New arrangement for Scotland & N. Ireland banks to issue own currency

http://business.timesonline.co.uk/ar...708098,00.html

"No man's life, liberty or property are safe while the Legislature is
in session." -- Gideon J. Tucker

Just about 40 years ago, the Beatles sang "Taxman" and in the
counterpoint they said "Tax man, Mr. Wilson. Tax man, Mr. Heath."

According to the story linked above:
1=2E "...they are obliged by law to back the notes they issue with
"risk-free" holdings of other assets, as a protection to
noteholders ..."

2=2E Since gold and silver no longer circulate, they use Bank of England
notes to back their own.

3=2E "... is only officially checked weekly, at the close of business
each Saturday, some of them have been substituting "alternative"
assets as backing on weekdays."

In other words, the banks are buying and selling money, which, of
course, is the business that banks are in.

4=2E The benefit of this has been that they have escaped the cost of
so-called "seignorage" fees due to the Bank of England when its
notes form the backing - fees that add up to =A380 million a year and
eventually go to the Treasury.

Now it gets complicated. It costs a few pence to print a note worth a
king's ransom. So, there is profit in that, clearly. How would these
banks pay for the notes? Only with notes of their own, of course. So,
the Bank of England is demanding that the private banks hand over a
huge sum of their notes. To do that, of course, would inflate the
stock of money from the private banks. So, it is easy to see why the
private banks resist. At the same time, the Bank of England -- oddly
enough, but then, they are not always the brightest lads in the class
-- increases its holdings of these private notes. Why would they do
that?

A=2E The private notes are worth more than B of E notes.
B=2E The B of E can then hold the threat over them of releasing the
private notes or cashing them in.

It both amuses and angers me when taxing authorities claim that they
are being "cheated" out of taxes. It sounds as if the people took
government services and refused to pay for them. In fact, someone in
the government sees a chance for a NEW tax and claims that it is really
the proper application of an OLD tax. We see this now with the
so-called "internet taxes." If not for eBay, etc., this commerce would
not exist, yet the governments claim that they are not getting their
due.

"The Bank of Scotland issued notes as early as 1695, one of the first
banks in the world to do so."

Scrooge McDuck has long been one of my heroes. Brave, affirmative,
confident, and good-natured, he is loyal to Donald and the Boys and he
triumphs over the Beagles not by brawn -- since he is an old man -- but
by his brains, the same tool he used to create a fortune.

Michael
"Taxman, Mr. Blair."