There are Four Generally Accepted Functions of Money.
Money Should Be a Measure of Value.
Most of the confusions of Money and its useful functions relates to confusing money with Wealth.
Bear this statement in Mind in the following.
Money and Goods Are Different
”Thus, clearly, money and goods are not the same thing but are, on the contrary,
exactly opposite things. Most confusion in economic thinking arises from failure to
recognize this fact. Goods are wealth which you have, while money is a claim on wealth which you do not have. Thus goods are an asset; money is a debt. If goods are wealth;money is not wealth, or negative wealth, or even anti-wealth. They always behave in opposite ways, just as they usually move in opposite directions. If the value of one goes up, the value of the other goes down, and in the same proportion.”
The Relationship Between Goods and Money Is Clear to Bankers
In the course of time the central fact of the developing economic system, the
relationship between goods and money, became clear, at least to bankers. Thisrelationship, the price system, depended upon five things: the supply and the demand for goods, the supply and the demand for money, and the speed of exchange between money and goods. An increase in three of these (demand for goods, supply of money, speed of circulation) would move the prices of goods up and the value of
money down. This inflation was objectionable to bankers, although desirable to producers and merchants.On the other hand, a decrease in the same three items would be deflationary and would please bankers, worry producers and merchants, and delight consumers (who obtained more goods for less money). The other factors worked in the opposite direction, so that an increase in them (supply of goods, demand for money, and slowness of circulation or exchange) would be deflationary.”
Mr Corbyn’s Answer.
there are some
banks that are publicly owned we will be
promoting building societies
cooperatives and we will be promoting a
national investment bank which won’t be
a lending bank it will be an investment Bank and that is an important part
Paxman yet again Interrupting.
you believe in
a public ownership of commercial & retail banks
an important part of directing investment
in this country of the retail banks RBS
is largely publicly owned there is a
public stake in most of The other banks them I was
Always favour banks being in public
ownership you said that in 2013
well I did say that
But it doesn’t get into the
the manifesto does it?
what we seem to
be struggling with here is an
understanding of a process that brings
about a manifesto
No No What were struggling with is how much of this ( Brandishes manifesto)
Do you believe in?
well I am
NOT a dictator that represents writes things to
tell people what to do this is a product
of a process in our party that’s why I
was elected leader of our party to give
a voice to the members and those who are
affiliated to our party.
well alright let’s take
another aspect of it, you say,.
benefits for three years you will now?
This Key Exchange talks about ownership of banks but importantly not about What Banks do. Banks create 97% of the nation’s money supply most people think the Government does that but it only creates 3% of the notes and coins in circulation the other 97% is left to the banks to create it does not come from the pre-existing store of people’s hard earned savings and earned investments.
A more Sophisticated Model of the functions of money adds two further functions
The Basis of Credit:
A Standard of Postponed Payment:
That is money is an IOU.
This was a short and largely left un-commented exchange between Paxo and Jezzer.
We can usefully recall these words of Benjamin Franklin regarding Matters of Money as they relate to Political Economy.
In 1729 Benjamin Franklin wrote a pamphlet ´´A modest Enquiry into the nature and the necessity of a paper Currency.”
a modest enquiry,
”There is no Science, the Study of which is more useful and commendable than the Knowledge of the true Interest of one’s Country; and perhaps there is no Kind of Learning more abstruse and intricate, more difficult to acquire in any Degree of Perfection than This, and therefore none more generally neglected. Hence it is, that we every Day find Men in Conversation contending warmly on some Point in Politicks, which, altho’ it may nearly concern them both, neither of them understand any more than they do each other.
Thus much by way of Apology for this present Enquiry into the Nature and Necessity of a Paper Currency. And if any Thing I shall say, may be a Means of fixing a Subject that is now the chief Concern of my Countrymen, in a clearer Light, I shall have the Satisfaction of thinking my Time and Pains well employed.
To proceed, then,
There is a certain proportionate Quantity of Money requisite to carry on the Trade of a Country freely and currently; More than which would be of no Advantage in Trade, and Less, if much less, exceedingly detrimental to it.
This leads us to the following general Considerations.”
The Investment Bank Labour Proposes and some minor changes to the Bank Charter Act of 1844 will
make a huge difference to rebalancing the economy, this is the Political Reality of money that Neo-Liberal Voodoo economics does not want to be known or that most politicians and commentators are ignorant of. Mr Paxman I guess is one of those who are ignorant of this, I suspect Mr Corbyn is fully aware of these Issues as is the Shadow Chancellor John O´Donnell.
Many people might answer ‘the state’ or the ‘central bank’. But the hard currency printed by the Bank of England only amounts to 3% of the money in circulation in Britain today.
The rest? It’s created and allocated by commercial banks in the form of digital money – the pixelated numbers you see on your phone or computer screen.
The likes of HSBC, RBS and Barclays are literally making money from money.