Very good and very helpful.

MH: "Abu, just out of curiosity, what is your justification for interest, especially compound interest"

AA: "It has been shown that time preference is a category inherent in every human action. Time preference manifests itself in the phenomenon of originary interest, i.e., the discount of future goods as against present goods (... ) Interest is a homogeneous phenomenon. There are no different sources of interest. Interest on durable goods and interest on consumption-credit are like other kinds of interest an outgrowth of the higher valuation of present goods as against future goods."

Ludwig von Mises

Click to view link

I have nothing to add to what Mises said regarding the subject of originary interest, but this: There's no such thing as a free lunch!

As regards compound interest: If, in a free market environment, some are willing to charge compound interest, and others are willing to pay it ... so be it. If, in a free market environment, some are willing to charge no interest at all ... so be it.


MH: "How do you feel about the points made by Summer and myself on this thread?"

AA: While it seems to me that both of you have the heart in the right place, I'm afraid you're wrong by and large, and additionally you're mixing stuff up - like with Monsanto and seeds. If you believe a free market would enable or even honor machinations like Monsanto's, I'd say you're mistaken. Methinks free markets consisting of free people would outright reject criminal wannabe patent-monopoly outfits like this.

Click to view link

Click to view link

Amen

I believe that the problem of interest rates can be discussed separately from the issue of who or what should be in charge of controlling the currency.

Abu, just out of curiosity, what is your justification for interest, especially compound interest (here, I refer to an earlier point I made about the distinction between compound interest and simple interest)? How do you feel about the points made by Summer and myself on this thread?

DB: "He believes the Austrians are insufficiently concerned about the "problem" of "interest."

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

Ha! I believe Mr. Migchels is insufficiently concerned about the problem of the Stockholm Syndrome and the influence it exerts on his thinking in terms of what governments and states are, and what they can/should do ...

Thanks Memehunter. I totally agree with all three points you've presented.

The case against interest is overwhelming. This is why a rigid adherence to one view or set of views (that interest isn't an economic problem because it is or isn't a part of AN economic theory that in other areas may have merit) leads to the rejection of wisdom.

It is true that minimum manipulation of the economy is the best course and interest gives maximum manipulation and distortive effects. Where production is not rewarded but sucked dry into the hands of the most unproductive - those who idly sit and 'earn' off the sweat of others FOR DOING NOTHING. It's absurd to think that this is not economically unhealthy.

Another striking example is one of Monsanto seeds. In India farmers were sold these seeds on the premise that they would produce greater yields. They were deceived and told that they would have to keep purchasing new seeds EVERY YEAR (whereas before they would just collect seed from the years crop - FREE) and pay interest charges on seeds they could not pay for in full. Consequently, huge numbers of farmers are committing suicide in order to cancel the debt (which with compound interest was impossible to repay) and give their wives and children a debt free future.

What astonishes me is that a corporation cannot go without extra interest profit but a family can be destroyed. This attitude is widespread - a family must lose its home even when the original debt has been paid off. A country can be brought to its knees but the IMF must be paid interest, even when the original sum has been paid - in Eastern Europe this has lead to the deaths of millions from tuberculosis as stringent healthcare cuts HAD to be made to service interest payments. European debt - I say: bondholder haircuts. Bank bailouts for stupendous bank debt? I say let them fail.

It goes on and on, the whole Mercantilist- Neo-colonialist system is efficient through debt servitude. The debt-trap has everyone caught and still people want more, interest is not a problem?! I have a feeling now that economic enslavement has hit home to the West we may soon be seeing a shift to the real demise of money power - the rejection of interest as an exploitative device.

"I studied Rothbard. He's useful and incomplete, like most monetary schools."

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

Care to elaborate on this? What, exactly, is "missing" in Rothbards' work ... in your view, Mr. Migchels?

Reply from The Daily Bell

He believes the Austrians are insufficiently concerned about the "problem" of "interest."

From "Maurice Allais and his attempts at rigour in economic science":
http://www.nbs.sk/_img/Documents/BIATEC/BIA05_02/13_16.pdf

"The current system, which enables banks to create money,
is in Allais' view absurd, because banks borrow money,
which they do not own and in this way gain unauthorised
incomes. Therefore he proposes that there be
established banks especially for accepting deposits and other
banks especially for providing loans. At first, deposits
would be received from their own clients and the deposits
would be taken care of, but could not be lent. In this way
this way there would not be created any money 'ex nihilo'.
These banks would however charge their clients for services
connected with the administration of their accounts.

As far as lending banks are concerned, these would borrow
money for the long-term and from this money would
provide short-term loans, without creating money. The rate
of growth of the money supply in circulation would thus
depend solely on the central bank and incomes from the
creation of money would flow to the state, which would
thus gain further sources of financing (besides taxes). Because,
according to M. Allais, it is necessary to reform also
the tax system, which in his view punishes the most capable,
meaning the most efficient.

In this way Allais' theory of money is closely connected
with his radical and original proposals concerning the tax
system. Allais calls for a lowering of all income taxes, basing
this on the principle, that the state does not have any
moral right to intervene in the private life of people and in
particular to tax the fruit of their labour. According to Allais,
only well managed enterprises (i.e. only those which
are profitable) pay taxes, meaning that the less effective
are in essence not taxed."

Perhaps some of Allais' ideas should be included in the discussion... What do the elves think (yes, I know, Allais was not an Austrian, but that does not mean we should ignore him)?

Some thoughts on interest rates from Maurice Allais (Nobel Prize in Economics, 1988):

Allais (1948): A competitive equilibrium maximizes the steady-state output of the consumption good if and only if the interest rate is zero.

Allais (1962): General version of the "Golden rule": A "capitalistic optimum" requires an interest rate equal to the rate of population growth.

"Bankers compared to counterfeiters":
Click to view link

"In his November 1993 report, Canada's Auditor general calculated that of the $423 billion in net accumulated debt from Confederation to 1992, only $37 billion (8.75%) went on actual goods and services, all the rest (91%) consisted of interest charges. this should tell us how we all have become slaves.

A real solution is now having a phenomenal promotion throughout the world. The main facts on which it is based are now being supported and taught by top economists like, for example, Harold Chorney, Assoc. Professor of Political Economy at Concordia University, in Montreal, the late John Hotson, who was Professor of Economics at the University of Waterloo, and Mario Seccareccia, Assoc. Professor of Economics at the University of Ottawa, published a booklet in May of 96: "The Deficit Made Me Do It". In it they say: "When World War II ended, the national debt relative to the national income was more than twice as large as it is now. but was the country ruined? Did we have to declare national bankruptcy? Far from it! Instead, Canada's economy boomed, and the country prospered for most of the post war period.

"Why isn't the same thing happening today? Why was a much larger national debt shrugged off in 1945, while today's much smaller debt (as a percentage of GDP) is being used as an excuse to let the economy stagnate?

"The answer can be found at the Bank of Canada. During the war, and for 30 years afterward, the government could borrow what it needed at low rates of interest, because the government's own bank produced up to half of all the new money. That forced the private banks to deep their interest rates low, too.
"Since the mid-1970s, however, the Bank of Canada, with government consent, has been creating less and less of the new money, while letting the private banks create more and more. Today, "our" bank creates a mere 2% of each year's new money supply, ... (p. 4, 5).

"... The conventional wisdom, however, is that inflation is the greatest threat to the economy and must be restrained by raising interest rates. This flies in the face of the commonsense observation that rising prices (inflation) are caused by raising costs, and that interest rates are costs. So raising them will raise prices, not lower them. p. 8).

"... One of the most pervasive myths about the government deficit is that government which spend more than they receive in revenue must borrow the difference, thus increasing the debt.

"In fact, a government can choose to create the needed additional money instead of borrowing it from the banks, the public, or foreigners." (p.9).

And to those who say that there are only two ways to control the deficit: one being to raise taxes, and the other to cut government spending, they say: "But, in fact, there is a third way: reduce the interest rate. The Bank of Canada can set the rate of interest at which it lends to the chartered banks at any number it chooses, and it can peg the rate on government bonds, too. This was evident during WW II When it set the rate on Treasury Bills at as little as 0.36%, and on longer term bonds at less than 2.5%." (p. 10)."
----------------------

To summarize the main points of this article:

1. Interest charges actually constitute a major part of the national debt of Canada (a conclusion that is likely valid for most Western countries), and a major reason why we have become enslaved to banks.

2. To have private banks create money out of thin air, instead of a central bank, is not in any way a solution to this problem.

3. Interest-free currency, even created by the government, would be a better solution to this specific problem than the current domination by a private money cartel using compound interest. [Memehunter: This is not to say that a government-enforced monopoly on an interest-free currency is the optimal solution (far from it), but it does represent an improvement over the present model].

Thank you Summer for your detailed and instructive feedback. I was aware of the Wörgl experiment and have read some of Silvio Gesell's work, but it was nice to see them cited on this thread.

It would be nice to have the DB explore these alternative money schemes, especially those that were apparently successful such as Wörgl. I think many of us would welcome a more open discussion on this topic, instead of "reflexively defending" compound interest and automatically putting all social credit experiments in the category of "governmental intervention".

Are the elves familiar with Bernard Lietaer's work ("The Future of Money")?
Again, I'm not an expert on this topic, but I would welcome an open discussion on these ideas. Let's go beyond Austrian economics a little a bit, shall we?

Indeed, the Austrian school of economics seems unfortunately to have become a religion to the DB elves, and straying off the "Austrian path" is apparently akin to heresy for the elves. There are other possible alternatives as far as monetary schemes are concerned, and I believe that not all of them are bogus...

Reply from The Daily Bell

The Austrian school is not a religion at DB. The Austrian school in its current incarnation is very pro-gold. We are not necessarily pro-gold. We are pro-freedom. And we acknowledge what cannot be gainsaid, that every law and regulation is a kind of price fix, removing wealth from those who create it and redistributing it to those who may not have the wherewithal to use it so efficiently.

Within the context of this perception, one then easily arrives at the conclusion that money, too, should be subject to free-market forces. Schemes that mandate the use of government force to ensure the creation and circulation of "money" are bound to prove less effective, and even to degrade, over time. The only money that can guarantee the broadest level of prosperity and the most opportunity is money that emerges from forces of unfettered competition. Not hard to understand? Apparently it is ...

To summarize, saying 'no' to interest is a PRINCIPLE that people should adhere to as otherwise it leads to economic enslavement (IMF et al). Just as other principles that dominate as 'right' courses of conduct. It is neither here nor there to argue that if someone wants to charge for borrowing money it doesn't matter. It's like saying it doesn't matter if there is war - this may be correct if there is the application of the non-aggression principle (in a scenario where a defensive war is undertaken) but in its absence an aggressive (pre-emptive) war is immoral.

The acceptance of interest charging by society is voluntary enslavement and THE reason for increasing the money supply. The only reason to do so is if someone is making money on each note printed - either at the point of printing or later by lending on interest.

Africa has repaid its debts many times over. It is an economic slave to money lenders - harmless? I don't think so!

Euro debt crisis?!

In fact, the Quran declares war on those who devour interest. This is relevant as charging interest leads to war as we have seen over and over again. Lenders would not fund both sides of war in order to give loans to nations at high rates of interest. Arms manufacturers would have fewer clients because of this. Nations would not be enslaved by the folly of leaders borrowing money at interest as a result.

Lending the poor money should not be seen as a business opportunity. Winning investment for a business is a different matter and genuine talent would be encouraged rather than unprofitable ideas having money wasted on them. It is an act of goodness to help him without expecting anything more in return than what was given to him - creating goodwill among rich and poor - and since there would be no cause for inflation receiving payment later would have no detrimental impact on the original sum.


Happy New Year to all!

Ok let's look at applications of interest free economic models:

(From wiki)
1. During the Rashidun Caliphate there was an economical boom in the lives of the ordinary people due to the revolutionary economic policies developed by Caliph Umar and his successor Caliph Uthman. At first it was Umar who introduced these reforms on strong bases, his successor Uthman who himself was an intelligent businessman, had further reformed it. During Uthman's reign the people of the empire enjoyed a prosperous life.

Bait-ul-Maal
Bait-ul-Maal, (literally The house of money) was the department that dealt with the revenues and all other economical matters of the state. In the time of Muhammad there was no permanent Bait-ul-Mal or public treasury. Whatever revenues or other amounts were received were distributed immediately. There were no salaries to be paid, and there was no state expenditure. Hence the need for the treasury at public level was not felt. In the time of Abu Bakr as well there was no treasury. Abu Bakr earmarked a house where all money was kept on receipt. As all money was distributed immediately the treasury generally remained locked up. At the time of the death of Abu Bakr there was only one dirham in the public treasury.

Establishment of Bait-ul-Maal
In the time of Umar things changed. With the extension in conquests money came in larger quantities, Umar also allowed salaries to men fighting in the army. Abu Huraira who was the Governor of Bahrain sent a revenue of five hundred thousand dirhams. Umar summoned a meeting of his Consultative Assembly and sought the opinion of the Companions about the disposal of the money. Uthman ibn Affan advised that the amount should be kept for future needs. Walid bin Hisham suggested that like the Byzantines separate departments of Treasury and Accounts should be set up.

After consulting the Companions Umar decided to establish the Central Treasury at Madinah. A separate building was constructed for the royal treasury by the name bait ul maal, which in large cities was guarded by as many as 400 guards. In most of the historical accounts it states that among the Rashidun Caliphs Uthman ibn Affan was first to struck the coins, some accounts however states that Umar was first to do so. When Persia was conquered three types of coins were current in the conquered territories, namely Baghli of 8 dang; Tabari of 4 dang; and Maghribi of 3 dang. Umar ( according to some accounts Uthman ) made an innovation and struck an Islamic dirham of 6 dang.

The concepts of welfare and pension were introduced in early Islamic law as forms of Zakat (charity), one of the Five Pillars of Islam, since the time of the Rashidun caliph Umar in the 7th century. The taxes (including Zakat and Jizya) collected in the treasury of an Islamic government were used to provide income for the needy, including the poor, elderly, orphans, widows, and the disabled. According to the Islamic jurist Al-Ghazali (Algazel, 1058-1111), the government was also expected to stockpile food supplies in every region in case a disaster or famine occurred. The Caliphate was thus one of the earliest welfare states.[25][26]

2. The Worgl experiment was an incredicble success evidencing the economic misery and evil monopoly that interest is. The Worgl experiment exactly used the twofold Islamic economic principles during the depression; with amazing results for the town's economy, where the rest of the country was in dire straits. The central bank soon put an end to this successful experiment!

Silvio Gesell

Michael read and re-read 'The Natural Order' by Silvio Gesell. He talked with people in the town and convinced the members of the Worgl Welfare Committee to hold a session on July 5, 1932. In this session he gave a short summary and then proposed a 'Distress Relief Program'. He stated that slow circulation of money is the principal cause of the faltering economy. Money as a medium of exchange increasingly vanished out of working people's hands and accumulates into the hands of the few who collect interest and do not return it back to the market. He proposed that in Worgl the slow-circulating National Bank currency would be replaced by 'Certified Compensation Bills'. The council would issue the Bills and the public would accept the Bills for their full nominal value. Bills would be issued in the denominations of 1, 5 and 10 shillings. A total issue of 32,000 Worgl 'Money Bills' was printed and put into circulation.

Worgl Success

Over the 13-month period the Worgl money was in circulation, the mayor carried out all the intended works projects. The council also built new houses, a reservoir, a ski jump, and a bridge. The people also used scrip to replant forests, in anticipation of the future cash flow they would receive from the trees.

Six neighboring villages copied the system successfully. The French Prime Minister, Eduoard Dalladier, made a special visit to see the 'miracle of Wörgl'. In January 1933, the project was replicated in the neighboring city of Kirchbuhl, and in June 1933, Unterguggenburger addressed a meeting with representatives from 170 different towns and villages. Two hundred Austrian townships were interested in adopting the idea.

One eyewitness report was written by Claude Bourdet, master engineer from the Zürich Polytechnic. "I visited Wörgl in August 1933, exactly one year after the launch of the experiment. One has to acknowledge that the result borders on the miraculous. The roads, notorious for their dreadful state, match now the Italian Autostrade. The Mayor's office complex has been beautifully restored as a charming chalet with blossoming gladioli. A new concrete bridge carries the proud plaque: "Built with Free Money in the year 1933." Click to view link

Mr. Wile,

You insist on sulkily misrepresenting my position after being on the receiving end on both the interest issue and Gresham's law.

In the meantime, I circulate a private currency, interest free credit.
While you are plugging a politician to... ..yeah, to do what actually?
Establish a free market? Use Government force for that?

hmmm... ... ..

Perhaps, when tomorrow's hangover is gone you should man up.

It was easy for me, because I studied Rothbard. He's useful and incomplete, like most monetary schools.

We will meet again, and you should be better prepared. The next occasion may be less favorable to you than your own home turf... .

Come on! Friends, ok?

Reply from The Daily Bell

AM: Mr. Wile,

DB: Mr. Wile is NOT responding to you.

------

AM: You insist on sulkily misrepresenting my position after being on the receiving end on both the interest issue and Gresham's law.

DB: You quoted Gresham's Law incorrectly and then when we pointed it out to you, you explained that your incorrect interpretation was the correct one. As to your position on the "interest issue" - we understand it theoretically but believe it to be incidental to the real issue, which is mercantilist monetary control via central banking.

-------

AM: In the meantime, I circulate a private currency, interest free credit.
While you are plugging a politician to... ..yeah, to do what actually?
Establish a free market? Use Government force for that?

DB: We have no idea WHAT you are doing as you steadfastly refuse to provide details or even links. (If it is pure social credit, then it most certainly involves a government solution.) As far as Ron Paul is concerned, he is the best POLITICAL hope of rolling back what is taking place in the US. He is no ordinary politician. At least not so far.

-------

M: hmmm... Perhaps, when tomorrow's hangover is gone you should man up. It was easy for me, because I studied Rothbard. He's useful and incomplete, like most monetary schools.

DB: We don't see what gender has to do with it. You are a follower of C. H. Douglas, the inventor of social credit. How you find him "more complete" than the Austrian School is a puzzle to us. He certainly believed in quasi-government solutions to monetary issues. And he had NO solution to the problem of money volume except to appoint a "board" to try figure out how much money was too much. The current central banking system is no better. The Greenbackers are no better. ONLY THE FREE MARKET CAN REGULATE THE VALUE AND VOLUME OF MONEY. As for Douglas, all anyone has to do is read him. We invite them to do so.

------

M: We will meet again, and you should be better prepared. The next occasion may be less favorable to you than your own home turf... .

DB: It is not a ball game so far as we know and our views are arrived at via about a century (all in between all of us) of concerted study regarding these issues. So "home turf" is not a metaphor we would easily use.

------

M: Come on! Friends, ok?

DB: We were never enemies. And you have an interesting mind, no matter where you came from or what your ultimate agenda is. But if your version of social credit includes government interplay as we suspect it does, then we would clearly not be sympathetic to it.

We would also point out that your prescription in this thread (which we have reproduced below) regarding how to break the back of Money Power is heavily weighted toward government action. We would rather see the private sector solve the problem. We would suggest the system is unravelling anyway, and education is preferable to government force when it comes to confronting Money Power.

"AM: After all, the Government gives it's monopoly away to allow a senseless plunder. I think it is strange to oppose reforms that would at least end that ridiculous situation, even though it may not solve inflation.

But on the bright side: we all seem to like the free market for currencies idea. "

I think it is quite clear I promoted the free market for currencies idea.

Keep in mind that my daily work is providing interest free credit in the free market. I'm not waiting for a politician to get what I believe is right.

I do support interest free credit or debt free Government money. As the lesser evil, compared to handing over this monopoly to a private banking cartel.

I've made this quite clear in both this conversation and several widely circulated articles.

The Daily Bell, on the other hand, is very busy hindering people who want to at least blunt the Private Cartel's plunder operation.

The effect of their interventions is, that the elite can proceed unhindered.
Until they finally give in to Daily Bell's coveted free market.

I have the impression the Daily Bell is misrepresenting my positions after they failed to break them down in an open minded discussion.

So I would like the discussion with:
DB says:
"Apparently there are two Migchels. One who wants to use the full force of government to smite people who don't agree with him and the other who is peaceful free-market promoter of monetary ideas."

Hmm-mmm... ..are you sure about this?

Reply from The Daily Bell

Are you sure about this?


OK, Mr. Migchel. Here's the deal: explain to us what about the below - YOUR WORDS - provides us with a voluntary, anti-state approach to monetary reform. You want to use the full force of the state to change Money Power so far as we can tell.

And worse! Now that you cannot disavow your own words and sentiments you fall back on the old animadversions and logical fallacies. But attacking US will not by a syllable remove what you have written ... below.

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

Migchel: The Wolfson Prize, I win ...


In order to have an orderly post euro (and post dollar) transition, we propose these measures.

1. All banks will be nationalized. They needed more than 20 trillion dollars in handouts and easy credit from Central Banks and Governments and are still all under water. Shareholders will not be reimbursed, their property is worthless.
A full investigation into the activities of these banks is ordered. Senior staff and management will be prosecuted where necessary.

2. All interest payments by and to these banks will be frozen. Since banks create the money they lend out through fractional reserve banking, they don’t need interest payments. An average mortgage of 200.000 costs up to 300.000 in interest payments during the thirty years the loan is payed off. If this money represents the ‘costs’ of the bank for providing the loan, these organizations must be among the most inefficient known to man.

3. All financial products, including derivatives, will be frozen. Within a year there will be a final decision on what to do with them, but a minimum of 95% of them will be canceled. There will be no reimbursements. Where necessary speculators will be burnt.

4. All real debts, mortgages, business loans, personal credit, the national debt, will be maintained and repayment according to contract, but excluding interest, is ordered in full. The real costs of managing these debts will be passed on to the debtor. Odious debts will be forgiven.

5. All Central Banks will be closed. Where necessary, their operations will be taken over by independent commissions and within a year they will be terminated.

6. All income tax will be abolished. The State will finance itself by taxing wealth and consumption of non essential goods and services.

7. All Banking families will immediately give full disclosure on their asset positions and records. Their activities will be investigated and when necessary they will be prosecuted. All their assets will be disowned.
All these assets will be centralized in a Trust, in which every citizen of the world has one share and one vote. These shares will not be tradable for the first year. We will provide all with the means and information necessary to exercise the rights associated with this share and vote. Within a year a number of scenarios for the liquidation of this trust will be proposed. A referendum will take place to decide which plan is best.

8. A legal framework for a free market of currencies is ordered within a year. This framework will be concise but will make clear that:
a. Governments will accept payment of taxes in these currencies when there turnover is sufficient for Government to spend the income of taxes in a useful manner.
b. Manipulation of these currencies, either by insiders or outsiders will be severely punished.
c. All currencies will be given free access, metal- or credit based or debt free. For Profit, or not for profit.
d. The prohibition of fractional reserve banking, to avoid insolvency of credit facilities. Credit will be created on a mutual credit basis.
The economy needs a free market for currencies, so that the most efficient will thrive.

9. A full investigation into the manipulation of the gold market is ordered. The culprits will be punished, fines will exceed the profits obtained with these frauds.

10. We the people take responsibility for having allowed this financial system to happen. The useful idiots within the system will therefore be treated with leniency, if they cooperate in the full disclosure of these operations.

11. A concise but comprehensive education program on the fundamentals of money will provided to all. We will again never allow ignorance to be exploited again.

12. All destruction of evidence as of now will be severely punished.

With these measures we will achieve the following:

- An immediate end of the wealth transfer from the many to the few through interest.
- An immediate end to poverty all over the world.
- A massive decentralization of economic power to the peoples of the world.
- An immediate end to the depression.
- An immediate end to the most destabilizing and warmongering class: the plutocracy.
- A solid and stable financial system, costing no more than 1% of GDP, providing the economy with the liquidity it needs.

I think that this article by Mr. Migchels was written in the specific context of managing the exit of the euro (it would be better to ask him).

There are other articles that are definitely about a free market for currencies, though:

For Self Determination, we need Free Currencies!
Click to view link

By the way, the DB still has not clearly explained who or what would make sure that the precious metal "backing" of the paper/digital notes would be honest and stable in the free market situation that the DB favors.

Reply from The Daily Bell

Apparently there are two Migchels. One who wants to use the full force of government to smite people who don't agree with him and the other who is peaceful free-market promoter of monetary ideas.

DB: "Why don't you start by spelling his name correctly? And what is it about advocating the use of government force that you do not understand? ...

Migchell: The Wolfson Prize, I win ... "

Well, I'm not the only one who spelled his name wrong (sorry, Mr. Migchels), but anyway I think that this is irrelevant to the larger discussion.

Reply from The Daily Bell

A typo is not quite the same as an apparently deliberate misspelling of a name that one is producing to make a point about one's familiarity with the person! And this is compounded of course by your arguments regarding Migchel, with whom you claim intellectual intimacy. When we produce his own material word for word, your response is that we must query him!

"An insidious consequence of a 100% gold reserve standard with compound interest is that those who own the gold will eventually control all the money supply."

I would be curious to know what the DB elves have to say about this quote from the Faux Capitalist Blog (Just to be clear, I am not saying that the DB advocates a "100% gold reserve standard", although it seems that the idea of a free market situation involving some kind of precious-metal backing combined with compound interest is not inimical to the elves).

A possible compromise would be to allow interest, but only in the form of simple interest, not compound interest. Here is a quote from the blog of the "Capital Research Institute", in an article entitled "On behalf of the 99%":

Click to view link

"What is needed is the banning of usury, an end to the Federal Reserve System, and a return to Sound Money, for starters. Usury is known to the average person in the form of: credit card debt, payday loans, and any type of loan from a loan shark. It is characterized by high rates of compound interest. This makes it increasingly difficult to pay off. It was illegal in the Middle Ages. Money could still be borrowed, but interest would be lower, and it would be simple interest, not compounding. The Federal Reserve System is a private banking cartel that currently has the power to create US Dollars out of thin air, with nothing more than a few keystrokes. There are many excellent sources of information regarding the ongoing deception by The Fed. A personal favorite is 'Secrets of the Federal Reserve', Eustace Mullins."

I'd also be curious to also hear what Mr. Migchels has to said about this idea(replacing compound interest with simple interest), if he is still reading this thread.

Reply from The Daily Bell

What is it about the free market, and free-market advocacy, you don't understand? WE ARE NOT FOR A STATE METALS STANDARD.

Is that clear enough? We believe in an open market of competing currencies and are sympathetic to a PRIVATELY ORIGINATED bimetallic standard (gold and silver). There is NOTHING remotely controversial about this remedy. Bimetallic standards have been used formally or informally for thousands, maybe tens of thousands, of years. They are a free market solution to monetary manipulation by the elites. We repeat this over and over and the best rebuttal that people can come up with (we have noticed recently) is to imply that we are "pawns" of Zionist Jews for mentioning gold (and silver) are historical FREE MARKET monetary solutions to the problems of monetary control and manipulation. It really is incredible. Logical fallacies and animadversions now pass for argumentation in the annals of the alternative media. The dumbing down of human beings in the 20th century bears grim fruit in the 21st.

DB: Instead of just reflexively defending him, why don't you read some of his articles.

Be careful, DB elves, with your blanket statements and throwaway accusations.

I'd wager I have read a lot more Anthony Migchaels than you did, and I was already familiar with his ideas before he started writing here (although as I said I only discovered him in the last few months).

Speaking about the use of government force, even though the DB gave a detailed reply to my earlier question about the backing of currencies (a reply which I appreciate), I am still not sure who or what would make sure that the "backing" of the paper/digital notes is honest and stable in the free market situation that the DB favors.

Reply from The Daily Bell

Be careful, DB elves, with your blanket statements and throwaway accusations.

------

Why don't you start by spelling his name correctly? And what is it about advocating the use of government force that you do not understand? ...

Migchell: The Wolfson Prize, I win ...

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In order to have an orderly post euro (and post dollar) transition, we propose these measures.

1. All banks will be nationalized. They needed more than 20 trillion dollars in handouts and easy credit from Central Banks and Governments and are still all under water. Shareholders will not be reimbursed, their property is worthless.
A full investigation into the activities of these banks is ordered. Senior staff and management will be prosecuted where necessary.

2. All interest payments by and to these banks will be frozen. Since banks create the money they lend out through fractional reserve banking, they don’t need interest payments. An average mortgage of 200.000 costs up to 300.000 in interest payments during the thirty years the loan is payed off. If this money represents the ‘costs’ of the bank for providing the loan, these organizations must be among the most inefficient known to man.

3. All financial products, including derivatives, will be frozen. Within a year there will be a final decision on what to do with them, but a minimum of 95% of them will be canceled. There will be no reimbursements. Where necessary speculators will be burnt.

4. All real debts, mortgages, business loans, personal credit, the national debt, will be maintained and repayment according to contract, but excluding interest, is ordered in full. The real costs of managing these debts will be passed on to the debtor. Odious debts will be forgiven.

5. All Central Banks will be closed. Where necessary, their operations will be taken over by independent commissions and within a year they will be terminated.

6. All income tax will be abolished. The State will finance itself by taxing wealth and consumption of non essential goods and services.

7. All Banking families will immediately give full disclosure on their asset positions and records. Their activities will be investigated and when necessary they will be prosecuted. All their assets will be disowned.
All these assets will be centralized in a Trust, in which every citizen of the world has one share and one vote. These shares will not be tradable for the first year. We will provide all with the means and information necessary to exercise the rights associated with this share and vote. Within a year a number of scenarios for the liquidation of this trust will be proposed. A referendum will take place to decide which plan is best.

8. A legal framework for a free market of currencies is ordered within a year. This framework will be concise but will make clear that:
a. Governments will accept payment of taxes in these currencies when there turnover is sufficient for Government to spend the income of taxes in a useful manner.
b. Manipulation of these currencies, either by insiders or outsiders will be severely punished.
c. All currencies will be given free access, metal- or credit based or debt free. For Profit, or not for profit.
d. The prohibition of fractional reserve banking, to avoid insolvency of credit facilities. Credit will be created on a mutual credit basis.
The economy needs a free market for currencies, so that the most efficient will thrive.

9. A full investigation into the manipulation of the gold market is ordered. The culprits will be punished, fines will exceed the profits obtained with these frauds.

10. We the people take responsibility for having allowed this financial system to happen. The useful idiots within the system will therefore be treated with leniency, if they cooperate in the full disclosure of these operations.

11. A concise but comprehensive education program on the fundamentals of money will provided to all. We will again never allow ignorance to be exploited again.

12. All destruction of evidence as of now will be severely punished.

With these measures we will achieve the following:

- An immediate end of the wealth transfer from the many to the few through interest.
- An immediate end to poverty all over the world.
- A massive decentralization of economic power to the peoples of the world.
- An immediate end to the depression.
- An immediate end to the most destabilizing and warmongering class: the plutocracy.
- A solid and stable financial system, costing no more than 1% of GDP, providing the economy with the liquidity it needs.

Excellent!