes, some quotes
and comments towards a free banking- handbook.
-----------
AN ALPHABETIZED COLLECTION OF NOTES AND QUOTES
ON THE ROAD TOWARDS FULL MONETARY AND FINANCIAL FREEDOM. - J.Z., 30.8.02.
-----------
How to stop inflation and end mass -unemployment
and depressions from one day to the other. - Try to- refute this, if you
can. Otherwise, do act upon this information -and become monetarily emancipated,
too. - J. Z., n.d. & 29.5.97.
----------
The following are some notes & quotes accumulated, over a period, and here transcribed, with some re-writing and additions. They are later to be integrated with previous alphabetized notes on free banking. Ten to hundred times that number of entries, from a variety of advocates of monetary freedom and xyz more sources than I have available to me, would be required to come closer to usefulness as an alphabetized handbook on aspects of monetary freedom. For now this very limited compilation, mostly of my own and still flawed views and expressions on this subject will have to suffice. I am not prepared to work all of the next years on in or for whatever remains of my life, although I consider this topic to be very important. It is, after all, only an aspect of all individual rights and liberties and of comprehensive panarchism and tolerance.
Nevertheless, the whole topic of monetary freedom is already too large for a systematized treatment in a single volume and such a volume would either remain largely unread or lead to more misunderstandings than comprehension.
Thus, I believe, it should be broken up into manageable alphabetized segments with cross references. A number of handbooks on banking have attempted to do so - but, most of them, without including the ideas, terms, practices and experiences of free banking and concentrating merely upon what the laws permitted or prescribed in this sphere and what was approved by the ruling school of monetary despotism.
The final aim is an alphabetized encyclopedia on free banking, including a directory, comprehensive bibliography, abstracts and review collection, with many different contributions on the same subject by various contributors and based on the full and permanent publishing of all relevant texts, cheaply and permanently, in an alternative medium.
Open entry for all kinds of well reasoned contributions on any related subject is one of the conditions to attain this publishing aim. Microfiche, floppy disks and, more so, CD-ROMs, DVDs & the upcoming Blue Light CDs, with 27 Gbs each side, have more than enough space for this, even if websites do not. - J.Z., 25.8.02.
For collaboration with Thomas Greco it is to be
considered whether multiple files are to be kept: For example, for:
1. His version of explaining terms,
2. My own version of FB terms
3. One version we both can agree upon
4. An open input version in which all such explanations
or comments are included, from anyone.
On the other hand and at least initially, not
such file separation might be undertaken. - J.Z., 26.8.02.
The length of several entries shows that for each term perhaps at least three different explanations should be given: A very short one, a more detailed one and a lengthy explanation. Also: Sufficient cross references should be added.
To be included or extracted for this compilation:
1) Comments added in all PP cover sheets.
2) Comments made in letters and articles in digitized
FB files on disks.
3) Comments in Ulrich von Beckerath's books, drafts
and correspondence.
4) Comments in manila folders on fb subjects.
5) Relevant entries from the Slogans for Liberty
files.
6) Translation of a previous German A-Z compilation.
7) Previous English A-Z compilations on free banking.
(Only this has been done so far.)
8) Extracts from the writings of Dr. Walter Zander
and Prof. Heinrich Rittershausen.
9.) Extracts from e.g. PP 41, 19 A &
C & all other monetary freedom writings in the LMP series.
10.) Extracts from correspondence, with e.g.,
de Fremery, O'Donnel, Greco, Carnaghan. -
WARNING: These notes are so far quite insufficiently proof-read and edited, sorted out, cross-referenced and not indexed at all. No attempt has been made to eliminate repetitions and flawed terms. Not enough time and thought has been spent upon choosing the most appropriate catchwords in front of an entry or to separate notes under different headings.
Introduction
The accumulated wisdom, experiences with,- arguments,
refutations of arguments and proposals and ideas and -theories, speculations,
hypotheses etc. on money cannot, I believe, be- sufficiently expressed
in a few pages or, sufficiently, in short dogmatic- statements. (Nevertheless,
such attempts should always be made, from "Slogans for Liberty" to one
page explanation attempts, platforms or manifestos. When they are sufficiently
backed by readily accessible and much longer explanations then they can
do some good.)
Here only a few personal notes and selected quotes
on -monetary freedom and monetary despotism are offered, -alphabetized,
appealing for corrections and supplementation by anyone interested, preferably
via disked entries in RTF or e-mail.
My- memory and attention span are rather limited.
I can't easily or -at all remember the ideas and arguments of previous
pages,- chapters or of whole books. But what I can remembers, dissect and
-reassemble, sometimes in different ways and details, are -particular points
of view, terms, ideas and arguments. These I -can somewhat deal with, piecemeal,
point by point. Their -alphabetical arrangement, under catchwords, for
reference -purposes and later re-writing or editing, correction and supplementation,
whenever I feel like it, are an aid intended -primarily for myself. If,
alternatively, they remain spread,- unsorted and forgotten for years, over
hundreds to thousands of- slips of paper, clippings and papers and in numerous
manila files, or texts in my microfiched series or online, or numerous
books and journal articles, mostly not readily accessible, then their thought
contents is not as readily accessible -to myself, for my own purposes,
or for others, as I wish it to be. -
I do hope that such an arrangement, rather than
a- systematic treatise, which I have only rarely tried to provide, -will
help others, too. They do not have to remember the whole monetary freedom-
system or read and study a whole and systematic book on it. They can tackle
entries that -interest them and follow up related points, if they want
to,- without having to read the whole book, laboriously, page by page,-
chapter by chapter, thus, possibly, getting turned off and -forgetting
most of what they have read, because it was not of -primary interest to
them.
Moreover, I do intend to offer this manuscript
-as an unfinished work, one to be gradually improved and- supplemented
by any of its readers who have something to- contribute to it or believe
that they do.
The errors on money and -related subjects are
almost as important as the truths are, for -so far they have dominated
our beliefs and actions in this sphere. So all of them should be registered
and refuted, as best- as we can at present. That is a job much too large
for a single -person to tackle. But, it does not matter how many pages
the -total effort will take. The more people participate in this -co-writing
and co-editing, the better. Microfiche, floppy disks,- text only CD-ROMs
and other modern media have all the pages and- volume space required, and
this at prices almost everyone could- afford.
If the publication would have to be done by a-
conventional publisher, at his risk and expense, then, if- interested in
this work at all, he would, probably, have to -insist that it be confined
to no more than 500 pages. - In this- open and participatory format it
might finally come to 5,000 or even 50,000 pages. Never mind. Not all would
want to possess and use the unabridged version. And this, in print, could
not be updated often and cheaply enough, except, perhaps, in editions that
are merely computer printouts from the latest digitized version. But everyone
would be- free to offer his own abridged version, if he likes to do so.
-No one has the time and energy to read all the
writings on money. In them one usually finds are endless repetitions of
basic truths and, still more -numerous, endless repetition of basic errors.
Here the -basic truths could be gradually compiled, explained, proven and
popularised and the- basic errors stated and gradually be confronted with
the best -refutations so far found for them.
For style and good English -and always correct
spelling and punctuation, as far as my own contributions are concerned,
look somewhere else. -Likewise, for a comprehensive handbook on banking
and finance and -all their terms and practices. This effort is confined
to monetary- and financial freedom notions, ideas, proposals and practices
and errors on these subjects.
-Help me, please, to catch most of these truths
and refute most of -these errors, in as concise, convincing, popular and
interesting- way as you can manage. If you have, for instance, some relevant
jokes to offer, -to lighten the reading load, by all means, do so to. If
you can- chop up my often all to long sentences into clearer and shorter-
ones, by all means, do so, under your own name, or offer clear- abstracts
of what I tried to say.
Never mind some repetitions on this important
-subject. They are as likely to occur as they occur in oral- discussions.
Any truth needs repeated statements to finally sink into enough heads.
Refutations, too, need frequent- repetitions, since errors are almost forever
repeated, again and -again. Microfiche etc. do have space for numerous
repetitions. Easy -reading and concise versions can be provided later by
anyone who -can and will do so. - J. Z., 23.4.97.
SUBJECTS NOT YET DEALT WITH: They should at least
be included, -in catchwords, with an appeal for contributions to them.
DIFFERENT VERSIONS OF THE SAME ARTICLES MIGHT BE OFFERED LATER: -1. A short version. 2. A medium sized best version so far -compiled or found. 3. The complete treatment, at lengths that are -often boring to many and with many repetitions, too. Articles to- complete monographs. But full books merely to be referred to, with details on -where they can be accessed, if they are rare titles.
That I have often repeated ideas, arguments and wordings here does not worry me but that, most likely, I have still missed out on good expressions of facts, ideas and arguments or included errors and wrong observations of my own - does. So point out all flaws to me and find and state better and more accurate expressions in your own terms and also in terms that would help to make others understand the issues better. -J. Z., 25.5.97.
==================================================================================================
ABC AGAINST NUCLEAR WAR: It contains some entries
which might be- worthwhile including here. (Formerly in print only in PP
16-18, then microfiched in PP 16-18. Now digitised as PP 16 & 17.)
ABILITY TO PAY & FREE BANKING: When you are
buying the markets -are open, it's when you are selling that you find the
markets- closed. - Klahn's law of marketing, in a letter by Robert W.-
Klahn, in ANALOG, 7/95, p. 312. - Free banking can turn each- large supplier
of wanted consumer goods into a large scale money--issuer and buyer of
the goods and services of others, rather than -entering into a competition
with them for the scarce, exclusive- and forced currency of monetary despotism.
Your own money issues -will also act like advertising leaflets and drive
potential- customers into your "net" - by inducing them to return your
money -to you, claiming the promised and available consumer satisfaction
-from your stores. You would only have to market your own money and not
your goods and services directly and exclusively only for- a monopolised
money. To market any useful additional money is- much easier than to market
any goods and services. And your own -money would inevitably return to
you in payments. What more could- you ask for than such freedom, practised
alone or in more -suitable local associations? - J. Z., 19.3.97.
ABILITY TO PAY & INABILITY TO PAY, BOTH UNDER
MONETARY FREEDOM- AND UNDER MONETARY DESPOTISM, SHOULD BE SEPARATELY CONSIDERED:
-...
ABILITY TO PAY & INTEREST RATES: The ability
to pay ANY interest -rates or not is often more important than the fact
of either -high or low interest rates. High interest rates do not matter
as -much when sales are easy to achieve, profit margins are high and- do
not merely represent, to a large extent, high inflation rates. -Low interest
rates are not an encouragement to take up loans and to- increase production
when customers are missing, sales are low and -factories work only at a
fraction of their potential, while -unemployment is high. Nor do low interest
rates CAUSE inflation -or do high interest rates CAUSE a deflation. To
judge the economy- and economic developments only by interest rates, especially
only -the interest rates for monopoly and forced currencies, is almost
-as one-sided as is phrenology, in trying to determine a person's- capabilities
and character merely from the shape of his skull. -- J. Z., 22.4.97.
ABILITY TO PAY & UNEMPLOYMENT: Unemployment
will be reduced to a minimum only once ability to pay or to clear is maximised,
developed to its natural limits, which consists in the ability and readiness
of people to offer productive labours and services in return, at market
rates. - J. Z., 25.9.93, 24.5.97.
ABILITY TO PAY, IOU'S & CLEARING: Pay your
debts with -acknowledgments of your debts. And back up your debt certificates-
with your ability and readiness to supply goods, services and -labour for
them. Fully acknowledge your own debt certificates -when offered to you
in payment by anyone, at any time (when they -are currency, not capital
debt certificates). Choose whatever- value standard unit is acceptable
to you and your creditors and do -price all your offers in these units.
Then, by accepting your- IOUs back, from anyone, you will have cleared
what you owed to- others against what some others owed to you. And neither
of you- will have had to own or use a single gold or silver-coin in the-
process - as a means of payment or cover or guarantee. Such coins,- in
the hands of others, freely rated and traded, would just be -your reckoning
units, for your means of payment, not your means -of payment themselves.
To that extent you would be independent of -their availability to you,
in coin form. - J. Z., 30.9.94, 17.4.97.
ABILITY TO PAY: Freedom to pay your debts
with whatever means of -exchange medium or clearing process and value standard
is acceptable to your -creditors, be they your employees, your suppliers,
your -financiers or your bank. - J. Z., 18.4.93, 15.4.97.
ABILITY TO PAY: Desperate sellers of goods and
services, as well -as unemployed and underemployed should cease to think
that their- only rightful and sensible action would be to consider themselves-
as "hunters" for the scarce "game" of a government's exclusive- and forced
currency. Instead, they should consider themselves as rightful and
potential buyers first, who could freely and widely- purchase, when they
have no government monopoly money at all or -are short of it, - with assignments
upon their own readiness to -immediately supply wanted goods, services
or labour for all the notes that they issued. Especially if at least locally
-they combined their readiness to accept their own token money at -par
from anyone. Then, and to the extent that they could thus offer a convenient
and attractive enough local currency, they- could first "import" and then,
and automatically, balance their -import expenditures by "export" in which
their issued money- tokens stream back to them in payment. They would
thus have made -possible extra sales and jobs and would even have been
able to- anticipate their returns from them. To prevent them from engaging
-in such self-help steps is a great wrong and one they do not -always have
to put up with. At least under certain circumstances -monetary revolutions
are not only desirable but possible and one might even say obligatory.
- As -Ulrich von Beckerath used to say: Combined purchasing power is- one
of the potentially largest and yet least appreciated- revolutionary powers
in this world. It can e.g. be used to -purchase the enterprise one works
in and to supply oneself with -jobs and sales. - J. Z., 19.11.92, 14.4.97.
- It does not only apply to combined savings but also to combined issues
of currencies, that oblige only the issuers. The acceptors are thus offered
the combined redemption capacity of the issuers, with their goods, services
and ready and willing labor. - J.Z., 5.9.02.
ABILITY TO PAY: It should be limited only by one's
ability to -supply wanted goods, services and labour in exchange. Under
-monetary freedom this readiness to supply consumer goods and- services
that are in daily demand, could be easily monetised by- these suppliers
and their associations, thus supplying a common- local token currency or
ticket money (goods warrants, purchasing- certificates, IOUs, clearing
certificates). Thus they could come -to pay and clear their ways without
the help of any exclusive or- forced paper currency and without possessing
a gold stock between -them, that would be large enough to mediate all the
exchanges -they can and want to make between them. - J. Z., 6.12.92, 30.4.97.
ABILITY TO PAY: The ability of most people to
pay their debts, -to find employment or sell their goods and services,
does become -greatly improved once they become free to offer to pay for
all -their expenditures with their own optional money, freely rated -against
an agreed upon value standard, which is also used in -pricing out their
labour, services and goods. They should not be- forced to ask for and accept
only the government's monopoly money- or non-cash payments ultimately based
upon it. Their own money, thus -issued by them, would inevitably return
to them. Only they would -have to accept it at any time at par. The combination
of several -potential issuers of private money tokens, e.g. in a shopping-
centre's bank of issue association, would make their alternative
-private or cooperative exchange medium even more acceptable, as a- local
currency, to many if not most of the local people. Territorial government
stands helpless before the economic crises which their -monetary and other
economic despotism has caused in the first- place. It does not see or admit
its own mistakes - but has- outlawed monetary self-help steps. Thus something
like a monetary -revolution is required to get rid of its monetary despotism.
Such- revolution requires a prior sufficient monetary enlightenment, one
-not offered by governmental educational institutions and also a- careful
choice of opportunities for it and timing and speed of -execution, so that
its successes would be rapid and-, under sufficient publicity, overwhelmingly
convincing. Then politicians and judges would no longer dare to suppress
monetary freedom self-help steps but, -rather, jump on this band wagon.
Those already fighting any- oppressive government, somewhere in the world,
would, naturally, not greatly add to the -penalties that their despotic
government would want to put upon them, if they -made use of monetary and
financial freedom steps to finance their -resistance or revolutions or
insurrections properly and overcome -the existing crises, whether deflationary,
inflationary or- stagflationary. Thereby they could win with greater certainty,-
faster and with much less bloodshed. Dozens of revolutionary -attempts
occur every year in the World. The revolutionaries are, as a rule,- not
monetarily enlightened and thus the fighting and bloodshed- becomes prolonged
and even when they win, the economic problems -they suffered under will
not be solved by them when they only -know the rules of monetary despotism
and thus will practise them -again. - J. Z., 19.6.93 & 15.4.97.
ABILITY TO PAY: The unused and undemanded ability
to pay and to- clear, via privately or cooperatively issued money tokens
and -cooperatively organized clearing facilities, upon the unused own ready-for-sale
goods and service -potential depends, is enormous - and still largely unknown
in every -country. Otherwise, inflations, deflations, stagflations, mass
-unemployment and unwanted and not merely accidental poverty could- be
done away with within hours or days at most - while- governments do not
even foresee their total abolition within years- or even decades - and
continue to stumble around in the dark, -causing much wrong and damage
with their "activities" and "measures", unaware that and how they caused
most major social -problems in the first place. Alas, the billions of victims
of- monetary despotism have so far shown little awareness of its- existence
and desire for its replacement by monetary freedom. The- situation is as
bad as in the Dark Ages, where religious -tolerance was not appreciated
or in the times of slavery, when- most slaves would rather be masters but
very few slaves wanted -the abolition of slavery and all too many "free"
people were opposed to the abolition of slavery. - J. Z., 29.7.96, 19.3.97,
28.8.02.
ABILITY TO PAY: Under monetary despotism the ability
to supply wanted goods and services is not equalled by the ability to pay,
because it is artificially separated from it. Under monetary freedom the
two are naturally combined. The producers and traders can issue sound money
to sell all the goods and services they do offer between them, at market
prices, to those who want them, because they do, directly or indirectly
supply their customers and clients with the exchange media to purchase
their goods and services. - J. Z., 27.6.89.
ABOLITION OF MONEY & ABOLITION OF PROPERTY
& ABOLITION OF FREE -TRADE & FREE ENTERPRISE: Many consider this
kind of utopia still -to be an ideal. They do not distinguish e.g. between
the abolition -of the money of monetary despotism, the abolition of all
monopoly -property, e.g. in land, or public utilities, the abolition of
government ownership of its whole territory and of all its -inhabitants
as tax slaves, military and brain-washing slaves, the- abolition of the
protectionist variations of international trade- and the abolition of privileged
or monopoly enterprises, - from- the optional, competitive, cooperative
and voluntaristic alternatives of monetary freedom, self-managed and cooperatively-
owned and run productive capital, free trade and free market- alternatives
and the limited territorial State options from the -almost unlimited options
of panarchism or voluntarism that are all -based on exterritorial autonomy
for all volunteer communities, in -which they could even practise freely
all their anti-capitalistic -and anti-individualistic ideals - at their
own risk and expense. - I, too, would find the abolition of all forced
and exclusive- currencies very desirable and that of all special privileges,
-grants and subsidies granted by governments to some of their- subjects,
at the expense of others. And I would not want to see any form of government
to government "trading" and "enterprise" -continued otherwise than at the
expense of consenting victims. - -From the wrongful application of the
property rights principle to -property in people, slavery, all too many
descendants of former- slaves or serfs seem to have inherited an emotional
aversion- against all property claims, even quite rightful ones. Perhaps
-there is something physical remaining in their genes, an -inherited memory
of their ancestors standing on the auction block, as -slaves, at a slave
market. Our present economic system has -not made it easy for them to acquire
and maintain productive- property and to profit from it. The class warfare
mentality, the- split into employers and employees and the anti-industrial-
warfare between them for their "right shares" in the added value- of production,
has coloured most of their thinking and their- actions. But from the admitted
and so far all too neglected evils- and wrongs of the State paper money
of monetary despotism and of -the scarcity problems with any forced and
exclusive rare metal- currencies, one should not conclude that all kinds
of monies must be alike despotic and difficult to attain. The situation
would be- completely different under freedom to issue, clear, accept,-
refuse, rate and discount alternative currencies, with legal- tender confined
to the issuer and his own notes. Least of all -should supposed enemies
of property discard "self-ownership" and -self-management and cooperative
ownership options and render -themselves the helpless victims of central
planners,- decision-makers and owners of themselves and of all other- "public"
property. Without monetary freedom all the other rights -and liberties
and opportunities were incomplete and one's -potential could not always
be fully realized. One restriction and -suppression led to many others.
The full release of all creative -energies (Leonard E. Read) can only be
achieved when monetary freedom is realized, -too. Otherwise we all live
in nation-wide prison-yards, confined -to the productive and exchange activities
permitted to us and- which we can manage to arrange with the exclusive
and forced- prison currency provided by the authorities of this prison.
That- situation does, often, provoke strong anger, even destructive and-
riotous behaviour and terrorist and mass murderous actions based- on the
"principle" of collective responsibility. Then scapegoats -are sought and
prosecuted or even brutally abused and murdered as supposed culprits: supposed
conspirators, members of other races- and religions or nations, as immigrants
and settlers and- competitors for jobs and business opportunities. - Money,-
property & trade must be liberated rather than abolished or -suppressed.
The forms in which they presently do exist do not -really deserve their
names. However, volunteer communities should- be at liberty to keep them
for themselves, as long as they are -not forced upon any dissenters. -
J. Z., 17.4.97.
ABORIGINES' BANKS OF ISSUE: There is much more
to independence -for Aborigines than ownership of land, traditional life-styles,-
dances, languages, arts and crafts activities and the primitive- and limited
trades they engaged in across the continent, access -to alcoholic drinks,
drugs and government schools and hand-outs at the expense of taxpayers.
- If they started to organise their- own banks of issue and provided jobs
for themselves in this way,- the governments would have a very hard stand
in suppressing this -self-help effort and would be more likely to grant
them- exemptions from monetary despotism or even repeal these laws when
-other ethnic groups would thereupon claim the same liberties for -themselves.
Voluntary taxation for Aborigines could also- become a popular issue, when
the same people declined, at the- same time, to accept any further handouts
at the expense of- taxpayers. Fully self-employed and not forced to pay
taxes to- governments that they do not want for themselves, their combined
purchasing power could be large enough to commercially acquire more land
than has -already been granted to them. Actually, per head of the- Aborigines
population in Australia probably much more land- already available to them
than is to any other ethnic -group or to the average Australian. Admittedly,
this land is often among the least fertile land and they and it are still
under all too many government restrictions. But how much could really free
people achieve even upon- such land? Compare the development of Hong Kong
and of some areas of Israel. - J. Z., 27.5.97.
ABSTRACTS COMPILATION OF ALL MONETARY FREEDOM
WRITINGS:
ABSTRACTS: Should be asked for of all monetary
freedom writings -and schools of monetary freedom thoughts.
ACADEMIC WRITINGS ON MONETARY FREEDOM IN RECENT
YEARS: Some -modern economists have finally rediscoverd some aspects of
-monetary freedom, especially since Hayek wrote "Choice in -Currency" and
"The Denationalisation of Money", in 1975 & 1976.- But even these are
usually still far behind the monetary freedom- theories and practices offered
decades e.g. by Ulrich von -Beckerath since World War I. - J. Z., 7.11.96.
ACCEPTABILITY OF MONEY, REJECTABILITY, REFUSABILITY,-
DISCOUNTABILITY, READINESS TO ACCEPT FOUNDATION, MARKET RATING,- LEGAL
TENDER, SEPARATION OF VALUE STANDARD & EXCHANGE MEDIA -FUNCTION: Currency
cannot be acceptable unless it is -rejectable. Liberty to use or refuse
it is essential to -desirableness. - Ezra Heywood, Hard Cash, 7. - Money
should be optional, refusable and discountable, in its exchange medium
function as well as in its value standard function. Only the issuers should
always be obliged to accept it at par with their nominal values. - J.Z.,
6.9.02.
ACCEPTANCE VS. REDEMPTION FOUNDATION: When paper
money is not -redeemable (by the issuer in gold) then it will suffice,
in -order to preserve the parity of the paper money with gold, to -arrange
for the acceptance of the paper money like gold money - by -institutions
which sell goods in daily and general demand. (Such institutions are e.g.
the taxation department - when it "sells"- tax receipts, the railway, the
P.O., and shops which owe -something to the bank issuing that paper. Their
indebtedness may- arise out of the discounting of sound commercial bills
and the -corresponding contractual obligation to accept the notes of the
-bank like gold money. Naturally, in all such cases, the bank must- concede
its debtors the right to pay back all their bank debts- with that paper
money as soon as they receive it, at par,- regardless of the exchange rate
of the paper money.) - Ulrich- von Beckerath, 25.1.52.
ADDRESSES OF MONETARY FREEDOM SEEKERS, INDIVIDUALS
& -ORGANIZATIONS:
ADVANTAGES OF MONETARY FREEDOM: Advocates of monetary
freedom, like myself, claim that the competitive supply of exchange media
would end any currency or cash famine, and could do so quite rapidly. If
not effectively repressed, it would drive unsound exchange media and value
standards, like most of the government paper money and its associated paper
standard, out of circulation. - Moreover, the free choice of value standards
would lead to a wide acceptance of the best one (or best ones, most widely
- J. Z., 14.9.02) - most likely a gold weight unit for account that
is based on a free gold market, free private coinage, and gold redemption
almost completely transferred to the free gold market and to gold-weight-unit
pricing of goods and services, with private and optional exchange media
being kept at par with their nominal gold weight value or close enough,
in general local circulation and strictly at par when returned to the issuer
in any payment. It would also lead to the rating of all exchange media
against this standard and would thus prevent inflation, even when some
exchange media would still and temporarily suffer a small discount. - Over-issues
would then be to the obvious and rapid disadvantage of the issuer and not
any longer, as at present, to his advantage. - With this monetary freedom,
all the illiquid capital of a short term nature, especially working power
and consumer goods and services, soon to be used or consumed, could be
fully mobilised in monetary form and thus much easier exchanged and with
less transaction costs. That is what the money of monetary freedom can
do, has done wherever, whenever and to the extent that it was allowed to
and will do also in the future, with or without the use of computers and
the Internet. It should be the equivalent of labour, goods and services
ready for sale, especially of consumer goods and services in daily demand
and labour for their production and should facilitate their exchange. -
The money types arising under monetary freedom would be very closely tied
to this labour, service and goods basis, could not exceed it, i.e. could
not inflate the money circulation and thereby the prices beyond this cover.
One of the main safeguards would be the right of everyone to refuse to
accept suspicious means of payment - like you would refuse my cheques or
IOUs - knowing my financial situation. Full publicity for private issues
and free and rapid clearing for all such tokens which went astray, would
be essential features of the system. No fraud or coercion would be practised
any longer in this sphere. - The most suitable issuers would be associations
of retailers of consumer goods and services that would use the variety
of goods and services they offer between them as a redemption fund for
their local currency. These stocks and this service potential form anyhow
and in all cases the short term backing of any currency, even of a gold
coin currency. Fully mobilised, this capital could provide the sound exchange
medium and the additional sales required to employ all the unemployed.
In a city like Sydney, thousands of millions could thus be mobilised almost
instantly for turn-over and wage payment credits, at all stable gold prices.
- So far the retailers have not bothered to explore and state their issue
potential and to demand that they be freed to utilise it, to their own
advantage, that of the unemployed and of the rest of the economy. - J.
Z., 1985 & 21.5.97. - To that extent they are not retailers in the
same way as employers are not employers as long as unemployment exists.
- J. Z., 14.9.02.
ADVERTISING COSTS WILL BE REDUCED: The rapid and
automatic -reflux of this private currencies to the issuers, to be redeemed
-in their goods and services, seeing that they have no other value -and
only a limited circulation period, turns them also into -advertisement
leaflets and reduces the need for advertising the -goods and services,
thus making extra competitive price -reductions likely. There will also
be less need for advertising -than under monetary despotism where free
competition is confined -to a struggle for scarce and exclusive forced
currency. - J. Z., 3/97.
AGGRESSION & MONETARY DESPOTISM:
AIRLINE MONEY: Air transport, at least in some
countries, and- internationally, is to a large extent replacing shipping,
railway- and road transport. Thus it could, like other transport -facilities,
issue its own competing currencies, mobilising more- of its so far unused
capacity, while helping to provide sound- supplementary currencies. - Air
lines are considered as rich and -powerful but, under monetary despotism
they are still struggling and many have failed, if not government subsidised
or granted- privileges. Nevertheless, so far and as faras I know, no struggling
airline has seriously considered becoming a note or service -certificate
issuer and used its influence upon government- legislators to permit such
self-help actions. - J. Z., 22.4.97, J.Z., 7.9.02..
AMERICAN OPINION, June 1983, contains an article
of free banking -interest, critical of Social Credit.
ANONYMOUS MONEY, CENTRAL BANK MONEY, PUBLICITY
ON ISSUERS & THEIR READINESS TO ACCEPT FOUNDATION, LOCAL MONEY VS.
CENTRALIZED OR WORLD MONEY: If I had a choice, I would not
readily trust and accept any money of which the issuers or acceptors remain
anonymous or remote (like money of a central bank) and which relies upon
compulsory acceptance and compulsory value, in combination with a monopoly
for its issue. Such monies deserve, instead, extreme distrust and refusal
to accept them whenever possible and other and better payment arrangements
can be achieved. Central banks do not provide the goods and services consumers
need. So why should they be entitled to issue claims to them? Any electronic
currency has purchasing power towards those of the local suppliers who
do accept them in payment or, for supplies from distant places, only to
the extent that the additional transport costs and delays are considered
to be acceptable. But for the required supplies from local suppliers it
would be much more sensible to accept a local currency issued by them.
For these neither a central bank currency nor an electronic world currency
is required. The currency issues of distant issuers, which only they and
their distant debtors have to accept, both of them unknown to me, have
some value to me only if I can exchange them, at an acceptable rate, at
a local money exchange bureau. They are not ready cash for me. The real
backers of any sound local currency tokens are the local providers of goods
and services, who have issued these tokens. Their readiness to accept them
would also be sufficiently publicized. Acceptance in distant localities,
by suppliers unknown to me, would not be good enough for me for most purchases.
What value have "tickets" to performances for me when issuers, times of
performances, their kinds and their locations are not known to me or too
far away from me? Who in the world or in a country can rightly issue liquid
claims to all the goods and services of a country or the world? The very
concept is absurd. What can I know about the soundness of the issues of
the central bank of a country or of the issues of a world bank or European
Bank issuing notes? Historical experience rather teaches their unsoundness,
at least in the long run. But I can easily become familiar with the soundness
of the notes of a local shopping centre. - J.Z., 17.6.01, 26.8.02.
APHORISMS ON THE MONEY PROBLEM, by Ulrich von
Beckerath, 1932, in- BANKWISSENSCHAFT, also in PP 587/588: - The question
whether one- could utilise non-interest bearing, long-term loan certificates
-and mortgage bonds in small denominations, e.g. "Wagemann Money", -"Feder
Money", etc., as a means of exchange, could perhaps be put -into the following
formula: MONEY IS A MEANS OF TRANSPORT. It- serves to overcome spatial
distances. With money one exchanges -values that do already exist in the
present. The exchange of -harvested grain for clothing, household goods
and hay forks is- done through MONEY. - MONEY is necessarily interest-free.
Both- justifications for interest, namely a) difference between future-
and present services and b) a just share for the creditor in the- production
of the debtor, do not apply to MONEY. - The notes- issued by a note-issuing
bank or clearing bank are, by their very -nature, clearing certificates
(settlement scrip). As such they -should not remain in circulation as long
as possible but, -instead, disappear from it as soon as possible. - To
oblige any- issuing centre (Zettelbank, note-issuing bank) to exchange
its -clearing certificates at any time for metal, is not only -superfluous
but harmful and contradicts the nature of this paper--money as a clearing
certificate (or settlement scrip). - The interest rates charged by a note-issuing
clearing centre are not- interest but fees. Insofar, a properly conducted
issuing centre- operates INTEREST-FREE. Only when any customer of the -note-issuing
centre delays the clearing (settlement), does the -bank charge INTEREST
FOR LATE PAYMENT. This interest is something -quite different from clearing,
although both are CALLED interest- and are ACCOUNTED as interest. (It is
more in the nature of a contract fine. J. Z.) - Credit instruments that
are FORCED INTO -CIRCULATION, like e.g. interest-free mortgage bonds in
small- denominations, must lastly DESTROY credit. They amount to putting-
warehouses on wheels and wanting to drive in them. That is- POSSIBLE but
the goods storage business is thereby ruined -- although it appears, at
first, as if one had solved two problems -with one stroke. It reminds of
the famous rifles that were to be- at the same time useful as umbrellas,
telescopes, lances and tobacco pipes. But they were somewhat IMPRACTICAL.
(Lombard loan -certificates do often represent present goods, in large
-quantities, that are kept out of the present market in the -expectation
of future price rises. If such certificates are -monetised then, obviously,
the present purchasing power is -increased but the present goods offered
on the market are not- correspondingly increased. - J. Z. ) - Inflation
is impossible -without forcefully equating future services with present
ones. -Many do not realize this as yet. - Interest bridges differences-
in time. It makes possible the just exchange of FUTURE services- with present
ones. Between the present and the future neither- TRANSPORT takes place
nor CLEARING. Consequently, to bridge the -present and the future is not
a task for a CLEARING INSTITUTE- like a note issuing bank (Zettelbank).
- Indeed, a credit -instrument with a properly certified interest claim,
does have a- value in the present and can thus be exchanged for other,
present- goods. Such a credit instrument (mortgage bond, annuity- certificate)
is even the natural means of payment for goods that- exist in the present
but are not PRODUCED in the present, e.g., -for REAL ESTATE. For this reason,
mortgages are often used as- means of payment in REAL ESTATE PURCHASES.
But goods PRODUCED in the present do require scrip as means of payment
(notes or -clearing cheques), if the producer wants to consume the- equivalence
in the present. If he does not want this but wants to- consume only in
the future, then the proper means of payment is, -again, the credit instrument,
e.g. the standardised mortgage -bond. - Feder wants to create a means of
circulation that at the -same time bridges differences in SPACE and in
TIME. That can NOT- be done. (A sound commercial bill does it, to some
extent, in a- limited circulation sphere and only for a short period. Moreover,
the bill debtor has immediately a corresponding quantity of goods -for
sale, payable in banknotes, with which the real bill had been- discounted.
- J. Z.) A railway has to overcome e.g. the distance -between Berlin and
Hamburg as fast as possible, if it is a GOOD- railway. But if, at the same
time, it is to act as a STORAGE facility, too, then it can no longer serve
as a means of- TRANSPORT.
APHTONIOS' SCHEME: Various ways of filling it
with monetary -freedom proposals.
ARBITRATION SYSTEM FOR WAGE DETERMINATION UNIONS,
NATIONAL WAGE CASES, INFLATION, WAGE INCREASES, STRIKES, COLLECTIVE BARGAINING,
VALUE PRESERVING CLAUSES: National wage case decisions raising the general
wage level can act inflationary. - You can try to demand money, to
steal it or rob it, try to order people like employers to pay it, or to
extract if from consumers via increased prices but what you will in effect
achieve is no more than people are able or willing to supply. An employer
has always the option to dismiss you instead of paying you a raise. If
he is not allowed to dismiss you then he might not be far from bankruptcy.
The taxpayers can only support so many otherwise bankrupt enterprises for
a while. Nor will you be able to force consumers to pay for goods that
are overpriced due to your wage demands. If it were really possible to
arbitrarily increase wages by more or less judicial decisions of arbitration
courts, then we should demand of them that they each entitle us to demand
a million dollars every week as our rightful wage, to maintain us in style.
Why be satisfied with anything less. And if they cannot provide us with
a wage increase of one million then they, by their decision, cannot even
provide us, on their own, with a wage increase of a single cent. - However,
we tend to overlook this reality under a system of monetary despotism,
which distorts not only our paper value standard and monopoly means of
exchange, but also our vision or understanding of it. The arbitration system
can "allocate" wage increases only when they are paid in additional forced
currency, directly or indirectly. Their purchasing power would soon tend
to be only the same as the former wage - and it might even amount to less.
We might also lose our job in the process and the employer might be driven
into bankruptcy, because the monetary despotism does not supply all employers
evenly and all potential customers for him with sufficient of its scarce
monopoly money, not even in times of galloping inflations, when prices
and wages might race far ahead of the fast inflation rate. Usually the
arbitration system's wage increase decisions and the "wage gains"
through anti-industrial and coercive union actions are only responses to
an inflation that has already increased many or all prices and has left
wages behind, at their formerly fixed nominal rates. Then, while no more
than an adaptation to the past inflation is achieved and no indemnification
is offered for the inflationary losses in the meantime, the unionists and
arbitration court supporters want to be praised for the merely nominal
wage increases that supposedly were due only through their actions. If
they were getting out of the way and individuals, in their wage contracts,
could propose and contract value preserving clauses, then their purchasing
power might thus not only be preserved but even be increased, corresponding
to their own contributions to increased productivity. Union and arbitration
court monopoly "actions" prevent this kind of self-help and self-promotion.
They also tend to prevent the spread of productive cooperative enterprises,
with no wage problem and personal subordination that is not warranted by
a job. - J. Z., 24.3.97.
ARMAMENTS, ARMS RACES & ALL KINDS OF MILITARY
SPENDING DO INEVITABLY LEAD TO INFLATION: A popular view. It is true only
if all such spending is "financed" by the government's printing presses
for forced and exclusive currency. Without legal tender and the issue monopoly,
it could not take place. Attempts to finance it then by additional paper
money issues would depreciate this paper - but not sound value reckoning,
and lead to more and more people totally rejecting government paper money
issues. Under financial freedom they would then also effectively refuse
to pay taxes to such a government and could not be forced to subcribe loans
to such a government. Under monetary and financial despotism this kind
of war promoting exploitation can, indeed, take place. This is one more
good reason to abolish this despotism. - Before the Prussian wars of 1864,
1866 & 1871 Prussia was also well armed but it did not inflate its
currency and could not because it had not given it legal tender, not even
for the financing of these wars. But it did introduce legal tender for
the conduct of WW I and maintained it, most of the time (a short period
of the Rentenmark of 1923/24 excepted, I do not know exactly when that
was ended ), for WW II and the "liberating" Allies maintained this monetary
despotism for the old RM and their occupation marks, to June 1948 and then
tolerated it for the new DM ever since, i.e., a totalitarian and communist
money system even for supposedly anti-communist States that were sometimes
in armed conflicts with communist States. - J. Z., 24.3.97.
ASSET CURRENCIES OR TURNOVER-CREDIT CURRENCIES?
Some notes by J.Z. on an exchange between Don Werkheiser and Theo M, March
23, 1990. Houses and note issues upon them: Assume the asset of a house,
estimated to be worth $ 180,000 and notes issued upon that asset, valued,
coming nominally, only $ 120,000. - Seemingly, and in the eyes of some,
these notes are then "well covered". In reality, they are only small and
standardised mortgage bonds that do not even pay interest. Only the house
owner would be morally obliged to accept them - if and when he wanted to
sell the house. Others would accept them from him only if they are potential
investors or buyers of that house. They would have to be tempted by the
offer of interest. Why should any shop owners or businesses accept
such notes from such an issuer, if they are not interested in buying his
house or investing in claims to it and no interest is paid and if there
are no ready acceptors for such notes? What could they do with them now?
Who would be contractually obliged to accept them from him? Why should
they act as brokers for such mortgage bonds? There is a difference between
mortgages and sound bills of exchange and between mortgage letters (or
bonds) and banknotes based upon real bills. The difference lies in the
securities offered, the value of a house vs. daily wanted consumer goods
and also in the time factor that is involved. For the house-currency there
is only a very limited readiness to accept (in case of the sale of the
house) by the single issuer. The shop-foundation and short-term debt-foundation
of banknotes, on the other hand, is offered by many acceptors and they
offer a great variety of daily wanted goods and services. They offer something
useful to the note holders, immediately or soon, a considerable and sufficient
choice. The house owner would hardly want to sell his house brick by brick
etc., after wrecking it first, nor would he find many buyers for
such a limited offer - or takers for his thus "secured" mortgage bonds.
What an honest house owner, issuing notes "covered" by the value of his
house, should explicitly declare on his "banknotes" is something like the
following: "I want you to give me the values I want now, for these, my
notes. But I am not willing to give you, with these notes, the values you
want and might be able to get from me now - apart from the value of the
house, which I have not even placed on the market as being for sale. All
I offer you with my "house notes" are small mortgages secured by the market
value of my house. I do not even offer to accept my notes e.g. in rent-payments
to me, in case I were to let this house to you, which I do not intend to
do. I do not offer you any interest payment for the period that will pass
until you manage to fob of these mortgage letters upon other victims with
capital, goods, services or labour that they do want to thus invest. I
merely rely on your good faith, trust and confidence, for which I can offer
no other basis than that the total present market value of my house, which
is not ready for sale now, is larger than the total number of notes that
I have issued upon this value. So, they are not altogether value-less but
more than "covered" by their visible and properly estimated "security"
and "cover". - If I were to issue notes for the total value of my
house and if I were to set a date for its sales and if you had managed
to accumulate all these notes in your hands and would want to buy my house,
then I would be obliged to hand over the title to it, in return for you
handing over to me all these notes. But, since I haven't made this sales
offer, I do entirely rely on your unfounded trust and confidence that these
notes do have their full nominal and free market value now, equivalent
to the sales price of my house, if and when I would sell it. I also trust
that you will be ingenious enough to fob them off unto others, also believing
in the possibility of "asset currencies", thus passing on the problems
of immediate redemption for these notes to them. - I cannot say why I prefer
to call these notes my "banknotes", fully covered by the value of my house,
instead of mortgage bonds or mortgage letters." - Money in the own eyes
is not automatically money in the eyes of others, no matter how confident
the issuer is or the person who assumes that he is a potential issuer for
banknotes. One should try to think through every issue and reflux, every
cover and redemption and security, step by step, taking all the liberties
and rights involved in consideration, all the special and general interests
of all the parties involved. Then one will find that it is not just a matter
of a "unilateral issue" into "circulation", a "single convenience action",
as Don Werkheiser called it, but that a "mutual convenience action" must
be involved, in which potential acceptors would only accept what they want
to accept and to the extent that they do want it and only at times that
they do. That means, in practice, that a free and informed market, made
up of all the potential acceptors for such notes, would largely refuse
them and the few who would accept them would greatly discount them, so
much so, that a potential buyer of the house could very cheaply buy up
these claims and with them, if they came, nominally, to the value of the
house, could make a for him very cheap bid for that house. The issuer,
if he had persisted in issuing these mortgages in spite of their great
discount, would have got only whatever values he would have been able to
buy with them, at their discounted rate. - J.Z., 17.9.02.
ASSET CURRENCIES: Asset currencies have been proposed
and tried -out again and again, largely without awareness of their- historical
precedents and failures and of the inevitability of -their failures. See:
LAND BANKS, REAL ESTATE AS COVER FOR- CURRENCIES, BONDS & GOVERNMENT
SECURITIES AS COVER FOR CURRENCIES. The issue principles and practices
of financial -freedom are different from the issue principles and practices
of monetary freedom. They should not be mixed up. In both cases one-
deals with valuable properties. In both cases the transactions -should
be voluntary. In both cases free market rating should -apply and in both
cases value preserving clauses or value -standards should be applied and
expressed in them and in prices, wages, rents etc. Ready for sale consumer
-goods and services, through suitable claims upon them, could be used for
subscriptions to capital securities, rather than the latter being wrongly
used as a the basis of currency issues. Capital securities can and should
be issued upon capital assets. Notes for apples and meat, mortgages for
houses, shares for factories. Security issues can be -sold for cash or
clearing certificates. Currencies or clearing certificates can be used
to buy capital securities. But this limited and in each case to be voluntarily
agreed upon exchange still does not make them -identical, in the same market,
among the same people, which each a full substitute for the other, immediately,
among all people. Capital securities have their special markets and their
separate circles of sellers and buyers. Securities represent rather land,
bricks & timber and -steel, hardware - machinery, resources or the
expectation of providing them and of benefiting from them in the future.-
Currencies, on the other hand, represent goods, services and- labour for
immediate use and consumption and already produced- & sold at least
to wholesalers, on the road to retailers or already -waiting for sales
there. Next year's birthday or x-mas isn't -today's birthday or x-mas.
One should keep the two apart. Time- differences do matter as you will
notice when you are separated -from your beloved ones for 3 months or 3
years. Future values are not -present values. Present values are not future
values, although -the two are related and can be somewhat interchanged,
at the -prices and costs involved. Consumers who want a currency for -today's
and next week's purchases, do not want, instead, a security -for a future
capital value, although sometimes, and to some -extent, they want such
values, too. In some heads a real block exists against such distinctions.
They imagine that only useless -hair splitting is involved. It would help
if the experiences of a -number of sound banks of issue for turnover-credit
banknotes were -put side by side with banks of issues that issued bank
bonds, -mortgage letters and shares and if these were also compared with
-the experiences of banks that tried to turn assets like land,- private
shares, government loan certificates, into currency, -immediately useful
for consumer shopping, although they would be- given no exclusive currency
status and legal tender power. A- fourth table might indicate the experience
with asset currencies,- where the assets became irrelevant because the
paper supposedly backed by them were in reality only accepted because they
were -given exclusive currency status and legal tender power (forced -acceptance
combined with forced value. - Then the different -recorded experiences
might speak for themselves and suffice to -convince. - J. Z., n.d., 30.4.97.
ASSET CURRENCIES: Assets have no real currency
- except e.g.-, among brokers, financiers and real estate agencies - and
those- who happen to be in the market for some assets, for a while and
to some extent, with a fraction of their earnings. -- J. Z., 23.4.97.
ASSET CURRENCIES: Just because the laws have allowed
them or even prescribed them in some instances, and this, sometimes, under
the misnomer of "free banking", does not make them right, honest
or economically sound and efficient or competitive under conditions of
full monetary freedom. Modern views on this are nothing better than a revival
of the old "land bank" schemes, by which the issuers attempted to foist
fractions of mortgages upon the population as if they were and could be
a sound currency. This particular fallacy was often refuted in the literature.
But the general asset currency notion is still very much alive and all
too widely practised by central banks. They even accept government "insecurities",
or investments in tax slaves, as assets. When such issues are monopoly
issues then the issuers can get away with them for all too long - for people
often accept bad forms of money if that is the only one which is made available
to them or permissible for them. But under monetary freedom no one would
be obliged to give any real purchasing power to any such currencies, by
accepting them for his goods, services and labour. They would, as currency,
have no more status and ready acceptance, far less par acceptance, than
have mortgages, bonds, shares and other securities have in most daily exchanges
for most people. I.e., they would not be currencies. They would be useful
only on the capital market, which embraces only a fraction of all buyers
and a fraction of all their purchases and sales. That is the main reason
why they cannot be sound currencies in local circulation. Their circulation
sphere and volume is all too limited. They are not tickets or vouchers
to daily wanted and ready for sale consumer goods and services. That is
an essential requirement even for gold coins. - J. Z., 25.12.88, 16.5.97.
ASSET CURRENCIES: The only assets which asset
currencies could- effectively move are capital assets and capital securities.
E.g., -mortgage letters can move large mortgages, which otherwise would-
not be as easily transferable. But asset currencies do not -represent and
cannot, therefore, easily transfer ready for sale- goods, services and
labour. These require currencies based upon- them. - Only when all other
currencies are effectively outlawed -can any monopolistic asset currency
somewhat replace them, in- spite of its unsound foundation for currency
purposes. Rather -than doing without monetary exchanges altogether, people
would -then even accept an asset currency - up to a fraction of all the
-capital assets, without responding to the asset currency issue -with inflated
price and wage demands. (These price and wage- increases would not indicate
a dearness of goods and labour but a depreciation of the forced and exclusive
"asset currency" imposed -upon them. - J. Z., 6.4.94, 24.4.97.
ASSET CURRENCIES: To try to turn capital assets
like raw- materials, premises, and machinery or the capital securities
that -represent them, directly into currency, supposedly useful for the-
current purchase of consumer goods, is a great mistake because at -the
same time no equivalent consumer goods and services are -provided by the
issuer to redeem them with. The holder of the -certificates could only
force the issuer into liquidation and- then claim his share in raw materials,
premises and machinery - -but few would want to acquire them. On the other
hand, if there -is someone prepared for a take-over bid for the business
of the -issuer, then such issue attempts would be very much welcomed by
-him, for this scrip would rapidly depreciate in a free market and- could
thus be bought up very cheaply and used in the take-over -bid. A few such
experiences, well publicised, will serve as a- deterrent. But that
does not mean that there should not be full -freedom to issue financial
securities, too, which quite clearly -represent capital assets and are
bought up and traded by people -interested in capital investments. To reduce
this kind of mix up -of capital securities with turnover bills and notes,
the issue -departments for both should be as far as possible kept separated
because- for people have fallen for the errors of "asset currencies" again-
and again and they have often been embodied in banking laws.
ASSET CURRENCY: An unsound turnover currency system
is not- sufficiently remedied by there existing, in case of its -bankruptcy,
some securities for the benefit of its creditors. Its- function is not
to provide such an ultimate guaranty or backing- for its currency but,
rather, to provide for its currency a ready -backing right now, especially
by short term securities and by the- ready for sale goods, services and
labour which the issuers of -the short term securities have to offer to
the holders of the -banknotes of the bank. Only such turn-over function
and security- and guaranty and convertibility arrangement or cover can
keep a- currency sound and current, by exerting a sufficient daily demand
-for bank notes, to keep them at par with their nominal value. (A sound
reflux.) If- the issuing banks do not provide such an instant cover, security
-and convertibility and no one is instantly obliged to accept all -the
currency issued by the bank, i.e., if there is no instant- demand for it
but only the distant redemption via the capital securities, then such a
currency must inevitably depreciate. --J . Z., 6.4.93, 27.5.97.
ASSET CURRENCY: Just because the law has permitted
or even -prescribed it in some or many instances does not make it rightful-
or economically sound and a desirable and predictable practice -under monetary
freedom. "Modern" views on this are often merely a- revival of the ancient
"land-bank" and "assignat" fallacies that -have been refuted by their practice
and several scientific -studies. - J. Z., 8.4.97.
ASSET CURRENCY: See: APHORISMS ON THE MONEY PROBLEM.
ATCOPS : Roger Young, in TC144p43 reports that
ATCOPS is alive -and well and in its 20th year.
ATKINSON, EDWARD, Pamphlet, title unknown, referred
to by TANDY,- Voluntary Socialism, p. 103, stated on a legal tender act
: "...-an act by which bad money may be forced into use so as to drive
-good money out of circulation." - All correct versions of- Gresham's Law,
with their author, title and date of publication,- preferably also page
reference, are wanted by LMP, towards a -monograph on this subject. - J.
Z., 12.4.97.
AUDITOR, Periodical published by WESTRUP, ALFRED
B., for free -banking. At least 2 issues appeared. I have not seen any
yet. -- J. Z., 28.4.97.
AUSTRALIAN MADE, BUY AUSTRALIAN! - If you want
to sell Australian- goods, services and labour, then monetise them freely
and thus -spend their value even in advance, before they are sold for this-
kind of privately or cooperatively issued competing currency. - -Australian
made goods, if up to world standards and at world- prices, are good enough
for such currency issues, too, for international trading. If they- were
not then there would be something wrong with these -recommendations. Why
should Australians be foolish enough to buy- Australian goods and services
and labour, if they were of- inferior quality or offered only at excess
prices? - J. Z., -6.10.93, 1.5.97. - If you spend Australian paper money
overseas then there is only one rational use for them, namely, to use them
in payment for Australian exports. Competing Australian clearing certificates
that are redeemable only in Australian goods and services, freely market
rated, refusable and obligatory only for their issuers, also time-limited,
would be more obviously balancing imports with exports. See the writings
of Prof. Edgard Milhaud and of Ulrich von Beckerath on this subject. -
J. Z.,
AUSTRALIAN MADE, BUY AUSTRALIAN: Permit the owners
of all- "Australian Made" goods to issue goods-warrants and purchasing
-certificates as well as clearing certificates based upon combined- goods
and service offers, for goods and services that are in daily -demand by
consumers, and allow wages, salaries and other debts to- be paid in them,
if the acceptance is voluntary and then, to the- extent that such alternative
monies will be readily accepted, the -purchasers will buy goods made in
Australia with money freely -made and freely valued, accepted and spent
in Australia. To the extent that such- private vouchers, in money denominations,
can be freely issued,- they will stream back with much greater certainty
to the issuer -and his debtors, for their goods and services and labour,
than -any rare metal coins or legal tender money spent by them. They -will
be busy and employed and achieve sales to the extent that- they can issue
their "tickets" and get them readily accepted.- Moreover, they are morally
entitled to thus offer their own -property in a monetised form. No government
owns them and their -property and stocks and services and labour for sale.
Thus no -government is morally authorised to issue assignments upon their
-property, for which, in the act of issue, it has to give nothing- in return
but a scrap of printed paper and the option to use this -in payment of
tax tributes which it extorts from its tax slaves. -Government cannot provide
such a soundly based money. It can only -requisition, with its paper money,
the real redemption fund for -any currency in any country, one that belongs
to the producers- and traders themselves: the ready for sale goods, services
and -labour. - The Australian nationalists should seriously consider -how
free and independent they are when they are only allowed to buy their goods,
services and labour provided by Australians with -the monopolised and forced
paper money by a single privileged and -legalized despotic institution
in Australia, its central bank,- called the Reserve Bank. - Why should
all Australians, for all- their economic activities, have to depend upon
its good will and- abilities - if any - and this in spite of all the evidence
that- speaks against any central bank? - When and to the extent that- Australians
can issue their own competing and optional -currencies, they will, inevitably,
"buy Australian!" - The same applies for competitively issued international
clearing- certificates that can only be used, after imports have been paid-
for with them, to purchase Australian export goods. - With government paper
money, often under a controlled exchange rate,- and with foreign central
banks mad enough to hoard such notes, as "-foreign exchange reserves" or
foreign private citizens being -inclined to hoard such notes, because they
are better than the -still more inflated paper currency of the own government,
the -reflux of such paper money as purchasing certificates for- Australian
goods, is much less certain. - To speed up the reflux- and make it more
regular, all internal and external clearing- certificates and goods and
service-warrants should also be given- a limited life span only, for 3
months to 12 months at most, thus -appealing to the self-interest of the
holders to redeem them in- Australian goods, services and labour within
that period. -Alas, -this kind of "buy Australian" with competing Australian
monies,- is not yet popular. - Help to make it so. - J. Z., 5.10.93,- 24.4.97.
AUSTRALIAN OWNED? Because something is "Australian
owned" or "produced in Australia" or "bought in Australia", following the
command: "Buy Australian!" - does not mean that it is cheaper or better
than other businesses or goods or that Australia, as a whole, benefits
more from such enterprises, purchases and sales than it does from others.
If, instead of buying from an Australian owned firm, you buy from a foreign
owned firm in Australia or one overseas, then you do, thereby, enable that
foreign firm, whether situated in Australia or overseas, to buy the corresponding
values from Australia. And these values, sold to foreigners, and paid with
by the return of the Australian paper currency, would then be proudly claimed
as Australian export achievements! (They are objectively achievements,
like any other sales, but in contradiction to the insistence upon buying
only Australian goods.) - If the owners of Australian enterprises were
not free to sell them to foreigners, i.e., if most of their potential buyers
were excluded, then they would thus be robbed of part of their property
rights. Each foreign owned firm means: This firm has not been given away,
stolen or occupied but SOLD by an Australian, who managed to get a higher
price for it than other Australians were willing to pay him. Should his
property rights be overlooked? Should he be penalised, taxed or should
the buyer be boycotted? His property belonged to him, not to the nation.
Those Australians, who did not buy it, did not offer more for it than a
foreigner or foreign company did, have no right to complain. Every transaction
that is free and voluntary, i.e., as a rule for mutual benefit (apart from
some errors or misjudgements or frauds on one side or the other), is right,
thereby, and the nationality of the seller or buyer, or their race or religion
or sex or age or ideology should have nothing to do with their trade or
exchange. Nationalism, statism and borders should be entirely excluded
from economic and moral considerations, as irrelevant, if not outright,
wrong, harmful and anti-economic. If any Australians can make a better
deal with foreigners than with other Australians, let them. The total of
all earned economic satisfactions in Australia would be increased thereby
- even while the number of dissatisfactions based upon ignorance, prejudices
and myths would also be increased. Mercantilism and State Socialism
were and are wrongful and harmful utopias. Only those individuals who voluntarily
subscribed to them should have to suffer under them. - PIOT, J. Z., 22.5.97,
15.9.02.
AUSTRIAN ECONOMICS ON MONEY: Austrian economists
often asserted -that the interventionism with currencies consisting in
legally -establishing an exclusive and forced currency would not matter
-at all if that were only done for gold coins and gold- certificates. They
could not do any harm, or so they believed, said and wrote. They could
not be -arbitrarily multiplied and thus would be the only exchange media-
and value standards that should be permissible and that should -also be
legally enforced as exclusive exchange media and value- standards. They
did this under the assumptions that prices and- wages would be infinitely,
fast enough and completely enough adaptable to any changes that might occur
in the quantities of- gold available for monetary transactions or to changes
in the -monetary demands for gold. - This belief is dogmatic for them,
fixed idea.- They do not bother to check it against the facts. They ignored
-the numerous reports of currency shortages and currency famines.- They
ignored the ten-thousands of reported cases of the issue of emergency-
,token- and truck-money, hundreds of years after the invention of rare
metal coins and gold and silver- certificates and even the millions of
incidents in which people in their exchanges were being -reduced to primitive
barter transactions - although, somewhere, -the same quantities of gold
and silver did still exist. Nor did -they consider the different effects
which falling price levels- have upon all sellers & buyers, to the
extent that the buyers can -postpone purchases, as opposed to fallen prices,
e.g. due to some -technical innovations. (Even here some buyer restraint
results,- e.g. in the purchase of computer hardware, in the expectation
of- even further price falls in spite of continued improvements in -the
hardware.) They do overlook the stickiness of prices and- wages. They do
overlook the numerous contracts which nominally- express debts over a time
period and which debtors would find it -hard to fulfil with severely deflated
currencies, which they -would find it much harder to earn, in the same
nominal quantities,- while the prices for their goods, services and labour
have been- deflated. - If gold and silver were so abundant and so useful,-
there would also exist the possibility to provide them in weight- units
for the black market and have black market transactions -finally take over
the whole market. But that hasn't taken place,- either. By now many people
may never even have seen a gold coin. -Then there is the fact of trade
having existed even among- Australian Aborigines, across the continent
of Australia. However, -gold coins or nuggets or dust did not become currency
among them,- either. The distribution of gold standard gold coins and-
certificates was rather limited to a few of the more developed- countries.
In others they were hardly ever seen, not even coined- out in mini-weights,
for very depressed monetary prices. Nor do -most Austrian School economists
seem to be aware as yet, that -clearing underlies all money transactions
and that pure clearing -transactions do not require any gold coins or gold
certificates- at all to become possible and wide-spread, even though they
might -prefer to use gold weights as their value units. Blinded by their
dogma on "-convertibility by the issuer, upon demand of the gold certificate
holder", they remained blind to the -possibilities and functioning of the
real bills doctrine or -banking principle and their functioning even without-
metal convertibility, even after their banks were declared failed and-
bankrupt, because they could not longer redeem their notes fully -in gold.
The clearing function involved in the real bills- doctrine or banking principle,
continued to function for a while, -because the debtors of the bank exerted
a strong demand for the -notes, which enabled them to pay their debts to
the banks. - The -minds of the Austrians were so focused on the metal convertibility
or -non-convertibility of notes only, that most of them and -probably some
of them still, overlooked the much greater -significance of legal tender
- and the harmlessness and- self-limitation of banknotes not covered in
gold but soundly-I ssued only in turnover credit transactions that are
soon- self-liquidating. How often have they been aware and to what- extent
are they aware now that without legal tender and the money -issue monopoly
one cannot inflate a currency in a market that- enjoys monetary freedom
and uses that freedom in freely competing- exchange media, clearing avenues
and freely chosen and competing- value standards? Held back by their
limited money model, as they- are by their limited government model and
limited defence model, -they have not extended their thinking to the full
range of -monetary freedom, of free societal options and of libertarian
and- anarchistic defence and war prevention possibilities. Anyone who-
thinks that he already knows enough cannot be taught any more, as -long
as this illusion persists in his or her head. - J. Z.,-26.1.94, 1.5.97.
AUTHORITY, AUTHORITARIANISM IN MONEY, MONETARY
DESPOTISM, CENTRAL -BANKING, EXCLUSIVE & FORCED CURRENCY, PROUDHON
: The fundamental,- decisive idea of this Revolution is it not this: NO
MORE -AUTHORITY, neither in the Church, nor in the State, nor in land,-
nor in money? - Proudhon, General Idea of Revolution in the 19th- Century.
- Alas, in his practical proposal he always spoke only- of THE Bank of
the People, not of banks of the people. - Maybe he spoke and wrote in this
way because he had only a particular model for mutual banking in mind,
the one for which his drafted his bank statutes. It would have been quite
inconsistent for him as an anarchists to demand a monopoly for his Bank
of the People. Alas, not all of his papers and correspondence seem to have
been published as yet. That would help to settle this question. - J. Z.,-15.4.97.
AUTOMATION, ROBOTS & UNEMPLOYMENT: Many people
believe that there is a link between automation, robots and unemployment,
that people would be replaced from their jobs by machines, robots and automation
and could not find new jobs. - "Japan, for example, has about 400,000 robots
installed and a declared unemployment rate of 2 1/2 %, while Australia
has about 1800 robots and a much higher unemployment rate. - The Australian
Robot Association estimates that 118 robots were installed in this country
last year. This number is too small to have had any significant impact
upon unemployment. - In the past two years, IBM reduced its workforce by
90,000 jobs, Boeing by 28,000 jobs, and Digital Equipment Corp by 27,700
jobs. But few, if any of these jobs, were lost because employees were replaced
by machines. Rather, according to a recent survey by Ms Trudy Bell, published
in the engineering journal IEEE Spectrum, the job losses were due to factors
such as the dwindling market for mainframes, diminished military orders
brought about by the end of the Cold War, and reduced purchasing because
of the global recession." - Michael Kassler, Survey explodes myth of the
link to jobless queue, THE AUSTRALIAN, 5.10.93.
BALANCING THE ECONOMY THROUGH MONETARY CONTROLS
OR MANIPULATION: The good intention is to keep goods production and service
offers in balance with the money issued. Some attempt to adapt the money
circulation to the increased goods and service offers and others want to
adapt productivity to the currency they make available. Most think only
in terms of a centrally managed, exclusive and forced currency and would
not allow free and competitive or cooperative issue and reflux arrangements
to keep the goods and service side automatically in balance with the money
side, through market forces, i.e., free enterprise, free trading, free
contracts, free acceptance or refusals of currencies and free pricing
for them, under full publicity for all details of issues and reflux arrangements.
Under monetary despotism all these balancing attempts never succeed fully
and for long and they cannot do so because almost all the automatically
regulating indicators are stopped and no one is fully informed of what
is happening and thus many false decisions result. Under monetary despotism
the exchanges tend to be limited to those this despotism permits to occur
and this often only under great difficulties, too. Despotic central banking
and its forced paper standard, maintained by attempted quantity controls
("open market" sales or purchases of securities by the issuer, discount
or interest rate policies, credit restrictions or grant of credits and
increased spending via the note printing presses) can never sufficiently
supply all the exchange media needed, everywhere and by everyone, nor keep
those supplied sufficiently stable for long. It is an unbalanced and unbalancing
system. It is so mad that in some instances it has led to "valorisation
(i.e., the burning, plowing under or other destruction of crops) in order
to artificially keep their prices up because, under monetary despotism
and all too often, goods, labour and services cannot be sold at free market
prices and the prices attainable under that despotic system might sometimes
not even cover the costs, either, because they are too much deflated or,
sometimes even because they are already inflated. (I have almost absolutely
stopped getting hair cuts by a barber, many years ago, ever since their
charges went above $ 1. That is not necessarily a rational response but
it is an economic response.) That price controls and subsidies have sometimes
misled producers to produce more, at artificially high prices, than the
market really wanted at these prices, does, naturally, not help, either.
Nor can stockpiling of such artificial surpluses, by governments, at the
expense of the taxpayers, help in the long run. The economic indicators
should never be artificially and coercively falsified - if equilibrium
is to be maintained as much as is possible in human affairs. Neither the
goods side nor the money side is to be artificially manipulated if trouble
is to be avoided. - J. Z., 24.3.97, 30.8.02.
BANK CHARTERS, MONETARY DESPOTISM, RIGHT TO BANKING:
Their (-bank charters ) effect is to give to individuals the advantage
of- two legal natures - one favorable for making contracts, the other -favorable
for avoiding the responsibility of them, when made. (-Spooner, Constitutional
Law 21.) Spooner argues that all banking -charters are unconstitutional
for they violate the natural right -of all men to make free contracts.
Moreover, the legislature, in- granting special favors to some and none
to others, abuses its -powers. - Charles Chiveley, introduction to Spooner,
I/27.
BANK FAILURES: Those, who are all too readily
and undiscriminately- prepared to accuse past and present banks of bank
failures, have -usually not distinguished e.g. between 1.) Failure of the-
issuing bank to redeem its notes upon demand fully and to their- nominal
value in rare metals, or, nowadays, in legal tender money- or even in government
insecurities. 2.) Failure to cover notes- issued and current deposits
granted, by means of short term and- self-liquidating securities that represent
goods produced and- already sold and on the road to consumers, 3.) Failure
to provide -sufficient clearing facilities or debt foundation for all notes
-to keep up a strong demand for them, that could keep them at par- until
they are withdrawn in the final settlement or payment. 4.)- Failure via
dishonesty, corruption or embezzlement among the -bank's officers. 5.)
Failure due to malinvestments, large ones,- in unprofitable enterprises,
so large in relation to the whole -bank business, that this single failure
could send it broke. The- lending risk was then not sufficiently distributed,
in accordance with insurance principles. 6.) Failure -through lending short
term or medium term funds on long terms,- instead of only on the terms
they were deposited on. 7.) Failure in- such cases to make contracts that
would allow them such -investments but also allow them to postpone repayments
until they -would be liquid again and in the meantime only offer to pay-out-s
in bank-bonds, transferable ones, that would cover the remaining- outstanding
loans. 8.) There are also various other forms , e.g. -"option clause" notes
that would cover the risk of any temporary -illiquidity in normal business,
when debt and credit terms and amounts do not exactly enough equal each
other. 9) Failure of- other banks than the central banks of issue due to
the -inflationary, deflationary or stagflationary policies of a -central
banks. 10) Failure to sign up a credit insurance policy -for the ordinary
risks of lending or undertaking sufficient- self-insurance precautions,
alone or in association with other -banks. - J. Z., 11.4.97. - Runs on
banks could have been prevented or greatly reduced in many ways. For instance,
by starting a list for those who wanted to withdraw their money, in which
those on the top of the list would have the top claim to monies received
in payment of debts to the bank. The banks could have offered limits on
the amounts of cash withdrawable immediately, without notice. Or it could
have insisted on having been given sufficient notice for all withdrawals.
(In the meantime, it could have accumulated the funds from repayments and
by reducing further lending.) There is not fixed limit for the kinds of
contractual safety clauses that could have been agreed upon. To promise
something to all that could never be fulfilled if all suddenly claimed
what was promised to them, was always wrong and bad business practice,
even though, in normal times, they could get away with this for considerable
periods. Generally speaking, banks and bankers do mostly not really comprehend
the sound business of banking, or the "banking principle". Like politicians,
they do engage in many wrongful and harmful practices, and, due to insufficient
competition from alternative political and banking systems, they go on
and on with their wrongful and harmful practices, all in accordance with
all too widely spread popular prejudices, supported by supposed academic
experts. Can one teach them to proceed morally and rationally in spheres
where they imagine themselves to be experts? You try it! - J. Z., 5.9.02.
BANK ROBBERIES & OTHER CASH ROBBERIES: There
would be less cash robberies under free banking because quantities of local
cash that have thus gone astray are much harder to dispose of and at the
same time much easier to trace than is, e.g., an exclusive legal tender
paper currency or rare metal coin currency, that can be spent all over
a large country. The same applies to forgery attempts. Moreover, freely
competing currencies are likely to have only a short circulation period.
Thus "hot money" cannot simply be hidden for a long period and then spent
relatively safely. It would no longer be valid currency by them. If, after
a robbery has occurred and the robbers got away, any strangers or locals
were suddenly to spend large amounts of the stolen local currency, even
if the numbers of the stolen notes were not known, they would immediately
become suspects. - J. Z., 21.3.86, 16.5.97.
BANKERS & MONETARY FREEDOM OR FREE BANKING:
You can no longer- bank on bankers. They will neither give you the highest
interest -nor credit when you need it most, nor can they protect you from
inflation or from credit restrictions and deflations, nor -from direct
tax raids by governments, nor from the prying eyes of bureaucrats. They
have let themselves be deprived of the business- of note issue and have
let the capital market become -over-regulated. They know by now almost
nothing about sound note -issue techniques nor do they show any interest
in them. They help -the government to "invest" part of your savings in
governmental- "insecurities", which you or your children and grandchildren
then have the honour, -later on, to repay in parts, out of your taxes,
or in depreciated -currency. They have become mere agents for the
government's -despotic monetary policy. You can rely on them only in one
respect: They -will firmly resist, together with the government, all your-
attempts to go into competition with them, opening competitive -and note-issuing
banks and clearing centres, practising sound -free banking principles and
all aspects of financial freedom. - J. Z., 12.7.78, -24.4.97, 8.9.02.
BANKERS OF THE OLD TYPE TO BE MOSTLY EXCLUDED
FROM FREE BANKING & LAWYERS & POLITICIANS AS WELL: Their remaining
privileges and the mystique that surrounds banking still, in all
too many heads, including those of most bankers and central bankers and
economists, has allowed some or even many ignorant, stupid, prejudiced,
careless and irresponsible bankers to get away with all too much, at other
people's expense, while continuing to enjoy prestige, high earnings and
high retirement benefits, no matter how many people they harmed or wronged.
- Some people got even so disgusted with the false notions that most bankers
entertain on bank note issues that they proposed that future note issuing
centres should explicitly exclude anyone who had previously occupied any
executive position in the banking world, unless they could prove that they
were among the few exceptions in this business. The same might be said
about lawyers and many of the brokers of our times. - That politicians
should be totally excluded from this business seem self-evident, at least
to me. No kind of confidence trickster, demagogue or power addict is suitable
for it, while he persists in this kind of career and at least until he
has been completely rehabilitated, as e .g., Auberon Herbert was. - I do
know that there are SOME honest lawyers around - but what do they know
about monetary freedom principles and practices and what opposition have
they ever shown to monetary despotism? - If there are such exceptional
people among them then they should not be kept out. - The free banking
business, like the computing business, should be largely left to its fans,
not to its enemies or disinterested, ignorant or prejudices people or those
with a looter mentality. Luckily, the ones who are already in the business
of providing consumer goods and services are also, through their local
associations, the most suitable among all the potential issuers under monetary
freedom and the ones who, apart from the unemployed, have the greatest
possible interest in gaining and enjoying the benefits of monetary freedom.
They would not need any politicians or lawyers- except in defence against
the oppressive actions of other politicians and lawyers. - J. Z.,
15.5.97.
BANKERS, CREDIT & MORAL CHARACTER: Bankers
perform the function- of the commercial virtues by demonstrating and advancing
the -pecuniary value of a good moral character. - Henry Meulen, THE -INDIVIDUALIST,
10/75. - With their demand for securities or -guarantors for loans, governmental
guarantees and deposit -insurance, bankers have either betted only on a
sure thing or- have become so careless to lend even to despotic foreign
governments, not only some wasteful and inefficient large private corporations.
Their own government would not allow them to fail, regardless of the huge
number of bad debts they managed to "expertly" acquire. They do no- longer
have to be good judges of business opportunities or of good- moral character.
A successful fraud was a often a better investment for -them, at least
temporarily, even if, finally, he cheated the bank itself. Personal loans
have -become only a very small fraction of the total loan accounts. In
judging their security the assessors of personal loan- companies were,
for many decades and probably still, much more competent. Bankers also
refused the mini-development loans now -becoming popular in underdeveloped
countries, although they have- a very low risk. The student loans, while
self-administered, had- also a better chance of being repaid than most
bank loans had and- have. - The number of bankers who really understood
the note -issue business and who conducted their deposit and savings -accounts
quite honestly has always been rather small. They were -mostly more gamblers
and high risk taking speculators than sound- investors, at the expense
of their note holders, depositors - or -the taxpayers. - The insistence
of bankers on securities for- loans has been satirised by the remark: "Bankers
lend money only -to those who can prove that they do not need it". - Moreover,
the -fact that a special insurance is required for cashiers does also -seem
to indicate that those who employ them are not good in- assessing their
moral characters, either. - And how many bankers -do you know who have
anything sensible to say on inflation,- deflation, stagflation, legal tender,
the money monopoly,- devaluation or re-valuation? - Mostly the good reputation
of bankers is as unearned as that of politicians is. - J. Z., 18. 4.-97.
BANKING PRINCIPLE: For me it is hard to comprehend
how long two -(or more) different scientific schools of thought can co-exist,
-side by side, without their differences becoming settled, or,- worse still,
how representatives of especially the ruling school- of thought can simply
ignore the facts and arguments advanced by- their critics, as the currency
school did, largely, versus the- banking school and as is still being done
today by various groups of "gold bugs" or "100% dollars". - Admittedly,
much of the thinking of the free banking -school was flawed, too. E.g.,
many of its members did, unnecessarily and without- sufficient justification,
adopt the obligation for rare metal convertibility for the issuer, although
the banking principle or the real bills- doctrine indicated already the
real cover involved as the only- cover required. - It is often not just
one or two different views- that are mostly or habitually ignored but sometimes
hundreds, if- not thousands. E.g., there are hundreds of different crisis
-theories and types of socialism. Nevertheless, most write on- crises and
socialism as if only their own favourite example of -them did exist
and were possible or worth talking and writing- about. How often have primitive
notions on trust or confidence in currencies, as one of their basic requirements,
been- thoughtlessly repeated, without mentioning the reflux and clearing
foundation that is involved in short-term turnover -loans, which do not
have to be covered by gold stocks at all but -are, like all debts and credits,
clearable. There remain so many -unsettled questions among freedom lovers,
e.g. limited- governments vs. anarchism, territorialism vs. exterritorialism,
-abortion vs. right to life, mercenary defence vs. militia- defence, nuclear
weapons strength and deterrence, vs. nuclear -weakness and all the possible
failures of nuclear deterrence. The -money, currency, credit, clearing
and value standard discussion -is full of arguments still unsettled by
libertarians and- anarchists. - J. Z., 31.7.82, 24.4.97. - It is
high time to tackle all these differences of opinion fully and systematically
and draw their balance sheets. - Our very survival may depend upon
it. - J. Z., 8.9.02.
BANKNOTES AS "CUT UP" REAL OR SOUND COMMERCIAL
BILLS FOR GOODS ALREADY -PRODUCED & SOLD & ON THEIR ROAD TO THE
CONSUMERS: Just -because SOME paper claims can in bill discounting be exchanged
-into bills or banknotes suitable for temporary and local -circulation
- and a short term later be withdrawn from -circulation, in payment for
the real bills they were issued upon, -and then, preferably cancelled,
rather than issued again in new- transactions (thus facilitating the control
of the circulation,- issues and their reflux, e.g. by numbering and issues
of series-), does not mean that ANY kind of paper claim can be thus and
successfully discounted, especially not mere financial bills,- speculative
and long term securities, or notes representing -speculatively warehoused
commodities, not available on the -present market. Only goods, services
and labour ready or very- soon ready for sale, can give a real and immediate
purchasing -power to any kind of currency. Without it no currency is more
-than a speculative security certificate that may or may not be -ultimately
redeemed, one day, with interest, or that may lose its- value fast. No
one is obliged to redeem it with his ready for -sale goods, services and
labour - although at any time some fools -or speculators can probably be
found to accept some such notes- for a while. A free market will not value
them as currency at all or not for long and not at par. Seemingly, many
issues had no -other foundation than long term securities or assets - because
-the other foundations were overlooked or not reported. In these -cases
the own capital of the bank or the private "securities" or- "government
insecurities" deposited, were nothing but an ultimate -guaranty or insurance
funds in case the currency had no other and sounder -foundation and did
fail. Especially their other debt, credit and -clearing foundations
were all too often overlooked, although- without them all banks would have
immediately failed, i.e. would- have been driven into bankruptcy and closure.
That sound money is- merely a clearing certificate and does need no other
value -than the acceptance or clearing readiness of its issuers, acceptors
and users, -for the payments of all their debts and the receipt of all
debts -owed to them, is even today not yet generally seen. Only -Professor
Heinrich Rittershausen has based his unfinished work on -monetary theory
upon this insight. And it is hinted at or implied- in all the writings
of Ulrich von Beckerath and the monetary- writings of Dr. Walter Zander.
BANKNOTES, CURRENCY, COVER, REDEEMABILITY, CONVERTIBILITY
INTO GOODS & SERVICES, AS OPPOSED TO CONVERTIBILITY OR BACKING BY SECURITIES,
PRIVATE ONES OR EVEN GOVERNMENT "INSECURITIES": Banknotes and other exchange
media should mainly represent the consumer goods and services that are
already produced and offered for sale now. To that extent they should be
merely "cut up" or discounted "real bills" or sound commercial bills or
equivalent securities. They should not represent "cut up" or discounted
capital assets, not wanted by most consumers at all or right now, or not
to the extent that they are offered. The capital values, offered as "backing",
might also be merely speculative. They might, in many instances, not even
be ready for sale on the capital market but only may become ready for sale
some time in the medium or long future. And they do not offer ready for
sale consumer goods and services now, in form of ready or current claims
against them. In some instance, they might be warehouse certificates, representing
goods or mere raw materials, still to be processed into wanted products,
that are currently not offered on the market at all but, rather, withheld
from it, in the hope of higher future prices. Thus, instead of increasing
the supply of wanted consumer goods and services, the backing for such
currency is speculative, not ready for consumption but rather withheld
from production or consumption. And yet the issuers of such "currency"
believe that on a competitive currency market such exchange media could
be kept at par without anyone being obliged to deliver any wanted goods
or services at market prices for them. Somehow the notion of a monopoly
and legal tender currency seems to have crept in, that would force the
providers of goods and services to accept even such a badly founded currency,
without sufficient reflux, if they want to engage in monetary exchanges
at all. - J. Z.,9.11.88, 15.5.97.
BANKNOTES: How many wrong or only partly correct
theories exist- on their origin, nature and function? See BANKING THEORIES
& FREE- BANKING THEORIES, BANKING PRINCIPLE, REAL BILLS DOCTRINE, -CURRENCY
PRINCIPLE. - I hold that all of them should be listed- and either proven
or refuted. The same terms have all too often -different meanings for the
banking traditions in different- countries and for different authors. Whenever
such terms are used -then the origin or definer ought, perhaps, to be included
in- brackets or the different definitions should be offered in a -numbered
list and. whenever the term is used, then the meaning should- be indicated
by its number being added in a bracket. - I hold- with Ulrich von Beckerath
that banknotes should mainly represent -the consumer goods and services
offered for sale now, within their private, -voluntaristic and competitive
payment circles or payment- communities. Therefore, no "currency" should
be issued that- merely represent "cut-up" medium or long term securities
or- commodity or real estate capital values, whose medium or long- term
value is merely speculative and whose equivalent is anyhow- not immediately
available in form of ready for sale consumer goods and services and labour,
at least not by the issuers of- such "asset currencies". Why should the
issuers of capital- securities be allowed to thus dispose of goods, services
and -labour of others, without the consent of the owners or providers-
of these goods, services or labour? And why should these -providers accept
such "currencies", when they are not prepared to -invest in the capital
market? There is, indeed, room for small- and standardised shares,
bonds and other securities, but only in- the capital market, not in the
currency market. The two should be kept quite apart, in theory and in practice.
A mortgage bond or a- share does not have any immediate purchasing power.
It does not- oblige any storekeeper or department store or shopping centre,
-bus company, petrol station etc. to accept it, unless such- acceptance
is contractually provided for. And then these -readiness to accept declarations
would form the real and -immediate cover or foundation or reflux option
for such -banknotes. But why should such providers depend upon others -supplying
them with notes - when they could issue them -themselves? - Free after
MFNL&MF 3/4, Feb. 89, & 8.4.97.
BANKRUPTCY AVOIDANCE VIA CLEARING OPTIONS: Enterprises
that are- still basically sound but merely have a cash flow problem, under
-conditions of monetary despotism, with its deflations, inflations- and
stagflations, depressions, recessions and credit- restrictions, should
be set free to offer, in settlement of their -debts, clearing certificates,
in easily transferable money- denominations, that entitle the bearer to
obtain from the debtor -his goods and services at par. Debtors should also
be at liberty -to set up a common clearing house for this purpose, mutually
guaranteeing their repayments and they should be free to offer -these certificates
at a discount, that is attractive to their -creditors, while these certificates
are not accepted at par -in general circulation. - With that liberty most
of these debtors- would not have got into their precarious cash flow situation
in- the first place. But once in it, they could trade themselves out -of
it. Moreover, their creditors could get the full value of -their credits
repaid to them, even if that required a larger- quantity of somewhat discounted
clearing certificates. The right -of creditors to demand legal tender cash
(or, as formerly, silver or gold coins ) in -payment, although that was
not especially agreed upon in private contracts, should be abolished. All
debtors and creditors should- be set free to enable them to pay and be
paid as far as is -humanly and economically and monetarily possible, via
clearing- options. If we consider that money itself is never the ultimate-
objective but that it is merely a means to an end and that, with the curtain
of the physical appearance of exchange media removed, in a thought-experiment,
then not only the large number of non-cash transactions that do take place,
invisibly for most people, but also the much smaller sums of cash transactions
to merely achieve a mutual exchange for goods, services and labour for
other goods, -services and labour. Only some limited time delays are involved
in these exchanges. (Exchanges over longer periods are involved when some
of the goods are capital values and their capital securities.) ANYTHING
that facilitates this process,- through the technique of monetary exchanges
or through clearing -exchanges or any other non-cash payment alternative,
that can- satisfy debtors and creditors alike and that makes it easier
to- satisfy both of them, should be set completely free. It would then
become -obvious that, to the extent that an unemployed, a tradesman or-
professional or a shopkeeper, could put into temporary -circulation his
own notes, or clearing certificates or electronically accounted clearing
credits, buying with them his requirements, he -would automatically, although
indirectly, supply himself with- work or sales. His spending would cause
his earnings, instead of-, as today, his spending would require first that
he obtain scarce and- exclusive currency for it, somehow, in a considerable
struggle for them, by offering his goods and services in -a market for
such exchange media that is restricted through the coercive and exclusive-
currency of monetary despotism. - J. Z., n.d. & 30.4.97.
BANKRUPTCY LAWS: "Would BANKRUPTCY LAWS be permissible
in a -libertarian legal system? Clearly not, for bankruptcy laws compel-
the discharge of a debtor's voluntarily contracted debts, and- thereby
invade the property rights of the creditors. The debtor- who refuses to
pay his debt has stolen the property of the -creditor. If the debtor is
able to pay but conceals his assets, -then his clear act of theft is compounded
by fraud. But if the -defaulting debtor is not able to pay, he has STILL
stolen the -property of the creditor by not making his agreed-upon delivery
of the creditor's property. The function of the legal system- should then
be to enforce payment upon the debtor through, e.g.,- forced attachment
of the debtor's future income for the debt -plus the damages and interest
on the continuing debt. Bankruptcy- laws, which discharge the debt in defiance
of the property rights- of the creditor, virtually confer a license to
steal upon the- debtor. In the pre-modern era, the defaulting debtor was
-generally treated as a thief and forced to pay as he acquired -income.
Doubtless, the penalty of imprisonment went far beyond -proportional punishment
and hence was excessive;" (even when he was a fraudulent debtor and cheated
people for millions? - J. Z.)- "but at least the old legal ways placed
responsibility where it -belonged : on the debtor to fulfil his contractual
obligations -and to make the transfer of the property owed to the- creditor-owner.
One historian of American bankruptcy law, though a - supporter of these
laws, has conceded that they trample on the -property rights of the creditors."
- Murray N. Rothbard, The- Ethics of Liberty, 142. - Here is Rothbard at
his best, in -exposing a wrong. Alas, he does not conclude that the willing-
debtor ought to be enabled, as far as possible, to clear his debt by clearing,
in the interest of the debtor and the creditor alike, even -if, for this
purpose, he could offer nothing but his own monetised IOU's,- based upon
his own continued goods and service offers and even if -these would suffer
a considerable discount, so that he would have -to offer correspondingly
more of them to make up the total debt, accounted in a sound value standard.
- Rothbard would be likely to- condemn such issues as mere fraudulent "fiat
money" issues, even- if such a payment were acceptable to the creditor
or to an- arbitrator that debtor and creditor had agreed upon. Thus,- Rothbard,
instead of making debt settlement easier via the right -to clearing debts,
would make the debt settlement harder to -impossible to achieve, by insisting
upon debt payment only in -gold metal or 100% gold-metal-covered gold certificates.
These the debtors are often -unable to obtain at all or in the required
quantities and whenever needed and that -would apply also to his own debtors.
Thus the debt settlement is -prevented rather than promoted. (To a large
extent the bankruptcy laws were passed in recognition of such facts, such
payment difficulties, even for quite honest and efficient debtors. - J.
Z., 8.902.) Indeed, Rothbard assumes that, in- case of a shortage of gold,
all prices, expressed in the exclusive -gold currency, would immediately
fall correspondingly, so that- gold payments would continue to be as easy
as before, due to the fallen gold- prices. Here he overlooks the often
pointed out "stickiness" of -prices and wages and the fact that in prior
centuries and in some respects even in our century, barter transactions
still persisted- because gold prices never fell far enough to mediate all-
exchanges monetarily. Moreover, he overlooked, like most other- economists,
the different psychological effect of falling prices- vs. fallen prices
upon potential buyers who do have some money -reserves which they do not
have to spend immediately to survive. Falling prices- discourage buyers.
Only fallen prices encourage them. Thus- falling prices lead to further
falling prices, preventing for a-long time the price adaptation that Rothbard
expected and predicted. In the meantime millions of unemployed and- ten-thousands
of bankrupt employers ask themselves: How did we -get into this? Has Rothbard
any sound advice to offer to use? All- he would tell us is: Reduce your
wages and prices further. He -wants to confine our exchanges to his favourite
exclusive and- forced currency, which we are short of, precisely at a time
when- there is an abundance of real cover: consumer goods and- services,
ready for sale, for alternative optional and market--rated currencies of
our own, which we might even, to do ourselves- and Rothbard a favour, denominate
in gold weight units as their -value standards and would readily accept
as if they were- corresponding gold coins. But such self-help steps would
be- condemned as fraudulent by Rothbard and as an unjustified- "expansion
of fiat money". - He was a radical and helpful thinker, -in many respects,
but not in all. Regarding money, he remained a -monopolist by prescribing
"only gold" (or 100% gold covered certificates) instead of "only government-
paper money". - In other words, Rothbard's ruling on bankruptcy- and on
an exclusive gold currency (however competitively- supplied), would assure
more bankruptcies and would not help- debtors and creditors to get the
remaining debts settled, unless- they can manage to settle them in gold
metal or 100% covered gold--metal certificates. - Nor does Rothbard offer
clearing as a- solution. Mutual debts that can be cancelled, cleared or
settled, -obviously do not require, for this kind of non-cash payment,
any- gold coins or gold certificates, except for the balances -remaining.
And the settlement of these can be postponed. - The clearing might well
use a gold weight unit as a standard of- value for accounting purposes.
But that was not considered by- Rothbard or would not have satisfied him.
He went on insisting on -gold coin or 100% covered gold certificate payments.
- Or did I miss some of his writings? Did he anywhere concede the -possibility
of non-cash gold value payments (using all kinds of -other means of exchange
at their gold weight market rating) in -settlement of debts expressed in
gold weight units? Sometimes- e.g., custom duties were so fixed and so
paid. - Did he report any -complaints by debtors and creditors about such
gold weight unit- accounting and clearing and payment transactions that
made the -means of payment used optional? - He fruitfully pondered most-
aspects of liberty but did not spend sufficient time and thought-energy-
on this one. - J. Z., 25.4.97
BANKRUPTCY RULES, See: FUTURES DEALINGS WITH CASH.
See: -CLEARING.
BANKS & THEIR FEES & INTEREST PAYMENTS:
You may earn the highest bank returns if you can manage no longer to go
to the banks or to return to them. - More and more alternative payment
methods are coming up. E. g., postal money orders are now sometimes cheaper
than bank transfers. They are also not subject to taxes, like your bank
deposits. Some traders, advertising on TV, allow you now to pay them through
your telephone bills. Cash payments still give you the chance to arrange
for discounts in all larger purchases. Unless you can establish your own
or freely choose among free banks of issue and investments, you are often
advised to avoid them if you want to save money. Alas, they have become
paymasters for wages and salaries, which puts all too many funds at their
disposal, for which they often pay an interest below the inflation rate.
Your money in the bank is no longer safe. To some extent it has become
the bank's money - and that of the tax department. Draw your own conclusions
from this. Gain your independence from them. Use them only if you must.
Safe as a bank has become a misnomer. They do not even guard themselves
sufficiently against bank robbers. Nor do they offer you banking secrecy.
They report to the tax department - and to who knows else. - J. Z., 11.11.92,
16.5.97.
BANKS OF ISSUE, NOTE-ISSUING BANKS: DO THEY NEED
CAPITAL? Banks of issue need sense not size, sound issue techniques, not
capital, sound value standards, and competition with other banks of issue,
not government guaranties, self-management, not government supervision
and controls. - J. Z., J. Z., 4.4.89,16.5.97.
BANKS UNDER MONETARY DESPOTISM: Banks today are
not free and competitive, private or cooperative enterprises but, largely,
from the central bank to the smallest bank branch at the corner, government
controlled, regulated and mismanage institutions, even though they remain
formally in private hands. Just consider the flood of laws and regulations
on them. The "economy" of fascism and totalitarian communism should not
be equated with that of a free enterprise and free exchange or capitalistic
or market economy. Nevertheless, for all the mistakes of government banking,
currency and credit policies, forced upon all, "capitalism" and the "market
economy" and the "profit motive" and "private property" are usually blamed,
even in a sphere where they do least of all exist. - J. Z., 28.7.93, 24.5.97.
- See: CENTRAL BANKING, MONETARY POLICY, CURRENCY POLICY, CREDIT REGULATION.
BANKS, CREDIT OR LOAN POLICY & THEIR DEMAND
FOR SECURITY: A- Banker is a fellow who lends his umbrella when the sun
is shining- and wants it back the minute it begins to rain. - Mark Twain,-
1835-1910.
BANKS: Alternative names: Debt-shops. - Ezra Heywood,
Hard-Cash, 7.
BANKS: Apart from the Central Bank all banks are
now reduced to- being merely dealers in the nationalised exchange medium
and its -forced paper "standard". Even in these limited dealings they are
-highly regulated. Likewise, in their options to issue and deal- with capital
securities. They are mere shadows of free banks. But, -at the same time,
they are privileged banks, insofar as entry into -the business of banking
is also highly restricted by legislation -and governmental compulsory licensing
schemes. They and the note- acceptors are kept in a monetary kindergarten
and thus are kept- ignorant and irresponsible in monetary matters. - J.
Z., 4.9.86,- 29.4.97.
BANKS: Some banks really lock your money away
from you. I- noticed in Los Angeles, near Union Station, a branch of the
Bank- of America. It is only open on 3 week days and then only from- 11.30am
to 2.30pm, at least that was its schedule indicated on 20 -Dec. 1990. And
this in a country where many shops, e.g. photocopy- shops, are open 24
hours a day! - J. Z., 16.4.97.
BARTER IS NO SUBSTITUTE FOR FREE CLEARING &
FREE MONETARY -EXCHANGES: Only free clearing and full monetary freedom
can -fully employ all people willing to work, at their highest -capacity
and skills and can make them prosperous and independent.- - J. Z., 27.7.83,
17.4.97.
BARTER, MONEY & CLEARING: Any money transaction
is essentially- an anonymous and multilateral barter or clearing transactions,-
one spanning time and distance, in which goods, services and labour -are
exchanged for goods, services and labour. - Any attempts to -issue monies
that are not based such turnovers are condemned to failures. But debts
that are shortly due can keep money issues -based upon them at par with
their nominal value, so that they, -too, are considered as acceptable in
payment for daily wanted- consumer goods and services. Both, the goods
and service cover- and the short term debt foundation, do establish a strong
demand -or "reflux" for the money involved, that keeps it at par with its-
nominal value expressed in some or the other value standard. For -money
issued upon long-term assets there exists no strong enough demand or -reflux
right away and continuously. It will occur only once that debt is soon
due. -In the meantime, no supplier of daily wanted goods and services-
is obliged to accept it, if he has not issued it. - J. Z.,-5.12.90, 16.4.97.
BECKERATH, ULRICH von, 1882 -1969. See: ACADEMIC
WRITINGS ON- MONETARY FREEDOM IN RECENT YEARS. See also his numerous writings,
listed in my main website: www.acenet.com.au/~jzube
BECKERATH, ULRICH VON, 1882-1969, See: GERMAN
SCHOOL ON MONEY. See the main literature list of LMP.
BECKERATH, ULRICH von, 1882-1969. From ca. 1913
onwards, possibly -already from 1908, he has, more thoroughly than anyone
else that I- ever heard of, knew or read about, explored and described
the -monetary freedom options. Alas, most of his correspondence before-
1943 has been lost with his library in an air raid on Berlin. -Recipients
of his letters and papers from before that time, who- preserved them, should
make themselves known to me. I would like -to microfiche his whole correspondence,
to the extent that it- is or becomes available to me. - J. Z., 9.4.97.
BECKERATH, ULRICH von, Monetary Freedom teachings.
See e.g.: -Aphorisms on the money problem, 1932, in BANKWISSENSCHAFT. Also
-in PP 587/588.
BECKERATH, ULRICH von, See: ECONOMIC & HUMAN
RIGHTS ASPECTS -IGNORED BY MOST MODERN AUTHORS.
BELIEF SYSTEMS ON MONEY: There are thousands of
different- articles of faith and prejudice and unfounded assumptions and
-assertions, fallacies and false arguments on money. Most are as -false
or misleading as the religious ones. Only a systematic and- an alphabetical
register of all of them, together with their best -refutations so far out,
could show us the ways out of this -labyrinth or avalanche. So far it has
not yet been compiled and- all too few people have shown any interest in
such a project. - -J. Z., 18.7.96, 20.3.97.
BIBLIOGRAPHY OF MONETARY FREEDOM WRITINGS. Draft
in PP 1022. Ask- for further contributions and translations. Ask for permissions
-to reproduce still copyrighted material at least on microfiche, floppy
disks and CD-ROMs & websites.
BILL DISCOUNT, SOUND COMMERCIAL BILLS VS. UNSOUND
"FINANCIAL" BILLS, REAL BILLS DOCTRINE, BANKING PRINCIPLE, CIRCULATION
CIRCLES, LEGAL & JURIDICAL "RIGHT" OF CREDITORS TO DEMAND PAYMENT IN
RARE METALS OR OTHER CASH: For a long time the payment of sound commercial
bills, was ultimately enforceable in gold or silver coins, although, in
most cases they were rather settled by clearing or payment in bank notes
for which they had become the common basis for issues. Banknotes, under
the real bills doctrine or banking principle are nothing but cut-up sound
commercial bills, in standardized, easily recognizable and convenient denominations,
that can circulate easier than the commercial bills themselves (which are
largely acceptable only among merchants and bankers) and these small and
even bills are finally used to redeem them. For all too long it was ignored
that the right of creditors to have commercial bills redeemed in gold is
quite unnecessary to preserve their value and that of the bank notes issued
upon them. Their redeemability in banknotes and the short term debts that
are involved, are quite sufficient to assure a corresponding reflux of
banknotes from the short term debtors of the commercial bills. The bills
were usually issued by wholesalers to employers, their suppliers, in payment
for goods already produced and sold to them and on the road to the retailers.
The employers, paid by the wholesalers with commercial bills, got these
bills discounted into banknotes at a bank of issue. With these notes they
paid their workers, suppliers and profits and then the notes streamed to
the shops for goods and services and from them to their suppliers, largely
the wholesalers, who redeemed their bills with the notes thus received.
The whole is easier to describe and comprehend graphically, than in words.
I have done that in PEACE PLANS 41. Still better charts of this payment
circle would be welcomed by me. The right of creditors to demand payment
in rare metals or rare legal tender paper money has done much more harm
than good and has only secured recurrent payment crises. That right should
be confined to quite optional contracts and even then, seeing that dealings
in futures and their risks are involved, withdrawal premiums for the withdrawal
from such obligations should also be agreed upon. Only then will the risk
of such claims be reduced to acceptable proportions. It this risk remains
quite unrestricted by withdrawal premiums and competition from suppliers
of alternative exchange media and value standards, then it can lead to
the rapid and prolonged collapse of the non-cash transactions, all dependent
upon a minimum but quite regular and always available supply of cash. If
cash supply sinks below this minimum, then numerous non-cash transactions
are no longer possible and lead thus to a much larger demand for cash and
this precisely when cash is already in short supply. Then some cash can
only be attained by postponing the payment of bills and by dismissing workers
and by ruthlessly collecting debts, payable in cash, even if that leads
to the bankruptcy of the debtors and to emergency sales prices. Only the
quite competitive supply of cash, in all its possible and desired forms,
can prevent and end such money shortages, which, by the way, also lead
to a collapse of the prices of capital securities because fewer shares
etc. are bought and enterprises that can no longer easily sell their goods
and services are reduced in their market values and cannot pay dividends
or interest or only much less. Thus the right to demand rare metals or
other exclusive currency from a debtor must be replaced, in the general
economy (apart from some payment communities which religiously adhere to
the cash payment obligation voluntarily, at their own risk and expense),
by the right to demand clearing, in stated value standards, but accepting
any kind of usable exchange medium or clearing certificate - but only at
its market rated value expressed in the agreed upon value standard. To
my knowledge Ulrich von Beckerath, 1882 - 1969, was the only economist
and writer who clearly saw and described this problem and its solution.
If you know of others and their writings, please let me know about them.
- J.Z., 27.9.02.
BLACK LABOUR OR BLACK MARKET LABOUR: In Freiburg,
Breisgau, on 4 March 93, I saw the van of a painter with the inscription:
"Ohne Schwarzarbeit mehr Arbeitsplaetze." (Without black labour more jobs.)
- Presumably, this professional painter would object against you yourself
painting your own house, inside or outside, or getting your friends or
family members to do so. Certainly he is opposed to untaxed underground
contractors and does not like to take up such opportunities himself, although
in his job it would be easier than in most others. He seems to count as
productive labour only his own professional work. - Nor does he mention
that largely rightful tax evasion and evasion of excessively high social
security and accident levies are involved. Just because he is heavily taxed,
he wants others to be taxed, too. Just because he loves bureaucratic interventionism,
he would like others to be so enslaved likewise. He would count only officially
created or recognized jobs as jobs, not private ones. Presumably, according
to him, once all of us would be in untaxed and unregulated black market
jobs, trading on the black market, we would all having no jobs at all.
He did not put his foot into his mouth, but, as a painter, on his van -
was sure to find many other fools to support him. - J. Z., 24.5.97.
BLACK MARKET PRIVATE CURRENCY ISSUES: To what
extent are they -possible? - Already now, sometimes and unofficially, other
national- currencies are substituting largely for inflated national -currencies,
e.g. the U.S. dollar internationally and the German -DM in some European
countries suffering more than Germany under- inflation. - Full exploration
of the extent to which the black -market might make possible not only barter
and some limited- monetary exchanges (using the money of monetary despotism,
or- forcing exchange, or gold or silver coins and bullion) but, -instead,
at least some kinds of monetary freedom and free -clearing exchanges that
could, potentially, become so extensive -that they could introduce a free
market, for the first time, a- fully free market. LETS founder Michael
Linton believes his -system to be capable of this. I don't. - He
seemed more -reasonable in his papers than in person and in his talk, although
-he is a smooth and popular speaker. - J. Z., 7.4.97.
BONUS PAYMENTS & WAGE & SALARY INCREASES
IN THE MONIES OF MONETARY FREEDOM, AS INTRODUCTORY STEPS TOWARDS FULL MONETARY
FREEDOM: Issue the next Christmas bonus or extra salary payment or salary
increase to employees in the own store currency or in the store currency
of all employers doing the same. Employers would benefit by paying this
expense in their goods and services - instead of having to sell these first
for scarce legal tender notes. Knowing this, they might even be willing
to pay a higher gratuity of this type in this form. - A fringe benefit
would be that both, employers and employees, would become accustomed to
dealing in private notes. - A single issue of that type, existing only
temporarily, might altogether escape the notice of the authorities and
thus legal prosecution. If not, then it would greatly reduce the penalties
involved. - When an association of shops issued this temporary shop currency,
the individual shop would receive the notes as a loan, to be repaid in
goods warrants or in cash - in case, by chance or by insufficient competitiveness,
one employer would not receive sufficient of these goods warrants back
to repay this debt with them. - The same could be done for demanded wage
increases, which they employer could not afford to pay in legal tender
but could well afford in his own shop foundation money. The wage increase
to the builders of Roseland's Shopping Centre, in 1964 (in Sydney, then
the largest shopping centre in the southern hemisphere), was a precedent
for this. This made possible the completion of the building in time, and
a corresponding additional cash flow from its opening day on. Since
this agreement with the unions broke a number of laws - by doing the morally
and economically right thing, the case was hushed up. - Such issues might
be considered as a pilot project for a monetary revolution, one to stop
unemployment and end inflation - by paying all wages, salaries and profits
and other expenses in shop currencies and by using a better or several
better standards than the government's paper standard in the shop currency
and to express all prices, wages and salaries and other debts. - J. Z.,
1985 & 21.5.97.
BOOK MONEY, CREDIT MONEY & CASH : By means
of bank or book money or credit or deposit accounts all cash can be multiplied
up to tenfold by all banks. - Pop opinion. - Wouldn't the banks love that?
Under competition they should then be able to pay their depositors much
more or charge their debtors much less. But do they? - Is there no honest
accountant left in the world who is able and willing to point out these
"created" super-profits? How can any rich people be prevented from
becoming such bankers and as easily multiplying their riches? - J. Z.,
28.3.97. See: CREDIT CREATION, CREATION OF CREDIT & MONEY, DEPOSIT
INFLATION.
BOOK MONEY, MONEY CIRCULATION, QUANTITY THEORY
& INFLATION: - The price effects of cash increases becomes multiplied
through book money that is nominally based upon the increased cash. - As
a rule everything and everybody gets blamed for inflation - with the exception
of the real culprits, the central banks, their money monopoly and the legal
tender legislation. - If "creative" book keeping could make the bookkeepers
rich then everybody would want to become a bookkeeper and banker. Why work
at all, if values can thus be merely created on paper? - We could then
become a nation of book keepers and bankers. Why bother then to produce
anything. We could all live on consuming our multiplied book values. -
The same illusion is involved as is involved in the mere printing of paper
money. Now we can express money values electronically and computers could
multiply electronic symbols endlessly, without limits. But could they "create"
a single cent of additional purchasing power for anybody, through electronic
fiat or unilateral action or declaration, not based on any goods or services
offered, ready for sale, without depriving anyone else of that one cent
or without arranging a fair trade that is of mutual benefit to all the
parties involved? - J. Z., 2.4.97. - See: CREATION OF MONEY &
CREDIT, DEPOSIT INFLATION, QUANTITY THEORY,MONEY CIRCULATION.
BOOKS WANTED LIST, perhaps integrated with FB
bibliography.
BRANCH BANK CLOSURES: Let the major banks close
as many local- branches as they like, in their cost-cutting attempts, but
do allow -the local people to establish not only their own local savings,-
current account, deposit and clearing banks but also note-issuing -banks,
quite free from Local Government, State and Federal- Government legislation,
regulation and jurisdiction. This would- mean an end to depressions, mass
unemployment and inflation in -all the localities where this self-help
freedom would be -practised. - J. Z., 8.11.96, 19.3.97.
BRAY, JOHN FRANCIS, Labour's Wrongs & Labour's
Remedy, Leeds,- 1838, also advocated a particular kind of labour exchange,-
different from that of Robert Owen. Further details are wanted- and the
whole book for microfiching. - J. Z., 20.3.97.
BRECKENRIDGE, R.M., The Canadian Banking System,
1871-1890, N.Y., -MacMillan, 1895, defended the right to issue as the common
right- of all. - According to Wells/Scruggs, Towards Free Banking, p. 1.
-- Westrup may also refer to him. Alas, I have not yet been able- to obtain
this book by Breckenridge for microfiching in my- monetary freedom series.
- J. Z., 26.4.97.
BRONFENBRENNER, MARTIN, THE CURRENCY-CHOICE DEFENCE:
I have got -myself a copy of this article from CHALLENGE, Jan/Feb. 1980,
pp- 31-36 and fiched it in PP 803. Already its sub-title seems to- contain
a disastrous misconception or wrong definition: "If any -means of exchange,
not only dollars, were considered as legal -tender, the market would be
left free to provide for monetary- stability." - It is one of the main
objections against free- banking that, if everybody were free to issue
money (and here, -usually, legal tender is presumed), then everybody could
-cause an inflation. This is quite true. However, B. probably -meant here
merely the lawyer's excuse for legal tender, namely,- that your are legally
entitled to offer it in payment but not -necessarily that the other party
is obliged to accept it at all- or at face value. In most cases, this harmless
sounding term is- interpreted quite differently by legislators and courts,
e.g.:- "Mark equals Mark", no matter how depreciated it becomes, $ equals
$, even when its value is down to cents and mere paper currency, -by government
fiat, is declared to be the equivalent of gold--certificates. The worst
interpretation and most wide-spread practice is: monopoly money with compulsory
acceptance and compulsory value. As such it is the- precondition for inflation,
deflation and stagflation. Alas, only- very few textbooks see it as such.
How many more monetary -catastrophes are required before enough people
begin to realise -the nature and effect of legal tender legislation and-
jurisdiction? - J. Z., in a note for MFNL, & 30.5.97.
BUCK PASSING & THE BUCK STOPS HERE: These
terms could acquire a- completely new meaning if applied to monetary freedom.
Those who -have realized the importance of their monetary independence
might -say, to those who offered them the monies of monetary despotism:
-Your buck stops here: It cannot buy anything from me. I refuse- to accept
it in payment. But I have assumed the responsibility to -produce and offer
my own means of exchange and sound value -standard and am prepared, on
that basis, to honest trading with- anyone at any time. (They could and
should issue their own "bucks", based upon their readiness to supply wanted
labor, services and goods for them, and these bucks would then stream back
to them in payment, i.e., their own bucks would stop there, where they
started from. - J. Z., 10.9.02.) - They would no longer pass on the buck
of -responsibility to the government to supply them with sufficient -sound
value standards and exchange media or welfare hand-outs. They could and
should so opt out of "the war against the poor". They would rather -supply
themselves with productive work and trade opportunities by -their own independent
monetary and financial efforts. From hand-out recipients they could turn
into free people paying for their wants and needs with their own currency,
redeemed by their own ready for sale goods, services and labour efforts.
- J. Z., 27.5.97, 10.9.02.
BUDGET, BALANCED & INFLATION: A balanced budget
would stop inflation. - A popular opinion. - But what would stop inflation
if no government were willing to balance its budget. As experience teaches
us, this is mostly the case. Either it increases taxes or forced loans
at the expense of future tax payers or it taxes us via inflation. It has
the powers to inflate, in legal tender and the issue monopoly and will
sooner or later and most of the times abuse them. A shortfall in its budget
is no more than a motive. It does not give it the weapon to inflate a currency.
If you have a shortfall in your budget then you cannot cause an inflation
because you cannot turn your IOUs into legal tender and an exclusive currency.
Honest or moral minds would not engage in crimes. Honest and moral governments
would not engage in inflation. But then who has reasons to think that governments
are honest and moral as a rule? So, should we grant them any means to engage
in an inflation and ourselves no rights and liberties at all to end or
prevent one? - J. Z., 28.3.97. - The "balanced" budget of most governments
today includes the degree of "deficit financing" or inflation that they
planned for! - If it is balanced through government borrowing then this
means that the government has further extended "investments" in tax slaves.
- J.Z., 30.8.02.
BUDGETS OF GOVERNMENTS & THEIR BUDGET POLICIES:
Government- budgets indicate the way governments are going to spend YOUR-
money, not THEIR money and also by how much they are going to -inflate
the currency EVEN FURTHER, INCREASE YOUR TAX BURDEN, even- more so and
PUT YOU IN DEBT, to an even greater extent and against your will. -Then
they do have the cheek to ask you to praise them for- this and to vote
for them. - J. Z., 18.9.92, 1.5.97.
BUDGETS OF GOVERNMENTS: They indicate how the
loot is to be -increased, at the expense of the tax slaves and how it is
to be -distributed among the politicians, the bureaucratic empires and-
their favourites. - The whole tragicomedy is treated not as a -farce or
a crime but put on the same moral level as a private or- company budget
that only honestly disposes of the own and honest earnings. -Calling a
wolf a sheep does not turn him into a sheep. Calling a- robber a benefactor
does not turn him into a benefactor. One can -rightfully distribute handouts,
investments and subsidies and- loans only from the own property. We should
as much as possible -avoid using the misleading or cover-up or obviously
dishonest and- false terms that governments want us to use to be able to
continue fleecing their victims with their consent. - J.Z.,-25.9.91, 27.4.97.
BUDGETS, SUPPLEMENTARY BUDGETS, TAXES & INFLATION:
Once can restrain an inflationary trend by introducing a supplementary
budget which brings increased taxes. - Popular opinion. To the extent that
it would introduce whatever is sound in tax foundation, this might be achievable
for the government's paper money circulation. But for all other spheres.
into which legal tender and monopoly currency is forced, it is wrong. To
the extent that all free and competitive money issues are suppressed and
coercively replaced by government paper money, these sphere are already
inflated by that paper money. They would accept tax foundation money
only to the extent that they needed it for the payment of these tributes.
Any excess beyond that is already forced into it because people do need
some money, have to accept it, have to accept it at par and are not allowed
to replace it, discount it or reject it. How much government money could
circulate under free market conditions, without the issue monopoly, without
legal tender and without taxation and by governments without a territorial
monopoly? Only voluntary contribution and subscription monies issued by
voluntary and only exterritorially autonomous communities could then remain
in the sphere of the former governmental forced currency. They would be
in free competition with all privately or cooperatively issued alternative
currencies. - J. Z., 6.4.97. - Even when annual budgets are replaced by
bi-annual or quarterly budgets, monetary despotism would remain, with its
inflationary, deflationary and stagflationary effects but instead of annual
stop and go policies we would have half-yearly or quarterly ones. And the
adaptation would and could never be as accurate as would occur naturally
and freely under monetary freedom. The victims of monetary despotism and
taxation should also ask themselves whether they should be taxed to make
up for the inflationary spending of governments, through additional legal
tender issues, suffer extra taxes to make up for the mistakes of politicians
and their central banking system, i.e., taxed to make up for the
inflation tax. If a gallows currency is not introduced (Hanging those responsible,
finance minister and central bank president, when they have, once again,
depreciated the forced and exclusive currency), then perhaps another response
would somewhat help: Reduce the real purchasing power received by all politicians
and bureaucrats at double the rate at which a currency is inflated! That
might give them a vested interest in not inflating their paper currency.
At present they have a vested interest in inflating it. - J. Z., 6.4.97.
BUSINESS SECRETS: Among other things, in a sound
alternative- issue, clearing and credit system, there will be no business-
secret. Either it will not be assumed to be necessary and- justified or
it will not be planned in, right from the beginning -of competitive issues
or current and clearing account services. I -would also predict that issuers
or account keepers who would not - claim "business and privacy secrets"
in this respect, would -be more successful, i.e. more used, than the other
ones would be.- - J. Z., 3/97. See : SECRECY.
BUY AUSTRALIAN (GERMAN, ENGLISH, AMERICAN, etc.):
If -Australian money consisted of a number of competing Australian -currencies,
all of them truly based on Australian goods and- services, then and automatically,
all spending of it would lead- to corresponding sales of Australian goods
and services, by -redeeming this money in the Australian goods and services
it is -based upon. Even if some bought only imported goods with such- currencies,
they would inevitably stream back to pay for the same -amount of Australian
exports. - It is also true that even the central bank's State paper money,
when used in paying for -imports, has ultimately no value for the foreigner
than by being -returned to pay for Australian exports. But there is not
time -limit on this kind of paper money, as is on private "ticket" -money.
Moreover, foreign central banks, in their foolish grasp -for and accumulation
of "reserve currencies", might retain a not- yet too depreciated state
paper money for years to decades. This -would mean that for these periods
we would have got the imports -as interest-free loans. But our central
bank might not- sufficiently replace these notes, hoarded in foreign countries,-
perhaps also by private citizens, which may have reasons to trust their
own government's paper money even less. Consequently, the- own circulation
of exclusive and forced currency might become- correspondingly deflated.
Such a diminished reflux of Australian notes might also -boost the primitive
notion of "buy Australian!" - Compare also a -hypothetical payment of imports
with gold coins. They would not -necessarily or at all return to us for
Australian exports, immediately or soon. The whole world market would be
open for -them. Only according to the "law of fluctuating gold quantities"-
would they ultimately tend to return to an Australia whose gold -prices
for goods would have become lower than those on the world- market, because
of a gold deflation (assuming gold to be an -exclusive currency). If, however,
we are free to issue at any time as many exchange media as we need for
our transactions and -also free to choose e.g. a gold weight unit as our
value -standard, then, although our gold stock would be reduced, our- gold
weight unit prices would not be. Only actual payments in -gold coins would
become rarer. - Anyhow, this kind of model of an- exclusive gold currency,
that once spent does not return- automatically to the spender, still spooks
in the heads of people- long after gold coin circulation has disappeared
and makes people -jump to wrong and protectionist conclusions like: "Buy-
Australian!" - J. Z., 29.9.93, 25.5.97. - Did you ever hear or see a good
refutation of this stupid little slogan, from any Dr. or Prof. of economics
or any commentator in the mass media? It is endlessly repeated in advertisements
- without being accompanied or followed by any criticism that I am aware
of. Oh the power of the great lies, myths and prejudices - while there
exists no encyclopaedia to systematically collect and publish their best
refutations sufficiently. - J. Z., 8.9.02.
BUY AUSTRALIAN, AUSTRALIAN MADE: If Australian
consumers were- free to accept and spend, rate or refuse and also, as producers-
and traders, to issue and offer and pay with their own printed or -coined
assignments upon their own goods- and service offers, in- their own tokens,
in standardised and convenient money -denominations (different in appearance
from any other money -issues), and using for these alternative exchange
and clearing- media any value standard that pleases them, as long as it
does, -then they would come to automatically buy Australian goods and-
services to a large extent. Their money would have no other value -or use
for them. Moreover, it would often enable them, in the -first place, to
do so, by this very freedom to issue and use their issues as their means
of payment. Moreover,- then they would be able to obtain or issue just
as many sound- means of payment as they would need for all their transactions
-and would no longer be misled, defrauded or cheated, exploited- and taxed,
restricted and held back by the despotic monetary- policies of the central
bank: the Reserve Bank, with its forces -and exclusive paper currency,
given legal tender powers (-compulsory acceptance and compulsory value,
no matter how much -it has been depreciated). Nor would they be rendered
unemployed- by being forced to sell or work only for this exclusive and-
forced currency, although it has often been inflated, deflated or -stagflated
and has never managed to supply all of them with- exactly the quantity
of sound exchange media that they do need- for their purposes. No central
bank can achieve that. Free- competition and free cooperation would work
its wonders, here, too, if allowed to do so. Under freedom the good money
would -drive out the bad, as it should, by rights. - J. Z., 19.11.93,-
24.4.97. - By the way, any private currencies, redeemable in Australian
goods and services only, if they were used to pay for imports would, in
the hands of any foreigners, have no other value than as a purchasing medium
in Australia. Thus, these imports would also lead to the purchase of Australian
goods. With government legal tender getting into the hands of foreign merchants
this return is less certain. They might then end up, for many years, in
the safes of foreign central banks, as "foreign exchange reserves". - J.
Z., 7.9.02.
BUY AUSTRALIAN. "Buy your kid a job: Buy Australian".-
"Australian Made" or: "Made in Australia" and : "Buy Locally!": -Give a
rational and new meaning to these slogans. Mobilise your own ready-for-
sale goods-, service- and labour supply capacity monetarily. Pay, -as far
as you can, i.e., as far as you can find voluntary acceptors for them,
with your own assignments or clearing -certificates or IOU's, or purchasing
vouchers, goods warrants- and service scrip - upon whatever you have to
offer, in money -denominations, but avoiding the money terms and standards
of the -government - due to its despotic monetary laws. All your local-
spending with these would, inevitably (apart from the actions of- collectors)
come back to you in form of extra sales. If, -instead, you spend government
money then it might never come back -to you or to your local community.
- But be not satisfied with -whatever you can achieve in this way. At least
discuss completely -free clearing and note issues in your local community,
as a- theoretical possibility and a self-help action as soon as you- could
legally or safely do so. - In the meantime, issue your -tokens and mutually
accept them at their agreed upon values, even -if none is stated in them.
(only "bucks", "units" or "notes" or "points"). But you are already free
to issue gift- vouchers in money denominations and there are, in cities,
shop- currencies for consumer credits. Try whether you could issue them
outside of consumer credits, especially in wage payments to young -people
out of jobs. At least start thinking and discussing such- options and their
consequences. Do not let yourself be disabled,- fleeced and exploited by
the central bank and its paper money any -longer. End your self-caused
ignorance of your monetary freedom- options. If your monetary freedom remains
effectively suppressed-, then at least protest, e.g. by putting signs in
your shop windows-: "If a local currency could be freely issued in this
community, -I would be one of the first to welcome it and readily accept
it. -I do not like to be dependent upon the government's paper money, -with
its inflations, deflations stagflations, credit--restrictions, sales difficulties,
numerous bankruptcies and mass -unemployment as a consequence!" - Even
while you are not yet free -to issue your own sound money and drive with
it unsound monies out of circulation, including the government's, at least
talk -about sound and alternative money options, with your neighbours,-
family members, friends and acquaintances. That is more important- for
you, in the long run, than talking about the weather, your- sicknesses,
your kids and your favourite sports teams. - J.Z., -22.3.93, 27.5.97.
BUY AUSTRALIAN: Australians would inevitably buy
largely- Australian made goods if only they were free to issue and accept
-alternative and competing local, private, cooperative and- optional currencies
that are based on local goods and services- ready for sale. - A cinema
owner who can pay for all his expenses- with tickets will have no trouble
getting his seats "sold", simply by the -return of the tickets to him,
in payment for the seats he offers for his performances. - Why bother to
export anything at- all when we are only willing to buy Australian goods?
- What, then, could we do with the sales proceeds from our exports? - J.
Z.,- 27.9.93, 29.9.93 & 24.4.97. 8.9.02
BUY AUSTRALIAN: BUY YOUR KIDS A JOB! BUY AUSTRALIAN,
-UNEMPLOYMENT & IMPORTS & MONETARY FREEDOM. - Buy your kids &-
yourself a job by buying locally, Australia-wide and -internationally -
with your own "Australian-made" money tokens -and clearing certificates
based on your own goods, products, services and labour. The government
is quite unable to manage -this Australian job, for you. - J. Z., 19.4.93.
- On the contrary: It has outlawed such self-help steps! - J. Z., 6.9.02.
BUY AUSTRALIAN: This popular slogan makes sense
only as an- advice to let all national and local purchasing power be directly-
based upon Australian labour, services and goods, in the form of- competitively
issued alternative currencies, optional and market--rated, which the issuers
would merely have to convert into their- goods and services, upon demand.
- As for external trading: Once Australian clearing -certificates, redeemable
only in standard Australian export- goods, like wool, liquid gas, coal,
wheat, meat, etc., are freely- used and accepted, to pay for imports, then,
indirectly, they buy, through the- foreign buyers and consumers, Australian
goods and services, when these clearing- certificates are returned to Australia
in payment. They have no other value and thus will be used in this way.
- Generally,- I would say: Buy Australian goods only if they are cheaper
or -better or do, for some other and personal reasons suit you more. Otherwise,
buy- foreign goods that suit you. Sooner or later, even the- Australian
government's paper money will return to Australia to -pay for its exports.
It has not other value for foreigners. (Apart from being hoarded as "foreign
exchange" in some central bank. Sooner or later most foreign governments
will spend that foreign exchange reserve as well. But the time delay involved
may be considerable. But then and to that extent, and for this time, Australia
would actually have been able to buy and use foreign goods and services
- just for the price of getting deposited in the vaults of these banks
some scraps or printed paper. Thus it would have received a foreign loan,
interest free, in goods and services for this period. A real disaster this!
- J.Z., 8.9.02.) So- when you buy imported goods you do buy Australian
goods indirectly. -To that extent the slogan is senseless. But when your
A $ is not -as much depreciated as the currency in a foreign country then
-private persons there and its central bank might use it to hoard, -thus
introducing a time delay, in which no corresponding demand for Australian
goods and services arises. This is one of the many- defects of forced and
exclusive currencies. Their hoarded notes are not easily, fast and efficiently
replaced by new issues. This is already a- sufficient reason to exclude
them for import payments. Private, competitively -and cooperatively issued
international clearing certificates are- a good substitute for them. Professor
E. Milhaud and Ulrich von- Beckerath have described their principles and
practices. - Buy- Australian is just a modern version of mercantilism and
of the- dogmatic statement that the own money should stay in the own- country,
before the truths of Free Trade were at least somewhat- realized for a
few decades. Now, with such notions, we are back to the wrongful, harmful
and expensive- morass of protectionism. - J. Z., 27.7.93, 24.4.97, 8.9.02.
BUY AUSTRALIAN? The only way how buying from yourself
and your -neighbours can be assured is by issuing your own exchange media
as far as possible, i.e. buying as many of your requirements and- paying
as many of your debts with them as possible. They would,- obviously, have
no other foundation than your own readiness to- accept them in payment
of your goods and services and for this- they would inevitably return to
you. Buy with your own local- currencies, which only oblige you and they
will inevitably return -to you in payment for your goods and services,
like any other -IOU. Monetize your own goods and service supply capacity.
You do- not even have to be an Australian nationalist to do so in your-
own interest. As far as Australian imports are concerned: See to -it that
they are paid for with competitively issued assignments -to Australian
export goods and services. Then, obviously and inevitably, corresponding
exports will follow these imports,- obviating your nationalistic slogan
appeal. - J. Z., 27.8.95,- 19.3.97.
CANCELLATION OF SHOP CURRENCY OR OTHER CURRENCIES
THAT HAVE RETURNED TO THE ISSUERS: Sound money would rather oscillate than
circulate permanently. (Rare metal coins and some cheap metal money substitutes
excepted, for purpose of small change.) It would be issued, frequently
or constantly, as required, and frequently to constantly return in payment
to the issuer. As turnover-credit money, not intended to be hoarded but
to be spent, in its reflux, it might have only a limited "circulation"
or oscillation period. As such, upon return it should be cancelled, rather
than issued again, for the still remaining stretch of that period. To replace
it by newly issued other paper currency is easy and cheap enough. This
would also facilitate the control of the reflux of each series and quantity
of such money that is issued. To prevent forgery (a risk greatly reduced
for oscillating money with a limited circulation period and circulation
are and acceptance foundation) these competing notes, too, would be consecutively
numbered. The return of all numbers of a series could then be easily checked
- and forged notes rapidly discovered. Whatever current issue and reflux
details the issuer may want to publicize, also whatever special advertisement,
he could include on each new batch of notes issued. The frequent renewal
of notes would also be more hygienic than notes that have been in the hands
of hundreds or thousands of people. And their texts would be more legible
than that of much handled notes. For savings purposes notes with a limited
circulation period could be exchanged into wanted securities. - J.Z.,
27.8.02.
CAPITAL REQUIRED FOR BANKS OF ISSUE? Banks of
issue require-n either a saved up capital of their own, nor investments
by -others not a guaranty capital in case of their liquidation. What -they
do need is at least a leased office, office equipment a -trained staff,
a printer's credit and an issue and reflux -technique and agreement on
it with the local businessmen, who- provide the "cover" and "redemption
fund" and "guaranty capital"- with their goods and services, which they
have ready-for-sale,- and an agreement with local employees, suppliers,
tradesmen -and professionals to be paid in the notes of the bank of issue,-
at least as long as it stands at par with its nominal value. -Moreover,
full openness of all transactions and publicity would be needed for all
its issue details, in order to dispel ignorance, prejudices, distrust and
slander. In other words,- monetary freedom is only possible within sufficiently
enlightened- circles. - J. Z., 3/97.
CAPITAL SECURITIES VS. CLEARING CERTIFICATES:
See : APHORISMS ON- THE MONEY PROBLEM.
CAPITALISM WITH & WITHOUT MONETARY FREEDOM:
CAPITALISM, LAISSEZ FAIRE, FREE ENTERPRISE, FREE
MARKETS, FREE TRADE, FREEDOM OF CONTRACT, MONETARY DESPOTISM & MONETARY
& FINANCIAL FREEDOM: Too many advocates of economic freedom have only
a limited horizon or blinkered view of the economic freedom potential.
They fix most of their attention on a few economic liberties and interventions
and ignore major ones, like a free and competitive supply of exchange media
and free choice of value standards, and fully free clearing rather than
imposed obligations to deliver gold, silver or legal tender in payment
of debts, although these are obvious alternatives to the ruling monetary
despotism of today. Without monetary freedom all other economic liberties
are greatly devalued. And financial freedom requires also not just some
degree of deregulation and liberalisation or denationalisation but a complete
freedom alternative to financial despotism: freedom to issue, free international
and internal exchange rates, free transferability of all capital, absence
of taxation, absence of imposed regulations, absence of monetary despotism.
Under full financial freedom any normal working person in a developed country
could become a multi-millionaire through his old age security savings,
productively invested, credit-insured, at the highest interest rate obtainable,
not subject to inflation, interest regulation, taxation, forced loans,
social security levies etc. - If that fact, calculation and tabulation
becomes wide enough publicised: The government prevents us from becoming
millionaires, by honest labours and investments, then we will have a bloodless
revolution pretty soon. - Likewise, once the hundreds of millions of unemployed
come to understand that monetary despotism keeps them unemployed and that
monetary freedom could provide full employment for them, within hours to
days, almost every present government will be shaken in its foundations
if not overthrown - unless it jumps fast on this bandwagon. - If for truths
like these a proper ideas market existed already, then we could benefit
from them very soon. But so far not even one in a thousand is interested
in such an ideas market, even among the free marketeers! - J. Z., 4.12.85,
9.5.97.
CASH HOLDINGS, QUANTITY THEORY, CIRCULATION SPEED
& A VARIETY -OF COMPETING MEANS OF PAYMENT & CLEARING: When there
is a variety of different means of payment and not- everyone but only issuers
and their debtors will be under- obligations to accept a particular one
of them, one might come to expect that cash holdings, in a variety of exchange
media, might- increase in total. But that need not be true. It would, firstly,
-be counteracted by the right of refusal towards means of exchange -for
which one has little or not use at all. Then there would be -those who
accepted some notes only because they had a discount- and because they
could rapidly spend them at the issuer for wanted goods -or services, due
to the discount. -Then there is the limited circulation period of most
privately -issued means of exchange, which assures their fast reflux, before
-that period is expired. One would also have the option to issue -one's
own exchange media and thus largely refuse to accept any or -many other
currencies. Then there is the effect of the better -monies driving out
the bad ones, so that only a few good ones -would survive in general circulation,
those which are widely -acceptable, at least locally. - Exchange media
that one would- have to keep in one's wallet for a long time, before one
had an-y opportunity to use them, would rarely ever get into and get stuck
in a- wallet. People can learn to distinguish between good shares and attractive
girls and wallflower girls. They could also go for -bargains and sound
values in currencies and avoid the rest. -- Another general effect of monetary
freedom might be that cash -holdings would be reduced because money would
be less scarce. -One would find it much easier to sell for payments in
sound & -competitive currencies than for monopoly money - and
one could- also issue one's own or one's own clearing certificates. Credit,-
on a sound value basis, would also be easier to obtain. Thus the -need
for cash holdings, for emergency situations, would be reduced. Under a
sound currency system most people would also be -better covered by insurance
arrangements against emergencies. - -J. Z., 29.3.93, 27.5.97.
CASH PAYMENTS & GOVERNMENT ATTEMPTS TO ELIMINATE
THEM: For tax-"-reasons" and in the pursuit of its drug war, governments
are more -and more on the road to eliminate cash payments altogether. They
wish to have all non-cash transactions becoming visible to them-, on their
computers and accessible to their form of legalized -looting. Unless
we can sufficiently Privatize our computerised- exchanges, we will thus
become more and more exposed to Big -Brother, his exploitation and abuses.
I am in favour of our doing- away with government cash and non-cash transactions,
government -taxes and subsidies, government guarantees and "insurance"
-schemes, altogether, in all spheres, at least for volunteer- communities
which know and want to arrange their affairs in a -more just, non-exploitative
and convenient way, one that does not- endanger them and their property
and exchanges. - J. Z., 3/97.
CASH PAYMENTS VS. NON-CASH PAYMENTS. In recent
years most wages -and salaries were also paid directly into bank accounts
only and -spent from there via cheques and credit cards, without using-
cash. Thus the proportion of cash habitually kept available, in- normal
times, and formerly necessary for most wage and salary payments, becomes
a smaller and smaller fraction of all the -non-cash means of payment at
any particular time. When, -nevertheless, by law and juridical decisions,
every debtor- remains obliged to pay in cash upon demand by a creditor,
then a- large crisis factor is thereby built into the payment system,-
especially a monopolised and regulated one, that would require- considerable
time to provide any extra cash that is wanted and- that may even be legally
prohibited from providing it. - J. Z., 3/97.
CASINO MONEY: Casino money is also possible and,
to some extent,- already practised, if only to ensure honesty among a casino's
-employees. So, the customers of a casino usually have to buy -first the
casino's own token money before beginning their games in it and they have
to redeem their winnings, if any, in-to outside money, before they leave.
Is casino money as taxed,- regulated and mismanaged as government money
is? Is it ever -inflated? Is it ever deflated? Or is even a stagflation
avoided- in it? - J. Z., 19.3.97.
CENTRAL BANK POLICIES TOWARDS COMPETING CURRENCY
ISSUES: Survey, -country by country, with relevant legal cases cited and
-abstracted.
CENTRAL BANKERS & THEIR WISDOM OR LACK OF
IT REGARDING THE CAUSE- & CURE OF UNEMPLOYMENT: "Bankers wash their
hands of jobless", by George Graham of the FINANCIAL TIMES in Jackson Hole,-
Wyoming", taken from a column in THE AUSTRALIAN, 30.8.94, from which I-
extract the following quotes which speak for themselves or,- rather, against
the central bankers and their "experts": -"Central bankers from 19 countries
gathered here at the weekend -at the invitation of the Federal Reserve
Bank of Kansas City in- the shadow of the Grand Teton mountains to discuss
unemployment- and came away with the reassuring message: it is not their
-problem. A bevy of academic economists agreed that most of the- high unemployment
rates in industrialised countries was -attributable to structural factors
- principally the way the- Welfare State distorts an unemployed person's
incentive to work -- and not to the cyclical demand factors which are within
a central -bank's power to influence. - Heads nodded piously in the audience
-as Paul Krugman, a professor at Stanford University, said it was- now
all but universally accepted among academic economists, -though still suspect
to politicians and journalists, that there -was a natural rate of unemployment.
A central bank could expand- demand and push the actual rate of unemployment
below that level -but only at the expense of accelerating inflation....
This is- music to the ears of most central bankers, who have long been
-defending themselves against the accusation that they are buying -lower
inflation at the expense of higher unemployment...."
CENTRAL BANKING & COMMUNISM, EAST & WEST:
Totalitarian communism in East and West, go on and on, at least in the
following forms: the monetary despotism of central banking (See point 5
of the platform of the Communist Manifesto), territorialism, taxation,
welfare statism, collective decision-making on war and peace, armament
and disarmament, international treaties, economic policies, migration and
trade, labor, housing, roads, transport, buildings, libraries, postal services,
policing, research and education. Collectivist mass murder preparations
are also very much "scientifically advanced." Their targets: the masses
of the people, rather than their Big Brothers and "statesmen". (By
comparison the mass murder camps of the Nazi regime were primitive.) Dozens
to hundreds of millions of people can now be murdered by "great leaders"
and button pushers in minutes to hours, largely in automated ways. And
such powers are hardly questioned at all . To that extent communism hasn't
fallen but gained an almost universal victory over public opinion, public
actions and public institutions. Naturally, all the problems inevitably
associated with these communistic institutions go on and on. - J.Z., 26.8.91,
24.8.02.
CENTRAL BANKING & FORGERIES: The central banks
print more of -their depreciating currencies, because their issue monopoly
and - legal tender power allows them to do so, than all the criminal- forgers
in their countries do. Alas, they can't be accused of -forgeries since
one can hardly forge one's own notes. But they do -certainly operate under
false pretences, namely their pretended- willingness and ability to prevent
deflations, inflations and stagflations. Central banks also pretend to
be able to help governments out of their -financial difficulties without
depreciating their forced and -exclusive currencies. - J. Z., 8.11.92 &
15.4.97.
CENTRAL BANKING & INTEREST RATE POLICIES :
Central bankers, other -bankers, financial journalist and economists nowadays
and as a -rule to not seem to be able to think of and propose anything
-better than putting the interest rate or our despotic monopoly -money
either a few notches up or down. - J. Z., 3.10.96.
CENTRAL BANKING & ITS FALLACIES: I would like
to see a book -written with this or a similar title, including the best
refutations of these -fallacies so far found. For easier recognition and
referencing these fallacies should perhaps not only be alphabetized under-
catchwords and indexed and cross-referenced but also be numbered. -I would
welcome any such manuscripts or essays or drafts of them- for microfiching
in my series. The ultimate book on this subject- would have to result from
collaboration. For no one has access to- all the monetary freedom writings
- or would have time to read -them and extract them sufficiently. The literature
on monetary -despotism, defending it or regarding it as self-evident or
-beneficial, is much more plentiful than the rich literature on- monetary
freedom (largely hidden from public view). When I- looked for writings
on central and free banking at the State Library of NSW, back in 1959 or
1960, I found ca. 400, a -bookshelf full, discussing approvingly only central
banking and- no work critical of it at all. Then I thought that I might
get- around to extract their main arguments systematically and to have
-the time, energy and knowledge to gradually refute most of them.- Now
I know better. Each individual, even with the best of will,- can only do
so much. If I had tried this task on my own, to the- exclusion of any other,
I might have only provided another- Don-Quichote fight against the wings
of a windmill. - J. Z., -8.4.97.
CENTRAL BANKING & LEGAL TENDER, FORCED CURRENCY,
MONEY MONOPOLY: By legalizing the monopoly and coercive powers of the central
bank we have given the government a blank cheque drawn on our earnings
and our property, in form of its legal tender (compulsory acceptance and
compulsory value) paper money or requisitioning certificates or forced
currency. It amounts to a camouflaged tribute system because it is not
recognized as such by the majority of the population, persuaded that the
central bank would be for the common good.
CENTRAL BANKING & MONETARY DESPOTISM: "Under
government- patronage the monetary system has grown to great complexity
(*), but- so little private experimentation and selection among alternative
-means has ever been permitted that we still do not quite know what -good
money would be - or how good it could be. (**) Nor is such- interference
and monopoly a recent creation: it occurred almost- as soon as coinage
was adopted as a generally accepted medium of- exchange. Though an indispensable
requirement for the functioning- of an extensive order of cooperation of
free people, money has -almost from its first appearance been so shamelessly
abused by -governments that it has become the prime source of disturbance
of -all self-ordering processes in the extended order of human cooperation.
The history of government management of money has, -except for a few short
happy periods, been one of incessant fraud -and deception. In this respect,
governments have proved far more -immoral than any private agency supplying
distinct kinds of money -in competition possibly could have been. I have
suggested- elsewhere, and will not argue again here, that the market economy-
might well be better able to develop its potentialities if government monopoly
of money were abolished." (Hayek, 1776/78,- and 1986: 8-10.) - HAYEK, F.
A., The Fatal Conceit, 103/104. - (*)- This complexity is built upon simple
despotic foundations: Note- issue monopoly & forced acceptance and
forced value or legal -tender for the notes. The rest is more or less only
-window-dressing and false pretences. - (**) Illegally numerous -monetary
experiments have taken place. But precisely because they -were not legal
and not supported by most scholars, they did not last long enough and the
records of- these experiments are rather incomplete. Moreover, they were
-never fully gathered together, translated into the major- languages and
then fully explored theoretically. But scholars -like Ulrich von Beckerath,
in a life-long effort, have come as- close to such an exploration and to
sound theoretical -conclusions based upon them, as an individual, largely
on his- own, could. - J. Z., 27.5.97.
CENTRAL BANKING & NATIONAL INDEPENDENCE: National
independence -does not mean e.g. a national central bank or currency board
but, rather, the independence of a nation and of all its citizens from
-any central bank and any other centralistic, monopolistic,- despotic and
territorial institutions. - J. Z., 5.9.92, 22.4.97.
CENTRAL BANKING & THE MONEY ISSUE MONOPOLY
AND LEGAL TENDER -POWER: If the central banking system and its paper money
were -really so efficient and popular as the government presumes it to-
be then it would not need any monopoly and regulatory powers nor- any legal
tender power to achieve a ready acceptance of its paper -money. - Then
it could also continue on and on, at the risk and -expense of voluntary
victims only, as many churches and sects did -and do. - J. Z., 26.3.93,
27.5.97.
CENTRAL BANKING & THE REDUCTION OF ITS FORCED
& EXCLUSIVE- CURRENCY TO A COMPETITIVE & OPTIONAL TAX FOUNDATION
MONEY ONLY-: How fast would the central bank's forced and monopolised-
currency disappear or become reduced to a relatively harmless and- even
(to the tax slaves) somewhat helpful tax foundation money- (while these
tribute payments are still tolerated), once it- were subjected to free
competition from several sound, private -and alternative currencies that
are optional and market rated- against sound alternative value standards,
freely chosen, too?- How fast could the State paper money be abolished
or so reduced?- - Almost overnight, if this monetary revolution is well
thought- out and prepared by enough people. The sooner the better. - J.
Z.,-19.8.92., 23.4.97.
CENTRAL BANKING : It is absurd to speak of a free
market, free- enterprise, free competition, free exchange, free trade,
under -the monetary despotism of a central bank and its exclusive and-
forced legal tender currency, not to speak of the other privileges and
powers granted to it. - J. Z., 23.9.92, 14.4.97, 6.9.02.
CENTRAL BANKING DECENTRALIZATION: Somewhat decentralized
central banking is still central banking and not free banking. - J.Z.,
26.8.91. - Classical instance: The Federal Reserve System of the U.S. -
Some have misread the FED so far that they think it is a private &
capitalistic bank. Some still remain unaware of its legal tender and of
its monopoly power, although they have handled its money often enough and
have experienced the result of its actions. The Federal Reserve Act of
1913 and all its amendments, is so badly publicized that I have come across
a copy of it only once, in the hands of a Social Credit advocate. The issue
monopoly clause of it was so well hidden that I could not find it in a
hurry. That may have been intentional or the result of the usual bureaucratic
bungling even in drafting legislation. - J.Z., 26.8.02.
CENTRAL BANKING, ACCOUNTS OF OUTLAWED GROUPS:
Somewhere and some- years ago I found a hint that a central bank has been
instructed- to stop payments of the accounts of all outlawed groups. Thus,
-merely by one of an avalanche of interventionist laws, which no -one has
the time to fully peruse, any group could be outlawed and -its bank accounts
confiscated. The abuse potential of this power -against political opponents
is immense. Are ordinary criminals,- who committed crimes of violence,
treated as severely? Are- criminals in office so treated? - J. Z., 1.5.97.
CENTRAL BANKING, CENTRALISM, MONOPOLISM, THE POWER
OF IT : The most important, centralistic and monopolistic economic institution
of the Australian Federal Government is its Reserve Bank. - We want to
break its stranglehold on the economy - not by destroying it but by depriving
it of its privileges and powers, by introducing free and decentralised
competition against it. Thereby we could overcome the depression, unemployment
and inflation it has caused. - Try exchanging without money and you will
soon find out how large your dependency on the central bank and its exclusive
currency has become. - Allow any employer to offer, in payment of wages
and any employee to accept any other exchange medium that is agreeable
to him. Do not force both to deal only in a monopolistic and also rapidly
deteriorating and otherwise mismanaged exchange medium and value standard.
Let's have the exchange media as competitively supplied as knives and forks
are - and we will have no shortage of them, either. - With sufficient sound
exchange media, sound value reckoning, free pricing and when no job or
trade is closed to anyone by any monopolies, then unemployment could be
done away with within hours to days in almost all cases - by people who
understand and are free to apply the monetary freedom techniques. - J.
Z., 1985.
CENTRAL BANKING, COMMUNISM, VOLUNTARISM, PANARCHISM,
MONETARY FREEDOM: The communist central banking system, as well as the
communist system as a whole, like any other system or belief-construct,
should be confined to volunteers only and that requires exterritorial autonomy
or experimental freedom for all communities. - J.Z., 23.9.99, 24.8.02.
CENTRAL BANKING, EURO-CURRENCY, WORLD BANKING,
INTERNATIONAL- MONETARY FUND (IMF) & MARXISM, COMMUNISM, STATE SOCIALISM
OR STATE- CAPITALISM, MONOPOLISM & ANTI-MONOPOLISM: Central Banking,
in -its national, Euro-currency and World Banking ideas and practices,
exemplifies of the central Marxist error that to defeat "monopolies"- (usually
quite wrongly defined) you ought to establish,- instead, a nation-wide,
European or even world-wide monopoly,- rather than abolish all monopolies
and introduce free- competition for all productive, creative and free exchange-
activities. - J. Z., 14.8.89, 29.4.97.
CENTRAL BANKING, INFLATION, PAPER MONEY, RESERVE
BANK OF AUSTRALIA, AUSTRALIAN DOLLAR AGAINST US DOLLAR: How much longer
will it take "our" official "guardian" of "our" currency to reduce the
value of the A $ to 1 cents in U.S. currency? It has already brought the
value of the Australian dollar down to 47 US cents. And that comparison
does not even take into account how much the US $ has been depreciated
in the meantime, by the same method and kind of institution. Against the
former value of the US $ the A $ may already be down to 1 US cent! - J.Z,,
1/10/01, 27.8.02.
CENTRAL BANKING, INFLATIONS & PRICE DEVELOPMENTS:
Central banks are destroyers of the values of their currencies. Just compare
the price history. - J.Z., 31.3.02.
CENTRAL BANKING, LEGAL TENDER & ISSUE MONOPOLY:
Was there ever a- large-scale and persistent paper money inflation, inflating
the -whole price and wage level, without these three pre-conditions?- Economists
and historians should be able and willing to check -these relationships
out. If the finding is that there was not and there cannot be such an inflation,
by the very nature of monetary- exchanges under freedom, then these findings
should be publicised- and lead to resistance against monetary despotism.
- J. Z., -15.4.97. - Can they really call themselves economists and historians
if they do not engage in such surveys?
CENTRAL BANKING, LENIN & COMMUNISM: Lenin
knew it. He said that- establishing a central bank was 90% of taking over
a country. - -James P. Hogan, Mirror Maze, 315.
CENTRAL BANKING, MONETARY EXPERIMENTATION, DEVELOPMENT
& FREEDOM: -"Like morality, law, language, and biological organisms,
monetary- institutions result from spontaneous order - and are similarly
susceptible to variation and selection. Yet monetary institutions- turn
out to be the least satisfactorily developed of all- spontaneously grown
formations. Few will, for example, dare to- claim that their functioning
has improved during the last seventy- years or so, since what has been
an essentially automatic- mechanism based on an international metallic
standard was -replaced, under the guidance of experts, by deliberate national
-'monetary policies'. Indeed, humankind's experiences with money- have
given good reason for distrusting it, but not for the reasons commonly
supposed. RATHER, THE SELECTIVE PROCESSES ARE -INTERFERED WITH HERE MORE
THAN ANYWHERE ELSE: SELECTION BY -EVOLUTION IS PREVENTED BY GOVERNMENT
MONOPOLIES THAT MAKE- COMPETITIVE EXPERIMENTATION IMPOSSIBLE." - HAYEK,
F. A., The Fatal -Conceit, 103/104. - Alas, government interventionism
with -exchange media, clearing and value standard had begun, many -centuries
before. Hayek admits this in his next paragraph. They -have, in almost
every sphere, prevented or suppressed spontaneous- development into the
best forms possible for particular times,- people and circumstances. For
instance, the intervention with- "truck" payments went on in Europe for
ca. 500 years and did not -permit them to develop beyond some primitive
and still very -inconvenient forms. However, even these were often the
only- "payment means" that employees could readily offer and neither the
-employers nor the employees cared much then - or now, about how- such
private payment options could be greatly improved and made even very attractive,
superior to the coins of the realm or the- paper monies of central banks.
- J. Z., 27.5.97.
CENTRAL BANKING, MONEY DEPRECIATION, "GUARDIANS"
OF THE CURRENCY: Central banks are not "guarding" their nationalized paper
money currency against depreciation but, thanks to their monopoly and legal
tender coercive power, they are systematically and regularly depreciating
them - while suppressing any competition against their misrule and abuses.
- J.Z., 28.4.02.
CENTRAL BANKING, MONEY DEPRECIATION, CENTRAL BANKING
POWERS &- ACTIONS: How, when, how often, by what means and why, do
central- banks, not private forgers or issuers or "creators" of money,
depreciate national currencies? Do they report all the relevant -facts
and powers and consequences to the general public? Do they- promote monetary
enlightenment and emancipation or, rather, -monetary ignorance, prejudices,
myths and outright lies? - J. Z.,-8.11.92, 15.4.97.
CENTRAL BANKING, MONEY MONOPOLY, MONETARY DESPOTISM,
GOVERNMENT,- TRUST & CONFIDENCE: A currency entrusted to any government
is -usually as good as lost. - J. Z., 27.1.93.
CENTRAL BANKING, NOTE ISSUE MONOPOLY, REFLUX:
Using a central bank's banknotes it is often easy to get credit paid
in them - but hard to pay it back because these notes, once spent, do not
return automatically to the spender. E.g., tax collectors and other users,
in other localities and industries do "waylay" them. Trade becomes a struggle
for a scarce exclusive currency that is well supplied only in those channels
favoured by the central bank system and governments spending its notes
after first extracting them from almost everyone or simply printing them.
Self-issued notes or notes locally issued in association with others would
return to the issuer or issuers, soon. - J. Z., 13.5.87, 9.5.97, 13.9.02.
CENTRAL BANKING, REDUCTION OR INCREASE IN UNEMPLOYMENT
BENEFITS, -THEIR TRANSFORMATION FROM GIFTS INTO CREDITS & THE DEGREE
OF -UNEMPLOYMENT: The Reserve Bank (central bank of Australia) -proposed
to reduce unemployment benefits in order to reduce- unemployment. While
it is true that one can get almost any degree- of unemployment that one
is able and willing to pay for, the abolition of involuntary unemployment,
in total, should remain- the aim. But, the central bank is the main culprit
with regard to -unemployment although subsidies, price controls, wage controls,
-coercive unionism, collective bargaining, etc., do also play a -role here.
Typically, the Reserve Bank did not propose the -reduction or abolition
of its monopoly, privileges and regulatory -powers, as means towards the
abolition of unemployment. Most of -its directors and employees probably
still imagine that it could- reduce rather than cause and increase unemployment.
Nor did it- propose the transformation of the unemployment benefits from-
gifts into credits, a thought which ought not to be way-out for -any bank.
But then only the central banks have access to the note- printing presses
for their exclusive and forced currency. With -that power, they do not
seriously consider the alternative of- permitting employers to pay and
employees to be paid in- alternative and competing currencies. - To sort
out the moochers from the genuinely unemployed, I would rather propose
an -increase in unemployment benefits but, at the same time, make -them
repayable by the unemployed, even if he might have to sell -his house and
car for this purpose. Moreover, he should see to it -that his family members
and friends do guaranty his repayment, if -necessary. That will tend to
spur them into accepting almost any -job they can get and looking for any
job opening. That would also induce them to accept lower wages or salaries.
But it would- still not suffice to induce most of them to ponder monetary
and- financial freedom as the main cure for unemployment. With the -gambling
spirit probably still rather large among the unemployed, -too, perhaps
it might be worthwhile to get them involved in a- prize competition for
the best ideas, not so far refuted in- literature and practice, to end
unemployment. Let them seriously- search for such ideas and practices.
Let us say that there are 1- million unemployed in Australia (there may
be, governments tend- to understate the case). Then, if every unemployed
just -contributed 1 dollar a month, there could be monthly prizes- of 1
million for the best idea of the month. The scheme could- even be judged
by the unemployed themselves, voting on each- scheme, with its pro and
con, as compiled by them. To simplify -the voting process, one could use
the jury system. 12 of them- would have to agree, unanimously, on the best
proposal for the- month. Such jury sessions should be publicised as much
as -possible. Let the finding and proving the cure for unemployment -be
the job, as far as possible, of the unemployed themselves -- and of anyone
really interested in this question. - The news on -the Reserve Bank proposal
was aired on radio news on 13 Dec.-1993. - J. Z., 23.4.97. - I may be the
only surviving member of -the Berlin Society of 1952 to Fight the Causes
of Unemployment. -It had much to say on this subject which is new still
to most- people, even to those who consider themselves to be experts on
-this subject. See the details in my PEACE PLANS series, all on-
microfiche. - J. Z. - Later I suggested somewhere that half of the money
so collected should be used for the prize money for the best proposal and
the other half for the collection, ordering and publishing of all these
ideas and opinions in the cheapest media, e.g. on microfiche, floppy disks
and CD-ROMs, even paying some of the unemployed for full-time work on this
library, archiving, editing and publishing project. As Ulrich von Beckerath
frequently remarked: Combined purchasing power is one of the greatest and
also one of the least utilised forces in the world. - J. Z., 7.9.02.
CENTRAL BANKING: "Small is beautiful, wrote Prof.
Schumacher, and -by this three-word aphorism, acquired more fame than by
his big -books. Cannot our politicians and economists see that the -principle
applies to banks as well? When this truth glimmers in on -them, they may
discover that it was state interference that gave -us bank monopoly, and
so gave rise to all the other monopolies." - -Henry Meulen, THE INDIVIDUALIST,
6/78, p. 27. - See: -DECENTRALISATION, MONEY MONOPOLY, NOTE ISSUE MONOPOLY.
CENTRAL BANKING: A central bank, like a monarchy
or a monopoly -post office, may, sometimes, be reasonably well run for
a while,- within its inherent limitations. However, in the long run and
for -most cases and times, it is a recipe for planned or unintended disasters.
-- See e.g. Kurt Schuler's writing on the Currency Board version of- a
central bank and Prof. Heinrich Rittershausen's attempt to make -the best
of this evil through his teachings in his work: Die -Zentralnotenbank.
- J. Z., 30.8.93.
CENTRAL BANKING: An engine for inflation and mass
unemployment- and trade depressions and one that often manages to combine
both,- inflation and deflation, to "achieve" stagflation. - But- legislated
into power and upheld by monetary prejudices, it -remains in force to dispense
its wrongs and evils, in all -countries. - J. Z., 10.2.93, 14.4.97.
CENTRAL BANKING: Central banking is the Golden
Calf worship of -today. It offers no benefits but only disasters. But when
has -that ever deterred any worshippers anywhere? - J. Z., 29.12.92.- -
See: MONETARY RELIGION, MONETARY DESPOTISM.
CENTRAL BANKING: Do nothing, be nothing &
dissolution are the -best 3 policies for any central bank. However, they
still have- some penalty lessons to teach to their VOLUNTARY victims and
we- should give them that chance. - J. Z., 7.4.94, 24.4.97.
CENTRAL BANKING: It is based on self-interest
of governments,- that of politicians, bureaucrats and their lobbyist favourites,
-very contrary to the public interest. Otherwise the victims would- not
put up with its powers, monopoly, coercion, meddling, fraud -and false
pretences. It is the most powerful economic institution -in every country.
However, since it is legalized and has a whole -statist faith as its backing,
it goes on and on and is not judged -on its merits or rather demerits but
upon the utopian and State- socialistic dreams that are involved in it.
To this faith it does- not matter that almost all facts speak against it,
since central -banking was established. It even allows totalitarians like
Lenin -to gain power and maintain themselves in power. It even allowed
a -madman like the German emperor Wilhelm II to start and continue WW -I
and allowed Hitler to finance WW II. - Nevertheless, we are not -supposed
to criticise this "holy" institutions and to try to -replace it by free,
cooperative and competitive ones. Nay, rather -have WW III & IV &
V and more totalitarian regimes for further- decades. That, in the minds
of most people, seems easier to bear -than the job of tackling the problems
created by monetary despotism and studying the -solutions of monetary freedom.
- If I were a visiting alien and- looked at this all too wide-spread mentality,
I could understand- if such an alien would say to himself: I have the power
to wipe out- this insect pest on Earth - why shouldn't I use it? Perhaps,-
after a few million years, the cockroaches or butterflies might -turn into
something better! - J. Z., 19.8.92, 23.4.97. - But then this would apply
"collective responsibility" on an even larger scale than the present war
on "Iraq" does, rather than holding Saddam Hussein individually responsible
for his government's actions. For the latter approach one does not need
any large military forces or any war. - J.Z., 7.9.02.
CENTRAL BANKING: National central banks have led
to as many- disappointments as national governments have, national post-
offices, national railways and national roads. Have any -nationalised industries
been successful under their motto: "Not- for profit but for use"? Have
they achieved consumer satisfaction -at less than market prices? Their
subsidised prices should not be -quoted here - without adding the subsidies
that are involved. -How many centuries of central bank failures do we have
to suffer- under before we finally abolish central banks? Price controls-
were tried, again and again, quite in vain, for 4,000 years. So -were inflationary
and deflationary policies by monetary- despotism. One feature, the suppression
of all kinds of truck--payments and truck payment notes, was applied over
at least 4- centuries and in emergencies, caused by the government's monetary-
despotism and in spite of numerous legal and juridical- prohibitions, employers
and employees had to resort to this -self-help means again and again. -
If politicians, their experts- and the whole community will not learn sufficiently
from such -failures, then at least we should set free all the minorities
of- people who believe that they have and can apply a better system,- at
their own expense and risk. We should grant them the same -experimental
freedom that we grant to scientists, artists, -technicians, biologists,
agriculturists etc. Otherwise monetary -science and practice will stagnate
under the rule of monetary -despotism, possibly for further centuries,
if not thousands of- years. - J. Z., 19.8.92, 23.4.97.
CENTRAL BANKING: The central bank, through its
issue monopoly -and legal tender power, has coercively and parasitically
inserted- itself as a third party into almost every economic transaction,
-exploits almost all of us to its own advantage and at the expense -of
our rights, liberties, security, property and earnings, -keeping the economy
unbalanced, throwing it from one crisis into -another and provides us only
with the illusion that a uniform- currency would be a great benefit for
us, and the illusion that -it and only it could manage to provide a sound
currency, although -it has never delivered one so far but has destabilised
the- monetary system as much as possible. This system is legally -upheld,
no matter how wrong, mismanaged and uneconomic it is for- the whole
economy and each of its participants. Those in charge -of it seem to have
adopted the motto of a French king before the -French Revolution: "L'etat,
c'est moi!" and: "Apres nous la- deluge!" (I am the State! - The great
flood will come - but only- after me!) -That any person with great powers
could become so- corrupted and conceited is humanly understandable. But
that- people and even scholars put up with this, not only for years but
-for decades, for generations, is not as comprehensible. Most -totalitarian
regimes have by now been overthrown. The rest might follow, soon. However,
we have established and retained their -most totalitarian institution
everywhere, even in the supposedly- free West! - I, too, am human, but
this is all too inhumane and- alien to me. - J. Z., 18.4.93, 2.5.97.
CENTRAL BANKING: The management of money has not
improved its- quality. - Sir Ernest Benn, The State the Enemy, cover. -
He- should have said: Centralised and coercive management. He might- have
added: It has not managed to provide the correct but for- each day fluctuating
required quantities, either. Instead, it -over-supplied or under-supplied
its exclusive and forced- currency for all too long, almost as a rule.
- J. Z., n.d. &-15.4.97.
CENTRAL BANKING: The very cheek of the central
banks of- governments, forcing themselves as a monopoly mediators into
every -monetary exchange transaction and into every value standard -measurement
within a country and this with a very inferior and- fast depreciating means
of exchange and a rubber band and- manipulated value standard that is close
to the worst of all- which have ever been imagined and practised. And with
all this -they still pretend to be able and willing to sufficiently supply-
the market with exchange media and with a sound currency. It is -like a
highwayman monopolising crime in a country and then- pretending to be a
crime fighter. Could anyone possibly have- accumulated more disqualifications
for the job of supplying a sound value standard and sufficient exchange
media, than have the- central banks, in every country? - J. Z., 19.8.92,
23.4.97.
CENTRAL BANKING: There is not a single good reason
to confine -monetary, clearing or credit competition or cooperative -credit
and monetary arrangements to international competition- between central
banks, their exclusive and forced currencies, for- whole national territories
and their exclusive and enforced paper -"standards" only. That is like
considering politics only from the -point of view of despotism and economics
only from that of -command economies. Those with as limited horizons should
only be- free to limit their own horizons and actions within their own-
limited spheres and associations, not the horizons and actions of
others who do -leave them alone. - J. Z., 18.3.97.
CENTRAL BANKS & COMMUNISM, CENTRAL COMMITTEES
OF DIRIGISM OR THE CENTRALLY PLANNED & MISMANAGED ECONOMY: Economically,
the central banks are the worst central committees of the communist movement.
- J.Z., 5.8.91.
CENTRAL BANKS AS "GUARDIANS" OF GOVERNMENTAL PAPER
CURRENCIES: The governments' central banks are reducing the value of their
paper currencies almost all the time (at different rates), although they
are supposed to guard their currencies against depreciation. - J.Z., 20.12.01.
- As usual, governments achieve the opposite of what they aimed to achieve
by their legislation, "measures" and "policies". In addition, central banking
has achieved and maintained large degrees of involuntary unemployment over
long periods and the persistence of some involuntary unemployment even
during its "boom" periods. It has made all economic crises worse. It has
also prevented the ending and prevention of depressions, deflations and
inflations by the self-help methods of monetary freedom. Regarding financial
freedom and at least in countries like Germany, it has also outlawed value-preserving
clauses or made them conditional upon permissions granted by the central
bank, which are almost never granted. However, the customary, traditional
or legislated exclusive currency condition of metallic currencies, and
of metallic redemption currencies and lack of clearing knowledge, techniques
and facilities, had also caused frequent and persistent deflations before
central banking arose to its present dominant position. - J.Z., 26.8.02.
CENTRAL BANKS, INFLATIONS, DEFLATIONS & STAGFLATIONS:
Is there- any central bank that has existed for several years or decades,-
and that has not yet caused inflations, deflations and- stagflations several
times - while blaming others for its actions- and their consequences? -
J. Z., 19.8.92, 23.4.97.
CENTRAL BANKS, UNABLE TO FULFIL THEIR SUPPOSED
FUNCTION OR ROLE: -Central banks do not know and cannot do anything better
than- fluctuate, almost constantly, between inflation, deflation and- stagflation.
Having removed competition and market rating and- full publicity for their
issues and practices (compare- especially their secrecy on the date and
extent of planned -devaluations), they are thrown back to fiscal policies,
open- market sales or purchases of securities, the insecurity of- government
securities, enforced claims upon the holdings of other- banks, legal tender
and their monopoly position, the observance- of foreign exchange rates,
and their stock of redemption funds -in rare metals, securities, insecurities
and foreign exchange) -and the regulatory power they have over the interest
and discount- rate, to more or less mismange the exclusive and forced currency-
entrusted to them. Almost all of them can point out only to- decades of
mismanagement, due to misjudgments and to their- failures to attain stable
currencies, a booming economy and full- employment. A few have managed
to keep their deflations, inflations and stagflations within bounds, for
a few years, one- never knows for how long they can manage to do so. And,
even in -these cases, monetary freedom would have supplied rightful and-
better monetary services. Thus one would expect sufficiently -enlightened
victims of this system - if they can be bothered to- take an interest in
it and to study it and alternatives to it, to -ignore, outlaw or overthrow
this despotic and harmful regime. -Except a few of its directors and employees,
we are all wronged -and harmed by it. But it does do well enough by them.
- J. Z., 2.8.94,-17.4.97.
CENTRAL BANKS, UNEMPLOYMENT, SALES DIFFICULTIES,
DEPRESSIONS: The central banks are so useless that they cannot even make
use of all willing and available labor and skills, of all the services
and goods offered for sale, of all the machines, workshops and offices
available for productive efforts, not even for 8 hours a day, far less
for 24 hours a day. - Instead, in their helplessness, ignorance and prejudices,
the juggle with interest rates, play with selling or buying securities
and offer promises, while almost continuously, apart from their credit
restrictions, depreciating their paper money currency. In the absence of
free market rating for their paper money against a sound value standard,
of well run tax foundation for their cash and of and optional acceptance
and of competing internal currencies, they do not know how much more or
less to issue of their forced currency and where and when they ought to
do so. - Nor are they able and willing to systematically study the
alternatives to their own rule, although, surprisingly, some of their employees
have managed to publish some papers on free banking in some of their periodicals.
So, at least, not all of them do systematically suppress all freedom of
expression and information in this sphere. But under the present conditions
of monetary immaturity, from top to bottom, they do not have to do so,
either, to maintain themselves in power. - However, one can also
charge most opponents central banking with having insufficiently studied
the alternatives to it. - J.Z., 22.4.01, 24.8.02.
CENTRAL BANKS. SHOULD THEY BE ABOLISHED OR DESTROYED?
Maybe the- Tamil Tiger terrorists of Ceylon are not so dumb as most other
-terrorists tend to be? According to ABC radio news on 1 Feb. 96, -suicide
bombers attacked the central bank in Colombo, Ceylon.- Alas, in their attack
ca. 100 people were killed. A night time- raid, preceded by a warning,
might not have cost any lives. There -was no report on how much the bank
and its ability to function- were destroyed. No such raid would be as helpful
as private and -cooperative note issues could be - and refusals to accept
the -central bank's currency any longer. - J. Z., 1/2/95.
CENTRAL BANKS: Central banks for communists and
other central bank adherents only: They deserve to get what they want,
in self-inflicted punishment. - J.Z., 27.5.01, 26.8.02.
CHEAP MONEY: The cheap money of monetary freedom
is different- from the cheap money of monetary despotism. It would not
and- could not lead to inflation and unjustified economic investments.--
J. Z., 1.12.96. Its production and acquisition would be cheap. -It would
be relatively cheap to get it accepted in your local -community. And it
would have a cheap, easy and fast reflux to -you, for its redemption into
the goods and services that are the basis of your issues. You would not
have to pay a monopoly -interest rate for exclusive and forced exchange
media provided by -a monopolistic and coercive central bank. Your own money
would be- cheaper and better for your purposes and those of your customers.-
- J. Z., 20.3.97.
CHEAP MONEY: To attack some monies as "cheap"
money is a rather -cheap attack. Neither cheapness nor expensiveness is
decisive for -money but, rather, its usefulness, soundness, competitiveness,-
free market rating for it, refusability, discountability,- availability
or unavailability, the ability or inability to supply- it oneself or in
association with others, its acceptability to- sovereign consumers, at
least locally, e.g. in wage payments., and, quite basically, its rightfulness
or honesty, its degree of "optionality" or "voluntarism" or "free choice"
or "competition", as opposed to coercion, intolerance and despotism. -Indeed,
some alternative currencies, that CAN be as good as gold- coins, although
not convertible into gold coins by the issuer but -only on the free gold
market, are cheap to produce, compared with- gold coins and gold certificates.
But that does not turn them -into cheap and nasty money. Indeed, central
banks that can pump -their forced and exclusive currency into circulation,
almost -without limits, will find their paper currency cheap to produce-
and circulate - until the last stages of the inflations they do -so cause
or until other effects of inflation begin to matter considerably, e.g.
the results of price controls -and rationing, the cessation of credits
on a paper money basis, and finally even the severely increased printing
costs for the notes-. To that extent its "cheap" money can very often-
become very expensive for a government. It might even be overthrown, if
not immediately, by a crackpot like Hitler & Co,- who tried it in 1923,
but, largely as a result of this inflation-- and the subsequent monetary
crisis of the Great depression, by -the same crackpot dictator, 10 years
later. Money that is very -expensive to obtain and with which an economy
cannot be fully- supplied, can reduce that economy to degrees of barter
and to -emergency sales prices. In such situations, and until normal- marketing
conditions for goods, services and labour are restored, -the availability
of some form of cheap money, even if it is not- ideal money, would be widely
welcomed. But governments in such- situations make neither the own exclusive
currency sufficiently -accessible nor do they permit or encourage unofficial
competitive- supplies. (On the contrary, in the last years of the Weimar
Republic the suppression of alternative currencies reached new heights
in legal and juridical comprehensiveness.) Once the "cheap" (despotic)
money of monetary despotism has- expropriated creditors (including all
wage and salary and- pension recipients) by the millions, a rather costly
treatment -for them, the value of that currency will finally come close
to- zero and to total refusal to accept it. Already in the meantime- many
people will resort largely to primitive barter. - The money of -monetary
freedom is physically cheap to produce, too. Only some -forms of it are
believed, by their supporters, to require gold- treasures, circulating
gold coins and convertibility into gold. Others can do- without that, even
while continuing gold weight reckoning and would thus be much cheaper to
provide. The cheapness of aluminium- via modern production methods has
not made it valueless but much -more widely useful and used. - One should
also distinguish between the low -production costs and high production
costs of money tokens and -low and high purchasing power of them. Low production
costs for -monetary freedom issues do not mean that they have to have a
low- purchasing power. And high production costs of notes during a -galloping
inflation does not meant that they do have a high- purchasing power, even
though their denominations are very high.- The largest German RM note of
1923 was 100 billion RM, worth then- only ca. 7 pounds sterling. Poor people,
with a few dollars or -pounds, could then live in luxury in Germany, although
their -foreign exchange paper money was also very cheaply produced. - In-
general, the mere production costs of sound exchange media should- be as
low as possible and their purchasing power should be as -high and stable
as possible. - J. Z., 13.1.94, 1.5.97.
CHEQUES FOR CLEARING ONLY: They do not have to
be covered by -legal tender savings or deposits or gold or silver reserves
and -do not have to be redeemed in any rare metal. It is enough if -they
are useful enough for clearing settlements, i.e. if the -cheque account
holder gets enough credits written into his cheque- account from the sales
of his goods, services or labour, which -here, too, form the real cover
for the value of his cheques.- Without them his cheque account would soon
run red. - J. Z., 3/97.
CHEVALIER, MICHAEL, French economist who opposed
the note issue monopoly - according to Rist.
CHILD LABOUR, CHILD LABOUR LAW, UNEMPLOYMENT &
MONETARY FREEDOM: -Child labour, voluntary and unexploited, should be part
of a- child's learning process and could make a child financially independent
of its parents at an early stage, which would help to avoid much -friction
and frustrations between the generations and also among parents in nuclear
families. When -unemployment is wide-spread then children and juveniles
are kept out of the labour -market by compulsory schooling and "protective"
child labour -laws, like minimum wages, set about the market level for
their work contributions. (In the average case, not in individual cases.
Under freedom of contract for wages many able and willing young people
could earn much more than their present minimum wage. But now neither they
nor their employers are given the chance to find out how productive they
can be.) When labour is still very unproductive and insufficiently- supplied
with capital and also forced to be sold only for a -forced and exclusive
currency, then the income of a family was- often insufficient and so the
children had to be sent work to -work. Now they are not allowed to and
their time is taken up by -compulsory school attendance and imposed homework
so that for much of the rest of the time they try to escape into games,
entertainment and play. (Just like adults, who are bored or stressed by
their job situations.) Neither of these are- very educational and a good
substitute for giving children the -chance to become early-on involved
in various self-supporting -labours that are self-chosen and naturally
educational. Under full employment they could change their jobs every -week,
if they wanted to, to give them a more varied although not a- very deep
experience with them - but they might find their true vocation in- this
way. That they should no be exposed to great risk to life, -limb and health
is self-evident. Parents and guardians should- have a veto there. Under
monetary and financial freedom parents would, as a rule, be able to earn
enough to support their- children and they would remain their guarantors
and guardians and- not forced, by their poverty to send their children
to go to work just to earn -enough money to help support the family. Most
would see the value- of unforced labour for their children. Moreover, then
there would- be many more part-time jobs. A few hours of work a day and
some- days a week is more bearable for them than 40 hours or more a- week.
Furthermore, upbringing and education loans would be much- easier to obtain
and easier to repay later, by the parents or the- children or both.
One child charity asks currently for $ 1 a day -to support a child in an
underdeveloped country. I feel certain -that FREE children, ECONOMICALLY
FREE, and that would also require full monetary and financial freedom,
would be able to earn much more than $ 1 in no more than- 1-4 hours of
daily work, if allowed to do so and most of them- would tend to learn more
from this than they do now in schools (in their "12 year sentences"). At
-the same time, competing schools and education systems, could be -made
much more attractive for them, give them a choice and their -lessons could
also be paid for by the children themselves, so low could they be, if they
were- organized e.g. under the monitor system of Joseph Lancaster. High
-school and university students, being already literate (only somewhat
literate, under present government schooling), would find it much
easier to support themselves through part-time work,- with chosen stretches
of full time work between stretches of full- time studies. Learning is
more and more becoming a life-long -process, anyhow, for all, since the
job skills and knowledge -required are continuously changing, too. The
fixed, long and compulsory school years are a form of unjustified enslavement
for- children and one of the major causes of juvenile delinquency, -escape
into drugs and alcohol, mind-numbing and hearing-damaging -music and of
unnatural friction between children and parents. It -also does most children
good when they are not only disciplined- by parents and teachers but by
job, trade and market requirements,- as spenders of their self-earned money
etc., becoming as early as- possible self-responsible instead of delaying
that more and more.- How many of them are e.g. killed on the road, because
the driving- option was withheld from them until they were almost 17? I
would -like to see a statistics comparing country children, who often-
drive tractors etc. on their parents farms, much earlier, with -the driving
records of city children, forcefully kept from- driving until almost 17.
For any suppression of natural urges -there is always a price to be paid.
Their internal control and naturally learned self-control is- much more
preferable then the controls imposed by compulsory school attendance and
government run or regulated schools. - 4.5.97. - J. Z., 13.9.02.
CHILD LABOUR: Why are most kids not productive
most of the time? -Because we are prepared to subsidize their idleness,
although- there would be plenty of jobs for them in house and garden,-
industry, business and agriculture, all voluntary, part time, -market rated,
if all restrictions upon their creative and -productive activities, including
taxation, licensing, labour -laws, wage controls etc., were abolished.
Only their guardians -should be free to set rightful limits upon their
activities. - J. Z., 16.3.97.
CHILDREN AS FREE BANKERS? To what extent
would they be immune -from the penalties for infringing the money monopoly
that would -fall upon adults? Could they be penalised at all? Would
their parents be? Could children be -trained for such freedom actions?
(That would certainly be more rightful and useful than training them in
the use of automatic weapons, as some regimes do. - J. Z., 10.9.02.)
Would they be interested enough -to try? - One should try to write a primer,
interesting and- understood even by children, on this option. It should
point out -the connection between unemployment and child abuse and
youth -suicides, the especially high rates of unemployment among young
-people, the educational options of free child labour, the- economic independence
they could acquire as such bankers and as -children whose jobs would be
made possible by such a bank. Their -right not to be taxed in their productive
efforts should be- stressed. A bill of rights for children should be attached.
The -project should be discussed with children, e.g. on the Internet,-
to which many school children now have access. J. Z., 2.3.95 & 27.5.97.
- See: START-UP OPTIONS, OLD PEOPLE'S BANK OF ISSUE,- WOMEN'S BANK OF ISSUE,
ABORIGINES' BANK OF ISSUE, RED INDIAN -BANKS OF ISSUE, IN RESERVATIONS,
NEGRO BANK OF ISSUE?
CHINA, UNEMPLOYMENT: "Hong Kong Bank says in its
latest CHINA- MONTHLY REPORT that labour problems in the country have worsened-
but have only recently drawn major concern and attention. - The -bank estimates
that there are between 10 million and 20 million- redundant workers in
the State sector, with another 120 million- in rural areas - figures which
are growing each year." - Robin Brombi, "Bank warns on China's soaring
unemployment." A photo -accompanies the article with the inscription: Searching:
Some- of the 25,000 students who applied for 1500 jobs in Zhuhai zone.
-- THE AUSTRALIAN, 24.4.94. - How can one raise interest in the- monetary
freedom options in mainland China, or at least in- Taiwan? Could only a
revolutionary army be interested in them? If -it could supply deserters
and POW's almost instantly with -productive jobs then it might not have
much fighting to do. -- J. Z., 27.5.97. - Even our defence department should
be interested in "armies" of unemployed, for another Hitler, this time
with Chinese features, could turn them into conquering armies. Moreover,
if we could supply any number of deserters and refugees very rapidly with
productive and self-supporting jobs, by utilising especially all monetary
and financial freedom options, then we would not have to fear any conscript
armies or hordes of refugees. - J. Z., 10.9.02.
CHINA: 200 MILLION UNEMPLOYED: "China admits 200
m people unemployed." Headline in BANGKOK POST, Wednesday, March 3, 1993,
p. 18: Peking, (UPI) - A government-run newspaper admitted yesterday that
China has more than 200 million unemployed and called on the government
to replace its failed social welfare policies with neo-classical economic
solutions to the growing problem. - The official ECONOMIC DAILY asserted
that misleading government figures are covering up whopping unemployment
figures equivalent to more than one-sixth of the nation-wide population....
No statistics were given on the national working-age population, but 200
million unemployed could translate into an unemployment rate of as high
as 30% if western statistical methods are used.... The Ministry of Labour
has officially admitted to only a 2.3% unemployment rate nation-wide for
the last few years, but these figures have long been considered suspect
by outside experts.... But most of the unemployed are made up of farmers,
who migrate by the hundreds of thousands into cities to look for jobs.
..." - That is like the population of 4 large nations. Add their dependants!
What a bankruptcy declaration for a communist regime, a supposed dictatorship
of the proletariat. With all the political and economic powers imaginable
in its hands, it still does not manage to employ and thus, according to
its notions and practices, exploit as many unemployed. Even the millions
of political prisoners in the forced labour camps and the dozens of millions
of supposed "class enemies", which the regime previously murdered, have
not prevented such an enormous failure rate. - That many unemployed does
automatically suggest: Why do as many people, mostly intelligent and productive
people, do not employ each other, i.e., produce and exchange as best as
they can? What hinders them, apart from their ignorance, increased by the
miseducation system of the regime? - Admittedly, in China they do encounter
not only monetary and financial despotism but more than the usual other
economic interventionism. Obviously, when the government is not able or
willing to employ them, they ought to be free to assert their right and
liberty to employ themselves, as best as they can and this independent
of any government laws, policies, measures, institutions, especially the
monetary, financial and trading and taxing laws of their government. As
many people, the equivalent of several large nations, ought to be able
to arrange for division of labour and free exchanges among themselves,
if not forcefully hindered to do so, and thus to employ themselves fully
and productively and even prosper. Naturally, there ought to be no hard
and fast borders around them. They should not be reduced to a ghetto existence.
In other words, they should also be free to trade with "outsiders", to
mutual benefit. Self-employment to mutual benefit and among themselves
is only suggested here as a thought-model to break through the mentality
that either the central government "provides" jobs or private employers
do or one is completely helpless and must remain unemployed. China has
a long tradition with various monetary experiments. It's copper tael currency,
using copper by weight as an accounting unit, has for centuries helped
Chinese to become independent in their value standard reckoning from the
depreciated standard their governments provided. Private and competitive
note issues go back, according to one book in my possession, to about 1300
AD - but were suppressed by the paper money despotism of the ruling Mongols.
- The communists make of talking about production for use, not for profit.
But they do not enable these 200 million to produce and exchange for their
own use and to profit thereby. They should not be forced for their production
and exchanges to use the forced monopoly money of the Communist Regime
which has made and kept them unemployed - and exploited and oppressed for
so long. Allow them to pay taxes with their own currencies - if they cannot
avoid tax payments at all. - With as many Chinese producing and exchanging
independently from the regime, even the communist regime could benefit
much more internal and exterritorially autonomous economic communities,
practising free enterprise, & free trade internally and externally,
under the practices of full monetary and financial freedom, than it has
benefited, over the last few decades, from trade with Hong Kong. The communist
regime, in its own interest, has tolerated this trade with a much freer
Hong Kong, on the basis of a territorial separation, until now, when the
treaty with the U.K. runs out and has promised to continue its economic
liberty. It has also permitted various industrial and free trade zones
(a little bit liberated from its economic despotism) in its domain, out
of sheer necessity. Hong Kong, when it was leased, was a largely rocky,
mountainous and infertile area. It showed something of what people can
do, if only somewhat set free. Instead of a territorial liberation let
there be a personal one, based on exterritorial autonomy for volunteer
communities - starting with those the regime is helpless to help. - Naturally,
this would and should ultimately have political consequences, too. - I
for one would favour allowing them to produce or purchase arms for their
defence against continued aggressions and interventions by a government
that has made and kept them unemployed. Allow them to trade freely with
the world and to refuse to trade , if they want to, with the Communist
Regime, which kept them largely enslaved but would not even supply them
with the life support of slave labour! They should be free to refuse to
pay taxes to Peking and to levy any, if they want to, only for their own
purposes. They should be free to declare their political independence,
too. Also, to federate freely, if they want to, with all other more or
less free Chinese communities in the rest of the world - and all other
somewhat free communities. - Once they have learned to support themselves
by their own labours, in a division of labour and free exchange process,
then an army or self defence force or militia of millions of members, serving
voluntarily and part time, a real "people's army", could serve for their
self-defence, protecting their liberties. Among its rightful aims should
also be full exterritorial autonomy for all the remaining communists and
socialists and other ideological groups, all based completely on the free
choices of sovereign individuals. That is not a declaration for a permanent
civil war or party struggle but a declaration for a quite tolerant and
permanent peace option, offering to everyone the government or free society
of his or her dreams. It would be the analogy to religious liberty or religious
tolerance but this time in the political, economic and social (ideological)
spheres. Chinese had much experience in the last 2 centuries with exterritorial
or personal laws. Alas, these were, mostly, unilateral options for foreigners
only. Chinese, unilaterally, could make them multilateral, for all kinds
of Chinese groupings and for all kinds of foreigners, not only in China
but in the rest of the world. (As the oldest continuous culture, with the
longest economic, political and social experience, they should and could
take the lead in this sphere. - J.Z., 16.9.02.) - If the communist regime
tried to suppress their self-help and autonomy efforts and defeated them
in China, allow them to retreat to any other country, there going on to
employ and support themselves, rather than becoming burdens for others
as refugees under other regimes that also cause mass unemployment. They
would probably gain much international sympathy if they formally declared
their secession from the communist regime - but, at the same time, did
not engage in any revenge or repression measures of remaining communists
in their areas or spheres of influence but allowed them to continue to
do their things to themselves, at their own risk and expense. On that basis
they could minimise resistance against them and maximise the chances for
Chinese people anywhere to become liberated, as far as they want to become
liberated. - Any "nation" (The Chinese want is largely an involuntary
conglomerate, too!) which has an unemployment rate of 20%, assuming a Chinese
population of 1,000 million, as the above quoted article suggested, is
already in a potentially revolutionary situation. The Nazis rose to power
on ca. 10% only. Obviously, friends and relatives of these 200 million
victims and self-liberators would sympathise with them. Once monetarily
and financially liberated, they could offer amnesty and jobs to the conscripts
sent to fight against them, provided only that they either desert, let
themselves be taken prisoners or declare themselves neutral. - Chinese
people, if not lorded over by ideological fanatics, could also establish
various self-management and cooperative production and consumer coop enterprises,
very different from the governmental ones, with all individual and group
incentives and rights maximised, rather than subjected to externally imposed
bureaucratic rules, so that the best ideas of alternative forms of socialism
and communism (There exists even something that calls itself "libertarian
communism"!) could, on a voluntary basis, be realized by themselves and
among themselves. In practice it would be found, I believe, that the best
forms of "socialist" self-management practices are not greatly different
from the internal best business practices of what has been called "free
market capitalism", with its property, profit and free enterprise incentives,
which were, alas, only realized in the "free" countries for a minority
in every enterprise, instead of for everybody, from the messenger boy to
the to manager. - J. Z.,24.5.97.
CHOICE IN CURRENCY COMMISSION, Exec. dir. Joe
Cobb, 325- Pennsylvania Ave., S. E., Washington, DC 20003, USA, T.-202-226-7850.
(1986).
CIRCULATING MEDIUM: A forced and exclusive currency
hardly -deserves the name of a "circulating medium". - J. Z., 2.7.96. It
-is rather forced, like a requisitioning certificate, into the -hands of
helpless creditors, including all wage and salary and -pension recipients.
- Something that circulates only under -coercion does not circulate under
its own steam. It would be -rejected under freedom. - J. Z., 19.3.97.
CIRCULATION CHARTS: See my 11 pages on this in
PEACE PLANS 41.
CIRCULATION OF FREELY ISSUED SOUND EXCHANGE MEDIA,
ESPECIALLY UNDER THE REAL BILLS DOCTRINE OR BANKING PRINCIPLE: Verbal description
of the circulation process involved: 1.) The employers have received the
services of their employees and produced, using their capital (raw material,
machines, premises, etc.) and with this labour, equipment, raw materials
etc., the produced goods which they would sell to wholesalers. - 2.) The
employers would be paid in commercial bills of the wholesalers, or other
short term debt certificates, instead. - 3. These they would then
get discounted, into private goods warrants or bank notes by the issuing
centre of the local shop association or a bank operating on the pure banking
principle or real bills doctrine. - 4.) With these notes or goods warrants
the employers would pay the wages of their employees and their suppliers.
They would take out their own profit in this way, as well and, after a
corresponding tax reform, pay their taxes with them also. (Otherwise the
State, as long as it is still allowed to raise taxes, could raise only
as much in taxes as it made sound tax foundation money available for current
and near future tax payments.) - 5.) The wholesalers would have received
the goods and given their commercial bills in return, obliging themselves
to repay their bills when they are due in goods warrants, or get them settled
by clearing. They would sell the goods to retailers, usually not
for cash but upon the short term promises of payment given by the retailers,
to pay them for the goods in goods warrants or banknotes within 1-3 months.
6.) The retailers, between them, would receive the goods from the wholesalers,
and would be obliged to repay them in goods warrants or banknotes in the
near future. The additional goods they could thus offer, together with
their stocks remaining from previous deals, would constitute the ready
for sale cover of the goods warrants or bank notes issued by the issuing
centre of the local shop association or the local bank of issue. 7.) The
retailers would sell their consumer goods to the employees for the goods
warrants or banknotes and would thus be enabled to repay their debts to
the wholesalers. 8.) The employees would have given their labour, would
have been paid in local goods warrants or banknotes and would have spent
their earnings in the shops. 9. The issuing centre had discounted the commercial
bills, or the equivalents, of the wholesalers, presented to them
by the employers, with its own goods warrants, or notes, keeping the bills
as a short term security. Lastly, the wholesalers would have been paid
for the goods supplied to the retailers and thus enabled to redeem the
bills of exchange, that were discounted and kept by the bank. All these
deals could also be transacted via non-cash accounts, deposit or cheque
and clearing accounts, credit cards or purely electronic transactions.
- All members of the issue association or bank, at least as debtors
of the banks of issue, would have to oblige themselves to accept these
certificates in payment. Especially the employees, if they want to be employed,
should not exclude such payments, as they have long been accustomed to
do. But they might rightly state that they would only be prepared to accept
these alternative means of payment if and while they are locally accepted
at par, in the shopping centre and, e.g., in their own consumer cooperative
and in the canteens of the employers. Their wages having been contracted
in sound value standards, they would insist upon being paid correspondingly
more - in case the local currency would ever be depreciated. - If they
insisted instead upon being paid in some or the other exclusive currency,
which the employer could not or not as easily and sufficiently obtain,
they might lose their jobs or their pay would have to be reduced. - To
make this form of payment initially more attractive, a wage and salary
increase might be readily offered if they accepted it in this form of payment.
- Once the notes or goods warrants have been used to redeem the short-term
securities - upon which they were issued, which would represent goods produced
and sold, the circulation process would be closed. Not a single gold- or
silver coin would be required for it and not a single legal tender note.
Then this process could be repeated over and over again. - For the service
cover that is locally offered, the circulation system would be slightly
different. The independent tradesmen and professionals involved could get
their own bills discounted by the retailers' issuing centre - up to the
amount of their service potential and average trading during the next short
term period. By paying their suppliers, profits and wage bill in goods
warrants, they would put them into circulation. By accepting them in payment
for their services, they would be enabled to withdraw them and repay their
IOUs with them. - Instead of joining the local note-issuing bank or issuing
centre of the local shop associations, the service providers, tradesmen
and professionals, could also establish their own issuing centre. They
might include e.g. transport services, restaurants, amusement centres,
educational services etc. - Local people would decide whether they would
be prepared to accept 2 or more such local currencies. - The issues of
the goods and service warrants would merely provide the necessary turnover
credit. They would not and should not be issued to provide medium or long
term capital loans - because that would not assure their rapid enough return
to the issuing centre. If issued for longer periods, they could depreciate.
But they could be used, like cash, to subscribe to term deposits, bonds
and shares and to pay out medium and long term loans and, later issues,
could be used to repay these loans etc. - This use of monetary freedom
would mean that due to our private local issues (alone, or, preferably,
in association with others), we would no longer have to scramble for a
chance to sell our labour, services and products against a monopolistic
and more or less scarce exchange medium issued by a central banking system.
Instead, we would be enabled to pay with our own notes or the notes of
our association and thereby we would assure that our own notes or those
of your association would come back to us and our association - to pay
the goods and services we have to offer, alone or together with them. -
To the extent that we have valuable goods and services to offer and do
offer them at competitive market prices, and that others have valuable
goods and services to give in exchange, also at free market prices, we
would then be enabled to exchange them, independently of the monetary policies
and mistakes of any government. All our issues would automatically flow
back to us to be redeemed in the gold-weight-values expressed in our goods
and services. (If we had accepted these as our value standards.) All our
earnings and contract earnings and debts would also be expressed in sound
value standards as reckoning units. - An instance of a single issuer, however
unlikely and rare such instances might be: A barber, to the extent that
he would be able to circulate standardised hair cutting tickets, would
not have to be afraid of being out of work. They would, inevitably, stream
back to him to be redeemed by him through his services. If he were to spend
the same amount of government cash, it would not necessarily stream back
to him or not fully. - Without this freedom, employment opportunities are,
indeed, tied down to the supply of legal tender. Under monetary freedom,
they are only limited by your willingness to give your productive labour
and services in exchange for those of others. In fact, under monetary freedom
you could anticipate your earnings, spend them with your own notes or clearing
certificates and then work, earn them, be paid in them and thereby finally
pay off what you bought with your standardised IOUs or those borrowed from
your local shop association. Naturally, you would always have to accept
your own notes in payment for your own work. Likewise, the notes of your
creditor, since you could use them immediately to pay your debt to him.
(I am speaking only of short-term turnover credits!) - Compare this self-liquidating
issue, acceptance and reflux system with the issue of e.g. gold or silver
coins or the circulation of legal tender paper money notes. These coins
and notes are not as effective in providing work for you because - whenever
you pay with them, they do not necessarily return to you, or your association,
or not soon enough or with sufficient certainty. Instead, they may flow
to anyone else in the country or even, temporarily, into foreign countries.
- Private notes, promising redemption in the goods and services of the
issuer - and his associates - have the essential capacity for a rapid and
regular reflux, i.e. they must stream back to the issuer, if they are to
have any value for the holder, and will thus provide corresponding sales
and employment for the issuer. To that extent they are like tickets. That
could and should be formalised by giving them only a limited circulation
period, 3 - 12 months at most. - If they happened to suffer a small discount
in general circulation and all the rules of a sound issue technique would
have been obeyed, then these notes and their discount would disappear,
with them, rapidly from circulation. Debtors of the issuing centre would
not only accept them at par for their goods and services when anyone buys
something from them, but would go out of their way in attempts to buy them
up on the market for exchange media, using other means of payment, and
gladly acquire them thus at a discount. If a debtor would thus be enabled
to buy such notes at 1% discount and could with them repay, on the same
day, his debt to the issuing centre, he would have made a 1 % profit on
this day, amounting to an annual profit rate of 365%. That would be so
attractive that the discounted notes, and with them their discount, would
soon disappear from circulation. (Provided only the issue and reflux technique
had been quite sound.) Potential customers of the stores of the issuing
centre (if it is a shop association) would also love to acquire such notes
at a discount - in order to carry them fast to these stores to be redeemed
in goods and services at par. In other words, a discount for a sound goods
warrants issue could not last long and would not be large. But, if a discount
were considerable and persistent then something else would happen. People
would mostly refuse to accept the notes altogether. Only a few would continue
to accept them, at a considerable discount - to the extent that they could
still use them against the issuer. In other words, the issuer could no
longer issue more notes or only at a loss. The loss would occur because
he could issue them only to a few and at a discount whilst he would have
to accept them again at par and immediately. - J. Z., 1985 & 21.5.97.
- For graphical descriptions of the circulation process for optional and
freely issued exchange media that are based upon shop or service foundation
see my drafts in PEACE PLANS 40. In the writings of Ulrich von Beckerath
you will also find many much shorter and clearer verbal descriptions of
this process. - I have not yet got around to extract them all and all his
numerous other important remarks upon monetary freedom, which he studied,
pondered for over 60 years and wrote about for at least 48 years. Alas,
most of his writings are still unpublished, even on my microfiche, in German
only and untranslated. - J. Z., 14.5.02.
CIRCULATION OF MONEY: "Strictly speaking, money
does not 'circulate' : it is exchanged against goods. When the turnover
of (*) money increases, the turnover of goods increases correspondingly."
- Henry Hazlitt, Where the monetarists go wrong, THE FREEMAN, Aug. 76,
p. 76. (*) Here I would insert: "good" or "sound". - If money is just turnover-credit
money then it could and should, perhaps, upon every return to the issuing
centre, be cancelled, instead of being issued out again into circulation.
This would facilitate the control of the issue. It would correspond to
the cancellation of the real bills the issue was based upon. It would
make e.g. the issue of new series more frequent and thus give less opportunities
for forgers. It would correspond to the use of tickets, mostly just once.
And it would become necessary - once one has found the limitation of the
circulation period to be useful or advisable. The discovery of forged notes,
with the same numbers, would be facilitated, too. Theoretically, one could
take down the numbers of returned notes before one issued them again. But
when another note appears with the same number, it would not always be
clear or easy to determine which of the two notes is the forged one, in
the absence of the first one that was received and re-issued again. - Thus
Ulrich von Beckerath advised to follow the old practice of the Bank of
England and to clearly cancel all returned notes and keep them as a record.
- In that case notes would have only a very short and temporary circulation,
it could be called that at all, and would, instead, oscillate, with each
new oscillation: issue and reflux, being undertaken by a new series or
new set of numbers of an old series. - J. Z.
CIRCULATION OR OSCILLATION OF MONEY? Not all kinds
of sound money -need to "circulate". Various private notes might be issued
and,- shortly afterwards, stream back, like stamps, tickets and gift--vouchers
or tokens. The more it is issued merely upon the -"security" of the goods
and services that any money is usually -"redeemed" in, every day, by consumers,
according to the note--holders' wishes and needs, among the choices offered
to him in his -payment community, usually the local shopping centre, the
more- will the issues be the accurate equivalent to the goods and- services
for sale and wanted, at market prices. Then, with any -increase in output,
that can still be sold at close to the old prices, or -with any increase
in the total of all prices asked for and which- the consumers would be
prepared to pay, if only they were sufficiently supplied with purchasing
power, the additionally -required purchasing power could be issued by the
suppliers. The -money would be issued and would stream back fast, in the
quantities required, to be redeemed in its goods and service-s cover. More
could not be issued than is required for this, for- then it would be discounted
- and the issuer would still have to- accept it at par and wants to stay
in business, rather than being -boycotted for not keeping his exchange
media sufficiently at par -in general circulation. - Henry Hazlitt may
have had something- similar in mind when he wrote, in "Where the Monetarists
Go -Wrong", THE FREEMAN, August 1976, p. 76: "Strictly speaking, -money
does not 'circulate': it is exchanged against goods. When -the turnover
of money increases, the turnover of goods increases- correspondingly."
- I would rather say: When the turnover of -goods money or goods warrants
or purchasing certificates -increases, the turnover of goods increases
correspondingly. - J. Z. MFNL 3/4. - Money is here like oxygen in the blood
circulation: Continuously issued by the issuing centre, it is earned and
used up by the consumers, in their working lives, and replaced again and
again by the issuing centre, e.g. the local shop association. A clearer
image is probably provided by comparing them with transport tickets or
other tickets. They, too, oscillate rather than circulate permanently.
They are continuously replaced by new issues when they have achieved their
intended turnovers. - J.Z., 5.9.03.
CIRCULATION PERIOD, LIMITED, FOR COMPETING CURRENCIES,
TO SPEED UP & ENSURE THEIR SUFFICIENTLY FAST & COMPLETE REFLUX:
The possibility of a discount, as a warning signal, is a necessary factor
in this payment system. It is a sign that something might be wrong with
the issue or its reflux and that some counter-action is required. For instance,
if it happens, the issuers might arrange for a special sale to speed up
the reflux of their notes. They might also charge a higher fee for short
term loans they grant in their own currencies, for wage payment purposes
or increase the discount rate when they discount sound commercial bills
of their members. Another option would be to shorten the reflux period
for all newly issued notes, until they have achieved a reflux period which
would keep their notes at par. E.g., if they used a reflux period of 10
years, then many of their notes might become discounted because they are
not rapidly enough streaming back to the store in repayment. A reflux period
of 1 day only (like for cinema or theatre or sports events tickets) might
maximise reflux but would be rather inconvenient for a local currency.
Thus, somewhere between at least a week, if not a fortnight and 3 to 12
months, is the optimal circulation period for any competitively issued
exchange medium that is to retain its par value while it changes hands
locally. Ulrich von Beckerath ascribed the limited circulation period to
a proposal by Prof. Edgard Milhaud. But it merely corresponds to the limited
circulation period for most sound commercial bills of exchange. It also
can satisfy the anti-hoarding aspirations of Gesellians, without burdening
the note holders with a special tax upon their notes or the obligation
and bother to affix stamps to them. It would, moreover, express the nature
of most alternative currencies as ticket money, transport vouchers, clearing
certificates etc., for time limited, i.e., perishable goods and service
capacities. A reflux of notes that is assured only in 1 to 10 years
is no more useful to most sellers of goods and services than is a rain,
coming only every 120 days to 120 months is to an agriculturists. - And
even for hardware goods the owners and sellers do not want irregular but
as far as possible regular sales. Naturally, especially with regard to
this, it would be a mistake to issue large quantities of a local currency
and all of it with the same expiry date. Instead, the expiry dates should
be staggered, best perhaps from the day of issue, perhaps by date-stamping
previously printed notes only once they are issued. What is possible for
transport tickets should be possible for these paper token monies, too.
- J. Z., 11.3.89, 28.11.92, 16.5.97.
CIRCULATION QUANTITY: How can one determine for
any particular- time and place and condition the right quantity of exchange
-media. In the same way as the right quantity of any products and- services
is determined, i.e. by free pricing. When sound exchange -media are freely
chosen and publicly rated against each other and -the competing exchange
media against them and against other -exchange media, then the exchange
media will either be at par -with their nominal value (their value standard
units) or below- or above par with them. If below par, or at a discount,
they will -be less and less issued and more and more refused or discounted.-
Thus they reach the limit of their circulation. If they do -circulate still
at par or even above par, then further issues are -possible and desirable.
Free market rating for exchange media, -sound value standards, and full
publicity make the circulation- determination automatic. We would no more
suffer shortages of the- media and of sound standards, than we do suffer
shortages of pens- and rulers, milk and litre measures, wheat and kg weights.
Any- despotic attempt to determine for others the right quantity of -exchange
media or clearing transactions and of supposedly ideal- value standards
for all their transactions, is condemned to- failure, like all other attempts
at central planning and -direction or experiments with command economies.
- J. Z., 3/97. See : LIMITS FOR -ISSUES.
CIRCULATION SPEED OR RAPIDITY, NUMBER OF TURNOVERS
OF A CURRENCY,- DEGREE OF HOARDING, DEGREE OF CASH HOLDINGS: A rapid circulation
-is not as important, mostly, as a certain and full circulation is- - of
all goods, services and labour, mediated by money tokens and -clearing.
Only monetary and clearing freedom, combined with free- choice of value
standards, can achieve that. This freedom can -also make issuers and acceptors
largely independent of the -quantity of hoarded exchange media, since they
can be easily replaced by additional issues, should a currency shortage
occur.- Moreover, competing exchange media, to assure their reflux, will
-usually be given a limited circulation period, too, like -commercial bills
and cheques and tickets. However, in their own -interest, issuers of sound
and private or cooperative turn-over currencies, will see to it that their
issues will return to -them, in payment for their goods, services and labour,
as soon as -possible. To the extent that electronic clearing and account
-checking has become possible, payment and clearing can become -almost
instantaneously. Quite possibly, people who do some of- their shopping
still for cash but only weekly or fortnightly, -would be quite satisfied
with a local shopping currency, to the -extent that they want to and can
spend it, that is valid only for -a week or a fortnight or a month, and
to the extent that they can and want to satisfy their requirements from
local suppliers. The circulation of alternative -media of exchange will
also tend to be speeded up whenever and- wherever they have suffered a
discount. For then the holders will- want to spend them fast - and can
be sure of getting them -accepted at par only by the issuer. Even while
a discount does -not occur, the system must provide for the possibility
of a- discount. The slightest discount, perhaps only at money- exchange
offices or in wholesale trading, sends an important signal to- the issuer:
discontinue further issues, while the discount exists and before it become
noticeable in general circulation and -thus gives us a bad name. The same
self-interest would also induce the issuers, if self-given or adopted issue
statutes do -not already oblige them to do so, to use other means of exchange-
to purchase the own ones, especially when they are anywhere- traded at
some discount. Any money that is essentially ticket -money or clearing
money, does not have, as a rule, any trouble- with its circulation speed.
Nevertheless, additional reflux -arrangements could be provided for it.
E.g., debt repayments in- other exchange media could involve payment of
a small penalty or -a fee for the conversion of exchange media which one
is not obliged to accept, because they are not the own. The prices might
-then be market in the own exchange medium at par and in other -media "plus
1-5%". That would also speed up the reflux of the own -exchange media.
Furthermore, loans might only be made within the -vicinity of the centre
of issue. Nor should the total amount lent -to any one business come to
a large fraction of the total- issue, thus involving too large a percentage
of the issues of a centre in the always possible failure of that particular
business. To -"suck" the own notes back to the issuing centre, in payment
of -debts, like with a vacuum cleaner, the issuing centre might -oblige
all its debtors to accept its own notes and to indicate -their readiness
to so accept them by large signs in their shops- and offices. Daily note
exchanges and clearing between centres of- issues will also speed up the
reflux of notes or clearing of -accounts. Electronically clearing could
even occur almost instantaneously. - J. Z., 14.12.93, 1.5.97.
CIRCULATION, PRODUCTION, DISTRIBUTION, CONSUMPTION,
MONEY, TURNOVER -CREDIT & TURNOVER CLEARING OR TURNOVER EXCHANGE MEDIA,
CAPITAL & -THE ECONOMIC PROBLEM OR CRISES: "The economic problem
is in- reality not a problem of consumption or of production but a -problem
of circulation." - Dr. Bank. Date? Source? See: EXCHANGE -MEDIA,
FREE EXCHANGE, MONETARY FREEDOM, FREE BANKING. - Which economic problem?
Are consumption and production really problematical? Does money really
have to circulate permanently? What does have to circulate? Are economic
crises due to insufficient "circulation" of capital or of exchange media?
Doesn't during an inflation at least one thing circulate too extensively,
namely the government's forced currency? All such general phrases and explanation
attempts do not sufficiently explain the realities but rather distract
from them. - J. Z., 9.9.02.
CLASSIFICATION OF WRITINGS ON THE SUBJECT, in
form of charts, -especially of details of exchange media and value standards
-proposed, stressing good points and errors still involved.
CLASSIFICATION SCHEME FOR EXCHANGE MEDIA AND VALUE
STANDARDS: The -literature on the subject is too extensive. Tabulations
of the -historic and proposed exchange media and their characteristics
-and, likewise, of value standards should be drafted, amended and gradually
filled out in a collaborative process. False premises, -observations, conclusions
and theories involved in them should be -pointed out, as well as the literature
defending and attacking -each position taken. No copyrights should be claimed.
But each -contributor should sign his statements. Giving each statement
a -number would make referrals more easy. - J. Z., 16.3.97.
CLEARING A clearing transaction does not
need ANY quantity of- exchange media nor ANY quantity of value standard
units, beyond -the one unit adopted, e.g., an ounce of gold. It can operate
well- enough with book keeping and electronic accounting only, in- figures,
expressing purchasing power in multiples or fractions of -the adopted value
standard units, e.g. of an ounce of gold. The- value of the value standard
chosen is in no way changed by changes in the number of clearing transactions,
in the same way- as the sizes of the meter, the weight of 1 kg, the volume
of 1 -litre, are not changed at all with the number of transactions -that
use these measures. To affect the purchasing power of a -medium of exchange
its nature of exchange medium must be legally- and coercively combined
with a fictitious abstract or paper value- "standard", the exchange medium
and this value standard must be -exclusive and forced ones (compulsory
acceptance AND compulsory -value, at its nominal value) and people must
not be free to- express their prices, wages, salaries etc. in sound alternative
-value units. Then, indeed, quantity changes in such forced -currencies
do affect prices, wages etc., which have to be priced -out in this "standard"
and have to pay paid in this "exchange- medium". - J. Z., 4.1.0.91, 27.4.97.
CLEARING & COVER, LIQUIDITY VES. SECURITIES,
CASH VS. CAPITAL: To the extent that any kind of money is a clearing medium
(Actually any kind of money is basically a clearing medium, a counting
token, whether its material is cheap, expensive or electronic, for a multilateral
and anonymous and automated clearing process.) it does not need a "cover"
at all. It either represents a debt or a credit and all of these cancel
each other out, at least over a period. However, instantly or soon clearable
debts and credits should be distinguished from those settled only over
medium to long term periods. For instantly or soon clearable debts and
credits money tokens and accounts are suitable. For medium to long term
debts and credits capital securities are the suitable issues. In any somewhat
free economy some cash exchange media (or non-cash payment accounts) are
all the time turned into capital securities or capital securities into
cash or bank accounts, but only to a limited extent, one voluntarily determined
by savers and investors. Capital securities are not suitable "covers" for
cash nor is cash a suitable cover for securities. Most cash is needed to
buy goods and services, not capital securities and capital securities do
represent real productive capital & future earnings opportunities and,
as such, do not need a cash cover but merely some cash operating funds.
Their main purpose is not to represent cash but to earn cash by the production
of wanted goods or services. The fact that most of the time sound capital
securities can be relatively easily turned into cash does not make them
equal to cash. Sometimes, for instance, they are hard to sell or only at
a loss. With sound cash it is different in normal times, only emergency
situations excepted, when real goods and services are often preferred to
cash. Both are valuable in their spheres, promoting the transfer of values,
but that does not make them identical or sufficiently interchangeable for
all purposes. The main purpose of cash, or corresponding liquid bank accounts,
is to pay for daily living expenditures and frequently occurring minor
debts. Try to pay for them with shares, bonds, treasury notes or mortgage
letters! In a perfect clearing system we would not need any physical or
electronic money tokens at all. All debts and credits could be cancelled
without them. Only some suitable value standards would have to be agreed
upon by the participants. Bad debts would have to be born as losses by
some - and unearned gains by others - or would be covered by insurance
premiums that had been paid by the traders. - J.Z., 13.3.02, 24.8.02.
CLEARING AND EXCHANGE MEDIA OR MONEY: Almost all
sound exchange -media, which do not, like gold or silver coins, carry their-
subjective and market determined commodity value in themselves, -are essentially
merely clearing certificates for an anonymous and- multilateral clearing
process, which they facilitate and simplify- by their very nature. But
it lies also in the very nature of free -clearing that it does not inherently
depend upon any QUANTITY of -exchange media or any QUANTITY of value standard
units but merely -upon a sound enough value standard that is agreeable
to all -concerned and that is merely used for clearing, accounting and-
reckoning purposes, but that does not have to be supplied and -used as
a means of payment or cover or reserve, in quantities and values that are
equivalent to the free clearing transactions that could- be carried out
without any exchange media. To maintain the value -of an adopted value
standard unit it is not required that it -becomes demandable as a physical
means of exchange in by every -creditor. It suffices that some transactions
in this metal take -place, which conform its market value against exchange
media and- value standards of another kind and that such trades are regularly
and publicly reported. While it can do no harm if debtors well -supplied
with gold quantities remain free to offer them in- payment, even gold coins
should not be turned into legal tender -- except perhaps within private
payment communities whose members- agreed to so accept them. - The clearing
nature and value reckoning nature of money is -essential. The rest is an
unnecessary although sometimes- convenient formality. No monetary policy
or theory should ever -ignore this fact. Then it will not be lead to wrong
conclusions -or towards monetary despotism. - J. Z., n.d., & 30.4.97.
CLEARING AND INTEREST RATES, SHARES AND TICKETS,
SAVINGS & -TURNOVER CREDITS: An extension of clearing merely indicates-
easier sales and a greater total turnover. It does not directly- indicate
or represent a corresponding increase of medium and long--term capital
becoming available. Additional turn-over clearing -can only reduce the
short term turnover credit interest rate. To -affect the capital interest
rates, clearing certificates and- notes must, like money now, be saved
up and invested on medium or -long terms. Tickets to a cinema are just
turnover media, too. One -cannot buy the cinema with them, directly. But
if one had bought -e.g., a large block of tickets for a large party and
for one or -the other reason the party is turned off, then one could negotiate
with the cinema, offering to sell it back the block of -tickets, either
for other forms of cash or for one or several- shares in the cinema. If
the cinema is certain to be able to sell -the tickets again, before the
performance, then it will be -amenable to either buying them with other
means of exchange or,- perhaps, with some shares in the cinema. The time
span, -motivation, ownership, function of shares and circulating notes
-is quite different. They circulate for different periods and- among different
people and are used for different purposes, even -when both are issued,
somewhat circulating and ultimately- somewhat redeemed, at least during
liquidation of a business. To- try to turn capital assets like raw materials,
premises, and -machinery or the capital securities that represent them,
directly into currency, supposedly useful for the current purchase of-
consumer goods, is a great mistake because at the same time no -equivalent
consumer goods and services are provided by the issuer -to redeem them
with. The holder of the certificates could only- force the issuer into
liquidation and then claim his share in raw- materials, premises and machinery
- but few would want to acquire -them. On the other hand, if there is someone
prepared for a -take-over bid for the business of the issuer, then such
issue- attempts would be very much welcomed by him, for this scrip would-
rapidly depreciate in a free market and could thus be bought up- very cheaply
and used in the take-over bid. A few such- experiences, well publicised,
will serve as a deterrent. But -that does not mean that there should
not be full freedom to issue -financial securities, too, which quite clearly
represent capital -assets and are bought up and traded by people interested
in- capital investments. To reduce this kind of mix up of capital- securities
with turnover bills and notes, the issue departments- for both should be
as far as possible kept separate, for people -have fallen for the errors
of "asset currencies" again and again- and they have often been embodied
in banking laws.
CLEARING AND MONEY & THE QUANTITY THEORY OF
MONEY, MONETARY -DESPOTISM & TICKET MONEY: When you consider money
merely as a- clearing facilitator, not as a commodity, then the quantity
of- goods, labour and services that people possess or can will offer, in
exchange for the goods, services and labour of others, has no other limit
than these goods, labour and service readiness themselves and the- quantity
of "money" available becomes irrelevant, because under fully developed
and free clearing no money would be required at all. Only for -some minor
payments would some form of physical clearing -certificates, which might
be called money, still be convenient,- more convenient than formal non-cash
transactions, no matter how- computerized. Under free clearing, essentially
not needing any- money tokens or money commodity at all, in quantities
-corresponding to the sum total of the cleared goods and services, -but
possibly using e.g. a gold weight unit as a value standard to -price all
goods, services, labours and contracts. The value standard unit that might
be used in all the accounting and clearing of the free exchanges might
not even exist at all or might not be traded at all within that clearing
community. E.g., gold value trading in Sydney might use- the market price
of that gold weight unit in London, Zuerich or- N.Y. for its own value
measuring purposes. Some clearing or payment -communities might be satisfied
with a value standard less stable -than gold or discover and use one that
is even more stable. -Freedom of choice, here, too. No exclusive and forced
value- standard (except by private contracts, binding only the- contractors)
and no exclusive and forced exchange media and- clearing avenues (except
within voluntary payment communities).-Under free clearing the number of
transactions might increase or- decrease. The total value of transactions
might increase or- decrease. This would not influence the standard of value
used or- depreciate or increase the value of the clearing avenue - or of
-clearing certificates. To try to put a quantitative limit on- clearing
certificates or mere turnover credit notes would amount to -forcing people
to limit their production and their exchanges when- there is no justification
or need for this at all. An issue or -circulation limit would then amount
to a rationing system for the -whole community for goods, services and
jobs. No more could then be- offered and traded than is prescribed or permitted
by the monetary despotism involved. - The -quantity theory of money makes
only some sense for an exclusive -and forced currency that is issued beyond
the limit at which, -under freedom, it would have been accepted at par
with a sound- value standard. Then it can be arbitrarily multiplied and
thus- depreciated, while the goods and services at the same time cannot
-be as much multiplied and would, even by multiplication, not- necessarily
be depreciated in their value, either. For instance, -if a baker bakes
10,000 loaves of bread instead of merely 1,000 a -day, and if he finds
buyers for all of them, then the value of the -bread for each of the buyers
would not be depreciated. Nor would- the money or clearing medium be depreciated
because at least for -these turnovers ten times as many money tokens or
clearing -certificates would have to be used. The need for monetary- exchanges
is, essentially, a need for clearing exchanges in a- very convenient form.
If that is kept in mind, then we will avoid wrong conclusions on varying
quantities. A community is enriched,- not impoverished, when its money
and clearing system enable it to -exchange more goods, services and labour
efforts, quite freely- and easily. The money and clearing transactions
would be increased - and so -would be the goods, services and labour turned
over. - The best -method would be to transform, as far as possible, all
ready-for--sale goods, services and labour into exchange media or clearing-
certificates or clearing accounts (using sound value standards), to the
extent that this can be done without turning the par-value of such shop
currency into a deterring discount. (If one can judge by the experience
with sound tax foundation money then shops might even be able to monetise
not only their current stocks but their turnover for the next 1-3 months.
Much would depend on current terms for earnings and timing habits for consumer
spending.) -Then any quantity of goods, services and labour could, with
their -help, be easily exchanged for those of others, in a division of
labour- and free exchange process - in a free market that would include-
monetary and clearing freedom. The need for money is merely a need for
clearing or for complete freedom to exchange, using the- best and easiest
available means, those accessible, in self-help -steps, to every productive
and honest persons. As Ulrich von- Beckerath used to say: Allow people
to transform their NEEDS -into effective monetary DEMAND, but only to the
extent that they -are prepared to supply, ready for sale, goods, services
and- labour. - Then and with their "ticket-money" (or goods, labour or
service warrants), they can satisfy their -needs, to this extent and the
others can use these tickets- against him as an issuer, to the extent that
he is able to supply -their needs. That would amount to production for
use and profit -at the same time. Useless tickets would be refused. Tickets
that are only marginally useful would be discounted or refused, thus limiting
their circulation. The tickets would -have an automatic reflux to the issuer
- and would serve as- advertisements at the same time. Ticket money! That's
the -ticket! - J. Z., 26.4.97, 8.9.02.
CLEARING AND QUANTITY OF MONEY: Full clearing
freedom (as well- as the freedom to issue and to rate and discount
or to refuse- money tokens, be they "real" money or "merely" sound money
substitutes) when -fully thought through and applied, at least in thought-
experiments, demolishes the notion that a certain quantity of -money is
absolutely necessary and that it ought to be fixed, e.g. -to the GNP, as
calculated by some, or increased at a fixed rate, -or tied to the population,
the price level, a corresponding gold--reserve etc. etc. People need only
freedom to clear and to- account in value units chosen by them or accepted
by them or even -established by them, not any exchange medium or any particular
-quantity of any exchange medium. However, once exchange media are -seen
as media to facilitate clearing, then as many of these media-s as those
people involved in the clearing find convenient to use,- should be freely
issued and accepted by them and cancelled after -their use. Nobody can
rightly prescribe for others how many of- such more or less advanced private
"cash" or clearing or ticket -certificates they should be allowed to issue
and accept. That -would be like prescribing to them how much they should
produce -and exchange. The subjective value theory applies here, too,-
quite apart from property rights and the right to make private -contracts.
No monetary theoretician or technician, expert or -reformer or authority
has the right to prescribe to them how they -are to settle their exchanges
and to promote them to the utmost -and what means and processes they are
to use for them. In fact-, there exists no one and no one may ever exist
who knows best what- is best for all other people in all situations or
even some of -them. Even if he did exist, he would still not be entitled
to -force other people to become happy or rich in the way he thinks -they
ought to go. If they do adopted him, individually, or as a group, as their
medicine man or guru, then that is their affair -and risk, indeed, also
their right and part of their liberty. - J. Z., 3/97.
CLEARING AS THE PRINCIPLE & PRACTICE BEHIND
ALL MONETARY -EXCHANGES & HOW IT COULD BE CARRIED OUT MORE PURELY &
EASILY,- for all but minor transactions :
CLEARING BANKING, DEPOSIT BANKING, CURRENT ACCOUNT
BANKING, CREDIT CREATION? CREDIT EXPANSION? MONEY CREATION? - A)
AMONG BANKS WITH OR B) WITHOUT OWN CAPITAL & CAPITAL RESERVES,
C) AMONG BANKS THAT PROMISE RARE METAL OR LEGAL TENDER REDEMPTION, D) AMONG
BANKS THAT DON'T MAKE SUCH A PROMISE, E) SUCH BANKS REGULATED BY A CENTRAL
BANK & F) SUCH BANKS NOT REGULATED BY A CENTRAL BANK & IN FREE
COMPETITION WITH EACH OTHER: Preliminary notes. This is a very muddled-up
subject. All kinds of different definitions and premises, arguments and
conclusions abound. It is difficult to work oneself through the jungle
they form. Even when one manages to hack temporarily a path through it,
much of the jungle remains, right and left and the path is soon overgrown
again. I have seen some famous libertarians and free marketeers repeating
a few of the most popular errors and prejudices in this sphere. All the
errors and myths in this sphere, often combined in Social Credit notions,
are a great obstacle to monetary freedom. - For mere current account or
clearing banks no bank capital or reserve would be required at all. It
would merely administer the accounts of its clients, more of less efficiently.
Ideally, even its customers would not have to deposit any cash, gold or
credits from other banks there. Its bank customers could just start with
it "ab ovo": Each just opening an account there, with a zero credit and
would contract to use this account for all his trading with the other customers
with this bank. For the sake of simplicity let us assume that this is the
only bank that they would use and that this would bank would mediate all
their trading, i.e. that there would be no trading by them with the rest
of the country or the rest of the world. We could assume this to happen
either on the local level, on the national or even at the international
level. Let us also assume that the participants have agreed upon a sound
standard of value for their pricing, all their trades and their accounting
at this bank. Let us also agree that they would use their accounts only
for their daily turnovers, not as a savings and investment account. (Here
certain precautions could and should be taken: Those building up too much
of a credit balance would, at a certain point, either have to forfeit them
or to purchase, with all the excess amounts, bank bonds or fixed term deposits.
These amounts, and these alone, could then be used for corresponding loans
to members. On the other hand, all those who built up too much of a debit
balance, would have to pay up the excess debt in their own IOUs, in convenient
denominations and with a discount to be settled between the bank and its
debtor, perhaps through arbitration. The debtor would have to accept these
IOUs at par from the bank or any of its customers. In other words, he would
be forced to undertake a discount sale towards all who offered him his
IOUs. For all customers some leeway would have to be determined in their
debts and credits on this account, in accordance with their kind of business
and their normal turnovers. - So much about possible abuses and difficulties
of this system. ) - Normally, the members could then settle all the
debts and credits arising out of their current trading among themselves,
without any other means of exchange, merely by assigning account credits
or account debts to each other. They could do so by cheques (cheques for
clearing only), by orders to the banks, by passbook entries, via credit
cards or any other convenient means. Among these might be standardised
clearing notes of the bank, in convenient money denominations, which would
promise nothing else by the bank than acceptance at par on all its clearing
accounts. When giving such certificates to any account holder, his account
would, naturally, be proportionally reduced or put into debt. - To assure
their use for clearing only, not for credits, these clearing house certificates
should be given only a short life-span or circulation period. In essence,
each payment through this bank would be an instruction to the bank: Debit
my account by xyz and credit A with xyz. They would use these payment instructions
(whichever payment method or means is used , in payment of any goods, services
and labour received. Naturally, they could do that only towards all those
willing to accept these transfers, clearing certificates, etc. at all and
at par or at a mutually agreed upon discount. - The total of the debts
of the members would exactly be proportional to the total of the credits
of the members. There would be no left-over capital amounts which the bank
could lend out, on medium or long term, with or without consent of the
account holders, apart from the above-mentioned (in brackets) purchases
of bank bonds or fixed deposits. - Now, it is very important to note that
their turnovers would not be confined to any level, to any maximum totals.
If they can manage to produce and sell more to each other, then all their
mutual debts and credits will simply become correspondingly larger. Goods,
services and labour being priced in sound value units, likewise the accounts
and the transfer orders, the fact of there being many more payments would
merely meant that there are many more exchanges. Millions instead of hundred-thousands,
billions instead of millions - IF people could increase their productivity
and exchanges by that much - or just in accordance with the increases,
or decreases, that take place at any time. Thus, apart from fluctuations
of prices from the goods, services and labour side, no depreciation of
these means of payment or clearing would take place. They could increase
their turnovers a hundred-fold or a thousand-fold and there still would
not be an inflation. Simply as much more would be exchanged. Their self-chosen
value unit, e.g. a gram of gold, would not be depreciated by so many more
turnovers using it. (Under a computerised accounting system even a number
of freely agreed upon value standards could be utilised, with ease, among
the members. By 1990 a major Australian Bank, like Westpac, was prepared
and, apparently permitted, to keep accounts not only in Australian dollars
but also in gold weight units.) None of the account holders could
demand payment in gold grams of all the clearing credits he had accumulated
and the bank could not demand of its account debtors payment in gold grams,
but merely payment in his own and also gold-weight valued IOUs, perhaps
only with a fair discount, and then his acceptance of his own IOUs, from
anyone to whom the bank or its customers might have transferred them, at
par, as if they were gold grams in the stated quantities. - Naturally,
bad debtors could go bankrupt in this system, too, although not due to
a faulty payment and clearing system. They picked the wrong trade or did
not conduct it properly or got careless in some large transaction or wasted
capital and earnings instead of improving their business, etc. Many other
problems than payment problems, do require many other solutions. If they
accumulated too much of a debt and had to pay this back in their own IOUs
at such a large discount that they could not recover their costs, then
they would be out of business, soon. The charges levied by the bank on
the clearing accounts it holds, would include an insurance premium to cover
this risk. - Seeing that all these accounts are only intended as turnover
and clearing accounts, and perhaps also as an insurance premium, to cover
bad debts, those who accumulate large debits on their accounts and do so
for more than a few days, might be charged a considerable interest rate
as an additional inducement to reduce their debits fast. - One kind of
low prices would be avoided by the system: emergency sales prices due to
money shortages. - Depending on the tax situation, the clearing bank accounts
might be open to inspection, et least to potential buyers and sellers,
who then could, perhaps even by phone, verify for instance the current
clearing account status of the buyers. - The members of this bank would
all, ultimately, and more obviously than usual in monetary transactions
today, pay for all their purchases with their own goods, services and labour.
The accounts and their figures at the bank would just keep track of all
these free exchanges - and facilitate them in a monetary or ideal clearing
way. Their own accounts would be deducted and those of their suppliers
credited or they would be credited with whatever their customers paid them
through this system. The bank would charge a small percentage of the total
turnover as its fee. The members would at any time have to let their own
debts be accounted against themselves. These deductions would be made with
or without their consent, if any genuine debt is involved. - They might
also be put under obligation to use any outside means of payment received
towards the abolition of their account debt at this bank. (The bank would
then sell this "foreign exchange" to those who had built up a large credit
with it and wanted to use it in this way.) The bank would explicitly and
publicly state: These accounts have not been established through cash deposits,
rare metal coin reserves or a reserve fund made up of some capital assets.
They do not entitle to any cash withdrawals or rare metal redemption. They
are merely current and clearing accounts. The clearing bank merely helps
to transfer the mutual credits and debts of its customers and keeps account
of them. It does not grant any credits and cannot grant any credits from
these current accounts. However, to the extent that some of our account
holders want to make some of their credits on their accounts contractually
available, for medium and long term credits, it would be willing to mediate
these, too, amongst its customers. - To that extent such a bank would be
safe from any time risk and means of payment or ability to pay risk or
difficulty. (Naturally, sickness, accidents, catastrophes, insufficient
business sense or business mistakes excluded. Thus the bank might insist
that its customers insure themselves, as far as possible, against such
risks.) - Such clearing and "deposit" banks (of current trading credits
transferred from others of its customers) should be open to inspection
by their members, or representatives of their members, but do not constitute
institutions that threaten the payment and value accounting situation in
any country. On the contrary. Without legal tender, subject to a free market
rate against a sound value standard, these means of payment or clearing
could not depreciate from the money side - unless they had picked a value
standard that was not really as sound as they thought it would be and at
the first sign of this they could change over to a better one. The elasticity
of the system would be unlimited. It could precisely fit all the output
of and trade in wanted goods, services and labour (among its members).
It would not distort exchanges but, instead, greatly facilitate them. For
small transactions, not worth any writing efforts or electronic checks
and transfer costs, such a clearing bank could issue token coins whose
only foundation would be their ready acceptance at par in all its clearing
accounts. To avoid the charge that thereby it would "levy a loan from the
public" or "create money out of nothing", it could be quite correct on
this, too, and debit each of its accounts with e.g. $ 30 (or the gold gram
equivalent) and pay out that amount to each of its customers in small coins,
less the cost of producing them. - The general assumption for such a service
is, naturally, that monetary despotism could not effectively outlaw &
suppress it. - Secondly, such a clearing bank should, naturally, possess
no monopoly and should be free to clear with all other clearing banks.
- This is as simple a free exchange system as I can imagine, free of all
the ordinary flaws and wrong assumptions and imposed requirements, supposedly
necessary controls and safeguards. Mind you, I have not described a savings
and short to long term credit bank. The credits mediated by this clearing
bank would be explicitly confined only to those means which the own customers
would make explicitly available for this purpose, with all loans to members
confined to these means and their terms. Credits invested and lent out
should be kept in separate accounts. They would not have to be run by a
separate department of the bank, although it would probably appoint one
or several investment specialists if there were many such funds available
for investments. - One should add, that the loans given by the bank would
be given only by its credit transfers and they would also be repayable
by those credit transfers. Terms and interest rates would have to be haggled
out among lenders and borrowers, with the bank merely acting as a mediator.
It might e.g., publish the funds available and under which conditions they
are available and the funds wanted and under what conditions they are wanted
and then act as a broker to achieve as many mutually satisfactory agreements
between these customers as possible. Part of the interest payable would
serve for credit insurance purposes. In this uncomplicated model I see
no need for any outside interventionism or any suspicion that the bank
or its customers would thereby be given any special opportunity to cheat
or defraud others, to "create" any money or value out of nothing, to appropriate
what really belongs to others, a chance to deflate, inflate, stagflate,
or tax the economy, to speculate at the expense of others, to establish
a monopoly or any coercive power to intervene with any productive or creative
activities, with any individual rights or liberties. It would be a contractual
self-help project. I see no need or justification for government control
or supervision or guaranties for such institutions. They would and should
operate quite separately from the government, more independently than the
present churches and sects are from them. Ideally, they should not be subjected
to any taxes & licences and regulations and official supervisory boards
and inspectors at all, either. However, once governments began to operate
as competing business organizations and for voluntary customers only, then
they and their members should be free to open clearing accounts there,
too, or establish their own clearing banks. - When dealing with all other
models and notions of deposit, note-issuing, savings and investment banks,
we should, first of all, keep this simple model in mind and check whether
any added features are really rightful and necessary or, rather, wrong
and self-defeating or risky and distorting, leading to panics, failures,
booms and busts or would be too inelastic and deceptive or coercive or
all of these combined. - What would happen, e.g., if any credit established
in such a simple clearing bank did go astray and were used as a credit
in some other banking institution, which might consider it as a valuable
foreign exchange and, based upon it, using it as a reserve and blow up
its deposit volume or note circulation in an inflationary way. - Imagine
that the other banks would do so. Would our clearing bank have to be blamed
for their actions? Would it suffer from this? To make it easier to answer
this questions, let us assume that our clearing bank, instead of establishing
clearing certificates or accounts with gold gram value accounting, had
possessed some gold coins and issued gold certificates and that these
gold certificates would have got into the hands of some other banks of
issue and were there used as "currency reserve" for a fractionally covered
and over-issued currency that is monopolised and made legal tender. Would
you, then, blame the gold weight clearing bank for the wrongs and mistakes
of that foreign central bank? If not, then you would have not right toblame
the gold clearing bank, either, when its credits were somewhere else so
used. - But, we should also consider that not only the credits of our clearing
bank would go astray but, those of other banks, too. Our clearing bank
could insist upon note exchanges or mutual clearing and thus get the own
credits back, soon. If, as we assume, our clearing bank adheres to stable
value reckoning, i.e., does not engage in an inflation, with its clearing
media and all the prices of its customers would continue to mark their
market prices etc. out in the agreed upon stable value units, while all
around it central banks would engage in monetary inflations. Then, most
likely, many more foreign exchange media would be offered to it than notes
of its own would have gone temporarily astray - by arriving at central
banks in other countries. So our clearing bank could easily pay for the
return of its credits, even before their stated validity has expired. The
exchange rate for the foreign currencies would fall and the clearing bank
would tend to refuse them at all if it would not need them to buy back
its own exchange media or debts gone astray. If central banks began
to imitate is value standard reckoning, then this would also not impose
any risk for our clearing bank. A mere clearing or accounting standard
can be shared with an unlimited number of other people. Nor would the establishment
of clearing credits at this bank by foreigners or even foreign central
banks bring any risks or problems. The accounts are for clearing purposes
only. No gold or cash withdrawal claims can be raised. They can only be
used for purchases or sales among the members, the more, the better. Loans
to foreign governments would no more be granted by it than to the own -
unless the own government would turn into a bank robber against it, using
all kinds of pious or cover-up or confidence trick phrasing in the process.
Naturally, this system could not function freely and without frictions
and problems if it were forced to use a fiat paper money standard (forced
currency: compulsory value & compulsory acceptance), were subject to
quantity regulations on the totals of its turnovers, had to redeem all
its debts upon demand in gold coins or legal tender paper money, had to
keep part of its accounts with a central bank, were severely taxed or not
permitted to freely clear the accounts of its customers, had to turn over
any foreign exchange received at a fixed rate, payable in legal tender,
to the central bank, had to purchase government "insecurities" or private
capital assets. Freedom from all acts of monetary and financial despotism
is presupposed. Its business is the liquidation, balancing or settlement
of debts of its customers, payable for the sale of goods, services or labour,
or their purchase, i.e. daily turnovers of what holds body and soul together
in a society based upon division of labour and free exchange. It would
not make any promises it could not keep - if not governmentally prevented
from doing its job. Up to the limits of the productive and trading capacity
of its members, to provide goods, services and labour to each other, it
could increase its business turnover, total of accounts, total of debts
settled, its short term clearing credits granted. Both terms, "overdrafts"
and "credit expansion" are misleading here. The customers started with
a zero account and did not have to deposit any rare metals or legal tender
to establish at first a disposable credit account. They might merely have
a personal debt limit on their clearing account, as is also practised with
credit cards. Such a bank would not and could not "expand credit" but its
customers might increase their exchanges among themselves and grant each
other credits, timed one, through the mediation of the bank. - But it could
become involved in international trade clearing to the extent that it could
issue, with the consent of exporters among its customers, clearing certificates
upon their ready for sale export goods, sell these, via account transfers
to importers among its customers, to the extent that these can use them
to pay for their imports, and could stimulate the rapid returns of these
clearing certificates in payment for the export goods, which would redeem
these clearing certificates. - I try to deal here with economics not with
anti-economics or neocomics, as Dr. H. G. Pearce used to say. To grant
credits to foreigners would, again, be a matter for its customers. The
clearing bank would only help in the process. By allowing foreigners to
pay with clearing certificates upon their export goods, to the extent that
the clearing bank's internal importers would accept these, it could, in
most cases, make the granting of credits to foreigners by the own exporters,
unnecessary. In other words, it would act like a bench (origin of the work
bank) or special market for the transactions of its customers. This market
institution would neither have the power nor the interest to inflate, deflate
or stagflate the transactions of its customers but, rather, to make them
as easy and fast as possible. All accounts would represent real goods (services
and labour included) and real sales. Or the bank would anticipate sales
of its customers, who are ready to sell, by allowing them to spend themselves
into debt, up their personal limits. The bank would EXPRESS or RECOGNIZE
that turnover credit of one of its debtors. It would not CREATE it. The
acceptors of the clearing bank's transfers would CONFIRM that turnover
credit by their acceptance of the transfer at par. No arbitrary credit
"creation" or "money creation" would be involved. Its turnover credits
would not promise any more than could be delivered at anytime: the ready
for sale goods, services and labours of its debtors. Especially gold or
silver coins or legal tender would not be promised. - Those who would not
merely desire the par value of the clearing bank's clearing accounts, clearing
certificates or tokens with their nominal gold weight values, but, instead,
gold metal of the corresponding weight total, instead, would be referred
by such a clearing bank to the free gold market, especially its local representatives,
with access to all the gold reserves in the world - and the best knowledge
of the clearing bank's par value and the par value of any other local currencies
that might exist aside it. The clearing bank itself should not be in the
gold metal storage and trading business. That is a business for other specialists.
The only connection would be the gold weight value unit used by it for
accounting and clearing purposes only. - If the clearing bank were paid
in gold coins or gold certificates it should use these to buy back its
certificates from whoever wants to buy gold or gold certificates with them.
If it saw its accounts or certificates suffering a small discount somewhere,
then it should make such gold coin and gold certificate exchanges especially
then and there. But it should not accumulate any gold coin and gold certificate
"reserves" for this purpose or promise to supply them upon demand. To that
extent its proclaimed fractional gold "cover" would be expressly "zero"!
It would only promise clearing AT GOLD WEIGHT VALUES. No one would be granted
any right to claim gold metal from it, except in the deals in which it
sells all gold coins received for its certificates, at par. All foreign
notes and credits received would also be used to speed up the reflux of
its own clearing certificates and account credits of foreigners.
CLEARING BANKS & NOTE ISSUING BANKS : Clearing
banks are the same -as note issuing banks in principle. Only the metal
redemption- does not apply to them. - Ulrich von Beckerath, in- correspondence.
- That applies only to clearing banks that- operate by clearing only, not
to cheque banks, that authorise -their cheque account holders to withdraw
either a rare metal -deposit or legal tender, upon demand. - J. Z., 7.4.97.
CLEARING CERTIFICATES & CAPITAL SECURITIES:
See: APHORISMS ON- THE MONEY PROBLEM.
CLEARING, CLEARING HOUSES, CLEARING PROCESS, CLEARING-
CERTIFICATES: ARE THERE BETTER NAMES FOR IT, NAMES MORE EASILY- UNDERSTOOD,
LESS LIKELY TO BE MISUNDERSTOOD? - Mutual settlement, -balancing of accounts,
set-offs, mutual payment adjustments,- mutual , writing off of debts, mutual
cancellation of debts, -non-cash payment, trade-off money or methods, transfers
of accounts only, book money settlement, balancing of debits against- credits,
numerical money, symbolic money, accounting money. In -German: Abrechnung
& Verrechnung. Perhaps from other languages more suitable- terms could
be taken?
CLEARING, CREDITS & DEBTS ON SHORT TERMS:
Short term credits and- debts that represent turnover transactions amount
mainly to -clearable credits and debts that would and could almost always
be -settled by clearing, if only the creditors were not given the -authority
to demand cash payments instead and would not, sometimes, be inclined to
demand them. Thus the assumption or -legal presumption that all short term
non-cash credits, deposits -and cheques are to be claimable in cash ought
to be done away- with and replaced by a right to clearing only, in as convenient-
and just a way as can possibly be arranged by private and- monetised notes
and clearing certificates. Capital savings should -not be used to finance
such turnover credits. They are -unnecessary for them. Such transactions
are inherently -self-liquidating if only no form of monetary despotism
interferes -with them. - J. Z., 7.12.92 & 15.4.97.
CLEARING: A man who can properly clear his own
labour services and products against those he wants, is no longer unemployed.
His danger would rather be over-employment - since the wants of most men
are rather unlimited. - J. Z. 7.8.75
CLEARING: Clearing needs no official organization
or regulation -nor any official or private funding - no more so than e.g.,
-postage stamp or coin exchanges for collectors do. But what it- does need
is freedom to organise itself under its own statutes,- independent of all
repressive legislation, regulation & jurisdiction. - J. Z., 19.7.91,-26.4.97.
CLEARING: If it is true that all exchanges can
be settled by -clearing and, lastly, are settled by clearing, even if only-
indirectly so, with the help of currencies, paper monies or coins -or banknotes,
then there is INHERENTLY no need to give such- clearing media any other
backing or cover or redemption other -than their clearing function. At
the same time, seeing that- clearing means the cancelling of mutually owed
debts, it is -obvious that forced and artificial values for clearing media-
would distort clearing transactions and so would the compulsory -acceptance
of such fiat currency and legally turning it into the- exclusive coin and
note currency for a whole country. Thereby, -and inevitably, the monopolist
and coercer could shed his own -debts, by unilateral action and authorise
all other debtors to do -the same, to the extent that this monopolist has
inflated his- currency. Creditors and debtors ought to be freed to agree
upon sounder value standards - and means of payment - that suit both of
them. Through private and free clearing and note issues we should make
ourselves independent of the wrongful, flawed and limited options that
are the only ones which the governmental central banking system offers
us. Free choice of exchange media, clearing facilities, credit instruments
and value standards, all of them optional and market rated - except for
their issuers, towards whom a juridical legal tender should apply, since
they ought to recognize and accept their own debt certificates at par from
anyone. Everything else would be fraudulent. - J.Z., 7.9.97, 10.9.02.
CLEARING: Let's clear the air about clearing.
With people free -to clear their labour, services and goods, all ready
to be- supplied, for the labour, services and goods of others, there -could
be no unemployment or underemployment or sales difficulties -for any labour,
services and goods that are still wanted at- market prices. All being supplied
with either sufficient sound- exchange media or clearing avenues, to facilitate
all these -desired exchanges (settled, even when paid in "cash", simply
by a convenient form of clearing-), all could be cleared against each other,
provided only that- all people concentrated on supplying labour, services
and goods -that are wanted rather than on those that are not wanted or
not -at prices that would more than cover their production costs. -Moreover,
under this condition, all ready for sale labour, -services and goods could
be liquidified & then utilized as purchasing -power - redeemable in
these wanted things. Whoever puts any -obstacle in the way of the free
and competitive private or- cooperative supply of sound exchange media
or of clearing avenues -and banking institutions and payment centres, does
thereby assure -unemployment, underemployment, depressions, inflations
and- stagflations. While a single and very efficient clearing centre- for
the whole world could, theoretically, arrange for all possible and desired-
exchanges, keeping all willing to provide labour, services or- goods busy,
producing them and exchanging them through this clearing centre, it remains
true that coins and paper notes, do facilitate clearing-, e.g. in the purchase
of a newspaper or a book. Thus, -fully freed clearing should always be
accompanied by the free -issue of optional and market rated and competitively
issued -exchange media in form of paper notes and coins. The sum of clearing
exchanges and the total circulation of notes required -can be no more rightly
and efficiently prescribed or limited than- could be the sum of labour,
services and goods which people are- able and willing to provide for each
other in a division of- labour process that depends upon free enterprise,
free exchanges- and free trade. All attempts to centrally manage and limit-
exchange media and clearing facilities have led to abuses and- economic
crises. Only full monetary freedom can prevent them - as- far as is humanly
possible. - J. Z., 3/97.
CLEARING: We are all each other's debtors and
creditors, with- the totals of debts and credits exactly balancing each
other.- Consequently, if only we organized a perfect clearing system -between
us, one not disturbed by any legally or juridically- authorised demands
for rare metal cash or monopoly- paper money that is legal tender, then
we could clear all our transactions. All the notes- we would still use
for the sake of convenience need be nothing- more than clearing certificates
to facilitate this free exchange -via free clearing. We should no longer
tolerate any law, regulation, juridical decision or administrative authority
which -prevents this from happening freely, naturally and fast, doing-
away with and preventing all monetary crises, especially inflations, -deflations,
stagflations, with their involuntary mass unemployment, expropriations,
bankruptcies due to this despotism, general impoverishment and their trends
towards despotism, terrorism, civil wars, and wars. - J. Z., 24.7.93,-
24.4.97, 8.9.02.
COIN AND MONEY COLLECTION HANDBOOKS: They should
be perused and- partly abstracted or extracted for precedents.
COIN OF THE REALM OR LEGAL TENDER PAPER MONEY:
Allow people to- pay and be paid in other monies than the "coin of the
realm" or -the government's exclusive and forced currency - and most of
our -economic problems would be over. - J. Z., 1989, 8.4.97.
COLES/MEYER SHOPS IN AUSTRALIA AS POTENTIAL ISSUERS:
Their -annual turnover according to news of 2.8.93, was 15 billion.- (Currently
around 20-20 billion A $'s. - J. Z., 12.9.02.) Assume that they could keep
in circulation ca. 10% of this. This- would mean that at any time they
could issue and keep in- circulation A $ 1.5 billion worth of their own
shop currency. This -amount alone suggests they should take an interest
in this aspect- of their own business. Moreover, if they could issue that
much of -their own currency - assured of its reflux in sales, then their-
total turnover could probably be increased considerably. Moreover, they-
might also use a stable value standard in their currency and in -their
pricing, thus making their own notes still more widely- acceptable. Furthermore,
they could grant wage payment loans with -them, to that extent of their
"shop foundation". Such extra short term loans could- greatly contribute
to reduce the current unemployment,- officially above 800,000, unofficially
probably considerably -above that number. (By exerting an extra demand
for productive labour and also turning over more goods and services than
before. - J. Z., 12.9.02.) Unemployment for young people is sometimes as
-high a 20 - 40%, depending upon the location. But they are not -interested
in or free to ask for payment in shop currencies and- the potential issuers
are not free to offer them such payments. -- J. Z., 30.4.97.
COLLECTIONS OF MONEY TOKENS AND PRIVATE ISSUES:
It could start- with the hand books for coin and money collectors but could
be- supplemented, for research purposes, with good photocopies of- other
specimens, not mentioned in these.
COMMITTEE FOR MONETARY RESEARCH & EDUCATION:
Seeks to promote the -public understanding for monetary processes and the
vital value -of a healthy monetary system for a free society. Pamphlet
series, newsletter MEN & MONEY. Pres. Elisabeth R. Currier, POB 1630,-Greenwich,
CT 06 836, USA, Tel. 203-661-2533.
COMMODITY MONEY, REDEMPTION, COVER & CONVERTIBILITY
TERMS SHOULD- NOT ONLY BE APPLIED TO RARE METAL CURRENCIES: These commodities
-are not the ones consumers usually want but only in-between- commodities
or arrangements in attempts to assure that their -holders or claimants
can get the satisfaction in the commodities -and services they really want.
Originally, there seemed to be no -better way, than this important step-up
from primitive barter. -But since then, in millions of transactions easier,
cheaper and -more direct means have been found and used, illegally or legally,
-to achieve consumer satisfaction, to balance the variety of- commodities
and services with a variety of commodity and service- vouchers, and in
thousands of cases the interest in value -preservation has also been served
by rare metal commodities not- serving as exclusive or even frequent means
of exchange but,- merely, as value standards, by weight, in more or less
free- exchanges. For free transactions the barter value of gold can be-
abstracted whilst the reckoning or accounting value of gold--weight units
can be preserved. For this purpose gold does not- have to be physically
present. Nor does it have to physically back up each transaction, nor do
even gold certificates have to be -backed or covered by gold or be redeemable
or convertible by the -issuer himself. He has only to see to it that his
"paper gold"- remains at par with its nominal gold weight value. Then the-
convertibility of his notes or certificates can then be transferred to-
the world wide gold market, embracing all gold stocks and all- current
gold production. Most of the commodity money advocates -never dreamt of
such a huge redemption fund for their supposedly- ideal gold standard currency.
They considered only the tiny -fraction of the total which their kind of
commodity currency -issuers could mobilise for their purposes. Goods warrants
with -local shop foundation could liquidify most currently wanted goods-
and services while still preserving gold weight pricing and- reckoning,
independent of the local supply of gold. When private, no-exclusive or
forced paper money has been supplied, which is optional and free market
rated but kept at par with its nominal gold weigh value, then it is "as
-good as gold" and it was usually preferred to gold as long as- people
expected this goodness of paper money to be continued.- Monetary freedom
would permit gold coin and gold certificates,- whether 100% or fractionally
covered, for all voluntary payment -communities and at their risk and expense.
After having been long outlawed, they would probably blossom for a while
but then shrink in their occurrence and volume, -in free competition with
cheaper and better alternatives, which -would preserve what is good in
rare metal currencies and certificates but would eliminate their drawbacks.
Say's Law would- then get fully realized: All suppliers of daily wanted
goods and services, suitably associated, could then -issue the required
purchasing power for them to achieve the sale- of their goods and services
within a normal consumption period. - J. Z., -22.4.97, 7.9.02.
COMMODITY MONEY: Commodity money, as usually understood,
in form- of gold, silver, platinum or copper coins and of certificates-
that are 100 % or, quite openly, only fractionally covered by- them (preferably
with precautionary redemption clauses that would- cover the risk of sudden
redemption demands), represents just a -few of the numerous options for
monetary freedom. Sometimes and quite without justification or necessity,
such issues would be granted legal tender status. - If it is so -good,
why insist upon it being legal tender? And it would still constitute an
exclusive or monopoly currency, unless freedom to issue & use other
kinds of exchange media and value standards is introduced. If it is so
good,- why insist upon such a privilege? It would limit value accounting
-to these standards and this in the face of hundreds of different- value
standards that have been proposed and that are believed in- - at least
by some. It would also limit exchanges to those that can -be covered by
ready availability of these commodities. It would mean that a few or even
one selected commodity only would have to -cover the exchanges of all other
commodities, as well as of all services, not- merely as mere standards
of value but as means of payment, too.- This means the establishment of
a very tight bottleneck for all- transactions. Prices in exclusive rare
metal currencies went- never so low that the available rare metal coins
sufficed to make -monetary transactions penetrate universally, everywhere.
Even -primitive barter continued to exist, to a considerable extent, even
in developed countries, even into the 20th century, at least in some- spheres,
with e.g. some agricultural workers being partly paid in- wheat, potatoes
and firewood. Under monetary freedom the ultimate- redemption fund that
most currency holders are interested in, -namely, ready for sale goods
and services, in millions of- varieties, would be the kind of commodities
that would back and redeem or- provide the convertibility for the most
common, competitive and optional monies of monetary freedom. Once these
have been -widely issued and accepted, rapidly streaming back and being
replaced by new issues, and when they have a relationship to commodities
like gold, or other rare metal weigh units, only as their accounting-
and clearing value units, in the competitive notes and- certificates of
private currencies and in the prices of all goods,- services and labours,
then the idea of confining all exchanges to those coverable by rare metal
commodities will come to appear ridiculous. To take an example from today:
Do you -imagine that railway, bus-, cinema or lottery tickets or postage
-stamp, to preserve their value and to measure it accurately, would -have
to be convertible, by the issuer, at any time and upon -demand, into a
rare metal? Neither does a shop foundation money- need such a cover to
give it value - measured e.g. in gold grams- and keeping it at par, in
a free market, with such a value,- perhaps even above par (among those
who do not want to carry gold- coins around or do not want to confine their
earnings to those -that can be paid in 100% covered gold certificates).
All other -ready for sale consumer goods (commodities) and even daily wanted
consumer services should be considered -as suitable "commodities" for redemption,
cover & convertibility,- by those desiring it. And the specialized
convertibility desires- of some, who do want to turn their "tickets" into
rare metals, should be referred to the greatest -redemption and convertibility
fund of all, namely the free and- world-wide market for gold and other
rare metals. Notes that are- locally accepted at par with their nominal
gold weight value can- also be used to purchase gold metal from a local
representative- of the world-wide gold market. Even now most banks do also
sell- gold coins to investors or collectors, but not because they are legally
or juridically obliged to do so. They are not. - 1.8.94, 17.4.97, 7.9.02.
COMMODITY RESERVE STANDARD OR CLASSICAL GOLD STANDARD?
MONETARY FREEDOM: Competition would provide better money than- would government.
I believe we can do much better than gold ever -made possible. Governments
cannot do better. Free enterprise,- i.e. the institutions that would emerge
from a process of- competition in providing good money, no doubt would.
There would -in that event also be no need to encomber the money supply
with -the complicated and expensive provision for convertibility which
-was necessary to secure the automatic operation of the gold- standard
and which made it appear as at least more practicable- than what would
ideally seem much more suitable - a commodity -reserve standard.... - Hayek,
Denationalisation of Money, 83.
COMMUNISM & CENTRAL BANKING: Communism lives
on, e.g. in central banking, also in compulsory taxation and the collectivist
ownership claim upon "national" territories that I call "territorialism".
It is also preserved in "protectionism", social insurance legislation,
legislation on industrial relations and in numerous other State interventions
with the economy and our work and private lives, even in the supposedly
non-communistic or even anti-communistic countries. But the worst aspect
is central banking. From it either the other evils arose or have greatly
grown through it. Since it is preserved by a faith it cannot be abolished
or effectively outlawed. But what is achievable is tolerance for dissenters,
freedom for them to opt out of central banking and to do their own things
for themselves, i.e., making use of monetary freedom, as part of the whole
range of exterritorial autonomy options for volunteer communities or of
freedom of action or exterritorial autonomy or minority autonomy. Since
popular majoritarian faiths are not directly challenged by it, as they
are e.g. by terrorists, and since monetary freedom is not appreciated by
most, that is an aim that is attainable, even as a "fool's" liberty. It
can also be claimed under the right to make mistakes, at one's own expense
and risk. So much about freedom of action contrary to central banking beliefs.
But that does not mean that central banking should no longer be intellectually
attacked. One of the most promising attacks in our times could very well
be to point out its communist connection, unknown to most of the victims
of state schools or state controlled educational institutions. Even those
who can't be bothered to study monetary freedom options might thus come
to reject central banking as a mainstay of what remains of totalitarian
communism, even in most supposedly free Western countries. - J. Z., 11.5.97,14.5.97.
COMMUNISM, CENTRAL BANKING AND LEGAL TENDER: Why
did and do all -supposedly anti-communist parties and non-communist parties
-support both central banking and legal tender even after the fall -of
most communist regimes and economic systems? Why is that- system still
preserved in the countries supposedly liberated from -communist regimes?
Karl Marx and Engels in their platform in the- Communist Manifesto of 1848:
"5. Centralization of credit in the -hands of the State by means of a national
bank with state capital- and an exclusive monopoly." In an 1848 leaflet
this was further- clarified in point 10: "A state bank the paper money
of which is -legal tender, will replace all private banks." - In the Communist
-Manifesto they called their programme themselves one of "despotic -inroads
on the rights of property and on the conditions of- bourgeois production,
by means of measures, therefore, which -appear economically insufficient
and untenable." - So, why is- this despotic, insufficient and untenable
system still legally -and coercively upheld everywhere and hardly even
criticized? -- J. Z., 20.3.97.
COMMUNISM, COLLECTIVISM, MONETARY DESPOTISM, CENTRAL
BANKING, STATE SOCIALISM, RUSSIA & THE "FREE WORLD": The institutions
and conditions of Russia as well as those of the supposedly free Western
world will remain largely collectivistic and communistic as long as the
coercive and monopolistic central banking system and its monetary despotism
are upheld. - J.Z., 26.8.91.
COMMUNIST MANIFESTO & UNEMPLOYMENT: Did you
ever read the 10 Points Platform in the Communist Manifesto? - It was expressly
drafted to create an economic chaos, by economically untenable methods
- a disorder in which the Communist Party could flourish and finally take
over power. - Its point 5 runs (from memory): "Centralisation of credit
in the hands of a State bank with State capital and an exclusive monopoly."
A leaflet that followed soon after explained that the intended exclusive
currency was to have the legal tender characteristic. - We know by now
and through bitter experience that neither the ALP nor the LP or CP nor
the DLP have a workable employment programme. If either of them had it,
it would be firmly in power. All of them, in spite of some lip service
to anti-communism, support at least point 5 of the Communist Manifesto,
i.e. a system expressly designed to create disorder and further the cause
of communism. They do not even apologise for this but consider their behaviour
as self-evidently justified and necessary. - The supposed anti-monopolists
in the main parties did thus establish the largest and most dangerous monopoly
of all, the money monopoly. - All Western and, supposedly free and anti-communist
governments did legalise this communistic (or state socialistic or State
capitalistic) proposal and outlawed all free market alternatives. (I find
this communist idea in almost every mind and, almost, "under every bed"
- and more or less hotly defended by most of its adherents.) - Frederic
Bastiat once said: "Society Is Exchange." If this statement is correct
then the socialists and other dictocrats, who raised exchange difficulties
in this form and others, are thereby and to this extent revealed as anti-social
elements, as enemies of society. - Full employment is something NO government
can PROVIDE. Not even a libertarian government could. A libertarian government
(severely limited government) would just leave the unemployed free to supply
themselves with work - and to take all the monetary, financial and organisational
steps required for this purpose. At most it would provide advice and would
see to it that none of its own measures would continue to create and maintain
unemployment. - J. Z., 1985 & 21.5.97.
COMPETITION UNDER MONETARY DESPOTISM & UNDER
MONETARY FREEDOM : -Instead of a severe competition (which has given competition
a -bad name in public opinion) among suppliers of labour, goods and services,
largely free to compete with each other as such- suppliers, for a monopolised
and thus scarce or unreliable or- depreciating exchange medium, upon which
all their exchanges -depend but which was, obviously, not competitively
supplied,- nevertheless, under monetary despotism - there would be, under
-monetary freedom, the easy competition of not only supplying- one's own
goods, services and labour competitively but, also,- competitively supplying
money tickets for their acquisition and- use and for paying all one's debts
with them, to the extent that such money tickets or purchasing vouchers
etc. can be issued at -par with their nominal values (expressed in whatever
value -standards are found acceptable under free choice of value -standards).
Not only the goods, services and labours could be- almost endlessly varied,
as wanted, but the means to pay for them -could be, too, by those who have
the wanted consumer goods, -services and labour to offer. Each certificate
would only have to -offer that degree of variety of local goods and services
-as its redemption fund which would induce potential acceptors to -accept
it at par. Thus severe competition in goods, labour and- services supplies
would be ended through an easy competition in- the supply of goods-, service-,
and labour vouchers, issued by -their local suppliers, within the limits
of their supply and- labour capacities. No more monetary bottleneck or
excess friction -would result. Each supplier could also supply the purchasing
-power to turn over all his supplies and could do so over and over- again.
The quantity of goods, services and labour could be freely -brought into
balance with the quantity of purchasing media for- them, by the providers
themselves, rather than by outside -monopolists, who have other priorities
and even contrary -interests to these suppliers and no rightful claim to
dispose of- the goods, services and labours of others by means of exclusive-
and forced currencies. Monetary emancipation would fully realize -or emancipate
competition, too, as well as free cooperation on a -free market. - J. Z.,
14.4.97.
COMPUTER OR ELECTRONIC MONEY, PRIVATELY SUPPLIED
AND MANAGED, FOR -CLEARING PURPOSES ONLY: This kind of clearing money would
have -to be hacker proof. Forgery would also have to be prevented. -Ideally,
a computer of a participant would be permanently -connected to this centre.
All his spending should provide his identity, assured by scanning, codes,
pass words,- whatever. The system should also be pre-programmed to sound
an- alarm at the account holder's computer and a security check- computer
at the clearing centre, whenever any tampering with an- account seems to
occur, e.g. by repeated tries to hit upon a code- number, flawed scanning
etc. E.g., the credit card, holding the -phone clearing credits of a participant,
might be associated with -a beeper that would indicate to the card holder
any attempt to -spend from his account. Then he should have the option
to press a -button leading to the message at the clearing centre: I am
not- trying to spend anything now. Apparently, a fraudulent attempt is
-in process to use my account. - Then such payments attempts, -at the expense
of others, without their consent, should not be- completed until the matter
has been clarified via checks with the account holder. Whoever made the
attempt to break into an account- and rifle it, electronically, should
also become automatically- and electronically traced and identified. -
We may not be there- yet but we might not be very far from that situation,
either. I- am less worried about this than about governments, especially
tax-d departments, getting access to this kind of private trading.- Security
against this should become close to 100% before I would- prefer that system
to cash payments. - Some claims have already -been made for a large degree
of security for private payment channels. I do not know how true and how
costly these security- avenues are. - Perhaps as an experiment, libertarians
and- anarchists could set up such a system among themselves, for the- exchange
of printed, disked, microfiched, on-line literature or- literature compilations
on hard disk drives, ZIP disks and -CD-ROMs of the cheapest kind, that
offer only text files. -Expensive multimedia are not necessary to convey
essential -freedom information. - I still think that e.g. 5,000 active
-microfichers in the world, producing and reading microfiche actively,
could use their fiche between them to set up a clearing -bank, using a
microfiche of acceptable quality of reproduction and -legibility, as a
value standard unit and also quantities of them, -as media of exchange.
If each participant deposited a few- duplicates of his issue at that central
bank of freedom- microfiche, then he could there get a corresponding credit,
in -form of the other freedom microfiche that he wants. The centre
-might also act as a literary agency for the participants and- offer their
fiche for sale, directly, on a commission basis or by -mediating subscriptions.
Thus it could cover its costs and make- some profits - provided only that
microfiche would have been- already as widely accepted as that. Indeed,
that might never -happen, in spite of all the advantages this medium offers.
But -the potential is there. - J. Z. - 1.5.97.
COMPUTERISED MONEY MARKET DEALS, INTERNET MONEY:
How sound can they be, or how soundly can you judge the currencies involved,
if all you see and can know about them, through the computers, are figures
on a screen? All face to face evaluations, knowledge of particulars, trades,
goods and services involved are abstracted in the process. Moreover, the
prices quoted are often prices artificially and wilfully manipulated by
governments to give a wrong impression. Such money manipulations can occur,
as despotic actions, almost at any time and at any degree. The monopolise
and forced currencies traded, as well as those which are offered on the
Internet, are all too separated from goods, services and labour exchanges
and their conditions. The exchanges and exchange media offered by monetary
despotism and to a large extent also those offered only electronically,
via the Internet, are all too anonymous, not immediately visible, touchable
or testable. Too much has to be accepted upon legal commands, faith, advertisements
and reputations. It is almost as if one considered only the markets established
by powerful criminals, organized crime, pirates, highwaymen, with their
loot, their fiat money, their requisitioning certificates, their regular
and irregular tributes and levies, and from them tried to judge the economy
in general and come to rational decisions. Indeed, the government securities
traded in the money markets are investments in tax slaves. When and where
and to what extent these tax slaves will finally rebel or simply refuse
to pay or evade or avoid taxes can't be safely predicted. To the extent
that credit claims to cash or gold are traded, and lead by its system to
of an immense non-cash payment and clearing structure, upon a comparatively
small gold and legal tender basis, with creditors entitled to demand rare
metal cash or legal tender paper money (of which there is never enough
to pay all the current non-cash payment and clearing claims), the whole
system is very unstable and subject to panics and collapses at any time.
Consider also the huge stocks of U.S. paper dollars hoarded all over the
world because the other national currencies are, usually, even worse. As
soon as the other national currencies improved or became more stable than
the U.S. dollar, then these huge amounts might suddenly flow back to the
U.S., leading there to a strong paper money inflation, since there they
still have legal tender purchasing power. Who can predict when that will
happen? - The whole embodies all the uncertainties of the old court watchers,
the Kremlin watchers of recent decades and of the Washington and Tokyo
watchers etc. - While the government is still despotically involved with
finance - this market cannot be free and sound, either. - J. Z., 12.4.97,
18.5.97.
COMPUTERIZED MONEY SYSTEM: Can any electronic
system, no matter how extensive, and how often it is changed or reformed,
but a full substitute for the inventiveness, creativeness and ingenuity
of free participants in a free market for exchange media, value standards,
foundations, clearing and credit methods etc. and the subjectivity of values
for different people or is it merely another instance of the "one size
or one utopia fits all" notion? Especially libertarians should be wary
of computerizing all their transactions, making them thus more or less
open to government snooping with the most expensive and extensive decoding
equipment, software and manpower resource for that purpose. While in a
quite free market computerization would offer many advantages, under the
rule of territorial governments it also offers many disadvantages. Computers,
software and their networks are not and may never the panacea that many
people expect them to be. I find that indicated by the way libertarian
computer users neglected and still neglect e.g. their microfiche, floppy
disk and CD-ROM publishing options for libertarian literature. -J.Z., 27.8.02.
CONFIDENCE & TRUST: The present banking system
of monetary -despotism does not deserve the maintenance or restoration
of -confidence or trust but, rather, the solid establishment of -permanent
doubt and distrust and the replacement of this -despotism by the individually
chosen alternatives of monetary freedom. - J. Z., 15.3.97.
CONFIDENCE: An honest currency is not a confidence
game or -trick. It can be as honestly offered and accepted as goods
and- labour services can be. - And its quality could be as rapidly- checked:
E.g., would it be accepted as "as good as gold", or at- its other par value,
to a different standard used in it, in the- next shop or service station?
If it is, any suspicion, distrust- and lack of confidence would be rapidly
dispelled. - One might -even say that it is a self-interested confidence
game of -advocates of an exclusive and either 100% or fractionally covered-
gold certificate currency, to insist that "confidence" would be -required
for banknotes. Such nonsense is simply thoughtlessly copied, from one author
or lecturer to another, over generations. - J. Z.,- 61.11.91, 26.4.97.
CONFIDENCE: Confidence as the basis for the value
of a currency?- Nowadays you can only be confident that a government paper-
currency will NOT be redeemed by the government issuer (or its- central
banking system ) in gold or silver or by any private bank- forced to deal
only in the government's forced and exclusive -currency - or forced and
exclusive currencies of other -governments. - You can also be confident
that you can pay your -taxes with it and that the government will mostly
back you if you -use its currency to cheat your creditors with it for part
of your -repayment obligation. At most you remain somewhat free to
try to purchase with it, at current paper prices for gold weight units,
-and often taxed, gold on a somewhat free gold market. - J. Z.,- 16.3.97.
CONFIDENCE: Only that confidence is needed for
a currency, to be -widely enough accepted, at least locally, that consists
in the -assurance that one can buy with the currency all one's wanted-
consumer goods and services and pay one's debts with it. When -this confidence
is assured then it comes close enough to a -certainty. A further guaranty
by the issuer: a promise to -deliver gold or silver for the currency, too,
upon demand, is- then not required and thus metal redemption will be renounced
by- competitive issuers and not asked for by most users of such a- currency.
If they really want to buy gold, they would remain free -to do so on a
free gold market. - J. Z., 16.3.97.
CONNECTION, THE, PUBLISHED BY ERWIN S. STRAUSS:
On and off it- discusses monetary freedom options, too, e.g. Dio in TC141p48,-
Jim Stumm in TC142p29. Stumm, in TC133p115 sees Gresham's Law- correctly:
Without legal tender & money monopoly, good money- drives out the bad.
Some of the usual objections are raised by D.- Ust, in the same issue,
p. 52. Strauss offered some comments to -them in TC134p6. I marked 3 free
banking contributions in TC143,- on pp 8,9, 38/39. - I would like someone
to provide me with good -photocopies of all such contributions for microfiching.
- J. Z.
CONSIDERATION FOR OTHERS: A system of monetary
despotism is hardly considerate towards the rights and liberties of others.
It does not learn from its mistakes. It does not allow its victims to opt
out from under it. It does not permit competition by others. It is the
product of totalitarian fanaticism. Under the pretence of providing the
greatest possibly public services it manages to provide, actually, some
of the greatest possible public disservices and this not only for a moment
but, for years and decades even, and this with the consent of most of its
victims, while suppressing the free actions of a few enlightened individuals
and groups, that could clearly show up its wrongs and defects. - J. Z.,
11.5.97.
CONSPIRACY THEORY AND CREDIT-, MONEY- AND DEPOSIT
"CREATION": To- assume that all accountancy and trustee companies and directors
of -banking coops are unanimous members in an international conspiracy,
to "cover up" an endless "creation" of deposits and- credits out of thin
air, goes a bit too far for me to take on- credit or faith, just upon the
assertion hot air or written assertions that such things would- occur.
Some accountants have written detailed reports to prove -that such frauds
and cover ups do not and cannot occur (although- many other culpable acts
do happen), and that we have here -merely one segment of the many sectarian
and popular beliefs on -money and credit. - J. Z., 3/97.
CONSULTANCY OFFERS FOR MONETARY FREEDOM EXPERIMENTS:
CONSUMER COOPS & MONETARY & FINANCIAL
FREEDOM:
CONSUMER PRICE INDEX: How can one achieve the
transformation of -a politically determined and correspondingly fraudulent
CPI to- one or several ones that are economically determined? Full -publicity
on the details of its determination would be essential.- Without them one
cannot criticise its foundation. A debtor, as -large as the government,
with its CPI committed payments, should- not be permitted to manipulate
the CPI under the pretence of- properly measuring the inflation which it
causes in the first- place through its monetary despotism, and thus, too,
diminishing- its debt burden through unilateral and fraudulent action,
under- the pretence that it would fully undo the inflationary effect, at-
least at annual intervals, for some people, so "protected". (That would
leave, for instance, the losses through the degrees of weekly and monthly
depreciations, for those receiving regular weekly or monthly payments,
like wage and salary recipients.) -Naturally, the abolition of monetary
despotism would be a more- fundamental solution. But honestly compiled
indexes, well -publicised, could be among the first of the required steps
to -reveal monetary despotism for what it is. - One wonders why the- creditors
of the government, so defrauded, do not speak up and -defend their interests.
Also, why supposedly free economists do -not speak up against this fraud.
- How much does the government -owe its CPI indexed creditors, every year
still, after it fraudulently determined the CPI in its favour? - We do
let- governments get away with all too much, against our own -interests.
J. Z., 14. & 18. Dec. 93, 2.5.97.
CONSUMER PRICE INDEX: How honest or dishonest
is e.g. the- Australian Consumer Price Index (CPI)? E.G. Superannuation
-payments are determined by it. Personally, observing the prices -that
I have to pay as a consumer, I was always of the opinion -that it understated
the inflation rate - because that was -opportune for politicians and saved
them money in indexed- payments. I was also assured by several economists
that in the- determination of it, in Australia, some price controlled items
were- intentionally included. That is an obvious absurdity and wrong and
fraud. To -measure inflation one should use only prices that are not- controlled,
or artificially kept low or perhaps subsidized.- Details on which of hundreds
to thousands of possible indexing -methods are used in Australia to determine
its official CPI, are -not known to me. Unfortunately, the mass media and
associations of employers, employees, retailers and wholesalers not- supplying
or sufficiently publishing independent and other CPIs, to my knowledge,
that would help to throw doubts upon the official one.- - J. Z., 6.7.91,
30.4.97.
CONSUMER PRICE INDEX: The official CPI seems to
be an at least -annually repeated malicious and self-interested lie of
officials- entrusted with its calculation and application. It harms -millions,
whose incomes are thus wrongly indexed in the inflated -and forced currency
of the government. The culprits involved seem- to remain anonymous and
immune from prosecution and even from -public censure by genuine economists.
So far no investigative journalist has tackled -this fraud, as far as I
know. No one has been brought to court -for it, as he should be, by a class
action. The top rulers and- politicians do not depend upon CPI increases.
They seem to- legislate salary increases for themselves and various perks
-almost as they please - and then even cheat in their declarations -on
their recoverable expenses. When one was recently found out,- an Australian
Senator, he first blamed mere accounting mistakes.- But, apparently, there
were dozens of them and almost all in his -favour. (No full reporting on
this took place but the matter is- supposedly under full police investigation.)
When he pointed out -that most of his colleges did the same, he earned
their wrath, risked his future and was called a traitor. Indeed, he betrayed
their -all too common frauds and dishonesty. They did not like that. -But
this hue and cry is likely to be soon over and the rorts will- go on and
on, in one form or the other, usually far beyond an -honestly determined
CPI, which they have so far not managed to- provide for poor retirees like
myself. The State Superannuation- Fund, to which I was forced to contribute
at least a minimum amount -annually, was once bragging that it provided
cheap, i.e. very low- interest housing loans to other than public servants.
The -representatives of the thus "insured" remained silent. Moreover,-
the employer's half of contributions were not paid together with -mine,
earning interest over the years, but, in nominal and- depreciated amounts,
only when I retired, after 28 years.- Economically, these contributions
were part of my wages and as my- wages, if invested, would have earned
interest over almost 3 -decades. Another fraud in this old age security
system that is -passed over in silence by most. At least part of this -superannuation
fund's accumulated reserves had, probably, to be -invested in government
insecurities - repayable largely by the -same people in form of taxes,
although in depreciated money. -Rorts upon rorts. And at the same time
quite honest and safe old -age security arrangements are outlawed and the
existing systems -are frequently interfered with and taxed and regulated
contrary -to the interests of the thus "insured". I was not at liberty
to- opt out of that system, while I remained a public servant in NSW -and
to adopt an alternative old age security option not government regulated
and controlled. Even if I -had been allowed to opt out, all the others
would be just as much meddled with and -none of them was free to offer
value preserving clauses, except -to the extent that it was also investing
in CPI indexed government securities. Flawed as this CPI is, to the advantage
of -the Fund, or its favored borrowers, and to my disadvantage, at least
I am somewhat protected by -it against the results of further inflations
of the Australian governmental paper dollar. What is misnamed social or
old age- "security" has actually forced many people into involuntary -poverty,
who, under full monetary and financial freedom could- have become rich
in their old age on no higher contributions than -they were forced to contribute
to achieve a low pension or -superannuation in their old age. Never trust
any government to -get or do anything right. - J. Z., 30.4.97.
CONVERTIBILITY: Convertibility is a safeguard
necessary to -impose upon a MONOPOLIST, but unnecessary with COMPETING
-suppliers who cannot maintain themselves in the business unless -they
provide money at least as advantageous to the user as anybody- else. -
Hayek, Denationalisation of money, 84. - Some have argued -that there would
be a competition to provide the best possible- convertibility and that
would be a 100% convertibility by the issuer upon demand of the note holder.
But, under free- competition it would surely revealed that the ultimate
liquidity- or guaranty that people would like to receive upon failure of
a -bank of issue is less important to the current value and use of a- currency
than is its acceptability for goods and services in -daily demand. Consequently,
and in order to save the outlay for a -gold redemption fund, many issuer
would proclaim merely that they -are always ready to provide for convertibility
of their notes -into goods and services that are in daily demand but that
they would not supply themselves their equivalent value in gold- weights,
too. Instead, they would merely price their goods and- services and their
debts in gold weight units and accept their -own notes at par with their
nominal gold weight value (and other -notes only at their gold weight value
in a free market). In- other words, they would only try to preserve the
par value of -their own notes with gold weight units but without obliging
-themselves to supply the gold weights. Those who would then rather -than
collect their goods and services at par with them, purchase -gold with
them, would be referred not to any stocks of gold- that the issuer might
posses, for other than currency purposes,- but, instead, to the greatest
gold reserve & redemption fund of all, that of the- whole world, of
all of mankind, the one available to all buyers of- gold, to all fans of
convertibility, metal cover, gold value guaranties and redemption, namely
to the free gold market. They cannot demand more than that -the notes which
they hold of any issuer are accepted there at par (or as good as gold).
With- the maintenance of that par value the rightful obligation of the
-issuer would be ended. Nor would the issuer be obliged to- maintain the
par value of his notes outside the locality where he- issues them as turnover
or clearing media. He is not under any -obligation to maintain them at
par in the whole world. At the- place of issue no only the issuer but most
of the whole local -trading community would treat his notes as good as
gold and so- would the local gold sellers. But, ultimately, only he would
be obliged to accept them at par from anyone and that would tend to keep
it locally at par in other transactions as well. What more can one rightly
ask for -from any as convenient paper means of exchange than -its local
purchasing power and value being at par with its nominal value? It would-
then be considered as superfluous and unnecessarily expensive to -try to
provide each note holder with a 100% or fractional gold metal redemption
-fund as well. Those who do not offer it and declare that they will not
so -cover their notes, would win out in free competition. Their -prices
will be lower and their exchange media and their value -standard will be
just as good or even better and less subject to fraud and deception and
runs upon the remaining gold hoard of an issuer. - J. Z., 18.4.97.
COOPERATIVE BANKS OF ISSUE:
COPYRIGHTS FOR MONETARY FREEDOM WRITINGS: Seeing
the -catastrophic consequences of monetary despotism - and how often -they
occurred and for how long, should we still insist upon- copyrights for
all monetary freedom writings, when this might- obstruct their publication
or republication? Or should we try to- promote their duplication and publication
by any means, in any- medium that we can afford, fully aware that at least
at this- stage it would be almost impossible to acquire any riches or even
-to recover the costs of such publishing efforts? Or can you -imagine any
such writings becoming best-sellers, soon? - J. Z.,- MFNL&MF
3/4, 2/89.
COPYRIGHTS RENUNCIATION FOR MONETARY FREEDOM CONTRIBUTIONS,
AT -LEAST UNTIL THIS BASIC LIBERTY IS FINALLY ATTAINED :
CORRESPONDENCE ON MONETARY FREEDOM:
COSME, PARAGUAY, Cooperative Colony, had a Labour
Exchange Bank, -according to TIMES, Aug. 31, 1897. Source: A. Menger.
COST-PUSH & WAGE-PUSH INFLATION: These notions
are based on the same fallacies as those of the wage-price-spiral. They
ignore the monetary factor or assume merely the degree of monetary mismanagement
that is normal for monetary despotism, in which politicians depreciate
the currency in the effort to maintain their own power by buying votes
with inflated paper money (inflation tax) and with other taxes founding
their "government-spending" programs. - J. Z., 24.3.97, 30.8.02.
COST-PUSH INFLATION: In the strict sense, there
is simply no -such thing as a 'cost-push' inflation. Neither higher wages
nor -higher prices of oil, or perhaps of imports generally, can drive -up
the aggregate price of all goods UNLESS THE PURCHASERS ARE -GIVEN MORE
MONEY TO BUY THEM. What is called a cost-push inflation is merely the effect
of increases in the quantity of -money which governments feel forced to
provide in order to -prevent the unemployment resulting from a rise in
wages (or- other costs), which preceded it and which was conceded in the-
expectation that governments would increase the quantity of- money. They
mean thereby to make it possible for all workers to- find employment through
a rise in the demand for their products. -If government did not increase
the quantity of money, such a rise -in the wages of a group of workers
would not lead to a rise in -the general price level but simply to a reduction
in sales and- therefore to unemployment.- Hayek, Denationalisation of money,
75.-- See : WAGES, PRICES, QUANTITY THEORY, INFLATION.
COUNTERFEITING The biggest counterfeiters
have been- governments. - Jack Allen Horrigan, article "Inflation Island",-
10/1971. - One can hardly "forge" one's own notes but, under -legal tender
and the money monopoly, one can multiply them, still -force these multiples
into circulation and thus depreciate them- and drive up all prices expressed
in them. In each transaction -the creditors are not cheated out of the
whole value, as by the -use of a forged note, i.e. an entirely invalid
payment, but- instead, merely by the inflation percentage. - Advocates
of -monetary freedom should try to avoid inaccurate terms. They- should
leave that activity, as a monopoly, to the advocates of monetary despotism
and attack these lies and false pretences with- properly expressed truths
and correct terms. - J. Z., 18.4.97.
COUNTERFEITING & INFLATION OF LEGAL TENDER
PAPER MONEY: If you- do it it's illegal. - From a Workers Party leaflet:
Something's- Wrong in Australia. - A forger does not forge his own notes
but -those of others. At most he could water down his stock or issue -more
of his own notes secretly than he has promised to do or recorded as having
done. But all his notes would still be -genuine. Only their value would
be reduced. Not a single one of- them could be declared to be a total forgery
and quite invalid,- although the purchasing power of all of them would
be reduced. --J. Z., 19.4.97. - Alas, I had subscribed to the same error
myself,- when I wrote on 14.11.73 : If you want to engage in- counterfeiting
legally, join the central bank.
COUNTERFEITING, FORGERIES: Counterfeiting is a
crime which politicians -monopolise. - Stormy Mon, TC121, 29.7.84. - CAN
one "counterfeit"- one's own notes? - The issue-monopoly of central banks
and the -legal tender coercion and monopoly of its nominal paper "value-
standard" are by themselves criminally wrong and harmful enough- without
adding the false charge of "counterfeiting" the own -notes. - When other
governments counterfeit the notes of the own -governments, or when private
forgers do so, or when private banknotes are forged by criminals, then
that is- counterfeiting. - J. Z., 2.8.89, 29.4.97. - The wide circulation
area and long circulation period as well as the uniform appearance of government
paper money makes large-scale and prolonged forgery of it easier and more
difficult and slower to find out. - Thus some people predicted that some
day government currencies might become destroyed through forgery. Usually
they manage self-destruction well enough on their own. - J. Z., 9.9.02.
COUNTERFEITING: When Block discusses counterfeiters,
even his- economic arguments falls apart. His protestation that paper money
-is already counterfeit is irrelevant. The counterfeiter, whether -government
or private, is an aggressor, defrauding others of -rightful value. The
real crime of the counterfeiter is not that- he copies worthless government
notes but that he passes on his -own worthless notes to innocent victims.
To say that government -theft justifies private theft is an argument worthy
or the New- Left, not a self-styled defender of liberty. - Sharon
Presley,- where? when?
COURT CASES AGAINST MONETARY DESPOTISM? - I think
them too costly -and having much too low chances for success. Most
likely only -the lawyers would benefit. The time and energy involved for
the -litigants and the costs, would be better spent upon research,- studies
and publishing efforts. - J. Z., 7.4.97.
COURTOIS, French economist who opposed the note
issue monopoly - according to Rist.
COVER & REFLUX ARRANGEMENTS THAT ARE POSSIBLE
& ADVISABLE :
COVER & RESERVES: Security provisions or guaranties
in case of- bankruptcies, when the circulation efforts of banks of issues
-have failed, should be distinguished from securities, safeguards,- covers,
reserves, clearing and reflux arrangements that limit- the quantity of
exchange media issued, assure demand for them,- make certain that they
stream back to the issuer and preserve, as -far as humanly possible, the
par-value of the notes with a sound- and acceptable value standard. These
latter precautions are -necessary to the sound functioning of alternative,
optional, privately or cooperatively issued local currencies. When these
precautions have all been taken, then the former precautions for the day
of liquidation of the note issue -business, would not be necessary at all
- at least not for such sound banks -of issue. (What kind of "securities"
would be necessary for banks -that issue capital securities is another
question. Some might -merely issue securities to make the real capital
assets - as well- as capital expectations of their customers - more
liquid and- transferable, as liquid as one can make capital securities.
They can't be made as liquid as currencies have to be - upon this- foundation
alone.) - Back to note issuing banks and e.g. shop -associations issuing
local currencies with shop foundation: -Unlimited liability for the directors
of such banks would not cost- anything, could not do much harm and might
do some good. Also -some common sense rules, like a limited area for loans
and- circulation, a limited circulation period, the obligation to use -other
exchange media received to purchase the own notes at par, -the acceptance
of other exchange media only upon payment of a- small fee, whenever the
own notes have suffered a small discount, -publicity for all issues, the
stopping of further issues upon any -but a trivial and temporary discount,
contracts with the debtors -of the issuing bank that bind them to acceptance
at par, the -discounting with notes only of "real bills" (sound commercial
bills) or their equivalents, -that are short-term and do represent goods
already produced and sold- and on the road to the retailers, if not already
in the- retailers' shops. - A currency is accepted as a "current" -currency,
at least as a local currency, not because in case of a- bankruptcy the
creditors would be able to resort to a guaranty -fund but because there
is a current use for it, either for the -note holder himself, or indirectly,
through a current demand for -it by others, for their consumer satisfactions
and other debt -obligations. This and the final readiness to accept them,
in debt -repayments to the bank of issue, and its debtors, who would- mainly
be suppliers of goods and services in daily demand, and -the demand for
the notes to pay wages, salaries, and one's own -profits etc. with them,
constitutes the essential debt, demand, clearing, -reflux or shop foundation
for sound local currencies. Without it- even gold coins would only be of
some use to some. If these few -could not convert some of their gold coins
readily into food,- drink and shelter, they would perish. Without this
shop -foundation small money tokens would be no more useful than e.g.,
-shares are as means of payment. - Which other local covers -than shop
foundation could and should be mobilised by a single or- competing local
currencies? E.g. the services of professionals -and tradesmen, also that
of local restaurants, pubs, coffee--shops, all kinds of eateries, entertainment
centres, bus- companies, taxi services, the local rail connection, and
the local rate -credits, and fees, legally granted to or extorted by the
local government, the local- suppliers of gas, electricity, water, sewage
and garbage disposal -services. As long as any shortage of exchange media
is still- perceived or expressed in a premium for local exchange media
over -their value standard, no monetary payment sphere, which could -issue
its own sound exchange media, should "poach" all its means of -exchange
requirements from those who have provided their own- media of exchange
for their own purposes. Custom and ethics on -this might, one day, become
as strong as e.g. the condemnations of -cheating are, when gambling. If
you can help yourself in this respect, -then you ought to help yourself
in this respect. Mature adults- mostly feel strongly the urge to become
self-supporting, not a burden -upon anyone else, if they can help it at
all. (Welfare States have greatly diminished that feeling for self-support
and self-responsibility. - J.Z., 8.9.02.) That aspiration- should become
extended to becoming monetarily independent as far- as possible and convenient
to do so. Naturally, nobody would be -obliged to issue personal notes that
could have only a limited- local circulation among a few and that only
at a considerable- discount. But as soon as proper discounting facilities
are- locally established, combined with proper clearing services, then-
even individual issuers of IOUs, known to be honest, industrious and productive,
could issue their own IOUs, in standardised- denomination, not for general
circulation, but bring them to a -local discount or exchange office to
get them there exchanged into one- of the local currencies. That discount
or exchange office would- then have the task to put these IOUs into the
hands of the few- who, with them, would want to purchase the goods and
services of -the issuer of these IOUs. Upon purchase, they could then present
-these IOU's in full payment at their par value to the issuer, themselves
or through their bank - for at least- towards the issuer any note must
have, juridically, a full legal- tender, i.e. debt-dissolving power at
its nominal value. The- issuer cannot rightfully and unilaterally repudiate
such a debt. If he tried to-, then he could be criminally prosecuted for
fraud. - J. Z.,-25.4.97.
COVER FOR MONEY ISSUES: As money cover can serve
anything that- is found acceptable by well informed acceptors of a paper
money -in a free market. - J. Z., 77 & 97.
COVER FOR NOTE ISSUES: Goods already sold to wholesalers
or -retailers are a better cover for notes than merely speculatively- warehoused
goods of manufacturers or speculators, withheld from -sales in the hope
for higher prices coming up or of goods -that are can be sold not for normal
market prices at all but- merely for emergency sales prices, i.e. at huge
discounts and, -possibly, only at a loss. That there can be "illiquid"
goods, -stored in hopes of future buyers, I know only all to well - as
the- producer and distributor of libertarian and anarchist microfiched
literature. -- My microfiche have certainly not yet acquired currency or-
bestseller status and are not even suitable as yet for inclusion in e.g.
LETS exchange lists, for lack of demand for them and not -yet included
in many literature exchanges, bibliographies and abstracts. - Microfiche
are -illiquid assets and others than libertarian microfiche publishers
and readers, like myself might not -even consider them as assets at all.
- But they do last and are available upon demand while, apparently, much
of the Internet- information stays there only temporarily and only a fraction
of -the temporary appearances is so far being archived by some,- probably
of all whatever it may offer in the monetary -freedom sphere, so far. -
Only some literature and address lists- have reached me so far from that
source, thanks to some -correspondents - and some disks which my systems
won't accept or -read at all! - J. Z., 4.7.91 & 12.4.97.
COVER: See: APHORISMS ON THE MONEY PROBLEM.
CPI & INFLATION: The official CPI (Consumer
Price Index) is intentionally full of misleading figures, because the government
has a vested interest in not letting it represent the real and much higher
inflation rate. It is obliged to pay CPI-indexed pensions and the real
inflation rate would make a bad impression high during elections. - It
also has largely pre-empted the market for other price-index calculations.
If they are compiled at all, by compilers not salaried or subsidized by
the government for their labors, then the government largely sees to it
that their divergent figures are not widely enough publicized. The mass
media do not want to offend the government, which is one of their biggest
advertisers. I would like to see a tabulation of the official CPI rises
over the last few decades, side by side with the real prices of some of
the standard consumer goods and services for the same periods. Not even
the rise in the A $ note and coin circulation is regularly announced, nor
are the rising figures for both, for the last few decades, put together
and published. It is much easier to defraud people who are kept in ignorance.
- J.Z., 23.1.01, 27.8.02.
CPI: See : CONSUMER PRICE INDEX.
CREATION OF CREDIT & CHEQUES: The creation
of credit is made possible by issued cheques not being redeemed immediately.
- Popular opinion. - If and to the extent that this would be possible,
we would than have a part disposal of cheque account funds by the banks,
for a short time, without consent of the cheque account holder and at his
expense and risk, not a "creation of credit" out of nothing. - The total
circulation seems temporarily increased but each of these seeming increases
is followed by a corresponding decrease. Moreover, the very delay in cheque
credit availability to the receiver of the cheque, still 5 days in Australia
as far as I know, in spite of computers and considerable competition between
banks, does slow down the spending of the cheque credit correspondingly
and thus balances out the "multiplication" of means of payment that may
be temporarily involved, if banks disposed of these funds for these periods.
The basic rule still applies: The same amount cannot be spent by two people
at the same time. One should also take into consideration that the establishment
of a cheque account, 100% covered in cash, has correspondingly hoarded
cash. And this cash becomes then mobilised or may be demanded from the
recipient's cheque account, only after a cheque is issued and credited.
In other words, a considerable hoarding is involved - to facilitate cheque
payments, which should be taken into consideration when one imagines that
cheques would multiply means of payment, not only facilitate payments.
- The "mysterious" nature of the seeming" creation" of cheque credits "out
of nothing" lies in the very nature of the clearing process, if one considers
merely the payment side of it and not the goods and service side, which
is thus cleared. Assume 1000 cheque account holders in a self-sufficient
economic community, each with $ 1000 on their cheque account and all producing
for each other, and providing each other with goods, labour and services,
all that they require and are capable and willing to supply to each other.
Within that limit of their physical capability, willingness and productivity,
each of them could spend their whole cheque account every week or even
daily and, nevertheless, in the average, all would end up with ca. 1,000
on their accounts again, through the goods, services and labour they would
have sold to the others. Since real exchanges of wanted goods, services
and labour would be involved, no price increase would have taken place
even when, from one week to the other or within a day, they would have
bought double as much from each other in this way than they had in the
week or on the day before. Their account total of 1 million value units
would not have been increased by a single value unit. All their cheque-mediated
transferrals from their accounts, would, in the average, have their equivalent
in cheque payments received from others. The used cheques would be cancelled
and new cheques would be issued all the time, to be cancelled in their
turn. The cheque credits transferred would be mutual, not unilateral. They
would represent genuine trades and exchanges not robberies or embezzlements
or "creative" financing. Each account would be liquidified by cheques but
not multiplied. But the number of possible, desired and agreed upon exchanges
could and would be easily multiplied in this way, limited only by the ability
and willingness to supply wanted goods, services and labour. - Since many
costs are fixed, regardless of the number of transactions that take place,
an increase in transactions could even lead to some price reductions. Certainly
the kind of extremely low prices happening in emergency sales or bankruptcy
sales, would become much rarer under such a system, especially, when all
the participants would renounce any claim to cash payments and declare
themselves satisfied for all their transactions with the mutual clearing
of their cheques through their clearing house cheque accounts. - In a world
where natural science knowledge is not yet general or wide enough, in which
still many still believe in a God as a loving father, in a devil or in
demons, in which libertarian gold bugs consider all means of payment not
made of gold or 100% covered gold certificates, one should not be surprised
when this clearing process is by them interpreted as a "creation of credit"
out of nothing or "out of thin air". - Thin air is, by the way, not nothing,
either. Otherwise people living in high altitudes could not breathe. And
even a vacuum is not something that can be produced or found very cheaply
on the surface of this planet. That is one of the reasons why some industrial
processes could be profitably carried on in space. - I guess this kind
of discussion of pop notions on the subject will have to be carried on
until quite striking and convincing refutations have been formulated. -
J. Z., n.d. & 29.3.97, 31.8.02.
CREATION OF CREDIT & MONEY? Credit or notes
are not created "out- of nothing" and do not only require paper, ink and
printing -presses. As a rule, credit certificates, banknotes and- clearinghouse
certificates are not "created out of nothing" but -are temporarily produced
IN EXCHANGE for other kinds of credit--notes or assets which are less suitable
for general local- circulation. These exchanges of bills, unsuitable for
general- circulation, into bills that are suitable for at least local-
circulation, represent clearing processes in progress and the- movement
of already produced goods, that are already sold, at -least to wholesalers,
if not already to retailers. And these goods are the real -redemption fund
for such notes and cut up bills, as they are for -any kind of currency.
Such turnover credit or bill discount is- not given for nothing but only
to genuine producers and- suppliers. And it is necessary to provide sound
wage and salary- payments to workers and employees, which they bring to
the -stores, spend them there, so that they stores can repay their -debts
to the wholesalers and these redeem their real bills (or -equivalent short
term debts) to their suppliers. Such clearing -notes and clearing house
notes, by their very nature, do -not need any rare metal cover at all to
keep them at par with- their nominal gold weight face value. Their par
value is assured by a strong reflux or demand for them in debt repayments.
If the -debtors cannot pay their debts they are thrown out of business.
-This is a strong enough incentive for them to serve others with- their
goods, services and labour for banknotes and clearing house -certificates
(or with equivalent book or electronic accounts). This -kind of money can
always be freely and competitively issued to -the limits of its goods,
services and labour cover - and not -beyond it. Readiness to accept a money
in payment for daily- wanted consumer goods and services and in payment
of any other -debts due, is a sufficient cover for any sound exchange medium.-
The best value standard for any kind of exchange medium,- purchase and
sale, for any kind of traders, at any place and time- is precisely that
which they consider to be the best or good -enough for them, as long as
they do. No third party has a right -to prescribe a standard for them,
which they do not like or- distrust. - Especially labourers and employees
must be free to- accept "cut up real bills" and employers must be able
to offer -them to them in payment and stores and store associations must
be -free to issue them and to accept them and to pay their debts with-
them - on via their bank accounts at banks of issue. - The free- exchange
of one type of paper claim for other kinds of paper- claims, more suitable
for their purposes, does not amount to a- creation of some value out of
nothing but merely to a -transformation of one suitable resource and matter
into another one, one- claim, into another. It does not interfere with
transactions. It- does not cheat and defraud or confiscate but facilitate.
It- increases transferability of goods, services and labour and of exchange
media like real or sound commercial bills. It is -transferability which
gives any goods, services and labour their -market value. In a division
of labour economy we all depend upon -it. The easier any value can be transferred,
the higher its- exchange value will be to its owner. No exchange medium
needs -universal acceptance or is universally accepted. It takes brute-
and wrongful force to make a single paper money acceptable in a -whole
country. Competitive and private and non-coercive and freely market-rated
paper exchange media need only a sufficient- local acceptance to be a good
enough local currency, that can -locally widely circulate at par. In the
next town or market it- may already have a discount. So what. That applies
also to all -national forced currencies, whose legal tender and monopoly
end -at a national border. - Compare the circulation charts in PP 41.
CREATION OF CREDIT, CENTRAL BANKING, CONTROL OF
MONEY, MONETARY CONTROLS, SOCIAL CREDIT: Private creation of credit is
inflationary and must be controlled. For this central banking is required.
- A monetary despotism and social credit notion. - Before central banking,
with its note issue monopoly and legal tender, was introduced, there was
never any evidence for this - and afterwards, the only one that could "create"
money was the central bank. Credits not granted in additionally issued
legal tender (or short term or instant claims to legal tender are
just credit TRANSFERS, mediated by banks or by other private contractors,
and as such they cannot have any influence on prices and wages, no more
so than any clearing transaction could. Consumer goods and services are
still largely paid for in legal tender cash - and only the Central Bank
can legally multiply that. There are, indeed, many credits that are ultimately,
upon demand, to be paid in cash. All credit transactions are speculations
over time on the availability of that cash. When it does not become available,
the credit collapses to a fraction of its former volume. It required, for
its granting, as well as its repayment, the availability of cash or of
claims to cash. Especially when payment through clearing options is not
generally recognized as an alternative, i.e., when the creditor's legal
and juridical claim to payment in cash is continued - and the cash supply
remains monopolised. No creditor can create his credits out of thin
air. None of them is a magician. But myths that are widely believed in
are hard to kill by mere facts - in economics, or what passes for economics,
as well as in religion or in "political science". How can one prove the
non-existence of something that does not exist? - All credits are limited
at present by the creditor's right to demand cash in repayment. And debtors
who are not cheats know that they do have to somehow acquire the cash -
or claims to cash - or try to acquire them, to repay the credits received,
if they do not want to be driven into bankruptcy and few want that. Once
this legally demanded cash backing for all credit and non-cash payment
contracts does fail or is insufficient, then, credit collapses correspondingly
- and even more cash is wanted from then on for many to all transactions
that were previously carried out without cash. During such currency
famines - under a money issue monopoly and a manipulated value standard,
in which all prices and wages are marked, prices and wages tend to fall
in a deflationary way and there is then a negative feedback effect involved:
While lowered prices encourage buying, falling prices discourage buying.
Thus, once a deflation has set in and is not stopped by the introduction
of monetary freedom, much more money hoarding takes place than usual -
as much as people can afford to hoard, and the effect is that a deflation
accelerates. Only those purchases are still undertaken by most that they
cannot avoid. Those lucky enough to be in possession of considerable cash
stocks can then acquire otherwise expensive capital goods very cheaply,
and may do so in the expectation that sooner or later the inflation will
end and that they can then sell these capital goods much above the forced
sale prices at which they acquired them. - Prices marked in stable value
units are not influenced by the amounts of cash or credit available. But
they can become reduced through the deflations made possible by monetary
despotism. When they are marked in unstable and manipulated "value standards"
then they participate in all the instabilities and manipulated effects
of that "value standard". - All cash transactions have a large clearing
"overhead", 10 to 20 times as large as the amount of cash available, because
they are easier and faster to arrange and, in normal times, they can, upon
demand by the creditors, be changed into cash, because in normal times
this is rarely wanted - because the clearing and non-cash-payments are
so convenient. Whatever effect this "overhead" is presumed to have upon
prices (I would deny any, since real exchanges are behind most of the payments,
if not zero sum speculative games), have already taken place. For centuries
the non-cash transactions have far exceeded the cash transactions. More
credit than the market requires and can be paid, in normal times, ultimately
and upon demand in cash, cannot be created out of nothing or upon a too
tiny cash basis. Debtors do indeed often defraud their creditors, spend
or waste what they have been granted in loans and become unable to repay.
But such cases do not blow up the total volume of credit. Instead, they
make more potential creditors more careful in granting further credits.
Such cheats, well publicised, rather lead to a degree of voluntary credit
restriction by the potential creditors, i.e. their cash holdings and current
account or deposit holdings tend to increase. Whereupon then many wrongly
conclude that no deflation has taken place because there is an abundance
of short-term funds accumulated at the banks. Part of these may be frozen
- with the banks unable to pay them out in cash (because they had lent
them out on long terms) - and part of them being kept there intentionally
because the deposit holders want them there and because the banks see no
liquid and secure enough investment opportunities for them, while sales
and orders are down. At the same time private cash holdings, by those who
have altogether lost their faith in banks, would increase as well. - J.
Z., n.d., & 29.3.97, 31.8.02.
CREATION OF CREDIT: "Creation of credit or money
by the banks leads to inflation. Banks can create credit or money out of
nothing or can multiply any deposits or money they receive by a factor
of ten. - Popular opinion. - 1.) Credit is not created by any bank but,
rather, through the mediation of a bank, given by its customers, its depositors,
to the extent that they do not dispose themselves of their deposits for
their own purposes and, especially, to the extent that they grant the bank
time deposits or buy its securities for a certain period. - 2.) Inflation
could take place only when there is "refinancing" by the central bank with
newly printed legal tender money (when under free market rating and monetary
competition it would suffer a discount and widespread refusals to accept),
in case the first, secondary and following depositors want to utilize their
deposit accounts for their payments at the same time. But then we would
have a coercive inflation of paper money and not "credit creation". When
not supported by fictitious deposits from the central bank or additional
fiat money issues by it, private banks can only transfer and not multiply
accounts. For each credit they have to account an equal debt, for each
debit an equal credit. As long as their computers do not malfunction -
and correct bookkeeping checks would soon reveal that, no multiplication
of credits takes place and a corresponding multiplication of debits would
soon be protested by the victims. Credit and money creation by private
banks is entirely imaginary, a false doctrine of Social Credit ideologues.
- Without this "refinancing" by the Central Bank, when any private bank
has over-extended itself, e.g. by wrongly investing short term deposits
in medium to long term loans, or in other cases of fraud, embezzlement
or careless investments in the irresponsible spending of some more or less
despotic foreign regimes, or in the wasteful projects of the own governments,
corresponding bankruptcies would and should occur. Banks should never give
their short term or instant withdrawal creditors the impression that they
could at any time fully withdraw their funds - in all cases in which they
have been invested, at least in parts, in illiquid funds. - But if there
is an agreement between short term depositors and a bank that specifies
that their money is repayable only e.g. in instalments, as it becomes available
from the repayment of loans, i.e., as soon as possible, then no run can
and will take place and the transaction can be honest on both sides, with
spare funds, from the repayments of due loans, used as best as they can
be used. I doubt that under free competition such banks would be very successful
but, at least, they would avoid the term or timing risk. Medium and long-term
loans should always be financed only by corresponding medium and long term
deposits or savings, best by the issue of corresponding securities. Otherwise,
the banks would sell to the short term depositors only the illusion of
having liquid funds while they have in reality only a claim upon the medium
and long term debtors of the bank. If the governmental bank supervision
or governmental juridical system and governmental auditing or government
approved auditing system worked, then such abuses would not be possible
in most cases or on a very large scale or for long. But, in the absence
of fully free banking they are likely to occur often. - Money or credit
can no more be "created out of thin air" than can anything else - except
the constituting elements of thin air and even that process is not cheap.
(Example: Nitrogen production out of the air for fertilizer production.)
- Credit cannot be created by cheque issues, either. In Germany cheques
must be presented within 8 days. Receivers of cheques use them fast for
credits on their accounts and do not leave their accounts idle as a rule.
People are not only savers but spenders. Borrowers, especially, are more
spenders than savers, at least when spending their loans productively,
to enable them to repay them when due and to make a profit in the process.
When workers or clerks are paid in cheques then they do not, as a rule,
put most of the amounts received into savings accounts. And if they did
this on medium or long terms, then such savings could not act in an inflationary
way, either. When banks rightly or wrongly assume that call-deposits
will continue to increase then many of them will be misled into investing
part of these total deposits into other than short-term liquid funds. A
liquidity risk is thereby taken up, not an inflation risk - unless the
central bank helps them out, with additional legal tender paper money issues,
whenever they need it in one of the inevitable future liquidity crises
that will then occur. - No one but the central bank can increase the cash
or near cash purchasing power of an economy under monetary despotism and
only this tends to increase legal tender prices when legal tender is inflated.
- To the extent that non-cash transactions can be freely settled by clearing,
without being suddenly disturbed by cash demands, for which no equivalent
cash exists, genuine exchanges are settled by clearing, in which the clearing
settlement always is equal to genuine transactions. Then, under sound value
standard reckoning no inflation can take place because the clearing settlement
is always equivalent to the purchases and sales of the goods, services
and goods involved. But if all prices, services and labour are coercively
priced-out in an inflated fiat "value standard" then all clearing transactions,
that also use that fiat standard, are also participating in its depreciation
- but, merely genuine exchanges of present goods, services and labour,
do not CAUSE this depreciation although they participate in it PASSIVELY.
- If banks could create credit and money out of nothing then they would
possess divine powers. But even the world was not created out of nothing,
or was it? What those believing in credit and money creation do not seem
to understand is the time factor involved in credits. Over a long period
many more loans are granted and become due than is available in cash at
any particular time to pay all of them. A cash amount of $ 1,000 may well
serve to repay 3 or more different loans at different repayment dates.
But what they might refer to is the dishonesty or negligence of banks borrowing
short and lending long. Most business men try to keep at least a small
and positive balance on their accounts for emergencies. If the banks do
not respect that requirement sufficiently then this can lead to the demand
deposit owners one day finding out that they have no have money at the
bank that is ready to be paid out to them in emergencies, or that they
can dispose of with cheques, but that, much against their intentions and
trust, the possess, in effect, merely something like a mortgage, bond or
share - a part of the long-term investments by the bank of their short
term funds or on demand deposit claims. Even though such bank actions may
be habitual, going back to the tradition of fractional reserve gold certificates
and although it may be quite common and legalized practice, somewhat insured
by central banks demanding minimum deposits with them, it is still basically
a dishonest, negligent and false business practice. That central banks,
when the minimal deposit with them is not enough to cover withdrawals at
the bank that borrowed short and lent long, are insufficient to cover their
obligations, then issues additional legal tender note to cover this wrongful
and careless action, means that then it is the central bank, once again,
which causes an inflation, not the original and wrongful lending short
term deposits, without the explicit permission or instruction of these
depositors, on long terms. Without this inflationary backing of this practice
by the central bank, the holders of "on demand" deposits would simply find
out that they do not longer have such deposits but merely long-term claims
against the bank and its long term debtors. The use of terms like "money
creation" and "credit creation" does not explain but rather cover up such
relationships. - One of the major troubles of this kind of dishonesty,
carelessness or fraud is that the central bank might refuse to cover this
flawed borrowing and lending process by additional note issues, while upholding
its money issue monopoly. Then a currency famine would result without its
natural cure or preventative being a permitted. Cash being already short
and supposed cash deposit having become illiquid, i.e., long-term investments,
more and more cash will be asked for . The non-cash payment sector will
shrink fast, since they still grant creditors the right to demand cash
and thus the demand for cash will greatly increase while the supply is
already short. - The cure lies then in abolishing the right to demand cash
and replacing it by the right to demand only clearing. In this clearing
certificates issued by the debtors must be negotiated at terms satisfactory
to both sides. And the cash shortage should be overcome by the issue of
exchange media based on ready for sale goods, labour and services. - Otherwise
all economic transactions will come to shrink to a fraction of their former
extent. - J.Z., 3/97 & 31.8.02. - See: TAYLOR, DAVID; MEULEN,
HENRY; SOCIAL CREDIT.
CREATION OF CREDIT: Credit creation is possible
because the owners of bank accounts do not dispose over all of their accounts
at any particular time. - Pop opinion. - Every embezzler has the same notion,
hopes that he will not be found out or not before he gets away safely.
But he still does not create anything by his "creative bookkeeping" but
merely steals, defrauds or embezzles. If the whole bank engages in this
then it is still not a creative act but merely stealing. If it "invests"
these funds in lottery tickets or horseracing tips, or medium or long term
investments without consent of the owners of short term funds, short term
or immediately and without asking them for permission, giving them the
impression that their on-demand deposits remain immediately withdrawable,
then this is still not "creating" values but defrauding others of them.
To the extent that the long term investment of on-demand deposits is, otherwise,
sound, they could then ultimately be repaid from the winnings or repayments
of the long term loans and dividends from them, when these payments are
finally made, but the on-demand deposits could not be immediately paid
out (except in additional notes produced by the central bank, if it is
prepared to cover this fraudulent action). Otherwise, the hopes and expectations
of the depositors of the on demand deposits cannot be instantly fulfilled.
The depositors may still imagine they do have these funds at their disposal
- while others have already disposed of them. These imagined credits should
not be added to the wrongfully and long term "invested" ones. The total
of credits has not been increased. On the contrary, such "investments"
frequently lead to losses, so the account holders and the bank may end
up with less than they had before. Other gamblers or betting addicts, or
suppliers of those who were thus wrongly granted credits and spent them
wastefully rather than productively, would benefit correspondingly. - While
at any time an honest cheque drawer (or one not granted a current account
credit - which has its own inherent limit in the current funds available
from others) cannot spend, in cheques, more than the amount on his account
upon it, he may, in the average, in his usual business, get so many cheque
payments into his account, as a result of his sales, that within a short
period, based upon these cheque payments to him, he can spend much more
than the average account balance through this account. But he can do this
only through him buying and selling real goods, services and labour in
this way as others buy real goods, services and labour from him in this
way. That "credit creation" would be involved in this is nothing but a
creative fiction. - J. Z., 29.3.97.
CREATION OF CREDIT: If banks could create money
and credit out- of nothing, I would like to be a banker under these conditions,-
and so would almost everybody else. Why doesn't everybody make use of -this
opportunity? An Aladdin's Lamp for everybody! Nobody need to -produce or
sell anything any more to acquire purchasing power. We- could simply multiply
it at will and live all from -the proceeds, a form of unearned income!
Please, tell me, why do the banks still ask you to- supply them with your
savings, to deposits them with them and why do they mind if you withdraw
them from them? Under the asserted- conditions they would not need you
and your savings at all. They could e.g. input- a single dollar of their
own and multiply it endlessly, with- only the trouble of spending the riches
thus gained by them. - -That such beliefs can still be widely held in our
century is almost unbelievable. - J. Z., 5.7.94, 18.4.97.
CREATION OF MONEY & CREDIT: De nihilo nihil.
Lucretius, Ueber- die Natur, I/149. (Aus nichts wird nichts. Nothing grows
from -nothing.)
CREATION OF MONEY: But you can't MAKE purchasing
power. You can- only TRANSFER it. - Terry Arthur, 95% Is Crap, 209.
CREDIT & BANKERS: Credit is extended only
to 90 year olds who come -accompanied by their grandparents. - Note I saw
years ago on a -cash register. - J.Z. - Have our present banks really practised
the common sense rule: No credit to those who are not credit-worthy and
credit to all who are? - Have they managed to utilising the "banking principle"
to properly finance turn-over credits with their own banknotes? At present
they seem even unable or unwilling to incorporate all kinds of fees and
insurance premiums in a single interest rate. Moreover, even their extensive
use of computers has not enabled them to reduced their charges and fees
but has rather driven them up. - They still take 5 days to credit you with
the sums of a cheque you deposit with them. - Even small credit unions
are often able to undercut the service charges of large banks or to pay
higher interest to depositors. - Their inabilities, unwillingness or bureaucracy
has also been a great aid in the growth of numerous other kinds of finance
companies. - J. Z., 7.9.02.
CREDIT & CLEARING SUPERSTRUCTURE, BUILT UPON
A SMALL CASH FOUNDATION: HOW DID IT ARISE? WHY WAS IT CONTINUED OR WHY
WAS THE RIGHT OF CREDITORS CONTINUED TO DEMAND CASH INSTEAD OF CLEARING?
There was never enough cash around, or could easily be produced, under
current legislation, customs and beliefs, to mediate all wanted and possible
exchanges. There were never enough sound or unsound physical exchange media,
currency, coins or banknotes etc., provided for this. Under a monopoly
or oligopoly for their supply nothing else should have been expected. Moreover,
there were risks and costs involved in transferring large amounts of cash.
So, for a long time, at least for trading between experienced merchants
various negotiable instruments were utilised instead of cash. They were
nominally and when due still payable in cash. But in reality most of them
were settled by clearing of such debts and credits against each other,
in internal as well as external trading. This kind of trade and payment
facilitation goes back at least to the time of the crusades and, most likely,
much further. Whatever cash was available was utilised largely only for
wage, salary and tax payments. With regards to the large formal cash obligations
arising out of e.g. sound commercial bills of exchange, cash was kept only
for the settlement of the usual small balances remaining, after clearing,
and, perhaps, in many cases even these were settled by short-term IOUs,
which went into the next clearing. This extensive clearing became traditional,
customary, habitual and influenced monetary thinking and is still present
in the current right of creditors not to demand rare metal payment but
payment in the exclusive and forced governmental legal tender money. The
total volume of non-cash transactions is usually ten to twenty times that
of cash transactions. Thus all non-cash transactions could not be readily
paid in cash, instead, if this were demanded. The full potential of clearing
and clearing certificates and electronic settlement of mutual debts is
still not being realized but insistence upon the right of creditors to
be paid in cash, upon their demand, instead of via clearing or non-cash
payments, as usual, remains upheld with, often, disastrous and prolonged
consequences. The long experience with banknotes that were 100% or fractionally
covered by rare metal coins and the right granted to the note holders to
demand their full redemption at any time, continued this practice and the
theory behind it - and it led to frequent runs and monetary famines, under
fractional covers, when as a result of suddenly increased cash demands
the volume of non-cash transactions was rapidly diminished and the demand
for cash rapidly correspondingly further increased. But even in normal
times, the cash demand right of creditors limited the number of transactions
that could be carried on via clearing, to a limited multiple of the
normal amounts of cash reserves and the normal demands upon these. Trade,
exchange via clearing, could not proceed, without limits, beyond these
cash reserves, while the right to demand cash, at any time, remained. And
they could not, as gold coins, and were not, as monopoly paper money, always
and rapidly enough increased in volume, in a sound way, to satisfy a rapidly
increased demand for cash. The possibilities of unlimited clearing of due
debts against due credits were theoretically realized only by some, during
the 19th century and are still not fully realised by most people, even
experts, today. Thus many of the libertarian money reformers merely want
a return to gold and silver coin circulation and banknotes, or electronic
accounts that are fully redeemable in rare metals. Under full monetary
and clearing freedom, the non-cash options available to merchants, already
for a long time, would be extended to the man in the street, especially
to wage and salary payments to employees and their consumer spending, which
would mean, in the absence of a "right to cash", the possibility of an
unlimited growth of the volume of exchanges. At the same time, the clearing
certificates used or clearing accounts, could become as convenient, at
least for local sales and purchases, as are cash notes and cash cheque
accounts now. - J. Z., 6.9.02.
CREDIT & MONEY CREATION & TOKEN MONEY
& EMERGENCY MONEY, DEPOSIT -INFLATION, CREDIT EXPANSION, etc.: In system
of the forced and- exclusive circulation of legal tender paper money and
the limited -non-cash transactions that can be built upon this, always
under- the risk of sudden legal and juridical cash claims going beyond
normal cash requirements, the resulting chronic- shortage of rare metal
cash (sometimes even merely a shortage of small- change cash, so incapable
was the centralised issue in many cases),- as well of legal tender paper
money cash, at least in some circles of the economy, led always to degrees
of sales difficulties for goods, services and labour. These have- persisted,
to some extent, even in "normal" or "boom" times. Traders, manufacturers
and desperate employers have always felt forced or -induced to try to bypass
the prohibitions and supplement the- cash money supply somehow in more
or less primitive and advanced ways,- with token money and emergency money
issues, accommodation papers -etc. For the alternative was bankruptcy or
unemployment. (One of the easiest and soundest way to extent the cash supply
for wage payments by employers was to get their sound commercial bills,
representing their sale of goods to wholesalers, discounted by a bank in
banknotes. Even though the real bills were nominally payable in rare metal
coins, as well as the bank notes issued, in reality most of the discounted
bills were either settled in clearing against other bills or paid for in
the bank notes issued, and to that extent neither the real bills nor the
banknotes issued for them in their discount, required any gold redemption.
What the bank notes required was the shop foundation, i.e. the readiness
to accept them for wanted consumer goods and services, rather than for
gold coins. The retail shops could pay the wholesalers with the banknotes
and the wholesalers used them to pay their bills issued to the employers,
their suppliers. The employers used the banknotes to pay wages with and
also their suppliers. They could not have paid wages with large and uneven
commercial bills, due in one to three months. Thus the non-cash payment
options were extended as far as they could, -but always under the risk
of the imposed (customary and- prejudice supported) delivery obligation
of debtors for cash, upon demand- by creditors. (The banknotes were usually
not legal tender and, for a long time, were not considered to be cash,
again out of the prejudice in favour or rare metal redemptionism that considered
only rare metal coins to be real money. Even forced and exclusive
legal tender, while not extremely short supplied or rapidly depreciated,
remained widely and for long times- preferred to all too primitive, not
only to other dishonest substitutes for it. -The private substitutes for
official coins or paper money, no matter how rightful and efficient -they
were already, at least sometimes, were never sufficiently -studied in the
official literature and lectures. Nor were they- granted experimental freedom
and thus the chance for gradual -development and improvements. Only the
prohibitions against them -were more and more developed, detailed and improved,
until they wove so- tight a net that it seems almost impossible to find
a legal way- out of this monetary despotism. The government was almost
never -blamed for its monetary despotism or, if at all, then usually too-
late, after it had done all too much damage, for months and even- years.
And it found apologists even decades after and these form -the majority
everywhere, still, even among the professionals, the -supposed experts.
In ten-thousands of ways did practical men try -to get around the money
monopoly and its effects, without -theoretical understanding or it and
of its inevitable consequences and without understanding all the monetary
freedom alternatives. -Often they did not even realize their limited self-help
actions were- illegal, because they could not imagine any government being
so -evil or misled or ignorant to have anticipated and be willing to- suppress
their self-help attempts and thus to have outlawed them by very- detailed
legislation. Ignorance in this sphere (promoted by- governmentally arranged
or supervised and examined and certified miseducation) -is so great that
Big Brother is always appearing as the shining -hero while Big Business
and Big Labour are cast as the villains.- Under these conditions government
money, even though unsound, was- usually much more widely accepted and
sought after than it would -be under freedom conditions. Usually just a
better and different management of monetary despotism was demanded rather
than its abolition Even under the supposedly best -management of
central banks monetary crises, inflations and deflations persisted or got
worse and more prolonged, -and people had either to give up or try to help
themselves, via- various token money, emergency money and clearing arrangements,-
no matter how outlawed these were. In that situation all kinds of- unsound
schemes could also temporarily flourish and spread, -before they were suppressed
by the government. Even now sound- issue and reflux principles and practices
remain largely unknown -and unpublished, even within the circles of money
reformers and- among these even among those few who do favour one or the
other degree- of monetary freedom - whilst condemning others. Sound money
and- credit arrangements require a development period in practice and-
also a preceding or following development of monetary, clearing and credit-
theory. That was never granted under the official religion on -money, clearing
and credit. Under these conditions most of the theorising and illegally
practising monetary reform sectarians never reached sufficient enlightenment-.
- J. Z., 14.4.97, 6.9.02.
CREDIT BANKING: It is possible without fractional
gold reserves- or short sales of gold, without the risks of runs upon gold
-metal or legal tender cash or reserves of legal tender at a- central bank.
Matter of fact, it works best when purely based on -credits and debts and
their free clearing, using any value -standard which the participants find
acceptable for their -accounts. There is no fixed limit for the total productivity
of -people, at least not in the long run, in spite of obvious present -limits,
due to presently known and accessible resources, -scientific knowledge
and technology and available capital. But -under full freedom each can
only exchange the products and -services of his own productivity for those
of others. That is his- present limit. Credit merely bridges some time
spans, during- which he can develop his potential. But, apart from insurable-
risks, all credits and debits cancel each other. And a small-insurance
charge on all transactions can cover that risk. We- should credit all participants
in credit-money transactions with -the ability to select for themselves
better value standards,- under freedom, than governments provide them with
under monetary- despotism. See: ISSUE LIMITS, CIRCULATION, LIMITS, REAL-BILLS-DOCTRINE.
- J. Z., 3/97.
CREDIT CARDS & CLEARING: As easily portable
proof, or easily -and automatically checkable proof, of the existence of
an account -with a more or less regular income and a credit remaining,
it -makes the acquisition and carrying of large amounts of cash- unnecessary.
But it does not as yet make its holders independent -of the supply of cash,
as a pure clearing account would. Cash- spent with the cards has to be
replenished with legal tender from -bank accounts or by cash. So far they
are spending accounts- rather than accounts to directly receive non-cash
payments from -others. A pure clearing account would have to have that
facility- and should be made independent of cash by not being redeemable
in- cash upon demand of the credit card holder, when he has acquired- a
positive balance. Moreover, so far to high costs were- associated with
the use of most credit cards, thus I rarely found- it convenient for myself
to use them, except when travelling, to- withdraw cash now and then. With
cash I could usually make better -bargains. It is, as someone once said,
"a poor man's credit- card." - But the varieties of credit cards in existence
are a -good precedent for a multiplicity of competing currencies and -they
could become ID's for pure clearing accounts. The smart -cards could
even carry the balance and all recent transactions- electronically. I see
no great advantage for them as cash cards,- except e.g. in the use of automatic
ticket machines, turnstiles- and in public phone payments. If government
supplied coins were -not relatively scarce, and prices for e.g. rail transport
and phone use would not be frequently driven up through inflation,- i.e.,
could be paid with standard coins, then these cash cards -would be less
popular. - If you could pay everything with a -credit card and received
all your payments in a credit card- account, then cash would not be necessary
at all. Alas, under -present conditions, it would then become still harder
to avoid- paying tributes to the tax gatherers. So far they find it much
-more difficult to trace cash notes, even their own numbered ones.- Sooner
or later they will use computers to do that, too, removing -that cash payment
advantage. - J. Z., 1.5.83, 4.5.97.
CREDIT CONTROL: Credit control by governments?
The sheer -impertinence of it: A robber organization setting itself up
as- controller over something as voluntaristic and productive as- credit!
- J. Z., 12/84, 18.4.97. - I would like to control the- credit of governments
- and have the right to control my own -credit and accept the private credit
arrangements I like. - J. Z.,- 12/74. - Credit control is in principle
as much an interference -with individual liberty as sex control would be.
- J. Z., 30.5.75.- - The use of the term "control" in the expressions of
"experts" -and of the man in the street is OUT OF CONTROL. It serves as
a- cover for almost any kind of despotic meddling and mismanagement, -always
under the pretence that thereby "everything is under control!" -- Only
self-control is real control. Human beings that are- controlled by others
are no longer free men but puppets or -marionettes that dance more or less
to the tunes of their -masters. - Granting them what is supposed to be
"THE" vote, but- which disfranchises them in most important respects, does
not- change the situation much. - Without full monetary freedom and of
the -right to secede from the State and to become exterritorially- autonomous,
together with other secessionists, also the right to bear -rightful arms
for rightful self-defence and to organise in- volunteer militias for the
protection of individual rights, and the full spectrum of the other basic
individual rights, man is not enough in control -of his own fate.
- Monetary emancipation is a very good starting -point. Let us individually
vote government paper money out of- existince and sound alternative currencies
and value standards -in! - J. Z., 18.4.97.
CREDIT CREATION OR SOUND BILL DISCOUNTING OR CLEARING?:
What is usually called "credit creation" is -nothing but false pretence,
fraud or robbery." - J. Z., 5/73. - When -only short term credits are involved,
that are self-liquidating, -like in the discounting of real bills, then
merely an advanced -form of clearing takes place, spread over a short period,
in- which the IOU of the buyer, being unsuitable for general- circulation,
is "cut up" or temporarily replaced by small bills, -suitable for circulation,
with which workers, retailers and, -finally, wholesale buyers are paid,
who redeem with them their -IOU or real bill, which they gave to the manufacturer
and which -the manufacturer got discounted at a sound bank of issue. Who
really gave the credit here was the manufacturer, for the payment- of the
goods he delivered to the wholesaler, products that are thus on their road
to the -retailers and the consumers. He merely got the IOU or the bill
of exchange, he drew upon the wholesaler, TRANSFORMED, by the bank, -into
a more suitable means of payment, especially for paying his- wage and other
suppliers' bills for his production. That -transformation is "creative"
only insofar as any artist -transforms some materials in one way or the
other, -to make them more suitable and attractive. It is in neither case-
of a "creation out of nothing". - To say that it is "created out of- thin
air" is misleading, insofar that valuable elements, like oxygen, -nitrogen
and helium are precisely thus produced. - J. Z., 18.4.97. - Not is the
term "thin" being appropriate in this connection, since neither mountain
or near-space nor sea-level air is used for this purpose. - J. Z., 7.9.02.
CREDIT CREATION, MONEY CREATION, DEPOSIT CREATION,
SOCIAL CREDIT-: To Robert de Fremery: Your own preferred monetary system
is -based on some of the premises of Social Credit people - followers-
of Major Douglas' teachings. They are split in many different- schools
and sects but do share some common premises or prejudices and false
observations, especially that on the supposed- "creation" of money and
credit out of nothing. It is- fundamentally and especially false when ascribed
to those private -banking institutions, which are otherwise privileged
but not in -this respect. "Ex nihil nihil!" ("Nothing comes from nothing!")
-Even the greatest artist, chemist, physicist or biologist cannot- create
something from nothing. He can only reshape and rearrange- existing materials
in a better way. When the government "spends" -its additionally printed
legal tender notes, then it does not -create anything, no more so than
an officer of an occupation army- does, who issues "requisitioning certificates"
in a supposed- "payment". I.e., he appropriates the values of others. He
doe s-not "create" new values. When a cheque forger forges cheques, he-
does not "create" anything, either, but, instead, wrongly -appropriates
some money that rightfully belongs to others. When a -government issues
directly or indirectly its currency notes,- those needed to finance its
spending as well as those which an -economy has to have, in the absence
of monetary freedom, as some form of money, even if it is a monopolized
money, then it does- not create and offer something that is currently wanted,
to the -extent that it is supplied, but it rather makes war on many to-
most of its subjects and charges them the costs of this warfare -under
all kinds of illusions, lies and false pretences. It -requisitions rather
than produces. It can rightfully act only for -those of its peaceful citizens
who have given their consent to -all its actions. And that is often only
a small minority. Least- of all is it able to provide peace, justice, prosperity,
freedom,- security and stability. Parodies of each are offered instead
and- contraries. Please consider: For many decades now we have seen the
growth not only of privileged commercial deposit and savings- banks but
also of cooperative and credit union banks, even banks -specially of and
for women and for the ecology and conservation -movement. How happy would
all these people be, and how fast their -banking enterprises would have
grown, if they had "discovered" -that merely by putting on the hats of
bankers, they could, thereby, -suddenly and arbitrarily multiply their
deposits, at will, between them, "creating" wanted values and becoming
rich, "out of- thin air". How nice it would be for them if they could "create"
-most of the funds they need for a new car or a new house in this- fashion!
How come all these millions of cooperative people did- never discover THESE
supposed banking advantages and privileges -for themselves? Are they so
dumb or blind? Berthold Brecht must- have had a similar prejudice in his
mind, when he suggested, in- one of his left-wing propaganda writings:
"Do not rob a bank! -Start a bank!" - If that kind of "something for nothing"
scheme -were possible, then everybody, especially the already rich and-
powerful, would love to get into the act and all barriers against -it would
have been broken down, long ago in their general rush for unearned riches.
How come so many rich people, skilled- businessmen and entrepreneurs and
innovators are still satisfied- with making an average of 5 - 15% in interest
and profits on- their productive capital investments, when they could thus,
and- much faster, multiply their riches without any effort or ingenuity-
or investment and risk? What could hold them back or away from- this supposed
"pot of gold at the end of a rainbow"? - I have- reproduced 2 books critical
of Social Credit ideas and also some- writings by David Taylor. A third
book title of this kind did once see but did not buy. - J. Z., 3/97.
CREDIT CREATION: Credit is never created but merely
-transformed. Goods and services capacities are liquidified, -freely transferred
in liquid form and finally settled against -each other in clearing all
the claims arising out of turnovers of- goods and services (including labour).
- J. Z., 5.10.88 &-15.4.97.
CREDIT CREATION: There is no room or possibility
for "credit--creation" in a monetary freedom scheme. It does not even exist
in- the present system of governmental monetary despotism and- government
privileged banking - although many other mistakes are -made in that system,
many wrongs committed and many abuses do- occur there. Government monetary
and financial activities are- never "creative" but, rather, confiscatory.
- But can one prove that something non-existent does not really exist or
exists only- in the imagination of some? That is as impossible as to "prove"
-the non-existence of God or the Devil or of "evil spirits" or of
fairies.
CREDIT CREATION? Many merchants do offer their
goods on credit,- with payment due only in 30 days, and without interest,
at least- for 30 days. Often such offers go now for much longer periods,
-even 6 to 12 months, interest free, if instalments are paid and- often
without an initial deposit. This also might be called a- credit "creation",
offered upon private initiative, offered quite -publicly and to many members
of the public. But what is actually- offered on credit is the goods of
the seller, which he could also -repossess upon non-payment. If it were
true that privately- "created credits", seemingly out of thin air (but
here granted in- goods values transferred, to be repaid later, on agreed
terms, in- cash or non-cash), were inflationary, then all such actions
would -be inflationary. In reality, they indicate rather a deflationary-
conditions, in which sellers are desperate for cash and do not- flee into
goods but still want money, even when the full money- payment is postponed
for a long period and even when no interest is- paid. At the same time,
the government inflation may go on, so -that, in combination, we have here
a symptom for a stagflation. -Closer still to home: If you were to grant
me a credit in form -of your literature, postponing repayment for it and
if I were to -grant you a credit in my literature, mostly microfiche,-
postponing payment for it, would we then have to add up both -these credits
as our contributions to the existing money-inflation? Or would exact equivalents
of valued goods-deliveries- exist? Could not out mutual debts, be completely
cancelled, if -they happened to come to the same amounts, without a single
cash- or non-cash Australian or U.S. dollar being set into motion in -the
process, even without effecting the statistical GNP, although -both of
us might feel information-enriched? - Would any woman, -who in a baby-sitting
exchange accumulates some baby-sitting credits against other participants,
thereby contribute to the -supposedly credit creation and credit inflation?
- If you are- short of cash, so short that you cannot buy a beloved grandchild-
a present, and promise to buy it later, after your next pay day- and he
grants you a credit for this, does he thereby contribute -to the supposed
"credit creation" and "credit inflation" or would we -rather have a deflationary
situation, at least one confined to you? - Try to envision a private bank
of issue, one designed and for discounting short term real bills or other
promises to shortly pay for goods received, or for keeping current accounts
with cheque and clearing facilities and imagine it as having the worst
possible intentions- but, at the same time, not enjoying the privilege
of legal tender for its notes, or- the chance to hide its over-issues,
in the absence of a free -market for exchange media and value standards
and also not-enjoying the privilege of keeping as "business secrets" the
facts- of its short term cover and reflux arrangements and of the number
-of its notes in circulation at any time and of the degree and- speed of
their reflux. Under such free and open conditions its- notes would
very soon get a discount upon any over-issues and would then encounter
-wide-spread refusals, that will extend to its future issues, too,- which
it might have reckoned upon. Any holder of its notes, with a- wad of them
in his hands and, finding that he has no debts to pay -to the issuer nor
that there is anything he wants or can purchase- with them, because there
is an insufficient "readiness to accept" -foundation for them, especially,
an insufficient shop foundation, -might find his own wad of notes depreciating
in his hands and cursing himself to have accepted so many of them merely
upon- confidence or trust in them, which were very much misplaced. But-
few will be so foolish to accept many notes from such an issuer. -Notes
they do not know or are suspicious of, or against which- their friends
have warned them, or the mass media did, will- simply be refused. His only
remaining option will be as a- creditor with a claim against all the remaining
assets of such a -fraudulent issuer. The same applies to any cheque account
credits- obtained with such a dishonest bank. If the courts were just,
efficient and competitive, the "banker" involved would loose his -car,
his house, the shirt on his back and would be forced, for a-long time,
to work in possibly menial jobs to pay his restitution- obligations. But
it is unlikely to come to many such cases. They -were rare even in the
cases of "wildcat banking" (with all the -flaws and fraud options of metal
redemptionism), as several -recent researches have shown. Already
William B. Greene, in his- classical work "Mutual Banking", pointed out,
the notes of- supposedly failed U.S. banks, unable to fulfil their formal
gold-redemption obligation, often continued to circulate at par, until-
all the local short term debts, they were based upon (in- discounting),
had been settled by paying them with these notes.- Some circulated even
at par beyond such short term periods, kept- at par by longer running debts
with their reduced current demand- for notes. Via the repayments of debts
to the banks the notes- disappeared from circulation and no note holder
was economically- harmed by notes thus kept at par, even though he did
not get any- gold coins from the issuer. He could have got them, if he
wanted- to, on the free gold market. Under freedom conditions a- unilateral
"creation" of credit, deposits or money, at the expense of others, is even
less likely or possible than it is- now. - J. Z., 3/97.
CREDIT EXPANSION & INFLATION: Credit expansion
is as much inflationary as e.g. paying public servants with additionally
printed paper money. - Popular opinion. - If you grant somebody a credit
from your bank account, in a consumer or an investment credit, with your
own funds, or those entrusted to you for this purpose, then you do not
multiply means of exchange and do not drive prices up but use he existing
exchange media and do trade or sell over time, as usual, hoping to make
a profit in your sales on terms, as well as in your sales for cash or cheques.
- No creditor who wants to get all his money safely back, plus a profit,
will be expansive with his credit.(But if he is allowed to gamble with
the money of others …) - When a savings and investment bank or a current
account and cheque bank grants a credit, then they tend to do the same
as you would do - only on a larger scale and for more people at the same
time (provided they are honest and competent). Through its mediation -
and for the fees and charges involved, creditors and debtors still do their
things for each other but, usually, anonymously as far as their total payment
transactions are concerned. They are aware only of their face to face and
order and invoice trade relationships, not of the mutual settlement process
behind them. When "credit" is granted via additionally issued forced and
exclusive currency, printed for this purpose, or via government "spending"
in additionally printed legal tender, then and then only and to that extent,
can the general price level be permanently increased, i.e. inflated, because
these price increases are the only defence left to the recipients of these
"payments". (I still remember, in times of rapid inflation, my public service
salary being paid in freshly printed notes, still with consecutive numbering,
i.e., having come straight from the note-printing presses of the central
bank. This happened for several consecutive months. Alas, I did not keep
a record of these payments.) - What is overlooked in the very term "credit
expansion" is the fact that at the same time a corresponding "debt expansion"
is involved. The "expanded" credit cannot be created out of nothing. It
must mobilise already existing funds and assets. Otherwise the recipients
could not spend these loans. E.g. a furniture or car sales firm might mobilise
thus part of its unsold stock, cramming its warehouse or parking space.
And the debtor, for each repayment or part-repayment of his debt, must
correspondingly restrict his purchases. In the whole notion of credit expansion,
if no inflationary expansion of the legal tender circulation is involved,
then all the fallacies of "credit creation" or "money creation" are involved.
- Even if in reality a "credit expansion" were possible, it would always
only be temporary, not permanent. A paper money inflation is reversed only
exceptionally - and then also with catastrophic effects. But a credit expansion
is always and automatically reversed by the repayments of the "expanded"
debts, which would have to correspond to it. It is negligent, to say the
least, to speak only of a supposed "credit expansion" and not of the accompanying
"debt expansion." Prices might then rise at most temporarily - to decline
correspondingly when the credits are repaid. But any expansion of the paper
money circulation would be permanent. However, I would deny that a real
"credit expansion" can take place - otherwise than in the imagination of
some. Just because one coins a word for something does not mean that the
reality will automatically and certainly conform to that new word. Otherwise,
I might say: Abracadabra: Turn into a frog, NOW! - and you would turn into
a frog - or whatever I had wished you to turn into. - When debtors can't
repay their creditors then both tend to go bankrupt and nothing but a myth
remains of "credit creation". Only in a system of monetary despotism can
practices arise which some interpret as "credit expansion" or "credit creation"
but which, in reality, are fraud and coercion of quite a different kind
than the one imagined. - It is particularly absurd when under the system
of monetary despotism some of its victims, namely private bankers, forced
to deal only with the forced and exclusive currency of the central bank,
are then accused of depreciating the currency of the central bank by their
manipulations - while the central bank is assumed to be a defender, protector
or stabiliser rather than an inflationist of its currency. - No decrease
in the percentage of hoarded funds for the granting of credits should be
termed a "credit expansion". - See: INTEREST, DISCOUNT RATE,
OPEN MARKET POLICY, CENTRAL BANKING, CREDIT RESTRICTIONS.
CREDIT EXPANSION? Attention should remain focussed
not on the dishonesty involved in fractional reserves used to promise 100%
redemption at any time, while much of the cash or deposits is lent out,
but, rather, upon the additional turnovers so achieved, which could also
have been achieved merely by honest clearing, using no exchange media,
or actual deposits at all but merely sound value standard accounting. To
the extent that this happens, the supposed credit- or money- or deposit-expansion
or "creation" merely represents more trading and does not disturb the total
balance between exchange media and goods, services and labour exchanged.
There is also a time factor involved. If the first depositor really leaves
much of his deposit, in practice, not by the terms of his deposit contract,
on long terms with the bank and if the bank then dishonestly lends that
money out, e.g. on short terms, several times, and is several times repaid,
then the total of these loans and their repayments, seems to some to indicate
a credit expansion, one that is unjustified. But others see a) the repayments
and b) the additional turnovers thus achieved. The same dollar, over a
short to long period, can change hands hundreds of times, promoting exchanges
of hundreds of dollars worth of goods, services and labour, without being
thereby depreciated. Naturally, sound value reckoning rather than paper
standard reckoning and free market rating of exchange media against the
sound value standard and the option to refuse and exchange medium and resort
to a competing one, would help in this process. Monopoly status, compulsory
acceptance and compulsory values do disturb all exchange relationships
and cover up essential details that are required for sound and self-regulating
issues and reflux of the issues. - When short term deposits are invested
on long terms, when fractional reserves only exist but promised are 100%
redemption at any time by the issuer, upon demand of the note holder, then
there is much talk about the dependency upon confidence and trust while,
in such cases, distrust would be deserved and correct. No one should be
allowed to get away with promising more than he can fulfil, with the excuse
that merely confidence and trust in his actions were ultimately lacking.
- The central banks try to reduce this malpractice by insisting that the
banks keep part of their cash or demand or short term deposits with the
central banks. I do not know whether they pay the banks - and thus the
depositors - interest on these accounts. Certainly, that interest would
not be earned through the most productive investment of these funds. Nor
do I know what the central banks usually do with these accounts, i.e.,
whether they keep them frozen or lend them out on short terms - or even
on long terms, especially to governments, since they are more or less at
liberty to print exclusive and forced currency cash when calls for cash
are made upon them. - When it keeps these bank reserve accounts frozen,
then it would have initially issued these amounts, with compulsory value
and compulsory acceptance - and then compulsorily retired them, for at
least prolonged periods, from circulation. When, instead, used for government
spending and then compulsorily withdrawn by taxes, the money is usually
not frozen (apart from inefficient and too slow handling of government
accounts, that leave funds unused for prolonged periods and can thus cause
deflations) but spent again, since governments are rather inclined towards
spending more than they do coercively extract or confiscate. - To the extent
that banks are forced to keep reserves with the central bank they can,
almost without risk, lend equivalents of these amounts out on long terms,
since the central bank could always back them in cash. To that extent the
dishonest practices of long term lending out of short term funds deposited
by one's customers, is encouraged rather than discouraged by these reserve
deposit practices. The central bank would then be an accessory or even
an abettor or guarantor for such dishonest actions of the banks, supposedly
under its supervision and control. - Tempted by its option to issue more
additional legal tender notes in "repayment" of these reserve accounts,
when needed by the banks, the central bank may also be tempted to lend
out the reserve amounts on long terms, most likely to the government. Then,
when the reserves are called upon and paid out in additional forced currency
notes of the central bank, this guaranty against credit expansion will
guaranty an actual inflation. - If the central bank paid no interest on
these "reserves", then the banks would have to charge correspondingly more
on their other loans or pay less to their depositors. - By the way, I have
still to find a clear statement by any bank on how it can justify the large
differences between the interest rates it pays and those it charges. In
the age of computers these differences seem to have become larger rather
than smaller. - Let us assume, instead, that the banks were free to issue
bank notes and clearing certificates for turnover credits. Then the volume
of their issues would tend to rise and fall with the requirements of trade.
More goods and services would be produced and sold, at least to wholesale
traders, and the debts of the wholesale traders to the producers would
be monetised upon the banking principle or real bills doctrine, temporarily,
by notes more suitable to circulation, until the short term debt falls
due and is repaid in the notes or clearing certificates (or deposit accounts)
issued upon it. That would not be a process that could unilaterally increase
the exchange media out of proportion to the goods production, sale and
consumption, but reduce it to the offer and use of means payment corresponding
to the quantities and values of the services, goods and labour supplied.
Under stable value reckoning, optional acceptance, freedom to refuse acceptance,
freedom to discount a suspected or really over-issued exchange medium,
and with only the issuer obliged to recognise and accept his own exchange
media at par with their value standard, enough exchange media could be
freely issued, not over-issued, and the repayment obligations involved
would keep them at par. Over-issued exchange media could not be forced
into circulation and could not be given a forced value. They would all
remain clearing exchange media, even if the clearing were not instantaneous
but spread over 30-90 days. These currencies or current account deposits
or clearing accounts could be as elastic as they would need to be. When
no one is legally or juridically or customarily obliged to supply rare
metal coins or, likewise monopolised, legal tender paper money cash, while
all he can offer by his own efforts are often only efficient means of clearing,
then the risk of inability to would largely be removed. - Instead or using
the clearing process for turnover loans, which can provide out of itself,
via sound bank note issues and clearing certificates, all the exchange
media required for it, bankers do now usually grant turnover credits out
of savings invested with them. Such practices are based on the old models
of bills of exchange redeemable in rare metal coins and of rare metal deposit
certificates, with all their inherent risks of cash payment disability,
while the clearing payment ability would have remained undiminished. By
now we should be able to think and act beyond these models and to reckon
in gold weight values without having to own or pay in a single rare metal
coin. - When rare metal deposits are required then the depositors should
be prepared to pay the costs of keeping them, 100% of them, in storage
or mobilising them only via 100% covered and redeemable rare metal certificates
and in case of fractional covers then only with any of several precautionary
clauses that would abolish the risk of a run. When bankers and depositors
would have to agree upon such clauses and contracts that would remove the
occasional impossibilities of fulfilment and replace them by a number of
options that remain possible for mutual satisfaction. (For instance, the
bank might pay out its deposits in banknotes with a clearing foundation
only, based upon acceptance by the bank in all payments due to it. - J.Z.,
14.9.02.) They could reduce repayment or withdrawal claims by requiring
timely notice of withdrawals, limiting them to the amounts becoming available
in repayments or allowing only fractions of the deposits to be withdrawn
immediately. Whenever bankers and their customers realize that they do
not need rare metal stocks or legal tender paper money to trade, then they
should be free to provide and use their alternative means of exchange and
clearing options, both using alternative and freely chosen value standards.
Then bankers would not need any rare metal coins or legal tender paper
money cash or cash accounts of that type to finance any turnover credit
loans or current exchanges. - When the savings and investment market is
quite free, then bankers and customers should also be free to determine
the terms and to remove any term risks by their contracts, apart from the
insurable risk of bad debts not due to money the monopoly and its manipulations.
Any risks the bankers take, in speculative investments, should be, quite
openly, done only with funds entrusted to them for this purpose. To assure
that, full freedom of contract, full publicity and full personal liability
should be introduced and the futures risk involved in all payment contracts
should be clearly stated and withdrawal premium and the clearing alternative
for all such contracts should also be pointed out. Confinement to monopoly
exchange media, an exclusive value standard, privileged banks, restricted
clearing options, to coin and legal tender cash redemption models should
be abolished as a constitutional, legal and juridical imposition (except
among exterritorially autonomous volunteer communities). Upon contract
and at the own risk and expense any payment system, from internal monetary
despotism to full monetary freedom, should become permissible for voluntary
payment communities, at their own risk and expense. - J. Z., 5/97. - We
should be given the chance to learn as much as possible from the mistakes
and errors of others. - J. Z., 14.9.02.
CREDIT EXPANSION? Those believing in almost unlimited
credit expansion as a result of every credit granted by one deposit bank
and the credits then being deposited in another bank and serving as a cash
security basis for much larger credits there, do forget that people do
not borrow and pay interest on their loans in order to leave the money
in the bank. They borrow to spend the money, and this rather sooner than
later. Further, most of what they spend is not ending up in savings accounts
of others but is spent on current consumption of those who supplied them.
However, the clearing effect, which does not need any quantity of exchange
media at all but merely a sound enough value standard, does often give
the impression (if all the turnovers achieved by clearing, are added up),
that an expansion of deposits or of currency has taken place. - REFERENCES
TO SOCIAL CREDIT REFUTATIONS in the PEACE PLANS series: 2 books, by F.
J. Docker & John Lewis, in PP 1042. Criticism of Social Credit ideas
can be found also in PP 242, 656, 740, 793, 906 & 1074. See also under
John Logan & David Taylor. - J. Z., 21.5.97.
CREDIT INFLATION? Isn't it strange that people
frequently speak of a credit inflation but rarely of a credit deflation
caused by repayments of credits? Actually, during inflations debtors
are more eager to repay their debts in inflated money than they are to
repay them with sound money. Should we call this a deflationary phenomenon?
One quite common in the middle of a raging inflation! Without free market
rating of currencies we have no reliable measures to find out whether the
circulation is oversupplied with exchange media or under-supplied or just
sufficiently saturated. A real inflationary effect of what has been called
"credit inflation" can only result with legal tender currencies, issued
not only in short term loans but spent into circulation or in medium and
long term loans, i.e. without sufficient reflux arrangements to balance
the issues at any particular time and thus maintain their value. When a
medium can legally be forced upon anyone, not only the issuer, then there
is frequently not enough reflux to the issuer, even when the State or its
central bank is the only issuer and reflux arrangements are as high as
the current direct and indirect taxes are. The inflation tax acts otherwise.
It gradually or destroys the purchasing power of the exclusive and forced
cash in the hands of everyone, without most people becoming fully aware
of this destruction. All they notice, to some extent, is the rise of all
prices expressed in this medium - and that their medium and long-term debts
are remaining nominally the same and that interest rates are rising. -
J. Z., n.d., slightly revised.
CREDIT INSTRUMENTS: See: APHORISMS ON THE MONEY
PROBLEM.
CREDIT INSURANCE: It can be a real insurance business
only for ordinary business risks, spreading them among its subscribers
or premium players. It cannot insure anyone or all participants against
the risks of inflation, deflation and stagflation, due to arbitrary and
at least in their degree unforeseeable government interventions and in
their total harmful effects these are much too large to be insurable risks.
It can also not insure against the abuse of this cover by careless investment
bankers and companies that think that they can skim off the high profits
of extremely risky investments and let the insurer (or involuntary taxpayers)
bear all their losses. To prevent that effect the insurance companies must
examine the credits to be insured more thoroughly than those lenders do,
who want their credits insured. - J. Z., 24.3.97. - See: Deposit Insurance.
- When incompetence, carelessness and corruption waste or make money "disappear"
by the millions and billions, as has happened too often in recent years,
then this is simply not an insurable risk. Only a much better, more public
and much faster and thorough accounting and court system prevent or reduce
such losses or recover much of the funds that went astray.The hierarchical
forms of enterprises do also multiply, maximise and prolong such abuses
and so does the relationship between employers and employees, capital owners
and employees, managers and shareholders. - J.Z., 30.8.02.
CREDIT OR DEPOSIT EXPANSION OR CREATION &
THE RISK OF INFLATION- & DEFLATION: This kind of expansion or "creation"
is nothing -more nor less than the "expansion" of non-cash transactions
upon- a limited amount of available cash (in form of rare metals or legal
tender), while all non-cash credits or deposits are still- claimable in
cash upon demand by a creditor. In all cases the- on-cash transactions
could actually stand on their own, without -"cash" backing by 100% or fractional
reserves. The cash would -merely be used as accounting units or value standards.
It would- not be required as means of payment, since clearing can, in most
-cases, provide that much better. But while creditors are legally and juridically
authorised to demand cash, when a debt is due, rather than merely a settlement
by clearing, this possible and sometimes more than usually actualised demand
exists as a risk factor for the -additional non-cash, clearing and
short-term credit and debit payments that have become customary upon a
relatively small cash basis. Thus the non-cash or clearing side of the
economy could only grow somewhat but could never grow, on its own, to the
requirements of- trade, to finally cover all possible and desired turnovers.
Via the cash demand option for creditors it remained still tied -to the
old-fashioned (rare metal coin) or modern cash (legal tender by a monopoly
issuer) redemptionism. The cash -demands of creditors fluctuate and thus
affect the much larger non-cash transactions built upon them - and thus
can lead to cash and credit crises, while the cash supply is monopolised
& thus slow to expand and while the larger volume of non-cash transactions
depends upon the available cash. E.g., -when a bit more cash than usual
and than expected and -anticipated, was suddenly demanded, a large overhang
of possible -and desirable credit, deposit or clearing transactions had
to be- withdrawn or became illiquid and their collapse increased the- demand
for cash further and that additional cash demand, when cash was already
short-supplied, led to further -collapses of non-cash transactions because
of that legal or -juridical claim granted to creditors. That currency famine
risk could be -largely abolished (apart from abolishing the issue monopoly
for cash) by not -granting creditors the right to demand cash and replacing
it by a- right to demand clearing only. (This in as convenient a form as-
possible, including private IOU issues in money denominations -that only
oblige their the issuer and, by contract, his debtors.) - In the extreme
case of a thought example, all immediate and short-term payments could
have become have become payable only through a very efficient clearing
system. Cash might thus have become as unusual or absent as are now gold
coins in most transactions. Under these conditions the sudden introduction
of the right to claim cash would certainly lead to difficulties, not foreseen
by the well meaning dogmatists who wanted to introduce e.g. an exclusive
and 100% covered or coined gold standard currency. The very extensive and
free exchange economy, based on clearing, would then largely collapse.
Fractions of such a general collapse occur through the still habitual,
legal and juridical authority of creditors to demand cash and the fluctuations
in these cash demands, especially for wage and salary payments and consumer
spending. -There is another risk factor in the non-cash or clearing payment
sector, -while it uses for all its payments not only optional cash demands
by creditors for an exclusive cash exchange medium but also the exclusive
and forced paper money standard of the central bank.- (Formerly the more
or less depreciated coin of the realm.) Then, and to the extent that they
do so or are compelled to do so, these transactions participate in the
depreciation of that exclusive and forced standard. But the clearing transactions,
no matter how large they are, do -not cause that depreciation. For short
term transactions, if that depreciation is not yet very rapid or even galloping,
it does not matter greatly. But it does matter when considerable time periods
pass before a payment is due, still to be made by using the exclusive and
depreciated value standard. Using a sound value standard and if their productivity
permitted it, clearing would permit them to double, treble or increase
tenfold their turnovers paid for by clearing, without depreciating that
sound value standard used in all their clearing exchanges. Simply more
goods and services would be produced and turned over, through a higher
volume of clearing transactions. But no corresponding increase of prices
and wages would take place, one corresponding to the higher volume of clearing.
Greater productivity and ease of clearing exchanges would rather tend to
increase wages, salaries and service charges while lowering the prices
for consumer goods. If they physically could, people could via automation
in production and clearing in exchanges, -increase their turnovers a hundred-fold
or a even a thousand-fold. Always -assuming that they would not have to
pay up, upon demand, in scarce gold coins or exclusive -government legal
tender. But these additional exchanges, on their- own, and by their quantity,
could not depreciate the forced and -exclusive value standard of the government,
or any other, but sound value standard adopted but they might -INDICATE
A DEPRECIATION THAT HAS ALREADY TAKEN PLACE, when a depreciating value
standard is still being used. People -might then finally find out
that they could do better for themselves by choosing themselves one or
even several different but -sound value standards, those which they prefer
for their own contracts. Consequently, they -might do all their clearing
with that or these. As means of -payment they would have already by-passed
the government's paper money.- They would already have excluded it as means
of- exchange. - What would be left to the government paper money -would
be a much reduced circle of voluntary acceptors or cash notes and coins
-of the government that could readily circulate - but only among among-
taxpayers and other debtors of the government. And these voluntary acceptors
of its notes and recipients of its spending might become further reduced
to voluntary state members by reducing its service supplies and charges
as well to free competition by other organizations in the same territory,
among people who have opted out and re-associated quite voluntarily and
under exterritorial autonomy. All governmental or central bank notes would
then be reduced to their own voluntary payment circles, used for their
spending, their budget items only and their voluntary taxes or subscriptions.
Under full competition governments would be reduced to exterritorially
autonomous volunteer associations, competing like e.g. insurance companies,
for customers, and to the volume of transactions they can build up under
competitive conditions. And that smaller -circle of acceptors would reduce
the circulation options for any -government to its own backing or cover
or reflux, to its "tax foundation" or clearing foundation, i.e., to its
-market value. When a government had previously, due to legal- tender and
the issue monopoly, over-issued and forced its currency -at least potentially
(seeing the extent of non-cash transactions -even now) into every channel,
it would then be excluded from -most private circulation channels or payment
communities and from what ever "official" payment circles other volunteer
communities have established for themselves. For its remaining economic
or anti-economic activities the former volume of its circulation would
be too large. The- quantities that it could formerly force upon others,
would no -longer be accepted or needed as exchange media. That would mean-
it would depreciate and could pay for goods and services of those -outside
its payment circles only at inflated prices, even while- the same goods
and services, if paid for in competing, optional private exchange and clearing
media with sound value standards, would remain priced at- the same level.
(Apart from changes at the goods side.) Obviously, this would also be a
situation in -which the former territorial and exclusive Central bank's
issue monopoly and other privileges and- its legal tender would not longer
be enforced or fully -enforceable in the private and cooperative self-help
and free- clearing and value accounting sector of non-members. The blame
for any- depreciation of its currency would then lie entirely on the side
of the issuers and acceptors of the State- paper money. It would be the
bad money that would be driven out -by wide-spread refusals to accept it
at all or by discounting it- down to its remaining foundation, e.g. to
tax foundation, while -that would still exist and be enforced. The government
could- then no longer use the goods, services and labours of all people
-within its borders as its redemption fund. They would express -their monetary
demands in other, better and safer ways,- independent of the government
and would reject its paper as means- of exchange and as standard of value
as far as they could. The -freer private and cooperative clearing would
become, independent- of a territorial government's cash and its legislation
and paper standard- and their manipulation, the more likely would sounder
value-s standards be adopted, too. - One should also take into -consideration
the short-term turnover credit transactions, in- which creditors are satisfied
with being paid within 7 to 30- days. (Under present stagflationary conditions
they are often -satisfied by being paid, interest free, after 6 months
to 2 years only.) -Such short term credit settlement should also be considered
like -the "instant" clearing settlements. After all, all transactions,
-even credit card and cash transactions, do take time, especially if one
includes pick-up and delivery as well. If ready sellers are prepared to
grant more time then it should be up to -them. (The delays that are involved
even in consume shopping do have their equivalents on the current mass
production and distribution side and, also, in the delays in receiving
payment for production and distribution activities and for the spending
of earnings received from them. Not all these earnings are, usually, instantly
spent. Mostly the consumer spending is spread over a period, the period
of wage or salary payments. Thus the balance between the exchange media
issued and the ready for sale consumer goods and services could also be
spread over a short period. - J. Z., 6.9.02.) However, the more widely
monetary and clearing freedom will be -practised, the less there will be
a need to postpone payments for -purchases and the easier it will become
to obtain real credits, -for medium and long term investments, on a stable
value basis, with these term credits paid and repayable as well in shop
foundation money circulating only for a short period. -The whole process
might be gradual or proceed in steps. At first only private alternative
exchange media and clearing certificates might be introduced. Then monetary
emancipation might be advanced further against the remaining government
paper money. For instance, taxpayers might insist on their -taxes being
determined in a sound value standard and so might public servants for their
salaries and other groups of wage and salary recipients and other groups
of creditors. Then tax payers might insist upon the -acceptability in tax
payment of their private clearing -certificates and clearing or money tokens,
but only at their market value. Moreover, they would then begin to insist
-that depreciated government paper money be accepted at the tax- offices
at par with its nominal paper value, while they, not being its issuers,
would refuse -to accept government paper money at par with its nominal
value -whenever it had been over-issued or refuse to it altogether in all
their -transactions. But at present the government has their throats -still
in the sling of its exclusive and forced currency and can- pull that string
tighter or depreciate its paper value standard at any time.- It will also
always tend to blame private exchangers and- their exchange media and channels
and their value standards, and speculations in them, for the depreciations
that -follow over-issues of its own exchange media. - J. Z., 14.4.97, 6.9.02.
CREDIT REFERENCE BUREAUS, CREDIT & PRIVACY,
INFORMATION REVOLUTION, COMPUTERS & CREDIT REFERENCES: Australia-wide
credit reference bureaus were planned in 1989 and also opposed under privacy
claims. - Those with a good credit rating want it rather known than hidden.
Those without debts will not be interested. Only those with a bad credit
record have a motive for hiding it as much as possible. All their
potential creditors have an interest in finding out how good and reliable
their potential debtors are. Not debtors have a right to cheat their creditors.
The general economy will be better off if bad debtors become known as such.
That would lead to less bad investments, fraud, embezzlement and waste
of scarce capital. If debtors are wrongly treated by one credit reference
bureau then they should be able to set up their own in competition, supplying
all the evidence required for their credit-worthiness. If there is no single
credit reference bureau and compulsory register in it and if there is also
the option for a debtor to see the record on himself and to make comments
and refer e.g., to more accurate reports in other credit reference bureaus,
then few debtors would have any right or cause to complain. - The most
accurate records would probably be compiled by a bureau which not only
supplied credit references but also engaged in credit insurance. Then it
would have no interest in providing a good reference to a bad debtor and
a bad reference to a good debtor. On the contrary. - When there are competing
credit reference bureaus then the more accurate ones will also get a larger
share of the total business. Uniformity, centralisation, a monopoly for
a credit reference bureau for the whole of Australia are not required.
E.g., debtors might come to declare towards their potential creditors that
such and such would be their credit reference keepers. And a special credit
reference bureau might then be established that would point out how reliable
the references of various credit bureaus have been, in the past, according
to the reports sent in by creditors. - Alas, credit bureaus can only supply
information on honesty and ability, not on the disabilities that are the
results of government interventionism, especially monetary despotism and
compulsory taxation and changes in taxation laws & regulations.
- J. Z., 13.3.89, 15.5.97.
CREDIT RESTRICTIONS ARE A MEANS TO FIGHT INFLATION:
- A popular opinion. - What ought to have been restricted, long before
credit restrictions are officially undertaken, is the issue of government
monopoly money with legal tender and that very often to inefficient and
dishonest debtors, sometimes on a vast scale, and sometimes also to very
wasteful governments. When, as a result, many private and public debts
become bad debts, then general credit restrictions are sometimes imposed,
while monetary and financial freedom remain suppressed. This means that
then honest and efficient or productive debtors will get less credits than
they need, i.e. the economy will be forced to shrink, while dishonest and
inefficient debtors get some or even all of their debts cancelled and depositors
lose some or all of their deposits or taxpayers are forced to subsidise
bad debts or the losses made in grating them. Reckless loans ought not
only be restricted but done away with altogether. Sound loans should be
expanded to their optimum, rather than restricted. Naturally, this should
not be done on the bases of an almost continuously deteriorated value standard
but at least under general use of value preserving clauses, better still,
under competitive sound currencies only. - In the absence of free market
rating for sound and competing currencies there is not obvious limit that
prevents over-issues. Thus the forced currency leads always either to deflationary,
inflationary or stagflationary effects, at least in some sections of a
national economy. To apply it evenly means quite different situations in
different parts of the country of segments of its economy. Those which
were over-supplied with exchange media may be thereby reduced merely towards
a normal supply of exchange media. Those which were already under-supplied
with them, as agricultural areas, for instance, often are, would be even
more deflated than they were already before. Honest and productive debtors
and sound credits to them should never be restricted. Dishonest and unproductive
debtors should never be granted any credit and unsound types of loans should
also not be made. But when loans are granted upon "connections", "reputation",
"power", or supposed "securities", often quite speculatively and negligently,
in millions and billions, without even thoroughly inspecting the account
books of the debtors, what otherwise can one expect than large accumulation
of bad and largely uncollectable debts? - To try to reverse a prior inflation
by deflationary steps does not undo the wrongs and damages of inflations
but adds the wrongs and damages of deflations. And the restriction upon
sound credits does not undo the damages done by the granting of unsound
credits. Credits granted and taken only in the expectation of further inflationary
price rises, which would enable debtors to repay their loans with more
and more worthless paper money are also fundamentally unsound and ought
not only to be restricted but abolished and prevented. Nor should governments,
at the expense of tax payers or depositors, ever bail out dishonest or
incompetent debtors or those who granted bad loans. Credit restriction
should be complete in all the monies of monetary despotism : exclusive
and forced currency. They should no longer be permitted in or imposed on
any transaction. - Trying to counter the effect of a previous inflation
of forced and exclusive (legal tender) currency by its deflationary reduction
via credit restrictions, while at the same time not permitting any competitive
currencies, is like driving over a pedestrian and then trying to revive
him by reversing over him. - If that example is too gruesome for you :
Envision how easily it is to squeeze out a toothpaste by hand and how difficult,
without special equipment, to reverse the process. - One of the major wrongs
of credit restrictions or credit squeezes is that ALL credits will be reduced,
directly by government authorities or upon their pressures, not only those
of governments and their authorities, although these were the only or major
offenders, and not only foul credits by sound ones as well. - J.
Z., 28.3.97, 30.8.02..
CREDIT RESTRICTIONS, RECESSIONS, DEPRESSIONS,
DEFLATIONS, SALES DIFFICULTIES & SELF-HELP AGAINST THEM: The best answer
to credit restrictions is to provide your own honest and efficient note
issue and credit institutions, and means of payment and value standards
and turnover credits paid in them or in establishing pure and free clearing
facilities for this purpose, legally, if it can be done, illegally if it
must be done, in rightful self-help efforts and in the realisation of basic
economic rights, never mind that governments have so far not recognised
them. - See: MONETARY FREEDOM, SELF-HELP, MONETARY REVOLUTION, RIGHT TO
SUPPLY ONESELF WITH WORK AND SALES. - J. Z., 1985 & 21.5.97.
CREDIT SQUEEZE: See : CREDIT RESTRICTIONS.
CREDIT, ESPECIALLY TURNOVER CREDITS. IS FUNDING
ALWAYS REQUIRED?- Your system would permit credits only with already pre-existing
-monetary funds, with savings that are invested. Such notions were natural
for advocates of a an exclusive rare metal currency- or of 100% covered
certificates of gold, silver or platinum or of any other commodity-based
currency, based on e.g. stored coal or wheat reserves. In this whole host
of -opinions, preconceived notions and convictions, the clearing- options
are usually overlooked, especially in the sphere of turnover--credit. These
options have been extensively discussed by Ulrich- von Beckerath, Prof.
Heinrich Rittershausen and Dr. Walter-Zander, to speak only of the most
advanced representatives of the- German monetary freedom school, particularly
with regard to the -inflation, depression and mass unemployment risks of
the present system. (I have tried to illustrate the turnover-credit
and- clearing money issue options in my circulation charts in PEACE- PLANS
41, to supplement their theoretical texts and those of- others.) Turnover
credit, like medium and long-term production- credits, also benefits from
a sound value standard, preferably -one chosen or agreed upon by the participants,
but it does not -need any external provider of exchange media or any uniform
and- externally prescribed value standard. It can provide its own -self-liquidating
and inflation- and deflation-proof clearing -media or banknotes and did
so, traditionally, for a long time and- well, limited or interrupted and
sabotaged, sometimes, only by -the prejudice in favour of metallic reserves
and redemptions. It -could have functioned much better and undisturbed
without these- unjustified and unnecessary impositions, "precautions" and
-"reserves" or "guaranties". Especially under full freedom of- choice of
value standards, if the participants are sufficiently -enlightened on this
and on the freedom to issue and refuse to accept or to discount (or to-
free-market-rate or price) any currency (that was not issued by them or
which they are not, by contract, obliged to accept at par) and thus are
habituated to compare & choose, rationally and well informed, all exchange
media and -value standards. These two should not be coercively and- monopolistically
combined because then the pricing mechanism of a- free market cannot function
with regard to them. This tradition -is sometimes known and described as
the essence of the "banking -principle" (especially in Beckerath's writings,
and in the -English and US tradition as the "Real Bills Doctrine". Alas,
it, -too is largely still misunderstood even by most "free banking" -advocates,
even 200 years after this principle and practice was -seriously but not
yet fully discussed. I had a long exchange- with Kevin Dowd on this,
which I will not repeat here. It is -filmed in my series. Considerable
controversy on this subject- exists still. Most of it overlooks some monetary
freedom -traditions or options. I will here only shortly describe, in one
-instance, what is involved. Even after centuries sufficient- enlightenment
in this sphere is still as rare as it is e.g. on -free trade, land reform,
cooperative production, rightful- revolution and liberation and defence
efforts: Assume a local -productive and exchange and payment community,
free to help -itself and insufficiently supplied with government cash currency
-to pay all wages and to enable all potential customers to pay for -their
wanted and needed purchases, e.g. a depression condition. -Under freedom
the local factory owner, for instance, who might- employ most local people,
would be free to sell his goods, as -usual, to a wholesaler, for a short
term promise to pay, which -the wholesaler hopes to make good by the sale
of the goods to -retailers. So he pays the factory owner e.g. with a sound
-commercial "bill of exchange", sound, because it represents a -real commercial
transaction, a sale of goods already produced and -on their way to the
final consumer. But the factory owner cannot -pay his labourers or his
suppliers with this large bill. It is a single -certificate for a large
amount owed to him. So he needs it- "broken" or "cut" up into small bills,
in money denominations, -running for the time until the large bill is due.
Thus he takes -the large bill to a local bank of issue, which does provide
this- service for him. For the bank's discount of the bill it does not
require -any savings or rare metal gold reserve. It can and should- "discount"
the large bill by exchanging it into its own -standardised and typified
bills or bank notes, in money -denominations. (It should not utilise any
exiting legal tender -paper standard for this, for then it would be involved
in any -inflation or deflation of that paper standard, by the third party
"authority".) Now, neither the large bill nor the small bills -need carry
any promise to pay gold coins or bullion or government- currency but merely
the promise to accept them in clearing and -payments like ready cash -
using such and such a value standard, -one agreed upon. With this discount
the employer gets the small- bills or notes he can use to pay his labourers
with. (If these -are not prejudiced against any private payment alternatives,
-misled by their union functionaries, as usual.) Alternatively, -he can
establish corresponding deposits at the bank for them,- which they can
dispose of with cheques or credit cards. Those- hesitant to accept the
alternative private bills or deposits could be informed and shown easily
that the local shops are ready- to accept them like ready cash. Perhaps
an insufficiently -prepared group of employees hesitates or refuses at
first such an- alternative payment. Then someone might be sent by them,
-immediately, to the nearest store to try this new payment method- out,
while the others still wait, refusing to accept the- alternative banknotes
or accounts until their messenger returns. -He could be back within minutes
with his important message: It's -as good as cash at the nearest local
store! Thereupon the -labourers will be, most likely, willing to be paid
in this way,- or so we will assume here. As usual, they will spend their
cash -or cheque accounts fast, mostly in the local stores. These return
-the notes, directly (or indirectly via their bank), to the- wholesalers,
to pay with them for their previous or new orders.- The wholesaler uses
the notes - or the corresponding account at -the bank, to redeem his large
bill of exchange, now held by the -bank against him. Then, ideally, all
the small notes and the -large bill should be cancelled. They have fulfilled
their -functions. This process can be endlessly repeated and paralleled
-by other such turnover-credit facilities or, accordingly applied, -in
other circles, too. Such bills or notes will be readily- accepted, at least
locally, only if and while they are running at -par with their nominal
value, e.g. a certain gold weight unit, -initially probably the government's
paper or rubber "standard".- They will be and should be widely or altogether
refused should -they suffer a considerable discount, making further issues
-impossible or costly to the issuer and beneficial only to his- remaining
debtors - if he has not contractually obliged them to- always accept his
notes at par. Obviously, they do not require a -gold cover or reserve or
redemption by the issuer in order to -function well enough. Such a single
issue transaction does not- describe sufficiently the mutual dependence
between local firms -and others. But, historically, it has often happened
that notes -of well known local firms were locally circulating like ready
-cash. Some of these local firms did even later turn into local -banks
of issue. - The law in most countries and most- theoreticians and reformers
would not permit a local payment- community such a freedom or freedom for
essentially similar -mutual clearing experiments. Almost all -rely on father
State or Big Brother doing his best and on his best being good enough.
Even at their best they are mostly not good enough, nor can they be, for
several -inherent reasons. To illustrate one of these, shortly, Ulrich
von Beckerath used to say: A single bakery cannot supply a whole- country
sufficiently with fresh bread, either. For more arguments on this see under
CENTRAL BANKING. The banking -principle or real bills doctrine, as applied
above, is not -and cannot be inflationary - if a sound alternative value-
standard is used. If, uncritically, an inflated government -standard is
used, then it would, naturally, participates in the- general inflation
- but not by adding to it. Remember, it merely -mediates local genuine,
wanted and necessary exchanges. It is -self-liquidating. It does not put
additional notes permanently- into circulation, by giving them a fictitious,
exclusive and- forced tender "value" but it sees to it that the issue is
in- correspondence with the goods produced and already sold to the -wholesalers
and on their way to the retailers or on their shelves-, waiting for the
consumers and also that these additionally- issued notes, achieving additional
turn-overs, are extinguished- again, soon, with the consumed products.
Often they may already- disappear from circulation or their representation
in deposits,- before the worker - consumers have used up all the perishable
-food items they may have bought with these private notes or- accounts.
Without this option to provide wage payments, the factory owner might have
to close the factory, the wholesaler -could not redeem his bill, the retailers
might go bankrupt, the- workers would go hungry - to the extent that
the governmental- central bank system does not supply the local community-
sufficiently with cash - or clearing facilities. Even in the best -of times
under the despotic central banking system a number of- manufacturers and
wholesalers and retailers do go bankrupt merely -because of the unjustified
and unnecessary frictions and- difficulties introduced by this anti-free-exchange
system. -Tradition and sound theories insisted that only sound commercial
-bills be so discounted, because they are self - liquidating, not "financial
bills" or long-term or habitually extended bills,- because these would
at least postpone their redemption, for a- longer period and would be much
less certain to be redeemed by -their debtors at all. FINANCIAL bills,
if discounted with- banknotes that are not covered by gold reserves,
would- inevitably lead to a depreciation of these bank notes (unless -they
are given the legal tender privilege and can thus drive up-prices) in a
market in which they may be freely rated, refused -or discounted against
sound alternative value standards and other -currencies. Their "reflux"
is not assured, in time. The same -amount that was issued is not soon due,
exerting a corresponding -immediate demand for the notes. Moreover, they
do not represent -additional goods added to the market, which act as their
-redemption fund. On the contrary, they exert an additional demand- for
the pre-existing goods, thus driving prices up. Only already -sold goods,
ideally consumer goods, not stocks of presently- unsaleable ores or grains,
or ready for sale goods (of shop--associations acting as note issuers)
can form a rightful and- efficient basis for private currencies, local
or shop currencies, -that are truly "current" and readily acceptable because
of this -foundation or "readiness to accept" for daily wanted consumer
goods and- services. All other kinds of issues are mostly attempts to thus
-acquire the goods and services of others without immediately offering
them goods and services which they do want. Assignments -upon accumulated
wool or wheat or coal stocks or blocks of land- have only a speculative
value to some consumers, with some -capital to invest, more or less speculatively,
for prolonged -periods. They cannot satisfy their "current" or "currency"
-requirements and they do not oblige those who have ready for sale- goods
and services to offer. Only when the issuers are -monopolists will the
suppliers of consumer goods and services be- more or less forced to sell
for such monopolistic issues, if they want to participate in monetary exchanges
at all. - The "Real- Bills Doctrine", as practised above, does not fulfil
the- requirements of Rothbard's "100 % Gold Dollar" or of Robert de- Fremery's
"Population Standard." But it can satisfy the exchange -requirements of
a local community, no matter how productive or -unproductive it may be
and quite independent of the payments- system desired by a State, State
federation or world federation. -No monopoly for such issues is needed
nor any coercive powers but- merely the right of the believers in them
to practise them among -themselves. To prevent forgeries or discover them
sooner and to -keep better track of the issues, returned bills used to
be -regularly cancelled or destroyed. But in order to save printing- costs
this practice was largely discontinued and the same paper--bills were issued
over and over again, as long as they lasted, in -new such limited and self-liquidating
issues. Beckerath suggested -a return to the cancellation practice after
the reflux. He also-suggested a limited and short circulation period for
the issue of- each series. Now there exist even automatic machines that
check -for forgeries. Duplicate numbers in short and often issued series-
of notes, that circulate only shortly and locally, in most -instances,
before they return, would be very rapidly discovered by -the use of such
machines. Then, in many instance, the forger -could be traced very rapidly,
too. - J. Z., 3/97.
CREDIT, HONESTY, GOOD & BAD MONEY: No man's
credit is as good as -his money. - Ed. Howe, 1855-1937. - A man's credit
may actually- be much better than the scarce and exclusive currency that
he is- forced to use. - Alas, he is so far not free to express his good
-credit in his own exchange media, nor are honest alternative note -issuing
banks at liberty to do this for him. - The saying applies- only to good
money cash, which is usually, but not always, preferred to credit -arrangements.
- J. Z., 18.4.97.
CREDIT, ULTIMATELY GIVEN IN GOODS, SERVICES &
LABOUR: Credits are ultimately given in goods, services and labour, made
available for an agreed upon period via certified claims upon them, which,
by rights, should be issued or subscribed by the owners of the goods, services
and labour. - J. Z., 30.4.97.
CREDIT: You should not be surprised when not getting
credit in -this world. Credit is monopolised and tied to an exclusive and
-forced currency, beyond which it cannot be much extended upon a- free
clearing basis as long as this monetary despotism remains in- existence.
As long as creditors are authorised to demand payment -in legal tender
cash, it cannot be extended as far as free clearing transactions could
and should be, to multiply production and exchange, using sound value standards
for honest accounting of- the values of all trades. Under completely free
clearing neither -inflation nor deflation nor stagflation would be possible.
All -debts and credits would be only different sides of the same- coin.
All could be settled against each other, for all turnover- transactions,
for which payment is immediately due or within a short period. -
J. Z.,- 22.8.76, 18.4.97.
CREDITWORTHINESS IN THE EYES OF PRESENT BANKERS:
Customer: "How- do I stand for a five-thousand dollar loan?" - Bank Manager:
-"You don't - you grovel!" - THE LION MAGAZINE, quoted in READERS' -DIGEST,
9/86, p.97. - Is this only a joke or is there at least- some truth
in it? - J. Z.
CRIMINAL MONEY ISSUES: The issue of monopoly money
or of money that -is otherwise coercive and confiscatory or fraudulent
towards third parties, who -have not contracted for it or were not at liberty
to contract, for- themselves, payments in alternative and better currencies
and may- not freely refuse or discount the monopoly money, is quite wrong,
-even criminal and harmful. - J. Z., 1.2.96, 20.3.97. - That, at the -same
time, it does provide a uniform currency for a whole territory, cannot
make up for its -wrongs and the harm it does. - J. Z. 20.3.97.
CRISES & MICRO-ECONOMIC DECISION-MAKING &
MONETARY FREEDOM: Micro-economic- decision-making is the primary device
for keeping crises on a -micro-level. - Gary North, THE FREEMAN, 2/74.
- Especially the -micro-economic decision-making of monetary freedom! -
J. Z.,-7.7.94.
CRISES, GOVERNMENT & MARKETS: Crises, as opposed
to simple- scarcity, result from market disruptions; and the only sector
of- society which possesses the power to disrupt a large market is -the
government. - Henry G. Manne, REASON 4/74. - Crises are -unknown
in an unhampered free market economy. - Dick Sabroff, THE-FREEMAN, May
74.
CRISES: First governments, by coercive interventions,
cause crises, while coercively suppressing self-help measures that would
prevent or end crises, and then, under the pretence of fighting or managing
or mitigating crises, they do, instead, by their methods of monetary despotism,
make them worse and prolong them, sometimes into a total collapse of a
monetary economy. Then they do have the cheek (impertinence) to do this
while blaming others for the results of their actions. Alas, their victims
usually accept their excuses and blame price extortionists, exploiters,
capitalists, financial conspirators, coercive unionists, greedy landlords,
speculators, foreigners, immigrants etc., i. e. people who do nothing else
but protect themselves as best as they can against a government caused
inflation. - J. Z., 17.10.89, 16.5.97.
CRISES: See: ECONOMIC & HUMAN RIGHTS ASPECTS
IGNORED BY MOST -MODERN AUTHORS.
CRISIS MANAGEMENT: To most of the ruling bastards
this seems to -amount to: Manage affairs in a way that the crisis is kept
going- or even increased. - J. Z., 3.4.95. - Not only communists have-
often tried to make an existing crisis worse and to prevent- genuine reforms,
in an attempt to gain or maintain power thereby. -- Politicians are always
ready to declare an emergency and then to -demand emergency powers for
themselves, to deal with the crisis.- (Compare Pres. Bush's "war on terrorism"
then extended to "war against the Taliban forces in Afghanistan" and now
to the planned "war against Iraq", not against its despotic ruler, after
the 9/11/01 terrorist attack on N.Y.C. and Washington, an always upon the
same wrongful principle that the terrorists apply in their actions, namely:
collective responsibility, and upon the same "ideal" that they hold, namely
exclusive territorial rule.) As a rule the crisis persists, in spite or
because of their -efforts, even much longer, as a result of their "counter-measures"
- and the emergency powers tend to be continued afterwards or not completely
abolished. The extreme -case of this is indicated by Randolph Bourne's
statement: "War is the- Health of the State". Compare the growth of the
"New Deal"- statism under D. Roosevelt, which was extended, at least in-
parts, from the Great Depression to today. - In most instances -"crisis
management" means "crisis mismanagement" and "crisis- prolongation", largely
through prevention of common sense and -economically effective and morally
justified self-help steps. - -The only thing that monetary and financial
despotism, in -combination with other forms of central planning and dirigism
or -dictocracy, can manage to supply is - one crisis after the other, -in
which they can always demand and all too often are all too-readily
granted, more power to themselves, in spite of a -continuing record of
failures for all their A-Z "reforms" and "measures" and "plans", which
repeat all the old wrongs and- mistakes over and over again - but under
ever new cover-up names -and propagandist "justifications" and "explanations".
But- sometimes they do reveal their empty-headedness, e.g. when they- merely
hope to reduce mass unemployment and rapid inflations by a- few degrees
in a few years, or when they have nothing else to -propose but changes
in the budget and in the official interest -rates. Thus, obviously, they
neither see nor admit the real causes -and possible cures. - J. Z.,
25.4.97, 8.9.02.
CRISIS THEORIES: Decades ago over 140 were listed
once,- somewhere. Probably many more do exist. They are so numerous that
-all should be listed - and confronted with the facts and contrary -theories
as far as is possible, in order to enable the patient -researchers to finally
sort the wheat from the chaff. - J. Z.,-19.3.97.
CRISIS: A Greek work for judgement or penalty
of nature. - Dr. -H. G. Pearce, one of the few Georgists who was a clear
advocate of -monetary freedom, too. I reproduced some of his writings but
not -yet the manuscript of his Introduction to Economics, being the -notes
to his lectures at the Aquinas Academy in Sydney, for a few- years. - I
still seek the hand-written final notes for this book- manuscript, which
was incompletely duplicated without them. --J. Z., 18.4.97.
CURRENCIES & GOVERNMENTS: The dishonesty,
coercive and -monopolistic nature and the vested interests of governments
are -today largely expressed also in their forced and exclusive- currencies,
their depreciations, stagnations and manipulations. --J. Z., 25.1.90, 29.4.97.
CURRENCY BACKING BY ALL KINDS OF VALUABLES, WEALTH,
CAPITAL & -ASSETS? - Not all real values and capital assets are a really
-good or sufficient cover for sound currencies. - Our health is very valuable
to us, but we can hardly turn it into an acceptable backing for our- currencies.
Our ecology is most important for us, so are sunshine- and rain-bringing
clouds, but they are a bit hard to coin. We -have valuables like large
stamp and coin collections and can even -sell them for much - but we can
hardly turn them into local or -national currencies. Each productive individual,
is worth- hundred-thousands of dollars in a somewhat developed economy,
in -the course of the decades that he is productively active,- sometimes
even millions. But we can hardly turn this, our -personal capital asset,
into an immediately useful currency, no more so than "the" labour hour.
It -happens to embrace goods and services we will only produce in -years
if not decades. They are not on the market as yet. Just try- to issue and
circulate the total production of your life's- productive efforts in form
of a personal currency right now? How -many acceptors would you find? And
at what discount rate? If you were a recognized genius or -inventor, film
star or pop star, you would find a few fans and- sponsors accepting your
notes. But what could they buy with them?- Your autographs? - At most you
could anticipate your near future -earnings through private clearing scrip
or through share certificates and bonds. - What we can somewhat -monetise
right now are our labour and services capacity now, and during the- next
few days and weeks - no more. - It is true that all capital -assets have
some value in a free market. One can even sell them -for currencies available
on the market. But one cannot -effectively turn them directly into
currency and give them- thereby much purchasing power towards daily wanted
consumer goods -and services. But one can SELL them for the currency of
others, -IF others are prepared to buy them. - Currency is not like the
-leaves of grass on a beautiful lawn, although that lawn is also a- capital
asset. Nor can it be grown, like leaves on trees,- although trees are also
valuable assets. It is only capital -securities that can freely mediate
capital transactions, and it is only soundly issued (as well as re-called,
in a natural reflux) -currencies that can mediate the daily turnover of
consumer goods and- services quite naturally, rightfully and effectively.
If asset "currencies", without a monopoly and legal -tender power, were
issued side by side with shop currencies and- service vouchers and clearing
certificates, they would have some -value only among some investors. But
no provider of goods, services and labour or creditor of short term debts
would be obliged to accept them. These -providers would, under freedom,
rather issue their own sound- currencies. Why should they give any purchasing
power to -thoughtlessly issued "asset currencies". Not much of any
asset- currency could be put into circulation. What is the recipient to
-do with it? Extract some bricks from the building of the bank- which issued
it? Claim some wheelbarrows full of dirt from the- farm which had monetised
its capital value? Cut off some wires from the transmission wires, or take
a turbine apart of an -electrical power plant that had not issued notes
acceptable to -pay electricity bills with, but had, instead, issued an
"asset- currency" based upon its valuables, like dams, turbines and electricity
cables? Capital assets -have value only among users and buyers of capital
assets. - If, on top of soundly issued currencies, based on consumer goods,-
services and labour, daily ready for sale, all capital goods were -suddenly
transformed into money denominations, why should anybody- but investors
accept them at all? The daily wanted goods, -services and labour would
not be increased by this multiplication- of private notes. Thus they would
not be exchange media for such goods. All you could buy with them would
be the capital assets -they were issued upon. No one else would have to
accept them or -value them when he is already supplied with sound exchange
media- for his purposes. Thus they would greatly depreciate below their
-nominal value and that would lead to their almost general -rejection -
except among some speculative investors, who might, -by purchasing them
very cheaply, get some capital assets very cheaply. - Historically, I know
of no instance where it was ever- successful as an asset currency. Almost
all vastly inflated -government currencies were fully covered - by government-
"securities". That did not secure their value. Ultimately, not even -their
issue monopoly and legal tender power could secure them -acceptance. Asset
currencies are not rally currencies but just a- few among the numerous
misconceptions on money, currency,- exchange media etc. - J. Z.,
12.2.86, 2.5.97.
CURRENCY BOARDS: I see in them only a variation
of central- banking. They may be the best form that central banking can
take -but that would not be enough for me. Morally and economically -acceptable
to dissenters would be only such currency boards which -confined their
activities to the voluntary payment communities- which believed in them.
Since the faith in monetary despotism is- still very popular this would
give them a very wide sphere to -act in, at least for a while. More and
more the successful -monetary freedom activities would deprive them of
their followers- and participants - through one-man monetary "revolutions"
or secessions. - -J. Z., 22.4.97. - The statutes for any competitive and-
voluntaristic currency board should carry a preamble like the -following:
We do no longer recognize the rightfulness of -monetary despotism via any
central bank over any groups of- dissenters. We do not claim a territorial
monopoly for our -transactions and powers. Our uniform exchange media will
-be exclusive only for our members (provided they agreed on this) and accepted
at their face value- only by contract. And these contracts can be terminated,
at least- at frequent intervals. Our exchange medium and value standard
is- legal tender only within our payment community and towards its issue
centre. - J. Z., 22.8.93,- 22.4.97, 7.9.02. - See ON PANARCHY in the LMP
PEACE PLANS series. See: -CENTRAL BANKING, MONETARY DESPOTISM, TOLERANCE,
MONETARY FREEDOM, -FREE BANKING.
CURRENCY MANAGEMENT & CENTRAL BANKING, MONETARY
POLICY, MANAGED- CURRENCIES: Whether inflation, deflation or stagflation
or a -temporary and relative boom prevails, it always means merely that
the government or its central bank is still in charge of the- controlling
position in the economy and that, sooner or later, it- can and will mismanage
it even more, although, perhaps, otherwise -than it did before. Mismanagement
is inevitable in any system -that is not foolproof, that is monopolised,
coercive and without -free pricing or the discounting and rejection option
of competing currencies, one that has no -competition among different note
issuers and no stable standard to measure its exchange media- against it.
It might try to impose circulation limits - that are ever increased, again
and again. It might try to counter an evil -like inflation with deflation
- only to arrive, most of the time, -at a degree of stagflation. It has
not inherent limitations. It is, in this respect, like- an unlimited government.
To be fully limited, all government- services and disservices and charges
for them must be refusable -by individuals. The same applies to the money
of monetary -freedom. All but the issuers themselves must be free to refuse
it-, as well as free to issue (print) and offer alternative exchange media
-and value standards, if they can find any takers for them. Only -monetary
freedom can provide sufficient quantities of exchange -media and sufficiently
stable currencies. To each the exchange -media and value standards of his
or her dreams and to each the -government or free society of his or her
dreams. Central- management of an exclusive and forced currency means mismanagement
most of the time in most countries. Only -accidentally and then only for
short periods, does it hit upon -the supplies that are correct, at least
for its particular -circulation channels. (Not necessarily for all of a
national economy.) Others it cannot correctly supply at all.- Imagine trying
to supply everyone with sufficient fresh water from a single dam in a large
country, or with sufficient electric -power from a single electric power
station. Similar difficulties- exist for any centrally managed currency
and it is high time that- they are recognised and abolished together with
the whole central banking as an imposition upon a whole country and all
its people and all its trading. However, -central banking would not
have to be prohibited or outlawed. It- would be enough to open it up to
fully free competition or to reduce it to the members of a volunteer community
that is only exterritorially autonomous. -- J. Z., 14.12.92, 29.4.97,
9.9.01.
CURRENCY PRINCIPLE: Its advocates are still predominant
among -money reformers and advocates of degrees of free banking.- Moreover,
they still misunderstand the "banking principles" (-several versions do
exist) and the "real bills doctrine" -involved in some of them. Partisans
of both schools still believe -that they have already refuted each other.
How could that -controversy be finally brought to a successful conclusion.
It is -about time, after nearly 200 years. First step would be a- complete
publication of all their relevant writings. Secondly: -All their arguments
should be confronted. Thirdly, all needed -additional arguments, so far
left out, should be added to the- debate. Fourthly: This might perhaps
be best done via flow chart- discussions on paper or with the aid of flow
chart computer -software on computers. - J. Z., 9.4.97.
CURRENCY REFORM OF THE GERMAN UNIFICATION: The
one on one exchange rate of one West Mark for one Ost Mark was absurdly
wrong and false. The wages thus paid in the same amounts in West Marks
were no longer earned by the sale of goods and services. Most people in
the West and in other countries refused to buy these goods and services,
as being of inferior quality, while the wage and salary earners spent their
West Marks, no earned by them but credited to them, not for the goods and
services of Eastern Germany but large on those of Western Germany. With
many less sales for their own goods and services, many to most employees
had to be dismissed. The unemployment benefits working couples got, in
West Marks, made them economically much better off than they were before,
when earning only East Marks and so they did not mind becoming unemployed
but rather went on an extended holiday through Europe. By rights they should
only have been paid with claims upon the goods and services they had produced.
That would have been a strong incentive to produce more and better goods
and would have largely solved the sales problem for their output. As it
was, they were, to a large extent, made unemployed and turned into welfare
recipients. To the extent that their wages were thus subsidized and the
production of largely unwanted goods and services went on, the collapse
of the enterprises they worked in was only postponed. Their goods and services
could only be sold at emergency sales prices. Moreover, for decades, the
work ethics in Eastern Germany was largely absent. For instance, bookshops
that were run in West Germany by 1-3 people, were run in East Germany by
ca. 12-20. Inefficiencies in other jobs was probably corresponding. After
all, all of production and exchange was bureaucratically run. This change-over
was not a change over from a state socialist economy to a market economy
but from one kind of state socialist economy to another kind of state socialism,
although not as totalitarian. But in one respect statist centralism was
even worsened: The former two central banks became one. The very limited
currency competition between East Mark and West Mark was eliminated. The
natural connection between earnings and labor was even more separated than
it was before. Those employees, who continued "working", did no longer
work to satisfy consumers among their countrymen but to receive hand-outs
from the West instead of earned wages and salaries. Moreover, these additional
payments in West Marks, also legal tender monopoly money, as recommended
by the Communist Manifesto, led to an accelerated inflation of the West
Mark. Could their products and services still be sold to anybody in the
world market? Possibly to people in underdeveloped countries, if claims
upon these goods and services had been issued and utilized, at free-market
exchange rates, to purchase goods from underdeveloped countries, that could
not afford the quality goods of West Germany and did not have the purchasing
power in their own currency, at free -market rates, to buy these goods
in West Germany, not had they earned enough West Marks by sales the West
Germany, to pay for imports from West Germany in West Marks. However, if
they had been paid in East Marks, redeemable only in East German goods
and services, and this at an exchange rate favorable to them, then they
could have become customers for East German goods and services, leading
to corresponding exports. These goods and services could have been sold
- even if only at emergency or low quality prices, instead of remaining
largely unsold. And the earnings thus achieved should have been shared
as wages, salaries, returns upon capital and for suppliers. Productivity
and earned wages and salaries would have fast risen from low levels to
higher and higher levels. Capital could have been obtained in sufficient
quantities with e.g. gold clause guaranties and tax and regulation exemptions,
to utilize the numerous productivity increase opportunities from a low
level of output to a standard high level of output. And employees would
have had to pull their socks up, with the elimination of most bureaucratic
featherbedding for them. Then they would soon have become as productive
as the employees in West Germany. The "currency reform", as practised,
prevented the natural adaption and development of the East German economy.
It amounted to State socialism, the mixed economy type, of the Western
model. - J.Z., 1990, 27.8.02.
CURRENCY REFORMERS, INTOLERANCE & MONETARY
DESPOTISM: Most are -like statist tax reformers, i.e., they just want to
replace -one monopolistic and despotic evil by another. - J. Z., 19.8.92.
CURRENCY SHORTAGES & CURRENCY FAMINES: They
and their effects- are largely denied by theorists of the Austrian School
of- Economics. They assume that the price mechanism will completely- and
immediately adjust to any reduction of credit and cash and- thus render
them completely harmless. Historical experience has- refuted this notion,
in practice, thousands of times. -Ten-thousands of times, if one includes
all the issues of- emergency monies and trader's tokens, as well as the
truck -payment and truck payment tokens that occurred in monetary history
and that are pretty well documented by coin and money- collectors. - Generally,
one cold simply refer to the proverbial- "cursed hunger for gold" which
does not indicate any saturation- of the circulation with gold coins to
mediate all desired- exchanges. One could refer to the often complained
about "greed- for money", which would hardly exist if it were always easily
to -be obtained in any market, just by offering one's goods, services -and
labour for it. The phenomena of the several "gold rushes" did- also indicate
that the world was not yet sufficiently supplied with gold so that hundred-thousands
braved hard circumstances and -worked hard and often in vain for small
returns, always hoping- that, like a few others, they might finally strike
it rich. -Lotteries, gambling and betting do also indicate a kind of- persistent
currency famine and the lack of faith in most people that -they can ever
earn enough ready cash through honest and -productive efforts - under present
circumstances. - J. Z., MFNL-3/4 & 8.4.97.
CURRENT ACCOUNT, TRADING, CHEQUE BANKS OR CLEARING
BANKS: -Apart from the difficulties which monetary despotism can cause
-them, via sudden cash demands, when all due credits are demandable -by
the creditors in cash, regardless of the cash supply of the- debtor by
the monopoly issuer, all such institutions should be-able to settle all
their accounts against each other. (The losses due to the minority of unable
or fraudulent debtors could be- covered by the insurance fees that are
part of the interest rates or due to special credit insurance arrangements.
Extensive incompetence or corruption in the lending institutions, running
up debts by the millions to billions, until these criminals are found out
and stopped, cannot be covered by insurance. Incompetence or dishonesty
among auditors cannot be insured against, either.) To each credit -there
would be a corresponding debt. To each debt there would be- a corresponding
credit. The total balance of all debts and all credits -should come to
zero. They should balance each other out - unless- there were some mistakes
make in the book keeping or electronic -accounting. Furthermore, to the
extent that clearing transactions -are almost instantaneous, they do not
suffer, as a rule, under a- depreciating value standard. Moreover, if the
law does not- prohibit this, they would be free to adopt whichever sound
value -standard pleases them most. And with regard to the profit margins
-involved, in the average, for the participants, a slight- variation or
loss in the value standard, reduced to that fraction -of the loss that
occurs in the period of the almost instant or -very short term transaction,
comes to very little. Furthermore,- to the extent that such clearing transactions
represent real- exchanges of goods and services (or of debts representing
goods- and services exchanges), the increased number of freely arranged
clearing -transactions does not drive prices up but merely indicates more-
trading, not "overtrading" or "over-production" or -"over-consumption"
and it cannot reduce the value of any value- standard - merely by using
it, in accounting and reckoning, more- often. - However, trouble will occur
when some clearing accounts,- so far reckoning in a sound gold weight clearing
standard only, can suddenly be closed- down by the creditors with their
legal or juridical demand that debtors pay them in gold or legal tender,
-although the clearing system may not and need not possess even a single
gold coin or gold bar or any legal tender cash. When not gold or cash redemption
is demandable but merely a gold clearing standard then, even when no gold
coins or bullion were available in e.g. Germany, all such German transactions
could still use the gold price of Zurich, -London, New York or Tokyo for
all their gold-clearing transactions. Any clearing system can be prevented
from -operating freely by the creditors being authorised to demand the
-pay-out of all or any of their clearing credits in cash,- regardless of
how much or how little cash is currently available -to that clearing system
or made available to it by its debtors. -It is one thing to be allowed
to pay in (acceptable and sound- cash), if one possesses it, and
quite another thing to be allowed to demand cash (sound or -unsound cash),
or, for debtors, to be obliged to pay cash, when the debtors do not possess
it, cannot easily obtain it and can offer only clearing options. A clearing-house
or clearing bank should always remain free to settle all -its debts by
clearing ONLY. Only when it can no longer do this, -then it should
be driven into liquidation and the creditors- should then be free to try
to extract whatever credits or cash -they still can manage to get from
the clearing house, not from its remaining debtors. For these debtors,-
again, should not be obliged to provide any cash - as long as they- can
still provide acceptable clearing options. Only if they cannot do this,
either, should one be able to drive them into bankrupcy with one's cash
or clearing claims against them. - J. Z.,-11.4.97, 5. 9.02.
CYCLES, ECONOMIC, CRISES, BOOM AND BUST PERIODS,
INSTABILITIES, -FLUCTUATIONS, IMBALANCES: Economic cycles are largely the
result -of economic interventionism, especially monetary despotism. In-
former centuries, without a world market and abundant transport- facilities,
natural catastrophes could lead to local starvation. -Now only economic,
political and military or revolutionary- interventionism can provide for
such artificial poverty and- starvation periods, keep them up and prevent
their abolition, -sometimes at the price of the lives of millions. Under
true free -market conditions, including full monetary and financial freedom,
free trade, free property rights and free enterprise, economic- cycles
would largely disappear and natural catastrophes could soon be overcome
for their survivors. Only price fluctuations -would remain, e.g. corresponding
to harvest or demand -fluctuations, e.g. due to fashions. Nature as an
enemy becomes -more and more bearable. But when one's own government and
foreign -governments and all their military, education and tax slaves and
-all their bureaucrats are turned into enemies of peaceful and -productive
persons - then the situation of the latter becomes often- desperate. Once
they come to realize that monetary and financial- freedom can be used as
their Archimedean leverage, then they could- soon emancipate themselves
from all internal and external- oppressors and exploiters. E.g., then they
could make their -separate peace with millions of military slaves sent
against -them, setting them free to support themselves productively,- within
a short time, in the country against which they were conscripted, much
against their will, in order to conquer it for their masters. Monetary
and- financial freedom ideas could be exported into the heads of -revolutionaries
everywhere, who do fight any despotic government. But- first we have to
come to generally realize that monetary and -financial freedom options
and techniques are rightful and valuable services -and also an exportable
or commmunicable ones. - J. Z., 4.12.92,-29.4.97.
DEATH PENALTY FOR THE REFUSAL TO ACCEPT DETERIORATED
GOVERNMENT PAPER MONEY: Governments could not, of course, pursue the- practices
by which they forced bad money upon the people without -the cruellest measures.
As one legal treatise on the law of money- sums up the history of punishment
for merely refusing to accept- the legal money: "From Marco Polo we learn
that, in the 13th -century, Chinese law made the rejection of imperial
paper money -punishable by death, and twenty years in chains or, in some
cases- death, was the penalty provided for the refusal to accept French
-ASSIGNATS. Early English law punished repudiation as- LESE-MAJESTY. At
the time of the American revolution, -non-acceptance of Continental notes
was treated as an enemy act -and sometimes worked a forfeiture of the debt."
- Hayek,- Denationalisation of Money, 28.
DEBT CRISIS, ABILITY TO PAY & INTEREST RATES:
In most cases it- should be seen as a means of payment problem that requires,
for -its solution, monetary-, clearing- and financial freedom. - In- most
cases the per head debts, of a private or a public kind, are- not so high
that they would be really unpayable. Payability of- private debts is usually
already calculated into them. Once -public debts are considered to be too
high by tax payers, they -should not only see to the repeal of all compulsory
taxation laws -but also to the repudiation of all public debts. The only
indemnification for all the losers in this case would be on an -equal basis
with all present taxpayers, through their share in- the remaining public
capital assets. Investments in future tax- slaves, all too long considered
as acceptable, as formal slavery- was for all too long, and as the education
and military slavery- still are, all to widely, should no longer be considered
as -morally justified and enforceable assets or credits. - Payments of
debts with -the own clearing-, goods- and service-vouchers would also be
much- easier and more honest in most cases than would their payment in-
exclusive and depreciated legal tender paper money. - The degree of the
interest "burden" or "exploitation" involved in monetary- despotism would
also disappear with it. For turnover--credits it could be reduced to close
to zero. For longer term- credits on an agreed upon stable value basis,
more secured -through monetary freedom repayment options, it would also
tend to -become reduced. Full employment and the permanent boom- conditions
that would be made possible by monetary and financial -freedom, would also
increase savings and their offers in form of -investments, which would
tend to reduce the interest rate. An -interest rate reduction is also to
be expected through credit -insurance, no longer subjected to the extra
risks of monetary- despotism. - But, at the same time, many more highly
profitable- investments in innovations, including self-management -innovations,
would take place, that would drive the interest rate -up, without being
a burden to the debtors. If fixed interest -rates were largely replaced
by rates that are "partnership- earnings" of "pre-done labour" in extra
profits made, then the difficulties in paying -even high interest rates
would disappear because they they would- merely be a share in high earnings.
- J. Z., 13.1.93.
DEBT CRISIS, INTERNATIONAL DEBT CRISIS, LOANS
TO GOVERNMENTS, -REPUDIATION OF GOVERNMENT DEBTS, GOVERNMENT GUARANTIES
OF FOREIGN- LOANS, DEVELOPMENT: "First, there is no serious doubt that
the -bankers of this country from 1973 on have made a lot of- incredibly
stupid loans. These loans are never going to be -repaid. The debtor developing
countries now owe a staggering $ 2- trillion." - Indemnifying the Debt
- A Special Kind of Fraud,- MULTINATIONAL MONITOR, Washington, July 86.
- Firstly, not only- "the bankers" are involved but State guaranties for
foreign loans -and often also straight government to government loans and
these -mostly on a mere paper money basis, i.e., repayable, if at all,
in -inflated currencies. Moreover, all the bankers involved are -privileged,
by special legislation, protected from competition- and via governmental
deposit insurance at least to some extent- against the results of some
of their own worst mistakes and dishonest actions. - What can one expect
in such a situation? -- Private and government loans to governments ought
not to be -repaid, since they are immoral investments in future tax slaves.
-In principle, they are morally no better than former investments in slaves
-were, bought from African slave owners and then used, largely or -mainly
in the Southern States of the U.S., as enslaved plantation -labourers.
Alas, I have not heard many of their descendants protest against tax slavery,
too. - Now consider the figure- given, assuming it to be correct. I would
estimate that at least- 2, if not 4 billion people are involved in developing
countries.- Thus this debt comes to only $ 500 - $ 1,000 per head. If all
-these funds had been productively invested, then their repayment-s should
not really have been very difficult, especially if spread- over a number
of years. But this would also have required, among- other things, that
their sales problems for goods, labour and- services would have been solved
via monetary freedom. They could- have repaid their international debts
e.g. with clearing- certificates based upon their export goods. - J. Z.,
in old MFNL- notes, & 30.5.97.
DEBT FOUNDATION & CLEARING: Since clearing
is the essence of any -monetary exchange and since all clearing is the
mutual- settlement of debts, any money has, in essence, a debt- foundation.
It does not need any other foundation but only a- value standard chosen,
contracted or provided by the- participants. - J. Z., 28.5.95, 16.3.97.
DEBT FOUNDATION: All debtors, to enable them to
pay all their- debts more easily, should become free to offer in debt settlement
standardised assignments upon their own goods and service- delivery capacity.
None should be driven into bankruptcy before -this potential is exhausted.
Creditors would not be obliged to- accept them at par, as if they were
legal tender, but remain free- to accept them only at a market-rated or
arbitration-determined -discount, so that both parties can be satisfied
with the debt -settlement. The automatic legal and juridical assumption
that a creditor may demand (if not, in our times. gold or silver coin or
certificates to them, that "right" has already been abolished)- government
legal tender currency should not be upheld, -unless it has been especially
agreed upon in advance. Since -creditors are also debtors at the same time,
in many ways, no- one-sided interest or privilege is involved here but
just a -facilitation of the payment and clearing process that was often
-interrupted by inherently unwarranted demands for cash which the
-old system of monetary despotism could not sufficiently and fast -enough
satisfy whenever the non-cash payment system partly broke -down and thus,
& quite suddenly, the demand for cash was increased, precisely when
cash was already somewhat short and this lead to the part-collapse of the
non-cash payment system. Sooner or- later the debtors' clearing certificates
and those of other local -providers of goods and services will become recognized
as local -currency cash, which is in some ways more risk free and more-
helpful to attain and maintain local boom economy conditions. especially
when enough of these potential local issuers combine their capacities and
issue, between them, their own local currency. - -J. Z., 19.3.97.
DEBT MONEY OR DEBT-BASED MONEY UNDER MONETARY
FREEDOM: For the- purposes of this discussion one should distinguish between
short--term debts arising out of goods and services exchanges and medium-
and long term debts that represent existing or hoped for capital -assets
or even debts imposed upon tax slaves, confiscated assets,- forced loans
etc. As an advocate of monetary and financial -freedom and free exchange,
one can advocate the monetisation of- the former, the issue of capital
securities upon real or expected -capital assets but not the monetisations
of wrongful capital -claims against the victims of imposed tributes, called
taxes.- (However, as long as taxes are still tolerated, one should- insist
that these forced payments become as far as possible- facilitated by the
mutual clearing arrangements involved in sound tax foundation money, rather
than extracting means of payment -from other payment communities or imposing
unlimited, -monopolised, legal tender tax foundation money upon the whole-
economy as an exclusive and forced currency. The least unjust and - east
harmful tax foundation money would be one that would use a- sound value
standard and that would be optional, refusable and- discountable in general
circulation but would have full legal- tender power towards the issuer,
i.e., there and there only, compulsory acceptance at- par with its nominal
value, no matter how much it had become depreciated in general circulation.
(That would constitute a strong disincentive for over-issues and also lack
of opportunities to engage in them, since the potential acceptors could
discount them.) - Monetary freedom promotes and utilises currency based
on short term, private or -cooperative and voluntarily undertaken debt
and credit arrangements, arising out of the -production and sale of consumer
goods, also debts based on- readiness to supply services and labour, as
opposed to the- so-called "asset currencies", based on capital assets,
under the- wrongful assumption that such valuable assets could also give
-currency value to currencies supposedly based upon them, instead -of merely
a capital market value to capital securities like shares, bonds, mortgages
-etc. - Under full freedom the suitable debt foundation money, -e.g., shop
foundation and railway or bus money, would drive out of- circulation the
bad debt foundation money, based upon capital -assets for which there is
only a relatively small demand among most consumers with their currency.
To maximise the -transferability of both consumer goods and services and
of unused- or under-utilised labour, this kind of readiness-for-sale can
and -should be "monetised" with its kind of competing currencies, -ticket
money, purchasing or goods vouchers, clearing certificates- etc. To mobilise,
as far as possible and desirable, the -transferability of capital assets
and their accumulation and- repayment, for purposes of production and development
credits, -the corresponding financial securities should be freely issued-
and marketed, i.e., not among ordinary consumers, in most -instances and
for most of these secur