Moderate Realist Ideas About Money and Banking.
rev. 5/2023
#tech
There is a big analogy with C style computer memory management. Programs use code that passes areas of memory by value or by reference, the latter using notation, for example *a and &a, that is often a source of security issues.
Pass by value implies copies of memory contents are distributed or scattered everywhere in the system and often in the network.
Pass by reference implies all messages and functions refer to a fixed block of memory, which becomes expensive or impossible to move.
With metals-based money, divisibility and fungibility imply that metals can be moved around for small transactions, as with cash. But for large holdings of gold, other metals or even cash, movement and shipping become expensive and often impossible.
Transferring a promissory note, or today commercial paper or a computer record, is much more cost-effective. Such transactions presume that banks are allowed to hold fractional reserves. So some debt-based money becomes unavoidable.
#banks
Gresham's Law says bad money drives out good. People usually put evidence of debt into circulation before they use evidence of assets for money.
Last things to go into circulation are usually metals or jewels.
So in a way, a free market in money makes us stuck with 'bad money,' which needs regulation because it is debt.
A Taylor Rule is probably the best way to regulate debt-based money. More at the 2/22 section here:
https://sites.google.com/view/ari4/home/blog
Discussion with opposing viewpoints is here:
https://www.npr.org/transcripts/1133720724
#history
Many good people today despise central banking, as did Andrew Jackson. It did not help that the leaders of the Second Bank of the US loved speculation.
This history is an important reason to keep central banks OUT of retail banking.
Sympathetic but helpful history of US Fed formation, includes panics as results of immovable metal money, or local lack of liquidity. Speculation and bad local bank management were also factors. In spite of Warburg's putative 'expertise,' his firms were soon owned by others.
https://www.federalreservehistory.org/essays/jekyll-island-conference
Later law, Pujo hearings and the 'Money Trust.' Antitrust laws continue to be important but have become increasingly difficult to enforce.
https://fraser.stlouisfed.org/blog/2019/08/the-pujo-committee
History of panics under monetary regimes of gold and bimetallism.
https://eh.net/encyclopedia/the-panic-of-1907/
Milton Friedman, short summaries of monetarism and recent monetary history.
https://miltonfriedman.hoover.org/internal/media/dispatcher/214480/full
https://www.nber.org/system/files/working_papers/w18828/w18828.pdf
#Bible #religion
Amos the prophet, others speak loudly against surety and usury.
Jubilee: Lev. 25, Deut. 15 avoid oppression, practice release from debts.
Pledges and collateral: Deut. 24.10f, Amos 2.6f, 8.4.
Biblical Welfare Laws also include usury, commons. The OT, especially Ex. 22.24, Deut. 23.20, 24.12, Lev. 25.35f, Prov. 28.8, Nehemiah 5, Isa. 5 (esp. 5.8), Amos 8 and others, show these as financial and property 'fences' against slavery and taking life. In the early church, the commons briefly dominated economic life (Acts 2.44). Monastic orders often try to preserve this.
Proverbs 22.26f avoid acting as surety for debts, you can lose your bed!
Proverbs 29.4 Justice gives stability, but heavy taxes ruin the land.
Core of biblical laws about money appears to be preventing theft and harm to life.
Aquinas on interest vs rent. He banned the former but allowed the latter. A strict prohibition of interest is not necessary, control of it is. Rates are needed as semiotic signals for normal business.
Financial fences against taking or harming life are still needed too. Ideas for using money and credit without too much debt or risk are in the Rule 72 paper at ari4.net, also link in left margin of this page.
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