(Trevor wrote:-) "It is not
logical to have governments hamstrung in carrying out their responsibilities
to those who they purport to represent by adhereing to and defending the
right of the private owners of the debt mechanism to dictate the terms and
conditions on which 'money' is made available for public provision."
Nor would it serve to realize Social Credit
objectives by shifting the monopoly of credit toward the State from the
banking sector. Social Credit policy is to distribute in the
widest manner the power of economic decision making to consumers via
the distribution of credit. Note: Social Credit does not define
"credit" as "debt" in the usually accepted manner.
(Joe replies:-) I quite agree. But
the methods by which this private 'monopoly of credit' is to be ended, as
proposed by the NZ Democrats and other 'Social Credit' political parties
elsewhere, (including here in BC, when they still had this issue in mind,
and weren't just trying to survive as a viable 'party', as they are at
present), is what I would question. They
tended to regard prosperity as being compatible with a full-employment
society and did not challenge fundamental orthodoxy in its acceptance of the
social objective of providing work for as many citizens as possible.
They never really envisaged genuine Social Credit philosophy and
policy--except for a few (such as Joe!) who never carried sufficient
influence to give effective or decisive direction. In the case of the
Manning administration of the Province of Alberta, Douglas expressed the
view that it was little more than a form of state socialism.
(Trevor continues:-) "There is a vast
difference in outcome between issuing new currency (printing money) and
making available a measured amount of interest free funding for
specific infrastructural assets that will contribute to increased productive
capacity and a better lifestyle for everyone." I
think, Trevor, that you have not had an opportunity to really study Douglas
in depth. The Consumer Dividend and Compensated Price employ money
issued without the involvement of either debt or interest in a manner to
increase effective demand and reduce the price level.
(Joe replies:-) It seems to me, strictly
from what I've observed here and elsewhere, that the ''vast
difference'' seems to be largely made up by the amount of
'inflation'. True enough there's likely to be a difference between the
way a responsible government, such as the NZ Democrats, would act in
this regard when compared with such as Zimbabwe's current regime, say.
But you are still going to get 'inflation'. Unless you've got
some way of controlling consumer prices in mind. Douglas makes a
comment in one of his earlier books about how the construction of a new
'railway bridge' raises 'the price of bacon' in the local butcher
shop. In other places he goes into a great deal more detail about
this. But regardless of whether the money is introduced
'interest-free' or not, when it's done the way you propose (for capital
works) it seems to always raise 'consumer prices'. This should lead us to the crux of Douglas's concept of true
"cost"--the latter being the mean ratio of consumption to production.
Most critics of Social Credit seem simply to ignore this idea which
Douglas regarded as being central to his ideas.
(Trevor continues:-) "The process of using
interest free funding for essential infrastructural assets must initially be
targeted at backing debt out the economy and thus creating
greater stability in the financial system and a stable foundation
for the policy of a philosophy as envisaged by Douglas."
Trevor, you seem repeatedly to refer to "interest-free"
funding. This does not address the fundamental accounting error with
which Douglas dealt. "Interest-free" money still originates as a
debt--how are you going to go about "backing debt out of the economy" when
you are in fact creating more of it?
(Joe replies:-) How are you going to
"back debt out of the economy" this way if it leads to a rise in 'consumer
prices'? You haven't made any use of new credit to lower prices, (as
per the 'compensated price discount' ),
nor have you moved to address the problem revealed by A+B. While
admittedly 'saving interest' currently paid to private bankers, is all the
money generated by the economic activity related to the new interest-free
'infrastructure' going to be used to repay existing debt? Or will
those receiving it be more likely to then be able to incur new debt?
What do you do when the initial round of creating 'essential' infrastructure
is completed? You either go into a recession or
the state dreams up some more superflous, unnecessary, self-enhancing or
destructive psuedo-economic activity to keep people busy and rob them of the
leisure which industrial efficiency should increasingly
provide. "Full-employment" the cornerstone policy of state-imposed
policy--of both fascism and communism, or, indeed, any centralized form of
tyranny. 'Interest-free' or not, won't you find yourselves in a
spot where you have to keep repeating the process to continue to provide
'employment'? Don't get me wrong, I detest the current methods
by which governments finance as much as you do. But those are just
some of the questions I'd have about what's proposed. If the price-system were adjusted so that it is
self-liquidating, i.e., so that there is always sufficent effective demand
in consumers' hands to cancel the financial costs of production, the problem
of unrepayable debt would be eliminated and with it the essential inequities
associated with interest. To flay at the branches of economic
injustice while failing to deal with the root causes is a futile endeavour
and can only perpetuate and even worsen the existing
All the best