[Subjectivist]

If money is based on trust don't we have to have trust in the system for money to have value?

[Hawkcreek]

$this->bbcode_second_pass_quote('davep', '')$this->bbcode_second_pass_quote('Hawkcreek', 'L')ooks to me like redistribution of wealth has been going on a long time - wealth going from the powerless to the ones that make the rules. That is how we end up with a system described by Paulo1 above.
Our whole society is based on giving half, or more of our work or wealth, to the kings above us.
It would not be hard to come up with an equitable system, but that means that the present giveaways to the rich would be stopped. That will never happen without force being applied.
One good start would be to make sure that everyone - including all corporate persons, pays the same percentage in taxes AND fees. If a rich person had to pay the same percentage of their income that a poor person did just to gain entry to one of the king's forests (state or national parks anyone), the fees would be reconsidered, in my opinion. Same for septic system, building permits, state supported education, etc..
Right now anyone with a brain can see that our tax and fee system is NOT equitable.

[onlooker]

Hawk, that is why the system Dave refers too is so good, because it distributes money as needed. Not the way currently whereby money is funneled to predatory banks and the elite and wealthy. The racket of banks has just gone too far, the whole world-wide economy is indebted so much that it is weighing down the entire world economy. Of course those who feel it the most are the little people around the world who can barely make a living and the only solution put forth by banks is austerity.

[davep]

$this->bbcode_second_pass_quote('', 'D')avep, I just don't see how money creation can be debt free? The money would have no intrinsic value without it being creation of the market place. Isn't it the value of the debt, the demand for that debt, that allows for different currencies and intentional trade? Doesn't money changes in value relative to other moneys based on the value of the debt?

If money is not fiat then it must be tied to something real, something ultimately inviolate. But does that exist?

[davep]

Here's the Wikipedia definition of fiat money:
$this->bbcode_second_pass_quote('', 'F')iat money has been defined variously as:

Any money declared by a government to be legal tender.[5]
State-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard.[6]
Intrinsically valueless money used as money because of government decree.[2]

[onlooker]

If I may Dave, think of credit cards how with the interest you get deeper into a debt hole till you cannot climb out, that is what the above quote is actually referring to. At that time not many were actually literate and those that were may not have understood the implications of fiat money, fractional reserve banking and compound interest as these three tools together were a novel idea at the time. Basically maybe one of the most insidiously lucrative schemes ever devised.

[davep]

$this->bbcode_second_pass_quote('onlooker', 'I')f I may Dave, think of credit cards how with the interest you get deeper into a debt hole till you cannot climb out, that is what the above quote is actually referring to. At that time not many were actually literate and those that were may not have understood the implications of fiat money, fractional reserve banking and compound interest as these three tools together were a novel idea at the time. Basically maybe one of the most insidiously lucrative schemes ever devised.

[onlooker]

By the way Dave from reading your link to the Icelandic draft, I see no reason why this model could not be adopted world-wide. Except of course the fact that private banks would find their cash cow drying up. haha.

[davep]

$this->bbcode_second_pass_quote('onlooker', 'B')y the way Dave from reading your link to the Icelandic draft, I see no reason why this model could not be adopted world-wide. Except of course the fact that private banks would find their cash cow drying up. haha.

[onlooker]

True, politics and thus the government can always be corrupted as we all know too well. So independent oversight by a group representing citizens I think could be a key.

[Outcast_Searcher]

$this->bbcode_second_pass_quote('onlooker', 'H')awk, that is why the system Dave refers too is so good, because it distributes money as needed. Not the way currently whereby money is funneled to predatory banks and the elite and wealthy.

[radon1]

Iceland is a country of 300 000 people. In addition, they use a disproportionate share of the world's resources. They probably know each other by name. They can devise whatever funny system they entertain and get away with it, given these circumstances. Extrapolating such a system to the world's industrial economy would be a joke, though.

[onlooker]

Radan I would be interested and perhaps Dave as well as to why you believe this Icelandic model could not be adopted world-wide? I do not see any obvious or salient flaws except perhaps that the government(s) may end up printing to little money for proper investment. But that could be remedied just by printing more on a ad hoc basis. I certainly think this model is a great improvement on what we have now whereby unruly investment dominates and taxpayers have to bail out the businesses to "big to fail" and whereby Banks especially the Federal Reserves have way too much power and are making way too much money by leveraging the entire planet with onerous debt.

[radon1]

$this->bbcode_second_pass_quote('onlooker', 'R')adan I would be interested and perhaps Dave as well as to why you believe this Icelandic model could not be adopted world-wide?

[davep]

$this->bbcode_second_pass_quote('', 'S')o "as needed" according to whoever is in power. Or according to you and Dave because you are so much smarter or more virtuous than everyone else?

[davep]

One more thing... The Chicago Plan, which the IMF document is based on, has always been considered a "right-wing" solution.

But the question now for me is how do we mitigate the risk whereby the current money creation process needs constant growth to stand still (to pay off the interest element of debt we need to constantly create more money, as debt). We live in a resource-constrained world so the current model needs to be changed, no matter what your political persuasion. The pressure on real estate prices due to the current monetary system in a time where we cannot keep growing in a finite world is not tenable. That's why I take an interest in this subject. Debt is becoming unrealistically high for both nations and individuals, while the bankers are back to giving themselves a pat on the back and big bonuses despite the fact there is very little to be pleased about in the real economy. Again, their interests are not those of the common good, and the debt-based system of money creation's time should come to an end IMO.

[davep]

$this->bbcode_second_pass_quote('onlooker', 'R')adan I would be interested and perhaps Dave as well as to why you believe this Icelandic model could not be adopted world-wide? I do not see any obvious or salient flaws except perhaps that the government(s) may end up printing to little money for proper investment. But that could be remedied just by printing more on a ad hoc basis. I certainly think this model is a great improvement on what we have now whereby unruly investment dominates and taxpayers have to bail out the businesses to "big to fail" and whereby Banks especially the Federal Reserves have way too much power and are making way too much money by leveraging the entire planet with onerous debt.

[davep]

$this->bbcode_second_pass_quote('radon1', '')$this->bbcode_second_pass_quote('onlooker', 'R')adan I would be interested and perhaps Dave as well as to why you believe this Icelandic model could not be adopted world-wide?

[onlooker]

Dave, so true that beyond the inequity in the system is the fact that this system is incompatible with a non-growing economy and much less a contracting economy. The whole debt with interest based system presupposes a growing economy lest it crumble upon itself with defaults and lending risk aversion. An equity based system would by definition be based upon tangible already existing equity so in that sense it would not overextend itself and would be responsive to resource constraints as liquidity and hard assets would define how much lending and money creation would take place and within the context of the actual current economy rather than the abstract of a future growing economy

[Pops]

Dave, seems to me your scheme basically is to socialize banking, give the gov total control... since the government has done such a bad job of regulating it. Kind of the Peter principle applied to government, LoL.

Instead of the Fed Board (appointed by the POTUS and approved by congress to 14 year term (in the US)) influencing how tight or loose the supply is via interest rates, some bureaucrat working directly for the POTUS decides who gets what, when. The bureaucrat of course is basically out to cover his own ass while making his boss look good. His liability only extends as far as his own salary, and if he's not an appointee directly riding the tails of the POTUS he's probably in a union so even his job isn't at stake. The point isn't that a loan gets paid back, or even is a good idea, the point is to increase the money supply. And if the point is to decrease the supply, no loans get made no matter how good.

The government creates new money via spending directly into the economy or passing out money to banks to loan out at interest. Instead of the Fed tightening or loosening interest rates, money.gov just helicopters in more cash whenever it decides more money floating around is a good idea; whenever people need a little boost of happy, when the polls show the current administration faring poorly in upcoming elections, that sort of thing.

All the political reasons an independent central bank was created in the first place.


The net effect then is to simply move control from bankers who are out to make money but are constrained by markets, laws, regulators, the Fed...

— to politicians and bureaucrats interested in whatever it is that motivates politicians and bureaucrats.

--
Personally I think the current framework is better because the motivations are more clear: bankers are out to make money and laws and regulators are theoretically out to prevent them from taking advantage. Unfortunately regulators and politicians were lately taken to believe (or paid to believe) that the market can and should regulate itself; which of course is wrong.

The fix is to hire lawmakers willing to make laws to protect the public rather than the deep pockets and regulators willing to enforce the laws rather than just pad their resumes in preparation to pass through the revolving door to wall street.

To get there we need to hire politicians who work for the public rather than the deep pockets. Until then I'm pretty sure giving the government more power is not a good idea.