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Joe,
Could you clarify for this New Zealander those
proposals other New Zealanders have posted that you describe as less
appropriate than those proposed by Douglas, for NZ, in 1934.
From my reading of what Douglas wrote
I suggest he saw clearly that nothing could be achieved in beneficial
reform for all until the monopoly of what is now recognised as the debt
creating mechanism is addressed. To quote "But none of these
theoretical objectives can be properly attained so long as this monopoly of
credit (debt) remains unchanged." (italics
mine)
In the 1950's and 60s nearly 40% of the money
supply in all the developed economies consisted of notes and coin. That
percentage of interest free 'cash' money has now shrunk to less than
5% with the outcome that over 95% of developed countries money supply
consists of interest bearing debt created for the direct benefit of the
owners of the debt mechanism.
The need is for a parallel mechanism whereby
interest free credit is created and used to provide essential 'public good'
infrastructure as a countervailing process to progressively back interest
bearing debt out of the economy until such time as a point of financial
equilibrium is reached and the economy actually becomes self liquidating.
Initially the credit capital provided would be in the form of an overdraft
applicable to specific projects and as the level of debt in the wider
economy reduced as a result of this policy then the opportunity would
be available to reduce taxes, provide some form of dividend,
reduce local authority rates etc. to give greater discretionary
spending power to every one. Would that promote inflationary expectations? No it
wouldn't, simply because the fundamental driver of inflation, interest
bearing debt as the main component of the money supply, would no
longer be a factor in the equation. Or at least it would be a factor in
decline rather than is the case today in
ascedency.
All the debate in the world about National
Dividends, Just Prices and the A+B exposition of the gap between
prices and purchasing power will not progress anything until the essential
and fundamental driver of the problems Douglas (and all the others) spent a
lifetime studying is changed. That driver, as I have said before, is the
mechanism which injects purchasing power into the economy as an interest bearing
debt which profits those who own, operate and control the process at the expense
of the vast majority of the worlds populace.
Regards
Trevor Crosbie
Hamilton NZ
----- Original Message -----
Sent: Tuesday, April 19, 2005 8:05
AM
Subject: [socialcredit] Douglas's
discussion of his New Zealand proposals
The following is extracted from "The Douglas System of
Social Credit" to which Bill Ryan has just provided a link (that works) in his
previous post. For those of you who do not have access to that
book other ways,. what's contained therein is a tract very well worth
reading in its entirety. It is interesting to speculate whether
what Douglas proposed back in 1934 would still have relevance to the situation
in New Zealand today, and form the basis for a solution more appropriate than
what some New Zealanders have proposed on here. Of course, only they
would know.
"Now New Zealand, from which I have just come, had a
monetary inquiry, and the
monetary inquiry was, for reasons connected with
the debt, the large debt to
London, practically incapable of discussing
the existing monetary system, so
that the line I took with New Zealand was
this: "We will assume that the
existing monetary system is perfect, and we
will make suggestions for the
amelioration of the existing situation
within the lines of the existing monetary
system, and we will see how they
work."
Broadly speaking, the suggestions were something like this (and
I shall have
much pleasure in depositing an actual copy with the prime
minister for the use
of this house): "We know quite well that the core of
this problem is in the
disparity between the real wealth available and the
monetization of that wealth;
that it is within the power of monetization
of real wealth that this power of
credit lies. Now certain institutions
alone have the power of monetizing wealth,
and we will take that power as
it stands, and we will go to the banks and say:
`Now you have the best
possible precedent in the Bank of England for limiting
your dividends to
6%--which is the dividend invariably paid by that bank. We
will by
our law-making powers limit your dividend to 6%. Then we will ask you
to do this, and if you do not do it we will ask you your reasons for your
objection; we will ask you to make a return of the whole of your assets
both
real and personal, at their market price at the present time and at
the price at
which they are held on your balance sheet for the purpose of
your annual balance
sheet'."
REAL VALUE OF BANK ASSETS
I may
say in digression that there is very little doubt that if we had any
conception of the market price of the assets held by the financial
institutions
we should be very much surprised at the real profits that
they are making. There
is an enormous difference between the disclosed
value of the assets either held
by banks or held in lien by banks, in many
cases under a lien which never can be
realized, and the figures under
which these assets are held for balance sheet
purposes.
We say: You
will make this return, and where it is found that the disclosed
market
value of your assets is in excess of the value for which they are held
for
balance sheet purposes, we will not take those assets from you, we will not
tax you even on those assets; but we will merely ask you very kindly to
exercise
your exclusive rights of monetizing that value, and we will
transfer that
monetized value to a suspense account. We will use that
suspense account for
providing every individual of the population of New
Zealand over 21, with shares
in public issues of debenture stocks or
preference stocks which will be paid for
out of this suspense account, and
will be ear-marked as not good security for
loans and non-transferable. We
will allot those shares to the individual so long
as he is a naturalized
or natural-born subject of New Zealand, thus providing
those individuals
with the beginnings of a dividend share in all undertakings,
without
having taxed anybody to provide the purchasing power. In addition to
that
we will go to the insurance companies and we will ask them for the same
returns and we will monetize that return. The difference of those
values
through the newly formed New Zealand Reserve Bank, we will apply to
the
retirement of the overdrafts and the loans of agricultural and other
producing
concerns, so that these farmers and agriculturists who have
become practically
hopelessly in debt to financial institutions may have
those overdrafts and loans
retired without the taxation of anybody.
The money which is created by the New
Zealand Reserve Bank for that
purpose will be automatically retired by the
payment of those overdrafts,
on the well known principle that the repayment of a
loan destroys a
deposit.
Under those conditions you will immediately make it possible
for a number of
producing organizations which are now moribund, and which
cannot meet their
interest charges, to go back into production and
employment. And on the other
hand, by the other suspension account to
which I referred, you will begin, and
will proceed at no small rate to
provide every individual with a stake in all
undertakings in a way which
is not a tax on other people, but with the necessary
purchasing power to
buy the productions of the country, without it being
necessary for them to
pass through the turn-stiles of the factory, as we may
say.
That
does not meet certain other difficulties which arise under these existing
financial systems but it does directly focus the attention of the public
upon
that locus of the difficulty, and it does bring up in our opinion for
public
discussion this question of the right to monetize, or still more
important, not
to monetize, existing real wealth. That, under existing
conditions, seems to me
to be one way to attack this citadel of real
wealth. When that citadel falls (as
it must fall, I feel confident, in a
few years' time, but it is better perhaps
that it should fall by
successive steps, than by a catastrophic shock) it will
undoubtedly
involve certain measures for the control and reduction of prices,
measures
with which I think you are all probably to some extent familiar in this
house. But none of these theoretical objectives can be properly
attained so
long as this monopoly of credit remains
unchanged."
Joe
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