The Centre for Economics and Business Research (CEBR), een Londense consultancy-maatschappij heeft de Griekse overhead geadviseerd dat zij niet onder hun probleem kunnen uitkomen als ze niet devalueren, teruggaan naar de drachme en de schuldeisers vertellen dat ze kunnen fluiten naar hun 300 miljard euro. Aldus de Times on Line.
Doug McWilliams, chief executive of the CEBR, zegt dat het praktisch onvermijdbaar is dat Griekenland eenzijdig dit besluit neemt.
Natuurlijk is dat rampzalig voor Duitse en Franse banken die miljarden aan Griekenland hebben geleend. Maar ook Nederlandse banken zullen een gevoelige klap krijgen
Een ander punt is dat daardoor Spanje waarschijnlijk zal moeten volgen, en dan ook Portugal en mogelijk ook Italië.
Op de vraag of we dan nu het laatste weekend van de gezamenlijke munt gehad hebben, antwoordde Williams: “Zeer waarschijnlijk Ja!”
Wat doen Grieken ondertussen? Die kopen goud.!
Tom Lassing schrijft in Beursbox :
De afgelopen maanden hebben de Grieken zelf een deel van de problemen verergerd door (heel slim) geld van de bankrekening te halen.
Dat was slim, maar bracht de banken in de problemen en verergerde daarmee de financiële crisis.
Wat de Grieken er ondermeer mee deden (met al die cash die ze opnamen) was fysiek goud kopen.
Veel Grieken deden dat niet zo slim bij boeven van de Centrale Bank, die vroeg $1700 voor een ounce, terwijl de officiële prijs op de wereldmakt nu net boven de $1200 ligt.
Waarom Grieken dat dan ook daadwerkelijk gedaan hebben, is een raadsel tot je het volgende hoort.
– In Griekenland is er een restrictie op het kopen van fysiek goud. Officieel schijn je slechts in British Sovereign Gold Coins (0,2354 ounce) te mogen beleggen. De Centrale bank verkocht er in de eerste vier maanden van 2010 maar liefst 50.000 van. Op de zwarte markt gingen er naar schatting meer dan 100.000 munten rond.
Ik begrijp het wel een deel van de Grieken.
De gemiddelde griek barst van het zwarte geld en bij een faillisement en overstap naar een nieuwe currency zul je met dit geld op de proppen moeten komen.
Een mooie gelegenheid voor de regering om die mensen bij de lurven te pakken.
Goud is vrijheid en waardevast en kan probleemloos de overgang van de ene currency naar de andere maken.
Ik vermoed dat het trouwens nog wel wat langer gaat duren voor de Grieken faillisement over zichzelf uitspreken.
Of je nou 300, 400 of 500 miljard in het krijt staat maakt geen moer uit als je failliet gaat. Voor de schijn zullen ze bezuinigingen doorvoeren om die leningen los te peuteren maar waarom zou je dit écht doen als je toch al failliet bent? Die schuld zal toch weggeschreven moeten worden door de europese banken want de Grieken gaan dat nooit betalen.
Het initiatief ligt daarom bij de andere eurolanden; laten ze zich nog langer chanteren of niet?
Libertus [10] reageerde op deze reactie.
Dat is nu nog eens goed nieuws. Hopelijk gaat Griekenland ook echt uit de euro en bij voorkeur voordat ik er op vakantie ga 😉
Het lastige van dit soort onderzoeken is dat er zelden open en eerlijk wordt verteld wie het onderzoek betaald heeft. Want het is nog altijd zo dat wiens brood men eet, wiens woord men spreekt.
Hoewel ook ik denk dat het enige is wat Griekenland kan doen, nadat ze de EU beroofd hebben van de 30mrd steun (!), is uit de Euro stappen en failliet gaan. Lekker met schone lei beginnen.
Maar deze Engelse economenclub (CEBR) is ingehuurd door een instantie. En het is maar al te duidelijk dat het in het belang is van VS en UK om alle aandacht op Europa te houden om hun eigen, buitengewoon beroerde, situatie uit het nieuws te houden. Beide landen zijn faillieter dan Griekenland…..
lol @ Griekse overhead.
Grappig dat men hier denkt dat het ook maar tot enige verbetering zal gaan leiden als de grieken uit de euro stappen. Dat betekent gewoon het einde van de EU. Alhoewel, dat is natuurlijk best goed. Alleen de gevolgen zijn vrij zeker niet te overzien.
Hub Jongen [6] reageerde op deze reactie.
@ikweethetbeter [5]:
Ik weet nog niet of “MEN” zo denkt.
Maar je zegt zelf al:
” Dat betekent gewoon het einde van de EU. Alhoewel, dat is natuurlijk best goed.
En daarmee zullen velen het met je eens zijn.
Goed artikel Hubert en spijker op de kop van het CEBR. Feit is Griekenland, Spanje, Portugal, Ierland en Italië kunnen de opgebouwde schulden niet meer terugbetalen in euro’s. Daar ontbreekt hen het productie- en exportvermogen. De enige manier is voor deze landen direct de eurozone te verlaten en terug te keren naar hun valuta. Tevens een algeheel moratorium op de schuldaflossing en rentebetalingen. Men kan in die landen de zelfliquiderende kredietverstrekking veilig stellen middels een nationale kredietbank. De schulden kunnen later worden geherstructureerd en daarbij ca. 30% op de boeken kan blijven staan. De buitenlandse banken moeten dus een verlies nemen van 70% van hun uitstaande vorderingen. Veel banken zullen dus omvallen, vandaar dat het ook voor zowel Nederland als Duitsland essentieel is om ook een nationale kredietbank te hebben, zodat de kredietverlening aan solvabele bedrijven kan worden veiliggesteld. Intussen kan de financiële sector worden gesaneerd en gereorganiseerd, waardoor commerciële banken worden losgekoppeld van de centrale bank. Als men het zo door laat sudderen dan is hyperdeflatie de enige uitkomst met alle ellende van dien, want de laatste keer dat dat gebeurde was na 478 bij de instorting van het Romeinse rijk en het begin van de donkere middeleeuwen.
Libertus [11] reageerde op deze reactie.
Zacharias [14] reageerde op deze reactie.
Astrid [24] reageerde op deze reactie.
The Austrians routinely reject mathematics; and they in fact exalt interest — the very cause of failure (not debt)!
The reason nonetheless that Austrians and Hayek in particular exalt interest (with no mathematic or rational defense whatever), Hayek himself tells us: It makes “banking” (obfuscating the promissory notes of the people) “an extremely profitable business.” (See Mises page, reproducing Hayek’s article: “A Free-market Monetary System.”)
“Freedom” is Hayek’s first lie, for there is no freedom even from terminal exploitation, when the purported “Free Market Monetary System” is imposed upon the people despite political promises to the contrary, and when it can only multiply artificial indebtedness in proportion to capacity to pay, as the unassenting subjects are forced to maintain a vital circulation by perpetually re-borrowing principal and interest as ever greater sums of artificial debt, perpetually increased so much as periodic interest on an ever greater sum of debt, until of course the sum of artificial indebtedness exceeds their (finite) capacity to pay, destroys their credit-worthiness to maintain a vital circulation — and you have what you have right now, everywhere around you.
That’s freedom, Mr. Austrian “economists?”
In fact the lie of your pretended economy can only multiply artificial cost!
Now, to say you predicted the present failure, even as it is the one possible fundamental consequence of the interest you advocate — that is one of the greatest lies in history.
But it won’t fly.
Eerst zien dan geloven. Ik hoor de laatste tijd zo vaak dat de laatste dag van de Euro is aangebroken. Dit betekend niet dat ik de ernst van de situatie niet inzie, maar het einde van de Euro geloof ik niet zo hard in.
@GB [1]:
Of Europa zich nog willen laten chanteren is wel duidelijk. Ze hebben net een potje van 750mljrd euro bijeen gelegd waardoor elk land, met een beetje boefgehalte, gaat watertanden.
Albert S. [12] reageerde op deze reactie.
@Albert S. [7]:
Het is toch al te gek dat wij met z’n allen, net in die landen, ons vakantiegeld gaan verbrassen. Zou dat niet voldoende zijn om het probleem daar op te lossen? Of komen onze centen daar in ‘verkeerde handen’.
Het wordt hoog tijd dat wit geld wordt afgeschaft. Wat dan overblijft is niet zwart geld, maar gewoon: geld.
@Libertus [10]: Dit is geen potje geld, maar gewoon krediet, dat moet worden gefinancierd door de vorderingslanden en worden terugbetaald door de hogeschuldlanden, die dat niet kunnen. Op papier wordt er dus meer schuld gecreëerd voor alle eurozonelanden, zonder dat daarvoor de middelen aanwezig zijn om dat terug te betalen. Met andere woorden dit krediet is gewoon een uitstel van executie. De eurozone is hoe dan ook gedoemd. Het spenderen van vakantiegeld in Griekenland of Portugal door Nederlanders kan daar niets aan veranderen, omdat het gewoon een druppel is op een gloeiende plaat. Het gat in de Euro-Titanic is al 39 jaar geleden geslagen met de komst van volledig ongedekt geld, zodat lage schulden, inclusief rente met steeds hoger wordende schulden inclusief rente worden gefinancierd. Geen enkele productie, export of vakantiegelden kunnen daar tegenop.
Libertus [55] reageerde op deze reactie.
Jack, in economics Interest is the natural fee for borrowing, it is not the cause of failure. The actual cause of failure is valueless money, i.e. unbacked by specie. Why? For without backing, governments and their central banks and banking cronies can produce imitless quantities of paper promises, i.e. legal tender and stack them up for decades on end. Moreover, they can also produce a limitless quantity of debt, which needs to be financed and serviced by money. Therefore, both aggregates (credit and money) are exploding, which are called inflation. There comes a time, when the debt buildup has grown so huge it can never be repaid or even financed, then you will see the whole monetary structure collapsing, as we are seeing now.
The Austrian economists foresaw this a long time ago. The actual problem with both monetary inflation and the limitless expansion of non-self liquidating credit is due to the permanent absence of a debt liquidator, i.e. a financial instrument, which carries only asset properties and which is not a liability to anyone, i.e. gold, silver, natural resources etc.
In a paper money (fiat) system, such a natural debt liquidator is missing, hence no shackles (or fetters) exist for governments to limit their natural inclination for credit and monetary expansion. Interest in a debt economy only exacerbates the problem, but is not the actual cause. Therefore, in the absence of a gold, silver, bimetallic or natural resources standard the ‘die is cast’ and we have to face the consequences in the end. And, the end is now.
jack [19] reageerde op deze reactie.
jack [20] reageerde op deze reactie.
@Albert S. [7]:
Albert, waarom zie jij toch zo graag de overheid weer terug als onderdeel van de oplossing? Vanwaar het gebrek aan vertrouwen in de markt met een eigen systeem te komen, bijvoorbeeld digitaal commodity-based geld? Nog even los van het feit dat het immoreel is wanneer de overheid zich met geld bemoeit. Ik weet dat je klassiek-liberaal bent, maar waarom dan de overschrijding van enkel de taken rechtspraak, politie en leger?
Albert S. [17] reageerde op deze reactie.
k wordt letterlijk schijtziek van alle vooroordelen over “De Grieken” wie zijn “De Grieken” die het hebben gedaan? De meerderheid van de Grieken die 21 tot 23 % BTW (Hier in NL maar 19%) moet betalen? Die 2 tot 3 banen moet hebben om zichzelf in levensonderhoud te voorzien? Die doktoren handje contantje moet betalen om geholpen te worden (of anders)?
Ik heb daar 2,5 jaar gewoond en het leven daar is keihard voor de normale werkende man/vrouw (die 8 tot 12 uur op hun poten moeten staan voor een miezerig loontje van 600 tot 700 euro per maand). De kosten voor het levensonderhoud zijn bijna niet te betalen als je niet in de elite zit, het beeld dat de media schetst is generaliserend en fout!
Boven hun stand????
Wij denken hier in NL dat we het hebben uitgevonden, alsof er hier geen corruptie bestaat…….. Heel zelfingenomen! Ja die overheid van Griekenland hebben het ook verneukt, maar ga niet de meerderheid van de hardwerkende Grieken generaliseren.
Van mij mogen ze die hele Unie opheffen en tevens ook die tumor-munt die de EURO heet!
Zacharias [16] reageerde op deze reactie.
Albert S. [18] reageerde op deze reactie.
@Griek [15]:
Je hebt helemaal gelijk. De Griek bestaat niet, net zo min als de IJslander bestaat. Ook waren niet alle Duitsers fout tijdens WOII. Het nadeel van nationalisme, socialisme en democratie in het algemeen is dat het individu (de ultieme minderheid) moet boeten en lijden voor het gedrag van anderen.
En inderdaad opheffen die euro.
@Zacharias [14]: Dat heeft te maken met pragmatisme Zacharias. Op dit moment staat alles op losse schroeven. We kunnen wel de overheid afschaffen, maar dan heb je complete chaos, zoals dat in elk land heerst, waar de overheid plotseling verdwijnt, zie Somalië en Afghanistan bijvoorbeeld. Hetzelfde hebben we ook gehad in West-Europa in de 5e eeuw na Christus nadat het Romeinse rijk in elkaar was geklapt.
De reden van de oplossing vanuit de overheid bekeken is stabiliteit en wel gebaseerd op klassiek-liberale gronden. De bimetale standaard functioneerde heel erg goed in de 19e eeuw, waarbij zelfs met een overheid de wereldhandel exponentieel groeide. Daarbij was het wel belangrijk dat er een rechtsorde heerste, zodat de handel en productie tot volle bloei kon komen. Het systeem van een bimetale standaard droeg daar heel erg toe bij. Nadat de stabiliteit is gegarandeerd dan kan men beginnen met de reorganisatie van het financieel-economisch systeem, door middel van een loskoppeling van de overheid en het bancaire stelsel, alsmede afschaffing van de wettige betaalmiddelen.
@Griek [15]: Mee eens Griek, Griekenland is het symptoom van een veel grotere kwaal, die ook bij ons heerst en dat is ongedekt geld en een enorm onbetaalbaar kredietsysteem. Daar ligt in feite de crux. Nederland, Duitsland, Oostenrijk en elk ander eurozoneland is failliet. Onze schulden en toekomstige verplichtingen binnen een verzorgingstaat zijn niet op te brengen met een steeds kleiner wordend potentieel (bijv. vergrijzing, exportdaling en productievermindering). We houden onszelf alleen maar voor de gek als we denken dat alleen Griekenland problemen heeft. We are all Greeks now.
@Albert S. [13]:
You are wrong. Let´s say you have 1000 units of currency backed by a finite amount of gold.
That´s it. There´s no more gold. Backed 1:1
If you bring these 1000 units of currency into circulation with interest attached, then where is the interest coming from?
Mathematically Perfected Economy:
And my original objection stands: When, exactly, is even 1 of you going to show me where the money comes from to pay the interest?
Moreover, I think that you guys are making the same set of MISTAKEN assumptions, about Mathematically Perfected Economy, that I, too, made, BECAUSE OF THE NAME.
Here is what I thought: When I heard the name—Mathematically Perfected Economy— visions of a Hungarian Central Planner entered into my head. …But that’s just me.
What I think has happened here, is that you guys have made the same mistakes that I once made. Well. Ignorance, once cured, returns for no good reason. So, here is what Mathematically Perfected Economy REALLY IS:
(1) Principals for loans, are created out of thin air, as debt. …Our current monetary regime does this anyway.
(2) But the loans are interest-free. …Why would you pay somebody big bucks to do something that you could do for yourself, for nothing?
(3) The ELIXUR: Loans are paid back, and the money is RETIRED from the circulation, in a time-based manner which is the mirror-image of the depreciation of the product. Why? So there can be no inflation or deflation. …And, yeah, I know that stuff happens.
(4) Otherwise, there is NO government intervention in markets! No central planning. No regulations or manipulations or market distortions—-the invisible hand rule the day.
Here is a simple example: A car dealer decides to lend you money for a car which free markets have decided is worth $20,000. And this car will last for 10 years. This car will depreciate in value in a linear, straight-line fashion—-that is, it will lose, on average, $2,000 in value per year.
(1) $20,000 are created out of thin air as debt.
(2) The car dealer recieves $20,000—-a trade of equal measures of production in exchange for equal measures of production. Why? Because the invisible hand says so. That’s why.
(3) $2,000 per year are retired from the circulation as the loan is paid back untill, in ten years, ALL $20,000 have been retired from the circulation.
The result: After year 1, there is $18,000 left in circulation, and the car is worth $18,000. After year 5, there is $10,000 in circulation, and the car is worth $10,000. And so on and so on.
Just think of the car dealer as a central bank.
Get it? Under Mathematically Perfected Economy, (1) There is always enough money created out of thin air to cause full employment—-there is always full employment. (2) But, at the same time, there is always, on average, an inflation rate of ZERO. (3) And there is no more business cycle.
Albert S. [22] reageerde op deze reactie.
Armin [34] reageerde op deze reactie.
@Albert S. [13]:
On Interest
Most advanced political and economic debate is dominated by the Americans.
Through films like Zeitgeist Addendum, the Money Masters and Money as Debt and the work of Mike Montagne http://www.perfecteconomy.org They have been
enormously important contributions to the awakening of the many towards the most pressing problem of our time, our monetary ’system’.
The one notable exception is interest. Of course all the aforementioned sources
have dealt with interest, but to my mind there has been no really comprehensive and satisfactory analysis of interest in the Anglo Saxon world. In fact, most
analysts concentrate on the fact that money is debt. There seems to be some kind of consensus that debt is the heart of the issue. But it is not. Without interest, debt would not be a problem , as I worked out here.
Interest is one of the few things that is more profoundly understood in Europe,
more specifically, Germany. Throughout the 20th century interest has been analyzed by some unknown, but brilliant thinkers. Silvio Gesell comes to mind,
Gottfried Feder and later Helmut Creutz and their current standard bearer Margrit Kennedy. Feder wrote a book ‘breaking the shackles of interest’ and
later advised Hitler, who was to say time and again, that ‘the kernel of National
Socialism is breaking the thralldom of interest’. Maybe that did some damage by association to the theme.
It is curious to realize, when studying Hitler, how close he came to the truth in his analysis (which was, no doubt, inspired by exactly the enemies he was
purported to attack). It is mind boggling to realize how much the bankers were willing to give away and how they entrenched their supremacy by totally
destroying him and his credibility. Be that as it may, it is time to make fully clear what the scale of the interest problem is. We need to get rid of any
misunderstanding, let alone underestimation of this most heinous tool in the hands of our Satanist masters.
Dealing with Interest
We’ll go through this point for point. Some points will in some way overlap others, but they are still worth mentioning because they widen our perspective.
I’ll be quoting Margrit Kennedy a lot and I would strongly suggest going through her classic ‘Why we need monetary innovation’ based on Mike
Montagne his original work.
1. To begin with, I’ll put forward my standard example: a mortgage. Let’s say you want to buy a house and go the bank and get a loan. Say 200k. The simple truth is, after thirty years you will have payed back 600k. 200k for the principal and 400k (!!) in interest. Now this might be ok, or at least somewhat understandable, if you were borrowing this money from somebody else, who has been saving it. But as we know, this is not the case. The money is produced the moment the loan is granted by the bank. In a computer program.
By pressing a few buttons.
So basically you pay 400k interest for pressing a button. Granted, the bank needs to manage the loan during the time it is being repaid. But the cost for this is still only a fraction of the income they get through the interest.
Now, we could stop here, because it is clear that the bank is ripping us off, also in legal terms, although they make the laws themselves, because there
is no realistic service being delivered for the money.
But there is so much more, we must continue.
2. When the bank creates some money by giving you a loan, it takes the money out of circulation when you repay. Repaying debts means a diminishing money supply. The banks only provide the principal, in our
previous example 200k. But after thirty years, 600k has been repayed and only 200k was created. So how can this be? How can 600k be repayed by 200k?
It can’t. Somebody else needs to get into debt to create sufficient liquidity to pay the 400k interest. And the borrower of the original loan must start competing for this liquidity with everybody else to obtain that, intrinsically scarce, cash.
This means that because of the combination of debt and interest, the money supply must grow forever. But we know that a growing money supply is the
definition of inflation and that inflation is closely linked to rising prices. So inflation is inherent in the system. This sounds strange, because Central Banks raise interest rates to lower inflation, reasoning less credit
will be issued because of rising prices for it. But the higher the interest rates go, the more money must be created to pay for this interest.
Just one of the perverse side effects of interest in the current wealth transfer system we call ‘finance’.
3. Due to interest, money circulates slower. This is a big problem, because the slower the money circulates, the more we need of it in circulation to meet
our needs. And when you have interest bearing money as debt, that is quite a problem indeed.
The reason for slower circulation is that it enhances the store of value function of money, with all it’s detrimental implications.
This phenomenon can be best seen when thinking about paying bills. If you know you can increase your money by postponing paying your bills, you will
help the money circulate slower. People will be encouraged to hoard the money instead of spending it.
It is also more likely because of this reason rather than the growing cost of money which lessens inflation (or better, price rises) in the short term when raising interest rates. Because less money is circulating slower, demand falls.
4. Now, because of the fact that the principal is created but not the money to pay the interest, money is intrinsically scarce. Because of scarce money,
capital is the scarce factor of production, whereas reason has it that labor should be the scarcer than capital. How else can we say we live in abundance?
I think it was Lietaer who pointed out the natural consequence of this state of affairs: competition. Economic actors in the current system compete with
each other primarily for scarce working capital.
Scarce money is a major driving force in the ever more competitive marketplace. Of course, the winners of this system have their lackeys (‘economists’) explain that competition leads to efficiency. But common
sense dictates that humans are more effective when they can cooperate.
Surely there is a place for competition in the market, but it has gotten totally out of hand and it is getting worse. Scarce money because of interest is one of the more profound reasons for this trend.
5. So what of it you think. I was raised to be conservative in these matters
and one should simply not get into debt, so you won’t pay interest. Wrong. Not only because if nobody went into debt, there would be no money,
but because companies go into debt to finance their production. They pay interest (capital costs) over these loans. And like any cost this must be
calculated into the prices they ask for their goods and services. And what percentage of prices can be related to interest? It depends on the kind of business, particularly how capital intensive it is. Going from 12% for
garbage collection to 77% for renting a house. All in all about 40% of prices can be traced back to costs for capital. These figures are by Kennedy and
they have been corroborated by an independent study done by Erasmus University, Rotterdam, the Netherlands under thesupervision of STRO,
a leading monetary think tank in the Netherlands.
So, you lose 40% (!!!!) of your disposable income to interest through prices.
6. Interest is being payed by people borrowing money and received by people
having loads of it. So it is per definition a wealth transfer from poor to rich.
It transpires, that about 80% of the poorest people pay more interest than
they receive to the richest 10%. The next richest 10% pay as much as they
receive. This means the vast majority is losing a substantial part of their
money to interest. The richest own the banks or have a lot of money there.
We must keep in mind that this is totally for nothing, since most of the
money is printed at the time it is loaned out. How much money are we
talking about? I have only figures for Germany, but reason suggests it is
basically the same everywhere. In Germany the poorest 80% pay 1 billion
Euros in interest to the richest 10% PER DAY. Yes, that’s right, one billion
euros per day. That is a grand total of 365 billion euro’s per year. That is one
seventh of
German GDP and extrapolating this to America, the poorest 80% must be
paying at least a trillion a year.
It conclusively explains the old adage that the rich get richer and the poor
get poorer.
This is the hidden tax that nobody is talking about.
This is the yoke that we carry.
This is the worst kind of slavery, because it is slavery without even realizing it.
This is interest and let it never be forgotten.
This is our mortal enemy and let us never take our eyes of it again, until it is
thrown into the fire of hell, together with the usurers enslaving us with it.
http://endtheecb.ning.com
Albert S. [21] reageerde op deze reactie.
@jack [20]: Thank you Jack for your input. I have some misgivings about your assumptions, because we should always realise governments and central banks do seriously disturb the natural flow of free markets. Several points you actually indicate this even.
I will answer your points one by one:
1. A mortgage is a loan on a house. This mortgage is not money, but credit for a longer term, so in order to pay off this mortgage you need to produce. This production will pay off the mortgage and interest on it. In a free market specie backed monetary system this will be the self liquidating variety. So we have a natural rate of interest of say 4-5% per annum. Add this together with the 5% pay off per year, then your outlay will be app. 9-10% per annum on the property. You have to compare this to renting a house. E.g. you pay 10% per annum on rent on the value of the property. Thus in a free market situation it would be advantageous te buy the property. What happens is the government distorts the rate of interest, by artificially lowering or increasing it, giving subsidies, preferential or soft loans etc. This will have the consequence of interfering with the price of houses artificially.
The same is true with loans regarding productive facilities. If your business plan shows a turnover which can take care of the repayment and free market interest rate as well as variable expenses and income, then you can endeavour to produce. When the government interferes with this process by artificially increasing of lowering barriers, interest rates, subsidies, preferential treatment or artificial legislation then this will have severe repercussions on the working of the free market. Therefore, a natural rate of interest will not distort the market and still make it possible for people to increase their assets, both rich and poor. The secret is self liquidating credit and a specie backed monetary system.
2. The banks can use this ‘push’ of a button, because they have the government given monopoly in creating credit. This credit is not only of the self liquidating variety, but als of the non-self liquidating one. Therefore, a lot more paper or digital money gets created. And as you already mentioned, more and more of this money enters the market (inflation). That is why, when there is a default or pay off in the system, this credit disappears without trace. In a specie backed standard the specie remains to be used again. This is another reason why a gold-silver-bimetallic standard is preferable to the fiat currency we use nowadays. Fractional reserve banking creates and exacerbates this problem. It will not be an issue when there are self liquidating loans, but will spin out of control when loans only get paid off partially or not at all. But even this will get sorted out in a normal free market system, because the bank in question will fail and go out of business. It is by governments propping up failed banks that is the problem.
3. What you describe is the Quantity Theory of Money, but as Prof. Antal Fekete already stated, this is an outmoded concept, basically it’s not only the money created which is at issue, but also the velocity of the money in the system. The natural interest rate will not affect this that much. Why, because the interest enters the monetary system as well. People can choose to save and spend their interest income. That depends very much on each individual needs. When people spend, the money enters the money stream in the economy. When people save, more credit is available for banks to lend out.
4. Hoarding, as you describe it, can only be done by people thinking the value of money will increase, this is not a bad thing when you talk about the specie backed standard. For people are using their power of arbitrage. If they think the banks are miserly with interest savers can choose to withdraw deposits, leaving banks short of capital, hence forcing the latter to raise the interest rate to a market clearing level, thus savers return. Instead of victims, people are the victors with such a system. It is different in a fiat money system, for people do not have the choice and power of specie to use their arbitrage. In the absence of a specie backed system, both government and banks have the power of leverage and can drop the interest rate so much, it will hurt the savers. We can see this happening now.
5. Real money ought to always be scarce, for it is most sought after and keeps prices in check. Once money is bountiful, such as was the case over the last two decades by artificially inflating it, it corrupts the markets and encourages wild speculation in the financial sector. Therefore, scarcity is a major advantage and not a disadvantage in the economy. Furthermore, money is not only a means of payment, but a store of value as well. If you destroy the store of value element, you destroy the ability of savers of providing for themselves in old age. Hence, inflation destroys wealth overall.
6. You said interest creates wealth for those who have the money to lend, and in effect poverty fot those who have to pay interest by borrowing. As mentioned previously, this only applies to non-self liquidating credit. Which is in fact consumer lending. It enriches both parties, when it is used as self-liquidating credit, i.e. productive lending. If you buy a house and pay it off in 20 years, then you are the owner of a property. If you squander this on speedboats and Ferraris, then you end up poor, for you still have to pay rent after 20 years up to old age. This is what has happened in the past with the serf society, when there was one landlord and dozens of tenants not being able to buy or own property. Nowadays, we live in a modern serf society, where this is happening again with fiat money and the enormous credit expansion carried out by banks in collusion with the government and full backing of the central bank. We see this happening in the whole western world, not just Germany or the US. Because of fiat money the transfer of wealth is tremendous.
So I still maintain it is not the natural rate of interest within a free market which causes poverty, but fiat money and non-productive credit which keeps people poor and increases their misery as the years go by. The collapse of the financial market and subsequent economic depression are the visible signs of such a corrupt system.
jack [23] reageerde op deze reactie.
@jack [19]: There are some thinking errors with your reasoning. Your assumption 1:1 gold is a static one. The economy is never static, neither is the supply of specie. The interest and loan repayments are paid out of future production, not out of present money. There’s the rub. Credit is not the same as money. Credit is a claim on money and for this claim the lender receives a payment in the form of a natural rate of interest within a free market.
Once production increases in relation to specie, the value of specie money increases, for you can buy more production for the same amount of specie, it doesn’t matter if gold is a 1000 tonnes or a million tonnes, it all relates to the ratio production-existing stores of gold. Besides, the production of gold increases every year, so even the 1:1 you mentioned is not right. There is inflation even in the gold market, albeit infinite smaller than the fiat variety from governments.
jack [25] reageerde op deze reactie.
@Albert S. [21]:
Thanks
Before i reply, pls answer my first question:
Let´s say you have 1000 units of currency backed by a finite amount of gold.
That´s it. There´s no more gold. Backed 1:1
If you bring these 1000 units of currency into circulation with interest attached, then where is the interest coming from? Free market or not.
Dennis Snel [27] reageerde op deze reactie.
@Albert S. [7]: Kunnen we dan ABNAMRO niet ombouwen tot een Nationale Kredietbank?
Hebben we al gekocht en heeft de business structuur al op de rit. Hoeft alleen maar versimpeld te worden tot kerntaken van een Nationale Kredietbank, lijkt me.
@Albert S. [22]:
your quote
¨The interest and loan repayments are paid out of future production¨
And that is exactly what makes any economy subject to interest terminal. As interest multiplies debt in proportion to a circulation, ever more of every existing euro is dedicated to servicing multiplying debt, and ever less of every existing euro can be dedicated to sustaining the commerce which is obligated to service the multiplying debt. Everything around you can be understood from the obvious consequences.
There is only one viable solution:
As this is the very set of principles — and the only set of principles which ensure the immutable value of money across its lifespan — a perpetual 1:1:1 relationship between remaining value, remaining *obligation*, and currency in circulation —.
I think our difference goes back to the question ¨what is money¨
Most people can’t give you a good definition of money — a definition which holds; and a definition which serves them.
Yet if we ask the questions which develop a fully accountable answer, we readily arrive at a fact that the only definition of money which can inflict no offense whatever, is a currency which comprises immutable tokens of value.
In fact likewise, most people do intuit that money IS a relatively immutable token of value — not understanding how the exceptions are engendered, or how the exceptions offend them. In other words, they recognize that immutability is a vital object; they likewise recognize that immutability of a promissory note is even vital to its facts of contractual obligation; but they do not recognize that one and one only monetary prescription makes good on this indispensable object of immutable tokenization of value.
Both to tokenize value and to immutably tokenize value nonetheless are only TO REPRESENT not only however many different products, but necessarily, to likewise represent the volumes of such products, or we fail to keep the ostensible 1:1 relationship between circulatory volume and remaining value of all products, which is necessary to immutable value.
The only way to immutably tokenize value therefore is if the units of value of the circulation are immutably linked to the remaining value of ALL represented property (not just to one or several of MANY products); and thus likewise, the remaining volume of units of circulation must at all times equal the volume of remaining value of the ALL the products which the circulation is intended to represent, or we fail to keep these principles. In fact then, the only way to maintain these equal volumes is to pay the value of the represented property out of circulation as the value of the property is perceived to be consumed, or to depreciate. The only way you can do this of course, is if we pay monetary obligations comprised only of principal, at the rate of depreciation or consumption of all represented properties.
Volume of circulation must likewise equal remaining volume of all represented property. Franklin observed in his “Modest Inquiry into the Nature and Necessity of a Paper Currency,” that the colonists prospered substantially more when they supplemented their circulation of precious metal with paper currency (certain implementations of which were debatably subject to interest). He postulated that some prospective extent of such supplementation might be excessive; and that it might have negative consequences. But nonetheless he noted (evidently then because they never reached such a limit) that the additional circulation of paper currency sustained substantially greater prosperity.
Why?
They must therefore have suffered previously from an effectively deflated circulation. But simple questions thus resolve Franklin’s curiosity:
If the circulation is to represent (tokenize) value, then if the circulation were ever to exceed the volume of the remaining value of all property, then someone would have received circulation for nothing. Such an excessive, “inflated” circulation however would be impossible, if in fact all promissory notes (of principal only) are legitimately collateralized.
Likewise however, if the effective volume of circulation is ever less than the volume of represented property, then it is impossible to trade all property all at once; and someone will not have received and persisted in just reward for their production.
So, an “effective,” just circulation must at all times equal the remaining value of ALL production (“productS”).
A further malady exists in the present disposition of currencies subject to interest. That is, ever more of a circulation is perpetually dedicated to sustaining ever greater sums of artificial debt, leaving ever less of the same circulation to represent/tokenize the value of property. Thus interest makes abiding by our necessary principles of immutable tokenization impossible.
1. The only circulation which sustains all these necessary objects therefore is a volume of circulation which is at all times equal to the remaining value of all property.
2. The only way to maintain such a circulation is to pay principal out of circulation at the rate of consumption or depreciation of related property.
3. Thus as a circulation comprised of promissory notes only represents FINANCED property (subject to promissory obligations), the only way to sustain a circulation which necessarily represents the remaining value of all property is to further accommodate immediate conversion of equity into currency.
These in fact then are the principles of mathematically perfected economy™; and this is a vital path of the logic of overall solution.
But our question asks if money is a product? Essentially, this is to ask if it MUST be a product in order to serve these vital purposes of a just currency, which of course must eradicate all potential for systemic offense.
We can see however, even on an abstract level, that the concept of tokenization can only go awry if the need for tokenization must account for all products, and the concept of tokenization requires A product or a few productS to do so. Yet even according to the concept of tokenization itself, the token is distinct from the product itself — unless to be an immutable token of value, “money” must actually exist in the physical form or instances of some such “product.” In other words, if just/”honest” money IS a product; how then and why would argue this restrictive concept of A product or productS? How can either case serve the objects of volume equaling the volume of ALL products, if money “must” be A product or productS; and if the volume of THE product or productS must yet equate to the volume of ALL products?
In fact, given the aforesaid observations, we readily recognize that nothing but ALL products CAN so represent all products; and the only reason folks like the Austrian “economists” are trying to insist on A product (or productS) for their obfuscated claim to tokenization, is they refuse to acknowledge the very principles they pretend their ONE or few productS somehow uphold — and yet are proven not to uphold.
As Franklin likewise observes, never did their precious metal monetary standards result in actual consistent values of money; and the reasons are evident in these principles: There is no perpetual 1:1:1 relationship between remaining circulation: remaining value of represented property: and obligation, because the Austrians refuse to recognize that the only mathematic course to this perpetual relationship is to pay off promissory notes comprising obligations of principal only, at the rate of consumption or depreciation of the related property — with the payments thus retiring the circulation as the value of the property itself is consumed. In fact, only promissory notes of principal, paid at this obligatory schedule of payment CAN accomplish these purposes; and do so even without regulation.
Thus we readily understand the problems of gold, which itself in fact perpetually violates our necessarily perpetual 1:1:1 relationship; and which further violates these principles when it coexists with interest, which perpetually disposes ever more of the circulation to servicing a perpetually multiplying sum of artificial debt — leaving ever less of the same circulation to sustain commerce.
Thus the answer to the original question is that money CANNOT BE A product, if it is to be an immutable token of value, because A product, in which the resultant circulation would ostensibly be redeemable, ITSELF cannot represent All products! Thus it cannot provide a perpetual 1:1 relationship between volume of circulation and redeemability which purportedly eliminates subversion of value. Effectively, the Austrians (and others) claim virtues of gold which do not exist, while the principles they exalt instead would endorse only mathematically perfected economy™, because the only currency which CAN accomplish this purpose of making the circulation effectively not A product, but in fact at all times ACTUALLY REDEEMABLE in ALL products, is mathematically perfected economy™ — which alone therefore, immutably tokenizes all products represented by the circulation, and in such a way that the circulation is always redeemable in the very scope and volume of products it was from the beginning, intended to represent.
Griekenland is een speelbal om de rest van het “gepeupel” angstig te maken en terug te krijgen in het hok. Fearporn. Laat je niet beet nemen. Het zal je als Griek overkomen, verkeerde plek, verkeerde tijd.
En wat betreft die pleuro, weg ermee. Het feit dat er met dingflofbips ezelsbruggetjes en “het is makkelijk als je op vakantie gaat” geprobeerd is om draagvlak te creeren, spreekt ook boekdelen. Deze munt diende slechts de NWO.
http://www.nieuw-nederland.nu
@jack [23]:
Production.
Say you’ll have to repay 1100 units: 1000 units debt + 100 units interest. The 100 units just aren’t there, so as long as you don’t produce anything, you’ll definitely have a problem.
BUT… Let’s say you produced a chair and you sold this chair to the bank. The bank can’t pay for the chair instantly, because every single unit has already been brought into circulation. But once you repay the original 1000 units, the bank will be able to pay you your 100 units for the chair, and as a result of that, you will be able to pay the 100 units interest. In the end, the bank has both the 1000 units and the chair without producing anything, while you produced and have nothing left, so the bank definitely got the better deal, but that’s also because this is an oversimplified example.
In general, interest is no problem as long as the paying party produces.
jack [29] reageerde op deze reactie.
Armin [35] reageerde op deze reactie.
Wat de Grieken nodig hebben is een nieuwe Papadopoulos!
@Dennis Snel [27]:
We´ll then i guess there is no problem because we the people (the paying party) produce the interest on money brought into circulation by the central banks. It is the most powerful centralizing centripetal force ever invented, and it steadily increases velocity to the point where life becomes nothing but a sprint in a hamster wheel to keep the debt system running.
And the so called free market advocated by the Austrians offers no solution whatsoever.
Why Austrians advocate higher interest without even indulging in the math which would be indispensable to proving we benefit from some ostensibly legitimate rate of interest, imposed ostensibly because the only legitimate process is to borrow our own promissory notes into circulation from “banks”? Well, the Austrian “economist’s” God, Hayek tells us: “I am more convinced than ever that if we ever again are going to have a decent money, it will not come from government: it will be issued by private enterprise, because providing the public with good money which it can trust and use can not only be an extremely profitable business; it imposes on the issuer a discipline to which the government has never been and cannot be subject. It is a business which competing enterprise can maintain only if it gives the public as good a money as anybody else.”
In other words, “competing banks” are merely a continuation in the same fatal processes, to our purported benefit under even higher costs and rates of escalation of artificial indebtednes.
Dennis Snel [30] reageerde op deze reactie.
@jack [29]: I agree with you on your first paragraph (except for the ’there is no problem’ part; I never stated that there is no problem, I just explained why the interest system theoretically allows for repaying every penny of debt, and you’re absolutely right about the hamster wheel situation)
I disagree on your second paragraph: the free market does offer a solution. If I don’t trust anyone of the existing currency systems A, B and C, I would be able to just start my own currency system D. In a free market, this would be no problem whatsoever. The currency system that suffers the least from inflation and still offers me the best interest ratings, would gain market share, so every co-existing currency system would be forced to control their inflation and interest rates. And that is exactly what Hayek meant by “it imposes on the issuer a discipline to which the government has never been and cannot be subject”.
The “competing banks” would then really be competing, and would need to control their currencies. In the world we’re living in today, “competing banks” never really compete, because they are not allowed to create (and control) new currency systems, they are not allowed to refuse poorly managed currency systems, new banks won’t be allowed to enter the market, poorly run banks won’t be declared bankrupt but instead are bailed out and keep bugging the system, and taxes, inflation and compulsory saving systems (like pension funds) force banks to take irresponsible stock market risks. As long as banks won’t be allowed to actually compete, you can’t accuse the Austrians of misunderstanding the banking system or having too high expectations of the free market.
jack [31] reageerde op deze reactie.
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