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  • 888
    http://www.sffo.de/suhrnnge.html An article by Prof. Dr. Dieter Suhr Interest Free Money: The Neutral Money Network 5.1. The Theoretical Carrying Cost Concept
    Message 1 of 5 , Sep 26, 2002
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      http://www.sffo.de/suhrnnge.html
      An article by Prof. Dr. Dieter Suhr

      Interest Free Money: The Neutral Money Network

      5.1. The Theoretical Carrying Cost Concept

      "We had to analyse traditional money and its effects thoroughly and
      vividly to see that it really brings with it inefficiencies and
      injustice. Now the time has come to show that traditional money need
      no longer be accepted as some kind of invariable fate. There are many
      ways to explain the practical concept of neutral money. An
      instructive one is to start from the freedoms which money grants to
      the money holder. In economics the valuable conveniences of money
      have borne names suitable to bring to our minds, from different
      points of view, the phenomenon we are dealing
      with: "conveniences", "liquidity premium", "money services", "yield
      from money held", "grant of money", "productive services of
      money", "money stock utility".

      "These benefits of money at hand are constituted by the genuine
      ability of money to serve as a means of economic transaction.
      However, the transaction function of money is undermined in that
      money yields its services for free even, and in particular, when it
      is held back and prevented from functioning as it should. It is this
      power to sabotage the transaction series, and to profit from that,
      that makes money suboptimal with regard to its efficiency. The
      valuable services of money intice individuals to hold money or to
      lend it instead of spending it. So, if we plan to reduce money's
      dysfunctions and to improve its efficiency we have to remove or
      neutralize the distribution effects of money by which the money
      holder has the benefits and the pecuniary returns and the others have
      the costs, risks and expenditures."

      -Bruce
      http://groups.yahoo.com/group/spiritualscience
    • QGJ
      What does it mean to say that money is held back and prevented from functioning as it should and sabotage the transaction series ? I understand you to be
      Message 2 of 5 , Sep 29, 2002
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        What does it mean to say that money "is held back and prevented
        from functioning as it should" and "sabotage the transaction series"?

        I understand you to be saying that when individuals are "enticed"
        to save or hold back money, rather than spending it, this is
        somehow less "efficient." If this is what you mean, I think I
        disagree. You only have basically three options as a money-holder:
        1.) You can spend it. This dissipates your power back into the
        economy in a sense, or exchanges one concrete commodity (a
        certain amount of currency) for another commodity (the product
        or service that is purchased).
        2.) You can (save/invest) it. This money does not just disappear.
        When you deposit/invest, it is in turn loaned out to other
        individuals, who use it for "productive" purposes.
        3.) You can just hold money, under your mattress perhaps.
        Counterintuitively, this is perhaps the most "efficient" use
        of money economically. Imagine you are extraordinarily wealthy
        and you own 5% of your country's wealth. By locking that up in
        a vault and not using it, everyone else's money becomes 5% more
        valuable (this is a deflation effect). When (and if) you
        return this money to circulation by spending or depositing it,
        an inflationary effect will occur.
        The reason this works, is because THE ONLY REAL "EFFICIENCY" IS
        REDUCED CONSUMPTION. To the extent that you produce (and earn)
        more than you consume, but then do not make your own personal
        demands on the aggregate economy (through spending), you have
        effectively increased the wealth of the economy. If you were
        to take those paper dollars and burn them, this effect would be
        permanent.
        This theory runs counter to the (defunct?) Keynesian theory that more
        spending = a better economy. Keyensian economics will probably never
        die, because it provides a perfect justification for politicians'
        desire to spend money.



        --- In anthroposophy@y..., "888" <fireofthe12@y...> wrote:
        > http://www.sffo.de/suhrnnge.html
        > An article by Prof. Dr. Dieter Suhr
        >
        > Interest Free Money: The Neutral Money Network
        >
        > 5.1. The Theoretical Carrying Cost Concept
        >
        > "We had to analyse traditional money and its effects thoroughly and
        > vividly to see that it really brings with it inefficiencies and
        > injustice. Now the time has come to show that traditional money
        need
        > no longer be accepted as some kind of invariable fate. There are
        many
        > ways to explain the practical concept of neutral money. An
        > instructive one is to start from the freedoms which money grants to
        > the money holder. In economics the valuable conveniences of money
        > have borne names suitable to bring to our minds, from different
        > points of view, the phenomenon we are dealing
        > with: "conveniences", "liquidity premium", "money services", "yield
        > from money held", "grant of money", "productive services of
        > money", "money stock utility".
        >
        > "These benefits of money at hand are constituted by the genuine
        > ability of money to serve as a means of economic transaction.
        > However, the transaction function of money is undermined in that
        > money yields its services for free even, and in particular, when it
        > is held back and prevented from functioning as it should. It is
        this
        > power to sabotage the transaction series, and to profit from that,
        > that makes money suboptimal with regard to its efficiency. The
        > valuable services of money intice individuals to hold money or to
        > lend it instead of spending it. So, if we plan to reduce money's
        > dysfunctions and to improve its efficiency we have to remove or
        > neutralize the distribution effects of money by which the money
        > holder has the benefits and the pecuniary returns and the others
        have
        > the costs, risks and expenditures."
        >
        > -Bruce
        > http://groups.yahoo.com/group/spiritualscience
      • Evert Hoff
        Hi QGJ, You are addressing the wrong person. This article wasn t written by Bruce - he merely posted the link for us. It was written by a Prof. Dr. Dieter Suhr
        Message 3 of 5 , Sep 29, 2002
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          Hi QGJ,

          You are addressing the wrong person. This article wasn't written by
          Bruce - he merely posted the link for us. It was written by a Prof. Dr.
          Dieter Suhr who might not be available on this list for comment. The
          article seems to have been written in 1990.

          I find the article quite interesting, but haven't yet made up my mind
          whether I agree with it or not. Below are my comments on what you wrote:

          On Sun, 2002-09-29 at 19:35, QGJ wrote:
          > What does it mean to say that money "is held back and prevented
          > from functioning as it should" and "sabotage the transaction series"?

          What the article says is that there are basically two ways that you can
          acquire money:
          1. You can sell something to someone, or
          2. You must borrow money.

          The second is more expensive, because of the interest that must be paid.
          When someone holds back money, it forces someone somewhere in the
          economy to have to borrow money, because there is now less money in
          circulation. Thus, transactions that could have taken place had the
          money not been withdrawn, now can't take place - that's why the author
          refers to it as 'sabotage'.

          >
          > I understand you to be saying that when individuals are "enticed"
          > to save or hold back money, rather than spending it, this is
          > somehow less "efficient." If this is what you mean, I think I

          I think the author has a different definition of efficiency than you
          have - or maybe the same definition, but maybe referring to efficiency
          of something different. The author is talking about efficiency of
          transactions, while you seem to be talking about the efficiency of a
          whole economy at the macro level. Please expand on the definition of
          efficiency that you are referring to.

          I think the author is referring to how efficiently money causes
          transactions to take place. He mentioned that barter was inefficient
          because both parties had to find each other. A lot of time was wasted by
          each party trying to find a suitable other to transact with, which could
          have been spent producing more. Money made this more efficient, because
          it makes it possible to do only half the transaction - you don't have to
          sell and buy at the same time, you can sell now and buy later from
          someone else.

          It is this type of efficiency that is impaired when someone withholds
          money. If he had spent the money, someone else could have gotten hold of
          money easily (efficiently). But, withholding it makes is difficult and
          expensive (inefficient) for that person to now get hold of money.

          I am still uncertain about the following things in the article:
          - The author delays talking about capital and in the end never actually
          addresses the subject of capital.
          - Steiner wrote in World Economy that the only bad interest is interest
          on land, because this just causes an increase in land prices without
          adding value, whereas interest charged for personal credit does not have
          this negative effect. I would like to understand better how what Steiner
          had to say about interest fits in with this article. (Please let me know
          if I am not paraphrasing correctly, then I'll go and look up the
          passages.)
          - I still have my doubts about how successfully such a system could
          exist in parallel with the conventional system. I suspect that you might
          get opportunists (speculators) who would try to profit from moving money
          between the alternative and the conventional monetary systems. But, I
          haven't thought this through yet.
          - The author didn't address the issue of risk. I think this is a large
          cost factor in interest rates. If I lend you money, then there is a
          chance that you might not pay me back - your business venture might go
          bankrupt. So, I have to charge interest in order to cover this risk.
          And, I have to add a profit factor to it as well, so that I don't just
          break even when I lend you money. Else there is no incentive for me to
          take the risk.

          Evert
        • 888
          Hi Evert, ... Dr. ... Indeed. Ralph Hesse is the man to make comments: rhesse@fto.de I forwarded the comments. Ralph has said in the past: Money has normally
          Message 4 of 5 , Sep 30, 2002
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            Hi Evert,
            > You are addressing the wrong person. This article wasn't written by
            > Bruce - he merely posted the link for us. It was written by a Prof.
            Dr.
            > Dieter Suhr

            Indeed.
            Ralph Hesse is the man to make comments: rhesse@...
            I forwarded the comments.
            Ralph has said in the past:

            Money has normally three funktions:
            ===========================
            1 as value-level for making exchanges
            2 as exchange good itself
            3 as value-saving for the future
            ===========================
            Funktion 2 and 3 are normally concurrencial

            If You are mixing all functions in ONE WORD or Idea You will also
            have BIG
            Problems of understanding and handling.

            Also You have to distinguish number 2 and 3 because 2 ist normally
            considerd to be in cash and 3 in any obligation a.s.o. what means,
            that 2 ist
            also called "Liquidity" wich is the base of all the ohter derivats
            and must
            therefore treated specially.

            Number 1 ist normally called "Currency or in German WÄHRUNG, what
            means duration""

            Cordially,
            Bruce
          • Judson Chambers
            Dear QGJ, I d like to comment in greater depth at another time, but for the time being, I found your comments quite clear and on point. I seem to notice few
            Message 5 of 5 , Oct 6, 2002
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              Dear QGJ,

              I'd like to comment in greater depth at another time,
              but for the time being, I found your comments quite
              clear and on point. I seem to notice few clear
              understandings of "human action" and anthroposophic
              insight in economics. What I do see are defensive
              apologia against such clarity with quips about "intent
              and allusions to who ??? wrote the nonsense", and a
              failure to "think" about the actions of the human
              concerning his scale of values. Dr. Starman, by the
              way, is gallant in his efforts, though disagreeable in
              some respects.

              The cited article by Prof. Dr. Dieter Suhr (offered to
              us by "888"<fireofthe12@...>) was abysmally
              abstract and obscure. His description of the origin of
              money was totally absent. His analysis is a fantasmic
              outlook on human economics and is oblique and
              certainly not a credit to an anthroposophic outlook.

              I think this will change as our thinking becomes more
              courageous in time. Bottom line I congratulate you for
              your clarity.

              Regards,
              Jud


              Date: Sun, 29 Sep 2002 17:35:47 -0000
              From: "QGJ" <qgj21@...>
              anthroposophy@yahoogroups.com
              Sub: Re: Money

              What does it mean to say that money "is held back and
              prevented from functioning as it should" and "sabotage
              the transaction series"?

              I understand you to be saying that when individuals
              are "enticed" to save or hold back money, rather than
              spending it, this is somehow less "efficient." If
              this is what you mean, I think I disagree. You only
              have basically three options as a money-holder:
              1.) You can spend it. This dissipates your power
              back into the economy in a sense, or exchanges one
              concrete commodity (a certain amount of currency) for
              another commodity (the product or service that is
              purchased).
              2.) You can (save/invest) it. This money does not
              just disappear. When you deposit/invest, it is in turn
              loaned out to other individuals, who use it for
              "productive" purposes.
              3.) You can just hold money, under your mattress
              perhaps. Counterintuitively, this is perhaps the most
              "efficient" use of money economically. Imagine you
              are extraordinarily wealthy and you own 5% of your
              country's wealth. By locking that up in a vault and
              not using it, everyone else's money becomes 5% more
              valuable (this is a deflation effect). When (and if)
              you return this money to circulation by spending or
              depositing it, an inflationary effect will occur. The
              reason this works, is because THE ONLY REAL
              "EFFICIENCY" IS REDUCED CONSUMPTION. To the extent
              that you produce (and earn) more than you consume, but
              then do not make your own personal demands on the
              aggregate economy (through spending), you have
              effectively increased the wealth of the economy. If
              you were to take those paper dollars and burn them,
              this effect would be permanent.

              This theory runs counter to the (defunct?) Keynesian
              theory that more spending = a better economy.
              Keyensian economics will probably never die, because
              it provides a perfect justification for politicians'
              desire to spend money.

              --- In anthroposophy@y..., "888" <fireofthe12@y...>
              wrote:
              > http://www.sffo.de/suhrnnge.html
              > An article by Prof. Dr. Dieter Suhr
              > Interest Free Money: The Neutral Money
              Network
              > 5.1. The Theoretical Carrying Cost Concept

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