John Gelles on The Full Employment, Green, Democratic Solution

Hello Again Folks,

Please find below John Gelles' second stab at defining 
"The Optimum Policy" (TOP) for human development.  My 
comments will be inserted, as usual, in the text and following 
John's solution.  

Before we get to that, here is Curtiss Priest's comment on 
John's attachment to Debt Free Money (DFM).  My comment 
on DFM follows Curtiss' comment. 

--------- Forwarded message ----------
From: Curtiss Priest <bmslib@mit.edu>
To: cyber-soc@topica.com
Cc: TheNewForum@yahoogroups.com,
         John Gelles <indexed-savings@sbcglobal.net>, WesBurt@juno.com,
         "List, Debt" <debt@CSF.COLORADO.EDU>
Date: Fri, 19 Mar 2004 14:35:17 -0500
Subject: Re: Human Success in a Free Market

John Gelles wrote:
...
>         Some "good" investments may be required to
>         ensure supply of necessities -- but these, too, can
>         be made with DFM [debt free money].
> 

Dear John,

Please think of it this way.  As everyone asks for
interest on any funds, your concept of DFM is
elusive.

If the DFM comes from government (whether federal,
state or local), the money (over time) has a true
economic cost -- called interest.  And, if debt
free money is provided via government, the carrying
charge must be charged back to the taxpayer.

If we simply mint money, the carrying charge comes
as the loss of value of every hard-won dollar out
there, and results in inflation, such that the
hard-won dollars are deprecitated in proportion to
the "debt free" printed money.  And, in the extreme,
this becomes hyperinflation.

When we have had similar exchanges, you point to
the growth that followed WWII.  I replied that this
only resulted by a massive level of savings, in the
form of "war bonds."

So, before you offer, again, DFM as a solution to
our ills, you must also convince me that you can
stop the spending mania, and that you can convince
U.S. households to provide the funds you wish to
spend.

In that the "discount rate" for money is very low,
it would make sense that now is the time to encourage
such savings, as the forgone costs (interest) are so
very low.

But, I witness no such savings -- but rather, an
increased mania to buy even more on credit (aka debt).

So, beyond the rhetoric, please tell me how we convert
a country of over-spending, debt-increasing Americans
to the America you have in your mind.

Should you again mention DFM, without such a plan, I
will remind you of these matters.

Kindly share this note with any lists to which I am
not subscribed.

Sincerely,

Curtiss

           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

(WSB  It is my understanding that all interest collected by 
The Bank Of England in excess of operating expenses is 
returned to the UK treasury.  The US Federal Reserve 
System has a similar obligation to the US Treasury.  Naturally,
central banking expenses are excessive.  But probably no 
more so than for corporate executives.  My ideas on DFM 
follow those of Harold G. Moulton, in his 1943 book, "The New 
Philosophy Of Public Debt."  Public debt has its place, but not 
as an increasing trend.  Hansen, Berle, Schacht, and Keynes 
are mentioned by Moulton.   WSB)

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
On Fri, 19 Mar 2004 15:12:20 -0800 John Gelles
<indexed-savings@sbcglobal.net> writes:
> The Full Employment, Green, Democratic Solution
> 
> Burt, Priest and Gelles are looking for enough of a consensus to 
> build one or more agendas for change to solve our most urgent 
> problems.
> 
> To some degree these three are stymied because each is 
> wed to a different picture of what is wrong and what to do.
> 
(WSB  I like to think that I have framed the picture at a higher 
level of the system.  This level is not taught in our schools and 
has not appeared in our public debate since the 1880s, so it is 
still a hard sell.  WSB)

> Time is wasted when they push their old doctrines (and even 
> diagrams) as each rejects all but his own ideas.
> 
> Instead of joining in and knocking heads, their audiences reject 
> what is received and hold their own views to themselves.
> 
> One common thread of agreement and disagreement among 
> those three and all in their audience is show me the money !
> 
>   By this I mean, that if a magical benefactor happened along and 
> paid any reader or writer here huge sums to tell the nation the 
> truth about what the solution is, that guy who got the money 
> would think he was Jesus Christ — that is, would think that 
> he knew the score and all the rest were just slow learners.
> 
> Of course it would not be true: unless the guy who got the 
> money delivered an agenda so correct that it was implemented 
> like wildfire — and it ended poverty, pollution, ignorance and 
> unjust war — unless something like that happened, all we 
> would have is one more book to read that did not change 
> a thing. 
> 
> Getting down to cases: 
> 
>   1.. Priest wants savings. So does Gelles. They both want savings 
> to help prevent hyperinflation. The corollary to this agreement (by 
> these two) is that if inflation is not a big problem, savings is not 
> a big deal; and a lot of private discretionary spending can even do 
> some good when what we want is full employment, respect for 
> green, and democratic protections of the individual from tyranny.
>
>   2.. Gelles wants government spending in the trillions to drive 
> the economy and prevent all unemployment, economic want, and 
> other signs of entropy.
>
>   3.. On account of 2, Gelles says spend Debt Free Money (DFM). 
> Priest says, "say what ?"
>
>   4.. Gelles says read the two accounts of DFM below my signature. 
Then read them again. Then read them again. 
> Then tell me, Curt, why you're such a slow learner?

>   5.. Burt, like a dog with a bone, has diagrams to sell he is in 
> love with. They prove there has been a shortfall in purchasing
> power that Says Law had promised would not exist — and it 
> does exist — and it may be as little as five or ten percent. Cure 
> that shortfall, and the rest of the political economy will take care 
> of itself. Burt is not wrong. But Burt is not playing the game to 
> best effect. He knows people have got to be persuaded to 
> change — and he knows that his diagrams have been introduced 
> to the wrong audience at the wrong time. Let us agree on one or 
>more agendas in writing. Then we can add drawings where they 
> illuminate what words cannot.

>     John Gelles
> 
>
-------------------------------------------------------------------------
-------
> 
> Channel Islands (off the coast of France) Idea of DFM  
> 
>
-------------------------------------------------------------------------
-------
> 
> Channel Islands model of debt-free money
> By Patricia Knox
> Adapted extract from a submission to the Global Ideas Bank 
> Institute. 
> The British government, like most other governments, has delegated 
> money-creation to the central bank. Money is therefore loaned at 
> interest to the government by the central bank, instead of being 
> issued debt-free by the government. 
> 
> Increasing amounts of tax revenue are therefore being used to repay 
> the debt to the Bank of England. Since there is no mechanism for 
> writing off any government debt, present day tax money is being used 
> to pay interest on the accumulated debt of the past 300 years. High 
> interest rates only aggravate the situation. 
> 
>   The banks should pay governments for a licence to create money. 
> Governments should not pay interest. 
> 
> As each year goes by, an increased percentage of tax revenue is 
> swallowed up by the Bank of England, and social services are 
> withdrawn as there is not enough money left to fund them. 
> 
> Debt is like a cancer in society. It causes the ills of 
> unemployment, bankruptcy, poverty and destitution, which lead, in 
> turn, to crime and ill health. At some point in the future, at least 
> in some countries, the rate of money-creation, increasing at an 
> exponential rate, will be overtaken by the size of the government 
> debt, increasing at an even faster exponential rate. 
> 
> At that point, all wealth will go to pay an unrepayable loan, and 
> there will be no social services. This is already the case in Third 
> World countries, where the real wealth of those countries is 
> exported to pay an unrepayable debt, and where every newborn baby is 
> already in debt to foreign banks. 
> 
> In the Channel Islands it is different. There, the government has 
> not delegated the money-creating powers to the banks. There, the 
> government creates debt-free money and spends it into the economy, 
> rather than lending it into the economy, so that the government has 
> no debt to the banks. 
> 
>   Partly as a result, Jersey and Guernsey experience prosperity 
> unknown in many countries. Income tax is only 20%. There is no
> VAT, inheritance tax or capital gains tax. 

(WSB  On page 62 of the World Bank's "03 LITTLE DATA BOOK" 
the only data for the Channel Islands are: Population 149,000, 
Area 200 sq km, life expectancy 79 years, fertility rate 1.8, and 
infant mortality rate/1000 birhs 6.  The rest of the page is blank. 
Switzerland, Germany, and Japan are better references.  

If any one has the data, I would like to know how the 20% 
income tax is spent for the public budget:  public works, 
public education, subsidies to parenting families, wages 
and salaries, Misc...  The 20% tax rate of the Channel 
Islands agrees with the 20% rax rate established by Moses 
at Mount Sinai in the Book of Numbers to teach and 
enforce the Ten Commandments.  The whole story is shown 
on one web page, Fig7-9e.gif, at the web site below.  Words 
without numbers are dull tools.  Words without pictures are 
useless tools, but handy for fuddling the public.  WSB)

> 
> Governments everywhere should take back their power to create 
> interest-free money, and nations would thus reach a new level of 
> prosperity. 
> 
>   An next step would be to make all loans unenforceable, like 
> gambling debts are now, and then money lenders would become more 
> responsible in their lending. 
> 
>   Equity finance, where the investor shares in either profit or 
> loss, rather than loans on fixed interest, would become the approved 
> method of finance. 
> 
> Patricia Knox, Pen Llywenan, Bodedern, Holyhead, Gwynedd, Wales LL65 
> 4TS (tel 01407 740767).
> 
> 
> 
>
-------------------------------------------------------------------------
-------
> American DFM: Lincoln's Greenbacks (and their WWII 
> equivalent: Unsold Bonds)   
>
-------------------------------------------------------------------------
-------
> 
> 
> The following rationale for American Debt-free Money is attributed 
> to President Lincoln himself, but must stand on its own 
> self-evident sense:
>
> The Logic of American Greenbacks
> 
>   Money is the creature of law, and the creation of the original 
> issue of money should be maintained as the exclusive monopoly of 
> national government. Money possesses no value to the state other 
> than that given to it by circulation.
> 
>   Capital has its proper place and is entitled to every protection. 
> The wages of men should be recognized in the structure of and in the 
> social order as more important than the wages of money.
> 
>   No duty is more imperative for the government than the duty it 
> owes the people to furnish them with a sound and uniform currency, 
> and of regulating the circulation of the medium of exchange so that 
> labour will be protected from a vicious currency, and commerce will 
> be facilitated by cheap and safe exchanges.
> 
>   The available supply of gold and silver being wholly inadequate to 
> permit the issuance of coins of intrinsic value or paper currency 
> convertible into coin in the volume required to serve the needs of 
> the People, some other basis for the issue of currency must be 
> developed, and some means other than that of convertibility into 
> coin must be developed to prevent undue fluctuation in the value of 
> paper currency or any other substitute for money of intrinsic value 
> that may come into use. 
> 
>   The monetary needs of increasing numbers of people advancing 
> towards higher standards of living can and should be met by the 
> government. Such needs can be met by the issue of national currency 
> and credit through the operation of a national banking system.
> 
>   The circulation of a medium of exchange issued and backed by the 
> government can be properly regulated and redundancy of issue avoided 
> by withdrawing from circulation such amounts as may be necessary by 
> taxation, re-deposit and otherwise. Government has the power to 
> regulate the currency and credit of the nation.
> 
>   Government should stand behind its currency and credit and the 
> bank deposits of the nation. No individual should suffer a loss of 
> money through depreciation or inflated currency or Bank bankruptcy.
> 
>   Government, possessing the power to create and issue currency and 
> credit as money and enjoying the right to withdraw both currency and 
> credit from circulation by taxation and otherwise, need not and 
> should not borrow capital at interest as a means of financing 
> government work and public enterprise. 
> 
>   The government should create, issue and circulate all the currency 
> and credit needed to satisfy the spending power of the government 
> and the buying owner of consumers. The privilege of creating and 
> issuing money is not only the supreme prerogative of government, but 
> it is the government's greatest creative opportunity.
> 
>   By the adoption of these principles, the long-felt want for a 
> uniform medium will be satisfied. 
> 
>     a.. The taxpayers will be saved immense sums of interest, 
> discounts, and exchanges. 
> 
>     b.. The financing of all public enterprises, the maintenance of 
> stable government and ordered progress, and the conduct of the 
> Treasury will become matters of practical administration. 
> 
>     c.. The people can and will be furnished with a currency as safe 
> as their own government. 
> 
>     d.. Money will cease to be the master and become the servant of 
> humanity. Democracy will rise superior to the money power.
> 
~~~~~~~~~~~~` End John Gelles' enclosures ~~~~~~~~~~~

John, your concluding paragraph, 5, above is a concise 
statement of TOP, The (one and only) Optimum Policy.  You 
ask that we agree on one or more agendas in writing, and 
then add pictures as required.  Why?  That is just backwards.  
The picture is complete in Fig7-9e.gif.  It was customary when 
Abraham paid the first Tithe to Melchizedek, King of Salem, 
who operated a school for teaching the knowledge of God.
(According to J. H. Herz, late Chief Rabbi Of The British Empire)

We have 4,000 years of recorded history in which nations 
rise or fall, accordingly, as they observe or neglect the 
technical requirement to fully disburse the first Tithe to 
fund human development.   Impairing the development 
process, is the common method of exterminating vermin.  
When done to people it reduces them to third world 
nations, for ever.

John, I think the burden falls on you and the rest of the 
folks, to refute the picture if you believe it is no longer 
applicable to human affairs.  My analysis found it to be 
standard practice in large and small corporations in the US 
private sector, and in Japan and most of Western Europe 
since 1946.  I have found no second and third way.
Thanks again for boosting this discussion.
           
Respectfully yours,

Wes Burt

            The Optimum Policy (TOP) or The Whole Divine Law 
                 for either Human or Capital Productive Assets is 
        illustrated at <http://www.epie.org/cyber-soc/default.htm>
        and discussed on list <TOP@topica.com>, and elsewhere.


________________________________________________________________
The best thing to hit the Internet in years - Juno SpeedBand!
Surf the Web up to FIVE TIMES FASTER!
Only $14.95/ month - visit www.juno.com to sign up today!