| Subject: | Re: [socialcredit] Smoothing the cycle | | Date: | Wednesday, March 1, 2006 13:37:30 (-0800) | | From: | Joe Thomson <thomsonhiyu @....ca>
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| In reply to: | Message 3541 (written by Jeffery Smith) |
(Jeff Smith wrote:-) > Yet, with the positive cash flow or profits, why not
save and re-invest in itself instead of borrow and incur interests? Tax
favors might answer that.
(Joe replies:-) You do realize that the modern economy is 'creditary', do
you not? I ask this because from reading what you've written, and also some
of the material on your website, an impression can be gleaned that you do
not.
That you think a bank "lending money" to a firm or other individual is
exactly the same thing as if some individual were 'lending money' (in his
possession) to those parties.
In other words, that instead of as what actually occurs in bank 'lending',
that 'loans create deposits', and the repayment of those loans destroys
those deposits, you seem to believe that it's the other way around.
Firms do save and re-invest their 'profits'. But what may be prudent in the
case of the individual firm can have a deleterious effect on the 'national'
economy taken as a whole.. For each time a firm does this, re-invests
retained earnings or 'profits', it creates a new set of financial COSTS
without creating any fresh 'purchasing power' to liquidate them.
And in doing so, it has also left an existing set of 'costs' unliquidated
"Costs' that can then only be fully liquidated (currently, under the present
system), if there is an equivalent amount of 'new credit' entering the
system by way of more 'loans', or 'export credits' from sale of goods to
some other credit area.
(Jeff continues:-) What's curious is that a business
chooses first to indebt itself, not to save or sell stock or whatever.
(Joe replies:-) You could possibly make a case for why some businesses
'borrow' rather than 're-invest earnings' on an individual business by
business basis, and the individual firm's circumstances in relation to
what's allowed under tax laws and the generally accepted conventions of
accounting. But we, here, are not specifically concerned with that.
We are concerned with what happens in the 'macro-economy', and its effects
on all of us, when through 'labour displacement' in all of its broad and
various forms, any aggregate financial cost accountancy cycle cannot be
completely self-liquidating without a variety of 'financially' induced
perversions taking place. This is the primary reason why there is such a
growth in 'debt'. This is what Social Credit means to correct.
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