----- Original Message -----
Sent: Monday, March 07, 2005 4:01
Subject: [socialcredit] Re: Re: in
continuing reply to Jim Schroeder
[SCHROEDER] Labour displacement only means that B is
to A. For A+B to be true, B > 0. B
does not need to be
growing relative to A.
[REPLY] In which case the theorem is true, but would
demonstrate a gap between prices and purchasing
power disbursed through
salaries, wages and corporate
Obviously if B>0, then prices are greater than purchasing power.
Purchasing power is A, but price is A+B, and it's simple mathematics to
understand that price (A+B) is > purchasing power (A) for all
If you admit that B>0, then that
proves there is a gap between prices and purchasing power.
All that labour displacement does,
by growing B relative to A, is make the gap WORSE.
In steady state, no matter what the ratio, there is
(reply) If a loan is
cancelled at the same rate as the costs which which it created are cancelled,
then there is steady state.
Only when the ratio of B to A is increasing
is there a gap that can
be resolved through a
national credit account, homologous to the capital
account of the single firm.
(reply) No. B does not
have to be increasing relative to A. B > 0 for there to be a need for
the gap to be resolved through a national credit account. And B does not
have to be increasing relative to A for B>0.
As to problems in elaboration: What does it mean
that B >
0? Certainly, for the economy as a whole,
every B payment by one
firm necessarily equals a B
receipt to another firm. In the terms of
accounting, they "net to zero."
(reply) There is no
"negative" B for any firm. "Net B" cannot be 0. If all B's for
every firm are > 0, then obviously "net B" > 0.
"The essential point is that when a
given sum of money leaves the consumer on its journey back to the point of
origin in th ebank it is on its way to extinction. If that extinction
takes place before the extinction of the price value crated during its journey
from the bank, then each such operationproduces a corresponding disequilibrium
between money and prices."
"Consider the nature of these B
payments. They are repayments colected from the public of purchasing
power in respect of production not yet delivered to the public. If the
wage earners in process "I" use their current month's, i.e. May's, wages to
buy their share of one current month's production of consumable goods, they
arre using money distributed in respect of production which will not appear as
consumable goods till October. They are in fact reinvesting their
money in industry, with the result previously explained."
What result is that?
"If we consider the case of the
wrokman earning, let us say, $5 per week, who saves $1 of this and at the end
of a hundred weeks subscribes for shares in a new manufacturing company, the
effect isnot hard to trace. The original $5 per week was wages paid to
the workman, and thse wages were, by th eorthodox costing system, debited to
the cost of the articles produced by his employer. Eventually, due to
his savings, these articles cannot be sold, as a simple arithmetical
proposition shows, since he has taken 20 percent of the necessary purchasing
power off the market. His investment of this 20 per cent we may assume
results in the manufacture of machinery in which his $100 again appears as
wages. Assuming that no physical deterioration has taken place, or that
the goods have not been exported, the 20 per cent deficiency in the first
cycle of production has now been restored, and the original goods could be
bought. But machinery which has been made in the second cycle of
production is now a charge on further production for which no purchasing power
whatever exists. This proposition may be generalized as follows:
Where any payment in money appears twice or more in series production, then
the ultimate price is increased by the amount of that payment mulitiplied by
the number of times of its appearance, without any equivalent increase of
In respect to the retail sector, how can you say that
its B payments
are not equaled by A payments made by
firms away from the retail sector in
the structure of
(reply) Again from
"To say that at some time or other
the money has been distributed is in the nature of a general assertion which
does not bear upon the specific fact. The mill will never grind with the
water that has passed, and unless it can be shown, as it certainly cannot
be shown, that all these sums distributed in respect of the production of
intermediate products are actually saved up, not in the form of securities,
but in the form of actual purchasing power, we are obliged ot assume what I
believe to be true, that the rate of flow of purchasing power derived from the
normal and theoretical operation of the existing price system is always less
than that of the generation of prices within the same period of
Moreover, how do you even measure B? Do you tabulate
summation of B by every firm to get the aggregate
(reply) I guess that's one
way. But does it really matter? Douglas said the true cost of a
product is the material consumed to make it - i.e. the true cost of a product
is it's financial cost* (consumption/production). We can easily measure
the financial cost, and it would not be difficult to measure aggregate
consumption and aggregate production over a given time period.
The inability to address such questions leads to the
Douglas and his theorem, perhaps the most
profound discovery in the
history of economics.
(reply) Anyone who ridicules
it truly does not understand it.
In terms of pure mathematics, the proposition is very
If it is true that the ratio of B to A is
increasing for any one firm, it
is reasonable to
assume it is happening with all firms, as a
statistical matter. If so, it is impossible for the
to amortize A+B with the reflux from A
paid to the consuming sector.
The differential must
come from some other source or sources, which it
(reply) I have already stated
that labour displacement causes B to grow relative to A. But B does not
need to be growing relative to A to be > 0.
[Schroeder quoting Douglas] "The essential point is
that when a given
sum of money leaves the consumer on
its journey back to the point of
origin in the bank
it is on it's way to extinction. If that
takes place before the extinction of the price value
created during its journey from the bank, then each
produces a corresponding dis-
equilibrium between money and prices."
(In other words Bill, the ESSENTIAL point is that
money is repaid
before the cost which it created is
ultimately cancelled in a consumer
displacement makes the B payments in A+B LARGER, and
emphasizes the need for Social Credit to a greater
degree as time
passes, but A+B is true without labour
displacement. That is my
[REPLY] And that will happen statistically only when
the ratio of
B is increasing to A.
(reply) This is where you are
wrong. Douglas never states this in any explanation of his A+B
theory. He mentions labour displacement as causing B to grow relative to
A, but never mentions it in regards to why prices are always greater than
income. Labour displacement only makes the gap worse.
You have to think
in terms of calculus rather than algebra. If
ratio is constant in the condition of steady state,
dollar cancelled through amortization,
there's a corresponding dollar
(reply) It doesn't matter if there's a
corresponding dollar simultaneously lent. That corresponding dollar has
a fresh set of costs attached to it. And it is only the lag between
those new costs reaching the consumer which allows that dollar to be used on
consumption today. But as soon as those costs show up in the
future, there is a deficiency between purchasing power and
For every dollar disbursed whose expense is delayed
depreciation, an equivalent dollar is
expensed that was previously
disbursed. In such a
condition there is no gap.
(reply) Are you suggesting the
building is being built at the exact same rate is depreciates? Douglas
has addressed this fallacy. In this condition, there is no gap.
However; this condition does not exist.
Only if the ratio of B to A is increasing (or there
is a contraction
of credit) does a gap manifest. It
is bridged through export credit
or the acceleration
of "investment" causing the piling up of debt on
debt. The other possibility is bankruptcy in a game
(reply) There's a gap the
moment a loan is cancelled before which the cost which the loan generated is
ulitmately cancelled in the consumer good it went to create.
The Douglas accounting adjustments (dividends and
are intended to bridge the gap
rationally, obviating the need for
balance in trade, wasteful investment, or bankruptcy.
A+B is indeed true without labor displacement, but
displacement there is no gap.
(reply) I disagree. And
I have given numerous examples by Douglas himself that explain the gap, and in
no way involve labour displacement.
why the so-called disproofs are structured without
displacement. They think, by demonstrating the
absence of a gap in
the special condition of steady
state, they have disproved the
theorem. It comes
from their inability to think abstractly in the
manner of Douglas, where change through time becomes
a factor to be
Look, there are problems with Douglas' various
conveying what he intuitively
perceived, which at first sight appear to be
incomplete, if not contradictory.
(reply) Me thinks that you
think less of Douglas than I do. It takes time to understand what he's
saying, but his examples make it quite clear. And although labour
displacement is an "irritating factor" in that it makes B rise relative to A,
it is not essential. And A+B, and consequently the price/purchasing
power gap, would be true without it.
From a cursory
reading, it is far too easy to fall into the trap of
a "magical" interpretation, as you have. A-B-C-D,
hocus-pocus, there's the gap! The
theorem becomes a
(reply) The A+B
theorem is no joke.
Hi Bill, I will respond in maroon.
----- Original Message -----
Sent: Sunday, March 06, 2005 1:06
Subject: [socialcredit] Re: in continuing reply
to Jim Schroeder
> http://www.elistas.com/list/socialcredit/archive/index/561/msg/588/> -
> [SCHROEDER] The simple point of
A+B is that the loan
> which originates with some capital good is
> before the cost is ever completely cancelled in the
> consumer good. Like you state, the average "flux-
reflux" rate is 3 weeks, yet some capital, like a
> building, is
depreciated over 30 years. That is the
> crux of A+B, and it
has nothing to do with "labour
> [REPLY] Then you put yourself in direct
> Douglas, who emphasized labor displacement in almost
> every expression of the theorem.
(reply): I mentioned the
fact that interest could have a bearing on Douglas' A+B theorem because of
the modern advent of consumer debt, and the fact that this type of debt has
flexible repayment schedules. I certainly don't think interest has
ANYTHING to do with A+B itself.
displacement does not have anything to do with A+B itself. Labour
displacement only means that B is GROWING relative to A. For A+B to be
true, B > 0. B does not need to be growing relative to
I will quote from the "Monopoly
"Although this is an extreme case, the
constant, and in one sense desirable, tendency is for direct charges to
decrease and for indirect charges to increase as a result of the peplacement
of human labour by machinery (in other words B, or
indirect charges, will grow over time). There is no difference
between a plant charge of this nature and a similar sum repaid as a "B"
payment. The essential point is that when a given sum of money leaves
the consumer on its journey back to the point of origin in the bank it is on
it's way to extinction. If that extinction takes place before the
extinction of the price value created during its journey from the bank, then
each such operation produces a corresponding dis-equilibrium between
money and prices. (In other words Bill, the ESSENTIAL
point is that money is repaid before the cost which it created is ultimately
cancelled in a consumer good). Parenthesis added.
Labour displacement makes the B
payments in A+B LARGER, and emphasizes the need for Social Credit to a
greater degree as time passes, but A+B is true without labour
displacement. That is my point!
I will send you a
> copy of his
«Credit-Power and Democracy» in PDF
> format if you do not have
it. In chapter II he
> prefaces the theorem with a discussion
> changing ratio of Atlas' lever. Then closes with
> this statement:
> "At the moment the point to be
borne in mind is that
> B is the financial representation of the
> capital, and is constantly increasing in comparison
> with A..."
> [SCHROEDER] I reject the debt
virus theory outright.
> [REPLY] You
reject the term rhetorically but not the
> essence. You deny
Douglas' labor displacement
> hypothesis and substitute an alternate
> that the higher the rate of interest the greater is
> the gap between prices and purchasing power.
Presumably, at a zero rate of interest there would be
> no gap.
Douglas' hypothesis is correct. Yours is
"fallacy" Bill is to even pretend to have been listening to what I've been
saying. As usual, you "presume" too much. Please show me where
I've stated anything about 0 interest loans. I only mentioned interest
rates in passing in that they might have a bearing on consumer debt, and the
rate at which it is cancelled, and hence; could increase the
disequilibrium. However; it's a MINOR point, but as usual you are
trying to "exorcize" this "monetary reform" demon that never existed.
I NEVER said that interest was in any way involved in Douglas' A+B
What I stated is that the
theorem depends on two primary hypothesis:
1) There are two
types of costs : a) consumer costs which are cancelled upon sale, and b)
capital costs which are carried forward upon sale
2) There is a double
circuit of money.
With those two primary
hypothesis, A+B is understood that when the loan which created a cost is
cancelled before the final cost that it created can be cancelled in a
consumer good, then there is a disequilibrium between money and
That is the crux of
A+B. And it has to do with the two primary hypothesis I
outlined. Labour displacement only makes it "worse", but is not
NECESSARY in order for A+B to be true, nor is it necessary in order to
> Schroeder: "My point was that increasing interest
rates can cause consumer debt to be cancelled (i.e.
> the principal
cancelled) at a faster rate."
> Yes, your point, not Douglas'
(reply) I said it was my
point and not Douglas' point. And it's not a point that is in anyway
tied to the A+B theorem.
Celebrate Yahoo!'s 10th Birthday!
Yahoo! Netrospective: 100
Moments of the Web
You're subscribed to this list with the email email@example.com
To unsubscribe, send a message to
For more information, visit http://www.eListas.com/list/socialcredit