Okay, we’ve been looking at money (looking at money you don’t have is much better than spending money you don’t have, trust
us), and the key role it must play in the restructuring of the economy to
empower people to take back their lives, liberties, and property, and run
things for themselves, instead of for the benefit of an élite, or to conform to
whatever weird idea has seized those who want to run the world for our own
good.
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| "Don't tell ME how to pull a cart. I've stayed right here for years doing it." |
Capital Homesteading would conform
monetary policy to the goal of sustainable, market-oriented, non-inflationary
growth. It is essential to note that Capital Homesteading
monetary reforms conform to the banking principle that money is only
created in response to the acceptance of financial instruments, i.e., mortgages and bills of exchange
representing the present value of existing and future marketable goods and
services, respectively.
That is, don’t put the cart before the
horse. To be sound, money should be
created only after there is actual
present value to back the new money. This ties the amount of new money directly
to the present value of existing and future marketable goods and services in
the economy, resulting in an elastic and stable asset-backed reserve currency.
In contrast, the currency principle
dictates that money is first created, consumption reduced, and money savings
accumulated, and only then are new capital investments identified and financed.
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| Money doesn't create value, value creates money. |
That is, money is created before there is actual present value to
back the new money. The only thing behind the new money is the obligation of
the issuer to make good on it at some future date. There is no link between the
amount of money created and the present value of existing and future marketable
goods and services in the economy.
This results in an inelastic currency
if the amount of whatever is defined as money is fixed by law (as under the
British Bank Charter Act of 1844 (7 & 8 Vict. c. 32 — don’t you just
love obscure legal citations?) and the United States National
Banking Act of 1863, Ch. 58, 12 Stat. 665, February 25, 1863, amended
1864, yeah, yeah, yeah), and an elastic currency if the
issuer can create money at will, but in both cases the money is inflationary
and debt-backed.
