| Subject: | Re: [socialcredit] Finance: Credit "Crisis" and "Depression" | | Date: | Saturday, November 29, 2008 15:39:11 (-0700) | | From: | Martin Hattersley <jmartinh @....ca>
|
| In reply to: | Message 5727 (written by Joe Thomson) |
Joe -
Thought you might like an article I recently wrote on the current "crisis",
setting it out as an accounting problem. I think it's relevant.
Martin Hattersley, 5929-189 St.,
EDMONTON AB CANADA T6M 2J1
Phone & Fax (780) 483-5442
e-mail <jmartinh@shaw.ca>
----- Original Message -----
From: "Joe Thomson" <thomsonhiyu@shaw.ca>
To: <socialcredit@elistas.com>
Sent: Friday, November 28, 2008 11:04 PM
Subject: Re: [socialcredit] Finance: Credit "Crisis" and "Depression"
Hi John,
I think many socialists, by their nature, are the type who want to be "their
brother's keeper". Whether the "brother" appreciates, or even wants, their
"keeping". Which he may well not. Especially if that "keeping" involves
the restrictions on his "freedom" such "keepings" always seem to entail.
I always thought Douglas's description of socialism was quite appropriate ~
"monopoly state capitalism with control by finance". Also his observation
that for all their desire to 're-distribute' wealth equally, we never seem
to hear the socialist call for an equal re-distribution of the National
Debt.
For if the country is said to be that much the 'poorer' by owing it, surely
those to whom it is owed must be that much the 'richer' by the same amount.
But I think you're right. Though maybe a shade optimistic about the number
of Conservatives, (or anybody else), who understand how banking really
works.
I believe that is one of the major challenges we've got to overcome, along
with vastly broadening an understanding of how 'double-entry' accounting
really works. Both our own, and the public's, and those we elect to office
to represent us.
There is a real need for a comprehensive, understandable, modern 'primer' on
both these subjects. And the relationship of one to the other.
Textbooks I've seen on Accounting are good at showing 'how' to do it, in
regards to the 'bookkeeping' involved. But sadly lacking on the history of
the subject, the 'why' many things are done as they are done, and are
generally limited to just what the 'books' show in regards to one Firm.
There's nothing that takes the subject beyond that, to the economy as a
whole.
An enormous amount of needless argument could be avoided if such a work
could be produced. (I would say, in going back and reading many of Bill
Ryan's posts, that he's already written a great deal of what such a work
should include). Without something like that, we're going to continue to
'dance in the dark', and spend more time arguing amongst ourselves
fruitlessly than in achieving any meaningful progress.
Regards,
Joe
----- Original Message -----
From: John G Rawson
To: Socred elistas
Sent: Thursday, November 27, 2008 12:58 PM
Subject: RE: [socialcredit] Finance: Credit "Crisis" and "Depression"
Greetings Joe. I doubt if one Conservative in fifty understands how the
banks work either. But yes, factional strife among monetary reformers
helped the socialists to throw out the while thing.
There are times when I wonder if Marx wasn't set up to draw attention away
from financial problems. The whole approach of writing this down as just a
sideline to the big nasty employer-oppressors is quite weird.
Of course, when discussing socialism it is important to define what it is:
state ownership of the means of production, distribution and exchange. Many
people project it as just having a conscience and care for people. Most
"socialist" parties these days would have been considered only slightly
liberal in a past generation; ours in the '80's was hard neo-conservative.
Regards.
John R.
------------------------------------------------------------------------------
From: thomsonhiyu@shaw.ca
To: socialcredit@elistas.com
Date: Wed, 26 Nov 2008 20:42:20 -0800
Subject: Re: [socialcredit] Finance: Credit "Crisis" and "Depression"
Hi John,
I believe Social Credit once had considerable support amongst members of
the British Labour Party, (in the years right after World War One). I think
it's quite clear now that the 'bright lights' of that Party never really
understood it, though, and probably wouldn't have agreed with it if they
had.
I wouldn't doubt the same could be said for the NZ "Socreds" who backed
your first Labour government, and substituted 'deficit financing' for
Douglas's "Proposals" to try to get you out of the Slump.
Douglas and Orage tried to get British Labour Party support for their
"Plan for the Coal-mining Industry", which would have been a 'social credit'
alternative to the 'socialism' those then prominent as leaders in that
Party wanted. One of them, Sidney Webb, questioned Douglas quite
thoroughly on all the details of his "Plan", and could find no fault in it
on any technical grounds. But still rejected it because he didn't like its
"object".
That "object" was the antithesis of the Fabian socialism Webb, and others
like him, really wanted. It would have led to a genuine 'economic
democracy'. Rather than simply changing the control of policy to a
different group of administrators.
Ones who, like all 'socialists' I've known, (most of whom I've found are
actually quite decent people ), are sure they know better than you do
what's best for you. And are determined to impose all the wonders the
'socialist' State can provide on you, whether YOU want them or not. (And
even if you don't, you still HAVE to pay for them ~ one way or another!)
Regards,
Joe
----- Original Message -----
From: John G Rawson
To: Socred elistas
Sent: Wednesday, November 26, 2008 1:26 PM
Subject: RE: [socialcredit] Finance: Credit "Crisis" and "Depression"
I tnink you mnay have that wrong, Joe. I think the truth might be that,
like here, the Labour Party was interested in it but the socialist faction
forced it out.
Labour here was originally unionist and backed by small farmers, even
small businessmen. It's socialist faction was relatively small, and part
communist, with strife between the two arms. I have been told there were 14
monetary reformers (not all SC, some followed Soddy or possibly others) in
the first Labour caucus of about 54. They and also the communists got wedged
out by the hard-core socialists.
Itis one of the fallacies of edited history that all workers' parties
were always Marxian.
Regards.
John R.
----------------------------------------------------------------------------
From: thomsonhiyu@shaw.ca
To: socialcredit@elistas.com
Date: Wed, 26 Nov 2008 08:24:42 -0800
Subject: Re: [socialcredit] Finance: Credit "Crisis" and "Depression"
It was once ''well received'' in the 'socialist' British Labour Party,
too. Until they realized its "object" was something which did not quite
mesh with the kind of socialism envisioned by many of that group's 'guiding
lights'.
Joe
----- Original Message -----
From: adavans@aol.com
To: socialcredit@elistas.com
Sent: Wednesday, November 26, 2008 6:42 AM
Subject: Re: [socialcredit] Finance: Credit "Crisis" and "Depression"
Funny you should mention socialists. I'm not exactly a socialist, but
I am a member of SDUSA/Socialist Party of America. (if there were a proper
Christian Democratic party around I'd camp there!) We operate mostly within
the Democratic Party and are open to working with Republicans as well. The
few times I have brought up social credit in our national committee meetings
it has been well received.
-----Original Message-----
From: John G Rawson <johngrawson@hotmail.com>
To: Socred elistas <socialcredit@elistas.com>
Sent: Wed, 26 Nov 2008 12:51 am
Subject: RE: [socialcredit] Finance: Credit "Crisis" and "Depression"
Thanks, Wally. It's all becoming so transparently clear. But nobody
important seems to be catching on. Particularly not among the Socialists.
Regards.
John R.
--------------------------------------------------------------------------
From: wmklinck@shaw.ca
To: socialcredit@elistas.com
Date: Mon, 24 Nov 2008 15:31:58 -0700
Subject: Re: [socialcredit] Finance: Credit "Crisis" and "Depression"
The system, being increasingly non- self-liquidating=2 0causes the
financial world to resort to a proliferating series of evermore tenuous
artifices in an attempt to make an unworkable system function. When the
debt load becomes stretched to the limit of any hope of debts being serviced
confidence breaks and the whole thing comes down like a deck of cards,
making nonsense of all previous denials that the financial system is
unsound. Then the government, if wholesale ruination is to be avoided, is
more or less compelled to intervene with injection of more of the same debt
poison which caused the collapse in the first place. They just borrow more
money from the banking system and carry on by further inflation of the money
supply with it concomitant upward pressure on the price-level, the inherent
deficiency of purchasing-power being set off further into the future by
transforming the debt of the private sector into permanent state debt. Of
course we are all expected to work harder and longer to meet the burden of
inflating prices and increased taxation resulting from interest charges on
bloating state debt. Of course, attempts by the state to reverse this
situation by endeavoring to run on balanced budgets and to pay down state
debt just constricts the economy while leaving the community of lesser
governments and individuals to shoulder the burden of the false debts that
are increasing exponentially. We now witness the futility and tragedy of
this unrealistic policy in the recent so-called credit "meltdown" and the
inevitable contraction of the=2 0economy which must come from the deflation.
But it serves those who confiscate the wealth of others and those who would
enhance the power of the state by proposing increasing state intervention in
the lives of the people--serving also the policy of forcing nations
increasingly into mergers leading to an eventual global government..
Sincerely
Wally Klinck
On 24-Nov-08, at 12:23 PM, John G Rawson wrote:
That is correct here too. I guess worldwide it was decided to
abasndon what our Monetary Commission referred to as a "blunt instrument"
for controlling the money supply in favour of controlling the "willing
borrower" aspect by varying the price, i.e. interest rates.
But that doesn't alter the fact that the banking system needs
reserves for interbank transactions, and in the present situation, to shore
up payments for withdrawals of deposits. In effect, this is what the
"bailout" is trying to do.
Amazing how governments are required to keep out of banking, except
when the banks need h elp!
Regards.
John R.
------------------------------------------------------------------------
From: wmklinck@shaw.ca
To: socialcredit@elistas.com
Date: Mon, 24 Nov 2008 01:03:21 -0700
Subject: Re: [socialcredit] Finance: Credit "Crisis" and
"Depression"
My understanding is that in Canada reserve ratio requirements were
discontinued some time ago for banks operating under Federal Charter--and
that only certain capital requirements remain.
Wally
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
money20paid 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
ret ail 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 kno w" 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
is20their 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 t o arouse a
placid and somnolent public?
Wallace M. Klinck
wmklinck@shaw.ca
November 21, 2008
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