| Subject: | Re: [socialcredit] what is risked? | | Date: | Friday, September 2, 2005 08:41:56 (-0700) | | From: | Joe Thomson <thomsonhiyu @....ca>
|
| In reply to: | Message 2686 (written by Kenneth Palmerton) |
>
(Ken wrote:-) > Assuming that we had SC understanding in our money system, I
can think of
> many many possible situations where goods or service can be lost, and I am
> sure you can too. SC would not, and could not affect that.
(Joe replies:-) Correct.
>
(Ken continues:-) > No amount of money can replace the lost goods.
(Joe replies:-) It can allow for the replacement with alternative goods,
though. The next best possible thing. Sometimes the replacement goods might
be better than the original ones.
If I carry fire insurance on my sawmill, for instance, I would be required
to carry insurance to today's estimated cost of complete replacement. Which
is far higher than the mill cost me originally, and also its depreciated
'book value'.
The insurer would insist that I rebuild. I don't get to 'accidently' torch
it, take the insurance money and go 'put my feet up', (or the damned thing
likely would've been ashes long ago!) The insurer is taking a risk that it
won't burn, and he WILL suffer a loss if it does.
He will take steps to mitigate that loss, (such as insisting I have a
sprinkler system in it, have fire-fighting tools at hand, etc.) His
'premium' will be based on the assessment he makes of the actual risk
involved. But in no case would I ever be paying in 'premium' more than the
amount it would cost me to replace it, even as it is. Or I wouldn't bother
having insurance, would I?
If the plant were entirely of steel construction instead of being in a
wood-frame building, the risk of loss and premium charged would be less.
Without 'insurance', if it did burn up, the entire loss is mine. With it,
the 'risk' is shared with others (the insurer), who do 'profit' as long as
it doesn't burn, but share my loss to a greater degree if and when it ever
does.
If the insurer did as insurers do, and 'invests, my and everyone else's
'premium', and then finds there's an unexpected number of payouts necessary
for losses, those investments would have to be liquidated. Possibly for
less than they were acquired for. Or, alternatively, money would have to be
sought on their 'security' to meet their obligations. Either way there is
a 'real' loss to the insurer.
(Ken continues:-) And as for MONEY being of
> less value, that idea is what I hoped we had left behind in adopting SC
> understanding.
(Joe replies:-) The only 'value' of money under Social Credit is as
'effective demand'. 'Price' will be determined on the upper side by what
the article will 'fetch', i.e. what you or I or anyone else is willing to
pay for it, and if the seller is willing to part with it for that much. The
decision on whether the item is 'worth' what you are being asked to pay for
it is yours. If the 'price' is too high, you do without, or go elsewhere.
Competition, in the absense of 'monopoly', will determine what will be asked
for and obtained. If his 'price' is too high, the purveyor is stuck with
his wares.
On the lower side, however, 'price' is determined by 'financial' cost. The
carrying forward of all the 'costs' involved in its provision, including the
sum the final seller has to have as profit to make his efforts worthwhile.
The seller cannot sell at less than financial cost plus his markup without
suffereing a financial loss. It is with the relationship between 'money'
available to meet this 'financial cost' and allow the whole cycle of
production and consumption of consumer goods to be financially
'self-liquidating' that SC proposes to deal.
>
Joe
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