| Subject: | RE: [socialcredit] Re: Article by Richard Cook | | Date: | Saturday, December 22, 2007 22:02:47 (+0000) | | From: | John G Rawson <johngrawson @.......com>
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| In reply to: | Message 5171 (written by William Hugh McGunnigle) |
Imperial Preference was a great idea, but like others it needed comon sense in application.
Exotic trees seem to grow better, in Australasia at least, if the provenance isbrought from slightly closer to the equator, say from California to here. In the thirties, we experimented with considerable areas of both Douglas fir and ponderosa pine, but under I P the seed had to come from Canada. The length of day confused the fir in particular so much that it burst bud too early in the spring and suffered frost damage in the Central North Island! Then it stopped growing at about Christmas, and missed out on all that glorious growing weather from then on to about May. Their growth rates were literally half to a third of that of better strains brought in later.
I know this is a sideline, but I think there is a lesson there about slavish application of particuolar ideas.
John R.
From: wmcgunn@maxnet.co.nz
To: socialcredit@elistas.com
Date: Sun, 23 Dec 2007 00:02:26 +1300
Subject: Re: [socialcredit] Re: Article by Richard Cook
Hi Joe
thanks for correcting me with regard to Canada being outside the Sterling area. It was a stupid oversight on my part, because Canada's major trading partner has always been the USA, and hence used the same currency. ( I believe at a fixed ratio set by the Canadian government). Canada was never in the same position as NZ who at one stage had as much as 90% of its overseas exchenge with Britain, but you are quite right when you observed that "Imperial Preference" helped to bolster a considerable amount of trade between Canada and Britain. After WW2 the loss of preeminence for Sterling as a trading currency came about as a result of the "Bretton Woods" conference which, while establishing the World Bank and IMF ostensibly to "stablise" trade, also established the Dollar as the trading currency for Oil. This immediately placed pressure on the Pound Sterling as a trading currency. The USA could do this because it was still then a net exporter of oil and could control the amount of oil flowing onto the world market. Western Europe, including Britain, was a net importer and was vunerable to oil price fluctuations. The US hierarchy recognised that oil would become the single greatest and most important trading commodity after WW2. Having all oil trade dependant upon the supply of US Dollars onto the world trade market has enabled the US to offset inflationary trends at home by manipulating the oil supply. Price increases demanding more dollars. The British government were not unhappy with this arrangement because it took pressure off Sterling so that it did not have to remain at a relatively high value with respect to other currencies. Nevertheless Sterling is tied rigidly to the Dollar and the two currencies support one another in International trading.
We, in new Zealand now have a very large percentage of our trade with Australia now as a consequence of our free trade agreement between the two countries. Trade with Britain has been reduced to about 10% of our total trade now. Our major trading partners after Australia are Japan, Taiwan, China, India, South east Asia, and the USA. This leaves us vunerable to the machinations of the IMF and World Bank instead of the Bof E. You can't win can you?
regards
Bill Mc G
----- Original Message -----
Sent: Saturday, December 22, 2007 3:31 AM
Subject: Re: [socialcredit] Re: Article by Richard Cook
Hi Bill (McGunnigle),
Thanks again for shedding some further light on an area that needs illuminating. My understanding is that Canada never was in the 'Sterling area', as were most other independent Dominions of the Empire, and most of the Crown Colonies, etc.
Even though our trade with Britain and other Empire jurisdictions was substantial, and protected due to "Imperial Preference" trade agreements, we were in the 'Dollar area'.
Canada, for whatever reasons, perhaps to show we were 'independent' of British Government foreign policies, or maybe under pressure from Washington, resisted efforts by Britain to form a more cohesive intra-Empire trading 'bloc' after World War Two.
I believe that was something Winston Churchill was pushing for, but Ottawa wouldn't go for it. It would be another one of those interesting speculations to ponder "what if" that had happened. For the Empire was physically even more internally 'self-sufficient' in regards to resources and markets than America, or the Soviet bloc, or a united Europe. Doubtless ''financial'' considerations played a large role in scuttling that idea. Though the personality and mind-set of Churchill and some of the other British proponents might have been detrimental to the idea too.
I'll have to go through what you've written further, Bill, and try to piece together how the 'competition' you mention fits into it. Out of time right now.
Regards,
Joe
----- Original Message -----
Sent: Thursday, December 20, 2007 11:59 PM
Subject: Re: [socialcredit] Re: Article by Richard Cook
Hi Joe
What you have postulated is essentially correct. However the BofE never held substancial amounts of NZ currency. NZ pounds were changed into Pounds Sterling in NZ by the NZ Reserve Bank. NZ companies were required to purchase Sterling from the Reserve Bank in order to undertake overseas purchases, thus NZ currency never reached Britain. I believe the pressure from the Bof E was from British Banks that, up until the advent of the Labour government, had monopolised loans extended throughout the NZ economy. They found themselves in direct competition with a government backed bank that could afford to offer loans at 0.5-1.0%. Obviously they could not allow any other British Empire "colony" to follow NZ's example, because a substantial amount of Britains overseas earnings came from Banking "investments" in the form of loans to all Empire colonies, hence the pressure. I am sure something similar was directed towards Canada and Australia to force them to remain within the Sterling area prior to 1939.
The position of the Bof E acting as the the holders of overseas exchange for Empire and Commonwealth gave it a unique position as banker for the Sterling area. It could therefore exert pressure on those countries by withholding the
exchange reserves it held in safekeeping for Sterling area countries. I am sure the BofE would have acted in this way no matter what, once it became apparent that the NZ government had determined to become the master of its own currency and foreign exchange rate. It was a necessary step for the Bof E to maintain its financial control of NZ's developement against NZ government efforts to become autonomous.
This is my interpretation of the actions taken by the Bof E in 1938. Nevertheless I concede that there are still too many "What ifs" and " If only's" in the whole senario. That all the negotiations have been embargoed until 75 years after the event doen't help matters either. Furthermore I suspect that once the time expires they will be reembargoed for a further 75 years. This seems to be a common factor in these events.
regards
Bill McGunnigle
--- Original Message -----
Sent: Friday, December 21, 2007 3:29 AM
Subject: Re: [socialcredit] Re: Article by Richard Cook
Hi Bill (McGunnigle),
Many thanks for providing the background details in regards to the New Zealand experience.
Could it be that what your first Labour Government was attempting was tantamount to a continual 'devaluation' of the New Zealand pound? (I don't know the answer to that, quite honestly, but it would seem to me that might be the case.)
If that were so, then perhaps your main trading partner, Britain, ran the risk that what had been acquired by the BofE in New Zealand denominated funds through trade balance settlements, (instead of a transfer of actual gold or silver), might quickly become progressively worthless as effective demand for further NZ goods?
If such were the case, and its holdings of foreign exchange reserves in NZ pounds were substantial, wouldn't it be likely that the BofE would naturally try to discourage the new found 'financing' method for Government infrastructure for that reason alone, if none other?
Now I don't have the answers to that, and maybe I'm way off track even in considering the issue that way. And if I am, I hope anyone with greater knowledge in these matters will come in and set me straight. But at the moment, that's what comes to mind.
If your first Labour Government could have gone instead to some variant of the CPD mechanism, which, in effect, makes each unit of NZ currency held capable of purchasing 'more' in NZ goods and services, I wonder how the BoE would've viewed that? Other considerations aside, wouldn't it be possible you might have had quite a sudden 'trade boom' with Britain and found funding infrastructure a lot easier?
It's always interesting to speculate what might have happened when we ask "what if" or "if only" we'd done something differently, but really, all things are so interconnected it would be almost impossible to ever know.
Regards,
Joe
----- Original Message -----
Sent: Wednesday, December 19, 2007 9:12 PM
Subject: Re: [socialcredit] Re: Article by Richard Cook
Hi Joe
Further to John Rawson's remarks on the use of Reserve Bank Credit for infastructure building works by the 1935-1949 Labour government of New Zealand, from my historical research into that government, The Bank of England expressed great disapproval of this method of financing New Zealand's internal infrastructure developement. It, therefore, took the unprecedented step in late 1938, supported by the British government, threatening to freeze all of New Zealand's overseas exchange funds to which it had security rights, (New Zealand was part of the Sterling area then) unless it discontinued the practice. This put a temporary hold on the practice, but, in 1939, with the outbreak of WW2, the Bank of England was in no position to continue to hold that threat over NZ, because NZ was a reliable supplier of essential raw material for the war effort. Consequently despite the enormous amount of expense, relatively speaking, that the war cost NZ, the bulk of the war debt for NZ was to its own Reserve Bank at a nominal interest rate. NZ had a balance of payments surplus during the war years because of this. Demand for NZ products after WW2 continued to exceed supply and it was not until the 1970's that NZ started to experience balance of payment deficits. Significantly the end of the 1st labour government in 1949 saw the downturn in the balance of trade with the advent of a series of National governments that steadily reduced the strict monetary exchange rules enforced by the 1st Labour government. However, ironically, it was the 3rd Labour government 1972-75 that removed exchange rate controls, and it was from that point onwards that NZ began to experience serious balance of trade deficits. The swing to the extreme right during the 1980's and 1990's completed the exchange rate "liberation", and NZ has never been able to post an overall balance of trade surplus since then.
I trust this amplifies some of the detail around the question
regards
Bill Mc Gunnigle
----- Original Message -----
Sent: Thursday, December 20, 2007 9:48 AM
Subject: RE: [socialcredit] Re: Article by Richard Cook
Thanks Joe.
The first parts remain theory either way for me and I keep an open mind until someone comes out with hard facts.
But your comment on NZ is wrong. There was no debt attached to the use of Reserve Bank credit for Government operations. It was new money issued for the purpose, non-repayable. For local bodies and the Dairy industry, yes, you are right. But the interest charged was only 1% and the finance probably would not have been available elsewhere. Making this repayable meant that more could be issued as it was returned, or alternatively made the debt bearable if it was not. . This distinction is in accord with our present party policy here.
I notice Richard has not replied to your comment on inflation, so try this translation. "No more inflationary than any other issue of new money from any source." That would, of course, include money issued by a Credit Authority as per Douglas recommendation.
The issue over government use of new money has nothing whatever to do with (demand pull) inflation. If it is confined to the amounts needed to balance the prices of goods, there should be none under either system. The critical point is that, in a dictatorship, Government spends all new money into circulation and therefore determines what shall be produced. We saw that in Soviet Russia., and to some extent in Nazi Germany, both of which seem to have operated a form of monetary reform. In a democracy, the public would be given at least some of the new money to spend into circulation so that they get to determine what goods shall be produced per economic democracy. However, in the modern high taxation state, it would be ridiculous to pass all new money to the public and then simply tax a large proportion back from them before it could be spent.
It is a pity if great ideas are made ridiculous by slavish adherence to totally impractical concepts
Regards. John R.
Date: Tue, 18 Dec 2007 20:03:47 -0500
From: thomsonhiyu@shaw.ca
To: socialcredit@elistas.com
Subject: Re: [socialcredit] Re: Article by Richard Cook
(John Rawson wrote:-) So the whole reform constitutional argument is based on the clause "To coin money"? It could be claimed logically that, since coinage was the only form of money then, this was intended to cover all money?
(Joe replies:-) But it wasn't the only form of 'money' then, John.
(John Rawson:-) I note again your reaction to the Guernsey story, but you have never given hard facts for your attitude. So far there appears to be more evidence for this event than against.
(Joe replies:-) That story was thoroughly vetted on here, or the predecessor list, quite some time ago. The ''States Notes", if I recall correctly from what was determined in examining the issue then, were redeemed by import duties. They weren't 'debt-free' money.
(John Rawson:-) After all, why should anyone invent such a happening in such an unusual place otherwise?
(Joe replies:-) There was a lot of propaganda put forth by various 'monetary reformers', John. BC's own G. G McGeer, a former Vancouver Mayor, who was later a MLA, a MP, and finally a Senator, was one latter day one. He was aided and abetted by still others who'd previously created 'facts' out of fiction to further their own ends. The myth might grow and grow, but it's still myth.
(John Rawson wrote:-) And would you argue that the actions of New Zealand's first Labour Government in funding much of infrastructure, state housing for homeless, and the dairy industry with Reserve Bank credit at 1% is a myth?
(Joe replies:-) They 'primed the pump' with deficit financing. That's all they did. It relieved unemployment, and stopped the deflationary spiral that you were in.
In a deflation it's hard to sell anything other than essentials, for why would you want to buy anything today if you felt you could get it cheaper tomorrow? And when prices have to be lowered below financial cost to move existing product, there's no inducement to produce any more.
So your government turned that around, and when prices started to come up, then there's an inducement to buy before they go higher. It's a quick fix, but it doesn't really solve the problem. And when it's carried on for any length of time you'll get an 'inflation' that'll negate its benefits. It is a crummy substitute for Social Credit properly applied.
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