Jose araujo JUL 27, 2017

Roger, what would be the difference between spending Debt base money and equity base money?



Still can't figure the difference... and I still have not found any theory that factors debt on economic development.



Hi Jose,

The main point of Werners is that In Germany lots of small banks evenly distributed across Germany mean that locally Small and Medium Enterprises have access to the Capital they need in a symmetric system which is very Robus. Highly centralised Banking models lead to asymmetric risk profiles and lack of skin in the game leads eventually to moral hazard becoming a trivial consideration ( To Big to fail , To big to Jail.``

Werner does not go into the differences between Debt based and credit based money but it does make a difference. The point which Werner does raise and that is relevant here iuis that Banking is extractive of value and not additive, this presents the Statistatic ians caluclating GDP a value added measure witrh a problem because the FInancial Services Sector as a profit centre does nothing to add to real wealth.

On the question of Usury, or the usury Mistake, my views on this are aligned with Bernard Leitaer and his parable of the 11th round, creating money through making loans without creating the interest element to pay for the loans adds competition for money into the System which serves only to commodity money when its real benefit to a market system is to function as an accounting device.

I think Carol Quigley statement Money and Goods are different from Tragedy and Hope makes this point pretty well.

Money and Goods Are Different

”Thus, clearly, money and goods are not the same thing but are, on the contrary,

exactly opposite things. Most confusion in economic thinking arises from a failure to

recognise this fact. Goods are wealth which you have, while money is a claim on wealth which you do not have. Thus goods are an asset; money is a debt. If goods are wealth; money is not wealth, or negative wealth, or even anti-wealth. They always behave in opposite ways, just as they usually move in opposite directions. If the value of one goes up, the value of the other goes down, and in the same proportion.”

The Relationship Between Goods and Money Is Clear to Bankers

In the course of time the central fact of the developing economic system, the

relationship between goods and money, became clear, at least to bankers. Thisrelationship, the price system, depended upon five things: the supply and the demand for goods, the supply and the demand for money, and the speed of exchange between money and goods. An increase in three of these (demand for goods, supply of money, speed of circulation) would move the prices of goods up and the value of

money down. This inflation was objectionable to bankers, although desirable to producers and merchants.On the other hand, a decrease in the same three items would be deflationary and would please bankers, worry producers and merchants, and delight consumers (who obtained more goods for less money). The other factors worked in the opposite direction, so that an increase in them (supply of goods, demand for money, and slowness of circulation or exchange) would be deflationary.”

http://letthemconfectsweeterlies.blogspot.se/2016/02/usury-hells-fuel-and-mans-oppressor.html



With respect to the difference when money supply continues to expand because Banks continue to make sufficient loans to maintain velocity of money sufficient in the system to allow sufficient time for all debtors to meet their interest payments there is not a problem, When the level of loans reduces to the Point where velocity of money slows as hoarding of money becomes "Prudent" the problems of the difference between Debt based money at interest and Credit based money shows up radically, these events are Known as Recessions, but are baked into the debt based money cake.

Here is a link to Lietaers Parable of the 11th round.



http://www.lietaer.com/2010/09/the-story-of-the-11th-round/

http://www.lietaer.com/2010/09/effects-of-interest-based-currencies/

Three Main Effects.

Encouragement of Competition

Need for endless growth

The concentration of Wealth.

For a most detailed empirical view of the problems of Usury based monetary creation systems Helmuth Kreutz is I believe the Leading researcher in the field,

Kreutz money syndrome and other important monetary texts are included and embedded at this link.

http://theconquestofdough.weebly.com/some-important-texts.html