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Hi
John,
I am interested in that point
(Swanwick principle #2), too. And I think Bill has answered it, though my
attempt to explain that answer obviously leaves lots to be desired. And may
be way off base.
Since the waters are
already muddied, I might as well muddy them some more. If there's
going to be confusion, nothing like total confusion!
When most people invest in
'production' I think their object is ususally to make 'a profit'. A
monetary profit. To get back more money than they've invested.
Douglas, in one of his books,
told us that it was impossible for a citizens of a "closed community", (one that
wasn't receiving 'export' credits as 'money' ), to
continually do business with one another "at a profit" if the
amount of 'money' within that community wasn't continually increased.
That if we were using 'gold
coins', say, as our only money within that community, and people were
transacting business with one another 'at a profit' using them, eventually the
possession of 'gold coins' would become totally concentrated.
(Unless, of course, there were MORE 'gold coins' being continually
introduced ~ something that seems to have bedevilled 'communities' how to
do, all through the ages.)
In such a case, what would be
the point of the ultimate possessor of 'gold coins' investing his 'savings',
(his accumulated 'profits' in 'gold coins'), in any new production? He's
already got all HE needs. Furthermore, HE can already determine the
'price' of anything HE wants to 'buy', because HE has a 'monopoly' of
the only thing that functions as 'money', (in the 'minds of the people', in that
'gold coin' oriented community), Gold coins.
One would think any such
community would never put up with such a thing, but it seems that variants of
exactly that have survived quite well.
Now substitute 'new credits'
for 'gold coins'. Only 'Credit' isn't limited by the amount of 'gold' the
community possesses that can be made into 'gold coins'. But the community
still desires to have it's citizens conduct business with one another 'at a
profit'. Is 'production' still financed by 'savings' ? (In the
overall sense). Or by 'new credits'?
And right now, the bulk
of 'new credits', (aside, I think, from the 'debt-free' profits of securities
dealers trickling into the economy from their buying and selling 'repos' to a
central bank), are more bank loans.
Regards,
Joe
----- Original Message -----
Sent: Wednesday, May 30, 2007 5:51
PM
Subject: Re: [socialcredit] in point of
clarification
Joe, I'm interested in this one point, not all the other aspects of
Social Credit. I am well aware of the distinction betwen micro- and
microeconomics, having pointed out, for example, that the A / A+B "gap" is
demonstrable fact in relation to productive industries microeconomically, but
becomes a theory when applied macroeconomically where other factors
come in. Which I am using as an example, not another side-issue for
someone to grasp.
My quibble is simply this, how "That credits required to finance production
shall (I note the imperative, I mistakenly quoted 'should') be supplied not
from savings but ...." can be translated as "savings can be used to finance
some of production".
You have also answered one of Bill's comments to me, in pointing out that
savings reduce purchasing power. That was the basis of my comment that
Douglas, at the time, would have wanted to reduce one of the factors that he
had identified as causing a deficiency in purchasing power.
We are, of course, showing up completely different backgrounds in our
approach. Mine is to take from Douglas what we can apply to make
life better for fellow new Zealanders. For that reason, I tend not
to fit in to this group, whose stated aim is to study the writings of Douglas,
presumably as an academic exercise. The latter approach makes long wordy
discussions appropriate, even possibly desirable. Mine renders them
infuriatingly frustrating. On those grounds, I accept that you are
right.
Regards. John R.
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.
>
----- Original Message -----
Sent: Tuesday, May 29, 2007 5:08
PM
Subject: Re: [socialcredit] in point
of clarification
Thanks, Joe.
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
.."
Regards. John
R.
From: Joe Thomson <thomsonhiyu@shaw.ca>
Reply-To:
socialcredit@elistas.com
To:
socialcredit@elistas.com
Subject:
Re: [socialcredit] in point of clarification
Date: Mon, 28
May 2007 22:04:00 -0400
Hi
John,
(You wrote:-) I think what
you are referring to is the socialist concept of a Universal basic
income, committed at a fixed rate, and paid out of taxation if
necessary on the assumption that the "big bad business exploiters"
could carry the cost. These people seem blissfully unaware that
costs like this get passed on to the mug consumer like you and
me. And them. And while I would normally hesitate to speak
for Don, who may well read this, I can assure you he doesn't agree
with this idea! A national dividend would depend on the state of
the economy, as determined by a national credit authority.
I wouldn't
want to infer that Don does agree with that idea, John. I've
never seen anything he, himself, has written that advocates
that. Even though the booklet itself was part of a package
of supposedly 'Social Credit' literature distributed by
him.
I
would think it would be simply to increase awareness of the need for
some changes. While that is always laudable, it is unfortunate,
but probably unavoidable, that some people's ideas that have certain
similarities to Social Credit are likely to be picked up and labelled
as 'genuine' Social Credit by many people introduced to the subject
this way.
Sometimes
it's pretty hard to shake some of those erroneous ideas loose, once
they've been implanted in someone's mind. (That's the "Voice of
Experience" (of an admitted holder of sometimes 'erroneous ideas'
myself), speaking here! Best to try to keep an 'open mind' until
we are certain how all the pieces of the puzzle fit together.
Lots of 're-thinking' necessary, but that's what we were given brains
for.)
On the other hand,
you still have missed my point. The public would have the means
to buy all the Fords and all the Toyotas. Many, many less
twenty or thirty year old cars on Kiwi roads!
Well, I
think we're both missing each other's point. And maybe the
'real' point, too, when I read what Bill has now written.
So far as I'm aware, the CPD would apply to all goods
for retail sale, your own production and also
imports.
Regards,
Joe
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