Tim, I suggest no term is woolly or inexact IF the person using it is prepared
to define it clearly as it it being used. I'll try, you too please.
Regards. John R.
>From: "Tim Knight"
<Tim_Knight@NTLWorld.Com>
>Reply-To: socialcredit@elistas.com
>To:
<socialcredit@elistas.com>
>Subject: Re: [socialcredit] Douglas - A + B and
the Bankers - January 1925
>Date: Fri, 20 May 2005 06:47:00 +0100
>
>John,
>
>I
have no problems with general approach. I will listen to coherent analysis and
argument from any perspective, and using any methodology. I only ask that the
analysis and arguments be expressed with terms which have explicit and precise
meanings. That means dropping woolly expressions such as 'money', 'the national
credit', 'injecting money', etc.
>
>Best Wishes
>
>Tim
Knight
>Tim_Knight@NTLWorld.Com
>
>----- Original Message -----
> From: John G
Rawson
> To: socialcredit@elistas.com
> Sent: Friday, May 20, 2005 2:10 AM
>
Subject: Re: [socialcredit] Douglas - A + B and the Bankers - January 1925
>
>
>
Tim, how did you guess?!
>
> Keep going. I'll answer in my amateurish way and I'm
sure the experts will leap in to correct me. But you could start by trying to
fault my scientific approach to that aspect.
>
> Regards. John R.
>
>
>
>
>
>From: "Tim Knight" <Tim_Knight@NTLWorld.Com>
> >Reply-To:
socialcredit@elistas.com
> >To: <socialcredit@elistas.com>
> >Subject: Re:
[socialcredit] Douglas - A + B and the Bankers - January 1925
> >Date: Thu, 19
May 2005 21:49:49 +0100
> >
> >John,
> >
> >I had almost given up, but there is
no point me persisting in this forum
if no-one responds constructively to my pleas for help. I get the feeling that I
am just irritating 'the faithful'.
> >
> >Best Wishes
> >
> >Tim Knight
>
>Tim_Knight@NTLWorld.Com
> >
> >----- Original Message -----
> > From: John G
Rawson
> > To: socialcredit@elistas.com
> > Sent: Thursday, May 19, 2005 9:12
PM
> > Subject: RE: [socialcredit] Douglas - A + B and the Bankers - January 1925
>
>
> >
> > Tim, because of your most unusual background of ideas, I think some of
us gained incorrectly the idea you were just trying to "tease" a bit
flippantly.
> >
> > However, I sympathise. When I tried to improve my knowledge of the
"discount" aspect I got three pages dealing with how a fair price could be
determined and a lot of other circuitous material
completely avoiding my questions.
> >
> > Do keep trying. I think we need you.
John R.
> >
> >
> >
> >
> > >From: "Tim Knight" <Tim_Knight@NTLWorld.Com>
> >
>Reply-To: socialcredit@elistas.com
> > >To: "Social Credit"
<socialcredit@elistas.com>
> > >Subject: [socialcredit] Douglas - A + B and
the Bankers - January 1925
> > >Date: Thu, 19 May 2005 10:06:20 +0100
> > >
> >
>John Rawson wrote:
> > >
> > >I will make two points:
> > >1. A+B at industry
level can be proven ("geometrically" as in Euclidian method), but at the next
stage, application to the economy as a whole, this can not be done without long
and tedious argument, as demonstrated here regularly.
> > >
> > >2. A+B most
certainly is the base of the financial proposals of SC. Were it wrong, we would
have little to offer.
> > >
> > >Tim Knight now writes:
> > >
> > >I believe
that, if Social Credit is to make progress, Social Crediters must be willing to
interpret the principles of Social Credit for those approaching the subject from
a conventional wisdom perspective. I agree with John that A + B is (perceived by
conventional wisdom as) central to the Social Credit case.
> > >
> > >A little
while ago, I read an article, reporting a presentation by Douglas, and titled A +
B and the Bankers - January 1925. It was one of many I had been encouraged to
read. I struggled to understand his point, and sent an e-mail asking for help. In
that e-mail, I presented my (conventional wisdom) interpretation of what he had
said, and asked for help in
pinning down what I had missed and/or the errors in my analysis. I sent that
e-mail, not to try to convert Social Crediters to conventional wisdom, nor even
to challenge Social Crediters to a spurious argument, but to outline why I and so
many 'wishful believers' have so much difficulty in understanding A + B.
Unfortunately, no-one offered me any direct help on that occasion. The only
responses I got were accusations that I was naive and deluded, and must read more
of the stuff I couldn't understand. However, I am determined to try to
understand, and I am taking the liberty of attaching a copy of that e-mail below,
in the hope that someone might be able to help me this time round.
> > >
> >
>Best Wishes
> > >
> > >Tim Knight
> > >Tim_Knight@NTLWorld.Com
> > >
> > >
>
> >
> > >-----
Original Message -----
> > >From: Tim Knight
> > >To: Social Credit
> > >Sent:
Wednesday, April 27, 2005 7:06 PM
> > >Subject: Douglas - A + B and the Bankers -
January 1925
> > >
> > >
> > >I have been trying to get a grip on Social Credit,
and in particular on A+B. I wonder if someone could help me?
> > >
> > >In his
paper 'A + B and the Bankers - January 1925', Douglas describes a capitalist
production scenario lasting six years:
> > > a.. In year 1, £100 of wages produce
£100 of production goods and £0 of consumer goods. Thus, there is an £100 excess
of 'purchasing power' (the £100 of wages) when compared to the £0 of consumer
goods available. In effect, the citizens are forced to 'save' their £100 wages by
investing in the £100 of production goods (via the banks
and the enterprises). The citizens have a net cashflow of plus £100, and the
enterprises have a net cashflow of minus £100.
> > > b.. In each of years 2-6 ,
£100 of wages plus £20 of production goods (depreciation) produce £120 of
consumer goods. Thus, there is an £20 shortfall of 'new purchasing power' (the
£100 of wages paid that year) when compared to the £120 of consumer goods
available. In effect, the workers are forced to 'un-save' £20 of their first-year
wages in order to purchase the £120 of consumer goods available. The citizens
have a net cashflow of minus £20 (£100 wages minus £120 spending), and the
enterprises have a net cashflow of plus £20 (£120 sales minus £100 wages).
> >
>Thus, during the course of the six years:
> > > a.. The workers earn £600 in
total.
> > > b.. The workers save/lend £100 in year 1, and unsave/unlend £20
in each of years 2-6 (net zero).
> > > c.. The enterprises borrow/invest £100 in
year 1, and unborrow/uninvest £20 in each of years 2-6 (net zero - corresponding
to the value of the now-knackered production goods).
> > > d.. The enterprises
make £600 consumer goods in total.
> > > e.. The enterprises sell £600 consumer
goods in total.
> > > f.. The workers purchase £600 consumer goods in total.
> >
>What's the problem?????????
> > >
> > >It seems to me that Douglas's A+B
argument is based on a myopic perspective which includes only the production
phase of a capitalist proposition (as per years 2-6 above), and ignores the
precisely-equal and opposite impact of the investment phase of that same
capitalist proposition (as per year 1 above). In fact, at all times, there is a
cumulative excess of 'purchasing
power' (the value of total production) when compared to the total value of
consumer goods produced. That excess corresponds to the current depreciated value
of production goods, which rises to £100 during the investment phase (as per year
1 above), and which reduces to zero during the production phase (as per years 2-6
above).
> > >
> > >In practice, of course, there is no reason to believe that
citizens would actually use their available 'spending power' to purchase consumer
goods as described above. In each year they may well try to spend more (resulting
in inflation) or less (leaving enterprises with unsold consumer goods, and
possibly deflation).
> > >
> > >In practice, of course, the overall economy
comprises a multitude of such capitalist propositions at every given time, some
in their investment phase (as per year 1 above), and some
in their production phase (as per years 2-6 above). Thus, the net impact on the
overall economy at any given time depends on the net balance of
investment/production at that time. Nevertheless, at every given time, there will
be a de-facto cumulative net value of borrowing/investment by enterprises, which
corresponds to the current depreciated value of production goods. This de-facto
net value was determined by enterprises when they made/withheld historic
borrowing/investment decisions.
> > >
> > >Fortunately,
citizens/workers/investors/savers have their own life cycles. They tend to save
whilst working, and unsave in old age (by cashing pensions, dissipating savings,
and purchasing annuities). Again, in practice, the overall economy comprises a
multitude of such citizens at every given time, some in their saving phase, and
some in their unsaving phase.
Nevertheless, at every given time, there will be a de-facto cumulative net value
of saving/lending by citizens. This de-facto net value was determined by citizens
when they made/withheld historic employment and retail purchase decisions.
> >
>
> > >Of course, the de-facto net value of saving/lending by citizens is
mathematically equal and opposite to the de-facto net value of
borrowing/investing by enterprises (banks, bond markets and stock markets simply
intermediate the lending/borrowing; in the form of a zero-sum network of
debts).
> > >
> > >However, that does not mean that the propensity of citizens to
save/lend is equal and opposite to the propensity of enterprises to
borrow/invest. In fact, quite the opposite is true:
> > > a.. If a boom is
anticipated, citizens try to unsave/un-lend and enterprises try to borrow/invest.
All economic agents (citizens and enterprises) simultaneously try to move
negatively in their net debt positions. Given that debt is a zero-sum game, this
can only end in tears (in a self-fulfilling boom).
> > > b.. If a bust is
anticipated, citizens try to save/lend and enterprises try to
un-borrow/un-invest. All economic agents (citizens and enterprises)
simultaneously try to move positively in their net debt positions. Given that
debt is a zero-sum game, this can only end in tears (in a self-fulfilling
bust).
> > >Hence the business cycles.
> > >
> > >Have I missed something? I would very
much appreciate your help here.
> > >
> > >Best Wishes
> > >
> > >Tim Knight
> >
>Tim_Knight@NTLWorld.Com
> > >
> >
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