BB: I don’t see the way banks create money as the problem. As a society we need to get it from somewhere, so we do need somewhere. Difficult to see how banks can justify the interest though, given the lack of any need for compensation for opportunity cost and any risk they run being a matter of accounting. Why not just use different accounting? There was a time in the world before double-entry bookkeeping, perhaps now is the time for after it. If the banks do indeed cease to be banks, I’m good with that. Why not introduce licensed money creation shops/houses/palaces, where your personal pledge of payment (the asset) can be exchanged for government approved assets (notes, formerly banknotes) for a flat fee, itself to be paid in installments over time?
Banking/Money creation cannot be fully entrusted to either private finance or the government as mere regulation that can be manipulated by vested interests. A third constitutionally arms length protected money creating institution with specifically mandated policies (universal dividend and “retail product” discount) is necessary if we are to be serious about resolving the money system’s problems.
Double entry bookkeeping is one of the greatest innovations humanity has come up with ranking right up there with the computer and agriculture. Utilizing its digital format and crafting monetary policies around it could “knee cap” private finance’s monopoly on credit creation and reverse the continual build up of Debt that results from its enforced paradigm of Debt Only.
BB: Steve, you are from Babylon and I claim my five pounds 🙂 I didn’t get your last paragraph at all, I’m afraid, I’d need to see examples.
Me: Sure BB. The pricing system and money system are both digital, that is $10 applied to the principle of a loan reduces it by $10 and $10 paid for a product or service liquidates $10 in prices. Hence, a 40% discount to prices that is rebated back to the merchant granting it to their consumers enables the enterprise to sell their product at 40% below their best competitive price…and yet get their full price because their discounts are rebated back to them by the third monetary authority I referenced. This policy was originally masterminded by C. H. Douglas and his theory of Social Credit almost 100 years ago. However, he suggested it only at the very end of the economic process at retail sale. My insight is that any point of sale throughout and within the entire economic process is completely analogous to retail sale in that it is a point of summing and momentary stopping of costs and prices. My innovation is applying Douglas’s discount policy to every sale of every business model to their “retail customer” hence broadening and extending the policy and at the same time saturating the entire commercial economy with the the reciprocal part of the new monetary and economic paradigm of Direct and Reciprocal Monetary Gifting. The effect is to enable enterprise to sell their product at a 40% discount thus increasing their volume of sales which translates into higher profitability. It also gives every individual an immediate 40% raise because their purchasing power has just been increased by 40%. When was the last time any economist or politician ever accomplished that much for the individual? Fast answer: NEVER.
And finally, the real problem with the current money system is it forces continual borrowing in order to “survive”. However, continuous borrowing is eventually debt deflationary as even at 0% interest if an individual or enterprise has debt service that outstrips their income….they’re bankrupt. My Wisdomics-Gracenomics universal dividend and extended discount policies eliminate the systemic necessity to borrow in order to limpingly survive for a period…and then still fail.
RM: Steve Hummel, You advocate a “constitutionally arms length protected money creating institution with specifically mandated policies..”. That’s exactly what Positive Money advocates. However, central banks would actually fulfil that purpose: they are about as “arms length” as we’ll ever get. And the various fiscal responsibility committees springing up around the World are fairly arms length as well.
Me: The key is a third institution. Thirdness is the signature not only of true alternatives but of integration which is the very process of Wisdom. What we need is to awaken to the pinnacle concept of Wisdom as it applies to economics and money systems because the pinnacle of integration would be both thirdness and greater unity, wholeness and oneness thereof.