eListas - My Lists: socialcredit: Messages

On 23-Nov-08, at 6:42 PM, John G Rawson wrote:

Sorry. It is standard for banking anywhere. They can not lend their liabilities. That applies to savings banks too, but it seems most of them draw on commercial banks to back them.
Money supply M1 (or M2 or higher) includes, as its major component "demand deposits with the financial institutions". That is where the money paid into a bank goes. The only ways banks could lend "money paid in to them" would be if the deposits were reduced when this happened (they are not) or if by some way the money magically doubled as it was paid in to the bank. That is not the point at which it is considered to be multiplied.
Every new bank loan results in a creation of that amount of new money 'out of nothing'.
But, of course, banks need reserves to guard their deposits. And also, under fractional reserve banking, any bank that suffers complete loss of confidence by the public must go broke. That is where the relevance of the reserve/deposit ratio comes in.
Regards.    John R

From: telergy@bigpond.com
To: socialcredit@elistas.com
Date: Mon, 24 Nov 2008 09:19:07 +1100
Subject: Re: [socialcredit] Finance: Credit "Crisis" and "Depression"

Well John R

it differs in different Nation States. In the US, I think Clinton removed the seperation of lending banks and investment banks,so that they can do both.

Australia's bank regulators kept ratios to about 10%, quite healthy compared to US and Europe.

George Jr and Greenspan don't believe in regulation.

The best overview I get is from following speeches at BIS (Bank of International Settlements) where central bankers they openly talkabout increasing liquidity by lowering the ratios for their banks.

http://www.bis.org/list/cbspeeches/page_6.htm

My easy english version goes

"Imagine a money lender around AD 10. He has a bag of gold, and people want to borrow some. More people want a loan than the amount of gold he has. He realises that, by issuing tokens, he can extend credit to all who want some, assuming that the debtors are a good risk, and will be paying it back on time."

cheers

Graeme Taylor

ps Whatever has happened to all that gold in Fort Knox?

----- Original Message -----

Sent: Monday, November 24, 2008 7:36 AM

Subject: RE: [socialcredit] Finance: Credit "Crisis" and "Depression"

It is also a totally wrong explanation, and a not uncommon error. 2% reserve ratio means $100 of loans for every £2 of RESERVES. Since loans create deposits, that ratio could never be attained under any circumstances where deposits are concerned. The writer forgot that bank deposits are their liabilities, and can never be lent.
Regards.

John R.

From: wmklinck@shaw.ca
To: socialcredit@elistas.com
Date: Sun, 23 Nov 2008 00:08:02 -0700
Subject: Re: [socialcredit] Finance: Credit "Crisis" and "Depression"

This not really an alternate explanation. It is simply the false explanation which has been promulgated from establishment sources. We are well aware that every imaginable artifice involving the extension of debt has been devised to make the economy function under a fundamentally and fatally defective and unworkable financial system. What do you mean by saying that you are "pretty well over the soc red concept"? Do you mean that you possess a good understanding of it?--or that you hold little or no hope of it being an effective solution to financial and economic problems of the industrialized world? Social Crediters intend to make it relevant and we cannot afford to heed defeatist opinions. We are currently provided with an almost unprecedented opportunity to advance our cause and we must press on with increasing intensity. So--down with hesitation and doubt and on with the job! I would not hold out much hope from Barak Obama's term of office. Already he has declared his intent to provide "jobs" for the population--hardly a Social Credit policy.

Wally

On 21-Nov-08, at 8:47 PM, Graeme Taylor wrote:

Herewith an alternate explanation

Because Green spam believed in the market and self-correction of itself, he saw no need to regulate the lending (reserve) ratios of the banks. Thus, it went below 2%.

That is, for every two dollars deposit, a hundred in loans.

Europe's banks, attempting to maintain market share, dropped their ratios down to 4 or 5%. Easy money for borrowing, and a race to the bottom.

The CHinese Banks, in August began by dropping their ratio for their Rural Bank to below 17% so as to increase liquidity in the hope that rual incomes could start to catch up to urban ones.

Now, I guess, they have dropped their Infrastructure Bank's ratios as an economic stimulus package.

Gordon Brown thought the best thing to do is to invest in the banks. Yep. More money in the coffers helps raise the lending ratios of their banks.

With a 2% ratio, (fractional reserve money backed by virtually nothing), only a small proportion of debtors going bankrupt sends the bank belly up.

I do hope that Barack gets better advice than George Jr got.

I'm pretty over the soc cred concept. Seriously, with up to 20% of the economy being illicit (drugs, extortion), no perfect formula is gonna work, same as with people going bankrupt.

cheers

Graeme Taylor

----- Original Message -----

From: Wallace Klinck

To: socialcredit@elistas.com

Sent: Friday, November 21, 2008 10:12 PM

Subject: [socialcredit] Finance: Credit "Crisis" and "Depression"

This message has been sent to all Members of the Canadian House of Commons:

I am forwarding a document outlining the basic and underlying, as opposed to superficial, causes of the current disastrous and ruinous credit "crisis" and the primary essential remedial measures required to effect an honest and stable financial system with it corollary, a viable producing and consuming economic system. Also attached is a short PDF showing how the Keynesian equations can be modified to achieve these ends.  (Not included in this posting.)

Yours sincerely
Wallace M. Klinck

FINANCE, DEBT AND DEPRESSION

The so-called economic and financial "experts" are apparently totally oblivious to the fact that the financial price-system is fundamentally and increasingly non- self-liquidating. Consequently, they blame the credit "meltdown" and ensuing economic collapse on excessive extension of loans (debt) issued primarily without adequate regulatory legislation. The essential problem is that while the convention is that industry, in order to remain viable, must recover its financial costs in final prices, the existing financial system makes this a mathematical impossibility.

Final price appears at the retail level. Consumers, being at the end of the economic process, are required through expenditure of their income, to liquidate all the financial costs of production. That is a perfectly reasonable and accepted accountancy convention. The crux of the liquidity failure is that, primarily due to the need for industry to add to retail prices certain increasing allocated charges in respect of capital, which do not constitute payment of income in the same cycle of production, consumers are increasingly short of income by which to meet the total retail prices necessarily charged by industry.

Obviously, if nothing intervened the economy would shut down. Of course, what happens is that the consumer is evermore under necessity of borrowing (contracting debt obligations) from the banking system, that creates out of nothing the money that it lends as a repayable debt. Eventually the debt overload so erodes the liquidity of the financial system and the ability of consumers to contract and service debt that consumers can no longer keep borrowing and/or lenders cease to provide loans (in preparation for a "clean out" by foreclosure upon the assets of the people who have laboured to produce and acquire real wealth).

There is nothing new about this confiscatory process. It has been characteristic of the credit system for hundreds of years—going back before  creation of the Bank of England in 1694. It can only be a deliberate policy on the part of the few who are insiders "in the know" to confiscate property and centralize both ownership of property and political power.

If the "experts" advice were followed and lending was simply restricted, this would just slow down the development of economic activity in spite of the national real capacity to conduct and expand that activity. This would intensify the problem of providing "jobs" with which they seem to be so strangely concerned—showing again a complete confusion of mind about the purpose of production—which purpose is not to provide work for humanity but to provide desired goods and services with maximum efficiency—which process involves minimization of all costs, including that of labour. The purpose of production is consumption—not the creation of work.

The unfathomable fact is that so-called orthodox "economists" and public policy makers think first of financial factors and last of real, physical factors— and mindlessly accept the financial system as a determinant of physical activity. Money is simply a unit of account and should merely reflect, and never control, our physical activity.  The whole thing, being a complete departure from reality, is quite psychotic.

We are told by our “expert” advisers that we are being cast into an economic recession or slow down in actual physical production. Have we suddenly lost our energy resources (our gas, petroleum and electrical power), our mines and minerals, our information and transportation services, our forests, our cultural heritage of know-how and production expertise, etc.? Have our citizens suddenly decided to sit down on their posteriors and not do anything any more—has everyone suddenly become divested of motivation, intelligence and capability? Our course not. On a physical level everything remains essentially unchanged with an already astonishing technological efficiency and productivity only increasing exponentially over time. Yet, we are informed by the “experts” that we are slipping inevitably into a recession involving the slow down of real production. Anybody who believes this to be unavoidable, as though some consequence natural law, and is so perverse as to continue to believe it in the face of actual facts, probably fully deserves the consequences of their stupidity.

As, William Aberhart, Social Credit Premier of the Province of Alberta said years ago, "If the people haven't suffered enough, it is their God-given right to suffer some more." I think people are guilt-ridden, because of sedulously inculcated false moral imperatives, such as the adulation of work for it’s own sake. Consequently they are masochistic, and therefore welcome misery as a penance and cathartic for their induced artificial and misguided feelings of guilt. The whole thing is quite mad.

The physical cost of production is fully met when goods arrive completed at retail. There is no need whatsoever for consumer debt. What is required before all else is a secondary flow of consumer credits injected extraneously into the price-system without debt as Consumer Dividends and to effect Compensated (lowered) Retail Prices at point of sale in order to permit consumers full, immediate and dynamic access to all retail goods—and to balance the price-system, so allowing business to recover its financial costs so that it can continue to serve the community if consumers so desire.

As C. H. Douglas, founder of the Social Credit movement who offered the only realistic alternative to currently accepted and destructive Keynesian debt finance, said, "society is hypnotized and only a drastic dehypnotization can save it." How much abuse does it take to arouse a placid and somnolent public?

Wallace M. Klinck                                                                   wmklinck@shaw.ca                                                                             November 21, 2008

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