Posted on: April 05, 2017 by M. Oliver Heydorn

Category: Social Credit Views

Social Credit USA 2017 - A Monetary System for all Americans

Isn’t it about time that we had a financial system that worked for all Americans? The Social Credit proposals of the engineer, Clifford Hugh Douglas, explain the kind of monetary reform that needs to be implemented in order to fix our current dysfunctional debt system.

 

1. In economics, the common good consists in this: all of the members of a society are able to obtain the goods and services that they need to survive and flourish with the minimum consumption of material resources and of human labour.

2. Given the tremendous productive capacity of the USA, a physical capacity that is made possible and steadily amplified by ever more astounding feats of technological progress, there is really no good reason for destitution, poverty, or overwork in its various forms. That is, there is no physical or realistic reason why the common good in economics (as defined in #1) cannot be realized.

3. The Social Credit diagnosis of our economic ills reveals that the reason why the economic common good is not actualized to the extent that it could and should be, has to do with the nature and role of finance in the modern economy. The current financial system (i.e., the banking and cost-accountancy systems) is not designed to provide a complete and therefore accurate representation of the physical economic facts and, for this very reason, it fails to promote, in an optimum manner, the well-being of all Americans.

4. More specifically, whenever there is a genuine unmet need on the one hand, and the raw materials, equipment, labour, and technological know-how, etc., to meet that need on the other, the financial system must be able to issue sufficient financial credit to catalyze society’s useful production capacity in the form of producer loans. Similarly, whenever goods and services reach the market with their price tags attached representing all costs and profit margins, there must be sufficient purchasing power in the hands of consumers to a) purchase all of the available desired consumer goods and services on current offer while b) liquidating, once and for all, total production costs. Unfortunately, for various reasons, the current financial system does not provide the consumer with sufficient unencumbered income to offset the costs of production in full. As a result of this anemic consumer market, the credit available for catalyzing useful production also tends to be restricted and therefore inadequate.

5. Because of existing cost accountancy conventions in conjunction with the fact that the private banks possess a monopoly or a near-monopoly over the money supply (over 95% of which is created as an interest-bearing debt or debt-equivalent whenever a private bank makes a loan or purchases a security), the rate at which the prices of goods and service are generated by the industrial economy exceeds the rate at which income, in the form of wages, salaries, and dividends, are distributed to workers, management, and owners in their rôle as consumers. There is, therefore, a lack or deficiency of consumer purchasing power being released relative to the costs and prices generated by every production cycle. Unless appropriate compensatory methods are employed, there will not be sufficient purchasing power to buy in full whatever we produce, nor will there be, ipso facto, enough to liquidate in full the prices and hence costs of what we produce. The financial system is not self-liquidating.

6. The existing economic system attempts to ward off the threat of recession or depression which the inherent lack of consumer purchasing power would otherwise cause by filling the recurring and growing price-income gap with additional debt-money borrowed from the private banks in the form of consumer loans, but also in the form government loans for public, non-consummable production (such as, public works, military expenditures, the space programme, etc.) and business loans for new investments (especially capital production and production for export) – hence the perennial emphasis on jobs and growth.

7. In lieu of this constant infusion of compensatory debt-money (which results in an ever-expanding societal debt burden) and in lieu of its only conventional alternative, i.e., economic stagnation or contraction, Social Credit proposes that a non-partisan organ of the state, a National Credit Office, Authority, or Commission, be set-up with the task of ensuring that a sufficient flow of ‘debt-free’ credit be created and issued to consumers in order to bring the flow of consumer purchasing power into an automatic balance with the flow of consumer prices.

8. The volume of ‘debt-free’ credit needed would be determined by the drawing up of a National Supply and Demand or Profit-Loss Account which, on the basis of the relevant published statistics, would determine the rate at which the flow of prices exceeded the flow of incomes. The proportion of production unrepresented by incomes would constitute a profit that could and should be shared amongst all of the American people on an equitable basis. Social Credit is the universalization of capitalism.

9. The National Credit Office (NCO) would have the duty of issuing the ‘debt-free’ credit to or on behalf of consumers so that it could be spent on consumer goods and services. The direct payment, called a National Dividend would be issued to each citizen in equal allotments on a periodic basis independently of employment status or any other consideration. The remainder of the compensatory ‘debt-free’ credit needed to make the financial system self-liquidating would be issued in the form of a universal discount on retail prices. This discount would be a percentage rebate determined by the ratio of National Consumption (as measured in dollars) over the value of concurrent National Production (as measured in dollars). Retailers would lower their prices in keeping with the discount level in exchange for a reimbursement of ‘debt-free’ credit from the NCO so that their full production costs can be liquidated.

10. To the National Credit Office, there would also fall the duty of keeping a National Balance Sheet, which would show, as assets, the total monetary value of the nation’s productive resources vs., as liabilities, the degree to which these assets have been called on for production purposes (as represented by the volumes of producer credit that have been issued to catalyze production). The nation’s net worth, i.e., the value of its unused assets, would represent the degree to which new producer credit could be issued through the banks, if so desired, in order to meet the community’s need for additional useful production.

11. In addition to solving the problem of poverty in the midst of plenty, and of servility in place of freedom, it is anticipated that the Social Credit proposals to re-engineer the economy’s financial system so that it will finally be self-liquidating (with the flow of consumer prices and of consumer purchasing power in an automatic balance) will also go a long way towards decentralizing economic wealth and power in favour of the individual citizen, eliminating economic waste and sabotage, eliminating both demand-pull and cost-push inflation, lowering taxation, reducing the size and power of government, improving social stability, facilitating environmental protection, conservation and repair, and laying a solid foundation for a mutually beneficial international trade system.

12. With the rapidly developing displacement of labour by technology and artificial intelligence, it is imperative that America be provided with a modern distributive financial system to meet the requirements of an age of increasing automation, abundance and leisure.

 

 

 

 

 

 

 


Comments

Posted: April 06, 2017

By: Dick Eastman

Compensatory ‘debt-free’ credit distributed as a National Dividend to everyone and another system of universal discount on retail items supplying purchasing power sufficient to buy whatever we produce, to liquidate the prices of what we produce. Is the Douglas dividend an addition to the money supply? The American people have large debt obligations and many default because the debt burden has grown to big even as the money supply has failed to expand with the debt obligations. This means that a percentage of the National Dividend disbursement will simply go to paying interest on the debt which otherwise would not have gotten paid. It also means that the financial sector can raise interest rates and simply capture that dividend money. It seems to me that a national dividend to households should be the only source of new money in the economy -- that none of the money supply should be "borrowed" (i.e. a new deposit co-created with a debt obligation to make future payments of principal and interest). I also believe that conversion to a social credit dividend-provided money supply should go along with repudiation of debt to international finance -- since the system of the all borrowed national money supply was doomed to pauperize the human race. The fraud should be abolished and the debt slaves set free. I suppose a Douglas Social Crediter would not agree, since they view the shortage of distributed incomes for liquidating prices as the result of problems with accountancy, rather than resulting from the criminal outrage of having private lenders loaning the nation's entire money supply at interest, when the money supply could and should be provided free, through the national dividend, as a public utility, as necessary infrastructure required by a rational maket system.

Posted: April 27, 2017

By: Wallace Klinck

Often certain advocates of Social Credit, frustrated in their ability to progress in gaining converts and adherents, look for some way of “modernizing” Douglas’s ideas to bring them “up to date” for purposes of gaining public appeal. Sometimes these proponents of “updating” Social Credit to increase “public acceptance” are sincere, sometimes themselves not clear in their understanding of the meaning and intent of Social Credit policy--and sometimes are agents of disruption intent deliberately upon sabotaging Douglas’s ideas. My response is as follows:

"Why would you want to modify the Social Credit philosophy and policy? Social Credit was an idea whose time had come a century ago, when the evermore capital intensive industrial age was effecting profound economic and social change, and has become more relevant and applicable with the passage of time. You don’t modify something that is fundamentally sound just because people may not understand it. Reality is reality. We simply must educate people in an effort to help them come to an understanding of actuality. We are assisted in this with every replacement of human effort by technology.

"Social Credit, per se, was conceived only a century ago, which is a very short time historically speaking. Press your critics to explain exactly and in detail why they think that you are “out of date.” Perhaps they can tell you why gravity is 'out of date'. If they concur with what you are saying but claim simultaneously that the ideas you are presenting are dated, then they appear to be suffering from cognitive dissonance. By inducing some confusion in their minds, you may be making some progress in managing to acquire at least some agreement. Social Crediters want to free people from their enslaving delusions—not ‘catch' them by catering to and reinforcing such delusions.

"We just have to keep honing our abilities to propagate the Social Credit concepts until they begin to gel and the dissonance comes together in clear resolution. I know that the inborn skepticism and/or crass ignorance of many people is frustrating—having spent nearly a lifetime in trying to promote Douglas’s ideas. But one can neither deny nor distort the truth just because people cannot perceive it. We have, of course, had powerful opposition in high places*—but the latter is becoming increasingly discredited and displays perhaps even itself some signs of fracture or incipient disarray."

Sincerely
Wally Klinck

*Douglas wrote in the "New Age", March 28, 1929:
“In this country the Institute of Bankers allocated five million pounds to combat the subversive ideas of ourselves. The large Press Association were expressly instructed that my own name should not be mentioned in the public Press. During the last five years the seed of Social Credit has been driven underground.” --Eric de Maré, "A Matter of Life or Debt” (Onalaska, WA: Humane World Community Inc., 1991 U.S. Ed., p. 87.)

Posted: April 27, 2017

By: Wallace Klinck

Responding to Dick Eastman's post of April 6, 2017.

The Social Credit position involves a study of both the banking or credit system and the existing conventions of industrial cost-accountancy. These conventions result in financial prices being created at a volume of flow which greatly and increasingly exceeds the rate of flow of consumer incomes being paid during each and every accounting cycle. Obviously, economic system could not function without the intervention of some factors which allow the consuming public to access the goods flowing from the production line. The primary factor is the creation of loans issued by the banking system for new production, increasingly for consumer purchases and to facilitate exports in excess or imports. Loans do not finally cancel costs and prices but merely transfer them as an inflationary charge against and repayable from future production cycles.

Entrepreneurs or producers, being actualizers of creative initiative require community resources to pursue their activities. They acquire these resources by the means of borrowed and repayable financial credit, created and issued by the banking system, which is not a borrower and lender of money but a creator and destroyer of financial credit.

The primary issue is the ownership of credit. Presently the banking system claims ownership of the credit which they create and lend whereas this credit actually belongs to the community, being representative of the real credit, or actual productive capacity, of society. By means of their false claim of ownership of the credit they create to monetize the communal capital, the banking system exceeds it proper role as a mere accountancy agency and has in effect appropriated this communal capital or Cultural Heritage of society. Karl Marx would have expropriated it directly whereas the financial system has appropriated it indirectly by means of financial legerdemain.

Social Credit would restore to society its rightful inheritance in the Cultural Heritage by means of beneficial rather than direct ownership. This would be accomplished by ensuring that all members of society as consumers are entitled to their rightful share in the ultimate products of industry. This would be accomplished by issue of inalienable National (Consumer) Dividends to all citizens and payments to retailers at point of sale of consumer credit allowing them to sell at reduced, i.e., Compensated Prices. These consumer credits would be issued without incurring financial debt--being simply drawn from a properly constructed and actuarial National Credit Account which would be an approximate valuation of all national assets which if used for production might in incur costs and result in prices. Because capital assets are growing at a rate which exceeds their consumption the National Credit Account would always be increasing although the withdrawals required to finance National Dividends and Compensated (Retail) prices, being items of consumption, would diminish the Account.

C. H. Douglas claimed that the consuming public should have cash credits equivalent to the prices of consumer goods but that all new production should be financed by new credits which would result in production costs and prices and must be recoverable from consumer purchases to enable the producer to repay his initial production loan and qualify for a new cycle of credit enabling him to continue serving the economic needs of the public. The consumer credits which Social Credit would issue would supplement consumer income directly by way of a National Dividend and indirectly by way of Compensated (Retail) prices and would simply compensate for the existing lack of effective purchasing-power in the hands of consumers. When spent these credits would pass from the producer to his bank and be cancelled in the same manner that existing debt credits issued by the banks are now cancelled. The difference is that when spent they would permanently cancel the costs of production without resulting in debt carrying forward as inflationary charges mortgaging future incomes.

Money was not meant to be saved but rather to be used. Monetary saving does not equate to physical saving. Actual goods spoil, decay, obsolesce and otherwise deteriorate. The actual "savings" of society consist of its real physical resources which can be monetized for production if or when required or desired. Social Credit does not propose that the cash credits available to society should equate with the capital values of society. "Money" is simply accountancy which should faithfully record the creation and cancellation of financial prices. In this manner a rational system of cost-accounting is made possible. Money would be created at the rate of production and cancelled at the rate of consumption. A rational system of cost-accountancy would ensure that the public has immediate financial access to the final product of industry and that all formal financial costs attached to that production can be cancelled by the act of consumption. A proper National Credit Account would represent the potential creative capacity of society which is available to be monetized and activated if this is desired.

When money or credit is created for purposes of production this involves the actualization of creative initiative which originates in individuals throughout society. Some "monetary reformers" would "restore to the Government all power to create money". This is a very dangerous proposal which can be found, predictably, in the Communist Manifesto. He who pays the piper calls the tune. If the State had all power to create money it would also have all power to initiate, suppress or direct all creative initiative. This would constitute the ultimate centralization of power over Society at large. Social Credit policy is to decentralize the power resident in real and financial credit broadly amongst the citizens at large. Social Credit wants to break the Monopoly of Credit and not to strengthen it. Financial credit should be widely available for production and should ensure full and broad distribution of final consumer goods without any residual financial debt remaining after the completion of any production cycle.



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