Sent: Friday, December 09, 2005 9:23
PM
Subject: Re: [socialcredit] Questions in
regards to Dec. 'Triumph of the Past' Swanwick #2 -- Wally attempts to
respond
Money is issued as financial income as it is
expended upon production--creating an accumulation of financial costs
accordingly. These costs must be liquidated by consumer
expenditure--inasmuch as consumption is the last function in each
cycle of the economic process. The incomes distributed during the
production process are insufficient to liquidate the full volume of prices
generated in any given cycle and to give consumers at large access to the
entire physical output or wealth represented by these financial prices.
Applied to the national economy as a whole, this is a macroeconomic
statement. Social Credit would issue and distribute supplementary
consumer income to meet this deficiency of buying power. No
differentiation is made between earned money income and credits issued to
supplement income--they merge into a general stream of financial income
which is then available to meet the full financial costs of production of each
production cycle. The full stream of financial income is required
to liquidate the totality of financial costs generated in each production
cycle. If some income from this combined income (earned from
engagement in production in addition to that received from outside the
price-system as a consumption credit) is not spent on the final product of a
given cycle, the costs of that cycle remained unliquidated. If any of
this financial income is spent on any form of economic activity which produces
goods for sale, then this income will generate new (i.e., additional)
financial costs and prices, thereby producing a further discrepancy of general
purchasing-power. This will be factored into the next national
accounting period in order to determine the deficiency created by this
re-investment of savings (saved incomes) which has created new financial costs
without creating new purchasing-power. Whether production is initiated
via the issue of new credits directly for production and repayble to the
source of issue or initiated by the application of financial savings does not
matter. In either case, the result is a shortfall of effective
(cost-liquidating) demand and compensation must be made via new consumption
credits. In either case new production is facilitated by the issue
of new credits--whether through production or from the consumer. If I
recall correctly, Douglas commented that a central problem is that the
producer presently receives his income from the banks instead of the
consumer. This is the way in which I understand the matter.
The problem is that producers withdraw income
from consumers in retail prices expenditures incurred in respect of the
cost of capital. These included charges in respect to capital are
allocated charges which are added to price and they do not simultaneously
create new and equivalent purchasing-power. But to prematurely withdraw and
cancel consumer purchasing-power in this matter implies that the physical
capital itself at the present point of time has been cancelled or fully
depreciated. This is a gross misrepresentation of reality inasmuch
as real or physical capital depletes slowly over future years. True cost
as measured by Social Credit is the mean rate of consumption divided by the
mean rate of production. The final or "Just" price of consumer goods
must reflect this fact and requires that the consumer must not only be debited
with capital depreciation but must be credited with capital appreciation
(measured in money terms)--which latter is vastly greater than the
former. Money should be withdrawn via prices only at the rate determined
by the ratio of national consumption to national production, which ratio is
normally and increasingly less than a numerical value of one. Under the
present system money incomes are withdrawn and cancelled prematurely via the
price-mechanism and Social Credit wants to "slow down" this rate of
cancellation. Realistically, costs and prices should be falling over
time instead of rising as they do under the existing orthodox financial
regime. This is the way in which I understand the matter.
However, in a Social Credit dispensation new
attitudes would arise which are different to those developed under the
constraints and depredations of the present defective money system.
Savings would become valued only primarily as a temporary means to
facilitate larger purchases rather than as a form of indefinite hoarding out
of fear of future insecurity. Social Credit aims at the "Life
Abundant". Money may be saved but spoilage and obsolescence will render
it valueless. Life, in the economic sense, can only be realized by the
expenditure of financial income on currently available consumer goods and
services. Remember that Douglas said we want to build a new society on a
foundation of absolute economic security for the individual. Savings
would not be directed to new superfluous, wasteful, destructive and
leisure-robbing activity merely to generate additional financial income
to compensate a previous deficiency in order that the consumer might
access previously produced goods. Society no longer would be required to
produce guns in order to access butter. Confidence would supercede fear
and our attitudes and subsequent patterns of behaviour would
become different from those which have developed previously
because of society's past subjection to the restrictions and vissicitudes
of the existing system, whereby money is only issued, ultimately, for
production and not for consumption. We want to make possible the
immediate and dynamic ability of the consumer to access the full physical
outflow of consumer wealth from the production system in each cycle--without
being required to commit to any further future effort or financial borrowing
against future income. We desire to bring about a sharing society
accomplished by means of a mechanism of distribution--not by means of
a mechanism for effecting re-distribution. Again, this is the way
in which I understand the matter.
Comments are welcome.
Sincerely
Wally
----- Original Message -----
Sent: Wednesday, December 07, 2005 9:20
PM
Subject: Re: [socialcredit] Questions
in regards to Dec. 'Triumph of the Past' Swanwick #2
I can only say that I find the Swanwick principle #2 the
hardest part of Douglas's proposals to swallow. Particularly, does this
recommendation apply to all business capital, including fixed capital
assets, or simply to working capital for day to day operation? And, if fixed
capital is intended, does this imply that private capital investment is
prohibited? Perhaps some of the experts here can give me some
answers.
----- Original Message -----
Sent: Wednesday, December 07, 2005
9:16 AM
Subject: [socialcredit] Questions in
regards to Dec. 'Triumph of the Past' Swanwick #2
The expanded version of Swanwick principle #
2, as printed in (I believe) the second edition of 'Warning Democracy',
and as reproduced on the NZ Social Credit Ass'n's website states:-
"That the credits required to finance production shall be supplied not
from savings but from new credits relative to production, and shall be
recalled only in the ratio of general depreciation to general
appreciation."
I believe it's been established
previously that in the first and third editions of 'Warning Democracy' the
last part has been omitted, and the quote ends 'relative to new
production', as it appears in the original rendition. I don't recall
now if it was ever determined why there was a change, and then a change
back. Does anyone know?
Michael opines that the "national dividend"
be used only to purchase 'consumer goods', and not 'stocks and
bonds'. How is it to be determined just 'what' the 'national
dividend' in the hands of each of us as recipients will be spent
on?
There is nothing I've seen in Douglas
that distinguishes 'money' received from the 'national dividend' from any
other 'money'.
It isn't of the nature of a 'Prosperity
Certificate', for instance. Nor, under what might be called 'normal'
circumstances, where control over 'credit' wasn't being contested between
two 'governments', would it be in a tangible form restricted in what it
could be used for. Does it not seem feasible that Douglas, in the
expanded version of Swanwick # 2 above is referring to a macro-economic
concept "the ratio (over the whole economy) of general depreciation
to general appreciation", with ALL 'money' being analogous and concerned
only with 'flows', not with what each individual who gets a 'national
dividend' spends it on?
If I used my 'national dividend' to purchase
'stocks and bonds' held by someone else, is it not conceivable that the
seller might be using the money received to then purchase 'consumer
goods'? What's changed? If I used my 'national dividend'
to purchase capital stock, say when a firm makes an intial public
offering, how would this differ from my using my 'earnings' to do the same
thing? Does not Swanwick # 2 simply encompass the changes
in 'flows' at the macro-economic level so that the 'natioanal
dividend' and 'compensated price discount' can be adjusted in future
accordingly?
Joe
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