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To: GraceZ who wrote (28618)	3/23/2005 9:42:10 PM
From: Elroy Jetson	Read Replies (2) \| Respond to of 306849

This passage you cite from the "Wealth of Nations" provides a good starting point to un-blur the current confusion between money and credit, the combination of which the Federal Reserve mistakenly calls the "money supply". More likely deliberate, than mistaken, as so much of their policy depends upon obscuration. Richard Cantillon provided a clear distinction in his book "Essai Sur la Nature du Commerce en Général". Charles Rist's comments on this spectrum of ideas, from currency crank to hard money, "Standing between the adventurous ideas of John Law and the narrow ideas of Adam Smith, Cantillon provides the only theory which, even today, really explains the phenomenon of credit." One objection, however, may be made. Penetrating in his analysis when the problem is to explain facts, he displays a certain smug conservatism on the question of organizing credit. Law dreamed of gigantic reforms; Cantillon, who consolidated and increased his fortune in the existing system, saw no need to modify the credit mechanism." .

To: GraceZ who wrote (28618)	3/24/2005 12:22:36 AM
From: Elroy Jetson	Read Replies (2) \| Respond to of 306849

The litany of money counterfeiting which Adam Smith lists, illustrates the clarity provided by money which has its own intrinsic value, when compared to monetarist or fiat money. Someone who calls a half-ounce a full-ounce is quickly exposed as a fraud. Monetarists can increase the supply of money in a dark corner with none being the wiser, at least for a while. Let's look at history. A common weight for gold money of the past was roughly a quarter ounce (Guineas, Sovereigns, Louis d'Ors, and Napoleons) which today would be much like a $100 bill. Another common weight was roughly one eighth ounce (Florins, Ducats, Dinars, and Solidae) which today would be a $50 bill. The weight of gold contained in a Guinea or Florin purchases far more food or clothing today than it did in its time, as our efficiency has greatly increased in these areas. Yet these same amounts of gold, over time, have purchased nearly identical amounts of skilled labor - what Adam Smith called a Primary Factor of Production which accretes wealth, unlike bread or shoes. Over time a Ducat is a Ducat. The price of most things, when priced in Ducats, declines as society becomes more efficient / more wealthy. Deflation for those goods which are not Primary Factors of Production is an entirely ordinary occurrence in a normal capitalist economy. Monetarists can't bring themselves to agree with these facts, because to do so is to admit to the world that their system is a fraud. Their normal response is obscuration, an attempt to blur the sharp boundary of concepts until everything is a bland putty. It should not be s surprise that this is the same method of operation used by the Federal Reserve. .