Part 21: Monetary Reform: Series 1

More peaceful communication:

Hi John Hermann,

"I suspect it's not so much a question of my attention span, as of my having difficulty in understanding what you were saying."

From your perspective, I see that. So, I don't want what are semantical differences in understanding to come off as a personality conflict. You appear to be an exceedingly calm and patient person and certainly not thin-skinned. However, we really do use the language differently. You use it, in my view, from a narrow-school, narrow-canon perspective. I do not. I can speak within the confines of your "school," but one, among several, of my main purposes for being here has been to widen the discussion to include public versus private ownership. It has been a gross disservice to the whole of humanity that in many huge venues, public ownership was systematically removed as an option.

Perhaps this will help. If we place laissez-faire capitalism at one end of a spectrum and total socialism at the other, then the New Deal falls somewhere between the two. Leaving the issue of coercive democracy aside for the moment, I fall between the New Deal and socialism on that spectrum and much closer the socialism than to the New Deal. In fact, I sit exactly on socialism, per se. Now, coming back to coerciveness and democracy, the let-do capitalists are fine with my anti-coerciveness. They do not afford me the same measure of anti-coerciveness. If my way "wins" in the marketplace of ideas or even the "markets" as the capitalists use the term and win by reason of any degree of socialism, as in market socialism, those capitalists will cry foul. In other words, I'm welcome to my totally volunteer socialism provided the capitalists' ideology remains in ultimate control even if it loses in free and fair, head-to-head competition in their own marketplaces.

More to the point though, "endogenous" is a relative term. Endogenous to what? If the whole system is societally owned, publicly own, as directly opposed to privately owned, then one must be very specific when one applies the term "endogenous." If there is one bank, whether as a system of branches or whatever, that is publicly owned, then nothing in it is exogenous to itself in whole. If the US gets rid of finance capitalism and if the monetary system is owned in whole by the whole people together with none owning any more of it than anyone else, then what is exogenous money? Even gold found in the hills would be a public find in a completely socialist endeavor. At that point, the found gold "money" would not be labeled as being from the outside or inside of the monetary system.

Don't think you've accomplished much intellectually by sucking down one, narrow notion defeating deposits as a requirement for lending or the attendant Post-Keynesian endogenous/exogenous construct. It's not a big hurdle. It's fine that it's been stated, but it needs to end up a footnote because we need to end capitalism in the end. Contrary to Ron Paul's ideas, it's not liberty, that's for sure.

Now, if this is lost on you, there's really nothing I will be able to say in short order to clear things up for you about it. I do hope though that you do comprehend what I've just said.

It is true that I can't define my whole language before I begin to speak. Usage, my using my language with you, helps to impart it. We all learn each other's languages by exposure.

This brings to mind what recently occurred vis-à-vis Joe. I read the NEED Act making mental notes along the way (nothing unusual in doing that). I evaluated it based upon my retained thoughts. When I came to the part amending 1813(l) and looked at it, I carried forward with me that it was a problem. Now, perhaps I should have dropped everything right there and said something, but I hadn't even finished reading the whole Act yet at that point. I read on finding many, many things that I would change for the sake of clarity and to improve the legislation in numerous ways. I entered into the discussion here. The rest is history. In hindsight, I quit too easily trying to locate where Joe was getting the idea that everything worked via the current construction the way he imagined. It finally came out. It was a painful process, but the demon was exorcised. The devil was in the details; the missing outline designator at "'Such term does...", etc., all of which I was finally able to circle back around to pick up and demonstrate for the problem it is. I took the long way, the hard way, but didn't realize to do it any other way at the time.

So it is with the semantics of Post-Keynesianism you keep using within narrow confines. I'm getting the hang of your style while I'm attempting to broaden your horizons.

"...the problem of maintaining a firm demarcation between the intermediary and retail depository functions remains. And this is what Hummel's proposal for a single national depository would achieve efficiently and in one stroke." Actually, it should be a non-issue.

"The national depository would NOT be a bank in any sense, because it would not be set up to lend money." This is why I said "short attention span." We already went around on this. A "bank" is not defined by whether it lends or not. I do not know where you were taught that it does, but you were taught wrong. You need to drop that mistaken idea. The national depository would most certainly be a bank proper. If it doesn't lend anything, then it is correct to say that it is not a "lending bank." I do hope you will see that, as you've been insisting upon this incorrect fundamental and ignored it the first time I explained it. If you got this idea from Hummel, well, Hummel's wrong.

As for the mechanics of having one and only one depository, pardon me but it's all rather obvious, isn't it?

"Furthermore, all deposits in the national depository would be demand deposits or checking deposits. There would be no interest-bearing deposits, as occur in traditional (fractional reserve) banking. Obviously it would be desirable for the single national depository to be organized under the umbrella of the central bank, and for the central bank itself to be a public institution acting in a semi-autonomous manner, but having ultimately responsibility and accountability to the central government." Well, I agree with the exception of the "semi-autonomous manner" bit.

The problems we face are due to all the so-called autonomous/"semi-autonomous" aspects of government. The Fed is/isn't autonomous/"semi-autonomous" depending upon one's apparent school of thought, as Scott helpfully posted here. As you know, I'd rather take policy out of it by making it a purely technical issue. I refer to the huge difference between the "people" who would constitute the MA versus the public, opensource, computer-coding community that could and would rise to the occasion to make the thing absolutely free of bias. The goal would be a money supply determined by inflation/deflation being brought into the smallest oscillations possible (stability) while simultaneously growing the real economy and only the real economy – no more finance capitalism, period.

You appear to be a disciple of Hummel. Why?

"I see it as misleading and unhelpful to conflate endogenous/exogenous modes of operation with private/public modes of control. Even under a 100% public system of commercial banking (i.e. where there are no private banks) -- and irrespective of whether the financial system is fractional reserve, full reserve or no reserve -- one would be obliged to make a choice between whether the system will operate in an exogenous or endogenous manner. This amounts to choosing whether (a) the volume of money is the control variable with interest rates as a residual, or (b) interest rates are the control variable, with the volume of money as the residual."

Regardless, you can read the following based upon what I outlined above and not as a standalone concept. What interest? I'm doing away with usury. There is no usury in pure socialism, and that's a very, very good thing. However, if you want me to speak hypothetically, then I will say that you are doing what is akin to mixing metaphors.

"I see it as misleading and unhelpful to conflate endogenous/exogenous modes of operation with private/public modes of control. Even under a 100% public system of commercial banking (i.e. where there are no private banks)...." You see, what you did there goes right to my point above as to one of the main reasons I'm here. You said that discussing pure socialism is "misleading and unhelpful" regarding the discussion of "endogenous/exogenous modes of operation" and "private/public modes of control." What you did there was limit the options to exclude pure socialism, where endogenous/exogenous modes of operation don't exist less you wall off part of the socialist system from itself. You can categorize parts within a purely socialistic system, but you have to do it in a carefully qualified manner. You must be very specific and definitely not assume that the Post-Keynesian terminology as applied to a mixed economy can just rightly be superimposed without causing huge confusion.

Oh, I have a sinking feeling that you won't understand that last paragraph. You see, what is "misleading and unhelpful" is that you want to confine the discussion to the exclusion of presenting the people with the absolute fact that socialism is a completely doable and better system than capitalism. At least that's how I'm viewing what you are doing. The capitalists want to own all of the means of communicating and what may be said via those means. They want socialism to never be discussed on the merits where the whole people would drop capitalism and take up a new socialism, not Stalinism or the like, in fact, further from Stalinism than is capitalism.

"(I don't often like to use the word "socialism", because it has many meanings, most of which are misunderstood and/or misapplied, particularly in America)." Give me an example where it is misunderstood and/or misapplied, particularly in America. Don't get me wrong. I could certainly supply examples. I just want to hear your thinking on it fleshed out a bit.

"I believe that capitalism has some virtues...." Name one. I never heard of one, not when placed in the context of the vast configuration of everything. What one thing is ultimately virtuous about capitalism given all of the alternative way of being? This I want to hear.

Thank you, John. This isn't fixing the minutia of what's wrong with the NEED Act, but it may help to steer to a vastly better big picture anyway, which before all is said and done, needs to, and will, happen.

Tom

More (Update):

Hi John Hermann,

Which of those sources of the obvious [emphasis on "obvious"] wrote its given "definition" within the context of a fully nationalized money system where lending itself is replaced by funding -- not borrowing: no debts, no interest?

So, what's your point?

Do I need to come back with a list longer than seven showing examples of non-lending banks?

Are there no banks left if the Treasury becomes the one and only depository bank and the people give themselves funds for their needed and desired projects? No.

Notice the term, "depository bank." Google returned "About 438,000 results (0.38 seconds)" on "depository bank." Please don't come back with a "generally used" definition of "depository bank." I'm already aware, and everyone else can do a Google search on it rather easily.

BTW, as you know, usage changes, and I'm working on it.

Google also returned "About 51 results (0.19 seconds)" on "non-lending bank."

Non-lending banks exist. That's why your use of the term "generally" means there perhaps more than you intended.

Let's not needlessly stick ourselves in a capitalist box.

I will assume you take my point, even if you don't acknowledge, which seems to be par for the course around here for some not so mysterious reasons.

Thank you.

Tom

Monetary Reform: Series 1

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  • Tom Usher

    About Tom Usher

    Employment: 2008 - present, website developer and writer. 2015 - present, insurance broker. Education: Arizona State University, Bachelor of Science in Political Science. City University of Seattle, graduate studies in Public Administration. Volunteerism: 2007 - present, president of the Real Liberal Christian Church and Christian Commons Project.
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