Banning Usury will promote cryptocurrencies

[BobK71]

The reason for writing the Orchard model in the way that I did was to draw attention
to the creation of credit by the bank. Once upon a time, banks were very careful
with their lending, and bank bankruptcies were a feature of the commercial world.

A real-life example of the Orchard model:

http://www.abiyamo.com/why-does-nigeria-import-so-much-rice-instead-of-just-growing-it-bbc-asks-worlds-most-populous-black-nation/
"Members of the Rice Farming Association of Nigeria say they can only access high-interest loans from commercial banks. Joseph Jatau Kudu has been farming near the town of Doma in Nasarawa State since 1982. He says the banks charge as much as 30% to lend money. 'It's too high. We end up earning nothing,' he says. Without the capital to mechanise, workers must do everything on his 15-hectare farm by hand. Sometimes the tractors are not available. 'So now I'm using manual labour. It's not as effective as in the case of using a tractor and it's one of the reasons I can't expand.'

There are multiple entwined issues here.  Money is unreasonably tight in peripheral countries in many scenarios -- this is another way countries are victimized by the imperial system.

If we return to our model of an ideal system, as long as debt is not propped up by the state in any way, high interest will just be the market signaling that perhaps new farms shouldn't be built, for one reason or another.  It's not written in the stars that all humans should enjoy great living standards, and to pretend so would make things worse.

History records that rapidly expanding the money base via Usury used to be a sure way
to get into trouble.

This was only true if debt came with state-backing.  E.g. Spanish-Empire sovereign debt started at a 'cheap' interest of 15 to 20% per year when the empire was in ascendance.  While Renaissance Italian interest was probably higher, Renaissance debt didn't implode.  Debt that is priced at free-market rates tends to be good.  (Such a simple idea, so many centuries of misery from ignoring it.)

Hence today's monopoly on the issuance of fiat credit notes,
is somewhat like the ability of a Bookmaker to offer bets on every horse in the race.
No matter the outcome, the risk to the Central Bank is so small it's almost not there
at all, because the Bank can always pay its own liabilities.  

Usury is not supposed to be risk-free. And it isn't. It just moves risk to approximate
the power balance between Creditor and Debtor. That in turn means that politics,
not economics or law, may be the final arbiter when unpayable debt must be extinguished.

The problem is not usury, but is, as you refer to, the various state-driven distortions of the financial market: monopoly, propping up of debt, lack of clarity WRT debt resolution (deception made necessary by state backing of debt,) etc.

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[BobK71]

If we are talking about real world examples, wherever and whenever gold (or silver, for that matter) had been used as base money, it didn't end well.

Do you refer to gold/silver standards, or physical gold/silver used as sole money?  The difference is crucial

I don't think we can talk about gold or silver standard (namely, gold exchange or gold bullion standard) when we refer to Roman Empire

The Roman Empire was just another example of collapse by state-driven asset (monetary) inflation.  This was by no means a constant-money-supply system.

The monetary units were defined by the state (denari, etc.) but the precious metal contents of same-denomination coins were progressively diluted to enrich or bail out the elites.  Money was not this or that much weight of gold or silver.

This just goes to show that the incentives inherent in state intervention in money, just as today (or under gold/silver standards, for that matter) lead to collapse.

In fact, there is a theory which states that capitalism as such was launched by severe population decrease (depopulation) after the Black Death epidemic. It basically says that the plague destroyed closed castes of craftsmen who didn't allow outsiders into their family businesses. When there had been no families hanging around any more, hired labor became the dominant form of production. Before the Black Death, it had been mostly small-scale artisan production

What you seem to be possessed with (i.e. the Italian Renaissance) was actually a minor event in the economic development of Europe

Assuming this theory is correct, I'm sure there were all kinds of events that paved the way for the modern age of high living standards (among them, for example, William Tinsdale's illegal translating of the Bible into English, which started a literacy revolution in England.)  But among the really key factors must be: (1) the discovery of the actual technologies and processes that allow real wealth to grow; and (2) a well-functioning financial system to fund the investments necessary to grow the economy.

The Italian Renaissance was able to have both, with only physical gold and silver as money.  It crucially demonstrated that a 'flexible' money supply was not necessary.

In these key aspects it was unique in human history, because top bankers soon learned how to leverage Renaissance technology with imperial power and financial inflation to create empires.  The empires dominated the world from then on, and there has been no more pure progress.

[marcoman22]

Usury is the illegal action or practice of lending money at unreasonably high rates of interests.Usury is a financial option and cryptocurrencies are trading option.They are not inter related to each other.We can inturn say that promoting crypto currencies and providing people a new source of income would free people from Usury.

[deisik]

If we are talking about real world examples, wherever and whenever gold (or silver, for that matter) had been used as base money, it didn't end well.

Do you refer to gold/silver standards, or physical gold/silver used as sole money?  The difference is crucial

I don't think we can talk about gold or silver standard (namely, gold exchange or gold bullion standard) when we refer to Roman Empire

The Roman Empire was just another example of collapse by state-driven asset (monetary) inflation.  This was by no means a constant-money-supply system.

The monetary units were defined by the state (denari, etc.) but the precious metal contents of same-denomination coins were progressively diluted to enrich or bail out the elites.  Money was not this or that much weight of gold or silver

Well, you basically just confirm what I'm trying to say

Or do you really think that if the Roman gold coin had been heavily debased through ages, the European Medieval and post-Medieval rulers wasn't doing essentially the same? I guess they were doing just that, though on a much larger scale than any Roman emperor could ever dream of. In fact, financing wars through inflation (or debasing currency as in the case of the gold coinage) is a viable economic means after all, if not downright inevitable (which history repeatedly shows). Really, if a nation wages a war against another nation (or one city against another) and ultimately wins the war, all expenses are covered by looting the other nation. But if it loses it just gets looted itself (such is life)



That pretty much sums it up

[BobK71]

Well, you basically just confirm what I'm trying to say

Or do you really think that if the Roman gold coin had been heavily debased through ages, the European Medieval and post-Medieval rulers wasn't doing essentially the same? I guess they were doing just that, though on a much larger scale than any Roman emperor could ever dream of. In fact, financing wars through inflation (or debasing currency as in the case of the gold coinage) is a viable economic means after all, if not downright inevitable (which history repeatedly shows). Really, if a nation wages a war against another nation (or one city against another) and ultimately wins the war, all expenses are covered by looting the other nation. But if it loses it just gets looted itself (such is life)

Assuming what you're trying to say is "if we are talking about real world examples, wherever and whenever gold (or silver, for that matter) had been used as base money, it didn't end well":

China is a counter-example (i.e. in addition to Renaissance city states.)  China had gone through the entire Western debacle with state issued money by the 15th or 16th century (inflation, financial repression, etc. over the previous few centuries) that it decided to use physical silver for money sometime during the Ming dynasty.  I guess it must have been so disillusioned with state issuance that the silver wasn't even coined.  Ingots were weighed and cut on the street.  The system functioned for centuries until the British Empire naturally saw it as a threat to its world system.  The problem of China was not being able to resist the British militarily in the 1840s.

The problem is not gold and silver per se, but the state's propping up of its own issued money or debt, whether fiat, 'backed by' gold/silver, or physically embedded gold and silver.

When you have a money that the state cannot (or realizes it shouldn't) manipulate, you're (literally) golden.  Part of the problem is allowing the state to define the monetary unit.  Once transactions are denominated in the state-defined unit (dollar, franc, etc.) the system is open to such manipulation, although state-defined units are harder to prop up in multipolar worlds like Medieval Europe than in, say, pre-15th century China.

[deisik]

When you have a money that the state cannot (or realizes it shouldn't) manipulate, you're (literally) golden.  Part of the problem is allowing the state to define the monetary unit.  Once transactions are denominated in the state-defined unit (dollar, franc, etc.) the system is open to such manipulation, although state-defined units are harder to prop up in multipolar worlds like Medieval Europe than in, say, pre-15th century China

And then we are right back to my example which proves that any economic system based on a fixed money supply is unsustainable in the long run. I don't know much about China of that period, so I can't say anything specific. But for it to be a viable example, you should confirm two things. Namely, that the amount of silver in circulation was in fact constant (more or less) during that time span and that the level of well-being didn't substantially decrease. If silver really helped them, why the British were able to so easily conquer them?

Maybe, they shouldn't have used silver as money (if they had been, in the first place)

[BobK71]

And then we are right back to my example which proves that any economic system based on a fixed money supply is unsustainable in the long run. I don't know much about China of that period, so I can't say anything specific. But for it to be a viable example, you should confirm two things. Namely, that the amount of silver in circulation was in fact constant (more or less) during that time span and that the level of well-being didn't substantially decrease. If silver really helped them, why the British were able to so easily conquer them?

Maybe, they shouldn't have used silver as money (if they had been, in the first place)

Pardon me for scratching my head, but how does your 'example' prove anything?  I just gave two historical examples of constant money-supply systems that were more than stable (in the case of China, lasting for 3 centuries before being dissolved by external forces.)

Such examples are extremely rare because any existence would be under attack from the imperial system.  (E.g. the IMF stipulates that if you want to enjoy the help that comes with membership, you can't use gold.)

No non-Western country could be the military equal of Britain.  Britain's power came not just from decent fundamentals, but also from the international bankers' choice to push it as the global top dog.  We have to remember that in this situation 'flexible' money is a powerful performance-enhancing drug.  It also always addicts the country and lead to eventual implosion or decline.

It's probably more correct to change a couple words and say 'any economic system based on a state-controlled money supply is unsustainable in the long run.'

[deisik]

And then we are right back to my example which proves that any economic system based on a fixed money supply is unsustainable in the long run. I don't know much about China of that period, so I can't say anything specific. But for it to be a viable example, you should confirm two things. Namely, that the amount of silver in circulation was in fact constant (more or less) during that time span and that the level of well-being didn't substantially decrease. If silver really helped them, why the British were able to so easily conquer them?

Maybe, they shouldn't have used silver as money (if they had been, in the first place)

Pardon me for scratching my head, but how does your 'example' prove anything?  I just gave two historical examples of constant money-supply systems that were more than stable (in the case of China, lasting for 3 centuries before being dissolved by external forces.)

If you don't want to accept my proof, I simply can't force you

Other than that, there are always external forces present, and somehow countries that stick to a state-controlled money supply overcome countries that are using hard currencies backed up by, say, precious metals. After all, money is only a tool, even if fiat is just a powerful performance-enhancing drug. No one knows about clean athletes, but you can't become an Olympic champion unless you are juicing (where it applicable, of course). In any case, the winner takes it all

[BobK71]

If you don't want to accept my proof, I simply can't force you

Other than that, there are always external forces present, and somehow countries that stick to a state-controlled money supply overcome countries that are using hard currencies backed up by, say, precious metals. After all, money is only a tool, even if fiat is just a powerful performance-enhancing drug. No one knows about clean athletes, but you can't become an Olympic champion unless you are juicing (where it applicable, of course). In any case, the winner takes it all

Where is your proof?

"Overcome" is not the same thing as "achieve true happiness."  In fact, I would argue quite the contrary.  Theft is ultimately just as bad, if not worse, for the thief as it is for the victim.

[Xester]

If the United States of America will use bitcoin then they could no longer reproduce us dollars which is more than the prescribed amount to be circulated. The united States of America is constantly printing us dollars so the public could not notice that their nation is already bankrupt. With bitcoin at hand the public can monitor how much remaining btc are in the hands of the government and they will also see how the government are spending the funds.

[deisik]

If you don't want to accept my proof, I simply can't force you

Other than that, there are always external forces present, and somehow countries that stick to a state-controlled money supply overcome countries that are using hard currencies backed up by, say, precious metals. After all, money is only a tool, even if fiat is just a powerful performance-enhancing drug. No one knows about clean athletes, but you can't become an Olympic champion unless you are juicing (where it applicable, of course). In any case, the winner takes it all

Where is your proof?

"Overcome" is not the same thing as "achieve true happiness."  In fact, I would argue quite the contrary.  Theft is ultimately just as bad, if not worse, for the thief as it is for the victim

Maybe, in this post

But then again you are free to disagree, but unless you somehow manage to make a viable rebuttal (you didn't so far), I will stick to my guns, obviously. Regarding "achieving true happiness", this is a matter of convention really. The rich also cry, but as the proverb goes, money may not buy you happiness, but it is still more comfortable to cry in a Mercedes than on a bus

[BobK71]

Where is your proof?

Maybe, in this post

But then again you are free to disagree, but unless you somehow manage to make a viable rebuttal (you didn't so far), I will stick to my guns, obviously.

I didn't think you would still consider this a 'proof.'

As I mentioned, you can't model this economy properly by only having actors who must increase their savings.  And I answered your question (ie the profits will come from people outside your model.)  I'm still waiting for your response to that.

I'm sorry, but at this point, I have trouble believing that you want to be convinced of anything you don't already think.

[deisik]

Where is your proof?

Maybe, in this post

But then again you are free to disagree, but unless you somehow manage to make a viable rebuttal (you didn't so far), I will stick to my guns, obviously.

I didn't think you would still consider this a 'proof.'

As I mentioned, you can't model this economy properly by only having actors who must increase their savings.  And I told you where the profits would come from (ie people outside your model)

Are you serious mate?

When I tell you that your examples don't work in real world, you throw out the window my arguments since they don't work due to "external factors", and right now you use the same argument to challenge my point. I don't think this is an honest approach. Anyway, there are no people outside the planet Earth so your reference to "people outside your model" remains as invalid as ever before. I basically said everything what I wanted to say, but you may think as you please

[BobK71]

If the United States of America will use bitcoin then they could no longer reproduce us dollars which is more than the prescribed amount to be circulated. The united States of America is constantly printing us dollars so the public could not notice that their nation is already bankrupt. With bitcoin at hand the public can monitor how much remaining btc are in the hands of the government and they will also see how the government are spending the funds.

Correct.  The big picture is that the international banking elite latched onto the US as ally to use its imperial power to artificially support the values of its printed dollars, Treasuries, bank debt, etc.

Before they did this to the US, they did it to Britain, and before that the Netherlands, and before that Spain.  Each time, the empire ends tragically, one way or another, as the world eventually refuses to support the value of the paper.

[BobK71]

Where is your proof?

Maybe, in this post

But then again you are free to disagree, but unless you somehow manage to make a viable rebuttal (you didn't so far), I will stick to my guns, obviously.

I didn't think you would still consider this a 'proof.'

As I mentioned, you can't model this economy properly by only having actors who must increase their savings.  And I told you where the profits would come from (ie people outside your model)

Are you serious mate?

When I tell you that your examples don't work in real world, you throw out the window my arguments since they would be "external factors", and right now you use the same argument to challenge my point. I don't think this is an honest approach. Anyway, there are no people outside the planet Earth so your reference to "people outside your model" remains as invalid as ever before. I basically said everything what I wanted to say, but you may think as you please

I am dead serious.

So a physical-silver monetary system that survived for 3 centuries and only got eroded after a British invasion is inherently not stable?  It is 'an example that doesn't work in the real world?'

While your 2-person model of the economy where both must keep saving money is 'proof' of anything?

[deisik]

Where is your proof?

Maybe, in this post

But then again you are free to disagree, but unless you somehow manage to make a viable rebuttal (you didn't so far), I will stick to my guns, obviously.

I didn't think you would still consider this a 'proof.'

As I mentioned, you can't model this economy properly by only having actors who must increase their savings.  And I told you where the profits would come from (ie people outside your model)

Are you serious mate?

When I tell you that your examples don't work in real world, you throw out the window my arguments since they would be "external factors", and right now you use the same argument to challenge my point. I don't think this is an honest approach. Anyway, there are no people outside the planet Earth so your reference to "people outside your model" remains as invalid as ever before. I basically said everything what I wanted to say, but you may think as you please

I am dead serious.

So a physical-silver monetary system that survived for 3 centuries and only got eroded after a British invasion is inherently not stable?  It is 'an example that doesn't work in the real world?'

The real question is how well it survived

I didn't hear about any economic miracle in respect to post-Mongol China. If it was mostly agrarian society, which seems to be the case (compare with England ca. 1840), then your example is meaningless since in such a society money itself is mostly irrelevant. It could survive without any money altogether, be it fiat, silver, gold, or whatever. Regarding my model, you can include in it as many people as you see fit, but if it can still be reduced down to a 2-person model, that makes no particular sense either

[BobK71]

Where is your proof?

Maybe, in this post

But then again you are free to disagree, but unless you somehow manage to make a viable rebuttal (you didn't so far), I will stick to my guns, obviously.

I didn't think you would still consider this a 'proof.'

As I mentioned, you can't model this economy properly by only having actors who must increase their savings.  And I told you where the profits would come from (ie people outside your model)

Are you serious mate?

When I tell you that your examples don't work in real world, you throw out the window my arguments since they would be "external factors", and right now you use the same argument to challenge my point. I don't think this is an honest approach. Anyway, there are no people outside the planet Earth so your reference to "people outside your model" remains as invalid as ever before. I basically said everything what I wanted to say, but you may think as you please

I am dead serious.

So a physical-silver monetary system that survived for 3 centuries and only got eroded after a British invasion is inherently not stable?  It is 'an example that doesn't work in the real world?'

The real question is how well it survived

I didn't hear about any economic miracle in respect to post-Mongol China. If it was mostly agrarian society, which seems to be the case (compare with England ca. 1840), then your example is meaningless since in such a society money itself is mostly irrelevant. It could survive without any money altogether, be it fiat, silver, gold, or whatever. Regarding my model, you can include in it as many people as you see fit, but if it can still be reduced down to a 2-person model, that makes no particular sense either

Your point was that a fix-money-supply system is logically provable to be inherently unstable.  Have we moved the goal post?

Not to mention, the Renaissance had great progress with a physical gold and silver only money system.  But of course that was an unimportant example in your book(!)

BTW money seemed to be important in 'agrarian' China.  The reason for going to physical silver was partly that hyperinflation after centuries of the state-issued money had reduced much of the economy to barter.  Under physical silver, the few decades before the British invasion of 1840s were also known for general prosperity.

You still have not addressed the core issue with your model, that having only actors who must increase their savings will naturally not work with a fixed money supply, so that the model was unrealistic and actually could be argued to have been chosen for its conclusions.

That fixed-money-supply is unstable is an establishment-promoted myth that has become something of an orthodoxy today, in a world where the 'top' mainstream economists are essentially bought off by the establishment (that is, surely blind on purpose unless they are so obtuse as to miss the elephant in the room.)

[deisik]

The real question is how well it survived

I didn't hear about any economic miracle in respect to post-Mongol China. If it was mostly agrarian society, which seems to be the case (compare with England ca. 1840), then your example is meaningless since in such a society money itself is mostly irrelevant. It could survive without any money altogether, be it fiat, silver, gold, or whatever. Regarding my model, you can include in it as many people as you see fit, but if it can still be reduced down to a 2-person model, that makes no particular sense either

Your point was that a fix-money-supply system is logically provable to be inherently unstable.  Have we moved the goal post?

I don't quite understand what you mean. Anyway, you should keep in mind that if you want to logically disprove something you should yourself use logic but not refer to examples. Regarding your examples themselves, the Italian Renaissance cities are irrelevant as such since their economies are not sustainable on their own at all, in the first place. They were basically bankers and traders (read resellers). Without the rest of the world, they would quickly die out in a matter of months if not weeks. And which book are you talking about?

The producer-consumer example was my invention, just in case

You still have not addressed the core issue with your model, that having only actors who must increase their savings will naturally not work with a fixed money supply, so that the model was unrealistic and actually could be argued to have been chosen for its conclusions

I assume that all other actors ain't relevant. If you disagree, explain how they should be

That fixed-money-supply is unstable is an establishment-promoted myth that has become something of an orthodoxy today, in a world where the 'top' mainstream economists are essentially bought off by the establishment (that is, surely blind on purpose unless they are so obtuse as to miss the elephant in the room.)

Talk is cheap, show me how it is actually sustainable

[BobK71]

Your point was that a fix-money-supply system is logically provable to be inherently unstable.  Have we moved the goal post?

I don't quite understand what you mean. Anyway, you should keep in mind that if you want to logically disprove something you should yourself use logic but not refer to examples. Regarding your examples themselves, the Italian Renaissance cities are irrelevant as such since their economies are not sustainable on their own at all, in the first place. They were basically bankers and traders (read resellers). Without the rest of the world, they would quickly die out in a matter of months if not weeks. And which book are you talking about?

The producer-consumer example was my invention, just in case

Sorry, you're the one who has to prove that a fixed-money-supply economy is inherently unstable, since that was your assertion.  I only have to provide counter-examples.

I am not asserting the stability of anything, since there are so many factors, that you can't guarantee stability, without looking at all of them.  But I'm proving that fixed-money-supply systems are not inherently unstable by giving you two counter-examples (Renaissance city states and 3 centuries near the end of Imperial China.)

Trade was only one of many supporting factors for the Renaissance economy.  Every economy has them.  I suppose you're going to say that if a Medieval crop economy was subject to destruction by climate change, it would prove that fixed-supply-money is inherently unstable?  Or that the economy was no example of a stable, fixed-money-supply system?

You still have not addressed the core issue with your model, that having only actors who must increase their savings will naturally not work with a fixed money supply, so that the model was unrealistic and actually could be argued to have been chosen for its conclusions

I assume that all other actors ain't relevant. If you disagree, explain how they should be

See my original statement.  I guess I'll just have to keep waiting.

That fixed-money-supply is unstable is an establishment-promoted myth that has become something of an orthodoxy today, in a world where the 'top' mainstream economists are essentially bought off by the establishment (that is, surely blind on purpose unless they are so obtuse as to miss the elephant in the room.)

Talk is cheap, show me how it is actually sustainable

In this case, I'll stick to cheap talk.  Thank you very much.

[deisik]

Your point was that a fix-money-supply system is logically provable to be inherently unstable.  Have we moved the goal post?

I don't quite understand what you mean. Anyway, you should keep in mind that if you want to logically disprove something you should yourself use logic but not refer to examples. Regarding your examples themselves, the Italian Renaissance cities are irrelevant as such since their economies are not sustainable on their own at all, in the first place. They were basically bankers and traders (read resellers). Without the rest of the world, they would quickly die out in a matter of months if not weeks. And which book are you talking about?

The producer-consumer example was my invention, just in case

Sorry, you're the one who has to prove that a fixed-money-supply economy is inherently unstable, since that was your assertion.  I only have to provide counter-examples

This certainly won't do

I think that I have logically proven my point. Ultimately, this is irrelevant (since you still consider my arguments as not sufficient). What is relevant here is that you can't just pop up and claim that my point is shaky or invalid. Basically, you should either disprove it by showing that it is internally wrong and inconsistent using the same logic as I used (which you simply can't since it is logically perfect) or somehow prove that this model, though internally consistent and coherent, is not applicable to real life. Obviously, your so-called example are not disproving (or proving, for the record) anything in any conceivable way

Trade was only one of many supporting factors for the Renaissance economy.  Every economy has them.  I suppose you're going to say that if a Medieval crop economy was subject to destruction by climate change, it would prove that fixed-supply-money is inherently unstable?   Or that the economy was no example of a stable, fixed-money-supply system?

It doesn't matter if it was only one of the factors in the Renaissance economy. What actually matters here is that it was not in the least sustainable on its own and greatly depended on the outside world. That pretty much renders your example useless. It is like claiming that you live on your own while in fact you live in the basement of your parents' house

You still have not addressed the core issue with your model, that having only actors who must increase their savings will naturally not work with a fixed money supply, so that the model was unrealistic and actually could be argued to have been chosen for its conclusions

I assume that all other actors ain't relevant. If you disagree, explain how they should be

See my original statement.  I guess I'll just have to keep waiting

Honestly, I can't fathom what you mean by me "having only actors who must increase their savings". Just in case, it is about consumers and producers. Essentially, it is not about saving, it is about having enough means for pure subsistence