Bulma In The Android Saga

Money, its circulation, its disorders

currency, its role, its origin, its dysfunctions.

This post will consist of three parts: the basic vocabulary, the origin and role of money, mistakes to his "good use"

The "currency" as any human creation can be both good and bad. Before we look at the qualities that "should" have a currency, we will first give some definitions. The vocabulary

monetary
Everyone uses in his everyday life, in one form or another, " payment " serving all market exchanges of goods and services: when it does not pay a bill, the amount is known in advance, will be the traditional expression: "How I owe you? "(Meaning" to resolve what I just buy ").

Nowadays, how to resolve this as well due to free themselves of debt - immediate or more distant - essentially takes two forms: "species" or "other."

The " species," or " fiat money", that Anglo-Saxons call "currency" are made up of notes and coins.
The other form of payment is called bank money "and is met by the use of a checkbook, bank card, or a transfer order.

The "species" are also called hand currency (coin pocket in Canada), since it passes from hand to hand (or pocket to another).

The use of "money", also known as book currency in Canada is best served by transferring the sum involved a bank account to another. When
bank accounts involve businesses or individuals, it is called bank money "bank" so is it the account opened by PSA with the BNP, or the account opened by Mr Smith with Societe Generale.
When bank accounts are those opened (necessarily) by commercial banks (or second-tier banks) with the Central Bank (or prime bank), it is called bank money "central" : thus account for opened by Crédit Agricole from the ECB (European Central Bank)
The currency used as payment by companies or individuals, whether in cash or bank money (bank) is called simply "money" or "money money" ("money" in Anglo-Saxon), or, if should be more explicit and precise measure of money as M1.

The monetary base, or base money, is sometimes symbolized by "M0". It consists of both cash flow and accounts that financial institutions are required to be opened with the central bank. Paper money, which constitutes the bulk of "fiat money" (the coins, or coins, representing less than 1% of total currency in circulation) is issued by the central bank: in Europe by the ECB. The monetary base is also used por exchanges between banks, when the net balance of interbank compensation claims it. Thus, if the account transfers to the BNP Societe Generale are more important on any given day, as in the other direction, the balance can not be settled in central bank money.

In summary, there are two kinds of currency :
currency 'central', which takes two forms, as "trustee" - the species, and the entry form (the accounts that financial institutions, including banks, are required to have with the Central Bank, said Senior)
deposit money banks (which appears on the accounts of individuals and businesses with commercial banks, also known as second-tier banks)
To fix ideas, in the euro area, the Central currency (M0) was in November 2009 of about 1.1 trillion (750 billion in cash). The M1 money was 4.462 trillion, the ratio M1/espèces , or "money multiplier" is 5.95 of the lever "book money (M1 fewer species) on species' is therefore 4.95.

M1/espèces ratio is often considered an expression of " monetary power" of banks.

The origin of the currency and money creation:

contemporary banks play two roles in managing the currency.
They serve first as an intermediary when they simply manage the existing currency, in an accounting role cash flows.
They also have a role of "money creation", when granting new Credits: sometimes we talk about this -currency debt . Let us clarify this second role, that raises the most questions. If

Dupont borrows a certain sum, 20 000 euros for finance, for example, buying a new car, instead of having these 20 000 to the dealer concerned, he will have the money to his bank. But Smith can also borrow EUR 50 000 for starting a business, and finance and its future investments in hardware, while paying a certain fee, while waiting to sell future products or services.

In both cases, Smith will sign an acknowledgment of debt Against a certain amount of money available to him, an amount that will be found initially in its bank account, also known as, unfortunately, demand deposit, or DAV.

This "deposit" does not correspond to any real deposit or its part or on the part of the bank, but a simple expenditure authority created by the bank concerned.

Since, in general, the loans granted (and created) are not converted into "cash", but are used as a scriptural currency "account", which circulates a bank account to another, banks are not really obliged to keep a "ton" of species. We will revisit this point later.

Let's just say that banks, for regulatory reasons or as a precaution, seek to maintain a certain ratio - or monetary lever - between what they lend "ex nihilo" and the species they have in deposit accounts equity, or on account of their clients. Historically, since September 1997, this lever has varied in the Euro zone between 3.92 and 8.35 (February 2002) to oscillate from one year between 4.80 and 5.10 (4.95 in November 2009). This lever

Monetary almost 5 means concretely that deposit money banks is currently about five times more abundant than the cash in circulation .
It also means that if each required to empty his bank account, the DAV, demanding that the withdrawal is made in cash, it would obviously be impossible for banks to do so. But as 95% of the value of trade exchanges is done using the deposit money bank, it would really exceptional for such a "cash run" takes place.

To understand how commercial banks were able to obtain such authority, the create, within certain limits, a currency considered almost as good, and often much more convenient , the kind issued by the Central Bank, we will do a brief history.

A little history: The first banks
"modern" - some based there are nearly 4 centuries - were formed from deposits of gold (or other precious metals) deposits to them entrusted by applicants who would not bother with this metal during their travels.

Thus, against the deposit of a certain quantity of gold, the banker Goldsmith gave his filing, Luke, a receipt stating the amount received on deposit. This receipt could "fly" and used to recover the same amount of gold deposited with a colleague Rockfailer at the other end of the country by another applicant.
As it was a receipt that could be countersigned by Luke, and be entrusted to John, this receipt "bearer" could serve to John to get him also that gold is at Goldsmith is among Rockfailer. The exchange between Luke and John may be made during a transaction, received payment method can be regarded as money.
Especially since this deposit receipt were 2 other qualities, which typically sought in a currency: it is a unit of account or "standard value" (hence the term "standard gold ") is also a reserve value.
From the moment these receipts began to pass from hand to hand and being used as means of payment, bankers have found they had rarely "draw" on their gold stocks, and that the real "Movements or" not concerned, on average between 5 and 10% of the total quantity of gold and stored.

bankers, so that their gold - or rather gold from their depositors - not "sleep" as well, began to make something other than receipts from applicants: it was the first "banknotes" ancestors of the bank money.
For these "pieces of paper" - which were based on more than a game of "real gold" - the bank Goldsmith stated that his client Bruce could have a certain amount of gold, to honor any commitment Goldsmith withdrawal not exceeding this amount. Thus, with a stock of gold to one million dollars, the bank could lend Goldsmith 5, 10 sometimes 20 times this stock, banking on the fact that the banknotes issued longer serve as means of payment as a means bank withdrawal.

legal limits, economic and ethical operation of the current monetary.
Can we call these scam loans, as banks, they are from 2 or 3 centuries or the present time, lend money they do not.
On a personal point of view, it is certain that a particular client, as important it is, is not likely to bankrupt a particular bank - even if, in a novel by Alexandre Dumas, The Count of Monte Cristo had managed to ruin the banker Danglars that way.
On a collective, a purely ethical standpoint, he is sure this is a blatant scam , since the community can not, generally, all suddenly convert bank money in cash. From an economic standpoint, it is more debatable, it depends of course on the use of loans and the interest rates offered to the borrowers. It 'important to remember that money it is scriptural or "trustee" has value only if there is concrete in front of wealth, goods and services that money can buy. If nobody does, the currency has no value, and having money "in reserve" will be meaningless. From a legal standpoint, this power is perfectly legal.

banks and bankers should take into consideration an economic obligation, if not moral, if their loans are used for common good and development of the economy, we can "forget" the fact that their loans' s akin to a scam, accepted or granted by regulators currencies, the Central Bank itself is meant to serve the community.
Otherwise, the practices of banks are more like the cavalry "to Madoff" or "Fonzi **" and should be punished as such.

Before discussing possible malfunctions money, this is occasional, probable, even certain, let us on the "formal" that exists between the quantity of bank money issued by commercial banks, and the amount of currency 'central "Issued by the monetary authorities, the Central Bank.

Central banks (BC), first floor of the pyramid money issue, that is created in two forms, the monetary base, or base money (see: http://www.skyminds.net/economie -et-sociologie/les-activites-economiques-et-leur-cadre-social/le-financement-de-leconomie /:
- a) cash, only to be legal tender, that money that banks prefer to receive only give (since their leverage of money creation, their monetary power, depends in part): the image is that of "printing money".
-b) scriptural base money, or electronic, that only exists in the computer files of the BC and assigned to the accounts of financial institutions. These accounts are part of what we call reserve requirements of commercial banks (see article 19.1 of the Statute of the ESCB). The reserve ratio is set at 2% for the euro area against 10 to 12% currently in China.

The scriptural money creation, which is sometimes shown as " liquidity" (in reverse, the destruction of monetary base is a "liquidity absorbing" by Central Bank) is as follows.

BC buys securities (like bonds or Treasury bills) using the central bank money, crediting much of the acquiring banks, improving bank liquidity. Conversely if the central bank wants to limit bank liquidity - and therefore the "monetary power" of commercial banks - it sells securities to banks in order to perform a drain on their reserves of money.

Now suppose that Societe Generale decided to grant 100 million euros in total to upgrade one of its refineries. If the Company General has already reached its required reserve ratio of 2%, it will - or should, because it is not always so strict - to grant the loan, to "refinance" with the Central Bank (or from one of his fellow bankers) of 2 million in "reserve money".

The total money supply will have increased by 100 million euros (if BC has occurred, it will be an increase of 98 million deposit money bank and $ 2 million base money: otherwise, if the company s General ' is re-financed on the interbank market, the 100 million will be only the bank money transfer).

Other rules or obligations 'prudential' limit the monetary power of banks
Banks must also comply with more or less rigor, other ratios: liquidity ratio - to avoid the "cash run" that is to say, if too many customers to withdraw cash at the same time - the solvency ratio (measuring the outstanding loans, that is to say the amount of loans, relative to their capital )

Bale agreements prohibit banks are expected to have a solvency ratio, or "tier" less than 8% (that is to say that the outstanding loans should not be more than 12.5 higher than equity). The BNP is far beyond these "rules", since at 31 December 2009, its total debt amounted to 1977 billion - exceeds the total GDP of Fance ... - Or 24.6 times the amount of capital which amounted to 80 billion euros (4.1% of total debt).

Deficiencies of such a system are numerous: they are mainly based on the choices that can make or not make the commercial banks by providing their credit, and opportunities and the desire to control the Central Bank vis-à-vis commercial banks.
banks unwilling to lend to firms or persons insolvent or whose debt will be paid by creditworthy entities. In fact, if the interest rate that drives hoped lending by banks, and even if the loans are made "from scratch", where a borrower is declared insolvent, the claim is not honored - if it is recognized such, will reduce the "low balance", that is to say, the capital of the bank, and thus will impact the ratio of the Resources Required said bank, and, more indirectly, its liquidity ratio: unless, of course, trying out the bad loans from its balance sheet before it needs to "accountability".

scriptural money creation by banks, if it exists, is not without limits. When the economic environment is relatively favorable when there is no major crises, it also does not really affect this power of creation. Thus no one really protested when, in 1973, the state debts with commercial banks have become producers of interest to them : Perhaps because the dominant economic thinking argued that if the state had to pay for debt, it think twice before considering any budget deficit.

Worse yet, few people at the time, protested against the adoption in 1992 of the Maastricht Treaty, which prohibits, inter alia, a state of the eurozone to refinance themselves directly with Central Bank: a montage where bizarre and very costly for a state that wants to borrow. The ECB lends
currently less than 1% for commercial banks, which will lend themselves state or government to 4 or 5%. When you think that if France, since 1973, had borrowed at rates "ethics" - that is to say, the growth rate adjusted for inflation - government debt is only half that it is.
If the state had borrowed without interest, his debt had been reduced to zero in late 2007. In fact, all taxes on income is the same order of magnitude as what France pays as interest on commercial banks.

In times of crisis, especially when we know that since 2007-2008 the original the current crisis is both a financial and banking - financial speculation on stocks, bonds and derivatives and the securitization of bad loans, focusing mainly on real estate market - the relative impunity enjoyed by the banks may be questioned.

It is then increasingly tempted to question the true value of banks. In fact, in a crisis of under-production and rising unemployment, if the currency is still essential to the functioning of a modern economy, the fact that monetary mechanisms are largely in the hands of banks, which therefore have the power exorbitant guide decisions by providing industrial and commercial or not new money is increasingly questioned.

Faced with this power that may appear unfair, even outrageous, two extremes are possible: the denial of one side or the search for solutions more or less "revolutionary" leading to a deep currency reform.

Denial will result in the desperate attempt of some to deny the obvious - that the bank money does exist and is used in 95% of trade - by dismissing as foolish or stupid simple idea of a money creation by commercial banks: hence the impossibility in this case to seek a "bank" to the current crisis, and therefore the choice, either intentionally or not, to guide the search for solutions to other ways banking supervision.

Among those who recognize the power "creationist" banks, and want to limit or even remove, some argue the group's proposals " 100% money , following Allais. The currency
exist only in its central form (cash or "cashless") and that would be emitted by the central bank, the Central Bank.

This solution and others - including those of social credit, the credit unions, money or stamped "slush" will be described in future posts.
It is clear that in the current context where there is both an unmet need, spare production capacity, and therefore a real production of real wealth far below potential output, the currency, which is justified really - and that has real value - that in relation to these riches, not playing its role effectively Economic .

be noted that in the euro area, money M1 increased by 12.5% in 2009, while GDP has remained stable, and that credit to the economy have not changed (net: zero) . Where did this new currency, what new "bubble" should we expect, if nothing is done?

BL

** Thanks to the commentator who noticed my slip, noting that it was Ponzi, not Fonzi, we had this scam: I retain, however, slip through honesty and also because the commentary is fun.

Small Engine Reducers

On the issue of debts

On the question of debts and the possibilities of escape ...

day long, and media, we hear statements prodigious debts, after talking two years ago of over-indebtedness associated more particularly subprime.


But what is it really, and we are, collectively and individually, condemned by this curse , over-indebtedness?

Who are these debtors, and why this heap of debt?

In this post, after speaking of debtors, creditors, we will talk about (not creditors, not debtors ;-)), Then we will talk about debt, and finally we will outline some possible "out of debt."

A-Debtors.

They are known, it is just everyone.

First, there are statements, not just those called, very hard, the PIGS (Portugal, Ireland or Italy, Greece and Spain): can add the USA, UK, France, Japan and lots of other pays.Ensuite some companies.

Finally, many individuals, either because they were caught by a frenzy of consumption or simply because they do not earn enough to live. Or certain individuals or organizations who thought they could win on the Exchange or on the financial markets for sure, and have speculated with the money they did not have.

B-Creditors
Prior to cite just a little background on the concept of money and currency. When we talk about money, it sometimes confuses two concepts.

The first notion is the silver-liquid, which we now call species: these are the notes and coins in circulation in a given area. In the eurozone, the euro banknotes will be (Five euros to 500 euros, or coins (a penny to a few euros). These "species" are released by the central bank (in euro zone, the ECB).

The second notion is that of bank money (bank), the amount of which is included in checking accounts for individuals or businesses in the accounts of commercial banks.

There is a third "currency," central bank money , which corresponds to the accounts that banks are required to be opened with the central bank, or its annexes (Bank of France for France)
The sum
"species" plus "bank money (bank is called, by definition, monetary aggregate M1, or money (narrow). Every element of M1 can be used safely as a" means of payment ".
The species are used for "small" amounts of up to 1500 or 2000 euros. scriptural money - through tools such as credit card, checks, transfers, ... - is increasingly used as 95% of the value of transactions carried out in this way.

Financial institutions nonbank merely to transit - a fee for their services, of course - any surplus money (cash or money) to those who have "too much" (they are called cleverly agents to financing capabilities' - our ants) to those who do not have enough ("agents in financing needs - our cicadas.

If only our creditors were" ants ", there would never needs Increasing the amount of money in circulation . The "Ants" lend to the cicadas, or through financial institutions or directly.

This is not, fortunately or unfortunately: from one year to another, M1 increases much faster than real wealth such that wealth can be synthesized by GDP.

In fact, most of the currency in circulation (85% of M1, against only 15% for species) corresponds to claims (views of the bank) or indebtedness (viewpoint of borrowers) made or due for months or years.

banks are very large creditors, even though they have created money , creation based only on promises of repayment of debentures. These debts, in the current monetary system, will never be fully repaid.

Suppose, in fact, that starting from a given situation, banks lend 100 billion euros to an agent cheap financing needs "- a very large grasshopper.
By taking a "small" interest rate, eg 5%, the cicada will make (if it repays in one year): 105 billion. Where could well come from the $ 5 billion more?
There are only two possible sources - if we neglect the international trade. The source

"central bank", which should issue new tickets, but she can not do that going into debt itself: where additional debt. Or
source "commercial banks" themselves, who can do that by granting new loans.

In both cases, there is full refund (principal plus interest) there must have increased the money supply M1 (sight deposits plus cash). If the party

GDP of 100 billion funded by these did not increase by 5%, the inevitable can take two forms (not to mention the event the borrower, the grasshopper, go bankrupt):
a) growth of money supply , larger than that of GDP, leading to inflationary trends
b) the share of "pie" of banks will increase: the financial and banking sector - the sector "capitalist" - is growing at the expense of the real sector of the economy (firms and households' non-pensioners)


The problem seems more complicated if we bring in international trade. But if one sees the world as a single economic system, the issue of debt remains the same, the only difference is that now there are several currencies. But it is always the commercial banks create bank money, which in all countries is much larger than the species 'national'.


C-Debt is inevitable?

Debts "provisional" are probably inevitable for many reasons, including the difference of timing between the processes of production and consumption, even if GDP is stable (zero growth).

may be needed to "make credit "- which is not the same thing to advance money - that is to say a loan" money "- when the expected cash flow of periodicals, but that one is obliged to consume, or buy other, more frequently.

If the interest rate would be "ethical", that is to say where the newly created money (by money lending) or the savings already made would be provided at the same rate as Growth of GDP, any debt (provisional) could be refunded without problems.

Thus, if we borrow $ 10 billion to 3%, and if our growth rate is 3%, we pay off the principal, $ 10 billion, plus interest: $ 300 million. Everyone is happy. Those who have produced "more", those who have lent (or savings, or the newly created money, and canceled by the refund)

Simpler still: zero growth, we borrow at 0%, it repay principal only.

D - Faced with the current debts, is there a solution?

If you do not change the current monetary system, it no alternatives to conventional solutions catastrophic.

More and more money will be paid to the most creditworthy countries, or more powerful politically, economically or militarily. The others will be put on the wagon, as "PIGS". But even this can not go on indefinitely. The only way to repay the interim, is to take money from others. This can be

by hyperinflation: pensioners being for a time, dispossessed: they lend to 10% as prices increase by 15%, money supply by 20%. Small annuitants lose, banks, which recreate money they need, do not risk much.

The deteriorating economic situation, some companies, yet "profitable" with an interest rate of "ethics" of 2%, are unable to repay at a rate of 5%. They fail, and this aggravates the situation of our "short-sighted" - not always responsible for their over-consumption "or their" under-saving, especially when they become unemployed in sectors such as automotive or agro-food sector.

No "method" can not function, incidentally, without collateral damage increasingly important, since Overall, the current debts can never be fully repaid with the current system.

What should he do so.
Two tracks, one on an urgent basis, the other taking a little longer.

a) In emergency : separate debts "public" private debt (corporate and individuals) to be able to treat them differently.
For public debts (or cancel them altogether - method "to the 1917 Bolshevik - or declare obsolete the past interests of the public debt - is central issue money - without interest - An amount equal to accumulated debts). For
private debts, again treated differently corporate debt and the debts of individuals.
For individuals, cancel the debts of heavily indebted, when they are in a precarious situation, and that these debts have been subscribed at rates "usurious" rates to higher ethics, adjusted for inflation and possibly one or two points. This usury rate in the current context (zero growth, 2% inflation) would be in France 4%, against 18 or 20% commonly practiced.

For corporate debt, those who watch correspond to business "for the collective good, environmentally friendly, and others. Fully recover debts to the former, or refinance by issuing central bank monetary (possibly by rendering these new resources at a rate "ethics"). For others, encouraging them to refinance themselves on the savings market, again limiting the rate to a non-usurious (ethics = growth plus inflation)

noted that much of these measures (especially the issuing central bank's monetary authorities led to pure cover public debt) is prohibited by the Maastricht Treaty and the Treaty of Lisbon . It will therefore submit the treaties in question, see out of the eurozone for France, perhaps even of the European Union. But such a threat may be enough to think it is right to do so without going to such extremes.

Denouncing the public debt, which is subscribed to 55% by "non residents" can also cause a scandal, but I do not see Chinese tanks, bombers or U.S. nomads Saudi intervene in this case, especially since they have similar problems at home.
The question is surendettemnt World and 280 billion surplus in China are nothing compared to the 50 or 60 trillion global debt. I think many countries would love the position that France could take in this area.


b) In the longer term

reform or revolution money are essential, outside and in addition to emergency measures discussed further above.

I leave because of the principle - or the premise - following: true wealth (at least in terms of hardware) is all that we can produce and consume . Currency, as cash or as bank money, is a means.

If this plea is perverted, if real wealth is much lower than the potential wealth - the fact that many are unused production capacity, both men and machines - then a monetary reform is essential.

This is not to want to enact any price growth, some productions are useless, even dangerous. But this has nothing to do with monetary problems: money created by banks is not created based on environmental or ethical considerations, but for the anticipated profit of banks. We must prevent banks adjust production according to their interests, whereas it is the general interest must prevail.

For this I only see three tracks 'global' possible, which can be tracked independently, but also complementary way .

The money trail or social credit - one of Douglas and Louis Even, the pioneers of social credit. The track
mutual credit : there are no additional issue of currency, but simply funds exchanged between the different economic agents, sometimes cicadas, ants sometimes
Runway suggested by Maurice Allais : commercial banks no longer have the right to create bank money ("100% money), are separated establishing "financial intermediaries" banks only passing management (accounting) money from cash management "

In next posts will attempt to take stock of these different tracks and on the track of specific currencies, complementary to use narrower, more specialized.

Comments Friendly, BL

Will A Genital Wart Bleed Or Puss

public debt, private interests

On the question of interest and debt service.

As more and more exchanges in the blogosphere address this issue, I think it is useful to re-emphasize that the issue of repayment of public debt and the problem of managing money - and a wild growth - are largely related to the question of the level and the influence of interest rates. Outside
therefore responsibilities related to money creation, it seems necessary to establish rules for credit control (in addition to any rules of supervision of revenues).

I often supported the idea of an interest rate of "ethics": no rate (especially that of public debt) should be above the actual rate of growth anticipated for the economy, only way of not having a bath 'money' which empties faster than it fills, and prevent excessive growth of research with the sole purpose of paying off loans.

A little arithmetic (and the basic use of a spreadsheet ;-)) show (s) the thing so trivial

Taking a growth rate of 2% and an interest rate 5%, an elementary calculation (at constant velocity, and with interest rates and stable growth rates) over 20 years gives us the following results:

The first column is the year, the second column of M1 decreased to 100 initially (rising to 265 in 20 years).
The evolution of GDP figure in the third column (it starts with the value 384: in fact, everything should be multiplied by 3.15 for the 1800 billion euros of French GDP in 2008).
The fourth column measures the change in the ratio M1/PIB
The last column resets, so "smooth" evolution of GDP between 1989 and 2008 françcais: these are just orders of magnitude, of course, corresponding to a growth rate of "virtual" of 2%.

(We will show in another table the statistical evolution over 15 years - evidence, "official" - the monetary aggregate M1 over this time to cash ("Currency" = higher ticket items) )




In 20 years, an interest rate of 5% and a GDP growth of 2% of M1 increased from 26% to 46% of GDP GDP .

is another way of saying that the financial sphere will be enriched at the expense of the productive sphere , or that capitalists take advantage of unearned income at the expense of "workers", such as contractors 'proletarians'.

We also see, well, a 3% difference between these two rates leads to the general government deficit could never be repaid, at least to reduce expenditures and increase revenues (taxes?) Of state drastically, and therefore intolerable.

That's what many writers, including AJ and Ph. Holbecq Derudder had shown (see "Public debt, a profitable business ") and interest payments for 27 years, between 1980 and 2006, accounted for more than 1100 billion euros, while the debt itself has increased by 913 billion euros. Ssns these accrued interest - that is, if France had been able to create the corresponding currency, instead of borrowing from commercial banks - France, in late 2006, would have had more than 200 billion budget surplus, which would have allowed fully repay accumulated deficits during these 27 years ...

Without going so the exorbitant privilege granted to banks (the privilege of "fiat money beat" and priest able to state with 3% margin: Natixis is a ticket dated January 2010 has yet confirmed) - other tickets on this blog or elsewhere, having amply discussed, it seems useful to show that if M1 has increased relative to GDP, it was the same in similar proportions to the liquid-money (higher ticket items) but with relatively large fluctuations.

The following table will illustrate this point, this time in the context of the euro area (15 years, month by month figures in thousands of euros):

Period ↓ Currency appreciation M1 M1/Currency
2009Nov 750,109 4,462,083 5.95
2009Oct 745447 4484004 6,02
2009Sep 740640 4402728 5,94
2009Aug 741163 4399063 5,94
2009Jul 745471 4332559 5,81
2009Jun 734980 4236798 5,76
2009May 731994 4186899 5,72
2009Apr 729212 4193541 5,75
2009Mar 719947 4118806 5,72
2009Feb 715969 4129472 5,77
2009Jan 712336 4099616 5,76
2008Dec 722924 3974183 5,50
2008Nov 703740 3957568 5,62
2008Oct 698922 4004350 5,73
2008Sep 657204 3887351 5,91
2008Aug 656106 3850635 5,87
2008Jul 658825 3836504 5,82
2008Jun 652134 3845554 5,90
2008May 645772 3850976 5,96
2008Apr 641431 3837211 5,98
2008Mar 632928 3840488 6,07
2008Feb 628792 3840617 6,11
2008Jan 623208 3854044 6,18
2007Dec 638620 3830465 6,00
2007Nov 618703 3853032 6,23
2007Oct 613589 3842720 6,26
2007Sep 610528 3832355 6,28
2007Aug 610685 3838780 6,29
2007Jul 612964 3823959 6,24
2007Jun 605045 3790991 6,27
2007May 597697 3766299 6,30
2007Apr 594842 3745802 6,30
2007Mar 588596 3738977 6,35
2007Feb 578812 3709559 6,41
2007Jan 575735 3691691 6,41
2006Dec 592282 3685076 6,22
2006Nov 571587 3616325 6,33
2006Oct 567175 3598083 6,34
2006Sep 563264 3599260 6,39
2006Aug 559066 3580731 6,40
2006Jul 562779 3557871 6,32
2006Jun 553802 3559106 6,43
2006May 543680 3544348 6,52
2006Apr 540385 3517573 6,51
2006Mar 532322 3484658 6,55
2006Feb 524920 3464427 6,60
2006Jan 520930 3440421 6,60
2005Dec 532914 3422983 6,42
2005Nov 514488 3386468 6,58
2005Oct 510522 3377160 6,62
2005Sep 507149 3349436 6,60
2005Aug 500919 3328395 6,64
2005Jul 506427 3300974 6,52
2005Jun 496551 3254973 6,56
2005May 485829 3050521 6,28
2005Apr 481074 3026812 6,29
2005Mar 471751 3003462 6,37
2005Feb 463566 2990502 6,45
2005Jan 459893 2962631 6,44
2004Dec 468426 2906478 6,20
2004Nov 448753 2912272 6,49
2004Oct 444394 2885794 6,49
2004Sep 438041 2870081 6,55
2004Aug 433400 2838079 6,55
2004Jul 436246 2825754 6,48
2004Jun 423014 2793055 6,60
2004May 416623 2775026 6,66
2004Apr 409373 2777006 6,78
2004Mar 399591 2756923 6,90
2004Feb 393469 2719587 6,91
2004Jan 389117 2707860 6,96
2003Dec 397902 2677644 6,73
2003Nov 379148 2661724 7,02
2003Oct 371239 2656872 7,16
2003Sep 364830 2623085 7,19
2003Aug 362668 2608287 7,19
2003Jul 361475 2576327 7,13
2003Jun 351042 2559749 7,29
2003May 343756 2553842 7,43
2003Apr 336320 2526511 7,51
2003Mar 327218 2501963 7,65
2003Feb 319317 2483887 7,78
2003Jan 312120 2456046 7,87
2002Dec 341158 2443268 7,16
2002Nov 321353 2416183 7,52
2002Oct 313872 2388636 7,61
2002Sep 306676 2371262 7,73
2002Aug 301114 2340264 7,77
2002Jul 296574 2323232 7,83
2002Jun 285696 2305287 8,07
2002May 273847 2290992 8,37
2002Apr 261655 2272466 8,68
2002Mar 254298 2241293 8,81
2002Feb 240476 2249355 9,35
2002Jan 246680 2247259 9,11
2001Dec 239720 2223121 9,27
2001Nov 279707 2219348 7,93
2001Oct 295453 2202549 7,45
2001Sep 309607 2192127 7,08
2001Aug 319234 2171594 6,80
2001Jul 328033 2157842 6,58
2001Jun 333023 2156258 6,47
2001May 332902 2142987 6,44
2001Apr 336171 2124661 6,32
2001Mar 336281 2105802 6,26
2001Feb 335032 2106116 6,29
2001Jan 336070 2094886 6,23
2000Dec 348369 2025811 5,82
2000Nov 337698 2021191 5,99
2000Oct 337602 2022323 5,99
2000Sep 339817 2014125 5,93
2000Aug 338781 2022499 5,97
2000Jul 343909 2012884 5,85
2000Jun 342023 1997825 5,84
2000May 338382 2005859 5,93
2000Apr 338582 2022097 5,97
2000Mar 335456 2003226 5,97
2000Feb 331989 1988897 5,99
2000Jan 333840 1987997 5,95
1999Dec 350787 1923210 5,48
1999Nov 331071 1914637 5,78
1999Oct 330544 1900239 5,75
1999Sep 328282 1887809 5,75
1999Aug 327370 1878935 5,74
1999Jul 332861 1880658 5,65
1999Jun 324790 1857387 5,72
1999May 322403 1837747 5,70
1999Apr 320733 1820616 5,68
1999Mar 318574 1807938 5,68
1999Feb 313911 1787741 5,70
1999Jan 314331 1808480 5,75
1998Dec 323437 1732438 5,36
1998Nov 314284 1705466 5,43
1998Oct 313372 1681123 5,36
1998Sep 311823 1669227 5,35
1998Aug 315095 1660416 5,27
1998Jul 320715 1650839 5,15
1998Jun 315514 1656273 5,25
1998May 317279 1634368 5,15
1998Apr 314877 1626160 5,16
1998Mar 311850 1607042 5,15
1998Feb 311818 1585539 5,08
1998Jan 311449 1573311 5,05
1997Dec 320614 1565384 4,88
1997Nov 314712 1554021 4,94
1997Oct 311745 1550447 4.97 311131 1530295 4.92
1997Sep


ratio M1/currency, I called in other notes "Money" / "cash" has varied between 4.88 and 7.80 - apart from a period a little special, that of the euro's launch in late 2001/early 2002 - currently about to turn 6 (In France, changes in the ratio of "illiquidity" seem smaller, the ratio being himself m ^ me lower (currently around 5)).

This suggests two things, it would probably dig a little deeper.

a) A liquidity crisis if it occurs in the euro area, probably not begin not France, because there are relatively more tickets available (relative to paper money) in France and Europe - while, however, the use of bank money (through employment bank cards, checks or wire transfers) is at least as great in France than in the rest of the eurozone.

b) changes compared to M1 and cash ("currency") can not say whether the central bank or commercial banks that initiate the process of raising money. But the process of increasing the money supply is undeniable, accompanied by a similar increase in the amount of money Cash in circulation. These concomitant increases are greater in percentage terms than GDP growth, and seem to be explained, in large part by the interests not "ethical" levied by banks.

Comments welcome.

BL

Bottemless Women From Behind

again on the currency, censorship, disillusionment, sense-cons and realities

On the new single thought in the monetary field.

I thought not having to do more duty, dismantle certain practices, especially coming from someone who claims to champion the poor, the marginalized, state debt, and destroyer of thinking. And yet ... On a blog

known in the French blogosphere, that of Paul Jorion the following comment was posted by a "@ toad red" (February 5, 2010 at 20:44)

"Bravo for the demo! It is very much in the direction of "The Silver manual" which is based on the distinction between "real money" - paper money - and what is simply recorded as giving the impression of be money but that does not deserve the name change. Deposits are merely promises to pay, alias IOUs .. ")

I tried to answer this "Red Toad" the next thing:

You're right: The argument Voyer (author of the ticket denying money creation by private banks) is well within the meaning of the words of Paul Jorion in the " silver, Manual ". The only difference is that Voyer has no literary talent of Paul, and that his arguments are much more boring, so even more objectionable, BL

Comment removed, which act.

course, Paul Jorion has the right to do whatever he wants on his blog: he might just have the decency to write any argument - it was courteous and 'civilized' - in opposition to my ideas will be banned from my blog.

I will say here, in terms courteous and civilized, which to me seems "preposterous" in the theses of Jorion - and Voyer (which is as grammarian, trading, accounting and ... philosopher, since for him "Accounting is an important branch of philosophy").

So back to essentially the monetary issue, and that claim explicitly Jorion and Voyer.

Voyer happen to think " Demonstration of non-money creation by commercial banks and stupidity of the saw "The funds are deposits" . So I will not repeat here the usual "authoritative arguments" used against (most often) or for this thesis, I'll just use this simple common-sense the reader, who will his own opinion.

heading back definitions of money and currency , that what these words represent, both conceptually and practically, for all of us: when it will be necessary for clarity, I will use a concrete example, that of the euro, to avoid ambiguity.

The currency - a term used by all Economists - (English money) is what is used to pay in a given community: the euro in Europe, the U.S. dollar. The term 'popular' to put money, alas, is "money", which leads to confusion semantic regrettable.

We reserve the term " money" to "cash" ("currency" in English): our Canadian friends of the movement "social credit" call "pocket money", those who speak "Franglais" also say "cash" ticket 100 euros is the money. A total of 100 euros , whatever its medium, electronic or paper, is the "currency .

There are different national currencies: the dollar, euro, yen, ruble, are all examples of "money", they are not "silver". A $ 10 bill is money, the sum of $ 10 is money.

Having acquired, at least for the present discussion, what is a "currency" for three things in reality.

1) is a means of payment, universal, accepted everywhere (at least within a certain community: Europe to the Euro, Russian ruble for)
2) is a standard of value, a unit of account (the prices of goods and services are displayed in euros in France - not sheep or kilos of salt)
3) is a store of value (you can keep notes under his mattress, and later use, keep a certain amount of euros on his bank account and use it later without "too much" to lose purchasing power: it all depends of course on the general evolution of prices of goods and services in the community concerned)

On point 1, "payment method" some believe that ticket euro is more effective than a euro bank account. It can pay its bills baker, and any merchant. You may refuse a check payable in euros or using your credit card.
But conversely, I'd rather have 1000 euros in my account to place an order on the internet or pay a deposit for my new real leather sofa. Moreover, above 1500 or 2000 euro, any transaction must use the money "non paper" currency short (either by transfer, either as sending a check or in the form of debit card a bank account).

So, no decisive advantage between cash and currency (banking), except, of course, if you have a certain attraction for the work 'black' and suitcases full of cash to carry in any tax haven.

On item 3, "store of value" may suggest that retain their tickets Devers by itself or under the mattress is more effective than keeping a sum greater or lesser extent, to the bank. If
bank run, you may not have time to collect your tickets, crash, your bank, if everyone wants to do the same. In fact everyone agrees, whether or anti-Jorion jorionaiste or-Jorion, to think that there are fewer tickets available as currency in circulation (I still have not figured out how Jorion, before this finding , could say that money "no money" did not exist without a philosophical mystery doubt).
So if you're interested in tickets, you will think this is a better "store of value" that your bank money: this reserve "tickets" will always be available.
Again, this can be discussed, because in case of bank runs "partial", you can always try to make a transfer to another bank, rather than get trampled at the doors of your agency by a cheering crowd.

But regardless, even if one can admit that the "Notes", the paper money is on this point - the store of value, "better money" that the "currency in general," currency "scriptural" and 100 000 in tickets, your home is preferable to 100 000 euros to a numbered account, somewhere, the question arises here how money "non-paper" is issued, how it "begins" how it "ends", in fact how money is created and how it is destroyed, and by whom .

Historically, the story is well known. The currency began as a currency "goods", and between 1700 and 1900, this commodity money was mainly for gold, at least in the West.

This gold was "stored" in bank vaults. Bankers were just "custodians" This gold guards safes. Their clients brought their gold, and received in return a certificate of deposit (it was a real submission, customers deposited something, unlike what is happening now in bank deposits which, in general, are not customers' deposit "money" hard currency ").

This certificate of deposit, or received, could be used in 2 ways.

The first way, of course, is whether the trustee sought to recover all or part of this gold.

The second way was to use the receipt as a ticket to bearer to purchase goods or services for hire. This receipt could then pass from hand to hand, the holder of such receipt (sometimes cons authenticated by a signature, or a series of cons-signatures) using it as currency (exchange), as payment.
The "store of value", it was the stock of gold.

We all know, more or less, the rest is history. Not content to get paid for the service of "security" of gold to their customers - which is quite normal, of course - the bankers, noting that they rarely came to claim their gold, began to emit Nor receipts, but loans. These loans were not secured on the gold they possessed (most bankers did not "own funds", or if it did, it was a small part of the stock of gold that they "kept") but the gold they had on deposit.

And instead of being limited to the beginning of this scam: lend other people's money, but without paying more than their stocks are not allowed (if they had one million euros gold, paying the same amount it there would have been two million in circulation, one million "100% or" corresponding to the received gold deposits of their customers, one million loans "Ex nihilo" based on wind, and a clear deception), they went much further
. Noting
"empirically" (the word scientist, scientist who wants to "empirically" or "pragmatic" .... is "statistically") less than 10% of "their" gold was claimed to be withdrawn and that the withdrawal movements were mostly offset by movements of deposit, bankers these "guards" went to emit 10 times - for the more timid - to 100-fold - for the most "audacious" - the value of the stock that they had in custody.

Hence, of course, recurrent banking panics, when the dispossession of gold trying to return for more than expected, their gold.

Well it is exactly the same today, gold had 'just' been replaced by paper money and bank loans have become the bank money, instead of little words written on a piece of paper by their banker, "bank-note"

If you look at the "bank capital," their "equity", European banks are required by law to possess 2% of the money that 'they lend. With cash reserves (money, paper stocks of euro banknotes) that banks are also more or less required to have, or can be obtained very quickly in the day, we arrive at a possible loan of about 7 to 8.

Holds specifically and concretely, with twenty billion euros of capital, and reserve tickets 150 billion euros, the European banking system can lend up to 1 trillion , these loans are 80% built on "trust", the word noble to say "wind", the "vacuum" of money created ex nihilo.

The facts speak for themselves. Over the past 20 years the ratio "Money" / "cash" or, more precisely M1 / "cash" in Europe has fluctuated between 4 and 9.4, to oscillate, since 2003, between 4.4 and 6.2. This ratio is currently 5.95. (M1 is the sum of accounts - wrongly called "deposits", while most of the time these deposits were created by loans, and not by an initial savings - and tickets, euro-notes, outstanding)

What do Jorion and his disciples, while not disputing that figure, they say simply that this ratio does not make sense, we should not compare the bank money and money (I dare not assume that they have also refused we examines the ratio between loans based on gold and gold itself there a century or two, the "sign" not "the thing")

So back to this issue of creation Money-destruction.

Taking into account the banking system as a whole (you can also see one of my previous posts), we can consider that this system - all commercial banks - has a certain amount of euro banknotes, tickets that were issued by the ECB, European Central Bank.

Until we pay in euro, whether in notes or coins (scriptural) - Checks, credit card, wire transfers or other - there is no problem, no "leakage" outside the system.

problems can come from three sources:
a) if for some reason or another, customers want the system removing more "liquid" (the equivalent of "more gold") that the banking system possesses.
b) if for some reason or another, the central bank requires a change in the ratios of banks, whether liquidity ratios or capital ratios.
c) whether the purchases made outside the euro area are more important than sales, and if the euro is considered a more attractive currency.

In these three cases, the European Central Bank would intervene. She will do for the common good?: This is another story.

Now, if we look at what happens inside the system, the story is a little complicated.

So far we have considered a cluster of banks, the banking system as a whole. Talk of euro in general had a meaning, and a ticket of 100 euros had a specific meaning, speaking of a count of 100 euros - that this account is at Societe Generale, the BNP, Credit Agricole that the Post Office or Banques Populaires also had a specific meaning.

But if we speak of competition between banks, this is no longer necessarily true. One euro BNP does the same as a euro CA, BP one euro, one euro Post.

The answer is ambiguous: it depends. If competition is "oligopolistic" and "stable", ie if each bank is satisfied with its market share, not trying to attract new customers, "leakage" between BBP euro, euros and CA euros to compensate for other "statistically".
The key word here is compensation: overall, checks, wire transfers that go to a banking group to others will be compensated by check, bank transfers and other transfers which come from other groups, and this will be true for each banking group. It is obvious, and there is no need, I think, to be an expert in accounting to understand. It is a game of musical chairs, but where there are as many chairs as people.

In case of "turbulence" bank, what are the biggest risk that "statistically" the least, unless the rumors are more specific groups: General and society could be attacked during the episode Kerviel. The banking system did not like too much turbulence, it is rare that they are trying to grow "in house" market share: they prefer to buy banks that grow at their expense. Otherwise, if banks want to increase their share of cake, if some people want more seats than they have initially, it can go bad, of course.

course, they may also try to acquire customers "liquid", for example those who have "real" savings. And hunting of Caisses d'Epargne customers and owners of Book A (Squirrel or La Poste) has enabled Crédit Agricole attempt to win customers providing them with a little more security.

Returning leakage "of money", we have seen that they could occur within the banking system. They can also occur between the commercial banking system and the central bank, if more tickets are suddenly needed. But historically, the ratio of "Money" / "liquidity" is very rarely changes abruptly, and the "panic" for lack of tickets has never happened in France since the 1930s or even earlier.

This bank money, which comes from banks, which circulates primarily between bank accounts, deposit accounts (called, wrongly, we have already said "deposits"), where is it? Banks, course.

This currency is issued in connection with loans, and is destroyed during reimbursements: this is why some call this currency a currency "credit" or "money -debt. "

How can one explain, then, that this money, especially when measured statistically by the M1 (bank money more cash in circulation) is growing faster than GDP, ie the measuring the aggregate production and consumption of wealth?

If repayments are lower borrowing is good for one simple reason, as highlighted by Louis Even and supporters of social credit in the mid-1940s: banks lend cons interest. can repay the principal, since money that banks created to serve it. But you can not pay the interest with money originally created .

Therefore new debt and / or destruction of wealth, to allow the money supply to grow faster than GDP. Borrowers, without new borrowing, will never, overall, statistically, repay all their loans. This is true for individuals is true for states.

course some individuals can pay, but by condemning other individuals to be driven to bankruptcy : in this case the relevant currency will actually be destroyed. Either the banks will use the guarantees that the borrower has deposited ruined for his loan. Thus, overall, banks always come out winners, as the system will work well.

And it is the same for the public debts. Less than coerce borrowers into bankruptcy, or obtain a moratorium on banks, public debt will never die.

It is amusing to see some good apostles, including P. Jorion and consort, the question of where this economy is from debt, then they deny the phenomenon that causes the creation of money through loans.

One last question, maybe. If money grows faster than the wealth produced, why the money-liquid itself - the banknotes in circulation - roughly follows the same curve, if one believes the ratio "M1/Argent. Currency "non-paper" is increasingly used (more than 95% of exchanges are otherwise than by the use of cash), less money and less.

The central bank is it simply "Follower" : it transmits the monetary base (notes and central bank money) to support the growth of debt, ie money (scriptural) bank, or is it vice versa?

I leave this question open. The reader to see.

last remark finally. Can we get out of this deadly system (for the economy in general and for the excluded, the humble, those without degrees in particular)?

I believe, and have identified two ways to do this, that I would resume in a future post, that of social credit of Louis Even and his successors, that of monetary reform described by Allais in his book "capital tax and monetary reform" and in subsequent articles.

Good reading, critical comments welcome.

Tender Thoughts Greetings Cards

Currency , realities and utopias

Mint, realities and utopias

playback of a video, very interesting, produced by the organization ** " theMoneyFix " prompted me to take the explanation of the "monetary system" both to try to stop the fantasies associated with them, and also, most importantly, to try to indicate some possible solutions so that the currency is more a means available to the economy an end in itself.

First, I'll fix the vocabulary used, before browsing the outline of the video above in commenting on key points.

I shall make some comments more personal.

vocabulary monetary
What the Anglo-Saxons call " money" will be translated as ... " money" (within the meaning of " currency, or whether to be more explicit and precise monetary aggregate M1).

The word " currency" will be translated as " cash" or "cash" or "paper money" (Other equivalent would be "cash", "fiat money", "liquidity") . The "paper money" is issued by the central bank in Europe by the ECB.

The "money" has, therefore, as proper subset, paper money . Some questioned, but we'll see why this is not debatable.

That tells us, or reminds us, this video, on the sociological aspect currency :

1) Facts and sociological phenomena.
The money seems to govern most of existences, that we have very little or a lot.
Few people really know what money is, and seem also not really worry about it. It's more uses of money, what can be done with, than it is of concern to most people

2) After noting that the Federal Reserve in America has been based 1913, a consortium of private banks and is neither "federal" or "reserve" the problem " social reality "of money is raised.

3) Two lines of inquiry are suggested: Why
money, which should be at the service of all, we manage it, at least in the U.S. by a private organization?

Would not it because there a link between the monetary system and the collective unconscious of society : with no doubt, subliminal, that it would change society in order to change monetary system - on this point, I call rather for the opposite?

The big "secret" or the mystery of money will then be revealed to us, after 14 minutes instructive because of the impressions from the "common man"

4) For this, we first recall the role of bankers time the "gold standard".
The first currency, or the first "paper money" was simply to received gold cons. Instead of wandering and pay with gold coins, gold was deposited to his bank in exchange for a receipt, and we paid with the receipt, which circulated so instead of gold, one currency jangling of the time.

5) As it was not very "profitable" for our bankers, they began to issue more paper money they had in their trunk .

We do not say is how it was possible (since these pieces of paper could not be delivered as received, since the new gold was not made by the same assumption). One can only assume that was the beginning of the currency debt or bank credit. A banker said his client B. I lend you $ 1000, or better, I'm worth $ 1000 paper: B, delighted, asked rarely to be seen whether that gold existed, or where that gold came from another client C, which have deposited their gold to the bank.

6) It is the beginning of "money creation" by banks . Banks issue more paper money they really have gold, or "received gold" or "deposits" of gold. This secrecy did not really have a , at least he appears periodically on each bank run, when people want to "touch" their gold - supposed to be sufficient - instead of simply using only as payment means the "piece of paper" issued by a particular bank.

7) What follows in italics is a personal comment:
The only "secret", perhaps, is that the same applies now to the "paper money" vs.. "money well."

Let me explain: When only the
golden stock gave rise to receipts issued by the bank, received the "circulating" consistent with an initial saving (gold) that was used for various exchanges: at one point there were so many pieces of paper and deposits .

When the number of pieces of paper began to exceed the number of receipts - that is to say, the real gold, it only means that saving is insufficient to meet the needs of trade.
This is neither good nor bad, it's like that. The pieces of paper "circulating" outnumbered the "received".
This is not necessarily the "wind" as the pieces of paper flowing correspond to real wealth, a triptych production-consumption- additional investment.

Only if this triptych is gone we may wonder what all these pieces of paper. If you prefer a stock of gold - still - that can be bought with pieces of paper flowing - because we no longer believe that you can buy with these bits of paper - that is when the bank run, the cash crunch is not far.

8) Thus, when the stock of gold has been replaced by the stock of paper money (banknotes), and when the "moving bits of paper" were replaced by " money "- simple inscriptions on the books of accounts of banks, nothing has really changed.
Prospectors and depositors of gold have been replaced by the Central Bank the exclusive right to "create ticket".
The "pieces of paper" issued by banks ... have been replaced by bank money issued by banks ....
But the principle was and remains the same: banquent create additional payment paying more than they have in deposits "credits are deposits, even it is necessary that there be some initial deposits to extend credit - more important.

9) But why banks carry them this: when they give more loans they have on deposit, whether gold or paper money (dollars or euros), they take the risk of be "liquidity" - and hence be "liquidated", put into bankruptcy. They make a bet, and a finding .
The bet made, or risk taken: it can not provide enough liquidity (gold, a century ago, or tickets today) they appear weak, very weak, for interest they get for this money creation.

One example to illustrate this.
Consider a bank that has 10 billion cash, $ 8 billion of customer deposits and $ 2 billion in equity. With ratios of "prudential" classic, it could lend up to $ 100 billion. If it lends to 5% (which is not very high) it will earn in a year 5 billion (2 billion of capital: cost, 250%). His
risk: that his clients want to withdraw more than 8 billion or more than 10 billion in cash: low risk in a "normal" but may nonetheless.

To hedge, she knows - better than the time of the gold standard - it can rely on three resources: its fellow-on the interbank market, other financial institutions-the-bank money market Central, then the only way of "creating" paper money, the "real cash". Currently
(Natixis report of January 2010), European commercial banks can obtain the monetary base (currency paper or central bank money) to 1.5%, to lend at 4% or 5 - (4% for the state French, although he is allowing banks that loan to 1.5% ....)

The risk is not very important, much less so than the time of the stocks of gold: not easy find a new gold mine in the event of bank runs ...

To return to the video itself, the authors insist on a very sound idea, but not always well understood, which is that the currency is more of an idea, an agreement, an "agreement" (ie a convention) a reality. The monetary system is an information system in which some people recognize owe money to others, these IOUs can take several media, including the physical, tangible, becomes less and less used (3 to 5% of trade), whereas Information itself is increasingly dematerialized (how to use essentially the credit card, check and bank transfer between accounts), money "intangible" is used in more than 95% of cases .

loans underlying the issuance of currency virtualized, this book money, in concrete terms simply write in "bank accounts", sight deposits (it would be better to call deposit accounts because there was no advance deposit)

10) So the best interest including banks, which is the basis of bank loans, these loans are justified or not, "I am interested in your money" say the banks. In fact it would rather " loans that I grant you I'm interested " should say that each bank.

11) It is from this "interest" that the authors of the video broadcast two theses, which are based on reality, but whose conclusions are partly questionable. Since
as principal of the debts, loans and is expected to be repaid a loan of 10 billion will not create permanent 10 billion, a gross balance of $ 10 billion should not be confused with a net balance of 10 billion. Should we, in contrast, conclude that there is no money creation "scriptural" durable, like keeps (wrongly) a small current heterodox? The authors of the video does not directly address this point - which is odd, by developing two theses following:

The interest is not created during the credits - which is true - will not be reimbursed from the loan - which is still true, and the corresponding resources will be found elsewhere - which is still true. They conclude that the interest can not be paid until other resources - which is still true - and that these resources are necessarily in debt, which is partly questionable.
If there was growth, it is also conceivable that the Central Bank was able to accompany this growth of an issue of additional paper money, or that the interest paid to banks has been used to these banks - which have the right to spend their own money (= "money"), even if they prefer to spend the their clients, created ex nihilo "- to buy additional production allowed for growth.

Moreover, these authors argue that if every person indebted repaying its debts, the monetary system would collapse , as there would be more money.

Again, it is "almost" true, it all depends on interest rates and liquidity ratio. If we return to our example, with 10 billion money (= banknotes), an interest rate of 5%, and 100 billion in loans must repay 105 billion: there will be more debt, and it will remain 5 billion of "liquidity" of fiat money.
Their thesis is "theoretically" wrong - at any given time, depending on the accumulation of interest already made - but "almost real", interest eventually accumulate more than reason, and this, more faster than the interest rate exceeds the growth rate of the economy. Indeed, in practice, the average interest rate is surely higher than the one I mentioned, and it seems difficult that everyone can repay all its debt without jeopardizing the general economic equilibrium.
In another form, the oldest writing in the years since 1940, Louis Even, we'll see about Social Credit, said in a manner equivalent to the body (when not controlled) Bankers:
" The banker made the capital, just capital. Nobody's interest, since nobody else is making money. But the bankers demand both principal and interest. Such a system can take only with a continuous stream and increasing borrowing. Hence a system of debts and consolidation of power dominating the bank . "

So much interest is the major cause of monetary crises : should however addressing the role of creation monetary banks? is a possible solution for bringing real money - as way - serving economic prosperity-the end . We'll talk later.

I would argue more readily For my part, the proposal Next: delete (or remove) the debts of state and excluded : it would put several banks into bankruptcy, but it probably would rely.

We come now to the tracks more or less realistic, even utopian, proposed by the authors of the video: I will mention three, and adding two more of my own.

The proposed five tracks all have the same goal: allow the socio-economic system in which we live does not remain forever hostage to a flawed monetary system , and prevent the potential development wealth, material or not, either blocked or directed by the iron grip of a currency is not primarily benefiting only the wealthiest at the expense of poorer or less fortunate.

These five tracks are: complementary currency "conventional" mutual credit, barter, social credit and currency melting.

Mint complementary "classical" and barter share a common vision: it is not to replace the currency "normal", that operated by bankers, but to supplement it. The

complementary currency in the video is based on a practical experience (that of Ithaca in upstate New York) and is issued hourly equivalent, which would not have repudiated Karl Marx and his labor-value, time of work is the standard measurement of all things. This idea is similar to that developed by the proponents of the French écosociétalisme, one of the best known representatives is Andre-Jacques Holbecq. I think

medium for this type of money that, in my opinion, can not be meaningful at the level of a community rather swaging not exceeding a few hundred individuals, this However, a good approach to currency "complementary."
It may also have a sociological and psychological impact not negligible, re-socializing of excluded or vulnerable people by the "system". Another problem highlighted by one of the authors of the video is that currency "zone" is a currency, and its amount is defined. It may therefore be insufficient money, money stock (cons this argument seems questionable, however, because the number of hours in a day is limited, too)

The barter ("bartering") Again, do not want to replace the currency classic, but complement it. We will exchange services products, through a grant, a news magazine, possibly web sites, the principle being to fight against the unused resources and unmet needs: printing does not turn that 50% of its possibilities, vintage cars sleeping in a garage, restaurant half empty, etc..
Again, at a local association or community not too large, this can lead to socio-psychological, but I do not see what barter industrialized as the track for the future.

Runway mutual credit seems richer, because it leaves decidedly off the beaten path. It is based on the fact that there is no system in this "stock" of money: the overall balance of the "credit mutuel" is necessarily zero.
At one point, there are accounts receivable and payable, but the debit-credit balance is necessarily zero. Everyone starts his day, or year with a zero balance, and according to its consumption and its "production" (of goods or services) is found at a given time debit or credit. The idea seems very interesting, and its use "community "Entirely conceivable. But its widespread use remains a mystery to me, despite all the books and articles or pointers I traveled on the issue. (See also )

In a world where all individuals are caring and generous, there would be no problem. In the real world, the issue of control seems fundamental.

The last two tracks are not included in the video.

One is the Social Credit Louis Even (http://www.michaeljournal.org/vraics1.htm) context in which production and consumption directly socially recognized and (therefore?) monetized. The currency is issued at the time of production, and destroyed at the time of consumption. Prices are expressed in what one wants, "euros normal" or "hours", depending on the socio-economic development. Banks are removed, at least in their role as shapers of debt (and interest rates), they can maintain their role as an accountant. For me, it "LA" runway digging, because it can be generalized and / or imposed on a department, a region or an entire country: it is not a utopian community restricted to a community "fun." It may be a utopia, but if it materializes, it does not depend on the kindness or good nature of individuals who constitute the society concerned. The social credit
talking about what should be done , what could be done: " Wealth is the thing, the money is the sign. The sign should go after the thing " (Louis Even , which also mentions the social doctrine of the Church and Pope Pius XI: 'Those who control money and credit have become masters of our lives ... without their permission no one can breathe')

Another track finally , complementary currency or substitute currency, I do know that of the slush money S. Gesell. It is an anti-hoarding currency, a currency biodegradable, a currency that is forced to circulate. The fact that she automatically loses, officially, a little of its value each month (eg 1% per quarter) is supposed to allow, even require, its traffic problems.

If the possessor of money is an incentive to spend it as soon as he receives it, separating the two parts of the transaction, selling a good or service against receipt of money, and spend money buying a cons good or service should make this shorter period, or almost instantaneous, and thus boost sales, so the production: less temptation to build a precaution, a mattress tickets.
The "store of value " portrayed by some as the absolute evil no longer exist. Again, this is probably an idea to dig, because it does not particularly appeal to good feelings, even if such feelings are very desirable course.

Among other tracks, some suggest no change in the 'small' detail near prevent money creation by private loans private banks, an expression of the slogan "100% money . I do not think if we are pleased with this, but ...

When we talk about currency reform, it is difficult not to mention the proposals Allais, specifically the focus of its monetary reform ( the other point would be a tax reform, we will not discuss here): Maurice Allais

has proposed (see C. Gomez ) in many studies to separate the functions (deposits and credits) by making exercise by separate entities. We have thus:

- Commercial banks , which would take care of that cash management customers, by covering 100% of paper money (issued by the central bank )***.
- loans banks that receive deposits / savings and loans at terms slightly shorter borrowers.

Comments and criticism welcome, BL



** see commentary 'anonymous' ***
point reminds AJH in a comment