Bank of England Economists Evidence Absurdity of Modern Money Contracts

By Marc Gauvin (c) 19/3/2014 Rev. 02/04/2014

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"...It is like insisting on building buses out of ice and then inventing a pseudo science based on ignoring that ice melts..."


In the Bank of England's article "Money in the Modern Economy",  money is defined "as an IOU and a unit of account",  of course it goes without saying that the IOUs are expressed in units of account.

Let's look at this statement carefully, money supply as described in "Money Creation in the Modern economy",  is the result of lending what essentially are IOU's.  But IOU's for what? For IOU's?   We must be able to clearly see that IOU's for IOUs is a recursive absurdity as IOU for IOU for IOU ... is nonsensical.   Therefore,  IOU's must be for something else than other IOU's.  What then do we owe if not money?  What does the Bank of England believe?

From the article we get this concluding statement:

"...More recently, though, with Bank Rate constrained by the effective lower bound, the Bank of England’s asset purchase programme has sought to raise the quantity of broad money in circulation. This in turn affects the prices and quantities of a range of assets in the economy, including money..."

But if the "price" of money changes as a function of its supply how can it function as a unit of account or measure?

This brings us to the single cornerstone logical fallacy that removes all legal credibility from current money contracts.  Money can ONLY be a record of a measure of the value of anything BUT itself,  when we register a debt with money as described by the Bank of England,  we cannot "owe money" that is an absurdity, we can only owe the value money represents.  This means that in order for the current paradigm to be logically consistent,  it is imperative that all debts be settled with anything else BUT money.   That is,  only transactions of goods and services can alter balances but under no circumstances can money (IOUs) be bought, sold or lent as a resource as that destroys the only logical useful purpose money can have.

The above linked articles, continue the scientifically untenable model of money as a resource that competes with other real resources, the value of which is its mission to represent.  This is an entirely logically absurd proposition,  furthermore money as a unit of account cannot be a "circulating object" of value as demonstrated here

If we look at the last graphic (consumers)  of figure 1. on page 16 of "Money Creation in the Modern economy",  we can make a crucial observation.  But first we must remember that previously ("non-money" was defined as "assets") as follows:



Essentially,  at the onset we have non-money as an asset but then later with respect to consumer accounting,  it is a liability meaning that consumers who now have money (new deposits) have their real wealth as a liability i.e. they owe that real wealth or non-money.



The thing to notice is that non-money (real wealth) "liability" is not correspondingly increased but rather is represented as "new loans", this serves to hide the fact that the deposit "asset" is directly proportional to an increase in "non-money".   Why would they not show a simple increase in non-money without "new loans"?  We all can understand that the increase liability in non-money "assets" is due to treating the new deposits (result of lending) as assets.

The key point,  is that the model presented by the Bank of England,  is essentially the model presented in this document,  where money is nothing more than a record of a measure of value of real wealth being transacted,  the bank provides nothing,  as it is our assets that are the value and not the money.  Giving the maximum benefit of the doubt, we might think that the bank is recognising that what is being lent is not money but rather the non-money assets, in which case the thesis that money is not a resource is further substantiated,  but then how can they lend money if it has no value, is immaterial in nature i.e. it is just a logical construct not subject to supply etc. and as pointed out in The Money PSYOP, can never be the value it must represent.  Finally,  we see that each transaction creates its own unique entries that resolve against existing balances extinguishing or augmenting them as the case may be.   In such a scenario it is absurd to conceive of money as a resource required by transactions,  but rather  logically it can only be the product of transactions as clearly explained in by The Money Action-Problem-Solution Fallacy document.

I call on all to support motions to all courts of the world for the paralysation and/or non coercive resolution of all current money contracts and for all governments to provide their citizens with the required means to represent their value in a technically and therefore legally legitimate fashion and according to the science and logic of Passive BIBO Stability as applied to money and the mathematics of measure

I therefore thank the "Bank of England" for unequivocally providing formal and authoritative documented evidence proving that the notion of what money is and that underlies all money contracts in "The Modern Economy",  is logically absurd,  rendering such contracts invalid according to the following fundamental principles of contract law as outlined here.

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