Hayek was also the semi-mystic who ascribed business cycles to sunspots. Ref
"Making Modern Economics", Skousen, Index gives page no. John R.
>From:
"William B. Ryan" <w_b_ryan@yahoo.com> >Reply-To: socialcredit@elistas.com >To:
ownership@cog.kent.edu, austrianschoolofeconomics@yahoogroups.com,
ijccr@yahoogroups.com, distributism@yahoogroups.com, socialcredit@elistas.com
>Subject: [socialcredit] The Rabbit >Date: Tue, 19 Apr 2005 04:38:14 -0700
(PDT) > >I think Professor Gunning may have been triggered >to go over the deep
end with my implication that >his train of logic may be representative of what
>we might expect from "a creature called rabbit." > >I suppose this dialog has
devolved into a war of >sorts. The Social Credit movement was first
>attacked by the "Austrians" when Hayek, during the >time he was in the service of the Fabian socialists >when employed at their London School of Economics. >At that time, Hayek was the humble (but well paid) >servant of totalitarianism. That was followed by >Mises, then Gary North, in his malicious diatribe, >*Salvation Through Inflation,* about ten years ago, >now Professor Gunning. > >This medium of the Internet allows responses to be >placed into the public record, which I am doing, >and will continue to do. You may be assured I >will use that medium to its fullest advantage. > >The following is excerpted from the series of >messages that preceding the one re-posted by >Professor Gunning today: > >http://groups.yahoo.com/group/austrianschoolofeconomics/message/1590 >From: "William B. Ryan" <w_b_ryan@...> >Date: Mon
Nov 17, 2003 2:06 pm >Subject: a creature called rabbit > >What I mean concerns
the questions posed to Bill. >Suppose that he supports the view that in the
modern >U.S. banking system, money creation by one bank is >ordinarily offset by
money destruction by the same >bank or by other banks unless the Federal Reserve
>Board deliberately chooses to make it otherwise. > >Pat Gunning
>---------------------------------------- > >[Ryan responding to Prof.
Gunning] >I do not support that view. [And] I completely reject >the money
multiplier concept. > >The Fed is the concertmaster in the following sense: >
>Imagine that all the banks in a closed system >associate between themselves
so that checks drawn on >any one bank may be deposited in any other bank. One >of
the banks is chosen to be the clearing bank at >which the member
banks maintain clearing accounts >that we will henceforth call reserves. All of
the >banks including the clearing bank continue performing >the ordinary
functions of banking. Each of the banks >may grant loans without limit so long as
it maintains >a sufficient balance in its reserve account to cover >checks that
may be deposited in other banks. The >clearing bank is the exception in that it
is >unconstrained by reserves because every check it >writes clears back to
itself and does not detract >from its ability to grant loans. > >If each bank
including the clearing bank expands >credit in tandem with every other bank,
clearings >between banks will always net to zero regardless of >the quantity of
aggregate reserves. Therefore credit >may be expanded without limit unconstrained
by >reserves so long as all the banks continue to operate
>in perfect tandem. If any single bank departs from >the prevailing practice, it will gain or lose >reserves to other banks, which enhances or detracts >from its ability to grant further loans. Each bank >therefore competitively attempts to gain reserves >from other banks and attempts to avoid losing >reserves to other banks. > >This juxtapositioning between banks would effectively >place an upper limit on bank credit expansion were it >not for the fact that the clearing bank writes checks >for loans that clear back to itself. So the >independent credit policy of the clearing bank sets >the upper limit to system wide credit expansion. It >is however the upper limit, not the lower limit, >which is zero. Credit actually granted to the public >is necessarily somewhere between zero and the upper >limit subject to change in bank policy
contingent on >the demand for credit from members of the public. > >Douglas'
theorem from *Social Credit* first published >in 1924 holds as a statistical
matter between zero >and the upper limit which is continually shifting: > >"In
respect of financial institutions, let deposits = >D, loans etc. = L, cash in
hand = C, and capital = K. >Then: assets = L + C, liabilities = D + K, so that L
>+ C = D + K. Differentiating with respect to time: >dL/dt + dC/dt = dD/dt; K
being fixed, dK/dt = 0. >Assuming cash in hand is kept constant, dC/dt = 0.
>Therefore dL/dt = dD/dt, which means that loans >create deposits and the
repayment of loans cancel >deposits." >-- > >[Message from Professor Gunning] >15
Nov 2003 11:17:07 +0800 > >Speaking of apparently misguided proposals, here's a
>puzzle. Can anyone solve it? > >What is wrong
with the following proposal? > >I propose that we increase the quantity of money
by >just enough to finance a 10% subsidy to retailers of >consumer goods. The
result, I predict, will be >approximately a 10% decrease in consumer goods
>prices. (This program is advocated by a movement >called "Social Credit." For
those who might be >interested, here is some background.
>http://en.wikipedia.org/wiki/Social_Credit > >Pat Gunning
>---------------------------------------- > >[Ryan responding to Prof.
Gunning] >Professor Gunning posted this Saturday to his
>austrianschoolofeconomics group at Yahoo. All I can >say is that it causes me
to empathize with Eimar >O'Duffy's allegory that man will be replaced by a
>creature called rabbit, certainly if this is a fair >indication of the
ability of man to communicate with >man. We've been at
this for how many days now with >Professor Gunning, two weeks is it? For him to
now >so misstate the social credit position is to me >beyond comprehension.
O'Duffy may well have had it >right. It certainly does indicate a failure to
>communicate. I am not however assigning blame as to >who is at fault for that
failure. > >Social Credit does NOT propose an increase to the >quantity of money.
It DOES propose a credit applied >at the point of retail - as a matter of
accounting - >to enable demand to match supply. That's all that >Social Credit
proposes. The percentage is determined >by what is required to accommodate that
match. If >nothing is required then the credit is zero, period. > >Social Credit
analysis - based on the A + B theorem >in the form of reductio ad absurdum -
concludes there >is a defect in the system of accounting
which >entrepreneurs use to measure the effectiveness of >their decisions that
is not resolvable at the level >of the individual firm. > >Therefore, accounting
adjustment at the macroeconomic >level of the economy considered in statistical
whole >is required for capitalism to reach technical >efficiency. > >The
wikipedia article that he references contains >numerous gross errors in statement
of fact. For the >moment I'll touch on two: > >[Quoting the Wikipedia article to
which Prof. Gunning >referred] >"Douglas believed that Social Credit could fix
this >problem by ensuring that there was always enough >money (credits) issued to
buy all the goods that >could be produced. His solution is outlined in three
>core demands: > >"1. For a "National Credit Office" to calculate on a
>statistical basis the amount of credit that
should be >circulating in the economy." >--------------- > >[Replying to the
Wikeipedia article] >The singular purpose of the national credit account >is to
calculate and apply the necessary credit to the >point of retail that enables
demand to match supply >as a matter of accounting. The "amount of
>credit...circulating in the economy" is determined >exactly as it is
determined now -- by the interaction >of the institution of banking with the
public. >-- > >[Quoting the Wikipedia article to which Prof. Gunning >referred]
>"2. For a price adjustment mechanism to absorb >windfall >profits in times of
inflation, and return them to >people in terms of subsidized, lower prices when
the >cost of goods on the market exceeds the money >available to buy them."
>--------------- > >[Replying to the Wikeipedia article]
>Social Credit has never proposed a "price adjustment >mechanism." Social Credit has never proposed that >something be taken now and returned later. As I >recall, that was the Keynesian Abba Lerner's >"functional finance" proposal based on his >understanding of the "trade cycle." > >Social Credit is pure credit applied at the point of >retail or directly to consumers in the form of >dividends in the manner of accounting adjustment. > >It thereby augments not interferes with the utility >of the market. > >For a good introduction to Social Credit in Major >Douglas' own words, see >http://www.geocities.com/socredus/compendium/money_and_the_price_system.txt > >I am cross posting this to Professor Gunning's group. > >Bill Ryan >------------------------------------------- > >From Eimar O'Duffy's *Kingdom of Assinaria* as
quoted >by Robert Hogan: > >This depression was followed by a great war which
>destroyed most of the civilized world and reduced the >few remaining
inhabitants to a primitive pastoral >existence. In a few more years, the society
of men >has been succeeded by a society of rabbits, and in >the last chapter two
of the Gods "observed a dim star >among the drifting millions flash suddenly, and
go >out." One of the Gods muses that, "There ends >another of my experiments." >
>And the second God inquires, "A successful one?" > >"'Nay, a miserable failure,
though at one time it >gave good promise. That star gave birth to a number >of
planets, on one of which I evolved, after much >thought and toil, a strange
creature called Man. At >first he was truly interesting, but he reached his
>zenith too quickly, and then rapidly declined.
>During his last few hundred years, when he was >already far gone in decay, he achieved a mastery of >natural forces that was marvelous in a race so >stupid, but his wickedness and folly were such that >it did him more harm than good. In the end I >superseded him by a somewhat lower creature called >rabbit; but this had no great potentialities either >for good or evil, and so nothing came of it. A few >million years ago the planet fell back into its >parent sun, which has now itself come to an end.' > >"'Did these Men that you have mentioned achieve >nothing of lasting worth?' asked the other God. > >"'Almost nothing,' replied the first. 'A few of them >did occasionally show some glimmerings of divine >wisdom to which their fellows paid no heed. That, >and some trifles of tolerable music, is their only >memorial. If you listen you
may catch some echo of >the latter still moving among the spheres.' > >"The Gods
were silent; and the ghost of the Ninth >Symphony came stealing through the
ether." > >This is an effectively wry conclusion to a highly >talented writer's
major work... >http://www.geocities.com/new_economics/assinaria.txt >-- >
>http://groups.yahoo.com/group/austrianschoolofeconomics/message/1596 >From:
"William B. Ryan" <w_b_ryan@...> >Date: Tue Nov 18, 2003 9:11 am >Subject: Re:
[Austrian School of Economics] a creature >called rabbit w_b_ryan >
>Misstatements of fact: > >"For some reason, I was added to the list and
>starting receiving its emails." >----- > >Professor Gunning himself
subscribed to the list at >Topica. He was sent an invitation to which he >replied
affirmatively. Topica software then >automatically sent a
confirmation message to which he >again replied affirmatively for a second time.
Only >at that point did Topica begin to transmit >socialcredit messages to him. >
>[the allegation] >"Bill claimed to be an economist." >----- > >I never
claimed to be an economist. You will not >find that claim in any message that I
have ever >posted to the list socialcredit. Nor have I ever >privately
communicated that claim to Professor >Gunning. Having said that, it should be
noted that >the "austrians" have a traditional proclivity for >withholding the
term from anyone but themselves and >their close relatives. This follows Mises
who >assigned the term only to the "austrians" and their >predecessors. Which
seems incongruous since >Professor Mises' own advanced academic credentials >were
in law, not economics. >- > >[the allegation]
>"I don't know why he posted the message here." >----- > >I am a list subscriber. I responded to a message >posted to this list that directly related to social >credit that contained several gross misstatements of >fact. > >[the allegation] >"So, hopefully, we will be spared future cross- >postings." >----- > >So much for an open mind. And -- So much for >considering "austrian" economics to be anything other >than cultic pseudo-science. It is very much faith >based, as is evident from Gunning's commentary in the >socialcredit@... archives. I will compile >them and post a link to them later. > >For an example of the methodology, take note of his >response to my message. It does not address even a >single substantive point I made in my message. >Merely an "apology" for list members having to endure >my "cross
posting" followed by further misstatements, >this time about myself personally.
> >I do sincerely thank Professor Gunning for an >interesting and informative
discussion. > >I will be cross posting this message to >socialcredit@... > >Bill
Ryan >-- > > > > >--- Pat <gunning@fcu.edu.tw> wrote: > > David, you asked who
Mr. Ryan is. > > > > I wrote the following message shortly after Ryan > > joined
this list. He > > later stopped the cross posting and engaged in some > >
discussions on this > > list relating to government, anarchy, and > > philosophy;
but did not seem > > to know any Austrian economics. He started cross > > posting
again several > > months ago. I asked him to stop and he responded in > > the
same way he has > > in the most recent exchange. So far
as I can tell, > > his goal at present > > is to disrupt the list. Since he
restarted his > > cross-posting, I have not > > ordinarily seen his posts unless
someone includes > > them in a response. > > They are filtered directly into my
trash bin. > > > > Ryan seems to have had some kind of breakdown around > >
December 2004, when > > he began cross posting numerous messages. Since > > then,
he seems to have > > lost all sense of propriety. > > > > /From:/ Pat Gunning
<gunning@...> > > /Date:/ Tue Nov 18, 2003 3:12 am > > /Subject:/ Re:
[Austrian School of Economics] a > > creature called rabbit > > gunning@... > >
Send Email > >
><http://groups.yahoo.com/group/austrianschoolofeconomics/post?postID=RuLmcjtAuhLug2t_i4nWM-eyW_eJxPRYO8XNMjq5TYkFHL-eeFfLcU9XewDTVt72eR2j0LZ0vNr7LXNIf0s7qwX61uQEng> > > > > Dear list: > > > > The posting by Bill Ryan relates to a debate we have > > been having on a > > different list -- the "Social Credit" list, which he > > moderates. For some > > reason, I was added to the list and starting > > receiving its emails. Since > > I had not heard of this "Social Credit" idea and > > since I have a strong > > interest in credit, I asked a few questions. Bill > > claimed to be an > > economist. One email led to another and another and > > eventually he and I > > were engaged in a debate. The final result was a > > complete impasse, as > > evidenced by the message relating to
the Fed's > > ability to control the > > amount of bank money creation. He
denied this; I > > affirmed it. > > > > Bill posted his message to his list and
to this one. > > I don't know why he > > posted the message here. However, I have
since > > unsubscribed to his list. > > So, hopefully, we will be spared future >
> cross-postings. > > > > Sorry :-[ > > > > > > -- > > Pat Gunning, Feng Chia
University, Taiwan > > pgunningp@hotmail.com > > New book: UNDERSTANDING
DEMOCRACY: AN INTRODUCTION > > TO PUBLIC > > CHOICE > >
http://nomadpress.com/public_choice/ > >
http://mail.ebtnet.net/~manta/public_choice/ > > > > Web pages on Praxeological
Economics, Democracy, > > Taiwan, > > Ludwig von Mises, Austrian Economics, and
my > >
University > > Classes; > > http://www.constitution.org/pd/gunning/welcome.htm >
> and > > http://knight.fcu.edu.tw/~gunning/welcome.htm >
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