MONETARY: Re: "usury" is NOT the problem

["William B. Ryan" <william_b_ryan@lycos.com>]

[Ryan]  I have inserted comments below.
----------

>From: "Dan Parker" 
>Reply-To: monetaryreform@cog.kent.edu 
>Subject: MONETARY: Usury is a problem 
>Date: Wed, 23 Oct 2002 02:36:32 -0600 
> 
>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, 

[Ryan]  The post office is a possibility.  There is a post office conveniently 
located in every community.  Formerly, many of them performed a financial 
function, i.e. the postal savings banks.
----------

[Parker]  ...not the bank 

[Ryan]  This is what Douglas said in The Approach to Reality:

"Now, I will let you into a secret. Nobody for any practical purpose is going 
to produce a Final Social Credit plan. I will tell you who is going to bring in 
Social Credit, and that is the bankers..."

He added, "...and we are going to make them do it."
----------

[Parker]  (which intimates he agrees with the 
>debt-free statement above - as indeed he knew the math)

[Ryan]  The "math" you are referring to is not Douglas' math, but the math of 
an ignoramus who insists that 2 + 2 = 5.
----------

[Parker] > 
>The interest-free concept is similarly a matter of dispute, 
>with the author above saying Douglas did not argue against 
>the charging of interest. 

[Ryan]  This is a significant admission on your part, Dan.  Think about it.  
The author is quite correct.  Douglas neither argued against interest nor 
fractional reserve banking.
----------

[Parker]  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.

[Ryan]  There are no mathematic effects of compound interest.  It is a method 
of counting.  Interest that is being paid is always a linear function of time.  
That is the mathematical reality.  It compounds only if it is not being paid.  
The compound interest formula relates a rate of interest to a specific period 
of time, that's all it does.  An interest rate of X payable yearly is 
effectively a lesser rate of interest payable weekly that is not actually being 
paid weekly but paid yearly.  It is indeed confusing to people who don't 
understand the mathematical concept, which is why the Truth in Lending Law 
requires that the actual amounts to be paid for principal and interest are 
spelled out in plain numbers in the lending contract.  That's all the formula 
calculates.  That is to say, the underlying debt will not compound unless the 
interest called for by the contract is not being paid.  If the debt is being 
serviced in accordance with the contract, the debt is not compounding b
ecause of interest.  If it is not being serviced it is not being paid.  No 
money at that point is changing hands because of the debt.  It is in default.  
Interest may be accruing and compounding, which might become a bargaining chip 
in some future legal proceeding, but at that point they are just numbers in 
account books.
----------

[Parker] > 
>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).

[Ryan]  Douglas was a bona fide engineer, not a phony like your friend John 
Turmel.  You are assuming that "as an engineer" he would "know" what John 
Turmel does.
---------- 
> 
[Parker]  >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.

[Ryan]  The text quoted above is not as precise as it could be.  It is not 
fully consistent with Douglas' theory.
----------

[Parker]   >To illustrate a disagreement you had with another expert, 
>and Douglas himself

[Ryan]  Not Douglas.
----------

[Parker] 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.

[Ryan]  The quote above from the Draft Scheme says nothing about fixing prices. 
 It says that prices "shall be maintained."  They will be maintained through 
the policies of Social Credit.  For example, the Dividend and Compensated Price.

English is your first language, isn't it, Dan?
----------

[Parker] > 
>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.

[Ryan]  The compensated price is not applied on an individual basis.  It is 
applied macro-economically as a percentage of sales.  The individual merchant 
may or may not make a profit even with his rebate.  It may be insufficient for 
him individually to make a profit, in which case he personally will go out of 
business.  The mechanism doesn't guarantee a profit to every merchant, but 
allows the retail sector as a whole to make a profit.  If the retail sector is 
making a profit, then its suppliers are making a profit.  Not the suppliers of 
things that people don't want.
----------

[Parker] > 
>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. 

[Ryan]  There is no theoretical basis for such a agreed limit in Social Credit. 
 It may, however, be politically expedient in terms of public relations to have 
such an agreement, due to the prejudice against profit after generations of 
socialist propaganda.
----------

[Parker]  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.
[Ryan]  In this regard it is no different than any other B payment. 
> 
>I am interested in social credit, but only so far as it is consistent, 
>and makes mathematical sense.

[Ryan]  The A + B Therem is conistent and makes mathematical sense.  The 
problem is your lack of understanding of mathematics.  You are not alone.  It 
is a difficult subject to grasp, particularly in regard to the A + B Theorem.  
Most people will never grasp it, nor do they need to.

The Dividend and Compensated Price are fully consistent with the Theorem.  They 
are not consitent with the "usury" argument.
----------

[Parker]  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. 
What?  A person's money to spend is not his purchasing power?
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.
It is not education to tell them that 2 + 2 = 5 or the earth is flat. 
> 
>Regards 
>Dan Parker 
> 
> 
> 
> > -----Original Message----- 
> > From: Vic Bridger [mailto:socred@ecn.net.au] 
> > Sent: Tuesday, October 22, 2002 10:54 PM 
> > 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 
> 
-------------------


>From: "Vic Bridger" 

>To: "William B. Ryan" 
>Subject: Re: Dan Parker 
>Date: Thu, 24 Oct 2002 17:15:01 +1000 
> 
>Hi William,
 
>His message is below. I have emphasised the comment. 

>Vic 

>PS His diatribe in response to mine to him again enphasises that like Kurland 
>he has his own agenda and will not accede anything. I do not intend to respond 
>to his last message which is full of holes, and incorrect interpretations as 
>well as using the DRAFT scheme to support his argument shows he knows little 
>about Social Credit. The Draft was just that and was an example of what could 
>be done in a particular place at a particular time. Douglas said that that 
>there could be other methods but the underlying principles of Social Credit do 
>not change. 
> 
>Dan ParkerI: 22/10/02 
>I did refer to usury as an evil, and indeed it is one. Theft is 
>wrong, no question about it. That we live in a world with 
>many evils is an obvious fact. Cybernetics founder Norbert 
>Wiener commented on this by stating that the rule of 
>ruthlessness must prevail, where there is no rule of law. 
>No great leaps of logic here. The solution, in my opinion, 
>is that of an effective world government, and I am active 
>in this field.

[Ryan]  The bit about world government pretty much says it all, doesn't it?
---------- 

[Parker]> 
>If you feel more comfortable subscribing to the absolute 
>relativist position, where there is no wrong and right, well, 
>that's your perogative. However, if this belief causes you 
>to infringe on the rights of others, then those others have 
>the right, and the duty, to defend themselves. 

[Ryan]  When you put it into terms of good against evil, rather than 
engineering, you can justify doing anything in the name of good against evil.  
You can lie to defend yourself, as Dan does.  It is the "right of defense" as 
he puts it.  You can ally with the Devil himself, as Churchill said he could do 
in the war against Hitler.  Hitler believed it too.  Hitler was the extreme 
example of that type of mentality.  You can bomb cities and kill their entire 
populations, as Churchill did.  You can wipe out entire races if they are 
"evil," as Hitler did.  But you are good.  You are above it all.  You listen to 
the Devil and think you are doing the work of God.  It is the Sin of Pride.
----------

[Parker] > 
>I glanced through what you have written, and don't see 
>any areas where an enlightening discussion seems 
>possible. 

[Ryan]  His knowledge is perfect and complete.  Even if all the angels came 
down from heaven to tell him otherwise, he wouldn't listen.
----------  

[Parker] > 

>Again, please remove my personal address from any e-mail 
>that you might send out. 
> 
[Ryan]  He's treating other viewpoints, the opinions of others, as something 
repugnant and offensive.  He's afraid that if he sees them in print, merely 
words on paper about economics, not pornography, he is in danger of becoming 
corrupted by it.  Since he already knows the perfect truth, anything else could 
only detract from it.
----------

[Parker]  >Thank you 

> 
>Dan Parker 
> 


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