Just one comment on the expected economic effect of issuing debt free
dividend or Just Price money through the state.
It seems to me that if this money is used to repay the mountains of private,
government and corporate debt that exist in the country, leading to the
cancellation of indebtedness to the banking system, there would not be any
inflationary effect on prices. Particularly so if the Central Bank were to
raise interest rates, so as to discourage borrowing and encourage
investment.
It's a subject that could do with more discussion. Personally, I see a
"catch up" phase, where a good quantity of state issued money could be made
available without ill effects if used to repay debt, but in the long run,
dividend payments would have to be much less, and we might have to resort to
Henry George's "single tax" if we want people to have a guaranteed basic
income. I would certainly like to see the justification for the actual
figures of dividend that Cook quotes.
Martin Hattersley
5929 - 189 St.,
EDMONTON AB CANADA T6M 2J1
jmartinh@shaw.ca
e-mail: hattersleyjm@interbaun.com
----- Original Message -----
From: "MODERATOR" <socredus@yahoo.com>
To: <socialcredit@elistas.com>
Sent: Wednesday, May 30, 2007 10:10 AM
Subject: [socialcredit] From Richard Cook
> Attached in PDF format is the full text of Richard
> Cook's latest Internet posting. I invite replies from
> Richard and the other list participants to my
> comments.
>
> The first two thirds of the posting is a historical
> narrative that I believe heavily sources to Stephen
> Zarlenga's work. As such, it contains many
> Greenbacker fabrications from the latter half of the
> nineteenth century. We've already discussed the bogus
> Lincoln quotes a year or two ago on this list.
>
> I would like to see a citation to a verifiable and
> credible source for this from Richard's article:
>
> "In 1913 the Federal Reserve System was created by an
> act of Congress signed by President Woodrow Wilson. He
> later regretted doing so, saying 'I have unwittingly
> ruined my country.'"
>
> I am very skeptical that Wilson ever actually said
> this.
>
> I append below the text from the final third of
> Richard's article, headed "analysis and conclusions."
>
> His first proposal is to eliminate all (or "at least
> ninety percent") of taxation, federal, state and
> local--with the federal government spending money into
> circulation, and granting funds to the other
> governments for their operations and infrastructure
> projects. "Interest free" loans are part of the mix.
> If I have not accurately summarized this first
> proposal, I would hope that Richard would correct me.
>
> Now, at the very least, this would result in an
> enormous and accumulating influx of money into the
> economic system, inasmuch as government services in
> their totality in monetary terms comprise presently
> something in the neighborhood of one third to one half
> of the GDP. It is difficult to see how this great
> continuing influx of money could possibly be sustained
> without great distortions to the pricing structure.
>
> Beyond this practical difficulty, I am very much
> concerned that this would enormously concentrate
> political power into the federal government over the
> entire nation. The constitutionally mandated balance
> of powers between the federal, state and local
> governments would be destroyed.
>
> Forgotten also is that the requirement for taxation is
> a check on the power of government. The government is
> not only required to levy the tax in an democratic and
> open environment, it must also collect it--both
> difficult tasks in a constitutional republic.
>
> The ability of the government to borrow, particularly
> at the federal level, is an erosion on that check.
>
> I have less objection to Richard's second proposal,
> which involves the social credit dividend and retail
> discount. Except for this question to Richard:
>
> You state:
>
> "The average National Dividend per person would
> probably exceed $12,000 per year under today's
> economic conditions."
>
> How do you arrive at this number?
>
> -----------------------------------------------------
>
> ANALYSIS AND CONCLUSIONS
>
> Perhaps the most consequential event of U.S. history
> during the twentieth century took place when the
> private banking system was given control of the U.S.
> economy in 1913 through the passage of the Federal
> Reserve Act. Those who accomplished this were not only
> Americans but also financiers from Great Britain and
> continental Europe. The Federal Reserve today
> continues as a branch of international finance.
>
> Since then this system has produced nearly a century
> of almost constant warfare, the ascent to power of the
> military-industrial complex/national security state,
> periodic creation and destruction of gigantic
> financial bubbles, and the erosion of ninety-five
> percent of the value of the U.S. dollar. The vast
> productive resources of the U.S. and the talents and
> hard work of its people have been used by the
> financiers for these purposes.
>
> Side-by-side have been tremendous advances in science,
> technology, and medicine, and a longer human life
> span. But much of the investment that has produced
> these benefits has come through public expenditures
> from tax revenues, supporting, for instance, the large
> state research universities, or from private
> corporations which draw on funding from retained
> earnings and the capital markets.
>
> Bank credit, by contrast, has historically been
> oriented toward asset purchases and speculation,
> especially real estate and business acquisitions,
> toward purchase of consumer goods by people who lack
> ready money to meet their needs, toward the profits
> drawn from capital gains fed by inflation, and toward
> purchase of federal government securities and lending
> to foreign governments. In the case of lending to
> governments, naturally the greatest profits are made
> at times of financial distress and war.
>
> It is extremely important to understand that most of
> these transactions are essentially non-productive in
> an economic sense, involve gigantic sums of money
> created from "nothing" through the bankers' fractional
> reserve privileges, and have little in common with the
> type of investment in the producing economy that takes
> place through the capital markets.
>
> A typical case involves the purchase of a business by
> investors who borrow large sums of money to close the
> deal, then sell off assets, fire many of the
> employees, and slash the benefits of those who remain.
> They then use the profits from the business to repay
> their loans or sell the stripped-down company to other
> parties. This strategy is especially appealing to
> equity funds and is called "restructuring."
>
> This type of financial corruption in which the banks
> and investment funds are complicit has become common
> over the last twenty-five years. It's another area
> where "market" forces are said to be at work.
>
> The history of credit shows its power to draw forth
> work on the part of men and women who need to exchange
> goods and services among themselves in order to live.
> But as this report dramatizes, credit can be used for
> divergent purposes. Like electricity, it is neither
> good nor evil. It can be used or misused. Electricity
> can electrocute prisoners or bring light to cities.
> Credit in the wrong hands can start wars but used
> properly can accomplish miracles of science.
>
> Today the U.S. is in great peril. Through the failed
> war in Iraq and the barbaric manner in which it has
> been carried out, our standing in the world has never
> been lower. As stated in the beginning of this report,
> our economy is wracked with debt. This debt is growing
> exponentially through compound interest.
>
> In fact our producing economy has been wrecked by
> monetary madness. Our working population is poorer
> every day even as the Federal Reserve pours out
> trillions of dollars in new debt and the incomes of
> the financial magnates soar. According to a recent
> report from the Bank for International Settlements,
> money is even being lent to hedge funds which are
> betting on our economic decline. We are looking at a
> potential system-wide collapse on a scale never before
> seen in history.
>
> Further, the dollar hegemony we have used so cleverly
> to float our national debt has come back to haunt us
> as we see China using the dollars they have acquired,
> through exploitation of their own domestic workforce
> in producing the goods that fill the shelves of our
> Walmarts, to buy up assets around the world-in Asia,
> Africa, Latin America, and now in the U.S. Economists
> who work for the Federal Reserve have advocated in
> print the sale of U.S. properties to China as a way of
> dealing with the "functional bankruptcy" of the U.S.
> government.
>
> China is already dictating trade policies to us. Soon
> they will be dictating political policies as well.
> Companies like IBM, GE, and General Motors are
> boosting their stock prices by building factories in
> China to sell Chinese workers consumer goods. It's
> great for the stockholders of those corporations. It's
> death for the U.S. workers who have no jobs and no
> money to buy the necessities of life except through
> more credit card charges.
>
> This brings us full circle to where this report began,
> for "market" economics is nothing more than the abuse
> of what should be a public good for just such selfish
> purposes. That is why a powerful economy such as we
> have built over the last several generations can do so
> much harm along with the obvious benefits. It's the
> result of monetary policies where what we were told
> were "market" forces were in reality the expression of
> unbridled greed by a financial sector that is totally
> out of control.
>
> We now need to return to the recognition that money
> and credit truly are public utilities as recognized
> during colonial days and at the times of great crises
> such as the Revolutionary War, the Civil War, and the
> New Deal.
>
> Today we are in a similar crisis, when the solution is
> the same as it has been in the past. It is for the
> commonwealth of Americans, acting through their
> elected representatives, to exert their constitutional
> prerogatives in controlling the nation's supply of
> money and credit.
>
> In other reports published over the last several
> weeks, the author has made a number of suggestions of
> the steps that now should be taken. These steps follow
> the guidelines of numerous monetary reformers of the
> past but can generally be summarized in two major
> provisions:
>
> 1. We should spend sufficient credit into existence to
> supply the basic operating expenses of government at
> all levels without recourse to either taxes or
> borrowing. At least ninety percent of all taxes could
> be eliminated. The only taxes that should be retained
> would be those in the form of user fees for
> infrastructure operations and maintenance and those
> levied only for dire emergencies. Capital expenses for
> infrastructure construction at the federal, state, and
> local levels should be financed through a
> self-capitalized national infrastructure bank lending
> at zero-interest. Operating on a national scale, such
> a bank could begin to rebuild our job base starting at
> the state and local levels. A public program of direct
> government expenditures as described herein would be
> as effective, as timely, far less inflationary, and
> much cheaper than creating new public debt by
> borrowing credit created "out of thin air" by the
> banking system.
>
> 2. The endemic gap between prices and purchasing power
> in an advanced economic system in reality is the
> "leisure dividend" that we never received from our
> amazing producing economy. That gap should now be
> filled by a non-taxable National Dividend of two
> types. One would be a cash stipend paid to all
> citizens which would also serve the purpose of
> eliminating poverty by providing everyone with a basic
> income guarantee. The remainder of the National
> Dividend would consist of an overall pricing subsidy,
> whereby a designated proportion of all purchases,
> including home building expenses, would be rebated to
> consumers. The average National Dividend per person
> would probably exceed $12,000 per year under today's
> economic conditions. It would be a calculated value
> charged against a government ledger but would be
> off-budget, with no need to finance it with taxation
> or borrowing. The calculation of this dividend was
> outlined by the author in his recent report, "An
> Emergency Program of Monetary Reform for the United
> States."
>
> The theory of this program of monetary reform derives
> from two principal sources. One is the worldwide
> National Dividend movement founded almost a century
> ago by Scottish engineer Major C.H. Douglas. The other
> is the program of monetary reform based on direct
> government spending set forth by groups like the
> American Monetary Institute in its model legislation,
> the American Monetary Act, to which the author of this
> report has contributed.
>
> In Great Britain, similar work is being done by the
> Bromsgrove Group and other reformers. The monetary
> reform movement is worldwide. Through his previous
> reports the author has received positive support and
> feedback from many countries, including Poland, Italy,
> India, Australia, Canada, Germany, New Zealand, and
> others.
>
> The top priority of the reform program would be to use
> public credit to rebuild the producing economy which
> has been wrecked by the phony ideology of "market"
> economics and the inept and self-serving manipulation
> of the money supply by the Federal Reserve and the
> banks.
>
> Direct funding of government expenditures would remove
> the banking system from the business of financing a
> massive government debt. Implementation of a National
> Dividend would establish the balance between
> production and consumption which the banks failed to
> do through creation of huge quantities of consumer
> debt to compensate for shipping our manufacturing
> capabilities to China and other foreign countries.
> Both measures would go a long away toward shifting the
> basis of our economy from one that uses debt for
> making war and transferring wealth to the upper income
> brackets to one that uses public control of credit to
> facilitate peace, domestic harmony, and economic
> democracy.
>
> Once these major steps were taken, other measures
> could be instituted that would also reflect the status
> of credit as a public utility. These include the ready
> availability of low cost credit for consumers, small
> businesses, and students; the ability of capital
> markets to function without the destructive overhang
> of predatory financial methods; the elimination of all
> bank lending for speculation, including purchase of
> securities on margin, leveraged buyouts, and leveraged
> hedge funds and derivatives trading; restoration of a
> liberal bankruptcy law and the writing off much of the
> debt currently in place that can never be repaid,
> including student debt and debt held by developing
> nations; the elimination of fractional reserve banking
> by requiring that bank lending in excess of deposits
> be done only with credit purchased from a central
> government authority; the creation of a fair and
> structured system of international finance and
> investment to replace the tragically failed system of
> dollar hegemony; and a plan to restructure the
> national debt that would pay off private and foreign
> creditors but eliminate Treasury securities as bank
> collateral.
>
> Such a program of reform would be far-reaching, but it
> would be based on the best traditions of America, and
> it would work. Above all, it would allow us as
> citizens of the American constitutional commonwealth
> to take back our country from the control of national
> and international finance. The same could be done by
> other countries. The technical know-how for
> accomplishing this program exists. A scaled-down
> banking system would still exist, but the tail would
> no longer wag the dog.
>
> What we need now is for the public to wake up to the
> urgent need for change and for the political
> leadership at all levels of government to step up and
> make it happen. Standing in the way is the near-total
> control of the mass media and the major political
> parties by the monetary elite. Given such control,
> only a grass-roots movement among millions of
> concerned people can have an impact.
>
> Of course it is much easier to suffer in silence,
> especially if people are uncertain about where their
> economic interests lie. But the hour is late. The U.S.
> is in great danger, particularly if our leaders
> continue to project our internal economic problems
> onto external enemies. What we need is a monetary
> system based on our best constitutional traditions
> that will allow us to resume our place as a great
> industrial democracy and live in peace with the rest
> of the world. The time for action is now.
> -
>
>
>
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> ---------------------------------------------------------------------
> 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 hattersleyjm@interbaun.com
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