An excellent description of the actual process and system Wally…which despite examination/confusion economists are apparently unconscious of. 🙂
To me one of the primary confusions occurs because B payments re-circulate through the economy but so far as the rate of flow of individual incomes is concerned…this makes no difference because this is business revenue not individual incomes and so must be costed//expensed exactly the way it was when the product was sold to the client in the first place. In fact the classical illustration of the velocity of money is a fraud because it shows businessmen using business revenue as if it was their own personal income and so completely drops out the costing/pricing system. When a business has a large increase in revenues and so usually profits, do they immediately raise everyone’s wages to perfectly numerically match those profits? Of course not. Yes a few employees like sales people’s salaries might immediately increase, but their incomes as an increase in the costs of payroll simply re-initiates A + B. There is no escaping the costing pricing system except by fraud…which I suspect is likely a frequent phenomenon/component on the small to medium sized business level and which is as we see from the relatively recent scandals in the the Savings and Loan industries and the Enron control fraud, also occurs….and the net result anyway is the ripping off of the consumer who all along is caught in the enslaving system where the rate of flow of total costs/prices always tends to exceed the rate of flow of individual incomes simultaneously produced.
My question for the group is if the present reality is the scarcity relationship between individual incomes and costs/prices….why couldn’t a reversal of that inequality be accomplished by the combination of a dividend and discount that approached a middle class income and thus transformed the cost inflationary nature of the economy into a truly abundant one? The macro-economically stabilizing nature of the dividend and discount mechanisms (+ and -) themselves would still enable a virtual equilibrium would they not? Wouldn’t this new abundant nature enable us to immediately begin re-industrializing western advanced economies in as high tech and productive a fashion as possible, actually reverse globalization and make it more of a necessity that export platforms like China, Vietnam etc. follow suit and make their economies serve the individual as well? Of course we could then also virtually eliminate redundant transfer payments for welfare, unemployment insurance etc. and so concomitantly lower the amount of the dividend necessary for such abundance…but let us have transformation of austerity and scarcity into abundance first….and then let the dullard politicians and economists fight over adjusting the balance cautiously downward….afterwards.
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Jim,
Is it not true also that despite depreciation allowances for businesses that they must continuously attempt to get the costs of depreciation in the prices they charge? In other words depreciation allowances are actually only a stay of execution of costs and not actually a gracious forgiveness of them and so making an impossibly onerous macro-economic condition just a little less impossible. And of course the individual/consumer doesn’t even get that consideration.
And if the business doesn’t garner/set aside the costs of depreciation, then somewhere down the line he’s going to get a call from the maintenance supervisor to the effect: “Numbers one through six just went down and they aren’t making parts for them anymore. There’s ball bearings and metal filings all over the place down here. You better go to the Bank and get a loan to replace them. The executive vice-president of Finance…faints at his desk and when he awakens calls the head of accounting to pressure him to fudge the numbers/create an imaginary account the VP can present to the Bank.
Social Credit/Wisdomics/Gracenomics/ Gracientialism 