OWNERSHIP: Re: Money, price, taxes, supply and demand, etc.

["William B. Ryan" <w_b_ryan@yahoo.com>]

[Ashford] Although banks may and do engage in
fractional reserve lending, sound bank lending
practice for capital acquisition always requires two
prospective sources of repayment: 1. The projected
cash flow of the capital acquired...
---------------------------
----------------------------

Almost always?  The statement is patently ridiculous. 
Never would be closer to the truth.  Lenders generally
look at the overall capability and willingness of the
borrower to repay, not whether or not the asset that
is purchased with the loan is prudently acquired.

It is however necessary for Ashford and his fellow
"binarian" cranks to begin with this absurd premise to
justify their "independent productiveness" argument,
that specific "cash flow streams" can be objectively
assigned to specific assets (or factors of production)
in order for them to be parceled out to their
respective "owners."

It is the perverse jargon of "leveraged buyout"
ideology, not economics (despite their attempt to
appropriate the term), "taught" in seminars and
magazine rack books.  They are the guys that look for
the firm that will "pay for itself," with assets that
can be stripped and sold to pay for the "loan" that
financed its acquisition.  The American industrial
base is thereby looted and gutted by this technique,
which finances destruction, not accumulation.

>From Ashford's referenced paper:

"According to the binary view of production, although
labor and capital may cooperate (just as people may
cooperate) to do work, each factor (the human and the
non-human) provides its own 'independent
productiveness.'"
-







--- "W. Curtiss Priest" <bmslib@mit.edu> wrote:

To: cyber-soc@topica.com, "List, Debt"
<Debt@topica.com>, "List, IJCCR"
<ijccr@yahoogroups.com>, "List, LWSIDE1"
<lwside1@yahoogroups.com>, "List, Discussion Forum for
Global Justice Movement"
<Discussion@globaljusticemovement.net>
CC: "Ben Bernanke" <bernanke@princeton.edu>, "robert
searle" <dharao4@yahoo.co.uk>, "John Jay Gelles"
<john.gelles@gmail.com>, "Robert Ashford"
<rhashford@aol.com>
From: "W. Curtiss Priest" <bmslib@mit.edu>
Date: Wed, 06 Jul 2005 12:05:31 -0400
Subject: [lwside1] Re: Money, price, taxes, supply and
demand, etc.

Dear All,

Professor Ashford has kindly provided a reply.  For
his most recent paper on Binary Economics:

      http://www.epie.org/cyber-soc/DEBBIN65.PDF

This is part of a growing collection:

      http://www.epie.org/cyber-soc/default.htm

Subject: Re: Money, price, taxes, supply and demand,
etc.
Date: Fri, 1 Jul 2005 10:21:25 EDT
From: Rhashford@aol.com
To: bmslib@mit.edu (W. Curtiss Priest)

Dear Curtiss,

I sometimes get confused about who is writing to and
responding to whom. But set forth below in quotes is a
passage that deserves a comment.

"John Gelles wrote (on Cyber-Soc): Dear Curtiss and
Jack, ... Curtiss questioned my factual assertion
that: "nearly all the money we create is basically a
measure of debt---not a measure of wealth for sale." >
> Curtiss did this because he thinks banks lend
depositors money. Of course they do not. Mostly they
create new money as they must under fractional reserve
banking. Therefore, the money we use for exchanges is
mostly banknotes that represent > what the bank has
lent to borrowers, not the potential output of
producers that will be exchanged for money over time."

Here is my comment:

In this analysis, I object to "not a measure of wealth
for sale" and "not the potential output of producers
that will be exchanged for money over time."

Although banks may and do engage in fractional reserve
lending, sound bank lending practice for capital
acquisition always requires two prospective sources of
repayment:

1. The projected cash flow of the capital acquired and

2. Valuable security or loan insurance in the event
that the projected cash flow proves inadequate.

When capital credit insurance is substituted for
collateral (as it should be to enable people without
capital to acquire capital with the earnings of
capital), the projected cash flow available for loan
repayment must also be sufficient to pay the insurance
premium to cover the anticipated rate of failure of
capital investment to pay for itself.

Thus "the potential output of producers that will be
exchanged for money over time" is (1) directly
reflected in the projected cash flow of the capital
acquired and (2) indirectly reflected in the (a) value
of security, (b) the market cost of capital credit
insurance and (c) the value of the currency of the
nation. The promise of the broader distribution of
capital assets (paid for with the earnings of capital)
positively affects all of the above.

The strength of the binary approach is that it links
incremental money supply with (1) increased projected
productive capacity and (2) the broader distribution
of production-based income distribution. The weakness
in the Douglas approach is that it does not.

I am attaching an updated overview of binary economics
which you may wish to circulate among your
correspondents.

Your suggestions for clarifying this overview are most
welcome.

With best wishes and highest regards,

Robert

***************

Robert Ashford Professor of Law Syracuse University
College of Law
Syracuse, New York 13244 Tel (315) 677-4680
rhashford@aol.com

-- 

         W. Curtiss Priest, Director, CITS
   Research Affiliate, Comparative Media Studies, MIT
      Center for Information, Technology & Society
         466 Pleasant St., Melrose, MA  02176
   781-662-4044  BMSLIB@MIT.EDU http://Cybertrails.org
-


                
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