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Message 4932
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| Subject: | [socialcredit] 10 can't pay 11, RIP | | Date: | Wednesday, July 18, 2007 08:55:34 (-0700) | | From: | william_b_ryan <william_b_ryan @.....com>
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Actually, 10 can't pay 11 is now off the table, no
longer a fit subject for discussion, inasmuch as it is
a simplistic mathematical argument, and any
mathematical argument of this type may be defeated by
a single example to the contrary, which Daniel Reeves
posted to this list on July 5 and July 12. This is
how he put it on July 12:
"Is it possible to borrow 10 tokens and repay 11 in a
two-person economy with no outside money?..YES, for
example on day 1 you could borrow the 10 tokens, on
day 2 you could pay back 5, on day 3 you could do some
work for the lender for which she pays you 1, and on
day 4 you could pay back 6 for a total of 11 repaid."
So we shall now proceed to the modified argument that
10 can't pay all the 11 because, while the banker does
spend his income into circulation, for salaries, bills
and the like--he doesn't spend all of his income into
circulation--so for that reason 10 can't pay the
totality of 11. This is the bankers' underconsumption
thesis.
The rebuttal to this modification is quite
sophisticated; I'll summarize very briefly and fill in
more details as required in continuing discussion:
Begin with the concept of the steady state economy
together with the pipeline metaphor in aid to
comprehension. See the illustration at
http://www.geocities.com/new_economics/pipeline.gif
The pipeline contains a volume that is forever in
subtrahend from system flow, but which becomes a
smaller and smaller percentage of total system flow as
time progresses. In Newtonian calculus we call it a
constant once the pipeline is filled and output begins
to flow. We say that at all points in time after the
pipeline is filled, the rate of flow being inputted
into the pipeline equals the rate of flow being
outputted.
It is a macroeconomic concept that in steady state the
rate being inputted into aggregate account balances
will equal the rate being outputted. For every dollar
being saved (or "hoarded") from his income by a person
who is saving, there is statistically a dollar being
spent by a person who is spending from his savings in
excess of his income.
The 10 can't pay 11 fallacy relates to economic
expansion, where the starting point is zero.
The concept of flux and reflux:
See the diagram at
http://www.geocities.com/new_economics/flux-reflux.gif
The condition of quasi-steady state or steady state
growth, where everything is expanding but everything
is expanding at a constant rate:
The first rising curve is the flux; the second curve
is its reflux.
If the first curve are disbursements for bankers'
salaries, wages, dividends, ordinary business
expenses, plus interest paid to depositors, the second
curve are the more general economy's payments for
interest plus other fees to the banks in reflux to
payments by the banks.
The differential between the curves at any point in
time is the rate of increase to account balances held
by members of the more general economy as a result of
bankers' disbursements to them.
Please note that at every point in time the rate being
disbursed by the banks always exceeds the rate being
paid to the banks by members of the more general
economy.
Yet the banks are recording a profit according to the
rules of double entry accounting.
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10 can't pay 11, R
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