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Hi Bill:
Thanks for taking the time to my queries, and I
apologize for my tardy response. I've been busy.
I will respond in red.
----- Original Message -----
Sent: Sunday, December 10, 2006 10:45
PM
Subject: Re: [socialcredit] Douglas: 1923 Ottawa -
Part 1
>I don't recall seeing a response from Joe on
this. So
> I'll attempt to briefly respond to Jim's
questions
> below:
>
---------------------------------------------
>
-----------------------------------------------
>
> Hi
Joe:
>
> In your response to Peter, you
stated:
>
> At various points along the horizontal, or "Time"
line
> of the "L", draw three more diagonals parallel to the
>
first. Starting with the first diagonal, label the
> first one
"Costs", the second one "Incomes", the third
> one "Sales", and the final
one "Expense".
> -
>
> I have a couple of questions
relating to this diagram:
>
> 1) Why do costs occur prior to
incomes being
> disbursed?
>
----------------------------------------
> [Response] See the
diagram appended that's also
> archived at
> http://www.geocities.com/socredus/compendium> Costs are not prior to incomes. At any point in
time
> costs and incomes are occurring concurrently. This is
>
the normal condition of continuous dynamic processes,
> in which all the
elements of the process are occurring
> concurrently.
>
-
Fair enough, but if you look at the
graph along the horizontal axis, (Costs - A+B) begin when there is no
income. Income is not disbursed until a later time.
If the graph is merely a
represtentation of incomes and costs ocurring concurrently starting at any point
in time, then doesn't the graph itself assume that A+B > A for all
t>0? And doesn't this then beg the question?
>
> 2) Why is the cost
function and the expense function
> parallel to each other?
>
----------------------------------------
> [Response] Costs and
expense are identical, with
> costs being an actual measurable flow, with
expense
> being the costs curve delayed in time by the
> conventions
of accounting so that it is matched
> against future sales in determining
profit or loss.
> -
I'm still a little confused on
this, so I will start with a concrete example, and perhaps you can explain it to
me from the example.
I own a business and purchase a
building for $100,000. The life of the asset is 10 years for
simplicity. Using straight line depreciation, this means I expense the
building $10,000/ year for 10 years.
From the diagram, it appears to
me that the whole $100,000 is delayed 10 years before it is
expensed.
> 3) According to this diagram, income > sales for
all
> time>0. Do you believe this to be true for all
time?
> ----------------------------------------
> [Response]
The assumption is quasi-steady state
> expansion. In steady state
expansion income is always
> greater than sales because of the delay in
the receipt
> of income and its expenditure, with the differential
>
represented by accumulating account balances in the
> hands of
consumers.
>
> On the other hand, it is possible to think of
a
> condition of steady state contraction rather than
>
expansion. In that case, the disbursement from
> account balances
held by consumers will exceed their
> income, in which case their account
balances will be
> depleting to the theoretical limit of total
depletion.
>
> What we are trying to do here is develop a
general
> model in which we can introduce labor displacement in
>
the A+B analysis, which is a departure from steady
>
state.
>
Perhaps this is the crux of my
misunderstanding with regards to this diagram. Are you attempting to
introduce labour displacement within the A+B analysis (i.e. assuming A+B to
be true), or are you attempting to demonstrate the validity of A+B with the
concept of labour displacement?
Take care, and Merry Christmas.
Jim
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