I am just wondering about free market and money competition...

Suppose there is a free market, and everybody can use whatever he wants for money and exchange. Nobody forces a legal tender.

In such free system, as elsewhere, people are very different. Some hard-working, some lazy, some strive for power and domination and some not. Some are smart and some incredibly stupid. Some think in the long term, and some live almost unconsciously, only for the moment.

The ones who long for power upon others, are free to make usurious contracts and enforce them. They are also free to use gold as the only means of payment in such contracts.

So, what would happen next? Most probably, the power hungry ones will use the stupid ones as "useful idiots", and concentrate some money and therefore power. As the main value for them is power, they will use their new power and money to make some more, until their power is enough to eliminate the "free market and competition for all" and put themselves in position, where they do not need to compete, that is, will make monopoly on money and probably many other things and occupations. Then not only "useful idiots" become slaves, but also men who are reasonably smart and cannot be tricked into borrowing unless made by force.

This concentration of power is actually what has happened many times in history. When dominant positions are occupied long enough and competition is eliminated, decay sets in and elites degenerate, for the natural law of energy conservation is "You lose What You do not use". If one does not fight for power, he looses the power to do it. By inner or outer forces this hierarchy is overturned and followed by revolution and a short period of freedom, and cycle is repeated.

OK, the following is speculation, I confess :)
It seems, that the length of the cycle depends on the numbers of people involved in the "system". It can be tens of years for small societies of several tens of thousands and hundreds and thousands of years for large and populous states with entrenched hierarchies. The Western civilization actually can be viewed upon as one loose state of money lenders, that has approximately 500 years of age. How long until its decay sets in, if not already happened?

I will post the following link here too as it is relevant...

For a different anti-interest perspective:

Click to view link

Thanks, I will take a look at the Fitts thread.

---------------

I understand :). My 'clarification' was meant for BM and the capitol letters were meant for emphasis only! (I wish underlining was available on feedbacks, perhaps next time I'll use ** instead ... )

memehunter,

Did you not get the memo?

Go lay in the cheese bebe . . .

Click to view link

Summer (and anyone else still reading this thread), I encourage you to have a look at the very interesting comment by feedbacker pm at 01/10/12 04:43 AM on the "Catherine Austin Fitts" thread:

Click to view link

Among other things, feedbacker pm makes the following points, which have already been discussed on this thread:

1. "Interest charging is not sustainable in the long term, even if there is no fractional reserve banking"

2. "Every interest bearing currency concentrates wealth and power in the hands of issuer and therefore leads to increased inequality, exploitation and wars."

3. "The difference is not so much in the commodity underlaying the bills of exchange (paper money, in other words) - gold, silver, other metal or goods. The difference is whether these bills enter circulation via credit and bear interest, or not."

His detailed comment is very well written and lends further support to the ideas exposed by Anthony Migchels, Summer, and myself on this thread.

------------------------------------------------------------------
Summer: "About the JAK Bank (Sweden) videos it was obvious from the following parts of the video that I MYSELF posted, that there were some charges but they were minimal in comparison to what compound interest amounts to."

@Summer: Of course, you posted the video about the JAK bank and I thanked you for it (I never claimed otherwise). I simply thanked the Mosquito for his research on this bank. You are right to emphasize the difference between these charges and compound interest (especially in the long term).

(Typo post should have read):

This is a pertinent point as during those 20 centuries many a time there was tribal/clan/regional 'leadership' and yet the system operated. Therefore, for those who strictly insist that the structure of government is inherently evil and will have to enforce no interest (I do not. Any society whether tribal or central can be and has been, corrupt - it's down to how people behave viz., moral standards - that's the main point - PEOPLE make up a benign 'authority'/society) upon others are wrong.

Use a freer alternative and put the Banksters out of business.

Investment advisors will tent to occupy a sales-capable stance, and seem to operate the human microphone practically.

With all the faults and abuses of MMMMoney Mechanics, it becomes obvious to the stupid folk like me that the solutions needed will come from outside the Money-mind-tainted intellectual sphere.

Or has the problem been fixed already, learned audience?

When the last person leaves the old auto-crippling economy, please turn out the lights.

Human race needs a Telethon to raise Metaflorins.

To clarify the following, which will no doubt be misinterpreted:

"governments without (or with limited) Money Power"

Of course, governments issued their own coins and their value was "diluted" over time. However, in the absence of compound interest (banned at the time) and fractional banking (introduced by goldsmiths around the 16th century, let's not forget), these practices can hardly be described as those of a "Money Power", at least certainly not in a way comparable to our modern Money Power.

It's only a cognitive dissonance for those, like you, who don't see the following:

"Banking was conceived in iniquity and was born in sin.
The Bankers own the earth. Take it away from them,
but leave them the power to create deposits,
and with the flick of the pen they will
create enough deposits to buy it back again.
However, take it away from them, and
all the great fortunes like mine
will disappear and they ought to disappear, for
this would be a happier and better world to live in.
But, if you wish to remain the slaves of Bankers
and pay the cost of your own slavery,
let them continue to create deposits."

[Quote attributed to Josiah Stamp]

Whether the quote is bogus or not, the point is that Money Power without government will still manage to eventually dominate the structures of society. In fact, that's what Money Power did in Europe starting in the 16-17th century or so (i.e., we had "governments without (or with limited) Money Power" but Money Power managed, over the next 2-3 centuries, to overtake governments.

I'd call it a matter of interpretation rather than an issue of cognitive disonance.

Governments are not fundamentally and necessarily bad, even if coercion should be avoided as much as possible; while there is absolutely nothing that can be said to defend Money Power, because it is based on exploitation of others' resources.

DB: Thanks for pointing this out. No more need be said. (Though no doubt more will be ... )

You are right about that DB. Do you prefer to defend Money Power in light of what I just said? At the very least, you might admit that the choice is not as clear cut as you like to present it.

Hi bionic mosquito,

My friends are talking about you and DB.

Click to view link

About the JAK Bank (Sweden) videos it was obvious from the following parts of the video that I MYSELF posted, that there were some charges but they were minimal in comparison to what compound interest amounts to. It is also obvious, as I stated that it is indeed an 'anti-interest' organization. Furthermore, and most strikingly, the video gives an impressive critique of interest which is yet to be rebutted by the 'pro-interest' lobby.

The JAK bank video was an illustration of irrefutable evidence of the manipulation of the economy caused by something far more powerful and pervasive than government - Money Power - utilising interest as a weapon to seize the wealth of a nation, buying political allegiance to the detriment of all people except Money Power.

Worgl (as Migchels elaborates on in his new article) is a modern day Western example of an interest free system, and anti-hoarding measures (zakat/demurrage) leading to prosperity and business development even in an era of depression. Before this, another European example is Islamic Spain. Where zakat was used to distribute wealth among the poor. Many voluntary conversions to Islam followed - some commentators say this was partly a result of the impressive equitable financial system; and one of the reasons feudal Europe feared its spread).

'For instance, charging interest on money -- which had been
prohibited on both moral and legal grounds for more than 20
centuries suddenly, became a normal and accepted practice'
(From Memehunter's post)

This is a pertinent point as during those 20 centuries many a time there was tribal/clan/regional 'leadership' and yet the system operated. Therefore, for those who strictly insist that the structure of government is inherently evil (I do not. Any society whether tribal or central can be and has been, corrupt - it's down to how people behave viz., moral standards - that's the main point - PEOPLE make up a benign 'authority'/society).

Millions are starving and die, as a direct result of interest-debt (IMF, et al). This is an issue that transcends rigid adherence to an economic school or the mainstream that fails to highlight the problem.

"if given the choice, I'd rather take governments without Money Power than Money Power without government"

--------------------------

The key to your cognitive dissonance in ONE sentence ... and in your own words. Wow!

Reply from The Daily Bell

Thanks for pointing this out. No more need be said. (Though no doubt more will be ...)

BM: I don't think I claimed anything either way about Wörgl. In any case, I am not going to research these further at this point. I have researched the claim of the "interest free" bank in Sweden, and found it to be bogus - as they charge fees instead of interest.

M: Thanks for your research for the JAK bank. I'm no expert on this particular bank (you are the expert here... ) but I note that there is a difference between a one-time fee and interest from a mathematical perspective. About Wörgl, the point is that we have an example of an interest-free currency that was voluntarily accepted and apparently successful.

BM: In an honest money environment, I don't believe this to be true - as it is certainly not true for the individual debtor / lender, I doubt it is true for the system. In a fiat money environment, I find this irrelevant as it is the fiat money environment that is unstable in and of itself. But if this was the crux of your entire point, then we wasted a lot of each others' time.

Even if the currency is a commodity or commodity-backed, compound interest is associated with the exponential function which is unstable. Now, for your example, I actually disagree. It may "appear" stable for two individuals but be unstable for the whole system (this is actually relevant to my point about voluntary choices having involuntary effects on other market participants).

Let's say that you and I are in a free market environment, using gold coins as a currency. Let's say that you are a private bank, emitting your own gold coins. I am your only customer (only user of your gold coins). If I borrow money from you at interest, it will be impossible for me to pay the interest. Even if I could somehow mine the gold or get it from other market participants (using other currencies), I cannot legally coin them using your bank's "trademark"(this would be counterfeiting). Therefore, I am stuck (unless you accept to be paid in gold nuggets, but again this assumes that I can mine them, etc... ).

Now, if there are other participants using your currency, I can manage to pay you back, but only by getting their coins (which I assume are also loans from you; in any case, they cannot mint your coins themselves) and using them to reimburse you. So, again, we have introduced scarcity (and therefore instability) in the system: there are not enough coins to pay for both the principal and the interest for all customers, even if this was just a voluntary transaction between you and me. In the long term, such a system will fail.

I agree that the situation would be different if other customers had somehow "bought" their coins from you, although we have still introduced scarcity (and added competition) in the system, and we can still expect that, eventually, you will control most of the coins (you or your successors should of course be wise and never try to take complete control of all the coins otherwise your private bank will probably fail because your customers will desert you). This is part of the distinction between "payable" and "unpayable" interest. In this last case, the system may not (as far as I understand) be mathematically unviable but it may still lead to quasi-total control of the money supply by you (the "Money Power").

"In a fiat money environment, I find this irrelevant as it is the fiat money environment that is unstable in and of itself."

I still think we need to distinguish between fractional banking, compound interest, and payable and unpayable interest. Private paper/digital currencies (note that I purposefully didn't use the word "fiat") could possibly work in a free market if the competition keeps them honest (of course it could also evolve in a cartel, but the same is true for commodity-backed private currencies), and I believe that it would be to their advantage to keep interest rates as low as possible (first, for long-term mathematical survival, second, to attract customers). Of course, I would expect smart customers to use gold as a long-term store of value and keep the paper/digital currencies only as a means of exchange in such a case.

BM: "Absent advocating for free markets and voluntary choice as the solution to this reality of imperfect man, what do you suggest?

Until you address this question, which has been asked of you several times on this thread in various forms, you will remain so accused. Or do you claim the fifth?"

M: I do not suggest anything. I simply pointed out some potential problems with free markets. I do not see free markets as the "miracle cure". Clearly, I don't believe in governmental coercion but I believe that Money Power is a bigger problem. In other words, if given the choice, I'd rather take governments without Money Power than Money Power without government. I am not American by the way...

MH: That's a good question. I honestly don't know.

BM: I can accept you don't know. For me the answer is quite obvious, as the PE desire control, and centralization offers the means for control. How could they control without centralization? Look at Afghanistan for the answer... they can't.

MH: What about a debt-free money in a free market?

BM: I am all for it. Who know, given the alternatives and the costs/benefits, I might even make use of this system for some aspects of my business needs.

MH: ... Mr. Migchels' Gelre is not supported by governmental coercion as far I as know... .The Wörgl experiment was also, despite your claims, not enforced by government.

BM: I don't think I claimed anything either way about Wörgl. In any case, I am not going to research these further at this point. I have researched the claim of the "interest free" bank in Sweden, and found it to be bogus - as they charge fees instead of interest. I have researched Lietaer and found him to be... well, my previous post on him says enough. I have chased several rabbit trails on these various claims and found them wanting. I don't want to spend more time at this time.

It is fine with me if interest free money, loans without interest, etc., have worked somewhere at sometime. As long as it is in a free market environment, I don't care.

BTW, as I mentioned before, in any deflationary environment, it is easy to find loans with a zero nominal interest rate - as the real return is positive. Perhaps some of these past episodes you cite have been during such an environment of deflation. If they were in markets of general backing by gold, I would expect that a slight deflation was, in fact behind the lack of charging interest.

MH: Then you have not understood that any currency system using compound interest is inherently unstable and will fail in the long run... .

BM: In an honest money environment, I don't believe this to be true - as it is certainly not true for the individual debtor / lender, I doubt it is true for the system. In a fiat money environment, I find this irrelevant as it is the fiat money environment that is unstable in and of itself. But if this was the crux of your entire point, then we wasted a lot of each others' time.

MH: I have also raise some valid points regarding free markets... .

BM: Yes, humans aren't perfect. Cartels might arise. I understand. By definition, neither you nor I nor ANY advocate of free markets will have the answer to every problem mankind has ever faced or will ever face. That is why they call it a market, that is why they call it Human Action.

Absent advocating for free markets and voluntary choice as the solution to this reality of imperfect man, what do you suggest?

Until you address this question, which has been asked of you several times on this thread in various forms, you will remain so accused. Or do you claim the fifth?

BM,

First, thanks for the more cordial tone.

Please note that I cannot reply from Mr. Migchels (but of course, we can infer some of his positions based on the material his published) and can only state my positions.

BM: "You started this conversation by suggesting that Austrians, by advocating gold, were playing right into the hands of the power elite - the Hegelian dialectic if you will."

M: I think that this is a misunderstanding or misrepresentation. The Hegelian dialetic is that both sides (Keynesians-Austrians) ignore compound interest. I believe I was clear on that (I actually just checked the "Silliness" thread to confirm). I'm not denying that gold was part of the conversation (this was indeed mentioned in Mr. Migchels' article), but not in the way you describe it - my point was that compound interest would still be a problem under a gold standard.

BM: "Now you tell me, which does the PE fear more: free market money open to competition, or debt free money issued by congress? Then tell me who is playing into the hands of the power elite."

M: That's a good question. I honestly don't know. Don't forget about cartels, which may happen both in a free market or under governmental control. What about a debt-free money in a free market?

BM: "Again, if your solution is unique - that somehow you see this debt free money springing up spontaneously in the market, I am open to hear it. You have not done so yet (in fact erecting strawmen regarding the market instead), and you would be the first."

M: It is not my solution (I never pretended that I had a unique solution). I note that Mr. Migchels' Gelre is not supported by governmental coercion as far I as know, so it is an example of a debt-free currency operating in the market. The Wörgl experiment was also, despite your claims, not enforced by government (rather, the central bank sought to end it). Why do you ignore these examples?

BM: The point is, I DON'T CARE about your arguments against compound interest. I don't care about compound interest AT ALL.

M: Then you have not understood that any currency system using compound interest is inherently unstable and will fail in the long run, regardless of the type of market (free or coerced) or the type of currency. This has been mathematically proven (and you can probably do so easily for yourself) and should not even be discussed at this point (and this is of course besides the moral arguments for favoring an interest-free currency).

About the "strawman" of perfect humans in a free market: I note that you (and the DB) often reply to any advocacy of a debt-free currency by countering that we somehow are against "voluntary choices" and in favor of "governmental coercion", as if the Austrian school had the monopoly of voluntary choices.

In any case, I do think that I have also raise some valid points regarding free markets [see especially my post on 01/07/12 01:28 PM], which hopefully can be discussed without automatically accusing the person bringing these points of being in favor of "coercion". The point is simply to be realistic both with respect to free markets and governmental coercion, instead of adopting a "black and white" stance.

I would add one more point.

You started this conversation by suggesting that Austrians, by advocating gold, were playing right into the hands of the power elite - the Hegelian dialectic if you will.

DB rightly countered that many Austrians advocate a free market in money, but history has shown that gold and silver usually win this competition.

Mr. Migchels (and Ms. Brown and all I have read that advocate some form of debt free money, the people's money) all look to congress or the state legislatures to take over this function from the Fed.

Now you tell me, which does the PE fear more: free market money open to competition, or debt free money issued by congress? Then tell me who is playing into the hands of the power elite.

Again, if your solution is unique - that somehow you see this debt free money springing up spontaneously in the market, I am open to hear it. You have not done so yet (in fact erecting strawmen regarding the market instead), and you would be the first.

memehunter

Respectfully, I can only conclude Anthony Migchels is advocating government force, and as you seem to be concurring and advocating right alongside with him, I conclude you are doing the same. I refer you to my earlier queries of him, which he ignored and cannot answer - and I know why he cannot answer. Here is my previous request:

-------------------

AM: That's we call for TWO things:

1. reclaiming the monopoly if it insists on having one.
2. ending it.

BM: Who is we? I would like to know my partners before I decide to give them such power.

How would "we... reclaim the monopoly"?

Who would be the leaders of this new entity that now has the monopoly? Nancy Pelosi? Barney Frank? John Boehner? Anthony Migchels? memehunter? You might think I am being funny or argumentative, but before you get me to enlist with "we", I want to know who will lead this entity once it is under new control. This is rather important, don't you think?

Why would the "we" who has done the reclaiming of the monopoly want to then end the monopoly? Again, the character of my partners (the now all-powerful "we") is rather important to this question. Mother Theresa perhaps? Wait, too late... but, who?

No tricks, no circumventing. Please expand on this important nuance by answering these very basic questions.

--------------

He did not answer, only answering a question with a question. In other words, he uses tricks and circumvention to avoid answering. A trait common to ALL advocates of funny money.

Why do you think that is? Could it be the obvious - that he advocates using state power to take over the current machine and use state power to operate the new machine? Can you provide an alternate answer?

As all advocates I have read regarding this theory of providing debt free currency have described it as an operation run by the state, what else should we conclude here - absent answers to a direct set of questions from Mr. Migchels himself.

"But please show me what was irrational in my arguments against compound interest... ."

The point is, I DON'T CARE about your arguments against compound interest. I don't care about compound interest AT ALL. The compound interest (however you define that, which I have seen at least two different ways) is irrelevant - a red herring. It is the monopoly over money, banking, and credit that is the culprit. Once this monopoly is established, all other sins and evils are possible - including your bogeyman of compound interest. Once this realm is left to competition, the market will manage itself just fine. (And please stop with the strawman that free markets require perfect humans - you are the only person on this thread that raised that point. In fact, it is because humans AREN'T perfect that we require free markets. Who wants IMPERFECT humans with monopoly power of violence in charge over the rest of us????)

Mr. Migchels wants a new monopolist, and from all I have read, most advocates of this "debt free money do the same.

Let your debt free money compete in a free market, and I won't complain or argue. Use the state to bring it into being, and it will be no better (and likely worse) than the current system.

DB: "It is surely statist, even hypothetically, to suggest that government used force to ban business practices of which you disapprove."

M: Who is talking about using force to ban business practices of which I disapprove? It is you, the DB elves, not me.

Here is a quote from Mr. Migchels (from his article "Discussing Interest and Gold with the Daily Bell"):

Click to view link

"Of course, the Daily Bell is right to say that people have a right to ask for interest, as much as they have a right to either accept interest on a loan they want. Nobody is suggesting we should outlaw it. The challenge for interest free currency is to make it superfluous. By providing interest free credit. Nobody will 'choose' to take out a loan with interest, if they can get one without."

DB: "Instead of advocating education and separating oneself from a destructive sociopolitical environment, you apparently advocate using the very forces that have made humankind miserable to rectify the wrongs now being imposed. It's a little like dropping nuclear bombs on Japan to "end the war."

M: This is a little bit disingenuous from the DB. No, wait a minute, it is very disingenuous. Regarding "education", I provided numerous links, quotes, and references on this thread, and presented alternative currency schemes.
I also note that interest is the principal weapon of Money Power.

As Mr. Migchels notes, "we can conclude that the Daily Bell is not a serious hindrance to the Money Power. In fact, perhaps unwillingly, it is a major asset for it: they ignore and downplay interest, which is the Money Power's main tool of domination."

Click to view link

Reply from The Daily Bell

"Of course, the Daily Bell is right to say that people have a right to ask for interest, as much as they have a right to either accept interest on a loan they want. Nobody is suggesting we should outlaw it. The challenge for interest free currency is to make it superfluous. By providing interest free credit. Nobody will 'choose' to take out a loan with interest, if they can get one without."

We repeat if Mr. Migchels has organized his currency without government help and can make it competitive, we would certainly be impressed and intrigued. So far we remain of the opinion that there is some level of government involvement somewhere.

-----

He writes: "In fact, perhaps unwillingly, DB is a major asset for it: they ignore and downplay interest, which is the Money Power's main tool of domination."

First of all tiny DB is not a major asset of any "power." Second, this frames the issue incorrectly. We are not downplaying "interest." We are interested in removing or dissipating the central banking money power of intergenerational familial agents.

"Just because bionic mosquito does not support your stated, or is it statist premise, does not mean he is pro compound interest!"

It is not "statist" to denounce compound interest. Weebley, don't fall for that strawman yourself.

"bionic mosquito is just being rational!"

Maybe. But please show me what was irrational in my arguments against compound interest (I don't need to repeat them again, just look at the thread).

Also, there is nothing irrational about demurrage - it may not be the "ultimate" solution, but as I said we can learn something from it.

"You should all spend a few moments on this other Daily Bell thread. I have made myself let Ingo Bischoff have me over a virtual barrel.

And it IS related to what you are all arguing about."

I had a look at the other thread, I had no idea the discussion went on for so long, but I'm afraid I lost track.

Reply from The Daily Bell

"It is not "statist" to denounce compound interest."

It is surely statist, even hypothetically, to suggest that government used force to ban business practices of which you disapprove. Instead of advocating education and separating oneself from a destructive sociopolitical environment, you apparently advocate using the very forces that have made humankind miserable to rectify the wrongs now being imposed. It's a little like dropping nuclear bombs on Japan to "end the war."

I have a distinct lack of interest in the compounded and mitred directions of this conversation.

We say, make money and give it away for free, not a fee . . . after that, those that gather it in clumps are free to charge a fee for the privilege of lending it to those that want to use it now, as opposed to later.

But it won't happen without trust in the money-makers.

Just because bionic mosquito does not support your stated, or is it statist premise, does not mean he is pro compound interest!

bionic mosquito is just being rational!

You should all spend a few moments on this other Daily Bell thread. I have made myself let Ingo Bischoff have me over a virtual barrel.

And it IS related to what you are all arguing about.

Click to view link