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Dear Monetary Reform members,
Bill Ryan's
true position on the most key matter of all is now very clear -- he denies
that loans are created from nothing and, consequently, places himself as a
staunch defender of the conventional banking system, its obfuscations and
stitch-ups.
I wrote in a previous email the
following words:--
" The creation happens because the
individual banks receiving deposits can on-lend and that lending can end up as
deposits elsewhere which can in turn be on-lent."
Actually, I confess, they are not my words but the words of the present Governor
of the Bank of England, Sir Edward George ( in a letter to Peter Challen and
I). In his letter, the Governor goes on to talk about minimum of
capital against deposits (but then does not discuss the ineffectiveness of this
as a restraint) and, of course, he says that interest rates influence the
matter. Which is true AND which confirms the main issue -- the fact that
the banking system does create money.
Bill's unwillingness
to accept that fact may stem from his refusal to accept that a loan
taken out from one bank will often end up as a deposit in another bank which
money can then be lent again .. and again... to many times, thirty or more, the
original sum.
Bill's view of the matter
is simply out-of date
If Bill Ryan wants to continue
this discussion, I suggest that he continues it with Sir Eddie.
Rodney Shakespeare.
----- Original Message -----
Sent: Monday, November 04, 2002 5:30
AM
Subject: Re: MONETARY: Re-turn of the
crank
[Parker]...loans that are
paid back are cancelled out of existence, with the banks being after the real
assets, or real estate, they can seize when the shortage of purchasing power
causes collateral to fall into their hands...Also, you have to remember that
even if the collateral a bank seizes has fallen in value to less than what
that loan was, the loan itself was created from nothing. The cost to the bank
was merely its administration charges, and holding on to a small capital
reserve.
----------
The
above states that 1) the purpose of loans is to seize assets; and 2) loans are
created from nothing. Both assertions are factually
incorrect.
1) This cannot be true because as a matter of law
banks do not get to keep the property. The property is auctioned off to
the highest bidder. Of the money collected at auction banks get to keep
only the amount equal to the unpaid balance of the loan.
2) Banks do not create loans from nothing.
The lending process is the exchange of debt instruments for debt
instruments. Borrowers exchange their promises to pay for bank deposits,
which are liabilities of the banks. What is happening is that the banks
monetize the credit of the borrowers, making it more generally acceptable to
the community as a whole, thereby facilitating trade and commerce. As
production, distribution and consumption grow, the money supply grows along
with it.
[Shakespeare] The
creation happens because the individual banks receiving deposits can on-lend
and that lending can end up as deposits elsewhere which can in turn be
on-lent. It would be nice if there were to be no further obfuscation of
this matter.
----------
Isn't this saying that loans are
made from deposits? This too is factually incorrect and contradicts
earlier statements. The individual banker doesn't make loans from his
depositors' accounts, but from his own deposits at the clearing bank or from
his own vault. His depositors' accounts are liabilities to him.
His own account with the clearing bank is an asset. In principle he can
make loans up to the net of his assets over his liabilities. This is
possible because the banker has credit lines with other financial
institutions. If the ratio of his assets is decreasing to his
liabilities, he is losing money. Banking is a profit and loss
operation. Defaulting loans mean falling assets and losses.
>From: "Dan Parker"
>Reply-To: monetaryreform@cog.kent.edu
>To:
>Subject: Re: MONETARY: Re-turn of the crank
>Date: Sun, 3 Nov 2002 15:06:32 -0700
>
>www.socialcredit.com
> ----- Original Message -----
> From: Rodney Shakespeare
> To: monetaryreform@cog.kent.edu
> Sent: Sunday, November 03, 2002 2:05 PM
> Subject: Re: MONETARY: Re-turn of the crank
>
>
> Dear Monetary Reform members,
>
> Bill Ryan in responding to Dan Parker is continuing to confuse
two issues. The first is that the banks create money out of nothing. That is
agreed. And I have previously pointed out the massive public ignorance about
the matter.
>
> The second is whether the bank's ability to make loans is
unlimited -- and I do not remember Dan saying that it was unlimited.
>
> Rodney, I have said that the Bank's ability to create money
was *not*
> unlimited, at least twice now, maybe three times in this
group.
> Once was to correct something that Keith sent that a friend
had
> written that had said it was unlimited, on this very thread
about
> cranks.
>
> I don't see Mr. Ryan's posts in my inbox, and have to look for
them
> elsewhere should I choose to read the odd one. I have stopped
doing
> even this now, as I can see no progression that can come out
of
> communications between Mr. Ryan and myself.
>
> The lesson I took from here is how to design an Internet
communications
> system for monetary reformers so that progress can occur
between
> participants.
>
> I have been on newsgroups where those who favoured the status
> quo reiterated a lot of incorrect information about the
banking system.
> In my opinion, Mr Ryan has outdone them all, not only about
money,
> but about social credit. I agree with you that the small
capital reserve
> requirement banks are required to hold have very little effect
on the
> overall dynamic of the unjust monopoly of credit.
>
> rgds
> Dan Parker
>
> Furthermore, suppose there is miniscule limitation on banks
making loans (as there undoubtedly is) how can that detract from the main
issue -- that the banks create the money out of nothing? It cannot.
>
> And if there is substantial limitation (e.g. an inability to
fund credit-worthy borrowers) that, too, does not detract from the fact that
the banks create the money out of nothing.
>
> The creation happens because the individual banks receiving
deposits can on-lend and that lending can end up as deposits elsewhere which
can in turn be on-lent. It would be nice if there were to be no further
obfuscation of this matter.
>
> Rodney Shakespeare.
>
>
>
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