It is a slow day in a damp little Irish town. The rain is beating down and the streets are deserted



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It is a slow day in a damp little Irish town. The rain is beating down and the streets are deserted.

  • It is a slow day in a damp little Irish town. The rain is beating down and the streets are deserted.

  • Times are tough, everybody is in debt, and everybody lives on credit.

  • On this particular day a rich German tourist is driving through the town, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

  • The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher.

  • The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer.

  • The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel.

  • The guy at the Farmers’ Co-op takes the €100 note and runs to pay his drinks bill at the pub.

  • The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him “services” on credit.

  • The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note.

  • The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything.

  • At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town.

  • No one produced anything. No one earned anything. However, the whole town is now out of debt and looking to the future with a lot more optimism.

  • And that, is how the bailout package works.

  • Is it “Money is the root of all evil.” or “The love of money is the root of all evil”







Unlike matter & energy it can be created and destroyed

  • Unlike matter & energy it can be created and destroyed

  • Print a little of it on your own and you go to jail.

  • Print a lot of it and sell it to the government and call yourself a commercial bank.

  • Individuals can transfer small amounts of money into real assets.

  • A community as a whole cannot exchange all of its money for real assets because someone will be left holding the bag (of money).

  • Money legitimately allows us to avoid the inconvenience and inefficiency of barter.







“A hoard of hammers takes up space and is subject to rust, rot, and entropy. Fifty hammers’ worth of money is not subject to rust, rot, and entropy and far from costing a storage fee will earn interest from whomever gains the privilege of “storing” it for you. Production or use value is self limiting (does the owner of the hammers on the left need any more of them ?). Since there is no limit to the accumulation of abstract exchange value, and since abstract exchange value is convertible into concrete use value, we seem to have concluded that there must not be any limit to concrete use values either. This has perhaps led to the notion that exponential growth, the law of money growing in the bank at compound interest, is also the law of growth of the real, or material economy.”

  • “A hoard of hammers takes up space and is subject to rust, rot, and entropy. Fifty hammers’ worth of money is not subject to rust, rot, and entropy and far from costing a storage fee will earn interest from whomever gains the privilege of “storing” it for you. Production or use value is self limiting (does the owner of the hammers on the left need any more of them ?). Since there is no limit to the accumulation of abstract exchange value, and since abstract exchange value is convertible into concrete use value, we seem to have concluded that there must not be any limit to concrete use values either. This has perhaps led to the notion that exponential growth, the law of money growing in the bank at compound interest, is also the law of growth of the real, or material economy.”





In 1914 he was appointed to a chair at the University of Aberdeen, where he worked on research related to World War I. In 1919 he moved to Oxford University as Dr Lee's Professor of Chemistry, where, in the period up till 1936, he reorganized the laboratories and the syllabus in chemistry. He received the 1921 Nobel Prize in chemistry for his research in radioactive decay and particularly for his formulation of the theory of isotopes.

  • In 1914 he was appointed to a chair at the University of Aberdeen, where he worked on research related to World War I. In 1919 he moved to Oxford University as Dr Lee's Professor of Chemistry, where, in the period up till 1936, he reorganized the laboratories and the syllabus in chemistry. He received the 1921 Nobel Prize in chemistry for his research in radioactive decay and particularly for his formulation of the theory of isotopes.

  • His work and essays popularizing the new understanding of radioactivity was the main inspiration for H. G. Wells's The World Set Free (1914), which features atomic bombs dropped from biplanes in a war set many years in the future. Wells's novel is also known as The Last War and imagines a peaceful world emerging from the chaos. In Wealth, Virtual Wealth and Debt Soddy praises Wells’s The World Set Free. He also says that radioactive processes probably power the stars.

  • In four books written from 1921 to 1934, Soddy carried on a "quixotic campaign for a radical restructuring of global monetary relationships", offering a perspective on economics rooted in physics—the laws of thermodynamics, in particular—and was "roundly dismissed as a crank". While most of his proposals - "to abandon the gold standard, let international exchange rates float, use federal surpluses and deficits as macroeconomic policy tools that could counter cyclical trends, and establish bureaus of economic statistics (including a consumer price index) in order to facilitate this effort" - are now conventional practice, his critique of fractional-reserve banking still "remains outside the bounds of conventional wisdom".[3]



Frederick Soddy made the distinction between wealth and debt very clear.

  • Frederick Soddy made the distinction between wealth and debt very clear.

  • “Wealth is the positive quantity to be measured and money as the claim to wealth is a debt.”

  • Monetary debt, the measure of wealth, is negative wealth, say ‘minus two pigs’. It obeys the laws of mathematics, but not of physics. Wealth, on the other hand, ‘plus two pigs’ obeys the laws of thermodynamics as well as mathematics. Positive pigs die, have to be fed, and cannot reproduce faster than their gestation period allows. Negative pigs are hyper-fecund and can multiply mathematically without limit.

  • “You cannot permanently pit an absurd human convention, such as the spontaneous increment of debt (compound interest), against the natural law of the spontaneous decrement of wealth (entropy)”



Virtual Wealth – the aggregate value of the real assets that the community voluntarily abstains from holding in order to hold money instead.

  • Virtual Wealth – the aggregate value of the real assets that the community voluntarily abstains from holding in order to hold money instead.







Gradually raise the reserve requirement to 100%

  • Gradually raise the reserve requirement to 100%

    • Private banks out of money creation business
    • Control of money supply back in government hands
  • Automatic rule based on a Price Level Index

    • If price level is falling then government prints money
    • If price level is rising then tax more than spend
    • International complicates matters but can be dealt with
  • Freely fluctuating currency exchange rates



The Gold Standard (100% reserve) is long gone

  • The Gold Standard (100% reserve) is long gone

  • Fixed exchange rates gave way to flexible exchange rates but freely floating exchange rates are considered too volatile

  • The money supply is largely determined by commercial banks that are manipulated but not controlled by the Federal Reserve.

  • The Federal Reserve:

    • Sets Reserve Requirements
    • Sets interest rates (discount rate) for lending $ to commercial banks
    • Buys Govt bonds (expand $ supply) Sells Govt bonds (contract $ supply)




Money is a problem because it leads us to think that wealth behaves like its symbol, money; that because it is possible for few people to live on interest, it is possible for all to do so; that’s because money can be used to buy land and land can yield a permanent revenue, therefore money can yield a permanent revenue. (comment on some fallacies in this logic)

  • Money is a problem because it leads us to think that wealth behaves like its symbol, money; that because it is possible for few people to live on interest, it is possible for all to do so; that’s because money can be used to buy land and land can yield a permanent revenue, therefore money can yield a permanent revenue. (comment on some fallacies in this logic)

  • “Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the captial development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.” John Maynard Keynes

  • Annual Global production of Goods and Services is roughly $50 trillion

  • The markets (paper buying paper) spend $2 Trillion per day. (20 x more)

  • Real enterprise has become a bubble on the whirlpool of speculation.








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