| Subject: | Re: [socialcredit] the non-neutrality of money | | Date: | Monday, July 28, 2008 08:12:03 (-0700) | | From: | Joe Thomson <thomsonhiyu @....ca>
|
Bill Ryan wrote:-"Far less inflationary are the Social Credit dividend and
retail discount programs, where new credit is rationally introduced at the
point of retail rather than directly as loans for investment."
Joe replies:- You say "far less inflationary..", Bill. But even with the
Social Credit dividend and retail discount in place we would still see some
ongoing 'inflation'?
In other words, you see prices in general still rising over time but with
the ND and CPD overall consumer incomes are at least keeping pace?
If this is the case, then that would mean the 'deflation' of prices that
Douglas was talking about would have to be considered somewhat differently
than the way many of us have probably thought of it. But, it would make
sense, since if the price of articles for sale were 'falling' as previously
envisioned, there wouldn't be much incentive to buy, but to wait as long as
possible for them to fall further.
----- Original Message -----
From: <william_b_ryan@yahoo.com>
To: <socialcredit@elistas.com>
Sent: Saturday, July 26, 2008 9:59 AM
Subject: [socialcredit] the non-neutrality of money
> "...from a financial point of view, the money supply has been inflated,
and the community as a whole has therefore paid for the new capital through
the loss in value of their monetary holdings. While the capital is being
created (say the many years spent constructing a new oilsands plant), no new
wealth is available for consumers."
> ---------------------------------------------------------
>
> Quite obviously no new wealth is created by the particular plant until it
is completed and in production. But this statement of yours falsely assumes
that money is neutral, that the only thing an increasing money supply causes
is increasing prices.
>
> In reality, while the construction of the plant is being financed with new
credit, the rate of profit by other firms is increasing with the increasing
spending, inducing the increasing production of real goods and services into
final consumption. The problem of inflation has more to do with the way new
credit is introduced than the fact that it is introduced.
>
> In Social Credit theory, the ratio of A is naturally falling to B with
labor displacement, so the ratio of A to A + B, the costs of production in
double entry accounting, is falling, causing a continual long-term fall to
the rate of profit, continually suppressing production in terms of
productive potential and real demand.
>
> The rate of investment is A + B. If A + B is accommodated through new
loans, the ratio of A to A + B is increased (rather than decreased) if the
flow of A + B is accelerating, and therefore the rate of profit is
increased, since A + B is expensed against sales after a delay, while A
refluxes into retail sales rather quickly. So the stimulus of an increasing
A takes effect before the consequent expensing of an increasing A + B. But
this stimulative effect continues only so long as the flow of A + B is
accelerating. This means that prices are exponentially increasing
eventually into hyperinflation, if not stopped. But while it lasts the
stimulating effect is very real, in terms of real production and
consumption. Look at Douglas's 1923 testimony in Ottawa on the Austrian
inflation.
> http://www.geocities.com/socredus/Douglas_1923_second_day_Part_3.txt
>
> Far less inflationary are the Social Credit dividend and retail discount
programs, where new credit is rationally introduced at the point of retail
rather than directly as loans for investment. In the Social Credit program,
more and more investment is financed from retained profits rather than
loans. Prices are therefore ameliorated rather than exacerbated.
>
> Some statements from Douglas regarding the non-neutrality of money:
>
> "...the true assets of banks collectively consist of the difference
between the total amount of legal tender, or Government money, which exists,
and the total amount of bank credit money, not only which does exist, but
which might exist, and which is kept out of existence by the fiat of the
banking executive."
> Swanwick, 1924.
> http://geocities.com/socredus/compendium/swanwick1924.txt
>
> "The business of a modern and effective financial system is to issue
credit to the consumer, up to the limit of the productive capacity of the
producer, so that either the consumer's real demand is satiated, or the
producers' capacity is exhausted, whichever happens first."
> Chapter X, *Credit-Power and Democracy*, 1920.
> http://geocities.com/socredus/compendium/chapter10.txt
>
>
>
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