The truly “funny” thing about the gracious nature of debt forgiveness…is that even those who lost the most (the Banks) afterward prospered right along with (and even more than) the rest of society. From this we need to learn the following things:

1) Forgiveness of excessive and onerous debt, no matter from who or what its cause, is wise and economically sound
2) Debt is the “product” of the Banking/Financial system and the way they make money.
3) Banking and Debt has always been a problematic business model for at least the last 5000 years.
4) Private Banking has no structural balancing counterpart making it a monopoly in this sense
5) Debt as an idea, as a monopolistic paradigm/zeitgeist is even more importantly a domineering lifestyle forced upon us by our failure to understand and demand its balancing with an idea of equal and freeing strength, namely Gifting, that must be integrated into economic theory and policy…if we are ever to evolve the discipline and peaceably maintain civilization.

Dave Taylor:  At Chdwr, I forgot to add that the workman (even a banker) is worthy of his keep.

The problem of paying the banker is resolved if we ALL have to live within a credit limit appropriate to the available resources and value of the work (including self-development) we have previously done, and if we are able to pay off our debts by doing our jobs and looking after ourselves insofar as we are able. Perverse motivation by fear of losing our jobs can be replaced by prizes for excellence in just about anything other than monetary profiteering, i.e. acquiring unnecessary credit.

Me:  Dave,

On a personal responsibility level I don’t disagree with anything you say, but if on a systemic level the economic system is in a continual state of disequilibrium because the rate of flow of total costs exceeds the simultaneously created rate of flow of total individual incomes with which to liquidate those costs…then anecdotal frugality and austerity won’t matter because systemic debt will inevitably build up as a necessity of keeping the system’s nose above water level. The data for this ongoing and hence dynamic state of the economy is to be found in the cost accounting statistics of any and all successful businesses, and then doing the calculus regarding the flows of that data the deepest cause of economic instability is revealed. Costs exceed individual incomes simultaneously produced.

The primary deceptiveness of Keynesian stimulus is its obscuration of A + B and the cost inflationary nature of commerce enforced by the convention of cost accounting that all costs must go into price despite the fact that the data shows that in the normal and unfettered operation and flow of the economy  more costs and hence more prices are created than it simultaneously creates in individual incomes. The other two deceptive things about it is its false claim to resolve our economic disequilibrium only by injecting money into the economy/commerce instead of costlessly Gifting the individual directly and only to match the diminutions to the circular flow of money within the economy…while again being unconscious of the accounting flaws that will still disequilibrate the economy via the creation of excess costs in ratio to individual incomes.

This is not to deny the problematic reality of the continuous diminution of large amounts of money to the circular flow of the economy, only to point out that the subtle, complementary and more insightful reality that costs dynamically and simultaneously push up prices from the lower end of their formation, and so must be factored into economic theory and remedied by economic policy.

Wally and Dean,

I agree about Douglas being exceptional. He not only looked at the empirical data he confronted it and its implications mathematically and systemically, and then like the good engineer and cost accountant prescribed policies to remedy what he looked at and discovered. Looking at the actual data and then finding the various relationships between those datums is the quintessential scientific mode of thought.  Douglas was more scientific than allegedly scientific economic theorists are today. He looked, they don’t, either because of ignorance, sheer opinionated  bullheadedness or the prejudice/distraction of either economic and/or scientific orthodoxy.

The Powell Memo, as most of you here probably know, was a manifesto written by former Supreme Court justice Lewis Powell that suggested the need for a grassroots corporate and political alliance to get their agenda ingrained into the minds of the populace and passed in the political system. Recently Steve Keen’s IDEA website suggested that we need a new Powell Memo on the economy, and this mine.

The Powell Memo was written in a time before the present dominating corporate Financial monopoly was apparent. Thus its suggested business and political agenda appeared enlightened, especially to businesses whose bankruptcy rate even in normal times is upward of 90%. What Powell and virtually no one else realized back then was that a monopoly on the creation of Finance’s “product” of Debt has historically always been the key problematic factor in the instability of the economy. The structural monopoly of private Banking and the paradigmatic monopoly of Debt ONLY are the economic system’s deepest and most unresolved problems. Finance’s monopolies ARE the problem….for both every other business model and for virtually every individual in the nation’s economy. Therefore businesses and individuals must ally themselves with each other to fight Finance’s monopoly.

What is the most basic interest that unites businesses with individuals? It is enough income in the hands of the individual to continually purchase the businesses products or services. In other words sufficient actually available individual income to make the entire system to flow freely through time.  

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Structural balance is important, very important, but structural reform will not balance an idea, a paradigm. Therefore businesses and individuals must cooperate together to bring about both structural reform and a new balancing paradigm as well.

Private Banking is an unbalanced monopoly business model. Public Banking is the obvious and correct business model to structurally balance Private Banking’s monopoly business model.

So, leaving aside for the moment the particular reasons why debt builds up, what is the correct and best idea/paradigm to balance Finance’s monopoly paradigm of Debt ONLY? Well, debt is an obligation to pay back a loan, and in a system that does not require the continual build up of Debt it is a legitimate obligation to enforce. In fact even with a new balancing paradigm this obligation to repay Debt…will still be a legitimate obligation. The problem of course is that the current paradigm of Debt ONLY results in the continual build up of Debt routinely, historically and inevitably. This has been recorded throughout the history of economics as David Graeber has studiously shown in his book Debt: The First 5000 years. So if Debt builds up SYSTEMICALLY to unrepayable levels as a matter of course what is the counter to payment of Debt and what are the policies to effectively stop that build up? To pay a debt one must have available income to do so. So enough available income at all times to live a normal and generally satisfactory life in an age of incredible productive abundance, and to pay off one’s debts as well on an individual level is what will most basically make the economic system as a whole stable, and that also means by definition that THE SYSTEM’S most basic problem actually is the failure to generate enough available individual income to live a decent life and pay off their debts as well, and the way to remedy that is to GIVE, to GIFT the individual a supplement to the income they make as work for pay, and even if they do not make any income from work for pay. Integrating Gifting as an idea and as policy into the economic system is the idea, the paradigm that will effectively balance the paradigm of Debt ONLY.

Okay, what is it about the idea of monetary Gifting that makes it the idea that will counter the idea of Debt ONLY? Debt is an obligation….Gifting balances and pays off debt…and yet there is no obligation to repay a gift. And there is no additional economic or monetary cost associated with a gift that would naturally have to be passed on to the consumer either. So Gifting is an effective way to pay off “unrepayable” debt that currently systemically and inherently builds up, and an economically efficient and sound idea as well.

Okay, what is it about Debt that makes it a humanly difficult and problematic idea in the current system? Debt has economic power over the individual and Debt inevitably builds up so that means the system of Debt ONLY has power over the individual. Are systems made FOR Man, or is Man made FOR systems? I don’t think too many of you would say the latter, but that is the nature of the current system. And what would change that SYSTEM (not individually or anecdotally) that inherently and inevitably builds up Debt so it cannot be paid off? AN ADDITIONAL AND UNIVERSALLY DISTRIBUTED SUPPLEMENTARY GIFT OF INCOME DIRECTLY TO THE INDIVIDUAL.

Okay, if injecting money into the system initiates and re-initiates the scarcity of total individual incomes in ratio to total costs and so total prices, how is this reality ever going to be resolved? The answer of course is to Gift the individual DIRECTLY. Gifting directly to the individual creates an immediate and costless increase in total individual income. So it fixes the deepest reason the system is unstable immediately and continuously…because it is does not go through the system first.

Now that fixes the systemic problem for the individual…but it still doesn’t resolve the tendency of the system ITSELF to continue creating the original instability. For that to be remedied you have to periodically and macro-economically equate the total costs of consumption and the total costs of production with a discount on prices at the point where all costs for each product and/or service are terminally summed, and that is at the point of retail sale.

What are each businesses/business model’s retail product? (Cont.)

Finally, it is essential to understand the difference between individual actions or inaction’s regarding indebtedness…and the systemic realities regarding Debt and its inevitable build up. In other words it is inevitable that some people will over borrow and also that some may not borrow at all, and/or a very few may make enough money not to be required to borrow either, but no matter these inevitable individual occurrences…the SYSTEM will still build up debt to “unrepayable” levels!!!!!!

You have to outsmart the cartel. If the Greeks either stay in the Euro and introduce a “complementary currency” and a retail discount of say 40% it will quickly become apparent to both Greek and foreign producers that an economy where everyone has sufficient money in their hands and where they can sell their goods to them at a 40% discount and get all of that discount rebated back to them….is one they are nuts not to invest in. Even if the Greeks left the Euro and introduced the Drachma along with a discount mechanism it will quickly become clear that their economy actually theoretically functions like free economies are supposed to…unlike the present one does. As a currency is as good as people have faith in its worth it will very quickly become apparent that this new Greek social credit system fits that bill much better than the current financial tyranny….and everyone will want this new actually functional profit making system.

Ardeshir:  But wouldn’t that encourage a massive influx of foreign firms into Greece, taking advantage of the low Drachma and the 40% discount (which of course the Greek Central banks would be paying them), and then repatriating all their massive profits – including the discount – back to their home countries?

Me:  Greek present producers and new ones as well would be working in a system that actually benefited the individual and was also a profit making one. That would undoubtedly attract outside producers also. To begin with Greece could encourage limited investment in Greek production much like China did/has. The workability of the system would then make the drachma a strong currency.

You just have to have the proper monetary and economic policy mechanisms in place.

Ardeshir:  I get that, Steve, but Greek production in what, is the question, isn’t it. Right now most Greeks don’t have the skills to undertake industrial production of any quality, and acquiring those skills may take a generation or two, as it did in China. (Remember, China was opened up to the West during the NIXON Presidency – over 40 years ago! It took all that time for the Chinese to be able to manufacture iPhones and the like.)

Me: The goods are available elsewhere until domestic manufacturing is built which with robotics and considering the smallness of the Greek economy can happen in a year or less. Again, with the proper monetary and economic policies in place the system will work much better than elsewhere and the drachma/social credit economy will be seen as a good system and currency. The savvy producer/invester will see this no matter what the media and the cartel might want to characterize it as. Make the system work for the interests of both the individual and business and the money will come to build it and profit from it.

Jim:  Steve,

Looking at your “discount” mechanism, using the analogy of an angle being either 30 degress or 150 degrees, would the discount have the same effect as seigniorage?

Is this something we could talk about on the radio?

Me: Jim,

I’m not completely clear on your analogy of the angles, but what the discount does is macro-economically and mathematically equate actually available money in the hands of individuals and the total costs of what is produced in a given period of time. By total costs I’m talking about the costs of rent, personal savings, retained earnings of business, i.e. profits, financial charges, i.e. interest, waste and exports. The formula for the discount is:

Total cost of consumption, i.e. what individuals actually purchased/over

Total costs of the above mentioned costs of production

That ratio determines the discount so if the ratio is (by example $55/$100) the discount is 45% on every retail price and on the total of what people purchased during the month. It would probably best be set up as a discount to your total price at the register so if you spent $1000 in a month’s time….it would only actually cost you $550. Nice, huh?

The policies of a dividend and discount operate seamlessly within the framework of a profitmaking economy and resolve technologically advanced economy’s biggest problems, namely scarcity of individual income because of robotics and AI and chronic consumer price inflation. They are actually an integration of the best aspects and intentions of both capitalism (efficient production)and socialism (economic democracy) which is actually an entirely new and different system known as Distributism.

And again, Public Banking fits within that framework as both a structurally competitive and downsizing element of private finance’s market for government and infrastructure funding, and also as a central credit creating agency constitutionally mandated to determine and distribute the dividend amount and the discount percentage and so operates in the true interests of the individual.

Me:  Continuing…Social Credit is actually the evolution of profit making systems in that it allows them to continue to exist despite the inexorable and contradictory drives of innovation, profit and artificial intelligence
and their effects on aggregate demand…and even despite private banking’s ability to create money ex nihilo because with public banking as both a structural balancing force and the public credit creating agency responsible for the computation of the discount and distribution of the dividend….the system always has sufficient money available to keep the system free flowing and with the discount not only does inflation no longer erode savings and profits but it actually increases everyone’s purchasing power.

Jim:  Thanks Steve,

Responding to both emails, it seems as though your system counteracts the interest-on-debt costs that Margrit Kennedy computed to be about 40%.

Those actually working in the realm of robotics should see their incomes go up, but then again capitalism has a way of forcing all incomes to their lowest. And your system seems to compensate for that.  N’est-ce pas?

Does your system mitigate the problems caused by human greed?  It seems to, by taking the pressure off, but there are always those for whom enough isn’t nearly enough.

Thanks again,  Radio invitation is still open.  This has been a theme of mine with Marc Gauvin et al.  Discussion is archived.

The angle analogy is very basic re point of view:  a 30 degree angle is a 150 angle looked at from the other direction on a 180 degree plain.  One way is the discount, the other is seigniorage, which grows the money supply as needed.  (See the Patacone, colonial scrip, and Guernsey pound.)  Might be a really bad analogy!

And speaking of the Patacone, don’t the Greeks know how well that worked?

Me:  Actually I’d be happy to do a radio interview. We’re going to Mexico for a week in a couple days, but in the interim if we could communicate via email on the questions you wanted to ask so I could have my answers well in mind I’d be happy to do it after we got back. Thanks for the offer. And of course I would be happy to mention the structurally balancing and individually beneficial nature of Public Banking in the overall framework of a Social Credit economy as well.

Me:

Thank you Ardeshir those were all relevant and good answers.

The Public central bank (in Social Credit circles it is referred to as the National Credit Office) (NCO) same Banking/Financial purpose and principle just different words. The Public central bank/NCO would ideally be a separate branch of government that was arms length (or more) from the executive or legislative branches with the specific mandates I have mentioned before of calculating the Dividend and establishing the Discount percentage, plus in my mind taking over the job of the FED as the issuer of reserves to all Banks at 0% interest, and only for stable and ethical purposes meaning not for MBS, CDS, or any other derivative product nor for shorting the currency either. Those kinds of things would be handled by private parties using their own money…as the Public central bank/NCO would not be forthcoming with such unstable and unethical leverage to do so.

The Social Credit/Public Banking concept and system would be one of true structural and paradigmatic balance. (Public Banking and Private Banking) and (Debt and Gifting) Profit could exist within it, but a philosophy and policies of consideration for the individual and the free flowingness of the system would be PRIMARY to profit unlike the inversion of such…as it is now. Such a system would be Social Credit or as I refer to it sometimes a Wisdomics or Gracenomics.

When you recently discovered that accounting was important to track flows of money and that DSGE/neo-liberal theorists could get their economics degrees without taking so much as a beginning course in accounting you were onto something. However you’re still splashing around on the surface of debits and credits. You need to get below the surface of debits and credits and into the actual 3 and 4 dimensional part of accounting known as cost accounting which gets you into the “quantum” empirical level of the economy where the data exposes the system’s deepest source of imbalance and how a flaw in the conventions of cost accounting enforces it.

When a business starts up or expands it finances it. Let’s say a firm gets a $100k loan and purchases or builds the facilities and capital equipment necessary to begin production. So the business must charge $100k and get $100k plus its profit margin, plus finance charges, plus the full costs of replacing their facilities and equipment plus any other incidental costs that they incur. Now all of this is possible to do on an individual enterprise basis of course, but it is number one very, very difficult and number two macro-economically actually makes the system unstable in its normal and unfettered operations….because the cost accounting convention that says ALL costs MUST go into price is always enforced, so macro-economically the rate of flow of total costs/prices will always tend to exceed the rate of flow of total individual incomes….simultaneously produced and actually available to liquidate those costs/prices. And that is the ever present, ubiquitous and hence dynamic A + B theorem and the Social Credit insight.

I would suggest you consider these empirical facts and the calculus of their ratio….before some other disequilibrium theorist or a slightly less doctrinaire DSGE one recognizes them and takes credit for discovering it…. and then all of your hard won iconoclastic re-discoveries will basically end up for naught.

And of course even if one doesn’t want to confront the empirical and calculitic evidence of the dynamic cost inflationary nature of the economy itself, there are the inherent, inexorable, increasingly economic and monetarily disruptive and just getting started forces of innovation and artificial intelligence in profit making systems, all three of which have basic logics/imperatives of efficiency (innovation-efficiency of human effort, profit making systems-efficiency of cost and artificial intelligence-efficiency of human input at all) ….resulting in increasing unemployment, decreased aggregate individual incomes and economic instability. And obsessing about unemployment and calling for “make work” schemes is completely stupid and inconsistent with freedom. Why? Because it will enable the Banking and Financial systems to continue their dominance of our political systems and so us all? Why insist on low levels of employment in a high tech  incredibly productive economy when a sufficient universal dividend and a discount to retail prices will enable you to still find (probably more) work  if you chose and also allow you the time and opportunity to self determinedly lead a more  fulfilling life….whether you work or not?

Finally, the real secrets of a universal dividend and retail discount is the directness and immediacy of their effects, their costlessness to the individual and the system and their ability to cause their effects both within the system (the discount mechanism) and by going outside of the normal operations of the system (the universal dividend). No other theory and no other orthodox policies have these essential micro and macro-economic remedial qualities.

The “No” vote’s protection of its political position is a great opportunity for Greece to implement IDEA’s “complementary currency” , and the rest of Europe and the world to see the idea of such is viable. It is actually a very tepid form of Social Credit but a demonstrable way to show economists that a supplementary income is integratable and then a twin policy of a macro-economic discount to retail prices would increase individual purchasing power and thus you could simultaneously have price deflation and increased purchasing power and increased macro stability. Think about it Dr. Keen, think about it. Do not settle for some “technical adjustments” from the troika. This could be an inverse assassination of the Archduke moment for Europe and the world.

Tsipras needs to work the anti-democratic nature of the troika. Work it, work it, work it.

In addition to a complementary currency if the Greek government implemented a macro determined discount to each retail price of any product of say 40% for any business foreign or domestic…and then rebated the totality of that discount back to those businesses if they would accept a new drachma on par with the Euro….the Greek consumer and the businesses who participated in that program would mutually thrive. Present Greek manufacturing would boom, and be able to expand. New manufacturing that presently does not exist in Greece would have an incredible opportunity to take root. The tyranny of the paradigm of Debt ONLY is unworkable. All it will take to transform and replace it with a complementary social credit and a retail discount….is the courage and insight to act. Old paradigms look intimidating…until you’re outside of them, once you’re out the clarity and workability of integrating the valid aspects of two seemingly opposing ideas…is truly a mind blower.

A vote against a complementary/additional currency is a vote for the glaring inconsistency of a monopoly on credit creation by Banks in supposed free market theory. Also, this process must not devolve into who ends up in power, but instead into what will free the individual and make the system truly free flowing.

Posted to Ellen Brown’s forum regarding what I think will happen:

I don’t know whether there will be a Grexit or not, but upon thinking about it for a second…..it actually doesn’t matter because even if they exit the Euro they can still issue Drachmas….and then also implement a dividend, that is a gift to Greeks, and also still implement a discount of 40+% to all Greek retailers and any foreign producers. What producer wouldn’t want to sell their products to Greek retailers who can sell it at a 40+% discount and still be whole on their profit margins and overhead payments???

So it doesn’t matter whether the complementary currency is the Drachma along side of the Euro…..or the Drachma and a Social Credit dividend and discount policies.

Ardeshir, a poster to Ellen Brown’s forum:  True, Steve, but are you sure this will HAPPEN?

Me:  I think the troika in reality has a very weak hand to play because their ideology and system WILL NOT WORK. This is apparent to me and to nascent social crediters like Steve Keen and Yanis Varoufakis. That will make the push for change very strong. And again Keen’s complementary currency idea IS a social credit dividend.

If I may be so bold, via youtube I am schooling Keen about how his discoveries, while brilliant and insightful given the ideology of general equilibrium, are actually re-discoveries of what Douglas said 90 years ago and that a discount mechanism is the stability insuring policy he should also advocate. Whether he will have the courage to grasp on to those actual solution in an egoless manner and not drop back into some kind of safe, cautious and palliative tweaking of Keynesian policies which merely continue the dominance of the private banking monopoly…is the question.

Me as posted to Steve Keen’s youtube channel:  Sell the complementary currency/dividend and macro derived retail discount policies to your socialist friends. After all they  actually are a socialization of the financial/monetary system…and a profit making system as well, that is an integration of the truths and best aspects of both socialism and capitalism….an integration  that can also avoid the tyrannical economic and political tendencies that both finance capitalism and socialism have historically resulted in. Why is there a difference here? Because its actually neither finance capitalism nor socialism, but Distributism.   But why quibble over words. Freedom for the individual and free flowingness for the system is much more important than an ego defense of one word or another. Don’t you think?

Me:  You can see that it doesn’t matter whether the Greeks stay in the Eurozone/Euro or not…if along with a universal dividend/complementary currency they implement the macro discount which is a gracious way of giving businesses “an offer they cannot refuse” ….don’t you? So that actually means that Tsipras/Varoufakis actually are guaranteed a winning hand no matter what. In fact going it alone would be an even starker rejection of current unworkable economic theory and the dominating bullying of the troika.

But they have to do the evolutionary paradigm changing thing by integrating monetary grace as in the free gift via the twin policies of a universal dividend and a macro-economic discount to retail prices that is rebated back to participating merchants.

An aspect of Grace is an integrated bothness. Bothness as in Duality, twoness, and also bothness in terms of Time as in simultaneity. Combine these with the immediacy aspect of Grace as in right now, and now and now and Grace covers both the moment and the flow of moments. Then consider the freeness aspect of Grace as in costlessness. the costless gift and also as in free flowingness.

Apply these aspects economically and monetarily and we can see that Grace as in an integration of Debt and Gifting leads to equilibrium, as does the integration of Private and Public Banking lead to a structural balance and in that sense a structural equilibrium.

We can also see that a dividend has a costless, additional (abundance is an aspect of Grace) and immediate effect on purchasing power and yet again it is costless/doesn’t have to be paid back and so does not incur an additional cost to the individual or the system that can be passed on in consumer prices. Therefore it does not upset the balance, the equilibrium created by the dividend enabling a continuous free flowingness to the economy. Also, the simultaneity effect of a balancing of individual incomes and consumer prices in an ongoing fashion ties it in again with the dual aspects of Time that is a moment and a flow of moments.

Finally, because circumstance is what it is, and also because as the system separate unto itself still will tend to be in the disequilibrated state of producing more costs/prices than individual incomes and also diminutions of money/incomes from its circular flow it will need a catch all mechanism for equating costs/prices and incomes actually available to liquidate those costs/prices. And that is what the discount mechanism does as it is an elimination/subtraction/forgiveness of costs/prices. And of course forgiveness is another aspect of Grace…..which concept just happens to align perfectly with all of the above valid economic and monetary concepts and workings as well. Oh, and alignment itself is an aspect of Grace as in the alignment of the will with the Good.

Oh, forgot as Grace is the epitome of Wisdom and Wisdom is the integration of the best and most ethical truths in thinking and acting, philosophy and policy, cause and effect Grace as the epitome of Wisdom/Integration must apply to BOTH inwardness AND outwardness which means it cannot be irrelevant and by definition is the best, (ethical) most valid (truthful) relevant application of thinking and acting, philosophy and policy as well.