|
Hi Joe:
In my opinion, the problem with Vic's
statement is that it focuses solely on "call loans", which, as you state below,
do not represent most financing arrangements.
I think the point that should be made is
that banks have the power to set the terms of any loan, and according to those
terms, the loans most often get repaid before the goods that they brought into
existence can be consumed, and this produces a "gap" between income and
prices.
Douglas elaborates on this process in his
testimony before the Alberta Agricultural Commission which I have copied
below:
"Well, that question of course is outside what I was
speaking of this morning, but I have no objection
whatever to answering it shortly. The best way of understanding what the speaker has referred to as the "A plus B"
theory is to look at the matter in this way: The
purchasing power of the general community is practically
98 per cent, I think, taken over all products, bank money. The actual deposits in banks under what are sometimes called
"normal times" (I don't know what normal times are, but
they are frequently referred to so we will assume that
there are normal times) the deposits remained fairly
constant. For instance, in Great Britain since the war
they have reached around between 16 and 18 hundred millions of pounds. Now there is quite obviously a circulation of those deposits
through the agency of costs. They are distributed for
wages and so forth and they come back to the same source
through the agency of price. That is the way the
existing financial system works.
Now all business in the world at the present time is carried
on on the theory of the balanced budget, including
governmental business. Therefore, you must
have a right, or period of cycle through which this money which starts from the banks goes out through cost and comes back again to
the banks through the agency of price; there must be a
time that that cycle takes. Now we have as a matter of
fact means of calculating that time, and in Great
Britain the average is somewhere in the neighbourhood of around about three weeks. Now, so long as a charge is incurred and
liquidated inside that period of three weeks it can be
liquidated by that cycle of the flow of purchasing
power, starting from the banks, going out through costs
and coming back again through prices. So long as the whole transaction of costs and prices is involved in a period of about three
weeks, there is no difficulty involved in the prices and
the costs being equal, but any item of cost which is
outside that period of three weeks we will say cannot be liquidated by that stream of credit which is constantly in:
circulation at a period rate, we will say of three
weeks.
Now we know there are an increasing number of charges
which originated from a period much anterior to three
weeks, and included in those charges, as a matter of
fact, are most of the charges made in, respect of purchases from one organization to another, but all such charges as
capital charges (for instance, on a railway which was
constructed a year, two years, three years, five or ten
years ago, where charges are still extant), cannot be liquidated by a stream of purchasing power which does not increase in
volume and which has a period of three weeks.
The consequence is, you have a piling up of debt, you
have in many cases a diminution of purchasing power
being equivalent to the price of the goods for sale. It is frequently
said, "Your theory must be absurd because we know that
there are periods in which purchasing power is in excess
of the price of the goods for sale, for instance at the
end of a war." What people who say that forget is that we were piling up debt at that time at the rate of ten millions
sterling a day and if it can be shown, and it can be
shown, that we are increasing debt continuously by
normal operation of the banking system and the financial system at the present time, then that is proof that we are not
distributing purchasing power sufficient to buy the
goods for sale at that time; otherwise we should not be
increasing debt, and that is the situation."
This point is reiterated by Douglas in "The
Monopoly of Credit":
"The essential point is that when a given sum of money leaves the
consumer on its journey back to the point of origin in the bank it is on its way
to extinction. If that extinction takes place before the extinction of the
price value created during its journey from
the bank, then each such operation
produces a corresponding disequilibrium between money and prices."
Take care,
Jim
----- Original Message -----
Sent: Wednesday, February 28, 2007 8:45 PM
Subject: Re: [socialcredit] A brief outline of Social
Credit
> (From Vic's
"Outline":-) "It must be remembered that the banks have
>
discretionary powers to call in loans and overdrafts even before the
goods
> they brought into existence have been sold, and they sometimes
exercise this
> power with
> disastrous effects on the
community."
>
> (Joe asks:-) How much financing is still done
this way, where the loan is
> subject to 'call'? Would it be
substantially more or less than loans that
> are issued for a definite
term? Ones that could not be 'called' so long as
> the terms
of the loan agreement were being adhered to?
>
> In the case
that one bank were to 'call' a loan, (of a firm that was
>
fundamentally financially sound, for reasons known only unto the
bank),
> could not that firm generally secure another loan from another
bank?
>
> I have seen some evidence that this has been the case
here in Canada (one
> instance is recounted in the book "The Acquisitors"
by noted author Peter C
> Newman, in a chapter on well-known (here,
anyways) Vancouver Island lumber
> entrepreneur H. S. Doman
and Doman Industries Ltd..
>
> Where, early in his firm's life as a
trucking and milling company, the CIBC
> 'called' Doman's loan, even
though the firm was 'sound' and was always
> current on its
payments. He quickly got another loan from Royal Bank of
> Canada,
paid off CIBC, and went on to undoubtedly make millions for the RBC
> over
the next three decades.)
>
> (From Vic's piece:-) "The first
step will be the establishment of a
> National
> Credit Authority to
take complete control of the money system and put the
> affairs of the
nation on a proper accountancy basis. This would restore
> money power to
the people and do away with the monopoly of credit by private
>
interests."
>
> (Joe replies:-) I realize that this piece is
intended for the readers of
> the "Michael" Journal, and so the way in
which some things are phrased or
> inferred may be designed not to
alienate them from their present perceptions
> of 'Social Credit'.
>
> They are now the main SC group left in Canada. And
certainly closer to
> some of Douglas's ideas in what they advocate than
either of the two
> 'political party' SC groups left here currently
are. (The one here in BC
> seeming to want to believe SC history
began in 1949, and Douglas is a
> complete non-entity.).
>
> It seems to me, anyways, from reading some of the "Michael"
publications I
> have, ones they used to occasionally mail out
across the Dominion, that
> they focus considerabley on the
"evils" of interest. And a desire to have
> the 'government'
''take complete control of the money system". Only in
> ways in
which I believe C H Douglas would hardly have approved.
>
> I
really do not see why what is supposed to be a 'statistical agency' has
to
> be made into what I think could not help but being a 'political'
one.
>
> Correct me if I'm wrong, please, but isn't it a case
that the 'problem' is
> not 'debt' itself, but that under the
current arrangements 'debt' cannot be
> totally liquidated? Why do
we have to have an all powerful NCA to correct
> that?
>
>
Now I recall asking Vic about this once before, quite some time ago.
What
> I've called before the "recurring question", and where in Douglas
could I
> find that he specifically advocates having the 'government'
"take complete
> control of the money system." And as I remember he
replied that it was an
> area in which Douglas wasn't too specific about
details, but what was
> advocated could be a 'method' which might be
used. And I suppose it could
> be. But I'm not yet convinced
there wouldn't be considerable disadvantages
> and dangers in going that
route. But i'm not closed minded about it, so if
> anyone knows good
reasons 'why', I'd sure like to hear them.
>
>
---------------------------------------------------------------------
>
Some introductory materials to the discussion topic of this list are at
>
http://www.geocities.com/socredus/compendium
> You're subscribed to this list with the email jschroeder@shaw.ca
> For more
information, visit http://www.eListas.com/list/socialcredit
> |
Re: [socialcredit]
Reply to this message
