eListas - My Lists: socialcredit: Messages

Begin forwarded message:

From: Wallace Klinck <wmklinck@shaw.ca>

Date: December 1, 2008 4:13:56 AM MST (CA)

To: socialcredit@elistas.com

Subject: Re: [socialcredit] Finance: Credit "Crisis" and "Depression"
Hello Joe and Keith,

Rather than offering a mini-essay in response to your exchanges below, I will simply insert some brief comments in [bold] text.

Sincerely

Wally
On 30-Nov-08, at 5:15 PM, Joe Thomson wrote:
Hi Keith,

Good to hear from you again, hope all is well.

I won't go into what I think of Zarlenga's proposals as they're reproduced below, except to say that I believe they are seriously flawed in many areas. I do NOT believe the "government" should "create ALL money", nor that "money" is something other than "credit", no matter who creates it, nor that it should be "spent into circulation" for all the wonderous things someone in "government" feels we need as infrastructure. [And most certainly not to effect a social policy of "full employment." The purpose of economics is to produce goods and services -- not work.] And especially not when the primary purpose of that seems to be to try to maintain, or raise, the general price level. [Both a so-called stable level of prices and inflation of prices are fundamental violations of natural law in the context of increasing production efficiency and where society is producing more than it is consuming of consumer, intermediate, and capital goods. Ideal price is zero-- meaning 100% efficiency of production and absolute abundance. This Is theoretically and rationally a practical goal for which to strive -- and one toward which we are making constant progress in the real world. The existing defective system of financial cost accountancy masks and Inversely represents this fact with Inflation of prices accompanying increasingly efficient use of real capital. That is, the existing financial system counters every genuine advance in science applied to production. We see here the ultimate theoretical and practical aim of Social Credit being the end of orthodox economics as such, defined as the allocation of scarce resources. This will no doubt be difficult to understand for those who defer, for false reasons of "morality," to the work ethic and cannot understand that production has no value whatsoever without consumption.]

To get back to your questions, you wrote:- "Your disbelief about how public infrastructure investment could ever be reflected in "real costs" is an issue that hadn't occurred to me before, and I am far from understanding what it means. It does seem securely premised to the "current defect in the price system" and I infer that you refer to the lag in payments that keeps spending power perpetually short of consumer capacity to purchase total output."

Yes, that's correct. I, too, am "far from understanding what it (all) means", yet it seems to me to be incontestable that there are definitely "real costs" involved in creating new infrastructure, and that these costs would have to be reflected 'financially' somehow. [ The real costs of producing infrastructure or anything else are the nonhuman and human energy and materials consumed in their creation. In a system of realistic accountancy the nation would be credited with the value of such completed physical assets which would be written up as an increase in real credit in the National Credit Account-- to be diminished only over time at the actual rate of physical consumption or depreciation. "Money" as a mere instrument of accountancy should be issued at the rate of production and withdrawn at the rate of consumption. Money should only reflect our activities and never determine them.]

There is, so far as I understand the matter, (or mis-understand it, which might well be the case, since I'm neither an economist nor an accountant ), a considerable difference in creating "debt-free" new credit, i.e., not "costed" into any production, in the manner of ongoing 'macro-economic' accounting corrections necessary to augment consumer incomes to the point where the financial system can be kept more fully 'self-liquidating', and allowing 'real demand' that can be satiated to be made "effective demand"; and simply having a "government" print-up "money" and spend it on 'new production', infrastructure, which is certainly not 'costless'.

Keith continues:- "If I follow your reasoning at all adequately, you seem to be saying that the only kind of accounting that can possibly capture real costs is that applied by private sector firms. If that is so, can you expand, or point me to some literature where it is explained?"

I'm not quite sure if I follow what you're getting at here, Keith. Do you mean that the "government" doesn't do its books the same way "private sector firms" do? That is true, it doesn't. That's the problem, or a large part of it, I think. There isn't any national equivalent to a Firm's "Balance Sheet" which lists the country's "physical" Assets, the "money" Liabilities owed against them, and the Capital Account that shows the shareholder's (citizen's) equity. [The consuming public is currently charged with capital depreciation but, wrongfully, not credited with capital appreciation. You might be interested in knowing that Victor Bridger ( socialcredit@ecn.net.au ) who conducts the Social Credit School of Studies and publishes a regular Social Credit journal from near Brisbane in Australia has authored three booklets this year: 1) Social Credit and Economics, 2) Money-Mysteries-Myths and Banking and 3) Social Credit and National Accounting.  I would recommend these and especially the last in regard to the forgoing issues.]

Instead we have a National Debt, to which we are about to greatly add. Zarlenga's proposals presumably wouldn't add to the National Debt, but they don't correct the defect in the 'price system' either. [True, they do not identify the defect in the price-system discovered by C. H. Douglas. They do not address the problem of inflation, which would be "monitored" (?), apparently not challenging the orthodox acceptance that prices should be determined by what they will "fetch." They do not address the issue of distribution as this relates to the progressive displacement of labour as a factor of production. They would seem to place perhaps ominous power in the hands of the State and neglect the dispersion of power to individuals as intended by Social Credit policy--which envisages each citizen as being a shareholder in the National Debt which would become a National Credit. This is not claimed to be an exhaustive list.]

Keith continues:- "As an aside to affirming that Martin's and Stephen's similar proposals would inflate all prices, you seem also to observe that prices need to fall further in order to restore the level of general economic activity." [They need to fall in order to accurately reflect real physical cost and to allow the consumer full access to production at retail level without being in need to resort to debt. Social credit is neutral about the level of economic activity, this being regarded as a function of consumer demand and producer response for both for goods and services as opposed to consumer preference for leisure.]

Last night's news included a very tragic item that clearly, albeit very sadly, demonstrates what's necessary to "restore the level of general economic activity." Wal-Mart had a sale, the prices were lowered, and a surge of customers literally shoved the store's doors in, trampling a Wal-Mart employee to death in their rush to get inside and buy.

  home with a

Elsewhere, stores that slashed their margins to kick off the Christmas shopping season witnessed a similar, though thankfully far less tragic, surge of buying. Obviously, there is "real demand" still present, even in these times of economic uncertainty, and a willingness on the part of the public to purchase what they believe they can still afford.

Now, doubtless if the general price level were made lower to all consumers, for all products, as per the Social Credit prescription for a Compensated Price Discount, we wouldn't see these kinds of extreme buying binges, but rather an increase in economic activity nevertheless.

We would see the benefits of a price 'deflation', to consumers, without the detriments to merchants, and manufuacturers, and, ultimately to those consumers in their alternate role as producers. [In a healthy economy where individuals are confident and secure in a realistic faith that the system can offer the basis of a civilized existence in the context of an economically or materially secure life we would not see such displays (above) of crude self-interest which the present financial economic system engenders and finds its most destructive manifestation in wars between nations.]

Keith continues:- "This seems a bit odd when we are falling into what looks like a deflationary depression, a phenomon that seems tightly linked to policies of globalization that have hollowed out North American industry and outsourced income-supporting jobs to Asian countries. (This has now gone so far that even news reporting inside the U.S. is written by scribes in India--see this morning's NYT.) This makes me wonder if Social Credit prescriptions depend for their effective application on much more tightly controlled national borders?" [In the context of the Orthodox financial system deflation means contraction of economic activity including that which distributes income and exacts, through bankruptcy and dispossession of assets and incomes, suffering, destitution and anxiety on the general public. In a Social Credit context falling prices mean the ability to produce adequately and even abundantly through increasing efficiency derived from the effective application of science to productive processes. Social Credit automatically provides for the general dispersion of the wealth flowing from the system to all individuals in society. Unemployment becomes, not a curse, but a blessing --realized through falling costs of production and lower prices with universal access for all citizens to the product of industry. As the American Social Credit author Gorham Munson cautioned, when we are thinking about Social Credit it is best to erase from the mind all previous conceptions and think from the ground up with an uncluttered mind--as we have never thought before. Old conceptions cause static in the is mind which puts up an insurmountable barrier to a correct understanding of Social Credit.]

Well, and I'd just be expressing my own opinion here, I think we'd certainly have to "level the playing field" if we are going to continue to impose on our industries costs which other countries do not seem willing to impose on theirs. Either that, or we join them in a race to the bottom. [ Social credit aims to establish individual nations in the position of having viable economic systems not primarily dependent upon international trade or relationships. It requires the assertion of national sovereignty and independence. Negotiation on an international level must be approached from a position of economic and political independence. Nations must not be forced into international relations and agreements which concentrate world political and economic power in the mistaken belief, and mischievous promise, that making a problem bigger will lead to its solution. Nothing could be greater folly. We must solve our problems by building up from the bottom--not by having unsound and dangerous so-called solutions imposed on us from the top. As an aside, until other nations adopted Social Credit measures we would obviously require restrictions on immigration for reasons that should be patently obvious. We would also be wise to ensure our own national and territorial security inasmuch as we would be regarded, and maliciously castigated, by the powers of Finance as a threat to the world financial regime and, ipso facto, to the world itself.]

David Suzuki's "Nature of Things" TV program had an episode on sustainability in the forest products industry once, and included in it was the story of a Mexican timber town that was "value-adding" the native pine into furniture for export. As if to say we here should be doing the same thing. But just try to do here what they were doing there.

A BC Worker's Compensation Board safety inspector would have run out of forms citing all the violations endangering life and limb there, if they were subject to the same requirements we are here! Not only a complete lack of guards over any of the belts that drove the machinery, but no guards on the saws and other cutters themselves!

Here, for the number of people employed in that plant, we'd have to have an ambulance onsite standing by in case anyone got hurt. As well as a First-Aid room equipped like a small hospital, staffed with people with appropriate training.

There they unloaded their logging truck, on which some good sized short logs were loaded crossways, by having a guy with a peavy standing on the ground at the end of the truck's deck, underneath the log, and rolling it towards him.   And hoping he could hop out of the way before it came off the truck on top of him. Life must be cheap in Mexico! But that's what we're competing with, and Mexico is far from being the worst offender when it comes to similar practices. So yes, I think we'd have to tighten up in those areas.

But another thing to consider is what international trade is really carried on for. If it's an exchange of relative surpluses, it makes great sense. Both parties to the transaction should benefit through the diversification of consumption this allows. But if it's just a trade of goods for 'export credits', ones necessary to make up an otherwise "in-effective demand" in the domestic market, well, that's something else again. [Looked at realistically international trade is simply barter. Essentially, it should be a balanced exchange with participating nations benefiting, of course, from actual comparative advantage in efficiency of production. Today, international trade is a desperate struggle for external markets aimed at capturing credits from other nations to make up an internal deficiency of purchasing power at home. International trade as it exists is economical warfare-- which leads, and must lead, to the dreadful scourge of actual military conflict. Because Social Credit would operate in the context of a much lower price level that other nations it would place us in a position of tremendous advantage in the export market--an advantage however which we would be no longer under duress to pursue. This would provide an enormous incentive for other nations to quickly adopt the Social Credit measures. A Social Credit nation would be in a much better position to offer assistance to other nations if it were socially desired-- either as a gift or in exchange for some other services such as services in the tourist industry, for example, as the case might be.]

Regards,

Joe

--- On Sun, 11/30/08, Joe Thomson <thomsonhiyu@shaw.ca> wrote:

From: Joe Thomson <thomsonhiyu@shaw.ca>
Subject: Re: [socialcredit] Finance: Credit "Crisis" and "Depression"
To: socialcredit@elistas.com
Date: Sunday, November 30, 2008, 12:18 AM

Thanks, Martin. One question. If the Treasury were going to create money
'debt-free', would it not be better to apply that new money to a
reduction
of existing goods prices "at the time of purchase", rather than
'spending it
into circulation' for infrastructure and such like?

I really don't understand how the "accounting", if that latter
course were
followed, could ever properly reflect reality. Infrastructure has

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

From: keith wilde

To: socialcredit@elistas.com

Sent: Sunday, November 30, 2008 6:46 AM

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

Hi Joe,

I just turned to my mail to paste in the following to Martin and to ask him the difference from what he was proposing, but then I saw you had already addressed the issue, so I send it to you instead. This item also showed up in my morning mail, from the American Monetary Institute.

Stephen Zarlenga says
The American Monetary Act
First, it incorporates the Federal Reserve System into the U.S. Treasury where all new money is created by our government as money, not interest-bearing debt, and spent into circulation to promote the general welfare; monitored to be neither inflationary nor deflationary.

Second, it halts the banks privilege to create money by ending the fractional reserve system in a gentle and elegant way. All the past monetized private credit is converted into U.S. government money. This real money does not evaporate in a crisis the way credit is evaporating now. Banks then act as intermediaries accepting savings deposits and loaning them out to borrowers; what people think they do now.

Third, it spends new money (not credit!) into circulation on 21st century eco-friendly infrastructure and energy sources, including education and health care needed for a growing society, starting with the $1.6 trillion that the American Society of Civil Engineers estimate is needed for infrastructure repair; creating good jobs across our nation, re-invigorating local economies and re-funding local government at all levels.
[End of AMI statement]

Now back to you, Joe, with a couple of questions:

Your disbelief about how public infrastructure investment could ever be reflected in "real costs" is an issue that hadn't occurred to me before, and I am far from understanding what it means. It does seem securely premised to the "current defect in the price system" and I infer that you refer to the lag in payments that keeps spending power perpetually short of consumer capacity to purchase total output.

If I follow your reasoning at all adequately, you seem to be saying that the only kind of accounting that can possibly capture real costs is that applied by private sector firms. If that is so, can you expand, or point me to some literature where it is explained?

As an aside to affirming that Martin's and Stephen's similar proposals would inflate all prices, you seem also to observe that prices need to fall further in order to restore the level of general economic activity. This seems a bit odd when we are falling into what looks like a deflationary depression, a phenomon that seems tightly linked to policies of globalization that have hollowed out North American industry and outsourced income-supporting jobs to Asian countries. (This has now gone so far that even news reporting inside the U.S. is written by scribes in India--see this morning's NYT.) This makes me wonder if Social Credit prescriptions depend for their effective application on much more tightly controlled national borders?

Keith Wilde

--- On Sun, 11/30/08, Joe Thomson <thomsonhiyu@shaw.ca> wrote:

From: Joe Thomson <thomsonhiyu@shaw.ca>
Subject: Re: [socialcredit] Finance: Credit "Crisis" and "Depression"
To: socialcredit@elistas.com
Date: Sunday, November 30, 2008, 12:18 AM

Thanks, Martin. One question. If the Treasury were going to create money
'debt-free', would it not be better to apply that new money to a
reduction
of existing goods prices "at the time of purchase", rather than
'spending it
into circulation' for infrastructure and such like?

I really don't understand how the "accounting", if that latter
course were
followed, could ever properly reflect reality. Infrastructure has
"costs".
Real costs, because real goods and services are involved in creating it.
Yet those who propose going this route, no doubt sincere in their belief
that such a policy will cure the current defect in the 'price' system,
never
seem to make clear just how these "costs" are to be dealt with.

Personally, from what little I understand of these matters at present, I
think we'd be simply substituting one badly flawed system for another if we
went that latter route. One which may very well have worse overall
ramifications than the present set-up when it come to the advancement of
'external' control over each of us as individuals.

That latter course seems to me like putting the cart before the horse.
Doubtless there is infrastructure that is needed, but it seems to me that
what's equally needed are policies which don't lead to the kind of rise
in
consumer prices that having a massive increase in government spending, even
if its Treasury does create its own money, is sure to bring.

None of us, and particularly those on 'fixed incomes', are really ever
advantaged by having to pay "more" for the things we need and want.
Yet I
can't see how this is to be avoided by following the
"greenbacker"
conception as it's being promoted by many in our time.

Surely if we lower prices first, without merchants and manufacturers in this
country taking a hit, there will be an increase in economic activity. And
infrastructural spending then becomes more than just expedient
'make-work'
projects, complete with all the 'boondoggles' such things seem to
constantly
attract.

For then citizens can decide for themselves whether or not any particular
project is worth contributing to solely for its own merits and benefits to
them. With lower prices we're making that desirable infrastructure more
affordable from the incomes which will end up paying for it anyways, one way
or another.

Regards,
Joe

Stephen says:
The American Monetary Act
First, it incorporates the Federal Reserve System into the U.S. Treasury where all new money is created by our government as money, not interest-bearing debt, and spent into circulation to promote the general welfare; monitored to be neither inflationary nor deflationary.

Second, it halts the banks privilege to create money by ending the fractional reserve system in a gentle and elegant way. All the past monetized private credit is converted into U.S. government money. This real money does not evaporate in a crisis the way credit is evaporating now. Banks then act as intermediaries accepting savings deposits and loaning them out to borrowers; what people think they do now.

Third, it spends new money (not credit!) into circulation on 21st century eco-friendly infrastructure and energy sources, including education and health care needed for a growing society, starting with the $1.6 trillion that the American Society of Civil Engineers estimate is needed for infrastructure repair; creating good jobs across our nation, re-invigorating local economies and re-funding local government at all levels.

----- Original Message -----
From: "Martin Hattersley" <jmartinh@shaw.ca>
To: <socialcredit@elistas.com>
Sent: Saturday, November 29, 2008 2:39 PM
Subject: Re: [socialcredit] Finance: Credit "Crisis" and
"Depression"

> 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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