|Subject:||[socialcredit] Jessop's questions|
|Date:||Sunday, August 1, 2004 11:32:33 (-0700)|
|From:||william_b_ryan <william_b_ryan @.....com>
In continuing reply to Jessop Sutton's post of July
in continuation of my post of 07-30.
***But "Depositor No. 10" only received the
to repay his loan from other parties who purchased
his goods, possibly with money originally created as
loans by some banks somewhere and which still have to
be repaid. Is this not so?***
***Also "depositor No. 10 repays his banker with 102
pounds obtained from the public in exchange for his
goods...there are 100 pounds worth more goods in the
world which are immobilized..." Has the system not
removed the goods from the world through the process
In an intangible sense, when we purchase, our
personal debt to the community increases; when we
sell, our debt decreases.
We must however make a distinction between the
selling of labor services to the firms sector, and
the selling of goods and services by the firms sector
to consumers. The former is in the "flux" portion of
the monetary circuit, the flow of credit money from
the banks through firms to consumers; while the
latter is in the "reflux" portion of the circuit back
to the banks.
There is a time delay from the receipt of income or
sales revenue, and their respective disbursement.
For this reason, the firms sector is always in debt
to consumers to the extent that consumers possess
positive account balances.
See the attachment, also archived at
which is the rudimentary model of the monetary
circuit. Notice that it is a compound circuit (in
contrast to the conventional model of circular flow),
that Douglas called the "double circuit." Douglas
was an electrical engineer (also a mechanical
engineer). Electrical telegraphy had what was called
the "double circuit," which may have been inspiration
for his theory.
In modern industrial economies, the banks have
subrogated the credit position of the consuming
sector. The firms sector nominally owes its debt to
the banks, not the consumers. Yet, the banks are
functionally agents for consumers, not the firms.
There is no other conceivable way for multi-stage
production to be organized, if we are to have
competitive free markets.
But the flow of money and goods do not necessarily
coincide, as they did automatically in single-stage
barter with a commodity-trading medium.
Because the credit flux quasi-mechanically precedes
its reflux, the reflux from consumers is always
paying for an earlier cycle of production already
delivered and consumed, not the production currently
being delivered and consumed. This is irrespective
of the "titular" ownership of the goods involved,
which is generally transferred on delivery.
Notice that while consumers are the creditors of the
firms, they are treated as if they were debtors, to
the detriment of all.
To the extent that banks have contracted credit,
goods delivered today cannot be paid for tomorrow.
Goods in the "pipeline" will not be delivered
tomorrow. They are immobilized. A financial wrench
has been thrown into the mechanism of mass
production, shutting it down.
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