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Capital is "Static", or "potential", Value consisting of "Money's Worth" in: (a) "Property" ("fixed capital"); and (b) obligations = credit ("working capital").
That's what Money SHOULD be and COULD be in a rational moneatry system based upon a "Clearing Union" approach and backed by "Guarantee Societies".
The toxic form of deficit-based Money currently in use is an interest-bearing "Claim over Value" issued - as Migeru puts it - "ex nihilo".
In essence it's the Bank taking my credit (promise to provide future value) and reflecting it back to me with their "guarantee". A Bank's "claim on a claim over Value" is a "double negative" giving a "false positive".
It is an illusion of Value or, in an analogy to anti-matter: "anti-Value".
Note that the whole business of "credit derivatives" is to all intents and purpose Banks outsourcing their "Guarantee".
My proposal of a partnership-based "Guarantee Society" achieves the same result, but without the costs and complexity. "The future is already here -- it's just not very evenly distributed" William Gibson
Jerome: It does not cost nothing [to create the principal of a loan] Nowadays, with regulatory oversight, it requires a capital allocation (8% or less, depending on the risk)." Chris: Note that the whole business of "credit derivatives" is to all intents and purpose Banks outsourcing their "Guarantee".
Chris: Note that the whole business of "credit derivatives" is to all intents and purpose Banks outsourcing their "Guarantee".
Also, what regulatory oversight are we talking about? Basel II? Bush is a symptom, not the disease.
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