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. 

Looking at the graph of velocity which doesn’t add a single additional cent to individual incomes actually (only lending/borrowing does that) but high velocity does indicate that more money remains in the circular flow of the economy as opposed to it being siphoned off in fictionalization which takes huge pools/amounts of money out of the circular flow and into bonds etc. which only return a very small percentage of actual individual interest income/profits back into the economy.

You’ll note that the upward trend in velocity ended with the precipitous fall in its rate following Volcker’s recession in the Reagan administration which heralded the beginning of the on going financialization process/drop in velocity. You’ll also notice the drop in velocity in the Clinton administration (think repeal of Glass-Steeagal)  and of course the continuing drop since 2008. Of course both globalization and innovation/AI have to be factored into the diminishment of aggregate individual incomes and hence factors in the drop in velocity as well.

Now if you implemented both a universal dividend and a macro-economically derived retail discount to consumers based on stats of total retail consumption over total costs of production including all interest charges, all depreciation costs that have to added to total costs and finally all profits and savings….and then rebate all of participating merchants’ discounts back to them….you’d get a huge discount to consumers/consumer prices (much more than the deceptive 3-4% of CPI even during the good times) because ALL costs are factored in it resulting in a tremendous increase in individual purchasing power….from the resulting actual consumer price deflation. And as businesses make more profit in good economic times when consumers have sufficient money in their hands…this increase in profit would reduce business’ needs for so much additional borrowing as well. That’s what is known as a proactive win-win situation for business and consumer, and a diminution to the over all market for finance as well.

You being a friend of Yanis Varoufakis, why isn’t he, Tsipras and the present Greek government aware of your IDEA website’s complementary currency”, i.e. social credit proposal? Or is that their next move? Bringing competition and the economic and monetary concept of Gifting is the actual answer to the monopolistic paradigm of Debt ONLY. You can see that can’t you?

Not well put. It forgets/denies the factors of taxes which further diminish aggregate demand by an average of 20-25% of individual incomes for almost 95% of wage earners, and waste which is actually probably the biggest factor in the gap which macro-economically includes the entire costs of interest…which alone, as you have often quoted Margaret Kennedy as saying, is as much as 45% of total costs. The discount formula is TOTAL costs of consumption, that is what we actually INDIVIDUALLY purchase over TOTAL SYSTEMIC costs for the same period of time. TOTAL SYSTEMIC costs.

Harping about interest alone is the cranks response to monetary reform because some of Banking’s income is re-circulated back into the economy, HOWEVER, having said that, MACRO-ECONOMICALLY SPEAKING, ALL OF INTEREST IS AN ADDITIONAL COST ON TOP OF THE ORIGINAL COST BORROWED, HENCE ALL, THAT’S ALL, OF THAT COST GOES INTO THE DENOMINATOR OF THE DISCOUNT FORMULA. A rather smallish percentage of the Bank’s income redistributed as individual income to the vast majority of individual wage earners goes into the numerator of the formula, that is true, but the vast majority of profit and savings going to the few owners, executives and all stockholders goes into the denominator….because profit and savings are diminutions to the circular flow of the economy and re-investments, as they are a carryover of present incomes into a proceeding financial and productive cycle are diminutions to the circular flow as well.

Adrian:  “I’d like to see a lucid explanation of how this part of the SC theory works, that is, not just a restatement, but an explication”

Me:  Accounting is as concrete a discipline as you can get. Go to the cost accounting figures of any enterprise and distinguish between labor/individual incomes and total costs including of course the total costs of replacing capital equipment which has to be garnered in addition to the total of original financing costs PLUS a profit. From those statistics the ratio of individual incomes generated to total costs = less than 1. As this is the normal and continuous state of commerce/the economy the calculus of that flow reveals the Social Credit insight.

Me:  The Georgist/financialist insight is a valid one. As is Public Banking. I have said this numerous times here. However, they are not the only diminution of individual income from the circular flow of the economy, nor do they account for all the additional costs that also destabilize it as well. Social Credit factors ALL of the diminutions and excess costs into its theory and policies. It is a complete macro-economic analysis. Do we want a comprehensive and actual solution to our economic and monetary problems…or are we willing to settle for half measures, palliatives and insistence on same for personal agenda reasons…despite the fact that the unstable, unworkable system dominated by the Banks’ monopoly on credit…is in the honest and last analysis…enslaving????

We can band together in a movement that is totally conscious of the total problem and focused on an actual solution, or we can remain theoretically atomized and weakened…precisely the way the Banks would prefer.

Adrian: Steve,

Me:  Adrian,

I appreciate the reply, but you’re not going to find a more bedrock empirical source of data than cost accounting. Cost accounting goes beneath the surface of mere debits and credits which appear to confirm general equilibrium, and get into the actual three and four dimensional (space-time) aspects of the economy which means what? ….that they reflect ACTUAL TEMPORAL realities instead of the abstract notions of mere debit and credit.

“I suppose Douglas wants to say that profits are somehow unearned income,”

Actually Douglas claimed no such thing. Douglas was a fervent advocate of profit making systems, and opposed to socialism because it was just as administratively tyrannical as Finance capitalism and also like capitalism did not recognize the need to supplement individual incomes. Douglas wanted businesses to make MORE profit…by eliminating many of their costs (like welfare, unemployment and even eventually social security taxes which with a sufficient dividend would make such taxes immediately redundant and unnecessary) and helping to reduce their ongoing needs/costs for finance as a result of the increased profits therefrom.

I hope I’ve cleared up the fogginess some.

Adrian:  Appreciate your reply as well. Of course accounting vs. no accounting is no contest. But accounting is in terms of current money prices. Those prices do not necessarily reflect real value, the most obvious case being the externalities that industry is allowed to project onto society and the environment in terms of pollution, health costs, etc. etc. So any accounting system is no better than the underlying pricing system. So still not clear how A+B works.

Me:  I’m all for handling externalities in as technologically efficient and philosophically wise way as possible. Making the system as a whole actually function in a way that frees business to make more profit, monetarily frees both the individual and businesses from the stress of that unworkable and onerous system without having to worry about unemployment due to the gifting of money and so better frees innovation to reduce resource usage and find undiscovered energy sources will go a long way toward doing the former. Understanding the various aspects of Grace like for instance balance as in enoughness and creating an ethic and zeitgeist based on all of the aspects of Grace will help with latter.

Regardless, making the system work in as free and efficient way as possible is necessary to effectively deal with the externalities. Unfortunately the Banks will be happy to pit the environmentalists/deep ecology advocates against monetary reformers and also bring up the false duality of capitalism versus socialism (when Distributism is the correct freeing and efficient alternative). We must be conscious of their ploys and conscious and focused on the overall solutions.

Interest is a cost. As costs exceed the production of individual incomes in the normal flow of the economy interest IS A PART of the problem. That is why the discount is necessary…to reduce costs and prices. Diminutions to the flow of money in the economy is also a part of the problem. That is why the dividend is also necessary….to enable an actual economic equilibrium.

A + B describes the actual condition of the economy, that is, disequilibrium. The mechanisms of Social Credit resolve that problem. Grace as in gifting handles the pure economic aspects of the problem, grace as in mental, emotional and philosophical balance, i.e. rationality handles our recognition for the necessity of an ecological viewpoint as well.

Me:  

Ardeshir,
Yes income inequality is a problem which is increasingly de-stabilizing and of course the dividend would resolve that problem quite well.

A + B relates to both costs and incomes. Therefore diminutions to money and to income are thus as much a part of the gap expressed by A + B as excess costs. No where near all of the business revenue of any business most especially Banks goes back into the circular flow of the economy. What, do millionaires and billionaires spend all of the income on consumer goods? Of course not they put it in bonds and other investments which pool large amounts of their income and pay out only a very small fraction of that total out as income. Taxes similarly diminish the circular flow and end up more often than not in CAFR’s etc. Re-investments of any kind reduce the circular flow of total money, and of course not all of that total immediately becomes individual incomes ACTUALLY AVAILABLE TO BE SPENT ON RETAIL CONSUMPTION.

The totality of the gap is much larger than merely the excess cost of depreciation charges.

Finally, the discount mechanism is a macro tool and macro derived. Macro-economics is concerned with TOTALS/AGGREGATES. Therefore the TOTAL DIMINISHMENTS TO INCOME FROM THE CIRCULAR FLOW OVER THE TOTAL COSTS, THAT IS TOTAL INTEREST, TOTAL DEPRECIATION, TOTAL PLANT CHARGES, TOTAL COSTS OF WASTE TOTAL, TOTAL, TOTAL FOR THE PERIOD OF TIME THAT THE DISCOUNT IS COMPUTED FOR becomes the ratio. And that is why the discount could easily to a quite large percentge. If 45% and the CPI is only 3% (which is probably the actual monetary inflation figure showing that increasing the money supply is not the bugaboo that libertarians claim it is) then consumer’s/everyone’s purchasing power went up by 42% That would mean the economy was in a state of price deflation….even though we had also added the dividend into the circular flow.!???? The current financial and economic systems are so titanically inefficient it is incredible.

Me in response to John Rawson: Fine, A + B may technically refer only to the excess costs aspect of the gap….but the gap still consists of BOTH excess costs AND diminutions to the circular flow. It only goes to point out the completeness and comprehensiveness of the theory. And also, the banks didn’t ascend to being so profitable and powerful without being a monopoly and they financialize/pool those profits, and as you yourself point out re-investment diminishes present flow and pushes it over into a new cycle with very scant or no additional production of individual income. Then factor in waste….and the gap is much larger than most orthodox economists conceive.

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Me:  All present theories are incomplete except Social Credit. General equilibrium theories are wrong, and that ideology prevents them from taking the corrective policy actions necessary. All disequilibrium theories are incomplete analyses and so merely palliative in their policy prescriptions. Steve Keen has unknowingly/unconsciously come to most of Douglas’s conclusions including disequilibrium and the relevance of money, debts and Banks. His call for “a modern debt jubilee” and his IDEA website’s call for a “complementary currency”, i.e. a social credit for Greece are both conceptually/philosophically reflective of Social Credit’s basic economic and monetary philosophy of monetary grace as in the free gift. In fact in several of his latest videos on his youtube channel he exactly states that Keynesian/disequilibrium theorists need a new philosophy/paradigm to overcome general equilibrium as a theory. Keen is truly a nascent Social Crediter, awakening before our eyes. However, paradigms which are habitual ideas and ways of looking at life, are difficult things to conceive while still inside of the old one. Once you’re out, it becomes much more clear and almost obvious.

It’s like flight. Flight is actually controlled falling, but it’s odd and somewhat difficult to think of it that way unless you’re outside of the atmosphere/(paradigm) in orbit and realize that the only way you can actually fly around serenely without effort is to be in orbital free fall.(two aspects of Grace are serene focus without mental effort and power/movement without apparent effort)

And by the way, another aspect of Grace is a flow of consciousness itself, continuous consciousness, continuous realization of your own self awareness, continuous realization of each moment being brand new and so the flow of moments as each brand new…which makes it exactly opposite of being mentally stuck in an old habitual paradigm.

Grace, it’s a totality type concept that just keeps giving if you contemplate it.

Well Mish, you have made my point that we are enslaved by a tyrannical and monopolistic Banking and financial system quite well. However, it actually goes even deeper than that. We are hypnotized by the IDEA of Debt, the PARADIGM of Debt ONLY.  It is a monopoly idea that must have competition in order to have economic and monetary balance, equilibrium and flow. The major meanings and descriptions of the word/concept of Grace are….balance, equilibrium and flow. Think through that linguistic alignment and reality for a second and you’ll see what systemic idea is necessary to balance the system and resolve this crisis. And no, bankruptcy is not systemic Grace. It is an individual and individual business option that would still be a part of the system, but the SYSTEMIC idea that will bring balance, equilibrium and flow TO THE ENTIRE SYSTEM is monetary grace the free gift. Those that have eyes to see and ears to hear…let them see and hear.

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Not if they incorporated the idea of monetary grace the free gift into their economy via the policies of a universal dividend and a retail discount. Steve Keen’s IDEA website advocates “a complementary currency” in other words a social credit to balance the Greek economy. And he is correct. He, like every other economist is a nascent social crediter…they just haven’t realized it yet. Everything Keen has brilliantly and iconoclastically discovered since the beginning of the crisis….is actually a re-discovery of most of what Douglas said 90+ years ago.  Disequilibrium, check. The relevance of money, debt and Banks, check. The necessity of a new economic  philosophy and paradigm, check. The concept of monetary grace the free gift and the policies of a universal dividend and a retail discount to implement that new philosophy and paradigm…..not yet.

trading:  Nonsense again.

Me:  Logic is nonsense then. Thank you for illuminating your ability to deny logic and thus reality by resorting to the blinding effect of orthodoxy.

trading:  You are completely indoctrinated. Your posts are full of ideological nonsense. It may seem like logic to you, but it’s about as logical as the claims of creationists and less coherent than the babbling of an average cult promoter.

Me:  You mistakenly think I am some sort of religionist when I am a complete agnostic.  You, on the other hand, are a denier of the importance and necessity of logic, linguistics and philosophy. And no amount of bluster from you changes that, and that is obvious to everyone who actually looks at what I actually said,

Billy Bonobo: I freed a thousand slaves, I could have freed a thousand more if they only knew they were slaves….HARRIET TUBMAN

Me: Correct. Once you have embraced slavery, whether bodily or mentally/paradigmatically….slavery can appear to be freedom.

Gifting or Paradigm…..The Movie Treatment

Steve C. H. Douglas, the owner operator of Discount Window Cleaning, a boutique residential window cleaning service who works hard and frugally cuts corners as much as he can….and more,  but always seems to have difficulty staying above water, has a dream one night that Gifting is the answer to his own and the nation’s monetary and economic problems. He begins to post on the internet and then to speak about the merits of Gifting to anyone who will listen. He becomes famous and wealthy and appears to be on the way to convincing the vast majority of the nation’s populace and so politicians to implement his idea of Gifting, but he has become the enemy of powerful financial and corporate interests who do not want to give up their monopoly power of money creation as Debt and their privileged business positions of power.

Steve gets a summons that he is going to be tried on charges of tax evasion.  The information the government received about some investments he made is given to them by the contrarian research division of a major Bank who bribe Cayman Island records authorities for the condemning information.  His defense lawyer discovers this and gets the information presented in the trial. Steve’s popularity and the self-interested skullduggery of the Banks and trans-national corporations is exposed in court and the jury finds him innocent. Steve then counter sues both the Banks and the American government (IRS and the leaders of the House and Senate ) for $50 trillion…and wins.  He takes all but $5 billion of that (“I have to pay my debts and buy some squeegees so I can keep cleaning windows. A clear view makes for a happy day.” he says with a smile and a wink.)  and with the rest pays off the debts of everyone in America…except the Banking and corporate monopolists who tried to dispense with him and his dream of implementing Gifting.

Wife      Alberta Testimony-Douglas

Civil Rights Defense Lawyer     Clyde “Mean Cat” Dividend

CEO of J P RICO Bank     James “Ice” Igloo

CEO of GOLDPAN SAX     Moe “God’s Prophet” Goldfarb

CEO of Euro Breathable Air Inc.    “Duetsche” Mark von Mises

CEO of Saudi Sand For Everything Inc.  Muhammad Ibin NonForgivin’

CEO of Heist Inc. (Hunger its Elimination and Immediate STimulation)  Motto: “Foods That Fill You Up And Also Make You Throw Up”   Tom “Twinkie” Cess

Hold outs against acquittal jurors    Dave “Dopik” Austrian and Kevin P. (Palliative) Keynes

“Dopik” is always mistaking problems and solutions and Keynes is easily bought and also opportunistic

C copyright

Steve Hummel

July 2015

Instability is inevitable….but only if you insist that we must have either capitalism or some form of socialism as the alternatives. However, if we adopt a genuine third alternative, the profit making Distributive theory of Social Credit whose ideas and tenets of disequilibrium and the relevance of money, debt and Banking you have brilliantly but unknowingly re-discovered…we can have prosperity, individual freedom and stability…if we additionally integrate the policies of a universal dividend and a macro-economic discount to prices into the economy. You are also quite correct in saying that we need a new philosophy and paradigm for the future. That idea/paradigm/philosophy is Gifting, i.e. monetary grace the free gift which is the only idea powerful enough to balance the monopolistic paradigm of Debt.

The actual problem is the system itself in its normal and unfettered operation creates a higher rate of flow of costs/prices than it simultaneously creates as a flow of individual incomes. Hence it is inherently unstable. Rent being a cost is an aspect of the above truth and must be compensated for and perhaps also regulated in a way that graciously but forcefully discourages such an economic vice.

Guarantee the individual enough individual income  to have a respectable middle class lifestyle in addition to whatever they may or may not make for work for pay via the integration of the policies of a universal dividend and a discount to retail prices …and the system will be in equilibrium, the individual will be free and the system will be free flowing.

Money Is Power and Freedom in a Monetary Economy

Robotics will happen. If there needs to be a small component/complement of individuals along with it that will also happen. The overall point however is the monetary and economically disruptive and inevitable (in profit making systems which we all want to maintain) forces of innovation and AI will result in the necessity of the Social Credit actual solution anyway…whether one wants to confront its systemic truthfulness or not.

You’re all nascent social crediters.

The real issue in all of this is not liquidity (just another word for money…except in a debt ONLY based money system it has an extra cost attached to it of course) …the REAL issue is national and individual freedom instead of dominance and enslavement by an elitist monopoly idea and the authorities enforcing that dominating (and unworkable) idea. The fact remains that the businesses and individuals in Greece are suffering austerity and domination….despite the fact that they don’t have to immediately pay their debts.

Change the idea of Debt ONLY by balancing it with Gifting and the system and the people and businesses within it will actually be free and free flowing, not just free to be dominated by a monopoly idea and and unworkable system.

Don’t let yourselves be distracted or bamboozled by Time, by apparencies or by powerful elites with a monopoly power. Debt, the idea, rules, and not graciously at all.

The real problem is we have lived with a dominating idea and system so long we’re hypnotized by it….to the point where we’ve forgotten what freedom actually is.

Ellen Brown:  We know how we would set it up if we were starting from scratch. The problem is that Greece will be issuing a new currency that has to compete with the euros hidden under mattresses and other foreign currencies, and with short sellers itching to bring the new drachma down. I’m wondering if they couldn’t impose a fixed exchange rate the way China did for many years, plus capital controls.

Me:  They can certainly try….and must. The fact that an unethical manipulation like shorting is allowed at all is proof of the dominating control by Finance. As Zarlenga showed in his book The Lost Science of Money it was the central bank of Germany that lent money to speculators to short the Deutsche Mark and create the hyperinflation.

In the last analysis it is going to take a mass movement to awaken individuals and small businesses to the fact of their enslavement by the idea and paradigm of Debt…in America and the rest of the advanced economies. That’s where the demon resides and rules from so the battle must be won there.

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No matter what palliative measures are taken…or not, in order to lessen the stress of the moment, the truly important thing to keep in one’s mind is that the Social Credit insight and policies ARE the correct and actual solution. And don’t forget that innovation and artificial intelligence will increasingly be the economically disruptive and erosive forces to aggregate individual incomes that will keep the system unstable, dominated by the paradigm of Debt ONLY and bring about the necessity of continual supplementation, i.e. the social credit solution any way….no matter whether palliative measures are used or not.

So why continue to palliate dominance and control by a self interested elite? Perhaps do what you may to lessen stress….BUT NEVER LOSE SIGHT OF THE REALITY OF THE SITUATION AND ITS ACTUAL SOLUTION. AND NEVER COMPROMISE OR SETTLE FOR THE ACTUAL ENSLAVEMENT THAT STILL REMAINS AFTER THAT PALLIATION. NEVER.