Last I looked at Beckerath's work, I quoted his question:
How much of the credits created by orders placed, by monopolies, or by taxation may be utilized for the payment of expenses, without the fractionalized parts of these assets i.e., the purchasing certificates, the railway money, the State paper money being exposed to a discount in the open market?
I want to put that in language I'm more familiar with. The phrase being exposed to a discount to me is the same as what we normally think of as inflation. It means you have to pay more (of the discounted money) to buy a thing that otherwise wouldn't cost more. That's crude, and Milton Friedman is probably turning in his grave, but I think the comparison makes sense.
We have gas stations that advertise "Same price, cash or credit." And we have others that offer different prices for cash and credit. These "others" provide an example of discounting one kind of money, and not another.
One may imagine also an economy where a surcharge is added to the price when payment is by check, to cover on average the losses arising from bad checks.
With more difficulty, perhaps, one can imagine an economy where those with accounts receivable issue their own currency, which is backed by the obligation of the buyer to pay. This, I think, is what Beckerath describes as "credits created by orders placed."
In an economy with sufficient money, rather than receivables we might largely have payments of money, and transactions actually completed. Then, rather than issuing currency based on receivables, companies could simply use the income from sales.
Note, however, that an economy moving toward sufficient money, which also knows how to turn every new dollar of money into 30 or 35 dollars of credit-in-use, will be an inflationary economy -- unless the increase toward sufficient money is accompanied by a sufficient decline in the reliance on credit.
The trick is to substitute money for credit-use by clever policy, so that economic growth is not disrupted in the process. I don't think that it would be difficult. I do think it has never been tried.
The outcome of the change I envision would be that people have a lot more money and a lot less debt than we have today.
2 comments:
" I do think it has never been tried."
To make taxes earmarkable would be remarkable to an unprecendented extent
Like so?
region 1 boasts 3 empty lots:
proposals to win title via a popularity contest (equal parts excercise of voting right, philantropy, curiosity and lottery like chances (why not speculate?), served on mass media quite tastefully for:
1 - pizzeria that funds a pizza bakery with discounts on future pizzas
2 a free fighter hall
3 an orchardist selling fruit he plans to grow.
4 a bomb factory.
all purchased promises (given credit) can be converted to tax-credit at face value should they fail entirely cause the (city/)state wants the bizzbuzz instead of the dereliction.
I have no such great imagination, Piet. I have enough trouble seeing what exists now. But what I see, what everyone sees I think, except bankers and central bankers perhaps, is that there is too much debt.
But debt only is a problem because we don't pay it off as fast as we accumulate it. So we need to pay it off faster.
We need to keep using new credit, because that helps the economy grow. Then, to pay it off the Fed policy has to be different. They have to consider that paying off debt is the right way to fight inflation. Not monetary restriction.
Congress has to see it, too. We get people to pay off debt faster by giving a tax break for it. I don't care how we do that, pizza places or florist shops, I have no idea.
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