Re: Capital Includes Goods in Stock - NOT!
royls_at_telus.net
Date: 09/23/04
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Date: Thu, 23 Sep 2004 03:14:47 GMT
On Sun, 19 Sep 2004 17:59:05 -0700, The Trucker <mikcob@verizon.net>
wrote:
>royls@telus.net wrote:
>
>> On Wed, 15 Sep 2004 19:26:53 -0700, The Trucker <mikcob@verizon.net>
>> wrote:
>>
>>>royls@telus.net wrote:
>>>
>>>> "Hoarding"?? How is that different from deferring consumption in
>>>> order to allocate resources to production of tools rather than
>>>> consumer goods? And what has it to do with rent?
>>>
>>>When you impede progress by hoarding gold or money and then asking
>>>for a payment so as to _allow_ progress to take place then you are
>>>a rent collector and we are talking about usury.
>>
>> But you haven't explained why accumulating gold or money impedes
>> progress, any more than socking away hammers or computers. It's his
>> stuff. Why do you care what he does with it?
>
>If you assume a gold backed fractional reserve system, or a system
>of gold coins without any other form of credit money then the
>holders of gold can choke the economy and demand "rent" for their
>gold.
No, they can't. All they will do is provoke additional gold coinage,
diluting the purchasing power of their hoards.
>If whale's teeth were used as money (like sea shells) you would
>have the same problem. And a wheat or tobacco backed currency is
>probably worse.
But we have seen that attempts to "corner" the markets in such
commodities in order to extract rents therefrom always fail, and
usually bankrupt those who attempt them.
>>>It is assumed that someone else
>>>has borrowed these forgone goods (obtained goods from the market
>>>without presenting dollars or without actually laboring) and this
>>>someone now OWES the borrowed goods to the market.
>>
>> No, he owes them to the owner.
>
>You are leaving the financial intermediary (the bank) out of your
>party. The bank is an extemely useful element. The borrower owes
>the bank. The saver is owed by the bank.
Fine, the bank is still not "the market."
>It is quite fair to
>imagine that the borrower owes the saver, but that is not the
>reality. And the owners of the actual goods have long since been
>paid by the bank.
The presence of an intermediary does not change the relationship. I
do agree that when the bank is not just an intermediary but the
privileged original creator of the credit money, then that is a
different situation.
>>>The saver
>>>has a call on goods in the common market. The saver does not
>>>get MORE because he has saved unless the market, by virtue of
>>>investment (a different thing), is producing more and thus his
>>>savings will buy more stuff.
>>
>> Why not just because the borrower _agrees_ that use of the savings now
>> is worth more than the same savings later?
>
>In a central banking system there is an absolute disconnect between
>savers and borrowers and that is as it should be.
I'm not sure I agree with that.
>Now if two individuals
>wish to conduct lending and borrowing outside the banking system then
>that is a different matter and fine well and good. Or if there are
>other 100% backed institutions that lend the pooled savings of "investors"
>then that is also quite fine. All that matters is that there is a
>lender of last resort in a non profit central bank that can offer credit
>at a very low cost to those who can collateralize the loans and to those
>who have an established history of responsible credit management. In
>such a competitive atmosphere usury cannot exist.
That is certainly false, if by usury you mean consumer credit at
interest.
>>>QA saver is never OWED more than
>>>he saves and, in fact, will receive very slightly less.
>>
>> ??? Why? Why isn't he owed more if someone borrows his savings and
>> agrees to pay back more than the amount borrowed?
>
>Why would an intgelligent person do that when they can more easily
>borrow from the central bank?
In the sphere of consumer credit, the central bank would do nothing
the private banks don't currently do, except lend at no interest.
>And if they have an idea of how to
>do something better than the way it is currently done (these
>entrepreneurs) then they should be looking for venture "capital"
>outside the banking system.
Why?
>>>People
>>>will still save because they want to be safe and warm against
>>>tomorrow.
>>
>> They may also want more tomorrow at the cost of less today, just as
>> others will want the opposite.
>
>If they want more than the savings then they should be required to
>invest the savings in _real_ capital instead of trying to put the
>squeeze on everyone else.
They aren't "trying to put the squeeze on" anyone. They're just
responding to a demand, like the purveyors of any other service.
>>>That is called a preference to consume in the future.
>>
>> What about a preference for more consumption in the future rather than
>> less consumption today, or vice versa?
>
>As I said: If you want to _earn_ interest you could invest in
>_real_ capital.
And if you want to pay interest in return for immediate gratification,
you're out of luck?
>>>Now some of these savers will elect to risk their savings by
>>>investing these savings in _real_ capital so as to receive
>>>__INTEREST__ and thus INCREASE their personal wealth. This
>>>would be called _real_ capitalism.
>>
>> Lexicographers get to say what real capitalism is, not you.
>
>The _real_ is my own advective and the underline is not gratuitous.
>It is a term/phrase coined by me and *_I_* get to say what it means.
Then we won't communicate very well.
>>>Nor is the value of gold based on its use in production.
>>>Gold serves as a means to escape paper fiat currency and that is
>>>about it. A store of value that is easily guarded if you let
>>>someone professional do the guarding.
>>
>> Gold is easy to guard oneself, or to hide, and does not typically lose
>> purchasing power when hoarded, as token money does.
>
>Hoarded gold will gain purchasing power as the circulating gold becomes
>more and more scarce,
No. What happens when gold money is hoarded is that deflation
stimulates greater gold production, which reduces the purchasing power
of the hoarded gold. When the hoarders attempt to cash in by
dishoarding (whether by spending the gold or lending it), inflation
takes hold and they are SOL.
>>>> Whether the owner of the gold
>>>> deserves to be paid interest or not depends entirely and _only_ on
>>>> whether someone else is willing to pay him interest for the use of his
>>>> gold.
>>>
>>>Cool... I do not need gold to buy a car on credit and so we are
>>>done.
>>
>> But you do need credit money, which must also be saved ("hoarded"),
>> except when it is created by a bank.
>
>No.
>
>That is the whole point! In a fiat system there is absolutely
>no need for savings in the way that you seem to want. Go read the
>Bimini thing again:
>
>http://GreaterVoice.org/econ/credit.php
Sorry, but you do not understand how money, interest and savings are
related.
>>>>>>>Capital includes all the physical wealth that aids in
>>>>>>>the production process.
>>>>>>
>>>>>> Then it also includes consumer goods in workers' hands.
>>>>>
>>>>>No. Comsumer goods are not capital unless you are talking about
>>>>>demonstrator models of those free samples in the grocery store designed
>>>>>to get you to taste the product so that you will buy it.
>>>>
>>>> Persuasion is not production.
>>>
>>>The stuff is being used as a tool in marketing a product.
>>
>> And that is different from consumer credit lending how, exactly?
>
>Consumer credit lending for big ticket stuff is not dependent upon
>savings because the goods are the collateral and the buyers in
>aggregate assume the risk of bad loans.
That only leaves out one thing: the money.
>The credit buyers pay a
>fee to the central bank that covers the cost of bad loans. This
>same facility can exist for just about any type of loan, even the
>ubiquitous lip gloss and panty hose loans (credit cards). The
>_finance_ _charge_ for these differnt kinds of loans will vary but
>the borrowers assume the risk in the aggregate. As more borrowers
>default on these loans then the remaining borrowers must pay the
>toll and they do pay the toll. This is currently called "a higher
>interest rate", but we both know better. The payment is actually
>a mix of the necessary finance charge and rent paid to a bunch of
>privileged bankers.
You left out the savers.
>>>>>>>Computers in stock in the local electronics store aid in
>>>>>>>the timely delivery (production) of computers to consumers. It is
>>>>>>>thus consistent to class goods in the distribution pipeline as
>>>>>>>capital.
>>>>>>
>>>>>> And goods in workers' hands.
>>>>>>
>>>>>> IMO you are obscuring the vital difference between capital and wealth,
>>>>>> in order to maintain a spurious distinction between interest and
>>>>>> usury.
>>>>>
>>>>>Goods in a store room, in a closet, on a shelf, or in the back of a
>>>>>truck are simply "goods" and can serve as a store of wealth or you can
>>>>>actually
>>>>>call them wealth or savings or whatever. But such piles of stored up
>>>>>labor are NOT capital unless they are being phisically depreciated by
>>>>>virtue of use in the process of marketing. e.g. the floor demo unit
>>>>>will be sold as _used_ and in this case it will be OK to refer to this
>>>>>particular unit as _capital_.
>>>>
>>>> How does it contribute to production? Seems to me its function was
>>>> only in post-production distribution.
>>>
>>>Good question, but if we call retail sales "production" then we must
>>>allow the demo stuff to be called capital.
>>
>> Likewise the credit...?
>
>No. The demo stuff must actually be pre-existing. Credit isn't like
>that.
A bank creating credit money is not the same as an individual saving.
The latter's fund of purchasing power _is_ like the demo stuff.
-- Roy L
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