|Subject:||Re: [socialcredit] Replying to Tim|
|Date:||Wednesday, February 16, 2005 00:23:09 (+0000)|
|From:||Timothy Carpenter <timbeau_hk @........uk>
Re: [socialcredit] Replying to Tim
Firstly, I must repeat a request that such discussions are conducted without your continued presumption that everyone else is an imbecile and you and a select group are the only persons in possession of the compete Truth.
That over with...
I have to say that you are not getting my point here. Indeed I think A+B may well be true, albeit not for most of the reasons so often touted.
It does not matter what ‘accounting adjustment’ you are making. If you are adjusting prices uniformly to enable all goods produced to be consumed (i.e. Price of all goods for sale now equals disposable income or similar) and resultant demand is non-uniform and unexpected or not predicted it is a distortion from what was intended and creates, at best, a moving target.
If the shortfall is 25%...
100 units of goods on sale are £100, value total £10000
500 of the goods are £50, total £25000
400 are £20, total £8000
Total market value on sale is £43,000
All adjusted by the same amount, 25%
100 units at £25 subsidy £2500 in total
500 units at £12.50 at £6250
400 at £5 at £2000 subsidy
Total subsidy = £10,750, i.e. 25% of £43,000.
If this means that the market share of the goods alters thus...
200 units at £100 (now £75) getting a 25% subsidy of £5000
450 units at £50 getting a 25% subsidy of £5625
350 units at £20 getting a 25% subsidy of £1750
Meaning a subsidy total of £12,375, £1,625 higher subsidy and two companies with unsold product and one with high demand.
This is a crude example of the distortion and does not take into account that the more expensive product is likely to go up in price due to increased demand as it tries to balance it, so increasing the subsidy required.
You could say this brings about equilibrium eventually and so this is ‘correct’. However, if one producer creates a new mechanism and doubles output does that automatically mean you create more liquidity to absorb it? Surely yes, unless you micro-manage each bottle top, soap bar and shoelace. Surely though it is wrong – what if all car makers churn out goods as a cartel? Do not think that will not happen!
As to Forex, the point I was referring to was when exchange rate changes are considered to be mostly about speculation on the fringes. Your para was at a tanget and not what I was referring to. However we can discuss that later as I do not entirely agree with your rendition or even of Douglas’ ( another ‘hope for the best’?)
I am not talking about the accounting adjustments removing the imperative for export. I am referring to the basic issue that if you import you need to sell your currency to buy the goods in. If you export, your customers need to buy your currency to get the goods. If more of a particular currency is being sold than is being bought and there is oversupply for the currency and its value will steadily go down.
This could be made worse by SC if it applies to imported goods too, for the importer gets 100% of their value but sells more as it is subsidised (say, by 25%). This 25% does not ‘disappear’ but ends up along with the other 75% on the Forex market. 100% of currency needs to be sold to convert into the importers currency.
For exporters they get 100%, 25% from the state and 75% from the foreign purchaser. The purchaser only need convert 75% of the goods value into the SC state’s currency vs 100% that gets sold by the importer, unless you prevent this by excluding imports from the subsidy as you have suggested. This gets very messy, however, when products are made partly from foreign raw materials. Even worse when imported materials are used to produce exports...
On 15/2/05 4:06 pm, "William B. Ryan" <firstname.lastname@example.org> wrote:
"If spending is non-uniform (and I would wager it is
highly likely to be) then SC will just introduce
another distortion into the marketplace."
I'm afraid you will never get it, Tim. How is it a
"distortion" to use a ruler that is twelve inches
instead of using an incompetently manufactured ruler
that is supposedly twelve inches but is really eleven
inches, divided into twelve gradations? The Douglas
theory is about truth in accounting; that the
"prices" being impressed to the point of retail
really should equal the purchasing power being paid
to consumers--what orthodoxy (and you apparently)
assume is already the case. A distortion is removed
through the accounting adjustments, not introduced.
The problem, Tim, is that you can't see there is an
accounting problem. Therefore, in your mind, any
adjustment would be a "distortion," rather than a
correction to a "distortion."
"Even though Douglas waives Foreign Exchange away as
a minor irritation, it has the capability of being a
nemesis if not factored in."
What is your source for the bold assertion that
Douglas said "Foreign Exchange" is a "minor
irritation"? I think you have plucked this from
"thin air." Put up or shut up, Tim. You will have
to do your homework to find out what he really said,
as I have repeatedly suggested.
From the Interim Report:
"...A difficulty does arise, however, where a
considerable portion of the commodities required have
to be imported from outside the credit area over
which the Government has jurisdiction, and it is
essential for the practical solution of this that a
considerable amount of what may be considered as
foreign currency or credit should be accumulated. I
have given considerable attention to this aspect of
the matter, and I do not believe that it is
insuperable in regard to Alberta, more particularly
since the fear of repudiation has raised in the mind
of the external bond-holder a recognition that his
debtor has claims upon his consideration,
particularly if no suggestion of fundamental
repudiation is contemplated."
Every trading nation has presently the irrational
imperative to achieve a "favorable balance in trade"
(or "imperative to export" in the old jargon) which
means it is attempting to export goods, not for goods
to be consumed (plus titles to foreign capital), but
for a surplus of money over the price of imported
goods (plus the acquisition price of foreign
capital). The imported money does tend to narrow the
"gap" between domestically generated "prices" and
domestically distributed purchasing power ("tickets")
redeemable against those "prices," allowing the
accounting cycle to close. The process creates an
illusionary "prosperity" but in reality a lower
standard of living than would be achievable without
this imperative. The Douglas accounting adjustments
will remove this imperative.
How could that possibly be a "nemeses"?
Timothy Carpenter <email@example.com> wrote:
“Discussions of this calibre” are occurring as people describe SC as a remedy to incorrect feedback to entrepreneurs who currently have to discount or discard their wares and so distort the economy and cause waste and lost opportunity/wealth. If the feedback is to be corrected it is an assumption that feedback is currently incorrect and also that SC has the capacity to correct this feedback. The feedback is the buying behaviour of humankind with insufficient purchasing power.
Right now it could be said to be incorrectly remedied by consumer credit. Right now it could be said that people still buy junk instead of quality produce because they cannot (or will not realise they can/should) afford it.
Is it lack of demand that causes Say’s ‘adventurers’ to complain or is it partially due to human nature that some goods languish on shelves unsold?
What adjustments/distortions will occur in the market if extra liquidity is introduced in the form of an across-the-board discounting from the consumers’ perspective? Will consumers buy more across the board?
Will more cheap goods be bought?
Will people go ‘up market’ and create more demand for more expensive items?
Will changes in demand be uniform across all social classes or price points?
You cannot dismiss these questions as somehow of insufficient ‘calibre’ for an economic discussion unless the discussion is to ignore and disregard the real world.
The price adjustments/subsidies whathaveyou of SC are made with the assumption that they are to create an economy with the necessary spending power to absorb, ultimately, ALL production across all producers in all sectors. Even as they grow from a partial position the understanding of human spending patterns and thus how they react to changes in their purchasing power in relation to the volume and distribution of goods for sale is critical to the success of the concept.
If spending is non-uniform (and I would wager it is highly likely to be) then SC will just introduce another distortion into the marketplace. It might be preferable and it might be better than now, but the effect needs to be understood before people play dice with a nation’s economy and people’s livelihoods just to find out.
Even with that said, I have not had a rational and practical answer to the issue of SC in regard to international trade. Even though Douglas waives Foreign Exchange away as a minor irritation, it has the capability of being a nemesis if not factored in.
On 13/2/05 5:09 am, "firstname.lastname@example.org" <email@example.com> wrote:
Social Credit is not about explaining human nature or attempting to change human nature. "Que cera, cera". I am at a loss to understand why dicussions of this calibre are occurring.
If the implementation and application of Social Credit principles does have any effect on peoples' behaviour it will be an effect and not an objective. All I can say is that properly instituted it would be for the good unless one wishes to argue that the elimination of a debt money system as currently exists is a bad thing.
We are talking about a correction of the financial accounting system to reflect the truth and reality and what people HAVE to do now. What people will do in the future under the current system or a Social Credit system is like arguing about the winning numbers in the next lottery and what people will do with their winnings.
----- Original Message -----
From: Timothy Carpenter <mailto:firstname.lastname@example.org>
Sent: Friday, February 11, 2005 10:19 AM
Subject: Re: [socialcredit] Re: Replying to Radu
Joe appears to say there is another answer (and that is?) and Bill has a vague hope of less incentive to chisel.
Yet to get a proper answer. What will people do? Unless we know this we do not know the effect of SC liquidity on human behaviour.
On 10/2/05 4:19 pm, "Joe Thomson" <email@example.com> wrote:
(Tim wrote:-) Are you saying that even in a recession the firewood sells better? I would also think if you stock premium materials that these lines hold up better than many lesser products. Well, it depends on your catchment area mentality I suppose. It might also explain why some people suffer more in recessions and it is partly their own spending mentality that is to blame and not just evil captialists.
(Joe replies:-) The lower, cheaper grades of lumber consistantly sell faster than the higher grades, Tim. 'Recession' or not. The customers may like to have the 'best', may even know that there's a greater 'economy' in the long run in buying better products, but a lot of their decision all comes down to the amount of ''effective demand'' they have available at the time of purchase. Many building supply outlets here will not even stock the 'upper grade', more pricey products, simply because they know it takes too long to turn this stock over. There is an old saying in our business, "If you want to survive, fall in love with the 'margin', not the 'lumber'." And there is no 'margin' til the sale is made. It does little good to manufacture and have on hand beautiful, but 'expensive' (price-wise) red cedar siding if five customers come in looking for it and four tell you the price is too high, and walk out, and only one actually buys. All that means is that it takes four times as long to liquidate the costs of making and handling that stock. And so it doesn't pay to make it. Instead siding is made out of some 'cheaper', but 'inferior' species, say, hemlock. Which won't stand up, and from a 'proper' perspective of 'genuine' long-term 'economy' is really a poor buy. Yet the other four will buy that, because it's cheaper, and that's all they believe they can afford. (and considering the rise in personal 'debt-levels' vs. 'incomes' nowadays, they're probably right!) I believe there are parallels to this in every industry, with virtually every product. There may be many things that are its 'cause', but one of the ones that certainly looms largest is what Douglas revealed in his analysis of the reasons for insufficient 'effective demand'.
(Tim continues:-) How do you see their spending altered by social credit? Do you see them continuing to spend on splintery planks, spending EVEN MORE on splintery planks or buying better?
(Joe replies:-) I think there would be a truer indication given of what the customers really want.
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