An interesting post. Here is what I have published on this topic:
When multi-national corporations begin to adopt 21st century economics, they will need to develop better means of currency conversion for transfer pricing and trade. These methods will rely on developing a common market basket of goods relevant to the needs of all of their workers. This market basket will then be priced in both currencies, comparing the cost difference with the exchange rate difference. To be true to all of its employee-owners, it will make internal pricing decisions based on the single market basket, while capitalizing on these differences for other economic decisions.
Comparing the various market baskets cost differentials and the price differentials is also the measure by which one economy exploits another. An examination of the effect of tariffs and subsidies will be part of this analysis. Knowledge of these disparities can be used as ammunition in lobbying for or against trade arrangements, such as the North American Free Trade Agreement (NAFTA), as well as subsidies and tariffs. Publishing this information widely will also have an effect, as the information itself will effect the performance of trade and currency markets.
Using this information in these ways is as close as the world can come to the adoption of a single currency, although wide publication of this information can be seen as a step in that direction. As tariffs and subsidies lessen and third world economies develop, and they will as employee-owned concerns gain power in both the American and the world economy, currency rates will stabilize. When this happens, agreements on money supply growth targets can be made between national reserve banks, controlling inflation and further stabilizing both prices and currencies, facilitating long-term growth and prosperity on a more global scale. These actions will diminish the need for such institutions as the World Bank and the International Monetary Fund and their failed fiscally conservative policies. In fact, the spread of Cooperativism will also lead to a wide adoption of tax and social insurance policies suggested in this volume. Such policies are the antidote for the failed policies of the World Bank/IMF.
These metrics can be used to accurately measure the health of developing economies and ease the transition to a free market system in the formerly Communist world, the topic of the next essay.
"Wallace M. Klinck" <[EMAIL PROTECTED]> wrote:
Comparing the various market baskets cost differentials and the price differentials is also the measure by which one economy exploits another. An examination of the effect of tariffs and subsidies will be part of this analysis. Knowledge of these disparities can be used as ammunition in lobbying for or against trade arrangements, such as the North American Free Trade Agreement (NAFTA), as well as subsidies and tariffs. Publishing this information widely will also have an effect, as the information itself will effect the performance of trade and currency markets.
Using this information in these ways is as close as the world can come to the adoption of a single currency, although wide publication of this information can be seen as a step in that direction. As tariffs and subsidies lessen and third world economies develop, and they will as employee-owned concerns gain power in both the American and the world economy, currency rates will stabilize. When this happens, agreements on money supply growth targets can be made between national reserve banks, controlling inflation and further stabilizing both prices and currencies, facilitating long-term growth and prosperity on a more global scale. These actions will diminish the need for such institutions as the World Bank and the International Monetary Fund and their failed fiscally conservative policies. In fact, the spread of Cooperativism will also lead to a wide adoption of tax and social insurance policies suggested in this volume. Such policies are the antidote for the failed policies of the World Bank/IMF.
These metrics can be used to accurately measure the health of developing economies and ease the transition to a free market system in the formerly Communist world, the topic of the next essay.
"Wallace M. Klinck" <[EMAIL PROTECTED]> wrote:
The following, Chapter 5, is taken from the book Warning Democracy
(Third Edition) by C. H. Douglas (London: Stanley Nott, 1935).
THE GOLD STANDARD AND INTERNATIONAL EXCHANGE
by Major Clifford Hugh Douglas
It must be within the experience of most people who have endeavoured to
popularise the idea of finance with which this review is associated, to
find that the question of international exchange forms a stumbling
block. In the case of those persons of whom, perhaps, it is most
important to make converts, such as business men and others who deal
practically with the everyday transactions of commerce, it is frequently
possible to obtain an admission that some new conception of finance,
besides being desirable, does not appear to present insuperable
difficulties in regard to internal business, but is ruled out of the
sphere of practical politics because of (what seems to them) the
insurmountable difficulty of international trade on a basis other than
that of the gold standard.
It is relevant to observe in the first place that this is exactly the
idea which the upholders of the gold standard would wish to disseminate.
It is fairly obvious that if you can imbue an effective majority with
the idea that nothing can be done for the financial system except as the
result of world-wide and international agreement, you are going to put
off any considerable action for a long time. It is convenient, though
not necessarily accurate, to say that the length of time required to
obtain action in regard to any fresh idea, varies directly as the square
of the number of people required to be convinced, and inversely as the
simplicity of the proposal, and is unaffected by its essential
soundness.
But while, I think, there is reason to suspect conscious assistance to
the idea that finance can only be treated as a world-wide problem, and
that reform on any other basis is impracticable, there are doubtless
genuine difficulties in the apprehension of the fallacy involved in this
idea; difficulties which in the main arise from the conception of money,
and more particularly gold, as having some fixed value in itself.
Now the theory, if theory it may be called, of a gold exchange standard
is that if two articles, A and B, have prices attached to them in
different currencies, those prices will vary inversely as the amount of
gold which the currencies in question will buy, varies. That is to say,
if the price of gold in English currency is �4 per ounce, the price of
gold in American currency is $20 per ounce, and the price of two
articles, A and B, in the respective countries is �1 and $5, a rise in
the price of gold in Great Britain to �5 per ounce would mean a fall in
the price of article A, if bought by United States currency, by 25 per
cent., and a rise in the price of article B, if bought in British
currency, by a similar amount. That is the theory, although it is very
far from being what actually happens.
The first point to observe is that we are considering the interplay of
two kinds of credit systems. The national currency depends for its
validity on the fact that, if tendered inside the country of origin,
goods will be delivered in exchange for it. Gold, in the post-war world,
has been artificially elevated into a super credit system of a peculiar
kind. For the individual, gold is an effective demand for currency of
any country at the gold exchange rate. For the banking institutions,
however, gold is not merely an effective demand for currency at the gold
exchange rate; it is an effective demand for international credit to the
amount of several times the face value of the gold. These
considerations may enable us to get a firm idea of the tremendous power
given to banking institutions by persistence in the use of gold, and on
the other hand, to realise that its use is essentially unnecessary. In
regard to the first, we have the astonishing situation that an ounce of
gold in the hands of John Smith is worth only �5, but in the hands of
the Bank of England it is probably worth �50�a situation which cannot
fail to keep John Smith where he belongs, from the point of view of the
Bank of England. In regard to the second point, we can see from the
proposal enunciated above, to the effect that a national currency
derives its validity from its effectiveness as a demand for goods and
services, that the problem of maintaining the exchange value of a
national currency, while eliminating the use of gold, depends on the
validity in a foreign country of the given currency as a demand for the
currency of the second country in question. It is easy to prove that
this is ultimately dependent on the ratio of unit prices to unit
purchasing power in the same country. If we exclude the trade in money
as a commodity in itself, the only object in buying a currency of a
foreign country is in order that one may, with a currency so bought, buy
goods or settle an account. If this be borne in mind (and an astonishing
number of people seem to lose sight of it) the value of that currency
depends solely on what it will buy. In other words, if we untie a
currency from the gold standard, its exchange value is inversely
proportional to the relative price level of commodities in the countries
concerned. The lower the price level, the higher the exchange value of
the currency. This is fundamentally incontestable, and I have never, in
fact, heard it seriously contested.
If, as is suggested in the ideas that I have put forward, a considerable
proportion of the credits created in the country are applied to the
reduction of prices, then it is quite obvious that a given unit of, let
us say, English currency will buy more than it would before: the ratio
unit purchasing power/unit prices is raised. Consequently a given unit
of currency will find a purchaser in foreign currency at a higher price
than it would before, assuming that the ordinary influences of the
market were allowed free play. I do not think that if such a scheme were
put into operation these influences would be allowed free play, and the
first result would possibly be a wholly artificial depreciation of, say,
the British unit of currency in the world exchange market--a matter
which the exchange brokers could quite easily arrange. But the result of
this would be that the British unit of currency, bought at less than its
true exchange value in some foreign currency, would, in terms of that
foreign currency, buy still more goods
- [SOCIAL CREDIT] Social Credit, The Gold Standard & I... Wallace M. Klinck
- Michael Bindner
