Posted by: graemebird | October 24, 2008

Ponzi-Money/The Importance Of Being Earnest.

“Graeme – essentially I did back down some time ago. I realised that getting people to use the word money correctly was futile so instead I now endeavour to use the words currency and credit. We agree that these days private banks don’t make currency.”

But it was YOU that were using the word incorrectly. And it was your usual softheaded compromise with wicked behaviour. Like when you refused to acknowledge the environmentalist hand behind the Malarial outbreak.

Credit just means a loan. It doesn’t necessarily imply new money creation. You are using lack of precision here to pretend that banks don’t create money out of thin air. Credit need not imply this. A simple loan need not create new money. If debt levels BETWEEN the banks are not increased then a new loan won’t create new money. If a single bank makes a loan out of deposits or at the rate at which his outstanding loans are being paid off this will not create new money. It takes usually 4 parties and 3 separate moves to create new money. And the phrase “credit” says absolutely nothing about this process.

This means when I go to ask you the difference between money and cash you have to get all evasive. And then you’ll talk as if money supply is just something the bureaucrats cook up.

If we outlawed ponzi-money overnight without replacing it with cash-money we would all be unable to pay our debts in AUD. The crash would be unimagineably harsh. So why do you refuse to acknowledge that the ponzi-money is indeed money? Not only is it money. Its your money too. And its the vast majority of the money that you have.

Every month of your life you acknowledge ponzi-money AS MONEY when you ask yourself “how much money have I got in my cash card.” But then you come here and wanting to compromise with these lunatics you claim that the money in your cash card is not money its credit??????????

Why would you want to sell out to these nutballs in that way??? If the ponzi-money goes we get by on barter alone until such time as the replacement cash-money can be printed up. One is a direct substitute for the other. So why be bigoted and be calling ponzi-money “credit”?

Its very much a case of:

1. Janet is Michael (Jackson)

2. Michael is Janet

3. Who is Diana? (ie Diana Ross)……… (conundrum via Frank Zappa)

You see if you are going to call cash “money” and ponzi-money “credit” what in the hell are you going to call other forms of credit that are not ponzi-money?

You are just playing silly-buggers and helping the usual suspects confuse people.

You can call ponzi-money “fiduciary media” or something of that nature. But we have to use definitions with some sort of precision. And “bank-pyramided-money”. Or alternatively “ponzi-money”, is what allows for that sort of precision.

Suppose you call ponzi-money “credit?” You are being horribly misleading. Suppose you call ponzi-money “fiduciary media?” Peoples eyes tend to glaze over. If you therefore adopt reason and good definitions you will differentiate cash-money from ponzi-money or “pyramided-money”. That way people will be able to follow what it is you are saying without being mislead.

 Comment by Graeme Bird | October 25, 2008″


People, this is a serious matter. And you must use the word ponzi-money unless you can think of a better word for bank-pyramided-money. Bank-pyramided-money is a better phrase but its a bit of a mouthful. And in any case you can have the phrase “bank-pyramided-money” as backup for variety and didactic purposes.

We cannot let the stupid side of the argument control the language. You get stomped every time by letting lunatics refer to industrial-CO2-release as “climate change.” Never let people control the language for purposes of desensitization or to mislead others. Because it works.

You have cash-money (in the hands of the public) and ponzi-money and together they make up the money supply. Simple. Who has superior definitions to these two?

Well what about broad money? Well broad money is not so much money as it is what money will buy. If people find that their cash balances have grown they will buy many things. They will spend more on consumer goods, on investment goods, all sorts of things. And some of these investment goods will be bank products that are a medium-term liability to the banks. The growth in extra bank products is stimulated by people finding themselves with more ponzi-money than they usually carry and offloading some of it into these bank products. So thats what M3 is all about. It can represent further pyramiding of liabilities on the banks part. But its playing silly-buggers calling this “broad-money.” We could call these “bank pyramided assets owned by the public at term” or “Medium-term bank liabilities”  or something like that. But since these are clumsy descriptions we might be stuck with “Broad Money” which ought not be thought of as money. 

If anyone comes up with a better phrase than “ponzi-money” for ponzi-money, then let me be the first to know and I’ll use that phrase instead.



  1. Another good post Mr Bird

    why so many libertarians give you hard time on their blog? I thought you are one of them.

    Do you know any good introduction to libertarians thinking for Muslims mr Bird? Should I be reading more of these thoughts on freedom people? I hear the name Humphreys mentioned a lot. is he like a guru in this field?

  2. Mr Bird
    this ponzi money sounds to me like serious breach of trust. very serious immorality.

    and how can real businessmen operate properly with such mess in finance?

  3. I don’t think we want to take this attitude that we have libertarianism for Muslims. After all we are all brothers and libertarianism if for all people?

    But I would reiterate what I’ve said earlier. If you want to avoid usury that brings some difficulties. But if the hard yards are overcome and the small business equity investment is perfected, then the proscription against interest, at first a grave disadvantage, can likely be turned into an unexpected advantage.

  4. “Mr Bird
    this ponzi money sounds to me like serious breach of trust. very serious immorality.

    and how can real businessmen operate properly with such mess in finance?”

    Well its a disaster. They have to cope with constantly changing spending patterns and they can never know the meaning of them. They don’t know whether to hang on in there and wait for the good times to come, or alternatively that their business model is completely wrong.

    Also this grave breach of trust pumps up the costs of producer goods that are not amenable to mass-production. So that he has to spend more money buying his way into commercial real estate and from there he is hobbled financially from developing his business.

    Its like this difference:

    Supposing you have $200,000 in financing. And can buy a house for 100,000 and spend another $100,000 putting in a basement, extending the house and landscaping the lawn. You beef up sercurity and put in an attic and a granny-flat.

    Now take this alternative. Its true you have $500,000 in finance. But you cannot afford it. So you take $300 000 and buy that same house that under 100% backing would only cost you $100, 000. You cannot afford to do shit. You haven’t improved the place and now your cash flow is emaciated.

    So the fractional-reserve economists jump out and say…. “Look at that wonderful fractional reserve. Look how it made you capable of accessing $300, 000 and someone else $200, 000 as opposed to without it you would only access $200,000 and the other folks be denied.

    But notice in this case the $300,000 was totally neutralised as wealth-building spending. Whereas in the former case, without fractional reserve, the lesser investment spending IN NOMINAL TERMS actually lead to real wealth creation.

    Its the same all down the line with fractional reserve. Its a killer for the little guy. You want someone to be able to arrive from a war zone and start the wealth-building process a few month after getting here. But fractional reserve makes this next to impossible.

  5. Mr Bird
    This is very serious. These bankers cause recession and then the infidel socialists blame free market yes? But this is no free market. Free market is based on honesty.

    I am in business myself Mr Bird and many of my family too. What can I do to protest this? is LDP good party for fighting this?

  6. No I’m afraid they are not. I cannot think of any outfit in this country that is dirty on this type of exploitation. The best was is to learn up your monetary-economics and then just hit out in talkback and on the net until enough people have an understanding of things. It will be awhile before it reaches the radar of any party.

  7. you are a pioneer Mr Bird

    I will talk to the imam of my mosque about this ponzi money business.

    may Allah progress your objectives

  8. Look JohnZ. I may be happy with Humphreys at the moment that he has opposed the hateful bank bailout. But I’m not having you come on here and call him the “greatest Australian Libertariaqn” or play this make-believe that Mark Hill has some sort of understanding of economics.

    This jive is not going to wash. Particularly coming from a know-nothing communist lunatic like you.

  9. Why wipe my post? You howl when your posts get wiped and yet hypocritically wipe a sensible one addressed to a newcomer at your site. You do want to build a community here, don’t you?

    Mustafa – JC is another interesting commenter. He has more practical knowledge of financial economics than anyone else – he is a currency trader by profession so he actually puts his money where is mouth is.

  10. I don’t like being wiped its true. But I’ve made the commitment to not let you guys come on here and tell outrageous lies.

    As for the market I have no money to put where my mouth is but my various predictions are here for everyone to see and they are not getting wiped after the fact to improve my record.

    JC is an ignorant commentator when it comes to economics. But he’s fine if he’s talking about making money on our fraudulent and unstable exchanges.

  11. Bird :

    If you’re calling me ignorant I must be Einstein.

    Sorry but gangsta style transacting doesn’t really do it for me. Cash for loot with guards watching over the money and a kilo of oranges exchanged isn’t my idea of a modern economy and how it works.

  12. The thing is JC you lie all the time:

    “JC. Says:
    October 26th, 2008 at 4:14 pm
    this is why it’s a complete waste of time talking to the idiot. he says banks are missing cash and dealing with phony money.
    You then show him a balance sheet
    assets = Liabilities = equity
    he suggests you are lying…..”

    Here you are lying again. I never contradicted double-entry book-keeping. You were lying about other things. Not about double-entry book-keeping which I never once contradicted.

  13. I’m afraid you reasoning is idiotic. The existence of double-entry accounting in no way contradicts the fact that banks create money out of thin air.

  14. Bird
    You idiot. If money was being created out of thin air double entry book keeping couldn’t exist.

  15. No thats bullshit. Thats rubbish. At no time is double-entry book-keeping violated and they in fact create money out of thin air.

    “there is no fraud in short selling you ignorant fool…..”

    Face it Joseph Cambria. You are a filthy lying dog. For months now you have rolled out this lie time and time and time again.

    This lying claim that I made the claim that short-selling is fraudulent.

    You are filth mate. And i would break your nose if you lied like that to me in person the way you continually lie to third parties in order to wreck discussions the way that Fyodor used to.

  16. Mark. Can you stop talking ignorant shit. If you don’t understand bank-cash-pyramiding…. aka bank-money-creation LEARN IT UP.

    All you have shown is that you refuse to learn things. You can find out how they do this from wiki. From your Samuelson textbook. Or from doing a search of this blog.

    This idea that you refuse to learn anything but spout a lot of bullshit constantly is not ok.

    Banks create money out of thin air. And this is why M1 is a larger figure than M0.

  17. No Bird, i not wrecking discussions. you are by pretending you know stuff when you know shit. So go ahead try and break my nose. You’re too fat to move anyway.

  18. Mr Bird
    why you wipe JohnZ and Mark Hill commendation?

    I am very new to this area and want to teach my Muslim brothers about free market and libertarian thought. I need ideas on what to read Mr Bird!

  19. can you recommend good site beside your own Mr Bird?

    is catallaxy good site for learning economic? I see a lot of knowledgeable people there but my english not so good. but you write well and use simple example

  20. JC
    you no good to make personal attack on mr bird

    many wise men can be fat. fatness irrelevant to wisdom. stick to your ponzi trading.

  21. is the best site on these matters. If you listen to all Joseph Salernos recordings and then go and listen to Murray Rothbards recordings on money and banking. Then after that all of George Reismans recordings.

    Reisman is the gold standard in modern economics.

    Now listen JC you dog. You can get all derogatory mentioning of your benighted name taken off my blog IF YOU SHOW THAT YOU CAN STOP LYING ALL THE TIME.

    I don’t think thats too much to ask. I haven’t busted Reynolds lying for quite some time now. And I’m not going to give him a hard time unless he takes up the practice again.

  22. Ignore abuse of Hill and JC Mr Bird.

    capitalism should not be like a casino. That is HARAM in Islam. Capitalism is about making things and selling things. These infidels think capitalism is just like poker which is immoral.,

  23. It almost sounds like you are trying to incriminate me Mustafa. But never mind.

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