Thanks for your responce Joe. I have made some replies but
they are also in red as I cant get around that.
(Peter:- )
If the fundamental flaw is in the
accounting side the perspective of the accounting side isnt eligible to
expalin to us how to look at things, is it?
(Joe
replies:- ) Just because the
‘accounting side’ is currently incomplete, doesn’t mean it isn’t ‘‘eligible to
explain how to look at things’’.
The ‘flaw’ lies not with the ‘accounting’ system itself, which continues
to serve us well, but what it currently lacks at the macro-economic level.
(Ps
responce- If the accounting system isnt at fault then the theorem must
be. Flaw, fault, incomplete are just words. If you prefer
'incomplete' then you suggest they are working on it? Is this
necessary? The point I was making was that we cant take it for
granted )
There
is no ‘National’ equivalent to the ‘capital account’ found in the Balance Sheet
of every business operating under
the conventions of double-entry accountancy. Were there, the overall relationship
between the Banks and the rest of the economy could finally be rationally
established. Something that’s
currently irrationally established, and the ‘cause’ of our
problems.
(Ps
responce- A national 'balance sheet' would be based on REALITY not aggregates of
the 'incompete' systems.
I question that the relationship would be rationally established. The
Communities Credit isnt the property of the banks. They are only entitled to
charge interest on money not credit in my view and the public should decide what
they want done about their credit, when they wake up.
WBR showed theoretically/conventionally how interest in passing from one account
to another doesnt impact on the money supply. Fine now show how the loan
on creation does the same. It starts out as debt as though it already
existed. The interest ( source) already exists, and so isnt the the real
problem. Its the principle. So the issue as often expressed - the
principle cannot pay the loan plus the interest is true but expressed
as the interest being the extraneous straw that breaks the donkeys
back shall we say. Lets turn it around and say, its the no existing money
that becomes a debt that is the extraneuos and unextenuated factor not
interest.
I accept that the Just Price mechanism would extenuate the creating of debt, if
there was no interest on it only standard service fees, in relation to the
productive sector only. The the realtionship there would then be rationaly
established in my view.)
If
such a device were created as part of a properly constituted “National Balance
Sheet”, then as the account balance in the ‘National Capital Account’ increased,
appropriate debt-free CONSUMER distributions could be made periodically to the
Nation’s ‘shareholder-citizens’.
In the form of the
‘national dividend’ and/or the ‘compensated price discount’.
‘Consumers’,
all of us, for we’re all ‘consumers’, could thereby be credited with the overall
and ongoing national ‘capital
appreciation’ which is rightfully ours. And something generally larger than the
‘capital depreciation’ we are currently expected to pay in prices.
By
augmenting as necessary overall CONSUMER ‘effective demand’, through the
‘discount’ and the ‘dividend’ each entire, overall ‘business cycle’ could become
‘financially’ fully self-liquidating, regardless of the extent of ‘labour
displacement’.
(Peter:- )
I think this has also made it easier
to see why Douglas didnt
concern himself with interest inside the theorem. It is another matter
outside.
(Joe
replies:- ) ‘Interest’ is simply another ‘B’ payment. So there was no need for
Douglas
to concern himself with ‘interest’ separately inside A+B. And he didn’t seem to concern himself much with it
outside it either. For good reason. It’s just a ‘transfer’ from the account balance of a ‘Firm’ to that of its ‘Bank’. Same as a ‘transfer’ from one ‘Firm’ to another ‘Firm’ for
anything else. It’s exactly the same as any other ‘cost’
that’s going to end up in the final price of its product. It will NOT increase overall debt, as
Bill McGunnigle and many others infer, (unless loans
are not being serviced). The ‘problem’ with the Banks not
‘spending’ all the interest they receive and re-investing some of it, as Per
mentioned, can easily be dealt with
through adjustments to the ‘dividend’ and ‘compensated price discount’. We are not concerned with what’s in
“anybody’s” account balances, but what is accumulating in the overall ‘flow’
into and out of account balances over time is relevant
(
Ps responce- The essence of the theorem in the cause of the difference in
rate of dispersements on the one hand and that of the costs into
prices.
The
theorem isnt the basis of SC, its philosophy, principles etc.
The relationship between interest and the theorem doesnt necessarilty have
any baring on what Douglas may have said about the banking system elsewhere,
that one could conclude that since he wasnt concerned about it in the theorem
its is ok or for that matter anything else. The concern about the monopoly
of the communities credit for instance, did he wink at this because it didnt
have any significance in the theorem?
I
made the comment many months ago that I thought that the issue of 'interest' was
a red herring and I still do. The whole economic system is based on the
preponderance of debt (( 97% of the money supply)) not credit. If it was
credit the value of its use to the community would be a determinant.
Because its debt to the banking system its availablitiy reflects a different
value, and so businesses can fall because while they meet the former they
dont the latter or similarly for various reasons including the fluctuating
rates of interest that can be fatal after contracts for supply are commited
to. IE businesses are falling through cracks that need not be there.
There is a case of musical chairs, so many fatalities for every
success.
A
slice of time or time freeze if you like such as saying that at the time the
loans is deposited, the principle equals the debt and no interest involved
at that point is pointless and misleading.
If
we could say the same thing about principle as we do about interest then it
would be as simple as just following through with a couple of
Macro-adjustments as you and WBR indicate and all would be sweet. I
believe that the debt system is much more self driving that just the 'gap' than
when Douglas wrote. Would compensating the 'gap' actually right the system
today while leaving the debt money system intact, eg at 97% of the money
supply?
I
think this needs discussing.
For
principle to be worked within the accounting system as interest has been
explained it has to pre-exist in an account. That account can be a
National Credit Authority account (( as opposed to a private debt
authority)) as a national allocation. If it (( principle)) isnt a cost ((
debt)) then it wont effect prices.
While
it is true that every individual loan is repaid and cancels the
debt ((asset)) of the bank and its earnings are just the interest.
The fact is its an inflationary system and the rate of new assets being created
(( snowballing)) to the rate of old ones 'depreciating' through
repayment makes the first point virtually misleading. The point
that interest only is income to banks and not repayment of loans is at
first considerably arresting in the debate but the fact remains- the REPAYMENT
(( how many times over? )) is a COST to be born by the consumer (( besides
the interest)). Accounting convention sees the sales/income but not the
people and whats happening to them. If the consumer pays for the factory
and its products it theretically should get a factory
dividend!
Obviously
there are two groups in this matter yet Douglas referred to ever increasing debt
((snowballing)) and thought that the systems would have collapsed decades
ago. Why?
The
banking system is compensating the gap by their own means and turning the world
upside down and turning people into slaves in the precess so if the
answer is 1. 'gap' compensation and 2. leaving the banking
system intact is the answer then I somehow cant see how the small volumn of
money supply debt free (( dividend)) and discounts are going to create the
equivalent of Social credit 'paradise' of every man sitting under his own tree
in leisure while technology slaves for his benefit. I can see the standard
of living going up and banks 'justifying' their claim that inflation is also
resulting and so charge more interest.
Is
this much different from Keynes answer?
We
need to discuss what Douglas actually said about the banking and debt money
system and not use the theorem or accounting convention as the one and only
peep-hole towards reality. It seems to have been avoided for
the nearly 12 months I have been here.
Peter
H
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