Time for a New Theory of Money (article)

[NonEntity]

Time for a New Theory of Money is an interesting article on the history and evolution of money and banking. I don't agree with a lot of the assumptions made by the author but find that the discussion is worthy of reading as it presents some things in a fashion I'd not heard before and tweeked my brain cells some. Sadly the author is a statist. :rolleyes2:

Njoy!

- NonE

[Dionysus]

Here's another good one I came across. He's another pro-State troll, but his research and analysis are "still" sound.

The Secret of Oz

[WorBlux]

To have a unit of accounting, you need something to count. A commodity is something provided without distinction between the individual units. Accounting requires some commodity.

In this case with public credit, either it will be stuck to some commodity or it will not. A barrel of oil with alway be worth X credits or something like that. If it is not, then there is not check against the inflation of credits and sets up a situation where interest on credits is less than the actual time preference of consumers and sets up a business cycle. As a response to high minded ideal being squashed extensive price controls similar to the one seen int he great depression might be implemented. Taken far enough this Egyptian method will lead to an Egyptian culture; one that is largely of slave and centrally planned.

"Money is simply credit" yet every student of even the most basic accounting knows there must be a corresponding debit. What Jane and Sue are doing is not in any way fundamentally different from what the banks did.

The banks gave people FRN's (cokies), in return for promissory notes(favors). The promissory note was taken and directly monetized. The difference is in that the transaction was also collateralized with a mortgage. Collateral on a loan reduces risk for the bank and interest cost for the borrower. Sue and Jane could have reached a similar agreement, unless Ellen is suggesting that keeping track of specific accounts, who owed what to whom is prohibited and that people just have a general account showing that they are owed or are owing. However, this sort of system if fraught with moral hazard, and is even less legally enforceable then these securitized mortgages. If the debt is not held to any specific person, no specific person could sue to recover. (All debts would be to the "State" if to anyone at all) This moral hazard would be very similar to the one that set the 2008 crises off. Banks lended to people that were less than credit worthy in order to gain in their own accounts. The risky mortgages with cut up so that nobody could really know who owed what in respect to each of these products. Likewise if personal accounting were not allowed only in favor of generalized accounting there would be incentive to people to give credit to those not creditworthiness just to increase their own accounts.

Either way specific or general accounts, Ellen hasn't really given any credible description of benefits to this scheme beyond transferring banking profits from the private to public sector.