| Subject: | Re: [socialcredit] Extrapolating A+B Part 1 | | Date: | Thursday, September 22, 2005 08:31:03 (-0700) | | From: | Joe Thomson <thomsonhiyu @....ca>
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| In reply to: | Message 2850 (written by cymric) |
(Peter wrote:-) (1) I dont know how you thought Joe I meant for the
borrower to approach the bank for a loan to cover the interest which in turn
would demand its own interest and then a third loan requested for that and
on and on etc. I can see why its isnt 'credible'.
(Joe responds:-) But can't you see that ridiculous scenario is exactly the
same thing as the assertion that the "banker doesn't create the' interest'
when he creates the loan principle, so therefore it can't be paid"? True
enough, if the banker just made one loan, that loan was the only money in
existence, and that's all we were considering. But Bill's original question
is asked in the context of the whole economy.
(Peter continues:-) > Obviously the interest is taken out of cirulation of
the subsequent money supply loaned for productive and or consumptive reasons
etc. Which then increases demand for new loans exponentially over time as
the dynamic I referred to continues - future incomes ( and loans/debt)to pay
off past production. I pointed to this dynamic as evidence that the system
cannot be self balancing as William indicates for this to be happening.
(Joe replies:-) There may well be a demand for new loans, as the system is
dynamic and the economy is in perpetual motion.. But in the example given
DEBT did not increase because INTEREST was paid on it. There was $ 200 in
debt in total created by the first two loans, $ 20 in interest was earned by
the banker in total on them as was agreed in the loan contract, and there
was $ 200 in total debt still when each of the loans were renewed. The DEBT
DIDN'T GROW EXPONENTIALLY because of the INTEREST. In this example it
stayed exactly the same. It would seem that process could repeat
indefinitely, each time the banker taking the interest, without the overall
debt increasing at all. So something other than the interest must be
responsible for increasing debt, and something is. It is what I think we
call 'growth', and this leads to more than the original $ 200 being
required. This is not to say that there isn't debt growth through
'interest' if the repayment of the debt as contracted wasn't, or couldn't,
be made. And it is with this latter, the "couldn't", and why it occurs,
that Social Credit proposes to deal. It has precious little to do with
'interest'.
(Peter continues:-) This is the equivalent to saying there is no 'gap' ( A
plus B ) as an uncle of mine used to say because the banks lend into the
gap!
> This game of catch up by the ever increasing debt and to pay the interest
is what drives the extra production ( now starting to consume the planets
resources) just to pay off the previous productive cycles and sustain the
banking game.
> The extent that debt money is syphoned off in the following cycle to pay
interest on previous cycles means that much less invested in production etc,
which is why we get into the perpetual catch-up mode.
(Joe replies:-) But what you are describing are 'effects', wheras the
'cause' lies elsewhere. To attack 'interest' as the cause, you'd also have
to attack all other forms of 'profit'. And it's a misdirected attack, as
Douglas told us in "The Development of World Dominion" in passages
previously quoted on here.
>
(Peter continues:-) (2) This is where we get the interest- from the debt
money in circulation through loans, ever increasing money supply. As the
late Prof John Hotson ( Ontario-Canadian) said the ever expanding money
supply can be likened to an aircaft in flight, the air speed being
determined by the demand to cancelled debt and pay the interest.
> If the aircraft ever slows ( the expansion below demand) the aircraft
falls short of the minimum airspeed to keep it in the air and thus it will
crash.
(Joe replies:-) But in the example, which admittedly assumes a 'no-growth'
economy, the interest could be taken indefinitely, and the overall debt
never increased one bit. Sure, we do get the interest 'from loans'.
Virtually all 'money' is from 'loans' ~ but ask yourself just WHAT was
really 'loaned'?
>
(Peter continues:-) > So we are both agreed on this in measure but your
explanation of how fractional reserve banking works defies the text books.
That 100 dollars loaned is entered into the customers account in the banks
records on one side of the account. As he pays of the loans, each
installment is entered on the opposite side of his account thus showing a
deminishing balance oustanding until that original $100 is cancelled. Banks
dont relend cancelled figures on paper,( there is no interest to be gained
on ZERO) they create new ones.
(Joe replies:-) Agreed. But in the example given, in our hypothetical
'steady-state' economy, did the banker lend out $ 220 so the interest could
be paid? He did not. The aggregate debt was still only $ 200, same as it
was before. How did the 'interest' make it any larger?
(Peter continues:-) So the extent and growth of debt is far greater (
exponentially in fact ) contrary to your expanation of fractional reserve
banking accounting system. Every day they create and cancel money and
obviously the rate of creation will be higher than that of cancellation if
they want to get the interest on their loans.
(Joe replies::-) We've come right back around to them 'lending money to pay
the interest', then. Which I think is obvious they do not do (for that
reason), but do lend increasing amounts of money, as one would expect, as
the economy grows.
(Peter replies:-) This is why Douglas pointed out that the economy isnt
driven by demand but by banking policy hence the over production beyond the
consumers demand and the need to export and find markets. The debt loads
are so great they have to get the national barriers down ( open markets) to
satisfy the debt bemands, not to feed the starving billions.
(Joe replies:-) I don't disagree with that. It is banking POLICY in
relation to our modern, machine-power driven economy that is the big problem
with banking. Not the 'interest' they charge.
>
(Peter continues:-) > (3) I can not understand how anyone is supposed to see
these two dividends ( Banks D and S.C Nat. Div ) as being the equivalent by
different means. Firstly the National dividend in volumn may or may not be
equal to the dividens released to very few people in society. I would expect
that a regular National Dividend would far exceed that of the annual
dividend of the banks.
(Joe replies:-) Oh, yes, definitely.
(Peter continues:-) I can see there would be a huge difference between
everyone getting a bank dividend for the social-economy rather than just a
few, who may invest it overseas today anyway. This is why I said to
William, I see he matches words ( eg 'dividends' and 'dividens') but I am
waiting to see the values being equal. I would appreciate someone showing
me how these two dividends can be equal. I dont recall Douglas indicating
they were, but certainly he made it clear that the banking industry was not
beyond making positive contribution by dispersing debt free money into the
economy ( dividends and interest on deposits).
> This is a good subject and I expect we are all or most of us have a bit to
learn or at least clarify here. William appears to have some ace up his
sleeve and I cant wait to see what it is.
(Joe replies:-) Many times we have started on here to see Bill's complete
extrapolation of A+B, and each time we've been sidetracked. I would like to
see the whole thing, because from what I have seen of it, it is a very good
explanation. Hopefully we'll get through it all this time, and some
longstanding misconceptions, (including some I might have), will be laid to
rest.
>
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