Following are my responses:
@Not Anti-military Per Se
Thank you for your kind comments.
“If Real Bills are like credit who gets the interest?”
Who says credit must come with interest? Credit can be created with or without interest, depending on the desires of the one granting the credit, I imagine.
“Real Bills seem to arrise from production and consumption which seems to be analagous to non fractional credit from savings…”
Fekete is quite clear, to quote him: “I made the central point that the source of commercial credit is not saving but consumption.”
Two people cannot eat the same meal. Something cannot be consumed and used in production at the same time. It is fractional reserves on its face.
“With consumption the Real Bill was in existence only along side the unsold product. This is not credit from nothing.”
From where did the means arise to produce something? Funny money and funny credit can be created from nothing; the worker producing goods financed by Real Bills must eat something while he works for 90 days.
“Inflation transfers wealth, true? Who is the beneficiary of this transfer with Real Bills? Production apparently.”
“Real Bills seems to decentralize wealth and power….In any event, Real Bills seem to limit the role of bankers generally and central bankers specifically.”
If arising from a free market, certainly. Ingo continues to indicate a role for the state, and this causes me to hesitate. I do not state anywhere that Real Bills offer no benefit to the current.
“But could Real Bills cause a misallocation of capital?”
Yes, as production is demanding resources that would not have gone into that which it was used absent Real Bills.
“Inflation causes rising price level, true? Real Bills may when the come into existence but then they disappear after ninety days.”
Inflation of the money supply may or may not result in a general increase in prices. Many other factors are also involved, technology improvements for example. That real bills are inflationary only for the time they exist makes them no less inflationary. They no less distort the market and send false signals for this period of time.
“Thru DB interviews it appears that by way of Geo Mason U Econ "Austrians" support fractional banking and even consider it sacrosanct apparently. At the same time these "Austrians" are clear in their denunciation of Real Bills.”
Generalizing the GMU crowd is probably not safe, but my overall read is that there are some there who support FRB only to the extent that it is fully left to the market, not supported by the state. I cannot disagree with this, although some affiliated with the Mises Institute take strong exception. I note that Ludwig von Mises himself seems to indicate acceptance of the possibility of fractional reserve banking within the context of a fully free market in competitive banking and that the market will discipline this to the extent necessary.
”Perhaps most notably Real Bills apparently do not lead to intertest charges as a drag on production or consumption.”
I do not see interest as a drag on production or consumption. All activity must be financed somehow, be it by debt capital or equity capital. Either type of capital will demand a return, which the user of capital owes to the provider of capital. Why isnt it said that equity capital is a drag on production? Does not the provider of equity also demand a return?
One of the issues that doesn’t hold water for me is the difference to the businessman of interest vs. discount. Both reduce from the source of fund (being revenue). Both reduce the bottom line (being profit). In both cases, a third party is taking a cut for carrying paper. All the pretty words in the world do not change these facts. I am quite certain this makes me too stupid for the Real Bills crowd, but to the businessman the distinction is meaningless.