Posted by bionic mosquito on 06/04/11 11:06 AM
(In reply to Bischoff)
"Money = Gold
"Gold = Money
"However, with the greater demand for products, the amount of gold used as currency was insufficient to also pay for each of the production steps in bringing an item to market. Unless there was a way to finance the production steps without the use of gold, the gold tied up to finance production would leave no gold with which to make purchases.
"The answer to the shortage of gold to finance both production and trade, lay in the development of a "redeemable" currency. Producers within a production chain for items in immediate demand by the consumer were financed by producers each other by drawing "Real Bills". These "Real Bills" were settled at the end of ninty days, after the end product had been sold.
snip-----------------
While recognizing the possible utility offered by real bills, I will suggest that I could not have written a better description of the fractional reserve and inflationary nature of this credit instrument. (Yes, it is credit).
Thank you, Ingo. As in our dialogue yesterday, I find in your words a better statement than any argument I might make on my own. I could save myself much trouble if you would only agree to take my part in our disagreements.
"Gold = Money
"However, with the greater demand for products, the amount of gold used as currency was insufficient to also pay for each of the production steps in bringing an item to market. Unless there was a way to finance the production steps without the use of gold, the gold tied up to finance production would leave no gold with which to make purchases.
"The answer to the shortage of gold to finance both production and trade, lay in the development of a "redeemable" currency. Producers within a production chain for items in immediate demand by the consumer were financed by producers each other by drawing "Real Bills". These "Real Bills" were settled at the end of ninty days, after the end product had been sold.
snip-----------------
While recognizing the possible utility offered by real bills, I will suggest that I could not have written a better description of the fractional reserve and inflationary nature of this credit instrument. (Yes, it is credit).
Thank you, Ingo. As in our dialogue yesterday, I find in your words a better statement than any argument I might make on my own. I could save myself much trouble if you would only agree to take my part in our disagreements.
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