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To: Skeeter Bug who wrote (251385)	6/1/2010 11:27:10 PM
From: neolib	Read Replies (1) \| Respond to of 306849

in your original example, no money (cash or coins) was created unless a private bank was directly involved and a lone made. What the heck does a private bank have to do with anything? Thats why I gave the example I did. The change when a "bank" pops into the equation is that multiple currencies are replaced with a single one, and central control replaces distributed control. But that does not change non-money into money. It changes multiple forms of money into a single form of money. People don't have to worry about this slip being of different value than that slip, even when they are both worth "1 fish". When you write me an IOU, I'm the freaking private bank. I can then trade your IOU with every other freaking private bank (i.e. any other entity). Why can't you understand such a simple concept? I think the problem is you are fixated on cash and coins. Do you think there are cash and coins in sufficient quantity to equal all the deposits in banks in the USA? Since there is NOT, does that mean you think the deposits are not actually money? It does not matter if the bank has gold, paper, coins, an entry on a page, or some electrons in a computer behind it. Its all money. There are however, significant differences in fiscal discipline, system efficiency, etc. But you can make any one system emulate any other system with external controls. like i thought up front, you've confused wealth with money. I have no such problem. Suppose one of the survivors builds a nice house for himself, all without any debt. He has created wealth without any debt. Now suppose he sells the house to someone else for an IOU. No wealth has been created in the second transaction, but money has. Its that simple. Suppose instead while the one guy builds a house, the other spends his time combing the beach for rare shells and comes up with an amount of "money" equal to the sale price of the house. Now, I assume you are happy because he "mined" the money rather than printing it? You likely think he created "wealth" as well. What happens if the next day, everyone decides that those rare shells are not as pretty as some new shell, and nobody will take them anymore? What happened to the wealth? Thats the problem with the gold bugs. They want their money to have intrinsic value somehow based on rarity & desirability, rather than understanding that money is a facilitator of trade. if you like the system now, you'll love it when over half your taxes paid go to interest to private bankers - that day is coming. It goes to pay whoever holds the debt, which is millions of Americans who chose to by treasuries, plus millions of Chinese who made all our toys. Which is how it should be. The government should not get money for free, otherwise they will be even more foolish than they already are. You can construct your debt free money on the island without recourse to rare treasure. Outlaw IOUs, let the bank issue fiat money, and don't charge interest. How do you decide how to inject the money? There are all sorts of ways. You could let anyone borrow as much as they wanted at the start of the day (its just a vehicle for trade) and at the close of the day, they must return the same amount. Thus money is injected in the morning, and returns in the evening. Nobody gets in any trouble, because all accounts square up each day. All interest free. You could take the next step and let the money stay out for 1 week,1 month, 1 year... At some point the utility of placing a price on the money (interest) as a lever to affect behavior should occur. Otherwise individual behavior will start getting some people in trouble.