Monday, September 7, 2015

Mal-Credit V Bene-Credit

The workers today are paid in credits, not money.  There is little if any money in our economy.  Currency is not money, and 2/3rds of it is outside USA anyway.

The error in the textbooks is to claim money arose to solve the problem of double coincidence in barter...  the guy with 500 eggs who wanted a lamb needed to meet a guy with a lamb that wanted 500 eggs.  Thus money arose to solve this problem, especially gold and silver so everyone could go home with parts of sales  (eggs to 125 people at 4 each earning enough silver to buy a lamb...)

But that is not what happened...  people extended credit.  All the people who wanted eggs were noted by a tally, and the tally could be given to the lamb fellow, or stored in the temple (it appears all cultures kept the tallies and the gold and silver in their temples).  Religiously (to tie? people would make good on their asset-backed credit eventually.

This was both creative in the sense it allowed people to produce (create) without having to worry about either or barter or money and unitive in that to play this game you must be, more or less, acceptable to the community at large.  Failure to perform generates ever less access to the system, so the system has a built-in behaviour modification, civilizing aspect.

This was the case, largely, until the late 1970s, when the extractors gave raw materials to the processors on credit, the processors gave the manufacturers product on credit, manufacturers to wholesalers, wholesalers to retailers, retailers to end-users.  There is very little money needed at all for an economy to thrive (and then only for one shot deals or in times of disaster when the community is ruined by disaster).  Archeologists find pots of gold and silver where cultures ended in war, none when cultures end in natural disaster.  Money (usually gold and silver) is beside the point in a sound economy.  It is in the temple because the hegemon needs it to buy what he wants.

Back to all that credit extension...  up to 1970s there were no student loans, since you would work a summer to make enough to pay for the year; there were few if any car loans since you could earn enough to get a used car to start, home loans were got through savings and loans, which essentially charged "interest" in the medieval sense of covering a loss for making the loan as opposed to the new sense, since circa 1975, or making money on a loan.

A group digging up tin knew that for the next month it could make more money digging up tin after all costs than all the costs.  So its work was profitable, and it thrived.  It extended credit to its customers, who did so all down the line.  No money.  The workers at the end of the month went around and paid the grocer, pharmacist, S&L, gas man, department store, and so on with cash if they were paid in cash, with checks if they were paid by check.  

This represented a massive economy all based on asset-backed credit.  There was tin dug up, there were raw materials, wholesale warehouses, retailers and end-consumers.  No money, lots of bene-credit, asset backed and no interest.  Plenty of jobs and a middle class.  But what was the initiating credit to get the ball rolling?  Who financed the first step, the extractors?  Why of course, labor, who waited a month to get paid.  A practice, for all of the changes, that continues today.  Billions of dollars in float, interest free loans to business, which is in essence skimmed right off by the banks.

I have the manual where the banks in 1982, were taught to stop lending against the gold and silver in their temples (notice how banks used to resemble temples?) and start lending their credit, indeed the seminar was entitled exactly that: lend your credit not your money.

Once they learned from a few big players that the FED would bail out any loss, away they went.  Whoever borrowed the most could out-borrow and roll up everyone else.  Petco got all of the corner pet stores, Safeway got the grocers, Shell got the family service station, Walmart got the small clothing shop, Lowes got the corner hardware store, Applebys got the corner diner, Blue Shield wiped out the country doctor, and now Buffett is ending the small homebuilder, and so on, all this by banks lending malcredit, a deal where they really lend nothing but make a note on tally, they win if you win, they take whatever you have if you lose.  they cannot lose since they never put anything into the game.  It destroys creativity and divides communities.

Look at this huge Detroit oversupply of cars, they have no problem making these cars, it just results in tallies going up here and there.  There is no money involved, just malcredit.  Importing allows them to book any profits overseas to avoid taxes while never acually making anything.

We have no much more productive capacity than in the 1970s, but the claims upon that productivity are astronomical.  There is no possible way anyone can be made whole.  It will be up to Hillary and her crew to decide who gets what, among those who stand in line to make a claim.  World Wars help, since the victors decide on who gets what, just as USA settled who got paid for WWII.

If you have paycheck, property or pension, you are screwed.  If your definition of wealth is personal accumulation, you will suffer.  If you definition of wealth is contributing to the ever-expanding range of goods and services so an ever wider range of people can afford what they need and want with their own money (commonwealth) then you'll be doing as well as can be done, or better.  You'll be creating and unifying while the others are slaughtering each over for claims that cannot be honored.

So what does it say about the state of what economy?  once defined, to what extent are you engaged in that economy/  Why have anything at all to do with it?

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