Skip to main content

Economists, Apologists and Sophists for Usury. Positive Money sells out to Bankers? Or Donald Wheres ya Trousers.



The first part of this so-called debunking of the desert island interest myth caught my eye as did a similar debunking by Steve Keen in Forbes. One of my touchstones of the critical faculties of any Heterodox or Radical ´´Progressive´´these days is to see if they are Sophists for Usury or Sophists for Anthropogenic climate change.
Fill in your own No True Scotsman arguments to taste.

No true Scotsman

From Wikipedia, the free encyclopedia
For the practice of wearing a kilt without undergarments, see True Scotsman.
No true Scotsman is a kind of informal fallacy in which one attempts to protect a universal generalization from counterexamples by changing the definition in an ad hoc fashion to exclude the counterexample.[1][2] Rather than denying the counterexample or rejecting the original claim, this fallacy modifies the subject of the assertion to exclude the specific case or others like it by rhetoric, without reference to any specific objective rule ("no true Scotsman would do such a thing"; i.e., those who perform that action are not part of our group and thus criticism of that action is not criticism of the group).[3]









    • Avatar
      Bernard Lietaers fable of the 11th round adresses this question, I have wondered why Steve Keen and others seem so keen to pooh pooh this as a naive urban myth. 
      Usury is the Price of money, it is the metric of Economists, the high priests of Economics Woo.
      What we see in Keen and Varafoukis is really at best a controlled opposition clinging to the social control mechanism that is debt based money. They all do it.
      Prouhdon scotched the artifice in his dialogue with bastiat, and also as described by Kropotkin.
      Story of the 11th Round.
      http://www.lietaer.com/2010...
      We can learn a lot from the Swiss referendum on Citizens Income as discussed here.
      ´However, the nearly universal misunderstanding of money is a major obstacle. For too long we’ve allowed a small coterie of bankers and “court economists” to hold the secrets and “tutor” us. So, it’s time for total openness.
      First, regarding the claim that the Swiss proposal would’ve been too costly, what’s entirely omitted from the discussion is that the proposal (and similar proposals elsewhere) appear to call for re-distribution of existing money—taking money from certain sectors through taxation and re-allocating it to the people at-large.
      The implication is that the money supply is basically static and that re-distributing limited funds would require tough budget decisions—sparking tax hikes and associated spending increases in several areas; hence the claim “costs too much.”
      But a successful basic-income plan can and must be based on the creation of new money, or “distributism,” not on reshuffling existing money, which is “re-distributism.” That’s the “state secret” that no one wants to touch.
      The issuance of new money needs to happen to overcome the huge “gap” between today’s paltry purchasing power and the massive mountain of debt and the towering totality of prices on all available goods and services. We have full stores and empty wallets. (Ideally and importantly, governments should reclaim their interest-free money-creation rights and forbid private central banks from creating money any longer).´´
      http://leconomistamascherat...
      This is for me the nub of the matter something I have in common with Joseph Prouhdon, explained by Peter Kropotkin in the Encyclopedia Britannica thus.
      https://archive.org/stream/...
      ”Now Proudhon advocated a society without government, and
      used the word Anarchy to describe it. Proudhon repudiated,
      as is known, all schemes of Communism, according to which
      mankind would be driven into communistic monasteries or
      barracks, as also all the schemes of state or state-aided Socialism
      which were advocated by Louis Blanc and the Collectivists. When
      he proclaimed in his first memoir on property that ” Property
      is theft,” he meant only property in its present, Roman-law,
      sense of ” right of use and abuse ” ; in property-rights, on the other
      hand, understood in the limited sense of possession, he saw the
      best protection against the encroachments of the state. At the
      same time he did not want violently to dispossess the present
      owners of land, dwelling-houses, mines, factories and so on. He
      preferred to attain the same end by rendering capital incapable
      of earning interest; and this he proposed to obtain by means of
      a national bank, based on the mutual confidence of all those who
      are engaged in production, who would agree to exchange among
      themselves their produces at cost-value, by means of labour
      cheques representing the hours of labour required to produce
      every given commodity. Under such a system, which Proudhon
      described as ” Mutuellisme,” all the exchanges of services would be
      strictly equivalent. Besides, such a bank would be enabled to
      lend money without interest, levying only something like 1 %,
      or even less, for covering the cost of administration. Every one
      being thus enabled to borrow the money that would be required
      to buy a house, nobody would agree to pay any more a yearly
      rent for the use of it. A general ” social liquidation ” would
      thus be rendered easy, without violent expropriation. The same
      applied to mines, railways, factories and so on. ”
      Such is, substantially, Socialism’s theory of Capital and Interest.
      DOI-IV-3.52
      Not only do we affirm, in accordance with this theory (which, by the way, we hold in common with the economists) and on the strength of our belief in Industrial development, that such is the tendency and the import of lending at Interest; we even prove, by the destructive results of economy as it is, and by a demonstration of the causes of poverty, that this tendency is necessary, and the annihilation of Usury inevitable.
      DOI-IV-3.53
      In fact, Rent, reward of Capital, Interest on Money, in one word, Usury, constituting, as has been said, an integral part of the price of products, and this Usury not being the same for all, it follows that the price of products, composed as it is of Wages and Interest, cannot be paid by those who have only their Wages, and no Interest to pay it with; so that, by the existence of Usury, 
      Labor is Condemned to Idleness and Capital to Bankruptcy. 
      DOI-IV-3.54
      This argument, one of that class which mathematicians call the reductio ad absurdum, showing the organic impossibility of lending at Interest, has been repeated a hundred times by Socialism. Why do not the economists notice it?
      DOI-IV-3.55
      Do you really wish to refute the ideas of Socialism on the question of Interest? Listen, then, to the questions which you must answer: –
      DOI-IV-3.56
      1. Is it true that, though the loaning of Capital, when viewed objectively, is a service which has its value, and which consequently should be paid for, this loaning, when viewed subjectively, does not involve an actual sacrifice on the part of the Capitalist; and consequently that it does not establish the right to set a price on it?
      DOI-IV-3.57
      2. Is it true that Usury, to be unobjectionable, must be equal; that the tendency of Society is towards this equalization; so that Usury will be entirely legitimate only when it has become equal for all, – that is, nonexistent?
      DOI-IV-3.58
      3. Is it true that a National Bank, giving Credit and Discount gratis, is a possible institution?
      DOI-IV-3.59
      4. Is it true that the effects of the gratuity of Credit and Discount, as well as that of Taxation when simplified and restored to its true form, would be the abolition of Rent of Real Estate, as well as of Interest on Money?
      DOI-IV-3.60
      5. Is it true that the old system is a contradiction and a mathematical impossibility?
      DOI-IV-3.61
      6. Is it true that Political Economy, after having, for several thousand years, opposed the view of Usury held by theology, philosophy, and legislation, comes, by the application of its own principles, to the same conclusion?
      DOI-IV-3.62
      7. Is it true, finally, that Usury has been, as a providential institution, simply an instrument of equality and progress, just as, in the Political sphere, absolute monarchy was an instrument of liberty and progress, and as, in the Judicial sphere, the boiling-water test, the duel, and the rack were, in their turn, instruments of conviction and progress?
      DOI-IV-3.63
      These are the points that our opponents are bound to examine before charging us with scientific and intellectual weakness; these, Monsieur Bastiat, are the points on which your future arguments must turn, if you wish them to produce a definite result. The question is stated clearly and categorically: permit us to believe that, after having examined it, you will perceive that there is something in the Socialism of the nineteenth century that is beyond the reach of your antiquated Political Economy.
      P. J. PROUDHON.
      Quite !
      https://www.marxists.org/ar...
      Steve Keen tried this already in his Forbes article the reality nheld up against Keens own beautiful theory is amply scothced in the comments.
        • Avatar
          http://simonthorpesideas.bl...
          All Risk No Reward 2 years ago
          Yes, the money flows, BUT NOT TO THE MAIN STREET DEBTORS IN AMOUNTS THAT MAKE THEIR DEBTS PAYABLE. Therefore, the choice is to exponentially grow the debt until the exponential debt-money growth implodes on its own or allow Main Street to implode sooner because there simply is not enough money available to Main Street in order to pay their debts.
          That concept isn’t complex, rather it is extremely simple.
          There is absolutely a positive net annual income flow into the Debt Money Monopoly Corporate Borg System and away from Mr. and Mrs. Main Street… and that annual income flow represents INEXTINGUISHABLE DEBT TO MAIN STREET CITIZENS…
          The complexity you inject into your examples actually works to obfuscate the simple truths behind debt-money systems. It really isn’t complicated.
          Two comments of note on the Keen article, also good to see others here are equally tunes into the Usury problem.
      • http://positivemoney.org/2017/03/interest-2/
      • The mechanism for the accelerated growth of indebtedness and corresponding monetary assets – a veritable infernal machine – is described in full detail in “The Money Syndrome” by Helmut Creutz.
        The following graph is taken from the book “The Money Syndrome“. It shows the market participants divided into 10 groups according to their disposable income and the amount they are using for consumption per year (the green columns). The orange columns indicate the interest payments hidden in consumer prices and the blue columns show average interest returns that the members of the respective groups receive from owning an interest bearing asset.
        redistribution mechanism
        The following graph is an extraction of the above figure and shows the balance of interest payments and interest yields. The balance of group 9 is almost even. The members of this group own interest bearing assets worth at least 450,000 euros, which yield as much interest returns as they pay while annually spending 50,000 euros for consumption. All lower groups have smaller assets the returns from which don’t suffice to compensate for the losses in consumption. Therefore, their balance is negative. Only group 10 has a positive balance and collects what the majority of market participants (groups 1 to 9) lose in this game. The growing gap between rich and poor is often referred to in the public discussion, but no one ever asks how it is caused. At any rate, primarily the creditors in group 10 should be asked to contribute to the emergency parachute for Greece, because they are the winners in the game.
        The whole premise of the article seems wracked with the same sophistry that we see in Jeremy Benthams , A defense of Usury. Why is PM bothering itself as an apologisdt and sophist for Usury?
        Benthamns Defense of usury is flawed in that it misunderstands the Debt aspects of Money creation, which was not as bad then as it is now but was still a system being pedalled by the infamous John Law in France.http://en.wikipedia.org/wiki/John_...
        ll3/bentham/usury
        Where is the Debate about reforming money for England Wales and Ireland freeing people from the yoke of Debt!
          • interest balance
            This system of compound interest is the basic mechanism for redistributing wealth from the poor to the rich. Mathematically, compound interest is an exponential function, which inexorably leads to a crash of the financial system. Nothing can be done to prevent this crash.



          • Avatar
            An old PM blog from 2012 that attempts to illustrate the pernicious nature of our commercially issued, debt-based money system, using the maligned "desert island economy" thought experiment. There is no mention of the "is there enough money to pay all the interest" red herring. The real danger is shown to be the accumulation of power and control by the banker who takes over from the people the function of money creation.
              • Avatar
                First of all I'd like to point out that a Positive Money-system probably would not have these problems at all. This discussion and criticism is only about the current system. Still I'm worried that PM would put itself at the same side as Steve Keen in this matter!
                The way I heard it (by talking to bank employees), private banks do NOT let their income disappear in some theoretical increase of their equity caused only by decreasing liabilities. What happens in reality is that banks buy government bonds for the money they receive, as fast as they could, simply to get someone else to pay interest on their earned money. This seems to me quite logically. In the past, banks deposited their surplus in a competing bank, nowadays they buy bonds.
                So the money paid in as interest is treated as an asset after all. An asset which requires compound interest.
                I've often wondered what people mean by "interest per se". In a private banking system there is only compound interest. Interest is just a name, or a number showing the growth of the exponential function after a year. Compound interest is what really exists, it is the process that is actually working, day after day. So in order to find the root of the imperative we have the look at the compound interest from all aspects, and specially the compound interest on the hoarder's deposits, and we have to keep in mind that there is almost no way for money to be interest- free in the current system.
                Example: 10 people and 1000 silver coins on a desert island. They have 100 coins each. Someone comes up with the great idea that they should start a bank, because then everyone would be promised 2% interest on their deposits, and they will all get richer...
                What will happen? 
                My answer: The system might seem to work for a short while, as long as borrowers work hard to pay everybody's interest on deposits, including their own. But not in the long run. You can't race against an exponential function and expect to win.The group will soon face a lack of ideas, new branches and borrowers. The circulation velocity slows down again, and they will end up with a zero interest rate on deposits, or close to zero, and now with less available money because of those greedy mr A, mr B and mrs C, who have been hoarding all their interest money all the time.
                As we (hopefully) can see from this example, hoarding isn't the only reason for the imperative to emerge. Hoarding make the situation worse, but the primary crazyness is the bank's promise to make every single deposit grow exponentially over time and simultaneously pretending that such a system could actually work with a constant (non-growing) money supply.
                  • Avatar
                    Remember, interest is paid out of deposits but it arises because of the level of outstanding loans. If banks allow deposits to dwindle to nothing by not returning the interest back into the economy through spending on current goods and services, so that their source of interest income dries up, they can indeed restore things by creating new deposits. In the absence of current spending by banks, this can be done through extending new loans or buying existing securities, but that does not involve spending the hoarded interest: the level of equity does not fall, as it would with current spending. Interest received is not an asset for banks since it does not accumulate as cash on the asset side of the balance sheet as for all other institutions.

                  Comments

                  Popular Posts

                  Econosophy and other musings - Post a Comment

                  My use of Wikipedia since February 20th

                  Have Banks Killed their Golden Goose

                  Positive Money Forum • View topic - Mortgages - Grip of Death or Total Scam or Both?

                  Positive Money Forum • View topic - People here are misunderstanding modern banks #WAYBACK MACHINE ) Lazarus Post.Update)

                  Blogger: Dashboard

                  Syria Cui Bono, Incitatus (Boris Johnson) Caligula (john Kerry) and the Curious case of the New Consul at the United Nations Security Council (Updated 7th April , Trump ordered attack On Syria)

                  Meet The Fuggers, Brexit, The Euro and Clueless Elites.