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Spencer Heath's

Series

Spencer Heath Archive

Item 502

Notation by Heath: “Typed 2-22-45. Pasted in Rummel’s book Page 187”

 

 

     Bank loans of credit (called money) normally supply purchase power (exchange medium) based on the assets pur­chased (the physical services and/or the sales services epitomized in the “value” of the things purchased). These assets, when resold (plus further services) support new bank credit wherewith the second purchaser similarly buys. With this credit, transferred to him, the first purchaser repays his loan. Any balance above repayment (minus taxes) is the first purchaser’s profit — his recompense for his added services.

 

     Taxation curtails profits and thus weakens or destroys purchasing demand. Only a small fraction of purchasing demand is fiat credit or “legal tender.” Nearly all business turnover is based on voluntary credits supported by assets; not on the “fiat” or enforced credit of “legal tender.” Even taxes are seldom paid in legal tender. It is a Damoclean sword hanging over all voluntary credit obligations. Every dollar of business credit is based on assets; every government dollar (above the market value of its metal or tangible demand reserves, if any) is based on fiat and force. Its value, purchasing power, is arbitrary, artificial and as capricious as political policies.

 

     For every transfer of business dollars, voluntary credits, there is a corresponding transfer of assets. Government has no assets of its own creation. All that it has it must take by fiat and force. Its credits, its promises, can rest on nothing else. It can only unbalance the equities of volun­tary exchange. It cannot create purchasing power except by force or command, and its impairment of the profits inhibits the process of exchange. As it confiscates producers’ profits it checks the flow of consumer goods while creating fiat and inflationary consumer demand. The only balanced purchasing power is credit supported by the assets purchased. Assets are equitably exchanged by transfers of the credits that they support. Assets are increased in value (exchangeability) by physical services incorporated in them between exchanges and by sales services, or by sales services alone, at any point of exchange. Assets are equitably exchanged by transfers of the credits that they support.

Metadata

Title Subject - 502 - Bank Credit And Legal Tender
Collection Name Spencer Heath Archive
Series Subject
Box number 5:467-640
Document number 502
Date / Year
Authors / Creators / Correspondents
Description Notation by Heath: "Typed 2-22-45. Pasted in Rummel’s book Page 187"
Keywords Money Legal Tender