Sorry for the quick email, but I am between meetings. Please dont get me wrong. I am not against debt at all. It is essential. I am against debt based money. Money creatyed itno existence as a debt. Under out reforms financial instituions will be able to operate and priovide the valid service they provide but with stable money not based on credit.

See the American Monetary Institure reforms (Google it), The Chicago Plan and http://www.bendyson.com for proposals on how to do this.

Thanks.

This paper has some valid and thought provoking arguments about where orthodox economics has gone wrong. However, the question we need to answer is the fact that the debt phenomenon has been based upon the belief that these theories were true. I would go on to say that these theories were based on our own expectations and needs. This is not only true for debt but many other concepts such as the concept of fiat money etc. I agree that society has been burdened with debt and the government/institutions may have been living beyond their means simply by leveraging themselves. Leaving even political issues aside, how can we ensure that the next notion we base our expectations on isn’t as destructive? Clearly , we can’t reverse what has happened already because that would mean a gross downfall in living standards across the globe. People who have little money will need to dig deep into their pockets to afford a home even – and I don’t think the housing market has been inflated due to debt on its own – it has a supply related component mostly.

Also, what relation has debt to society’s general well being. Surely the happiness /well being of society is not entirely related to money if at all. Another point, Interest rates work both ways – it’s not just the banks vs people, its also people vs people in terms of borrowing and lending. By shutting off the debt idea, are we closing off legitimate sources of business and income in society?

Hope this helps

Thank you for the excellent work you are doing – the most important work in the world.

For about 6 months I have been trying to get to the bottom of this point:

“Under this understanding most believe that bank credit only lasts for the duration of the loan, and upon repayment will be cancelled out of existence. This is not what actually happens at all! As any bank manager will confirm, when money is repaid into an overdrawn account, the bank cancels the debt, but the money is not cancelled or destroyed. The money is regarded as being every bit as real as a deposit; it is regarded by the bank as the repayment of money that they have lent. That money is held and accounted as an asset of that bank.

The fact that upon repayment, money that they have created is not destroyed, but is accounted as an asset of the bank, proves beyond dispute that when banks create money and issue it as a debt, they ultimately account that money as their own. The only factor which disguises their indisputable ownership of the money they create is the fact this returning money is usually rapidly re-loaned.”

There is not much written about this in the literature. Could you please advise me of at least one reputable reference source, so that I can verify this point to my own satisfaction (it’s not that I don’t trust you, it’s just to be certain).

Thanks again.

Jamie Walton.

Excellent exposition of the essential conundrum – and coming from an insider, all the more powerful. More power to your elbow.