MONETARY: Usury is a problem

["Dan Parker" <danparker@socialcredit.com>]

Victor, before giving quotes from experts, and Douglas
himself that contradict your statements, I feel compelled
to say if my answers have been brief, it is because
I think this is not time well spent. I am also reposting
an e-mail where you were quite clearly wrong about an
important matter of the compensated price, and which
you haven't answered me on, to show that experts can
sometimes be very mistaken. 

Please excuse me if I refrain from discussing this issue 
further after this:

>From you point 2, below

Victor stated below: 

'Douglas makes no mention of debt-free purchasing power'

>From vol 6. No 4. of the Australian Social Crediter.
(I had thought previously maybe you had wrote this 
from the SCSS).

The reference by Douglas to the National Debt is simply a
recognition that all money comes into existence as a debt
under our current system. His idea for the National Dividend
would be that it would not come into the system as a debt.

This writer elaborates here:

Under the Social Credit proposal ALL new money created
for the purpose of the National Dividend and Compensated
Price mechanism would not be borrowed but be created and
applied to those two proposals.(emphasis in the original)

Dan adds: The phrases "not be borrowed" and "would *not* 
come into the system as a debt" means debt-free. Note: 
Douglas advocated issuing the dividend through the post 
office, not the bank (which intimates he agrees with the 
debt-free statement above - as indeed he knew the math).

The interest-free concept is similarly a matter of dispute,
with the author above saying Douglas did not argue against
the charging of interest. Of course simple interest could
be compensated for much as capital reinvestment, whereas this
would be mathematically impossible regarding the mathematical
effects of compound interest. 

But we know Douglas considered the interest angle
important, and as an engineer would know the mathematical
expression for compound interest (i.e. the effects of 
interest).

To recap:

"Now the first point to notice is that the result of this
complicated process is exactly the same as if the Government
itself had provided forty millions, in Currency, with the
*important* exception that the public pays 4 or 5 per cent
per annum on the forty millions, instead of merely paying
the cost of printing the Currency notes." - p. 138, 139
Fifth edition, Social Credit by C.H. Douglas.

A social credit expert, Wally Klinck, agrees with what is 
really an obvious mathematical reality under the system of
interest we have when he stated "But interest-bearing
debt money issued against real wealth, the physical costs of 
which are actually met as production proceeds, does not liquidate
the financial costs of this production. It transfers as
an inflationary claim against future cycles of production".

Knowing the mathematical formula for compound interest, I
will go with Wally on this one.

To illustrate a disagreement you had with another expert, 
and Douglas himself in this case, I will pull up an e-mail 
that you haven't answered me on yet. It is on a rather 
important issue regarding the compensated price.

Dan wrote: My main issue was with compensated price was the
government fixing prices as a percentage of profits,
and how this would be hard to enforce".

To which Victor replied: That is a new one on me. Where did such 
an idea come from?

Dan quoted in reply: "under the Companies Acts, should contain 
an additional item showing the average profit on turnover, and 
that these prices shall, as far as practicable, be maintained 
at a figure to include such average profit where this is agreed 
as equitable for the type of business concerned (the suitable profit 
being, of course, largely dependent on the velocity of turnover)."

Draft Scheme for Social Credit in Scotland, Appendix Social 
Credit.

To which I can add, to once again show discrepancies among the
experts.

Robert Klinck.
Q. Fair enough. But what guarantee do you have that
the seller will not pretend that his normal price for
the glove is $24, charge the buyer $18 and collect a
$6 rebate from the government? This would thwart your
purpose of keeping prices down.

A. Again, the answer is obvious. Merchants agreeing to
participate in the Compensated Price program would
have to agree on an upper limit on the profits they could
make. The most appropriate form for such a limit would
be a fixed percentage of gross turnover.

Getting beyond the clearcut contradictions, I would like to
dispute the semantics of one last point you made.

Bill Ryan wrote: "The "effects of interest" have nothing to
do with the A + B Theorem nor any aspect of the Douglas theory."

Victor wrote: 1. There is a difference between "interest" and the 
"effects of interest". This may appear to be pedantic but a 
little thought will reveal the difference. William Ryan is correct. 
Interest is a B Payment and as such is a cost that enters into price 
at the time the price is set, and for which no equivalent amount of 
money has been distributed at that time.

Dan replies: A B payment that enters into a price is something 
that is integral to the A + B theorum. No question about it.
If there were no interest, this effect, or price entry, would
not take place, and would not consquently need to be liquidated
by increased purchasing power.

I am interested in social credit, but only so far as it is consistent,
and makes mathematical sense. As for the jargon, I will not explain the
concepts to the public by saying a person's money to spend is not their 
purchasing power, and that these are different concepts. It encourages
a high priesthood approach to what can sometimes be a difficult topic
for the uninitiated, and fails in what is Job 1 in my opinion, which
is public education.

Regards
Dan Parker



> -----Original Message-----
> From: Vic Bridger [mailto:socred@ecn.net.au] 
> Sent: Tuesday, October 22, 2002 10:54 PM
> To: Dan Parker; 'William B. Ryan'; monetaryreform@cog.kent.edu
> Cc: oassoci508@aol.com; mike@mrowbotham.swinternet.co.uk; 
> socialcredit@fsbdial.co.uk; aopstad@telusplanet.net; 
> martinh@freenet.edmonton.ab.ca; wmklinck@shaw.ca; 
> gkiriaka@ecn.ab.ca; mklinck@hotmail.com; kwilde@ca.inter.net
> Subject: Re: "usury" is the problem
> 
> 
> This reply is directed to Dan but may be equally directed to all
> participants or readers.
> Language is a wonderful medium for communication and it is a 
> pity that it
> is
> not used correctly in applying a communication which is 
> supposed to be in
> the same language. It becomes more difficult enough when attempting to
> interpret a
> communication between two people who do not either quote the 
> other party
> correctly or who choose to change the level of the playing field by
> introducing extraneous arguments.
> 
> For example: Dan Parker wrote 19/10/02:
> "Again, I have read and understood >some excellent. articles 
> that Wally
> Klinck has sent me. The idea of flows of >money, rather > 
> than stocks, the
> effects of interest etc. are not difficult to grasp".
> 
> 
> 
> 
> 
> It is quite clear that reference is made to the 'A+B 
> Theorem'. It is also
> quite clear that reference is made in this connection to the 
> 'effects of
> interest'. If the comment re 'the effects of interest' did 
> not refer to the
> A+B Theorem one could excuse the confusion that appears to 
> have arisen.
> However, Dan has substantiated his intention by his statement 
> on 19/10/02:
> 
> " The Monopoly of Credit, Fourth Edition by C.H. Douglas, 
> Appendix 1 on
> detailing A+B Theorem (written as theorum) p. 143 - ' Group B 
> - All payments
> made to other organizations (raw materials, *bank charges* and other
> external costs".
> 
> Dan continues: "In case one should argue that interest is not 
> included in
> bank charges (I don't know why, but it seems wise to cover 
> all bases here)
> on p. 144 Douglas makes specific reference to interest re: 
> 'it being assumed
> (ie. Wrongly by mainstream economics) that the interest on 
> Government loans
> is provided by taxation'.
> 
> William Ryan responded 19/10/02: "The "effects of interest" 
> have nothing to
> do with the A + B Theorem nor any aspect of the Douglas theory."
> 
> 1. There is a difference between "interest" and the "effects 
> of interest".
> This may appear to be pedantic but a little thought will reveal the
> difference. William Ryan is correct. Interest is a B Payment 
> and as such is
> a cost that enters into price at the time the price is set, 
> and for which no
> equivalent amount of money has been distributed at that time. 
> Sometime in
> the future that interest, if and when recovered in the price 
> being met by a
> purchase will become part of the profit of the lender who charged the
> interest. It matters not whether the period is one hour, one 
> week or five
> years; the result is a deficiency in purchasing power. 
> Whatever may be the
> rate of interest or what results may occur at the point of time in the
> future the "effects of interest" have nothing to do with the 
> A+B Theorem. It
> is a pity that Dan did not quote in full. The full text 
> reads, "Since money
> is normally distributed only through the agency of wages, 
> salaries, and
> dividends, it being assumed that the interest on Government loans is
> provided by taxation, the whole of these wages, salaries, and 
> dividends must
> have appeared in the cost and consequently in the price of articles
> produced".
> 
> It would do well for readers to note that Douglas makes a distinction
> between "money" which is distributed in the form of wages, 
> salaries and
> dividends, and "purchasing power" which becomes deficient 
> between the actual
> costs incurred and prices established which can only be met 
> by a form of
> purchasing equivalent to the B Payments which has not been 
> distributed in
> the form of wages, salaries and dividends. I have stated 
> previously that
> "money" and "purchasing power" are not synonymous terms.
> 
> Dan Parker again wrote on 19/10/02:
> "It is far simpler to understand than the related rate of 
> flow of purchasing
> power and other aspects of the A+B theorum (Theorem) such as 
> some debt-free
> purchasing power is required in addition to interest-free 
> purchasing power"
> 
> 2. Douglas makes no mention of debt-free purchasing power or 
> interest-free
> purchasing power. These are not part of Social Credit 
> financial policy but
> are terms that have been introduced by "monetary reformers" and I must
> repudiate any suggestion that Douglas advocated such ideas. 
> They are not an
> aspect of the A+B Theorem. Other quotes from Douglas by Dan 
> are completely
> irrelevant and I would tend to agree with William that there 
> appears to be a
> lack of understanding of what Douglas advocated and in 
> particular the A+B
> Theorem.
> 
> Vic Bridger

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