It is:

Only Via Debt and Only Indirectly to the Individual Via The Economy First

In other words the only way money can be created is as Debt via a loan by the business model of Finance, and the only way that the government can create additional individual income is by first injecting money into the economy via businesses and/or the various governmental bureaucracies. (The government does give individual money via the welfare  bureaucracies, but they also tax wages and business revenues so its a wash with no net increase)

And of course Direct and Reciprocal Monetary Gifting is the new paradigm that needs to integrated into the economy and pricing and money systems.

MMT  Main insight is that the monetary system can be distributive

Steve Keen”s Financial Instability Thesis  Main insight is that the problem lies with Finance whose product is money, also General Equilibrium Theory is fallacious and government austerity is completely ineffective and part of the problem not the solution

Public Banking  Main insight is that Private Banking is the primary structural problem

QE For The People/Positive Money/UBI/BIEN   Scarcity of individual income is major problem of modern economies/Private Finance’s virtual monopoly on credit creation is problematic

Social Credit   Actually preceded the insights of all of the above except it still had a remainder of orthodoxy regarding equilibrium and did not have a way to saturate the entire economy with the new paradigm they had discovered

Wisdomics-Gracenomics    Integrates all of the insights from above including Social Credit’s dual policies of a universal dividend and compensated retail discount and fully extends them so that their impact saturates the entirety of modern economies and actually reverses the problematic vector of same. It discovers the new paradigm and its full fleshing out of the philosophical concept behind the new paradigm brings full consciousness of it to economics and economists.

Finally it brings additional insights about the very process of Wisdom itself, (integration of the truths in opposites) the trinity-unity-oneness nature of all new paradigms and new insights into the structural and mental manifestations and effects  that accompany all new paradigms (fully integrated duality, inversion of a ratio, inversion of position-primacy of the old paradigm)

History tells us you cannot trust either the private banks or the government with money creation. That’s why we need a third constitutionally arms length institution with unimpeachably beneficial mandated monetary distribution policies like a universal dividend and a substantial discount to the “retail product” of every business model that is reciprocally rebated back to participating businesses. This institution could also serve as a truly objective and balanced central bank whose overweening mandate was increasing economic prosperity and freedom for all agents with a bias toward increased traditional production with less actual resource usage. That way it could be a true lender of last resort instead of being the hand maiden of the too big to fail banks.

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FC:  “No, it created the deposit out of an asset; a loan.”

Me:  “No, it created the deposit out of an asset; a loan.”

The fraud by The Banks in this case is that the “asset’s” value is essentially 0 dollars/pounds/etc.

Which of course means that in reality they are creating money out of the nothingness of 0 value.

FC:  I am wondering if we are getting too hung up on liabilities and not looking closely enough at what happens on the asset side of the balance sheet. When banks lend, or purchase existing assets, the balance sheet is grossed up. In the case of lending, both the liability and the associated asset are newly created. In the case of asset purchases, only the liability side is newly created: the balance sheet is still grossed up, but there is an equivalent reduction in the seller’s asset base, so the net change in assets is zero: this is more obvious if you account for an asset purchase as quadruple entry accounting rather than double entry. When banks pay staff from earnings, no asset is either created or purchased: there is no change in the size of the balance sheet, only in its composition – hence paying staff is really a change in the distribution of money, even though it appears to result in money creation. I hope this makes sense.

Me: What is needed is to take the cost accounting datums of any going concern and compare their totals with the payments to individuals simultaneously produced. As incomes paid is only a subset of total costs paid by any firm in any period of time it can be determined that the rate of flow of total costs inherently exceeds the rate of flow of total individual incomes required to liquidate those costs. And that means the only way to equilibrate the system is to distribute a costless gift to the individual.

I’m certainly not opposed to deciphering the truth, however rather than slogging along defining/nit picking about the exact definitions and processes of the problem (Debt Deflation/the monopoly paradigms of Finance/the fact that A will not pay for A + B when B is more than 0 combined with the truth that Austrian economists mistake for a solution, namely that: “There ain’t no free lunch.” The fact is that statement is actually a succinct description of the ACTUAL problem)

So the free and costless monetary Gift is both the individual and systemic solution. And crafting policies that are aware of and reflect the ongoing process reality of the temporal universe (Starting, Changing and Stopping) and that saturate the economy with the new monetary paradigm of Gifting instead of the old paradigm of Debt ONLY…are the forthright and intelligent route to freedom instead of fiddling while western civilization disintegrates until a rhyming war occurs with modern weaponry after which the Banks will be pleased to lend the relatively few survivors the money to re-build.

U:  Thanks for this! It helped me to connect the dots between commercial banks and the central bank, as well as to the government sector itself.

The next port of call would be the international sector: how does this money creation story develop in an open economy? How should countries behave when they hold a powerful currency (USD and its “exorbitant privilege”) versus a weaker one? Or when they are part of a monetary union?

Me:  Basically all economies need to resolve their deepest problem which is that the rate of flow of total costs and so total prices exceeds the rate of flow of total individual incomes simultaneously produced. The way to do that is implement the policies of a universal dividend and a price deflationary discount to prices….and then let “animal spirits” guide their development.

For undeveloped economies they might need to implement tariffs etc. exactly like every other developed economy did. It is also more complicated than this politically, culturally etc. of course, but history is history and when the primary problem of a system is resolved all manner of attending irrational problems tend to dissipate. So it is with human neurotic behavior, so it is with human systems.

For countries in a monetary union the decision is first should they join or stay depending upon the awareness of their leaders regarding the 5000 year old dominance of the business model of Finance and of the above policies. Frankly, I favor the concept of subsidiarity over republicanism because ethically self sufficiency trumps power, and its always problematic exiting a political agreement as Britain has discovered. (Despite this, Brexit is the correct move because the EU cannot and will not survive.)

While I’m entirely convinced  A + B is correct, frankly I think a much better approach to convincing theorists, commercial economic agents and individuals is to stress the breakthrough nature of the dual policies of social credit, especially the discount in its linking both increased purchasing power and effective control of the pricing/payments systems. Theoretic s are fine, but the true test of any theory is whether or not its policies effect and maintain freedom and prosperity for economic agents and that’s exactly what the discount policy does. Also, in positing A + B Douglas was actually the first disequilibrium theorist and Minsky and Keen are simply re-discovering that reality. The temporal universe being in continual flux abhors and prevents equilibrium except for a moment. The real power of the dividend and discount is their ability to invert the scarcity ratio of A + B from cost inflationary to cost/price deflationary….and maintain that new inverted ratio.  If one examines paradigm changes it is found that fundamental inversions of position, primacy and/or actions/direction/vector are always there. The Copernican Helio-centric paradigm change was simply the inversion/change of position and central primacy of the earth and the sun. The paradigm change from hunting and gathering to agriculture was simply the inversion of moving about for the abundance of nature to staying in one place and gathering more abundance from same. And social credit has the potential to change the entire vector of modern economies from cost inflationary to cost/price deflationary, not to mention inverting the primary vector of human civilization from obsession with power to the transformative and inclusive vector of Grace.

…but the true test of any theory is whether or not its policies effect and maintain freedom and prosperity for economic agents. Wisdomics-Gracenomics does this in spades.

You salt it, marinate it with Grace, and if necessary, because it is absolutely determined to dominate and there is a rational end to patience, you cut it into a billion pieces and give it to someone sane and able to see that there is something above it.

…you’ll see that not only does the paradigm change everyone’s mind, it also is a complete mental inversion of the former paradigm and also ends the absolute rule of the former paradigm while becoming the new problem resolving idea.

Thusly, any economist who doesn’t think that Finance must step down off its structural and paradigmatic throne is fooling him/herself, and should ask themselves what is the opposite/inversion of the paradigm of Debt Only?

Answer: Monetary Gifting

A new conscious awareness is the beginning of all true advances, and the end of all spiritual and scientific investigations. And the realization that Grace is the pinnacle concept of Wisdom, Grace as in Gifting is the new monetary and economic paradigm and Grace as in integration-saturation the necessary monetary and economic policy effect…is the message that must take root in the individual’s consciousness so as to win the paradigmatic day.

Me:  The solution to the numerical anthropological conundrum is to directly and/or reciprocally make everyone relatively monetarily prosperous so that then every one of their 1 to 150 human associations will be more likely to have a smile on its face as opposed to a seething xenophobic and/or schismatic one. As the build up of Debt is the problem and the curiously monopolistic paradigm of finance is Debt as Loan Only, then monetary gifting seems to be the new paradigm to balance it and become the primary one of the two. The trick is how to democratically saturate monetary gifting and maintain that saturation with the best and most beneficial policy effects.

UN:  Money gifting ain’t gonna happen though. Why not make banks like venture capitalist firms that invest and help rather than simply loan?

Me:  According to SunTzu the best way to win a war is to convince the opponent he cannot win. As for making Banks VC firms, that’s probably a good idea, but in order for a new paradigm to saturate the economy you’re going to have to make as many firms as possible “an offer so good that they cannot refuse it.”

DB:  Debt jubilee would be a start. Then figure out how to keep the rent seekers from taking over the government again. We used to hang speculators well into the 1700’s and now they control the world…………. perhaps the past contains some hints.

Me:  A debt jubilee is an excellent idea, and I’ve always liked Henry George because he went deep in considering one of the three productive factors. Perhaps what we need is a fourth factor like a nation’s cultural heritage of productive capability.

…everything, consciously perceived.  And being pinned to hell is leaving anything unconsciously perceived.

Steve Hummel 10/28/2017