This article responds to Ellen Hodgson Brown's claim to answer to our controversy:
Mike Montagne has posted this on his website, concerning a “controversy” with me of which I was unaware until it was sent to me by someone else.http://perfecteconomy.com/wp/2008/10/18/open-letter-to-global-research-on-the-controversy-with-ellen-hodgson-brown/
My sources on the Pennsylvania land bank are here:
Alvin Rabushka, “The colonial roots of American taxation, 1607-1700: The low-tax beginnings of American prosperity,“ Policy Review (Hoover Institution, Stanford University, August/September 2002); “Representation without taxation: The colonial roots of American taxation, 1700–1754,” ibid. (December 2003 & January 2004); Stephen Zarlenga, The Lost Science of Money.
The math works like this: you print $105, lend $100 at 5% interest and spend $5 into the economy on government salaries, projects, etc. $105 is now circulating in the economy, which comes back to the government bank as principal and interest on the $105 loan. You lend THE SAME $100 all over again and spend $5, which returns to the government as principal and interest; etc. The interest funds the government, replacing taxes. No inflation, no government debt, no taxes — as proven by the Pennsylvania experience.
What you only call simplification is hardly a virtue if it fails to account for the issues at hand. It's not complicated to account for those issues; nor is it an excessive complication to account for those vital issues, as your inability to account for those issues asserts.
You merely claim that the few aspects of the cycle you cite accounts for all issues. You've claimed that over and over again, without ever answering to the questions I've asked; and of course, you've pretended weak answers to others account for their questions, which they have asked (I'll get to those next).
You don't even explain for instance what you're loaning "THE SAME $100 all over again," assumably back into circulation for. So what simpleton can even truly pretend to understand your purportedly "simple" example? Tell us with necessary certainty, supporters of this proposition, what is she lending the $100 back into circulation for? And how is that this "simple" explanation determines a wholly accountable solution, which is non-inflationary, non-deflationary (able to sustain all industry or trade of all wealth), and so forth? There are no further questions, just because you prefer not to think of them?
In your purported account of accountability, you don't even cite what the circulation should or must be, if it is to account for or sustain all the stresses which might be (and will be) imposed upon the circulation. Why loan the same $100 back into circulation, as does the present fractional reserve system? How is the same circulation to account for different purposes simultaneously, particularly if for instance we were to trade all wealth at once? How would that same $100 suffice to do that? How does your circulation sustain the possibility of such a transaction?
Worse, how do simpletons pretend to know it can, or that your "solution" is even "more simple," *unless* they indeed understand that it can?
Do they understand that, Ellen?
It doesn't of course, because there isn't an effective circulation equal at all times to the remaining value of all represented wealth. That's pretty simple. Just a "small" detail we don't need to account for, or even explain?
Obviously, your purported circulation can only sustain the trade of all wealth if there is an effective circulation equivalent to all wealth. You don't even understand that there's a question of such an issue... so you merely reply that's an unnecessary complication -- one which, of course, you don't understand.
If you did understand it, you would not be giddy about the proposition or model of a land bank, which can only of course finance the purchase of land (as your earlier correspondence indicates).
Furthermore, obviously, there are further issues which make your proposition -- I'll give you the simple version, since you prefer that -- "idiotic." What would make it idiotic?
Because you're doing two quite inept things here, and only pretending you have answered for these things.
First of all, the only assumable reason you have to spend interest back into circulation is so that it can be paid without re-borrowing it, to maintain a vital circulation (so that it can be paid). In other words, tacitly, your purported solution recognizes my principle that any currency subject to interest inherently multiplies debt in proportion to the obligated circulation, until this multiplication produces a terminal sum of debt.
So all you're really doing, is paying taxation through what you still call interest (although this is neither its definition or consequence). And of course, you're doing that only to avoid multiplication of debt by actual/conventional interest, even as you carefully avoid plagiarizing the vital reasons for that, which I provided so long ago -- and all the while since. Of course, neither can your readers possibly understand or appreciate that necessity but in veritable terms -- even as you merely describe the process as a Ponzi Scheme, which of course hardly reflects the need to re-borrow interest as subsequent increases in the sum of debt (to maintain the necessary circulation) -- a requisite and process which certainly is not defined by or incumbent to "Ponzi Schemes."
While yet you deny this principle that conventional interest multiplies debt in proportion to the obligated circulation, you advocate an obfuscation of taxation, imposed in a form similar to interest, but with the further provision, to avoid the consequence of interest which I raise, of spending all interest payments back into circulation (so that these payments don't have to be borrowed back into circulation, as is the case with the pattern of *conventional* *interest*).
At the same time, I've asked you how this properly administers taxation. How do you -- what is your formula for -- properly adjusting interest so that everyone might pay for instance, different rates of interest, which might properly distribute their burden of taxation, if particularly, it were the case that some or others of us not rightly bear the same proportion of taxation? Worse, how is it those who do not assume debts are taxed? Or what is the connection between government service and proper rates of taxation, which makes "interest" levied against debt the proper rate of taxation for all cases?
The idea that your arbitrary rate of interest answers to any of these issues is preposterous; and even the lowliest simpletons should realize this.
I'll give you one clear example of how ludicrous this idea is: I'm paying the "right" amount of taxation for the degree to which government serves me. Then, without receiving any more service of the government, it is necessary for me to assume say 100 times my previous debt. Now I'm paying 100 times as much taxes through your obfuscation of interest. How is that right? Because it's ostensibly "simple"?
To simply not answer the question, neither conveys a virtue of your proposition, or the purported simplicity you claim, for if you had accounted for these things, you would explain in sufficient detail all the more complicated processes by which interest rates might be adjusted upward or downward as more property per government service was financed (requiring lower interest rates for all), or individuals opted out of government programs (which requires lower interest rates for them), or further government spending on the accounts of some increased the share/interest of government costs for others, and so forth.
After all, once a person has paid their debts, or if a person assumes no debt, they are paying no taxes whatever, regardless however much their enjoyment of government services might stress the taxation system, placing the burden on others.
This is not solution. It's preposterous pretension of solution. Nor is it simple, because it obviously places tremendous complications upon implementation, merely if we are to distribute the tax burden justly, for all logical cases.
Obviously, this is a far more complicated scheme than it needs to be; and I have already detailed some of the injustices it would impose. How do we resolve all these issues more simply?
We simply eradicate (real) interest to solve the adverse consequences of interest; and we impose taxation in the most straightforward, justly distributed manner.
How do we do that?
We restore to the individual the right to issue their own promises to pay. We aren't taking "interest" from the real creditor, who is the producer of the subject property, who accepts the promise to pay as currency... for that producer is denied such "interest" now, by an extrinsic party, which produces the promise of the real debtor at virtually no cost whatever, pretends to loan that to the debtor (only by denying the debtor the right to issue their own promise), and, as if that freely (virtually costlessly) published, obfuscated promise represented earned wealth of the intervening publisher... we pay *the publisher* (of all parties!) the "interest," instead of the actual creditor (producer of the subject property).
You too in fact are denying the true creditor interest, so what exactly is your justification of interest? (!)
So the simple answer is that mathematically perfected economy™ alone sustains the whole necessary relationship of money to represented wealth, without multiplication of debt by interest, and while, the whole while, debtors pay for the wealth they consume, as they consume of it.
In other words, the simple solution is to pay for wealth, only the cost of the wealth, and to pay for taxation according to the separate rules which might determine however we should be paying for taxation. Otherwise, OF COURSE, you're going to place ridiculous complications upon your preposterous notion of obfuscating a rate of interest to pay for government costs, the burdens of which obviously may never be JUSTLY distributed in any uniform rate of interest, applied yet to further disparate, individual volumes of debt.
The fact is, Ellen, if you sorted all that out, you'd come to the simplest implementation of all:
Should we be able to pay for a house, what the house itself should cost us? Of course, this is a just goal of economy, and therefore of solution.
Should we be able to pay for government services, what those services should cost *us*, regardless of however much we might or might not borrow? Of course as well.
So then, for all cases, there is one way to do this:
Pay for the property you acquire, only the costs of the property; and pay for the costs of government, only what you should have to pay as well -- which obviously, has no consistent, uniform *rate*, relative to however much debt we might assume in whatever we have to do.
When you were asked why not eradicate interest, you simply answered you thought it was too complicated to implement such a system. Of course, you didn't say how; and I responded in detail how the (unanswered) complications and/or injustices which your proposition imposes comprise a greater set of (redundant) difficulties.
The simpler solution then, *IS* mathematically perfected economy™.
Because the subjects of the system *do*, in all cases, simply pay for the wealth they consume. If it is a $100,000 home with a 100-year lifespan, they're paying for the home at the overall rate of $1,000 per year, or $83.33 per month -- the very rate they consume of it. They're not paying taxes at the same time, for ostensible government services they may or may not consume, and which too, are not necessarily relative/proportional at all to however much the house *should* cost!
Likewise, in the case of *actual* government services they might *elect* to consume, and should pay for to some different proportion or relationship, they simply pay for those services by equally simple processes. How so?
If the usage of roads provided by government is decided to be levied proportional to gasoline consumption, the tax is levied in the cost of gasoline... which *alone* of course, with no complication whatever, determines just payment across the very duration of the consumption of the government service, as you propose to decide rightly by your uniform rate of taxation, instead applied to a wholly disproportionate sum of individual debt!
Not only have you not answered the questions then... the injustices of your system impose greater complication than mathematically perfected economy™.
The difference is not that your proposition is less complicated. The difference is, you don't account for the further complications, by the simplest answer to all the requisites of a just implementation. The difference is, you don't provide accountable arguments. You just fire off your idea, without ever establishing even to yourself, that it solves the things you pretend to solve.http://perfecteconomy.com/wp/2008/12/22/response-to-ellen-hodgson-browns-claim-to-answer-to-the-controversy/