or Monetary Baryogenesis
In theoretical physics matter and anti-matter have particles of identical mass, but have the opposite electrical charge. While a proton has positive charge, an antiproton has a negative one. Collisions between matter and anti-matter particles result in their mutual annihilation.
Matter and energy may be interchangeable, but an old axiom says that matter/energy cannot either be created or destroyed. This still holds true except for when anti-matter is employed. It was once hypothesized that somewhere there must be an equal amount of anti-matter to the observable matter. This defies discovery. The process by which this inequality between matter and antimatter particles developed is called baryogenesis.
The subject under discussion here is monetary baryogenesis.
In modern economies both credit and debt are born simultaneously. As the Bank of England’s 1st Quarterly Review of 2014 explained, both bank deposits and our debts to the money creating banks arise together with every bank loan. Monetary baryogenesis is therefore reduced to a study of the differing rates at which debt and credit die.
Debt repayment is the antimatter of consumer purchasing power (CPP) and it is one of the two main regulators of whether the economy is in recession or inflation. The other regulator is the propensity to borrow. The purchasing power available in the economy is wholly a matter of the amount of debt which has been created by banks, but has not yet reached the point of being repaid. In an expanding economy debt must be increasingly issued at a rate progressively above its rate of repayment. Because of the long terms of residential housing loans these have become the main means of keeping purchasing power out there in the economy.
The public’s confidence to borrow and their resistance to early repayments, are therefore the critical determinants of the state of the economy. The rapid destruction of confidence, such as that wrought by the 2020 covid-19 pandemic, would therefore seem to only offer one option; the Central Bank’s issue of credit and the Government’s acceptance of this debt.
The study of monetary baryogenesis does present another alternative. An understanding of money and anti-money is critical here. These two are co-determinants of available consumer purchasing power. Debt negates purchasing power so may be seen as the negative or anti-money matter. Credits are purchasing power for they in fact constitute it, and are therefore the positive or money-matter proper. An excess of one may be negated by the addition of the other into the environment.
The great difficulty when confronted by excessive debt in an environment of deficient credit, is that no means of creating the one without the other is generally acknowledged as existing. A few ancient and primitive examples of financing through note issues such as President Lincoln’s war and Australia’s transcontinental railway are dimly remembered. Printing notes is now archaic as typing numbers into cyberspace is current money-creating practice.
The great question of the modern monetary era is whether credit can be typed into existence in cyberspace, a process without cost, without its ownership being arbitrarily given to somebody who will demand its repayment. This may indeed prove to be beyond the wit of man.
One persistent proposer of the above suggests that a carefully measured amount of credit be issued against a comprehensive National Balance Sheet. No Government does such an account of course, but if they did, the money supply which constitutes a claim upon national assets would be accounted as a liability. Money created without a corresponding debt would, when used to pay down debt, extinguish both the debt and the credit, and remove the liability from the nation’s balance sheet. The claim is that this would enable a self-liquidating economy and a mechanism to negate excessive debt.
Personally I have to say that I don’t think it will work because I simply can’t understand it.
It isn't that difficult to understand:
1) Debt is anti-money. Just as the existence of the universe requires a surplus of matter over anti-matter, a properly functioning economy requires a surplus of money over anti-money.
2) In our current system, money is created alongside debt - it is essentially debt-money. This creates a serious problem since money is required for two purposes - to pay off debts and to pay for goods and services - but can only serve one function at any given time.
3) The 'solution' of our current monetary system has been to keep increasing the flow of debt-money to compensate for the repayments of existing debts - but this leads to an ever-increasing debt spiral. It also generates boom-and-bust cycles when the supply or demand for loans does not match the economy's requirements.
4) The application of interest leads to a situation where anti-money exceeds money: the opposite of what a healthy economic system requires.
5) The correct solution is to generate a flow of debt-free money, so as to ensure that there is no shortage of money for repayment of debts or facilitation of transactions.
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