Dear Wally,  The other day I read your brief lesson (that
I shortened and attach after my related comments below.
It offered clear insights into logical improvements to our
way of producing and consuming, etc. Thank you for it
and for allowing me to address you directly, as well as
on the SC list.  My ISP and Outlook program both were
half-busted on the weekend -- I was unable to reach
the list or get my mail. Things may have been fixed -- this
message may show it. -- John Gelles on Tuesday

Below are my comments from last Saturday that got hung
up as mentioed above. I've added a bit to admit that the
fault I find in SC is also found in myself.

-------- my comments (Wally's lesson comes after it) --------

As Wally writes it below, it is wise I think to accept that Social
Credit and Douglas's ideas are completely right -- that --

        Were consumers paid a measured dividend and 
        retailers adhered to a measured markup there 
        would be in each production cycle ample mone-
        tized demand for accountants to feel content that
        their measures were useful in our struggle to end
        poverty, redession and forced loss of wages..

The system we have, which uses consumer debt and the
agony of insolvency, to move from one production cycle 
to the next has built great industries, cities and nations. Its
accountants (of which I'm one), politicians, builders,
economists, voters, etc., cannot grasp the step by step
procedure that might take an economy from today's
substantial if peculiar prices and rewards to the greater
promise of a Social Credit model. 


Who is to blame that the model in use could change to
accommodate lend lease and unsold-bond financing to
win WW II --  but has not changed to accommodate 
the consumer dividend and controlled retail price that
might have won and still might win the peace that

It is obviously YOUR fault ! -- not you Wally, but the 
collective world of reformers, including Social Credit 
reformers and people like me, as well.   You and I have 
grasped your model and mine but cannot rewrite it and 
write a plan to make it available in the minds of the 
people for whom it would be a godsend.

Only the voters and all the professionals on whom they 
depend can implement the model Wally or I hold in our

But Wally and SC friends tell these necessary implementers
to read an original Holy literature. It is obvious the literature
lacks a plan to make the SC model digestible. The plan is
clear in Wally's team's minds but it is couched in jargon and
fancy business language that does not paint a picture in
an ordinary mind.

I will admit that our reserve banking system, out consumer
loan industry, our crazy tax laws, our crooked election 
financing, are all systems whose written models are not
capable of common understanding.  But they evolved and
we are stuck with them until reformers change things.

Years ago Beardsley Rummel (or a similar name) changed
the income tax from pay-later to pay-as-you-go. To do it
his model skipped a whole year's income tax. But he was 
able to add to the model (of how to collect taxes)  a plan 
of how to go from the evolved system to the new system.

It seems to me that SC advocates must try to rewrite
their model to fit a single page. Then they need to write
a long compelling plan of how to get millions of people
to love the model and pressure the power structure to
see the light.

And these advocates should not be purists. If the SC
consumer dividend is close to other entitlements in other
models, common cause with their near-alikes ought to
be attempted. Similarly, the debt-free nature of some
legal tender and the tax reforms in the SC model ought
to be broken out so that alliances with money cranks
and tax cranks can be made.

SC is standing still because its advocates will not see 
what's blocking the road ahead.

My own reforms are standing still because although
I see what's blocking the road, I'm unable to present   very effectively.

        John Gelles

============ Wally's  Lesson ================

From: Wallace M. Klinck
Social Credit analysis approaches economics from the standpoint 
of industrial cost-accountancy as it relates to the existing financial 
system wherein practically all money is issued by private banking 
institutions as debt.  

Money spent by consumers includes the cost of the physical 
plant or capital involved in production of consumer goods. When 
consumer income is spent, it is cancelled when business repays its 
bank loan--opposite to the way it was originally created by a bank 
loan.  The point is, money is taken back from the consumer and so 
cancelled in respect of all costs including capital.

But capital physically lasts for a long period of time.  The money 
reflection of it is, therefore, cancelled long before the physical 
capital can be expected to fully "depreciate".  One might say, that 
the consumer is charged with capital depreciation but not credited 
with capital appreciation which is far greater than depreciation.
Now, it is a central concept of Social Credit that the true cost of 
production for each cycle is, measured in financial terms, the national 
mean rate of consumption divided by the mean rate of production--
always and increasingly a value of less than one.  

Surely, in light of these considerations, the enormous degree to 
which the present financial system robs the individuals of society 
of their very real and potentially increasing inheritance in the 
"communal capital" (which could be restored to them via increasing 
economic independence, abundance, leisure and freedom) should 
be starkly apparent.

Douglas's "A+B Theorem" demonstrates how under existing debt 
finance the flow of industrial financial costs swell increasingly relative 
to the release of "effective demand" (capable of finally cancelling 
financial costs and not merely transferring them as a charge against 
future production), i.e., financial income in the form of wages, 
salaries and dividends.  

Douglas's proposals to make up this deficiency of effective 
income incurred in each cycle of production involve an injection 
of non-repayable ("debt-free" and interest-free) money from 
outside the financial costing system as direct payment to 

This is to be accomplished by means of a National (Consumer) 
Dividend payable to each citizen and a payment to retailers on 
condition that they lower their prices to effect a Compenstated 
Price.  By this means, the citizens would receive their rightful 
share in the communal capital (currently appropriated by existing 
financial practice)--which would be fully restored, continuously 
and dynamically.

The above is an encapsulated statement and does not deal with the entire 
subject which is somewhat more complex in detail.  To have a Cultural 
Inheritance and accumlating communal (not collective or "communist") 
capital, society must have the realistic basis for such.  This involves 
a high and normally increasing "real credit", i.e., capability of 
producing goods and services as, when and where required. 

        Social Credit would ensure that "financial credit", i.e., 
        the ability to deliver money as, when and where required 
        equates to "real credit".  

Social Credit becomes, therefore, more applicable to 
a modernizing industrial state where capital costs are 
increasing relative to labor costs.  In primitive economies 
where labor predominates as a factor of production, physical 
production is severely limited but total financial incomes 
earned in each cycle of production more nearly equate the total 
financial costs of production.  Hopefully, of course, all nations will 
continue to modernize through invention and more efficient physical 
capital in a positive and beneficial way--making Social Credit 
increasingly relevant to all. 

The passing on of one's private wealth and receipt of such as an 
inheritance would remain an undisputed right in a Social Credit 

Scarcity necessitates more group dependence but Social Credit 
would enhance individuation--that is more individual creativity and 
independence.  Human association is central to Social Credit and 
results (if realistic principles of association are understood and 
practiced) in the Increment of Association.  Social Credit aims 
to maximize the latter and minimize Decrements of Association.  
This involves such things as freedom to contract out of an 
unsatisfactory association--which is positively related to 
economic independence and security.

======== End of Wally's Lesson (as shortened) =======

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