Re: MONETARY: Usury is a problem, a binary response

["Norman G. Kurland" <thirdway@cesj.org>]

Dan, I want to publicly acknowledge and thank you for becoming the first
Social Credit signatory (to my knowledge) to the "Statement of Shared
Vision: Toward a More Free and Just Global Economy" developed by Shann
Turnbull and me.  Our objective is to bring together social creditors,
binary economists and all other movements committed to ending world poverty
essentially (though not exclusively) through the democratization of the
money and credit systems of the world.  I hope other advocates of Major
Douglas' ideas follow your lead and at least consider joining the ranks of
over 6,500 people in 32 countries by clicking on
http://www.cesj.org/about/programs/declarations/sharedvision.htm.

Your exchanges with Rodney Shakespeare reflect not only a seriousness of
thought but also I think we're on the same wave length on many basic issues,
including (1) the role of the state in "creating money" for growing the
economy in sustainable ways that balance aggregate demand with aggregate
supply and avoid price inflation and (2) "interest-free" money within a
process where the "service costs" of the money-creation process (e.g.,
printing, regulatory and administrative costs) are passed on to the users in
the form of taxes or reasonable transaction fees.  If not, please correct
me.  I also share your moral opposition to usury, but this needs a deeper
discussion on the subject, a subject that my colleague Michael Greaney has
developed in several of his papers.  On the issue of "debt-free" money, I
presume you are not opposed to "asset-backed" money (i.e. real wealth, not
gold), and that you acknowledge that modern money by its nature is an
instrument of the credit system (i.e., a social tool that is critical for
facilitating transactions in a sound market economy.)

If my perception of your views are at least somewhat accurate, then I would
welcome your comments (and those of other Social Creditors) on my paper, "A
New Look at Money and Prices: The Kelsonian Binary Model for Achieving
Growth Without Inflation."  (Please click on
http://www.cesj.org/binaryeconomics/price-money.html)  This paper was
published this year by the Journal of Socio-Economics and is an appendix to
the recently published book, "Seven Steps to Justice" by Rodney Shakespeare
and Peter Challen (New European Press, London).

Dan, as you may or may not know, Louis Kelso, Frank Capon (then Financial
Vice President of Du Pont of Canada and as I recall the president of the
Canadian association of chartered accountants) and I spoke before the 1969
Alberta Social Credit League convention held in Calgary.  While people like
William Ryan may blow his lid on this, we were escorted from the lobby to
the stage behind a cowboy band playing, "When the Saints Go Marching In."
(See the Albertan, November 21, 1969, "Socreds told of economic
revolution.")  In no small measure our invitations were due to the
initiatives of the late Jim O'Dell of Barrhead, Alberta, who for years was a
one-man lobbying force for Kelsonian ideas in Alberta.  The political
groundwork for our involvement with the Social Credit movement was an
article published by Ernest C. Manning, the former Premier of Alberta in his
article, "Widespread share ownership -- bulkwark against state socialism" in
the August 1969 issue of Canada Month magazine, which was a virtually total
endorsement of Kelso's binary economics, the Kelso-Adler principles of
economic justice and plan for what we now call "Capital Homesteading.  (I'd
be happy to send copies of these by fax or mail to people interested in this
history.)

Arrogant, abusive and negative thinkers stand in the way of the solidarity
needed to bring economic and social justice to the world.  They waste time
that you and I would rather spend in solving problems.  That's why I welcome
your positive, open-minded and common sense approach to ideas, and look
forward to continuing a mutually respectful exchange and eventually building
a united political front among binary economists, social creditors and
others committed to restructuring the economic order to achieve a more
participatory and effective economic democracy for individuals everywhere.

Yours in Peace through Justice,

Norm Kurland
Center for Economic and Social Justice
Web site: http://www.cesj.org



Dan Parker wrote:

> 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
>
> www.socialcredit.com