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Money as Debt

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Nov. 12th, 2007 | 01:36 pm
mood: complacentcomplacent

This seems to bring together a lot of things I knew individually to be true about money, but hadn't really considered all together:
http://video.google.com/videoplay?docid=-9050474362583451279

I'd be interested in hearing any comments. The simplest things seem to inspire controversy -- people get labeled as crackpots even when they're just referring people to primary sources, definitions, and written laws. There's too much la la la I can't hear you in the world.

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Comments {26}

JP Sugarbroad

(no subject)

from: taral
date: Nov. 12th, 2007 11:02 pm (UTC)
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Interest has to be agreed ahead of time to be charged in the ripplepay system. Since credit is an optional thing, you have the option to refuse and thus have a zero credit limit with that person.

Interest reflects the value of time. Work done today is worth more/costs more than work done tomorrow.

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Triple Entendre

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from: triple_entendre
date: Nov. 13th, 2007 06:46 pm (UTC)
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That's fine, but what about the interest that is being charged on newly created money? No work was done.

yes, the *existence* of this new money as it is being created has some value to the system, but it seems to be slightly less than the amount of value that its existence removes from the rest of the system. Even if it's equal, it still implies an arbitrary (and well-hidden) transfer of wealth. (If it's truly greater, we should find a way to do as much of it as possible and give it to everyone, and we'll all be infinitely rich!*)

The argument that banks receive this grant as compensation for risk only works if there's collateral that the *bank* is risking, which is not the case!

I am struggling to find a shred of difference between this system and Enron's. So far, I got nothin'. (Which is also mostly what Enron had. Well, actually, maybe what Enron had was the unconscious belief that the government had granted it the some of its power to print money...)

Apparently, Enron's mistake was not having a standing military.


If someone can explain the current (international) monetary system adequately, we may be able to use that explanation to construct perpetual motion machines. Either way, it's worth figuring.

- Trip

* or is that the same as us all being infinitely broke?

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JP Sugarbroad

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from: taral
date: Nov. 13th, 2007 09:26 pm (UTC)
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I'm not sure what you mean by "newly created money". Interest in Ripple reflects this type of agreement:

"Do 1 hour of work for me today and I'll do 2 hours of work for you next week."

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Triple Entendre

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from: triple_entendre
date: Nov. 14th, 2007 01:12 am (UTC)
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by "newly created money", I mean the money that happens when you (person A) borrow money from a bank, deposit that money in another bank, and it is then (in part) loaned out by that second bank to someone else (person B). The money that person B now has doesn't come from anywhere. Or the original money you deposited is now in more than one place at a time, which amounts to exactly the same thing.

This property *not* being present in Ripple, and I assume that's a good thing, but I don't know enough to say for certain.

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JP Sugarbroad

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from: taral
date: Nov. 14th, 2007 01:36 am (UTC)
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Ah, that kind of created money. I don't see what's wrong with it. Banks are like any other business, but they increase the money supply instead of the velocity. Same macroeconomic effect.

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Triple Entendre

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from: triple_entendre
date: Nov. 29th, 2007 10:24 am (UTC)
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Alternatively, this suggests that whatever it is that's wrong with banks is also a problem with any other business, or that they have a different problem with a similar effect to it.

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Triple Entendre

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from: triple_entendre
date: Nov. 14th, 2007 01:25 am (UTC)
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Maybe the fractional reserve system + FDIC translates to "I promise to have someone do 2 hours of work for you next week if you promise to do 3 hours of work for me the week after that, but I'll only actually do 1 hour of work and replace the other with a promise to have someone else do it, and you'll never get around to demanding that it actually gets done. But if you insist, and I can't deliver that promise, 100 people you don't know will have to give you a penny."

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JP Sugarbroad

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from: taral
date: Nov. 14th, 2007 01:38 am (UTC)
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I don't think your analogy here works quite right.

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Triple Entendre

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from: triple_entendre
date: Nov. 14th, 2007 02:09 am (UTC)
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Be nice to it; it's been tortured and never quite recovered from the experience.

I went ahead and posted it hoping someone might be inspired to make a better one.

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Triple Entendre

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from: triple_entendre
date: Nov. 14th, 2007 01:31 am (UTC)
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I'm sorry; I wasn't being clear that I was responding to your information about Ripple with speculation about the monetary system at large, not Ripple.

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