You hold the contradictory positions that it is irrelevant to promote a pure gold standard; but not irrelevant to promote pure capitalism. You attempt to justify this clear contradiction with the above comments. Actually, neither has ever been completely tried. Each has been modified from day one. Splitting non-existent hairs does not cover up the fact that your pov on one contradicts your pov on the other.
It is remarkable how the 200 yr. old lies of the Jeffersonians still hold sway
Neither you nor I knew these two gentlemen. We both rely on perceptions from historical records. We are both aware that, by birth, Jefferson was the aristocrat. I am basing my opinion on their respective philosophical position when I say Hamilton was an elitist. Is it really your position that no knowledgeable person can conclude as I have despite the fact that there are authoritative historical records on both sides of the issue ? If so, why?
No country will ever close down its central bank because to do so will collapse its economy.
No country will ever voluntarily close down its central bank UNTIL the central bank causes the collapse of the financial infrastructure---and only then, if people wake up to the fact that central planning conducted on behalf of the general interest is merely sub-optimal BUT central planning on behalf of the elite is far worse.
But it is false that the economy of the U.S. was not negatively affected by the closing of the Bank in the U.S. Both times depression resulted the second one was the worst until 1929. Only because of the chance discovery of gold in 1848 did it lift because of the increased money supply.
Your facts are both sparse and inaccurate. For example, there was a severe depression in the early 1820s following the Panic of 1819, DURING the 2nd Banks reign. The UNPOPULAR bank closed in 1832 and was followed by 4 boom years followed by the Panic of 1837 caused by the Specie Circular in Dec of 1836. As someone who has studied this era, I have never seen your interpretation before and would be interested in a citation so that I can pursue it myself.
If the money supply does not increase when business activity increases the velocity of circulation must also increase or else the increase is shut off. Velocity cannot increase that rapidly with a gold standard. Thus, using the simple quantity theory equation P*Q=M*V one can see that output (P*Q) cannot increase unless either M, V or both increase.
Wrong. As the formula clearly allows, Q can go up while p goes down, for the same MV levels. It is how progress is reflected in an honest monetary system.
It is not the absolute quantity of money which is significant but the per capita amount.
It is neither. Any amount of money (AS LONG AS IT IS SUFFICIENTLY DIVISIBLE) can finance any size economy with any number of people, no matter how big or how small.
I don't quite understand your comment about the distribution of an increase in the MS. Sorry.
Currently, the banking system chooses who gets the increased MS by creating liabilities against itself to extend loans. I reject that process as both unjust and unsound.
I don't believe the Central banking systems of advanced countries have ever collapsed particularly not recently. Nor do I believe it likely to happen.
I believe it is DEMONSTRABLY inevitable. Furthermore, the only reason it has not yet happened is because of the huge welfare that you and I give the monetary elite. But, like a needle to a heroin addict, that welfare not only puts off the inevitable but makes it worse as well.
I will be happy to comment on your proposal but don't pretend to be a monetary expert so its value is limited.
You sell yourself short. Just as one does not have to be a weatherman to know which way the wind blows, one does not have to be a monetary expert to see the merit in a monetary system that benefits everyone rather than a small but powerful elite. I will post the article separately.
What prevents us from swapping $3.5 trillion in non-interest bearing paper (i.e., money) for the $3.5 trillion in publically held National Debt (i.e., bonds), thereby saving all that interest? Actually, only one thing prevents us from doing so: the banking system could pyramid the $3.5 trillion into ten times that amount thereby creating massive inflation. If we take this capability away, however, nothing prevents us from eliminating the National Debt, in its entirety. All we have to do is simultaneously pay down the debt (by replacing it with non-interest bearing obligations) and (by degrees) remove the banking systems ability to create and distribute money. By increasing the reserve ratio, ultimately to 100%, we will prevent undue growth of the money supply during the pay-off process. At the end of the process, a Treasury Certificate will stand behind every dollar in the system.
During the transition process, the Publically held National Debt will be completely paid off while the money supply will remain under control. The composition of the money supply will change, by degrees, from Federal Reserve money and bank deposit money to 100% U.S. Treasury Certificates. This effect is produced by slowly increasing the bank reserve ratio (the mechanism that currently allows banks to create and distribute money). For example, in Year 1, lets say paper money (Federal Reserve Notes plus Treasury Certificates) increases by 100%. This requires that the reserve ratio also be increased by 100% (from 10% to 20%) in order to keep the money supply stable. In Year 2, paper money goes from, lets say, $1 trillion to $1.5 trillion, or an increase of 50%. Therefore the reserve ratio has to also increase by 50% from 20% to 30%. At the end, the reserve ratio is 100% (i.e., the money creating ability of the banking system has been completely eliminated) and $500 billion Federal Reserve Notes have been replaced by Treasury Certificates.
Major initiatives such as the one proposed above will always produce various primary and secondary effects. Defenders of the status quo often use this fact, alone, to instill fear in order to avert change. This technique works best with people who believe they cannot possibly understand the issues well enough and, who want to believe the experts know exactly what to do ---and are motivated to pursue the general interest rather than special interests. Virtually all of the noted experts are, themselves, among the few beneficiaries of the current system. Gone are the days when people like John Adams, Thomas Jefferson, Andrew Jackson, Roger Taney, Martin Van Buren, James Knox Polk, Abraham Lincoln, James Garfield, Thomas Edison, William Jennings Bryan, Henry Cabot Lodge Sr., and Charles Lindbergh (to name a few) argued publicly, passionately, and persuasively for positions along the lines I espouse here. So be forewarned: powerful forces (along with their dupes and lackeys) have a vested interest in keeping you mystified.
My proposal, clearly, has four very direct and obvious effects:
1. The Publically held National Debt will be fully retired.
2. Hundreds of billion in annual interest will be available for other purposes.
3. The money supply will be government issued rather than the debt of private corporations.
4. The money creation process will have been removed from banks.
All other effects are less direct, less predictable, and therefore, less certain. I personally believe, however, that these secondary effects are largely, even overwhelmingly beneficial. In summary, I believe my proposal will lead to a more equitable, more accountable, less risky financial infrastructure. Lets discuss, however, the undeniable effects.
My proposal pays off the entire National Debt, saves substantial interest ($150+ billion per year), and creates no inflationary pressure in the process. What could we do with this found money? For one thing, we could give over $500 every single year to every man, woman, and child, forever. Alternatively, we could reduce personal income taxes by 1/3, across the board. Another possibility is to spend it on various government programs. This is somewhat more controversial. Everyone has a different favorite program and some opposes all big government. Virtually all such programs, however, are preferable to the big government program of paying unnecessary interest.
Defenders of the status quo might argue that it is impossible to eliminate fractional reserve banking (FRB) because the free market will demand the services that FRB uniquely provides, and, therefore, my proposal is inflationary after all. However, simple monetary regulation that requires banks to finance assets (e.g. loans) with liabilities (i.e., deposits) of equal or greater maturity is sufficient to disallow the offending behavior of FRB banks. Such legislation essentially revokes a banks money creating ability. It prohibits them from entering into the essentially fraudulent contractual obligations that arise when they lend out money that they are contractually obligated to pay out on demand (or within any other time frame shorter than the maturity of the funding asset). The 100% reserve banks and other institutional arrangements will be fully capable of providing all of the good services that FRBs now provide but without the inherent risk, instability, and unaccountable control over our money supply that FRB entails.
Defenders of the status quo may also argue that the economy needs a lender of last resort. There is absolutely no substance to this conventional wisdom mantra. As we now know, money is created out of thin air, anyway. If there is an emergency need for liquidity, the government, which is, at least, accountable to the people, is fully capable of dealing with it. Furthermore, the Feds track record as lender of last resort leaves something to be desired, to say the least. It actually contracted the money supply, thereby creating/exacerbating the Great Depression. Then, when it had its biggest opportunity to deal with the opposite problem, the double digit inflation of the 1970s, it was, again, completely ineffective.
Defenders of the status quo will also tell you that under my proposal you will have to pay fees for your checking account. In this, they are correct. You must measure the cost of paying for your checking privileges against the huge offsetting benefits we have discussed. Rest assured that defenders of the status quo will come up with other, relatively unformed and vague allegations: capital market inefficiencies; financial turmoil; intolerable interest rate levels; mom; apple pie; the flag. Some or all of these will be put forth as reasons to reject this proposal.