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Dear Monetary Reform members,
Dan Parker says " Alexander de Mar, in his Science
of Money, avers usury was child's play compared to the
propensity of gold to centralize wealth and power."
EXACTLY! Which is probably
why PM Mahathir has ruled out gold for the national currency and why the Seven
Steps proposal created such interest in Malaysia -- it would DEcentralize wealth
and power while ending much usury and maintaining money's value. (However,
at the international level, an experiment with gold as a standard of value
and convenient way of setttlement for international trade is definitely going
ahead -- in fact, it has already been started with a bilateral agreement between
Malaysia and Saudi Arabia.)
In Malaysia, as
regards national currencies, Peter Challen and I were essentially
witnessing, and being as it were part of, a battle between extremists and
moderates. If the extremists win the day it is very likely
that gold will become national currency in the Islamic societies, (even
though gold for national currency is nonsense and will create larger
rich-poor division etc. and all Dan's other arguments against gold). Those
arguments said, however, it is STILL possible that gold will win the day in
Islam. The underlying reason is that gold represents a reassertion of
Islamic values versus "western" values -- and that is basically why the
murabitun are concentrating, in the first instance, on the Islamic gold
dinar. So Dan (and I and others in this Group) can say what we like about
the disadvantages of gold as national currency but that does not mean it will
not win through in Islamic societies.
I think that Dan may be missing a point about
Social Credit money and Islam. To the Islamicist, Social Credit
money is fiat money because a) it is created out of nothing and b) it has
no intrinsic value. Moreover, it is viewed (rightly or wrongly) as inflationary. Furthermore,
it is a weak argument to say that "Socred money issuance is approximated on the
actual wealth capability of the sytem". The word "approximated" is where
the problem lies. In reality, Socred money has no direct relation with
productive capacity, particularly, no direct relation with the individual
elements of productive capacity e.g. a particular piece of machinery or a
factory.
I will now be blunt about
something which has to be said. Whenever monetary reform is mentioned in
conventional economic and political circles it is always alleged that the
printing of money is proposed ("Just as in Germany in 1923, dear boy") and that
government public spending is being favoured over market spending with
consequences for allocative efficiency. Indeed, James Robertson is
building a big file of all the answers from bank officials, politicians, civil
servants etc. I have not yet seen that file but I bet that the answers are
ALL as I have indicated.
So Dan's defence of Social
Credit is, frankly, sneered at by the conventional mind. That may not be
fair but James Robertson's file will be proof of rejection by the
conventional mind
.
So it is not possible to win a monetary reform
argument with conventional minds UNLESS you start upfront with the clearest
statement of counter-inflationary intent (and the mechanism to do it) AND
you also address the allocative efficiency argument. In Seven Steps to
Justice, Peter and I record the opening of a correspondence between ourselves
and the Governor of the Bank of England. Claiming to have read binary
economics, the Governor then said that binary economics was inflationary
money-printing, breach of allocative efficiency etc. It was all untrue --
nobody who has genuinely read about binary economics could say other than that
it is counter-inflationary and allocatively VERY efficient. It therefore
took some time to focus the Governor's mind on reality and when Peter and I had
him pinned to the wall, what did he do? Why, he refused to reply, of
course -- which is the position at present.
Dan asks whether there should be
a one-size-fits-all solution to the current monetary
problem. The Seven Steps book does not propose that. It has much
content and, inter alia, it proposes that nations/societies should find
their own monetary solutions (whereas at the moment they cannot) and it proposes
local and community currencies on which there is considerable discussion.
In fact, there seem to be three broad headings which could give a wide
appeal:--
a) International .
Bernard Lietaer's terra.
b) National. Fiat
interest-free money directed at productive capacity and wide ownership with
debt-free money to keep stable level of prices.
c) community and local
currencies.
I should add, however, there is
other possibility e.g. locally-issued money for productive intestment on wide
ownership principles. BUT such possibility will remain inchoate until the
whole monetary reform issue is successfully opened up.
Dan also says "There is no reason that a pure Social Credit economy could not
exist in one country or region, and interact well
with a pure system of binary economics in the next." That sounds to me a
nice theory but it is missing the key issue -- how to open up the monetary
reform debate successfully. The Seven Steps do that nicely because they
address conventional concerns and open up the monetary debate as well
as enabling all sorts of monetary reformers more hope of achieving their
goals than would otherwise be the case.
Rodney Shakespeare.
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