Posted To Ellen Brown’s Public Banking Google Group 09/30/2017

Me:  Money may re-circulate back through the economy, but the real point is that its re-circulation doesn’t increase individual incomes at all because as it re-circulates it is transformed from individual income into business revenue which is expensed against that business’s gross costs which may be as much as 99%. So in fact a businessman who spends $100 of his business revenue as if it were his personal income merely adds to/puts off his actual business expense and is headed for bankruptcy or having to hide his true income which of course could be perilous. This undoubtedly goes on a lot in cash transactions on the small business level because the scarcity of actually available income tempts it, and we know “creative” accounting exists a plenty on the larger corporate scale.

So far as additional taxes are concerned that might actually be true, but if you can believe MMTers our tax dollars don’t actually pay for government anyway. And even if MMT is only half correct and a sovereign government can simply create the monies for necessary deficits above tax revenues it only proves that direct creation of money is imminently possible….so why live in the old paradigms of scarcity and “necessary” re-distributive income taxation when a new paradigm of direct distribution works and everyone’s purchasing power could be increased considerably with the elimination of such?? And with an adequate dividend to everyone 18 and older virtually all federal transfer taxes could be eliminated as well.

E:  I don’t follow this. I thought a universal basic income was basically the social credit solution.

Me:  Unfortunately the basic/sparse/minimal aspect of the dividend actually IS most social crediter’s idea of its character. This however is both misaligned with the concept underlying social credit itself, namely grace as in abundance, individual empowerment and freedom and, so far as the economic system is concerned free flowingness as opposed to mere statistical equilibrium…which if understood correctly is actually a stopping point and not flow at all.

I stand on the shoulders of the giant of C. H. Douglas in so far as the form
of the dual policies he recommended but my Wisdomics-Gracenomics is an extension of those two policies that more closely dovetails with temporal universe realities and is a more fully fleshed out philosophical exegesis of its basic concept.

J:  Steve,

Measurement of inflation is “rising prices”. Therefore that must be its definition.  Full stop.

Orthodoxy have two definitions of its causes:

Demand-pull inflation; too much money chasing too few goods, (yes, inflation of the money supply) and,

Cost-push inflation resulting from rising costs, e.g. rising oil prices.

I believe that, in a situation where all goods can be sold,  i.e. there is little or no competition, profiteering could be a third cause.

Orthodox economists seldom, if ever, refer to the cost-push variety.  I believe that they are very wrong in this and that the cost-push form is the main cause of present price inflation. After all, that is a logical codicil of Douglas’ A + B model.

Me:  J,

I don’t dispute your definitions of inflation, and I would add another one I call freedom of human action inflation….because in profit making systems as Minsky and Steve Keen said: The fundamental direction of capitalism is up”. Also, in an unstable system plagued by an inherent scarcity of demand and that for a variety of idiotic orthodox reasons fails to take adult, ethical, thorough and yet gracious control of the pricing system the freedom to yield to temptation to inflate one’s prices….will inevitably be a chronic reality.

These points are why most social crediter’s lingering attachment to the paradigms of scarcity and equilibrium via minor amounts of dividend and low percentages of discount are both philosophically misaligned with its basic concept grace (one of whose aspects is grace as in abundance) and doomed to failure because continual minor increases in human freedom inflation will enable finance and businesses to game the system….unless the the discount percentage is so large that they will not be able refuse participation in the program which requires them to pass along the high (40% or more) discount to their consumers, and even if they raise their prices 2 or 3% will still reduce prices to their consumers by 37%. And if they keep raising their prices they will risk losing their market share as well as risk being booted out of the program because unwarranted serial inflating of their prices will be grounds for such booting of unhealthy, abnormal, anti-social and dumb son of a bitch reactions to being gifted with greater profitability due to being able to sell more volume via the dividend and discount, paying less taxes and being in a system that has a continually free flowing nature.

If every business model’s prices are 40% less than their formerly best competitive price please explain how that can be price inflationary????

J:  Steve,

In concert with the rest of the movement in NZ, I do not believe the discount system is workable and have never propounded it for that reason.

“Pure” Social Crediters propose it in two different ways, subsidising the vendor or refunding the purchaser, and jump from one to the other when challenged.  Because of the paper work involved in the second,  I will only consider the first, but nobody has suggested  how to stop the vendors simply lifting prices first when there is little or no competition.

My other objection to it is that, in present times, the main benefit would go to those with the most spending power, i.e. the top 1% or 10%, or 50%, depending on how you look at it.  I prefer to look at reducing the financial costs of infrastructure for everyone rather than subsidising private jets or multi-million dollar yachts.

I am using the correct term for a subsidy, a payment to reduce prices. It does not have to come from taxation, as some claim.

Me:  John,

I also think rebating their discounts back to vendors is easily the more practical way of implementing the discount.

However, your problems with the policy are in my opinion either quite easily handled or are of the “So what?” variety.

Enterprises have pricing histories and if for instance in response to them raising them greatly and arbitrarily for 6 months or a year before the policy was implemented….the rule that such gouging would have to be reversed could easily be mandated in the law implementing it. I already mentioned that such serial and unjustifiable price increases would not be tolerated. “The bully pulpit” could be effectively used to discourage rogue businesses/businessmen from trying to rake in early profits, and once the dividend and discount were implemented their obvious beneficial effects would quickly become apparent to virtually all much the same as has social security which despite it being only a palliative policy has been able to resist reduction/elimination by regressive forces for almost 100 years. Even the terminally “principled” libertarian whose soldered in motto is “There ain’t no free lunch!” would probably only object for a short period of time before his wife whacked him over the head with a rolling pin, he grew a couple of new neurons, finally came into present time enough to stop regurgitating fallacious economic orthodoxy…and started enjoying life.

As far as the rich getting the larger percentage of benefit from the discount, I could care less in view of the tremendous general benefits of the two policies.

 

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