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.
