<**>One further question, Bill: Do you expect that
the new money that is used to finance the national
dividend or national credit office, or whatever, will
cause an ultimate increase in consumer goods prices
by raising consumer demand and costs of production?
Have you neglected the time honored quantity theory
of money which holds that, other things equal, an
increase in the quantity of money tends to cause a
nearly equivalent percent increase in consumer goods
prices in the long run?<**>
--------------------
We specifically deny the quantity theory of money.
It is meaningful only within the fungible commodity
"medium of exchange" model where money is an
independent variable. That money would be
"exogenous" in Post Keynesian terminology.
Modern economies are mostly "creditary" or
contractual where prices are determined within the
nexus of contracts where money is financially the
dependent variable of those contracts.
The process "endogenously" converts - meaning through
market transactions - the individualized credit
instruments of producers into credit instruments that
are generally fungible - checking account money -
which serve as the means of final settlement of
contracts.
Douglas used the "ticket" metaphor to describe the
process. There is the flow of "prices" (A + B) to
the point of retail in parallel to the flow of goods.
Also in parallel is the flow of "tickets" (A) to
consumers that allow them to claim those goods. The
"tickets" are "fungible," which means they are
redeemable not only at the "company" store but any
store, making the competitive mass production
possible, enabling mass consumption.
Most credit is therefore "endogenous" to the market
and would remain so with social credit. The proposal
is that a certain amount of credit be introduced
"exogenously" (consumers' dividends and retail
discounts that do not displace but supplement the
"endogenous" credit) as an adjustment mechanism
(control variable) to compensate for deficiencies in
accounting.
A + B is the analytical tool that explains the
primary way those deficiencies come about. One of
the consequences of those deficiencies is inflation,
which is explained through the theorem.
As paradoxical as it might seem, the dividend and
discount are counter-inflationary if prudently
implemented.
---original message---
Date: Wed, 05 Nov 2003 14:53:05 +0800
From: Pat Gunning <[EMAIL PROTECTED]>
Subject: Re: [SOCIAL CREDIT] Questions from Gunning
[EMAIL PROTECTED] wrote:
><**>So the government will print more money (or
>create it in other ways) and give part of it to
>consumers hoping or expecting that the consumers will
>use it to pay their debts ("national dividend").<**>
>-------------------
>
>It wouldn't be government as government but perhaps
>it would be an independent public agency. Ideally it
>would be the central bank. It is not inconceivable
>that the banking system would do it on its own
>initiative without government prodding, because it
>would be in their own best interest to do so. The
>idea is not for consumers to pay their debts although
>they may do so from their credits that are theirs to
>spend as they like on whatever they like. The idea
>is to equate the flow of "prices" (A + B) flowing to
>the point of retail with credit flowing in the
>direction opposite from sales into consumption,
>thereby proportionately offsetting the costs of
>production. You do that by augmenting consumer
>incomes and subsidizing prices.
>--
>
><**>The government would also give part of the new
>money to retailers in exchange for reducing their
>prices to consumers...<**>
>--------------------
>
>Again, not the government as such but the national
>credit account that would have to be affiliated in
>some way with the central bank. It is not "in
>exchange" for reducing their prices but would
>effectively lower prices in real terms. It is a
>fixed percentage of the individual retailer's gross
>sales. The percentage would be the same for all
>retailers.
>--
>
><**>it would lend part of the new money to businesses
>to finance new production.<**>
>--------------------
>
>No loans are contemplated from the national credit
>account for either production or consumption. It is
>not in the banking business. Its sole function is to
>prudently grant credits to consumers or to the
>benefit of consumers at the point of retail.
>--
>
><**>Would you also make a law against buying consumer
>goods on credit and/or against investors financing
>production by borrowing not new money but existing
>money?<**>
>--------------------
>
>Of course not in either case. Wally's answers in
>this regard reflect his fundamentalist Christian
>aversion to debt. "Neither a lender nor a borrower
>be" is how Benjamin Franklin put it. Western
>Canadian social credit had a strong connection to
>fundamentalist Christianity. The founder of the
>Alberta party was a prominent radio evangelist who
>served as Premier until his death in 1943. In Quebec
>the movement had a strong Roman Catholic following
>that elected twenty or thirty federal
>parliamentarians. In England the movement had strong
>support from "High Church" Anglicans (those who like
>ornate vestments, chanting, incense who prefer to be
>called "Anglo-Catholic"), including for a time the
>Archbishop of Canterbury and also the Dean of
>Canterbury, who served as Treasurer of the Social
>Credit Secretariat until his defection to Stalinism,
>whence he became infamous in history as the "Red
>Dean." He was an interesting but eccentric character
>who was the last known clergyman to routinely wear
>gaiters, the street attire of nineteenth century
>Anglican bishops.
>--
>
><**>if you were hired as an agent to implement the
>policy, how would you decide whether a firm should
>receive the new money or not?<**>
>--------------------
>
>Essentially, the program is limited to the point of
>retail. Except for some minor requirements for
>record keeping, etc., it is contemplated that all
>retailers would participate.
>--
>
><**>How would the agent decide how much to give to
>each firm (or consumer)<**>
>--------------------
>
>The dividend is equal to each resident, man, woman
>and child. The retail subsidy is a straight
>percentage of actual sales that would be the same to
>all retailers, much like a sales tax in reverse,
>except it isn't given as a tax credit but as a cash
>credit. There is no connection between the national
>credit account and the taxing authority. If costs
>flowing to the point of retail are running ahead of
>sales, the dividend and subsidy are increased. If
>sales are running ahead of costs, they are reduced.
>--
>
>
One further question, Bill: Do you expect that the new money that is
used to finance the national dividend or national credit office, or
whatever, will cause an ultimate increase in consumer goods prices by
raising consumer demand and costs of production? Have you neglected the
time honored quantity theory of money which holds that, other things
equal, an increase in the quantity of money tends to cause a nearly
equivalent percent increase in consumer goods prices in the long run?
--
Pat Gunning, Feng Chia University, Taiwan;
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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