Hi Bill, I think there has been a digression away from the central simple statement re interest. I am not concerned with any effects that may arise because of the interest factor on a borrowing and the expenditure of the debt which goes into prices and the interest which also must be added to price. The recovery of price and any profit does allow the original borrower to repay his loan, but unless there is a continuance of borrowing the money received from the one who provided the profit must obtain a profit which would include the interest charge other wise his debt could not be repaid.
A simple example: There exists a bank. There exists two traders. Trader A borrows from the bank $1000 @ 10% and producers goods which he sells to Trader B at cost%. the selling price must be $1000 plus $100 i.e., $1100 Trader B borrows $1100 from the bank @ 10% to purchase from Trader A who repays his bank $1100 . Trader B now has a debt of $1210 . Trader A has no money. Trader B has a debt of $1210 and unless someone borrows more so that he can recoup his borrowing plus interest there is insufficient money for him to do so. The debt of course has increased. I reiterate, that interest can only come from subsequent creations of credit, i.e., bank lending, and when this does occur there is an increase in debt. I find this in line with your comment re Douglas below: "Douglas's point about "B" was that it is on the way back to the banks; it is not available for the payment of interest or principal without furthering borrowing." Vic ----- Original Message ----- From: "William B. Ryan" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Monday, July 14, 2003 3:29 AM Subject: Re: [SOCIAL CREDIT] to Victor > -->Bill, the difference I think in our approach is: > (1) I have stated that interest can only come from > subsequent creations of credit (ie. bank lending). > If at any time I borrowed from a bank with an > attached repayment of interest and from that point on > no new lending occurred there would be insufficient > money to repay "someone's" debt.<-- > > Douglas's point about "B" was that it is on the way > back to the banks; it is not available for the > payment of interest or principal without furthering > borrowing. That means there are different > determinants to the "costs of production" and the > flow of consumer "purchasing power" considered as > "rates." They do not automatically coincide. Say's > "law" cannot be a law in the sense of being a natural > law, such as the law of gravity. > > It is difficult to think of profit as it really > exists in double-entry accounting, because our minds > like to think in terms of "money" being a tangible > thing--like "coins" or "banknotes." We like to think > that profit is getting back more money than we have > spent. Marx put it this way: M -> C -> M', Profit = > M' - M. It is the "common sense" way of looking at > it. > > In this case, as in so many other cases, common sense > fails us. Douglas was one of the very few to have > ever recognized this. He saw that money is credit > but credit is not necessarily money. In this he is > one of the singular productive geniuses in the > history of mankind. We will be learning from him for > years to come. Credit is an abstract concept that > requires thinking "out of the box," which Douglas was > able to do. We lesser mortals can only hope to > follow his method, which we will glimpse as we grow > in understanding. > > Profit in accounting (whether received by > entrepreneurs or bankers--what they call "interest") > is not the surplus of cash received over cash > disbursed. It is the increasing ratio of assets to > liabilities. > > With that increasing ratio your credit line with the > banks is increasing (individual banks also have > credit lines with "the banks"). With that increasing > ratio--and I am speaking in terms of the economy as a > whole--increasing costs, reflecting increasing > production and productive capacity, are being passed > along to consumers, which is the relatively > increasing "B" component to a+b. But the money > corresponding to "B" is in your hands or at your call > via your increasing credit line, not the hands of > consumers. > > The "A" component is therefore decreasing in terms of > a+b, yet consumers are expected to pay the totality > of the proportional equivalent to a+b from their "A". > So your sales to consumers are falling in respect of > your costs, which you bridge by going further into > debt to the banks (if you are a bank you go further > in debt to the other banks). > > You may try to shift some of that debt to consumers > to boost sales. You might implore government to fill > the gap. Regardless, debt is increasing > *exponentially* or disproportionately in the economy > as a whole as compared to increasing production. > Sooner or later somthing will have to break. > > Two possibilities reveal themselves in terms of > policy: The "monetary authority" will control the > "money supply" so that wages increase proportionately > to increasing production, in which case the price > level rises exponentially, morphing into hyper- > inflation; or the authority will control the money > supply so that the price level remains proportional > to increasing production, in which case wages fall > exponentially, with collapsing "employment." > > In recent years, the monetary authority has been > attempting to chart a "middle course" between these > two extremes. > > But that is the "common sense" solution. > > It is definitely not the "best" solution. > > Bill > > ---original message--- > From: Victor Bridger <[EMAIL PROTECTED]> > Subject: Re: [SOCIAL CREDIT] to Victor > Date: Sat, 12 Jul 2003 17:27:56 +1000 > > Bill. > the difference , I think in our approach is: > (1) I have stated that interest can only come from subsequent creations of > credit (ie. bank lending). If at any time I borrowed from a bank with an > attached repayment of interest and from that point on no new lending > occurred there would be insufficient money to repay "someone's" debt. > (2) I still adhere to my statement that money is not an asset (at least not > in Social Credit) terminology. It is a "claim, a means" by which an asset or > anything else may be obtained. By itself money is a nothing and I agree with > Douglas that it is psychological in that it can be anything we want it to be > provided it is acceptable by others, as per our definition of Money. > (3) I have attached in PDF an extract from Douglas's "Monopoly of Credit" in > which he clearly accepts that money is a liability not an asset. He refers > to "Fixed Assets and Money Assets" in his following explanation but the use > of Money Assets is a reference to the fact that these "Assets" can be > converted to or are a claim on money and also included Cash at call. It is > simply a recognition that "Money" is or should be a reflection of reality > i.e., those things he has shown under assets. > Vic > > _________________________________________________________________ > The new MSN 8: advanced junk mail protection and 2 months FREE* > http://join.msn.com/?page=features/junkmail > > > > ==^================================================================ This email was sent to: [EMAIL PROTECTED] EASY UNSUBSCRIBE click here: http://topica.com/u/?a84IaC.bcVIgP.YXJjaGl2 Or send an email to: [EMAIL PROTECTED] TOPICA - Start your own email discussion group. FREE! http://www.topica.com/partner/tag02/create/index2.html ==^================================================================
