Re: MONETARY: Monetary Reform -- Reply to "John Medaille"

[John Médaille <john@medaille.com>]

At 12:44 AM 10/24/2002 -0600, Wallace M. Klinck wrote:
>Attention:  John Medaille, Dan Parker and others.
>
>Thank you, John,  for your interesting e-mail message.  I attach some 
>documents re Social Credit for your perusal.
>Says's law becomes increasingly invalid with the introduction of capital 
>relative to labor under the existing system of banking (money being issued 
>essentially only for production and never for consumption, except for 
>escalating consumer debt which must be recovered from future production 
>which is the same thing).  This transfers costs from an earlier cycle of 
>production as a charge against a future cycle with which it has nothing to 
>do realistically.  The physical (as opposed to the financial)

I've heard this serveral times. Could you distinguish for me "physical" vs. 
"financial" costs.


>cost of production is fully met when that production is completed and 
>ready for use.  Fortunately, the defect in financial accountancy which 
>leads to an exponential deficiency of purchasing-power relative to 
>financial cost provides the the opportunity to address the problem.  The 
>issue is the ownership of credit, the charging of interest on money 
>created as debt and fundamentally the premature cancellation of 
>purchasing-power in respect of repayment of capital loans (the 
>reinvestment of saving creates new costs without creating new 
>purchasing-power and creates a deficiency in a similar matter).  The 
>consumer is charged, rightly, with capital depreciation but wrongly not 
>credited with capital appreciation.  Major Clifford Hugh Douglas dealt 
>with all these problems beginning as early as 1918.  We should be 
>concerned not about a just wage but about providing sufficiency of income 
>via a Just Price (jus pretium) a modern interpretation upon which Douglas 
>based his analysis and prescriptions--a concept upon which the Church has 
>a locus standi.  A number of Catholic thinkers were apprised of Douglas's 
>"Social Credit" and were strong supporters.

Could you be more specific about this last point. Which "Catholic thinkers" 
would you recommend?

>  The ideal price level is zero,

Really? Why? I certainly don't want to sell my services for nothing.

>  the ideal employment rate is zero and the Just Price is financial price 
> times the mean production rate over the mean consumption rate in a given 
> period.

What are the mechanics of this? For example, is their a gov't agency that 
sets "just price"? Or is this just a theoretical paradigm? And how are 
these "mean" rates computed?

>   The money issued as debt (created) by the bankiing system belongs 
> neither to the banks nor the government but to the community and should 
> be issued (for consumption) without debt in the form of consumer 
> dividends and compensation to prices.

Again, how exactly does this work? Is is like a reverse sales tax? Do we 
get a check in the mail (from whom?)?

>   Not everyone is interested in owning capital--but all should be 
> beneficiaries of the proceeds of capital which emanate increasingly from 
> an accumulation of factors which we call the Cultural Heritage.  The 
> proposal to finance acquistion of capital (as per the suggestions of 
> Binary Economics) by issue of more debt in circumstances which currently 
> already  create exponential unrrepayabale debt hardly seems a realistic 
> way to achieve a self-liquidating price-system.  To repeat, the very 
> operation of the existing price-system operating under debt-finance 
> creates the deficiency--but fortunately provides thereby the  very 
> opportunity to correct the problem via realistic financial accountancy.
>Your observations are welcome.

BTW, I see my name in the subject line, but I can't recall posting anything 
but a brief comment to the monetary list. What post are you replying to?


John C. Médaille

"A dead thing can go with the stream...
but only a living thing can go against it."
         -G. K. Chesterton
http://www.medaille.com/distributivism.htm
john@medaille.com