JR: Steve, the “gap”‘ is not 50% of GDP, or debt would be more than doubling now every two years. Or the economy would collapse every two or three years.
The cost inflation effect of tax needed to do what you suggest would at least treble prices.
No. Not nice. Just a harmful presentation of needed reforms.
Me: John,
I don’t give a sh!t about what the Gap is empirically. Why? Because:
1) trying to merely fill the Gap doesn’t actually resolve (except statically for a moment) the scarcity ratio of individual incomes to costs/prices that Douglas identified as the deepest problematic reality of the economic system, and merely filling it is falling back on now invalidated General Equilibrium theory which social crediters unconsciously and culturally fell into, and
2) the only way to make the Gap dynamically go away through time is to transform it from a scarcity ratio into an abundance ratio of incomes to costs/prices, and
3) the way to insure that the doubling of income 50% price deflation is linearized throughout the entire length of the productive process through to retail sale is to implement the 50% “pass on” discount/rebate from business model to business model which gives them a rational self interested alternative to inflation and at the same time insures that they will opt into it because to not do so means they have to get 100% of their price without the rebate….while their competitors only have to get 50%.
4) with a 50% reduction in the final retail price of every item or service…just how are we going to have price inflation???…as final retail sale is the terminal end of the entire economic process where production becomes consumption and also the terminal expression point for all forms of inflation.
My innovations and extensions of Douglas raise a superior theory to the level of paradigm change.
G: I oppose UBI but support real helicopter money that is not continual. Cashlessness is the goal of banksters. Don’t be fooled.
JB: Thanks Steve.
Taking the point I think you are trying best to put over, yes, I agree that most of our inflation is of the cost-push variety, not demand-pull.
But we still have to realise that, putting too much money into could cause the other problem. And yes, putting half the value of GDP into circulation to pay industry its costs(prices) has to be in that category.
The worst thing about irresponsible statements is that they put people off reading carefully prepared scientific proposals too.
Me: None of your (John or Gary’s) concerns are relvant so long as you eliminate the possibility of inflation as my policies do. Retail sale is the end of the economic/productive process where production becomes consumption. If possession is 90% of the law then possession/consumption is 99.99% of economics and double entry bookkeeping accounts like credit for damaged goods and returns and allowances make up for the .01% of the remainder.
Retail sale is the terminal expression point for ALL forms of inflation. A 50% discount there that still allows merchants to become whole on their margins and overheads with the rebate and solves the most thorny problem of modern economies….and finally exposes the quantity theory of money as fallacious because the real cause of inflation is the complete and chaotic freedom for commercial agents to raise their prices. The 50% discount/rebate gives them a rational and self interested alternative to that chaos and creates an abundant directly distributive monetary paradigm that will end the continual private debt build up by reversing that trend and enabling finance to “wither away”.
Just look at the effects of the policies. Orthodoxies die hard and usually require repetitive invalidation for minds to let go of them.
All paradigm changes are radical by nature…but looking at their effects has historically ALWAYS convinced people because the changes are always dramatic and undeniable…once you experience them.
GA: People don’t have total freedom to raise prices, Steve. That is simply not a valid point of view. Expectation of inflation by consumers, alternative products, boycotting with the wallet, all control prices. If prices get too high there are the means of influencing those prices. You have no study that can show otherwise.
Me: Does any of that ocur after retail sale? Of course it doesn’t. Yes there are some slight effects (mostly costs) that effect whether commercial agents raise their prices, but those changes are nothing like a 50% price deflation, and again do not ocur post retail sale. And hyperinflation never occurs without dramatic and extenuating circumstances like drastic reductions in productivity and political desires to get out from under excessive debt.
JB: I’ll be generous and take the figure for the “gap” at 10%. Personally I believe it could be half that or less.
You are not considering the other forty percent business would then have after covering its costs.
Looks as though a lot of them would be getting luxury yachts of personal jets ar half price.
Me: “Looks as though a lot of them would be getting luxury yachts or personal jets at half price.”
That’s irrelevant regarding the actually important things which are do these policies create economic free flowingness and a new paradigm.
Look at the policies and their terminal effects….and keep on looking at them until you see how transformational they are.
JB: Hyperinflation In Germany after WW1 was engineered simply by putting money into circulation, to help deal with their massive debt. But I have been told that they were surprised by how much was needed. Evidently, for a start, production rose to meet the larger supply.
However, Steve, I think your proposals would be dramatic enough to have that effect immediately.
Me: Won’t happen because as I said several very bad circumstances must preface hyperinflation including a compliant central bank to loan money to speculators so they can short the currency. Ellen knows this if she has read Stephen Zarlenga’s excellent history of the Weimar republic.And again, money is not the actual causitive factor in “monetary inflation”. Finance might do a lot of scare mongering about it, but if one business model decides to hyperinflate and even one of their competitors decides not to….the hyperinflater is a dead duck. Businesses must inflate for additional costs, but they can’t inflate “bigly” because their expenses enforce only a smallish percentage of net profits. Any recklessness of inflation would thus be suicide for market share.
And for the third time if you reduce prices by 50% at the terminal expression point for all forms of inflation….how are prices going up?????
JB: Very simply Steve. Depends on the level of prices you are reducing.
The value of the article will remain the same. The value of money would be reduced,
In any case, it’s not suitable for modern conditions. It would do so much for the very rich compared with the poor.
Me: Nonsense John. The value of money depends on the quantity theory of money being true. Problem is it’s false. The real, deepest and operant cause of “monetary” inflation is exactly as I say….the complete uninhibted ability to inflate prices (by the relative smallish percentage that keeps them competitive) by commercial decision makers.
The monetary value of the article or service is the same with the discount or without it because of its costs. The discount simply reduces it by half to the benefit of both the consumer and the enterprise….and the rebate restores the enterprise’s actual over head costs and margins of profit.
You’re still not looking at the temporal universe effects of a 50% reduction in price at retail sale. You’re also apparently not looking at the way the “pass on” 50% discount from one business model to the next on the line toward final retail sale…would linearize the price deflationary effects of the discount/rebate policy. Finally, you’re not recognizing that such a large discount to prices would largely if not completely eliminate the present necessity to borrow to purchase big ticket items like autos and homes or at least vastly reduce the amount needed to borrow, thus reversing the current problematically compelled post retail sale borrowing that Steve Keen has re-discovered in his researches as problematic coming from the opposite direction that Douglas took.
JR: Your first para. states exactly why it won’t work without policing and you give no means of doing that.
Me: I never said that the system would not need policing. Of course it would. There would be guidelines and rules regarding honest reporting etc. etc. No system can long exist without rules because man is not an entirely rational or ethical being. Did we do away with rules and guidelines when we went from Hunters and Gatherers to Agriculture? Of course not. The whole idea of it being unrealistic, unworkable or dangerous is just “the powers that be” dominating and manipulating the masses with fear and orthodoxy. Your old argument that it would require an army of accountants is just a great example of you internalizing a fear drummed into you when New Zealand lost its attempt to implement SC. In the first place algorithms do most of the accounting nowadays and even if forensic accounting is the new growth area in the economy….so be it.
GA: But that is false. Nobody has the uninhibited ability to raise prices. That includes both the wholesale and retail levels.
Me: Not correct. When I said they have the uninhibted ability to raise prices I also said that such ability is within a relative small percentage because of competition and their own fixed costs, but there is still no barrier or better alternative to that present reality and any attempt at reform will be gamed by enterprise and Finance will encourage them right along. You have to create a better, more beneficial and self interested alternative for enterprise….and that is exactly what the policies I advocate do.
Money IS NOT THE ACTUAL CAUSE OF “MONETARY” INFLATION. That’s just orthodoxy.
GA: Of course money can be the cause of inflation and deflation. A shortage of dollars can deflate emerging markets as may be happening now.
Me: I said THE ACTUAL, OPERANT AND DEEPEST cause of inflation NOT the ONLY cause.
As for deflation from scarcity of money, you’re absolutely correct. But why? Because money is the means of survival for individuals and enterprise, businesses cannot long survive without sufficient amounts of it and Finance’s virtual monopoly control of its creation via its enforced paradigm of Debt Only….is their means of dominating and manipulating everyone.
The system is set up to dominate and deceive theorists and benefit the private banks…..and a third beneficial, democratic and thorough means of ending that domination is what my policies will do.
Allowing money to tempt decision makers to inflate throws the system completely out of control. It is already unstable because it is cost inflationary on the lower end of price….and if it is not effectively controlled on the upper end of price by the policies I advocate it is BY DEFINITION A CHAOTIC system….that Finance can dominate.
JR: Right Gary.
Try calculating the compounding effect of markups between of costs of taxes or interest charges between stages of industry for one example.
And they’re supposed to “cure” inflation!
Me: “Right Gary.
Try calculating the compounding effect of markups between of costs of taxes or interest charges between stages of industry for one example.
And they’re supposed to “cure” inflation!”
It’s nothing that complicated at all. There are accounts for taxes, sales and every other cost including profits and the 50% reduction in each of their vendor costs from the discount. A calculation of all of these from month to month would yield a final selling price for every item sold to the next business model on the route toward retail. The business would discount each item by 50% and submit a total sales number to be rebated. If after an analysis of each individual enterprise’s data and the effect of the 50% discount resulted in say on average a 43% reduction in total prices at its arrival at retail sale because of other circumstancial costs….then fine. The price for every item at retail after their margins are applied would be discounted accordingly to effect a 50% discount. Businesses do all of these activities already and their purchasing agents are not stupid and will notice any upticks in vendor prices from month to month and that do not honestly reflect the discount accurately. A relative routine forensic analysis can spot such outnesses. Of course incentives to not inflate or even lower prices more could be implemented and tax penalties and eventual expulsion from the discount program for serial inflaters as well.
By the way the costs for transfer taxes paid by both individuals and businesses for welfare, unemployment insurance and other transfer programs can be eliminated altogether because who needs them when everyone 18 and older gets a dividend that is higher than the amount they would get from that bureaucracy. Nice little reduction in costs and increase in incomes for individuals there.
JR: I suggest you now inform us how you will prevent retailers from setting exorbitant prices to be discounted.
In particular, how you would deal with three differently-priced brands of the same food item in one supermarket. Then go on to the one in the dormitary suburb that has higher freight costs. Etc.
I suggest you would really settle the employment problem, with the army of inspectors needed.
Me: Nobody is suggesting that the program would be an attempt to make prices for the same item….the same. That’s not the purpose. Competitive or non-competitive prices will still be competitive or non-competitive. It’s to reduce prices as closely as possible to 50% throughout the entire economic process and then make them 50% less than what the item cost the retailer at retail sale per producer by calculation of a percentage discount at that point on each item. Again, some business can have different costs and margins and so prices. Consumers will decide which product they want to purchase. No problem. It’s just that it will be 50% less than it was before the program was implemented.
“I suggest you now inform us how you will prevent retailers from setting exorbitant prices to be discounted.”
Competition will do that exactly as it does now.
“I suggest you would really settle the employment problem, with the army of inspectors needed.”
I already posted about that. It’s not a problem at all.
GA: Nice statement to Steve, JR. Yes, I thought NGDP targeting was complicated. Steve would have an army of government accountants looking at every business transaction. Scary stuff.
Me: Yes, scary for cheaters. Very, very good for consumers, honest enterprises and the system as a whole. You guys would rather throw doubt at a scientific process like double entry bookkeeping and the non-onerous process of gathering datums….that the accounting process is designed to do in the first place….than confront the paradigm changing effects of these policies. People who don’t look and WON’T look are always the last ones…….to claim they knew the new paradigm would work all along. Carry on.
Social Credit/Wisdomics/Gracenomics/ Gracientialism 