Wally:

Social Credit reveals that the consumer is rightly charged with capital depreciation but wrongly not credited with capital appreciation. In the primitive economy labour charges constituted the major proportion of costs and so more nearly approximated total costs and prices.

C. H. Douglas proceeded from the standpoint of cost accountancy and made quite clear the fact that the inherent deficiency of effective consumer purchasing-power becomes increasingly burdensome as modern technology increases the capital component of cost in prices. Thus, Social Credit becomes increasingly relevant as the economy becomes more efficient by replacing labour as a factor of production with modern real capital, i.e., tools, plant, technique, automation, robotization and artificial intelligence.

Douglas’s “A + B Theorem” is simply a statement of observable fact. All businesses make internal (A) and external (B) payments. “A” payments are wages, salaries and dividends and are effective consumer purchasing-power. “B” payments are all payments made to other organizations and are not purchasing-power to the personnel of the business making these payments. Although “B” payments originated as “A” payments, they are spent “A” payments. They are not and can never again be effective purchasing-power in the possession of consumers. They have gone back through the production system to be cancelled as purchasing-power when a producer loan is repaid to the bank, or when used to replace capital reserves–from whence they can only be issued to create new production which incurs entirely new and additional financial costs. Because of increasing non-labour factors of production, “B” costs are, of course, always growing in relation to “A” costs.

“A” payments cannot liquidate “A + B” costs, for individual businesses or in the aggregate nationally. The only way total costs can be “liquidated” is through further credit issues to finance new production or to mortgage future incomes. Governments increasingly accrue debt in order to compensate the shortage of purchasing-power in the overall economy. The point is, that payments financed by debt do not finally liquidate financial costs but merely transfer such charges as a claim against future incomes–which is no liquidation whatsoever.

When banks make loans they not only create this very necessary credit but wrongly claim ownership of it. They monetize the community’s real assets but do not create these assets–upon which they will foreclose in the case of loan default. They do not return such foreclosed assets to the community. By claiming ownership of the credits they issue by monopoly privilege they effectively appropriate the communal credit and acquire control over the Cultural Heritage. Monetary theorists who ascribe our economic problems to “usury” as such reveal themselves as captives of religious obsession, seemingly incapable of rational scientific analysis of the comprehensive role of money and credit. As such they seem willing to overlook the theft of our rightful inheritance in the communal capital while engaging themselves in shadow-boxing with a result rather than a cause of economic evil. Their are willing to sacrifice our very inheritance for a “mess of potage.”

Growing and accumulating debts, private and public represent the extent to which the banking fraternity assert their bogus claim to the community’s assets. They represent wrongfully appropriated purchasing-power of the community and should reside on the credit rather than the debit side of the national accounts. Douglas very appropriately recommended new consumer credits as an extraneous injection of purchasing-power so as to properly balance the price-system with sufficient unattached income capable of defraying all production costs, dynamically, as the occur. Such credits would be drawn from a properly constructed National Credit Account representing the estimated value of the nation’s real credit or ability to create and deliver goods and services. They would be paid equally to all citizens in the form of National or Consumer Dividends and to all retailers at point of sale on condition that they lower or “Compensate” their prices in accord with the varying current ratio of overall national consumption to production. As items representing consumption they would be debited to the National Credit Account–which latter nevertheless would always be increasing due to addition of new real capital assets. All things physically and psychologically possible would be made financially possible.

The critics of Social Credit almost always totally ignore and seem entirely oblivious to Douglas’ analysis of financial cost as this relates to actual physical cost–which he demonstrated is increasingly becoming much lower than computed financial cost. Social Credit demands falling prices but in the context of industrial financial liquidity–unlike deflation in the orthodox sense which is caused by credit restriction resulting in widespread bankruptcy.

Money in the modern economy is mere accountancy, which should simply represent our commercial activity but never restrict it. Being mere accountancy, “money” must be made the servant and not the master of mankind.

Me:

An exact, comprehensive and complete analysis. Thank you very much Wally. If one actually looks at and understands the productive/economic system, the accounting rules that enforce the original problem and the Financial system’s dominating monopoly powers in this affair…the debate ends and the only question is…how do we best band together and make it clear to the politicians and financial authorities that we DEMAND our immanent and un-extortable economic freedom from this non-functioning system with the means of economic freedom in a monetary economy….the policies of an ongoing universal dividend and retail discount!