From: Joe Thomson <thomsonhiyu@shaw.ca>
Reply-To:
socialcredit@elistas.com
To: socialcredit@elistas.com
Subject: Re:
[socialcredit] in point of clarification
Date: Tue, 29 May 2007 22:30:23
-0400
(John Rawson wrote:- In terms of "what Bill has now written", I'm still waiting
with bated breath to get the difference between "New production should be
financed, not by savings ..." and "New production should not be financed by
savings .."
Hi John,
I think Bill has already explained what you're waiting for. Lets go back and
look at what he wrote, and I'll try to clarify the first part of it, as I
understand it anyways, and, hopefully, do so correctly. If I misinterpret what
he means, he can set us both straight. Or write us both off as hopeless ! The
latter part, I'm just going to ask him a few questions on, since it's not that
easy to grasp.
Bill wrote:- "This is what Douglas said at Swanwick:
"The credits
required to finance production shall be supplied not from savings, but be new
credits relating to new production."
>
Firstly, I don't see anything here about
the "banning" of the use of savings for investment.
(Joe replies:-) I believe we have the same problem here we have with
correctly understanding the 'Just Price' as Tudor Jones described it, and the way
you still seem to think it is. It is the difference between what is
'macro-economic', what takes place in the economy as a whole, and what is
'micro-economic', what takes place amongst the individual participants in it.
In any rational financial system, and Social Credit is certainly quite
'rational', in my opinion, it would be as ridiculous to ''ban'' savings from
financing 'production' as it would be to "ban" savings entirely.
Your 'savings' are yours, and what you do with them is your business. And
if you want to 'finance production' with them, that's exactly what you do. In
whatever way you want to do that.
But on a 'macro-economic' basis, which is what I think Douglas is discussing
here, (and Bill, too), "savings" have to be accomodated in any reform of the
financial system, (as do their homologues, 'profit' and 'interest'), because
'savings', as either complete 'abstention from spending', or as to their
're-investment', are listed as two of the five main causes of a shortage of
purchasing power. And we want to 'rationally', in the economy as a whole, and
thus through that to the individual participants in it, correct that 'shortage',
(by means other than the perverted ones presently employed.)
(Bill continues:-) An increase in the rate of saving for the economy as
a whole would have a depressing effect on production
inasmuch as it would reduce
sales over the retail
counter in respect to the costs of production
being impressed to the point of retail by the conventions of double entry
accounting, thereby reducing the rate of
profit and the incentive to produce--if
that were all there was to it.
(Joe:-) Here I believe he's simply telling us if you're 'saving' your
money, you aren't 'spending' it on personal 'consumption'. Japan once, (maybe
still), had a very high 'savings' rate, and it seems their domestic economy
suffered because of it. So I've read, anyways, though like many things there may
be quite a bit more to it than that.
Your dollar can't be in two places at once. The 'savings' you've put away
in a jar or deposited in your bank, or bought some Company's shares with, etc.,
have already appeared in the 'cost', and thus the price, of some good or
service somewhere.
But because you, and a whole lot of other people whose 'savings' have also
already appeared in product prices, have 'saved' instead of 'spent', there is
another cause of the 'gap' between overall 'costs' coming forward into prices
at the point of retail, and overall 'money' that's going to be available
(without anyone incurring any further debt), and spent to liquidate them.
Accordingly, Sales of goods and services are reduced, and the 'profit' that
would've come form those Sales, from which Firms would repay their Bank loans,
just doesn't materialize to the degree necessary. When the Firms see they
aren't getting anything out of what they've been doing, they either don't do it,
or their banker cuts them off. We enter 'hard times'.
(Bill continues:-) But it isn't all there is to it.
The credits required
to finance production are not now supplied from savings, if by finance production
we mean the financial facilitation in the increase to the rate of production.
(Joe:-) I believe he's talking 'macro-economically', about the economy as a
whole here now.
Read the following very carefully. This is not easy to grasp.
(Bill continues:-) Our theorem is that loans create deposits, which
applies to the financial system as it now exists, and will continue to exist
under social credit.
(Joe, to Bill:-) There seems to be some disagreement from some quarters with
what "... will continue to exist under social credit." But I, at the moment,
believe you're correct.
If the rate in the flow of loans is increasing in respect to their reflux, it
cannot mathematically be the case that that the flow is being funded by an equal
and contemporaneous abstention in spending by the recipients of that flow. New
credit is being created through the assistance of the financial system.
(Joe:-) So if there were 'new production' being added and financed from
'savings' then the ongoing 'reflux' from existing loans must be declining
relative to the ongoing 'flux'? Since what is being invested in the 'new
production' is obviously not being spent on Sales of existing 'consumer' goods
coming forward to the point of retail?
And if ongoing overall Sales are falling, then the ongoing rate of profit
from which that 'reflux' will come must be falling too?
But if this is the case, (and I'm not sure now that it is ~ maybe I'm off
the track completely in all of this here), it really doesn't seem very logical
to 'invest' savings in 'new production' ~ how is it ever going to 'pay'? Unless
there is 'new credit' coming in it wouldn't ever pay. Is this the 'new credit'
that comes in now as a result of the Fed's and Bank of Canada's 'open market'
repos?
What "saving" really means in the modern creditary economy is that the
recipients of income, with increasing wealth, are increasingly
purchasing securities of one form or another, or holding on to the dollars they
are receiving, which are already securities, rather than purchasing consumer
goods and services with those dollars.
>
> Social Credit would simply
rationalize that natural
> process through accounting adjustment.
>
-------------------------------
>
> 1. The cash credits of the population of any
country
> shall at any moment be collectively equal to the
> collective cash
prices for consumable goods for sale
> in that country, and such cash credits
shall be
> cancelled on the purchase of goods for consumption.
>
> 2. The
credits required to finance production shall
be
> supplied not from savings, but be new credits relating
> to new production,
and shall be recalled only in ratio
> of general depreciation to general
appreciation.
>
> 3. The distribution of cash to individuals shall be
>
progressively less dependent upon employment. That is
> to say that the dividend
shall progressively displace
> the wage and salary.
>
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