A Social Credit Debate among Friends
>Date: Fri Apr 16 00:12:29 1999 >From: email@example.com ("William B. Ryan") >Subject: [lets] A Debate among Friends >John Turmel: >I hereby propose a debate between you and me, in which others will >hopefully join in, where I will challenge your "debt virus" thesis >that interest is the root of all evil. I will argue from the A + >B Theorem that the fundamental problem is that growth vectors in >technology and population are insufficiently accommodated by the >historically evolved system of finance, resulting in perpetually >wasted resources and unrealized potential. JCT: Fair enough. But let's make a few precisions as to the A+B theorem. A represents the money issued into circulation and B represents the prices demanded for the goods. Douglas and I both agree that the money issued is the Principal of the loans and our only difference is what components make up the B costs in the prices. I state that the only imbalancing cost that cannot be taken care of by velocity and interest-free credit is the interest, so Turmel's equation is P/(P+I). Douglas's A/(A+B) theorem states that there are several other imbalacing causes included with the interest so since A=P, Douglas' equation could be said to be is P/(P+I+T+O+...) where T is taxes and O is overhead and +... are any other costs you care to consider.
>From the Douglas perspective, interest per se is not the problem; it >would exist even if the rate of interest were somehow forced to zero. JCT: Okay. I propose we consider this as a LETS where the interest is zero in the denominator. I hold that the system is now stable and cannot be destabilized. You'll have to prove that the equation imbalance is now P/(P+T+O+...) and the Taxes and Overhead costs are still unrecoverable throwing the system into imbalance while I'll have to prove that it doesn't.
>The word "interest" is hardly mentioned in any of his writings. JCT: That's because it was lumped in with his assumed other imbalancing costs. He may not have realized that interest is the primary positive feedback loop while the others aren't feedbacks loops at all. I call interest the problem in the pumphouse and the other costs are splashes in the pool.
>The trouble with interest is that it is not a supply and demand >phenomenon, but is determined by a cartel acting in accordance to >what are tantamount to superstitious rites, resulting in rates being >much higher than they should be, aggravating the disparity between >rich and poor. Money should be considered to be a public utility; JCT: I agree. The banking system should be run as a public utility owned and profited by all.
>interest rates should be regulated as low as possible consistent with >financial institutions being allowed to earn a reasonable profit over >their legitimate expenses. JCT: And I would restrict bank computers to cover their expenses with a pure service charge doing away with the positive feedback altogether.
>But even if it were possible for rates to be brought down to zero, JCT: Even if it were possible? LETS has made it possible by insisting upon it.
>the problem revealed by the A + B Theorem would still manifest. JCT: And here is the point of our dispute. The imbalance revealed by the A+B theorem would not be manifest when B does not include interest.
>Your characterization of Douglas' A+B is not Douglas' A+B. The >simplistic fallacy of the "debt virus" thesis is easily demonstrated. JCT: The debt virus theorem simply states that the prices needed to repay debt grow beyond the capacity to repay. Douglas went a lot further in stating that other factors also made the prices grow beyond the capacity to repay. So I propose a simple example. We'll take the example from the famous Salvation Island example of Louis Even where castaways stranded on an island start up their own money system, a LETS timecurrency, and you tell me where any imbalance arises.
Eg: Island. The first castaway is the mayor and runs the LETS storehouse and levies a 10% income tax on every transaction. One of the castaways is a miner and spends a 40 hour week mining iron ore. The storehouse pays him 40 Hours for his ore and he sends 4 Hours income tax to the mayor. Another castaway borrows 40 Hours to buy the ore and spends a week smelting it. He also adds 40 Hours for his time and the storehouse pays him 80 Hours for the ore with which he repays his 40 Hour debt netting him 40 Hours. He sends 4 Hours tax to the mayor. Another castaway borrows 80 Hours to purchase the iron and over a week fashions it into farming implements which will be used completely in that one farming cycle. Longer lasting tools could be paid off at the depreciation rate. Adding 40 Hours to the price tag for his effort, the storehouse pays him 120 Hours for the tools with which he repays the 80 Hours he owes netting 40 Hours. He sends his 4 Hours income tax to the mayor. The next six castaways form a farming cooperative and borrow 120 Hours to purchase the tools. They plant crops for a week and charge the storehouse 30 Hours for the 240 Hours labor costs plus the original 120 Hours materials costs and they repay the 120 Hours they owe for the the tools used up. Each sends the mayor 4 Hours in income tax. Finally, the storehouse borrows the 360 Hours to purchase the crop and 40 Hours to pay the mayor for sweeping the streets and delivering the mail. He sends his 4 Hours in tax to his office. At this stage, the storehouse has issued 400 Hours for the crop but has collected 40 Hours in taxes and needs only charge a total price of 360 Hours total for the crop. All 10 castaways each have 36 Hours to spend on food. All the food gets bought and the mayor replaces the 400 Hours used in the process until next time. Now, Douglas maintains that when the prices include the cost of the raw materials, overhead and taxes, there will be a price to money imbalance. Evidently, there is not. I know it sounds funny to charge taxes and then subtract them from the cost, but I had to somehow include that element to show that such ripples in the financial pool has no effect. Of course, if the storehouse also owes 10% interest to the LETS bank on the 400 Hours used in the process, then it has to charge not a net price of 360 Hours but a price of 400 Hours and not everything gets sold when everyone only have 360 Hours to spend. They'll have to find a way to export what can't be bought at home. Again, I refer you to the explanation of the difference between how it works with interest versus service charges in my bankmath.htm. As long as everyone has access to an interest-free credit line, all the B costs (other than interest) can simply be paid for with new credit which must balance in the end. And even if the tools are assumed to depreciate over a longer period, it means that the final prices for the food would include labor costs and a reduced prorated materials cost so that at the end of the cycle, people would be left with money in their wallets matching the value of the undepreciated tools, money which can be used to pay for the price of the tool depreciation in next year's crop. I have to therefore challenge the notion that the cost of raw materials, overhead and taxes have any imbalancing effect at all on an interest-free island. And given that there is no imbalance between the money in the numerator and the prices in the denominator, the notion of simply spending money into circulation "debt-free" no longer applies. When government spends money into circulation, it acts just like any other contributor and must recoup that money in taxes to pay its debt and balance the equation. Of course, if interest were to persist, then spending money into circulation "debt-free" would be the logical way to counter the imbalance. But since this isn't the case and there is no imbalance to counter, "debt-free" spending is no longer possible. So Douglas was correct in noticing that there exists an imbalance but was incorrect in blaming any costs other than the interest in the pump house. That finding a small error in Douglas, the engineer's, price analysis strikes many Socreds as heresy is too bad but it's a fact. Call them Dollars instead of Hours if you will but Turmel, "The Engineer's, analysis that all LETS interest-free social credits are stable and need no numerator adjustments in the money supply to remain stable is correct no matter how it may rankle them. -------------------------------
A Social Credit Debate among Friends #2
>Date: Sat May 1 17:18:09 1999 >From: firstname.lastname@example.org ("William B. Ryan") >Subject: [lets] Re: A Debate among Friends > >FIRST REJOINDER: >>JCT: Fair enough. But let's make a few precisions as to the A+B >>theorem. A represents the money issued into circulation and B >>represents the prices demanded for the goods. Douglas and I both >>agree that the money issued is the Principal of the loans and our >>only difference is what components make up the B costs in the prices. >>I state that the only imbalancing cost that cannot be taken care of >>by velocity and interest-free credit is the interest, so Turmel's >>equation is P/(P+I). Douglas's A/(A+B) theorem states that there are >>several other imbalancing causes included with the interest so since >>A=P, Douglas' equation could be said to be is P/(P+I+T+O+...) where T >>is taxes and O is overhead and +... are any other costs you care to >>consider. >WBR in reply: You begin here with a straw man argument in that you >completely misstate Douglas' A + B Theorem. JCT: It's not my style to beat up on straw men. I don't have to. I can beat up on the original argument.
>In Douglas's notation, A are payments firms make to directly final >consumers in the form of salaries, wages and dividends. B are >payments firms make to other firms or equivalent accounting entities, >including government. There are accumulating account balances in both >the firms and consumer sectors. JCT: Where do you think the money paid to government goes? To people to be spent. Where do you think money paid to suppliers goes? To their employees to be spent. Sure the interest can be spent but not in the original cycle.
>If the economy is growing, and this is the big "if" crucial to >understanding Douglas' theorem--incrementally increasing A + B is >placed into total circulation, but only A is placed into the hands of >final consumers. So even if consumers spend all that they receive as >soon as they receive it, it would be insufficient to purchase the >totality of increasing production. A cannot purchase A + B. JCT: But with access to credit, all can be purchased and paid for later.
>The argument is very much cast in the form of a reducio ad absurdum >because consumers never spend all that they receive as soon as they >receive it. JCT: When consumers have access to credit, it doesn't matter that others are saving at the moment. The money paid for the production that isn't used to buy now will be used to buy from the debtors later.
>Indeed, it would be impossible for them to do so. JCT: Not if they have access to LETS credit.
>The problem revealed by A + B is thereby compounded, and applies to >any conceivable system of finance that preserves free enterprise, no >matter how rationally constructed. JCT: Not to a LETS system of finance which still preserves free enterprise.
>What it means is that entrepreneurial investment, in the statistical >or macroeconomic sense for the economy as a whole, cannot derive from >income diverted from consumption by the recipients of income, or >saving, or redistribution through taxation, to the extent that such >income is costed into production. It must derive from some >extraneous source, i.e. credit. JCT: Right. Exactly what LETS does.
>Presently, this credit is usurped entirely by the *financier* acting >in his perceived self-interest, or supplemented within national >economies by the aggressive exporter achieving a "favorable" balance >in trade, and has little correspondence to the wishes of either >entrepreneurs or consumers or even governments as reflected by their >spending or saving decisions in free markets. >It is the Social Credit program to appropriate and distribute, >through democratic initiative based upon scientific principles, an >increasing portion of this credit to the general welfare. JCT: That's what LETS does too. Except that LETS is engineering fact, so far, Social Credit is engineering theory.
>>>From the Douglas perspective, interest per se is not the problem; >>>it would exist even if the rate of interest were somehow forced to >>>zero. >>JCT: Okay. I propose we consider this as a LETS where the interest >>is zero in the denominator. I hold that the system is now stable and >>cannot be destabilized. You'll have to prove that the equation >>imbalance is now P/(P+T+O+...) and the Taxes and Overhead costs are >>still unrecoverable throwing the system into imbalance while I'll >>have to prove that it doesn't. >There is no imbalance caused by interest. The banker is not only a >banker, he is a businessman. "Interest" is merely the name given to >his gross profit, and in this respect does not differ in any >substantive way from the gross profit received by any businessman. >From his profit he pays his expenses, dividends to his stockholders, >and a salary to himself. JCT: This is the standard cover story for interest with which I disagree. Even Douglas includes interest in his imbalancing factors. Now you're saying it doesn't? While arguing that the others I say do not imbalance the system still do?
>3.>>The word "interest" is hardly mentioned in any of his writings. >>JCT: That's because it was lumped in with his assumed other >>imbalancing costs. He may not have realized that interest is the >>primary positive feedback loop while the others aren't feedbacks >>loops at all. I call interest the problem in the pumphouse and the >>other costs are splashes in the pool. >There is no "feedback loop." The missing element in your argument are >dynamic growth vectors in population or technology. JCT: So define "dynamic growth vectors in population and technology" and tell us how missing this affects the "feedback loop" in Fig. 6 of my http://turmelpress.com/bankmath.htm? I'm not sure if "feedback loop" means the same thing to you as it does to me. I'm using it from a systems engineering point of view. What do you mean by "feedback loop?"
>>>Money should be considered to be a public utility; >>JCT: I agree. The banking system should be run as a public >>utility owned and profited by all. >It matters little who putatively "owns" the banking system, so long >as it is regulated as a public utility. In that case its beneficial >owners would be the public. It becomes simply a question of >competent management. JCT: I agree that it doesn't matter who runs the bank as long as it's done right. I personally would prefer that it be run as a public utility but don't mind if it's run like a private LETS with the banker collecting his charges for his service. But it is not a matter of competent management, it's a matter of evil versus benign ways of paying for it.
>4.>>interest rates should be regulated as low as possible consistent >>>with financial institutions being allowed to earn a reasonable >>>profit over their legitimate expenses. >>JCT: And I would restrict bank computers to cover their expenses >>with a pure service charge doing away with the positive feedback >>altogether. >You merely give another name to interest by calling it a service >charge. In principle, a LETS bank does not differ from the >theoretical basis of an orthodox bank in any fundamental way, except >it is an attempt at the local level to break the existing cartel, >thereby in effect lowering interest or "service charges." JCT: The difference between the control system of the current banking system engineering in Fig 6 and the LETS banking system engineering in Fig 8 seems pretty fundamental to me.
>It does not ipso facto address any of the issues raised by the A + B >Theorem. JCT: I'm truly amazed that after my explanation of the "major" difference between interest and service charges in the bankmath.htm that you still don't see the different effects on borrowers. You either haven't read read the Interest Island vs. Service Charge Island example or you shouldn't be debating with me. To help you out, I'm going to post that part here:
"TO PLAY MORT-GAGE: The necessary game equipment to play "mort-gage" is: 1) 3 types of tokens to represent food, shelter, and energy (the tokens can be knives, forks, spoons) 2) a fair chance mechanism like a coin, cards, dice, etc.; 3) matches, beans, chips or tokens to represent currency. Here is how I demonstrated the difference at a dinner party between the interest on a business loan and the service charge on a Greendollar LETSystem business. The hostess provided a bag of raw beans which I used as my model dollars. I used knives as tokens for food, forks as tokens for clothing and spoons as tokens for services which I put into a bowl representing the market economy in the center of the table.
INTEREST-USURY MARKETING METHOD: In the Interest Game, all borrow 10 but have to inflate their prices to recuperate the 11 they owe the bank. Step 1): I had all 10 guests at the table pledge their watch as collateral for a $10 Beandollar loan. At 10% interest, they each owed me 11 Beandollars at the end of the loan period. Step 2) I had all 10 guests spend their $10 Beandollars into the market bowl in exchange for a product token. Step 3): Once all 10 guests now had a product token for sale, I used fair chance to determine who would successfully market their product. Starting first with pairs of players with similar product tokens for sale, I flipped a coin to determine which the economy chose to buy from. Then winner delivered the product token to the market bowl and collected $11 Beandollars. After the first round, half the players had successfully marketed their product and half had not yet sold. Finally, taking diverse pairs, I continued tossing the coin to decide who the economy chose to purchase from, the winner delivering goods and taking price out of the market. Step 4) Since everyone put in 10 and the winners all took out 11, eventually, the market bowl ran out of Beandollars with one guest still having products unsold. I foreclosed and seized the loser's product token and watch. Step 5) I explained to the winners how their $100 Beandollars had inflated because there were now only 9 watches.
NO-INTEREST LETS MARKETING METHOD: In the No-interest Service Charge Game, all guests borrowed 11 and owed 11. The 11th Beandollar borrowed was to pay the bank employees a service charge. Step 1): I had all 10 guests at the table pledge their watch as collateral for an $11 Beandollar loan. Step 2) I had all 10 guests spend the same $10 Beandollars to purchase their production token from the market bowl and then spend their last Beandollar into the market to pay for the services of the bank employees who facilitated the transactions. Step 3): I again used the coin to model the decisions of the fair market and noted that at the end of the game, all the production was sold. Step 4): I noted that no one lost their watch even though the bankers still got paid. Step 5): I noted that at the end of the LETS service charge game, there were enough watches for the Beandollars to retain their original value, unlike in the Interest Game. I noted that everybody had sold all their product tokens because the 11th unit of money had entered the market bowl through the bank employees' service charges. The very subtle difference between systems is that in the Interest Game, the bank demands payment of money it did not create while in the LETS Service Charge Game, the bank demands payment of money it did create. With exactly enough markets to match the prices of goods produced, there can be no foreclosures."
JCT: So, which island would you rather be living on? Or do you still see no difference?
>5.>>But even if it were possible for rates to be brought down to zero, >>JCT: Even if it were possible? LETS has made it possible by >>insisting upon it. >It is not possible to lower interest or service charges to zero. JCT: It's truly amazing that with the growth of zero-interest pure service charge LETS banks around the world that you could conclude that LETS interest-free banks are not possible. Perhaps you should write to the thousands of interest-free LETS banks around the world and tell them that the banking they are doing with only service charges isn't possible and they should stop.
>6.>>the problem revealed by the A + B Theorem would still manifest. >>JCT: And here is the point of our dispute. The imbalance revealed by >>the A+B theorem would not be manifest when B does not include >>interest. >It is indeed the point of our dispute. JCT: And I'm still waiting for you to explain how the problems you assume will arise in a LETS system due to taxes and production payments to other members since those problems don't seem to arise.
>7.>>Your characterization of Douglas' A+B is not Douglas' A+B. The >>>simplistic fallacy of the "debt virus" thesis is easily >>>demonstrated. >>JCT: The debt virus theorem simply states that the prices needed to >>repay debt grow beyond the capacity to repay. Douglas went a lot >>further in stating that other factors also made the prices grow >>beyond the capacity to repay. >And here you setup another straw man. The "debt virus" hypothesis is >usually characterized--you have done so many times yourself--as: "If >banks loan ten, how can you pay back 11?" JCT: Starting with a 1-man game, then a 2-man game, then a 10-man game and finally, an n-man game, go ahead and tell me how you pay back 11 when the banks only printed 10. I'd remind you that prefacing my above example of interest vs service charges, I wrote:
>In his book `The Theory of Games and Economic Behavior', John Von >Neumann, one of this century's top mathematicians, stated that >"important questions in economics arise in a more elementary fashion >in the theory of games." JCT: So remember that as Canada's foremost court-accredited expert witness in the Mathematics of Gambling, what seems financially complicated to many, I happen to find quite elementary.
>>JCT: So I propose a simple example. We'll take the example from the >>famous Salvation Island example of Louis Even where castaways >>stranded on an island start up their own money system, a LETS time >>currency, and you tell me where any imbalance arises. >You refer to the "famous" example of Louis Even. Louis Even was the >great Quebec Social Credit leader of the 50's and 60's, who though he >died many years ago, still has a substantial following. I dispute >that this is Even's example, in the manner you state with the >conclusions you attribute to him. JCT: Louis Even's Salvation Island comic book was about castaways who allowed a banker to start a bank whose interest charges eventually got them all into impossible debt. Then one day, a Social Credit manual washes ashore and they realize that he hadn't printed the interest and there was no way they could repay it. Look for the page where one of them is explaining on the blackboard how they all owed 108 but they were all given only 100. My grandfather, Socred Adelard Turmel, was quite convinced that Louis Even was right that interest was theft because "money has no babies." This is a major tenet of Quebec Social Credit. I realize that Quebec Social Credit as taught by the Michael Fighting White Berets from Rougemont Quebec has always provided a superior grasp of the problem that most other Social Crediters who think that interest is okay may never get but what is it about Even's story as I've portrayed it that you dispute?
>>JCT: The first castaway is the mayor and runs the LETS storehouse... >This is nothing more than a list of disjointed transactions occurring >in various stages of production. All you have "proven" is that if >0+4-3+5-6=0, then 0=0. What does this have to do with the modern >industrial economy? JCT: It just demonstrates that under a LETS banking system, money and debt add up to zero. In our modern economy under an interest banking system, it's not 4-3+5-6=0, it's 4-3(1+i)+5-6(1+i)=-9i. Under a LETS, you got $G4, owed $G3, got $G5 and owed $G6 = 0 but charging 50% (for easy math's sake - use 10% or i% if you have to) interest on the negatives means you got $4, owed $3*1.5, got $5, owed $6*1.5 for $4-$4.5+$5-$9 = -$4.5, for a -9(.5) = -$4.5 imbalance.
>Where is the market? JCT: The market is the credit of all the LETS members.
>Where is the entrepreneur? JCT: They're called LETS members.
>Where is the profit-loss firm? JCT: What's a "profit-loss firm"?
>Where is the factory with hundreds or thousands of workers? JCT: Why do you assume that LETS don't have hundreds and thousands of working members? They do.
>Where are the workers displaced from that factory by automation or >cheap imports? JCT: How do automation and cheap imports affect LETS service charge banking any differently than regular interest-charge banking?
>>JCT: So Douglas was correct in noticing that there exists an >>imbalance but was incorrect in blaming any costs other than the >>interest in the pump house. [In] finding a small error in Douglas, >>[that my] price analysis strikes many Socreds as heresy is too bad >>but it's a fact... >The LETS concept has merit unrelated to Social Credit. The "heresy" >we are concerned with does not concern religious dogma or even >scientific fact, but your purloinment of the term, "Social Credit" >and claim that it applies to your theory. Social Credit has a long >and proud history. We object to you wrapping yourself in its flag in >your quest to gather support. JCT: Your brand of Social Credit has proven to be a failure at getting across even though it would have worked, though less efficiently than LETS. That's why Quebec-brand LETS social credits are proving to be a success. As Adelard often proudly stated, he was the only person in his whole village to have voted Social Credit back in 1935 so my family has a long and proud Social Credit heritage. Furthermore, I was not only a member of the Social Credit Party of Canada who was evicted from the party for protesting too forcefully leader Martin Hattersley changed the party policy to condone 6% interest but I then formed and led the Social Credit Party of Ontario which continued to advocate 0%. So please don't say I've purloined the term Social Credit when I simply promote a superior model due to the teachings of the Quebec branch. It's sad to say but the Socreds who have endorsed usury are the guys who've purloined the term if they claim that credit can still be social even when it has an anti-social element attached.
>Timedollars are based upon man hours, either already delivered or >promised contingently at some unspecified future date. Timedollars >thus benignly encumber labor in a form of cooperative slavery when it >should be our ultimate objective to rationally displace labor from >the productive process through automation. JCT: If you look at the Abolitionist Party programs at http://turmelpress.com/abprogs.htm, you'll notice that we also endorse sharing the products of the robot revolution through a national dividend. So calling Timecurrencies some kind of slavery is an erroneous conclusion. Automation has nothing to do with our discussion about whether interest banking compensated for with Social Credit inputs or service charge banking needing no such compensations is best model of social credits.
>LETS does not begin to answer the fundamental economic question: How >do we engineer the transition from the Age of Scarcity to the Age of >Plenty? JCT: Of course it does. You just haven't seen it yet.
>There is nothing inherently wrong with the tools of finance legated >to us by our ancestors. The tools already in place have been >repeatedly demonstrated to be capable of working. JCT: If you look at Fig. 6, you'll see that the banking tool has an inherently wrong positive feedback loop. Engineers don't call such positive feedback loops instabilities for nothing.
>It is our task to harness them in the light of modern knowledge, so >that what is physically possible becomes financially possible. JCT: And LETS social credits are doing just that. Show me anywhere where your brand of social credits are having any success at all.
>Date: Sat May 1 19:43:47 1999 >From: email@example.com (Paul Dumais) >Subject: [lets] Re: A Debate among Friends >Is the A + B theorem equivalent to stating: >The concentration of wealth in fewer and fewer hands reduces the >money in circulation for the vast majority of citizens. JCT: As long as everyone has access to credit, there can be no shortage of financial IOUS to replace the goods bought.
>As such, there is a chronic shortage of cash with which to buy goods >and services. I know this is simplistic, but I am a simple person. JCT: The chronic shortage of cash is caused by the demand for 11 for every 10 that manufacturers borrow. They must inflate their prices to recoup at least their debt which is 11 but the people only received 10 with which to buy it with. Try the Interest Island example with some friends and you'll soon see the dilemma.
>This shortage of cash produces a shortage of employment (at fair >wages). WBR seems to be saying that interest charges result in a >specific form of concentration of wealth. To eliminate interest does >not eliminate the problem of wealth concentration in general. I >would have to agree. I've argued this with JCT before. JCT: And I keep pointing out that it doesn't matter how much people save in a LETS as long as everyone else has the power to create the purchasing power they need to buy the products at the moment with the promise of later repayment with their labor.
>I support the idea of interest free money. However, if the currency >is interest free but is still controlled by a private, undemocratic >cartel, you will still see the kind of wage slavery and unemployment >as we do today. JCT: Not when LETS allows everyone to create the cash they need.
>I applaud all attempts to break this cartel and LETS is leading the >way in many places around the world. JCT: Ask any LETSer if the fact that some members build up large positive balances in any way affects the purchasing power of the others.
>So I agree with both JCT and WBR to some degree. I agree with John >that a global interest free currency will greatly improve things but >only if it is democratically controlled. JCT: It doesn't matter whether it's democratically controlled or not. There was no democratic control of the chips in my casino. The cashiers did as they were instructed. Of course, how people use their chips is not controlled which is probably what you meant. You don't want anyone being able to say that you can't have any chips and I agree but this doesn't happen as it's programmed into the rules.
>I agree with WBR in that interest charges is not the sole source of >unemployment and wage slavery. It is wealth concentration in general. JCT: And again I point out that wealth concentration has no ill effects in LETS operations.
>My solution would be to create a global democratically controlled >currency (LETS). This would solve the problem of wealth >concentration. The solution would involve citizens voting to increase >the "maximum uncollateralized debt limit" (MUDL). JCT: As I thought, it's what they do with the chips that you want democratically controlled, not how they chip cage operates.
>The MUDL is the amount that each individual may borrow in their >lifetime without collateral. In this way, people simply vote dollars >into their pockets. The solution is as simple as that. JCT: Sure, I see no problem with credit limits being democratically controlled. But credit based on collateral must always be freely available with no limit.
>The elimination of wage slavery would soon result because the >means of sustaining our current population could be bought by the >citizens instead of allowing wealth concentration to reduce the >majority of the worlds population to serfdom. JCT: Wage slavery results from the poverty caused by the interest rates. Wages per se are not necessarily slavery. Unfair wages are.
>>There is no imbalance caused by interest. The banker is not only a >>banker, he is a businessman. "Interest" is merely the name given to >>his gross profit, and in this respect does not differ in any >>substantive way from the gross profit received by any businessman. >>From his profit he pays his expenses, dividends to his stockholders, >>and a salary to himself. >The only imbalance is that a cartel controls how money is issued. The >profits gained by the issuing of money belong to the people. JCT: LETS systems gain service charge profits by issuing the money with no problems. As William points out, it doesn't matter who profits from it. But it's only as long as the profit mechanism doesn't cause problems. Service charge profits are okay, interest profits are not.
>Whether these profits are accrued via interest or service charges >makes no difference. JCT: I continue to be amazed that people cannot see the difference between the two. Why would I be able to see a difference while many educated and intelligent people cannot?
>>It matters little who putatively "owns" the banking system, so long >>as it is regulated as a public utility. In that case its beneficial >>owners would be the public. It becomes simply a question of >>competent management. >Yes! This is what it boils down to. I would be willing to let the >government run this utility if I thought it actually listened to the >public. JCT: What's the difference if the government is doing the loansharking and foreclosing or whether its private banks? We must stop the foreclosure mechanism, not change the loansharks.
>However, in Canada and the US I fear we have a political climate >where those in power will not do the peoples' bidding. Even where a >referendum yields 90% in favor of a resolution, "our" government >refuses to abide. Media and political control bought by money power >(corporate and banking) compounds the problem of educating the slaves >about their position and what they should do to improve it. JCT: But with a LETS where everyone can create their own money, there would be no "monopoly" to be exploited in this way.
>>>4.interest rates should be regulated as low as possible consistent >>>with financial institutions being allowed to earn a reasonable >>>profit over their legitimate expenses. >>JCT: And I would restrict bank computers to cover their expenses >>with a pure service charge doing away with the positive feedback >>altogether. >Interest charges will disappear if the utility is democratically >controlled. It seems silly for me to do a service for someone once >(print cash or do a computer entry) and then ask for money from now >until eternity. JCT: Right you are but eliminating the deathgamble is the greater benefit. No more automatic percentage of producers being foreclosed upon.
>>It does not ipso facto address any of the issues raised by the >>A+B Theorem. >I disagree. A democratically controlled LETS would vote money into >the their pockets. JCT: And undemocratically controlled LETS would too.
>>It is not possible to lower interest or service charges to zero. >I agree, but 0.000000001% is pretty close. JCT: Why that small percentage at all? To pay the banks? Why when we're already paying them with service charges?
>>LETS does not begin to answer the fundamental economic question: How >>do we engineer the transition from the Age of Scarcity to the Age of >>Plenty? >I disagree. A democratically controlled global currency would do just >that. JCT: So would a fixed dictatorially controlled global currency run by robots or a software program.
>>There is nothing inherently wrong with the tools of finance legated >>to us by our ancestors. The tools already in place have been >>repeatedly demonstrated to be capable of working. >Which tools? Interest? I think democracy is the only tool you need. >We've never had democratically controlled currency and that is why >we've never had an age of plenty. JCT: Even with democratic control, charging interest will still cause the same inflation and unemployment malfunctions in the money.
>It's quite simple really. The tools created by our ancestors is >actually the chains created by a select few of our ancestors. These >chains have been passed down from generation to generation. JCT: Nicely put. What could be a useful tool has turned into an enslavement device.
>>It is our task to harness them in the light of modern knowledge, so >>that what is physically possible becomes financially possible. >If interest and service charges are equivalent, then we should get >rid of interest since it is only used in banking, whereas the term >service charge is used everywhere else. JCT: Great idea. If anyone doesn't see the difference between the two, then let's try a pure LETS service charge for awhile just to see if any problems still arise..
>It would allow people to think "Hey I'm paying for a service". It >would simplify an issue which has been confusing the common person >for millenia. Interest is, without a doubt unnecessary. Paul Dumais JCT: Even the 0.000000001% is unnecessary if we pay our bankers 10% with service charges.
>Date: Sat May 1 21:23:34 1999 >From: bfowler@NetRevolution.com >Subject: [lets] Re: Social Credit and interest >Greetings to All: >In reply to the debate between Bill Ryan and John Turmel, et al... >I just happen to be doing a piece on Social Credit for the Monetary >Reform Magazine. see: www.monetary-reform.on.ca >I think I must side with John Turmel at this point. >Interest is the key element in ALL economic debates and is usually >totally ignored in principle, except for the endless debate over it >being too high or too low. This is not the fundamental point. The >point is that the interest on any debt simply does NOT exist and >cannot be created by any means except through a 'debt-free' infusion >of totally 'new' money or credits. JCT: The Social Credit solution to make the money in the numerator balance the prices in the denominator.
>Presumably, from the Central Bank or National Credit Office (in >Social Credit terms). JCT: Yes. But the issue I'm raising is whether such an office needs to inject money to balance anything else but the interest. I say no. Socreds say yes. They say payments to other companies and the government are somehow unavailable purchasing power which needs to be replaced. I disagree. The money the government gets is available to be spent, the money the other firms get is also available to be spent. So these costs do not cause any imbalance in the prices which need to be addressed.
>It is essential that this 'new' money be at ZERO % interest. Even at >0.0000001% it must be eventually paid from the existing pool of money >(unless we keep adding more). The reason is mathematical. Any amount >of interest above zero% will eventually lead to infinity. We can >never get to infinity obviously and the system must implode at some >point. JCT: Good point. If it's 100% interest, it doubles every 1 year. If it's 25% interest, it doubles every 3 years. If it's 10%, it doubles every 7 years. If it's 5%, it doubles every 14 years. If it's 1%, it double every 70 years. Sure if it's 0.000000001%, it doubles every 693 million years but that's not enough to pay the bankers anyway. [log(2)/log(1+i)]
>This is why 'usury' or 'interest' is banned by three great religions >- Christianity, Islam and Judaism. It will inevitably lead to >slavery and disaster. JCT: And let's distinguish between interest and usury for the record. As Adelard pointed out, 10% on cows is interest, 10% on gold is usury because "money has no babies" and hence creates the deathgamble between the participating borrowers.
>LETS works as John said, because it runs at 0% interest. The system >always balances to 0. That is debit = credits. JCT: Versus a system where credits < debits*(1+i).
>Social Credit will work if there is a continuous supply of 'new' >money to equal the total interest payable by government, corporations >and individuals. JCT: My point exactly. But William is arguing that the supply of new injected credits must equal not only the interest payable but also other costs such as taxes and payments for raw materials. This is the point I am challenging him to prove. That something other than interest needs to be compensated for.
>In Canada, this is about C$400 billion on total debt of C$4 trillion >or so. This is about half the GDP!!! This means that 50% +/- of all >prices are in fact composed of interest charges only. JCT: I've been citing the 1993 Fraser Institute report that says the total debt was C$3.2 trillion. C$400 billion / 30 million Canadians is $13,000 a year per capita, $1,100 a month. So I'll now start claiming it's at least a grand a month per person for a service our LETS software could provide virtually free.
>Needless to say, this is inflationary in the extreme. But it still >cannot be paid because it still does NOT exist. Inflation does NOT >create any 'new' money at all. It only creates the illusion that we >are making more money. JCT: It's true. Shift B Inflation is actually generated the moment the loan is signed.
>Note: This $400 billion assumes no other external money imports or >loans to cover the interest are added into the system. JCT: But it sure does provide a stimulus to export what we can't sell at home or be foreclosed on.
>Interest is then the largest single cost in production. It may very >well be that the entire B amount in Douglas' famous A+B Theorem is >actually interest! JCT: That my point. I'm waiting to hear how any other of the cited costs affect Douglas's B amount in the denominator.
>I think this may be virtually impossible to prove or disprove. I am >not able to defend this... JCT: It's proven by the fact that LETS suffers no imbalance and only the interest feedback has been eliminated. Pretty conclusive.
>In fact, the only ways to pay the interest was mentioned by Bill. >Export like crazy, borrow more money and through bankruptcy. That is, >the other guy must go broke to provide the money (from the principal >on his/her loan) that is still in circulation and still available to >pay your interest. This is basically called 'competition', mort-gage >(death-gamble) and warfare. JCT: Absolutely correct.
>Since I cannot see the system allowing any change at all, I must >conclude that we shall witness a global monetary implosion. I believe >that we narrowly avoided it last summer and fall. It must eventually >happen. I see now other way out of the mess. My only hope is the >LETS, Time-Dollar systems that are now springing up like mushrooms. >When the usury system implodes, they will be all that is left in >place and can rapidly expand while all the dust settles. >Regards, Baron Fowler, Quebec, Canada JCT: Right you are again. Broke people turn to LETS for credit based on their manpower when they can't get it anywhere else. As more people can't get credit, they'll have to turn to the only stable source available. And when the majority can't get money, the majority will have to turn to the only source. As pointed out in Edward Gold's article on local currencies at http://turmelpress.com/gold.htm, communities who have a LETS to turn to will weather the upcoming financial storm far better than those communities that do not. I think of all those LETS around the world as oases in a financial desert just waiting to be tapped. And what's most interesting of all is that the LETS control system equation (1/s) only differs from the USURY control system (1/(s-i) by the one factor. The i. Make i=0 by restricting the current bank software to a pure service charge and you're left with the LETS software. Isn't it sad that we can't get the Social Credit establishment to join the LETS social credits bandwagon because of one small error by the original Social Credit engineer? -------------------------------
A Social Credit Debate among Friends #3
>Date: Sun May 2 15:50:55 1999 >From: bfowler@NetRevolution.com (baron fowler) >Subject: [lets] Interest/usury and A+B Theorom >To: firstname.lastname@example.org (lets discussion group) >I am pleased that we agree on interest. Yes, I think that you must >be correct that Douglas did not understand that interest is >'non-existant' and THE problem. JCT: Douglas, of course, did list interest in the denominator as one of the claimed imbalances. In this he was correct so he did understand that interest was a problem. He even stated that there is no equivalent to interest in nature so he did see that it was an abnormal growth. My only difference with him is in his claim that other "natural" costs like taxes and raw materials purchases were also instabilities. It's the identification of other spurious instabilities which prevented him from seeing the "deminotor" solution and forced him to concentrate on the less efficient "numerator" solution. After all, what's better, vigilant compensation for the imbalance of eliminating the imbalance in the first place? And considering my grandfather held him in such high esteem, I would never denigrate his contribution though I must point out his one error of overcomplicating things.
>I also now agree that the amount B in the A+B Theorum is entirely >interest on debt. ALL other costs for tax and so on get 'recycled' >into wages eventually or the A amount. JCT: That's right. So granting that the A amount is the principle P of money issued into circulation for spending and the B amount is this A=P amount plus only the interest I means that my P/(P+I) equation fundamentally agrees with his A/(A+B) equation and there was no misrepresentation of a straw man argument on my part. Again, I've learned too much about the problem from reading his eminently erudite books to fail to respect his engineering integrity.
>This gave me some trouble before. JCT: But I'm sure that it hasn't satisfied the Socreds yet. I'm sure it will take a much more in-depth analysis of the B costs to finally make my point but I'm pleased you see my point.
>Re: ZERO interest rates. Why cannot interest be 0%??? Why can it not >be negative??? I understand that in Switzerland they charge interest >on your savings account. They do NOT give interest. This is a >warehousing fee for the billions in drug money, etc. JCT: I don't like negative interest rates or "demurrage charges" because they introduce a negative feedback loop which must be compensated for too. 1/s is the best control system, not 1/(s-i) or 1/(s+i). Like Buddha, Nehemiah, Mohammed, and Christ command: "Let the exacting of usury stop." Let not the debtors nor the creditors be punished for using the tokens.
>I assume that the Swiss government gets money at extremely low >interest. Perhaps this is partly why they are so prosperous there??? JCT: Makes sense to me.
>The CDN$400 BILLION that I mentioned for interest in Canada is more >than double the Federal Budget of $150 billion. This would provide >an income of CDN$13,333.33 for all citizens of Canada. If we did not >give it to the 20% of the rich class, it would be CDN$16,666.66 or >$1388/month. >This is the National Dividend, of course, and would instantly abolish >poverty and all its ills overnight. JCT: That is exactly the point I make in my Plates poem to the Queen:
While Crowns of old had ruled that "Treasury run money plates," Without the interest to middle-men at rip-off rates, Today most governments to banking industry have lost, Control of money plates so interest is now a cost. To service debt in ninety four, Canada's request, A hundred'n eighty billion dollars paid in interest. We're taxed over five hundred dollars each per month to pay, For interest to holders of our plates they gave away!!!
We Abolitionists would get the plates back from the banks, Have Treasury create the money for printing charge and thanks. The interest we save could be split up I recommend, For each to get five hundred dollars monthly dividend, As if you owned a share in the incorporated state, An income guaranteed for life, no question, no debate.
JCT: Where I was only talking about the amount of our taxes that are used to pay interest and not the personal and commercial debt service, I'm going to have to change some lines to reflect the new numbers for the whole of the debt service:
"To service debt in ninety nine, Canada's request, Four hundred thousand million dollars paid in interest.
We're raked over a thousand dollars each per month to pay, For interest to holders of our plates they gave away!!!
The interest we save could be split up I recommend, For each to get a thousand dollars monthly dividend."
JCT: Makes for a much more lucrative goal, doesn't it?
>It would also stimulate production tremendously and provide all the >non-existant interest to pay all debts without any one going >bankrupt. JCT: Actually, there would be no more need to provide forthe non- existant interst when no interest is demanded. But it certainly would stimulate production, maximum industrial capacity actually, without anyone having to go bankrupt, though some may still end up in the negative if they produce less desired products. Only they wouldn't be punished for such failure but given the chance to try to produce a more desirable product to pay off their commitment.
>The only question that I have concerns inflation. Any comments??? JCT: Remember that just like banks, LETS banks would only issue new money in exchange for collateral or an IOU used for the purchase of collateral, just as my casino cashiers would accept cash collateral or IOU markers from the players with no subsequent inflation. It's the concept of linking the number of tokens to collateral that economists just can't seem to grasp. They've been conditioned to believe that any increase in the money is inflationary when it's obvious to any gambler that new chips in the game really means new matching wealth pledged to the cage.
>Date: Mon May 3 11:25:30 1999 >From: email@example.com (Paul Dumais) >John Turmel wrote: >>I foreclosed and seized the loser's product token and watch. >>Step 5) I explained to the winners how their $100 Beandollars had >>inflated because there were now only 9 watches. >Why don't you count the watch that the banker has (you in this >example)? JCT: Because the issue is how much purchasing power the players have. They only have enough money to get back 9 watches. That's the point. Whether the banker chooses to try to sell the foreclosed watch in the next cycle is another question but the point is that at the end of the game, the banker ends up with all the watches.
>>JCT: It doesn't matter whether it's democratically controlled or >>not. There was no democratic control of the chips in my casino. The >>cashiers did as they were instructed. >Precisely. Whoever gives the instructions controls the currency. JCT: No, I gave the instructions controlling the rules of issuance for the currency but no one controlled the currency after that.
>Have you ever considered the possibility of corruption? If the one >giving the orders is corrupt, then we still have a cartel. JCT: Since the policy for the issuance of the currency by the cashiers is fixed and open to public examination, as if a robot were doing it for us, no, I don't see any possibility of the robot becoming corrupt. And the one giving the orders on how to run the currency is the engineer who is bound by scientific principles and the cartel you mention is really the democratic decision on the rules for issuance, not the procedure of issuance.
>Anyway, I see you will never allow democracy in currency creation. JCT: I will allow democracy to set the limits in currency creation, I just won't let democracy then affect how it's done. Again, much like Douglas's civil engineer not letting democracy decide how many pylons he's going to use in his bridge though he will bow to their decision of where to put the bridge.
>I think this will always be our main difference of oppinion. JCT: I don't think there is any real disagreement here. As the Social Credit engineer Major Clifford Douglas said, be democratic all you want in deciding where you want your bridge but once that's decided, then leave the building of it up to the dictatorial civil engineer. I'm sure you don't want the cashiers to democratically vote that some people can get chips without pledging any collateral to imbalance the system just as I'm sure you don't want any democratic vote to reduce the number of pylons in the engineer's bridge.
>>Of course, how people use their chips is not controlled which is >>probably what you meant. You don't want anyone being able to say >>that you can't have any chips and I agree but this doesn't happen as >>it's programmed into the rules. >Just like people don't kill since it's programmed into the 10 >commandments and in the laws of our countries. >JCT: Again, it's a robotic software running the accounting cage. >I'm not worried about the software deciding to change itself on its >own but if it happens, that's a malfunction.
>>JCT: And again I point out that wealth concentration has no ill >>effects in LETS operations. >If the currency is democratically controlled, we won't need to run >into this problem. If it is run for "the peoples' own good" as it is >now, we will run into the problem of wealth concentration. JCT: Concentration of wealth is only a problem when it deprives others, like it does today. When everyone has access to credit to access the wealth the others aren't using with the promise to replace their wealth with your own new production, then people amassing wealth won't be a problem. For instance, having lean inventories is good in today's world because having large inventorires waiting to be sold costs you interest for the time it takes. This accounts for auto repair shops not stocking parts and forcing you to wait until they order them only after the purchase is made. When there's no interest, they can stock all the parts without any penalty. Besides, what's wrong with fat inventories? This is the reason the world is not amassing mountains of supplies for a rainy day and has only food for 6 months. It costs interest to do so. Without interest, we could maximize harvests and inventories without any penalty.
>>>My solution would be to create a global democratically controlled >>>currency (LETS). This would solve the problem of wealth >>>concentration. The solution would involve citizens voting to >>>increase the "maximum uncollateralized debt limit" (MUDL). >>JCT: As I thought, it's what they do with the chips that you want >>democratically controlled, not how they chip cage operates. >Well not really. I want the users to vote for the best MUDL. The chip >cage will have to follow the policy set be the people. If you agree >with this, then you agree with my fundamental point. JCT: I felt you didn't want to democratically control the number of pylons in the bridge though you wanted to democratically control where the engineer put the bridge. If you discern the difference of when democratic control is necessary and when it is not, then we have no disagreements at all.
>>>The MUDL is the amount that each individual may borrow in their >>>lifetime without collateral. In this way, people simply vote >>>dollars into their pockets. The solution is as simple as that. >>JCT: Sure, I see no problem with credit limits being >>democratically controlled. But credit based on collateral must >>always be freely available with no limit. >Yes! We agree! I'm so happy now! I take back what I said about you >not wanting democracy. JCT: Right. I want democracy too in deciding what to use the chips for and what limits to set on the MUDL but once that's done, it becomes a fixed policy, as dictatorial as it can get. Democracy is fine in setting policy but not in setting engineering design.
>>>The elimination of wage slavery would soon result because the >>>means of sustaining our current population could be bought by the >>>citizens instead of allowing wealth concentration to reduce the >>>majority of the worlds population to serfdom. >>JCT: Wage slavery results from the poverty caused by the interest >>rates. Wages per se are not necessarily slavery. Unfair wages are. >What I'm referring to here is an increasingly less hypothetical >situation where you live and work on someone else's land with >someone else's tools and technology. This is slavery. JCT: But when you have access to credit, you can purchase the tools and rent the land that the owner is not using. So there's no slavery when each person has the credit to become a capitalist. As I like to say, when everyone has credit, not only the rich guys, then you have a communistic or socialistic capitalism where everyone gets to be a capitalist, not just those born with collateral.
>Without the means to sustain ourselves we have no choice but to work >for the owners of our means of staying alive. We must work for >whatever wages we are allowed. JCT: And having access to credit takes that power away from the owners of the collateral.
>The citizens in this case cannot band together to support >themselves, because they cannot buy the land or tools required. JCT: And when all the employees of General Motors have access to their own credit, they can band together and use that pool to purchase the company from the previous owners and then share in the profits of their own labor.
>Ultimate slavery is the result. This can happen even with an >undemocratic LETS currency. JCT: No, since LETS allows everyone access to credit, even an undemocratic credit, all the benefits occur and no slavery results.
>The citezens in this sad example cannot buy the means to sustain >themselves, because they don't have collateral (they don't own >anything). The LETS system will not extend them credit, because it >is controlled by wealthy interests who don't want the price of >labour to increase by allowing the people to free themselves by >buying land and tools. JCT: In a LETS, their physical manpower is the basis for their credit. LETS is not controlled by any wealth interests and LETS will not refuse to extend credit based on manpower. That's it's greatest feature.
>Is this situation too far fetched? I see this situation as a real >possibility. Interest is not the root of the problem referred to in >my example since it doesn't exist. The problem in this example is >purely lack of democratic control of the currency. JCT: One of Douglas's greatest books is called "The Monopoly of Credit" which does denounce the abuses you see. But LETS permits no such monopoly on credit so no such abuses can arise.
>>>Whether these profits are accrued via interest or service charges >>>makes no difference. >>JCT: I continue to be amazed that people cannot see the >>difference between the two. Why would I be able to see a difference >>while many educated and intelligent people cannot? >I suppose it is because I feel that democratic currency control is >more fundamental to the problem. Don't get me wrong, I think >interest should be abolished for the reasons you state. However, our >solution will cure the problem entirely: Create a global LETS where >the people set the Maximum Uncollateralized Debt Limit (MUDL). JCT: I agree on setting such a policy and only disagree on whether any democracy is needed in carrying it out. Since carrying out the policy can be done by robots, where's there a need to vote?
>Our difference of opinion is quite unimportant now since we agree >with the solution. You think 0% interest is the best feature of the >solution while I think democratic control is the best feature. >However, we both think that 0% interest and democratic control of >the MUDL are pretty good features (at the very least). JCT: Actually, I doubt that we have any difference of opinion. We've agreed where democratic input is necessary and I can't believe that you really want voting on how it's carried out when the software is already set.
>>JCT: What's the difference if the government is doing the >>loansharking and foreclosing or whether its private banks? We must >>stop the foreclosure mechanism, not change the loansharks. >The difference is that we are loansharking for ourselves. JCT: But even if we all share in the profits of the loansharking, only the losers who suffer foreclosure share in the pain. Why continue to foreclose on businesses even if the profits from throwing people into poverty is then shared by all?
>Take the Bank of Canada for example. The government can borrow money >essentially interest free by borrowing directly from the B of C. JCT: As they did during the Second World War but as they no longer do preferring to borrow from private banks and tax us to pay them interest.
>The B of C prints the money, the government borrows it at interest >and the B of C pays back the government the interest as a revenue >stream. The only problem is that the government is not allowed to >borrow as much as it wants in this way. JCT: What would be the purpose in goverment taxing us to pay the bank to then get it back? Yet, the mort-gage problem would then still persist in the first cycle. The Government of Canada would borrow the principal, spend it into circulation, try to tax back the Principal and the Interest causing some businesses to fail, and then getting the interest back at the end of the cycle. I don't care that the goverment might end up no losing in the deal but I do care that it would be inflicting a death- gamble on the tax-payers for no good reason.
>It has to borrow the other 80% or so from other banks or its >citizens. Why is this? This is because we do not have real democratic >control over how our money is issued. I'm willing to bet thet even >if we mustered up enough public opinion to get 90% in favour of >allowing the G of C to borrow as much as it wanted from the B of C, >there'd be huge resistance from banking and political interests. JCT: If 90% of Canadians voted for me to do just that, resistance from the banks would be futile. There's nothing they can do about it if we choose to use Bank of Canada-created funds instead of their bank-created funds. Like one of my old verses would say: Why represent our collateral with their chips for fee, When we can represent our collateral with our chips for free? Bank resistance might be effective before we vote for monetary reform but not after or I'll throw them all in jail for loansharking. Another of my favorite political mottos was: Bankers in the jailhouse or people in the poorhouse even though now, they either run our LETS accounts for us or we do it ourselves. In my next article, I will debunk the Douglas's notion that the reinvestment of savings into new production is a cause of the money- price gap. In future articles, I'll do taxes, raw materials, overhead expenses one at a time so that there can be no doubt that the reason LETSystems do not suffer the gap has only to do with the elimination of the interest rate cost.
>Date: Mon May 3 17:50:08 1999 >From: firstname.lastname@example.org ("Alan Sloan") >Subject: [lets] Re: TURMEL: A Social Credit Debate among Friends #2 >From: Paul Dumais <email@example.com> >Absolutely.... but what makes you think that democracy will solve the >problem? When one small sector of the population has control of the >knowledge (through superior education) and control of communications >(through the old school tie network) the property will gravitate >towards them, and rapidly. JCT: But the function that automatically takes from the poor to give to the rich is the interest function. Without it, any extra wealth accumulation is only due to skill and organization which is quite acceptable.
>The disempowered and dispossessed will have to go along with it >because that is the way things work. Power begets power, largely >because centralisation of power has proved advantageous in the past, >though the style of power has changed from feudal to industrial over >the last couple of hundred years. JCT: But when they have their own credit line based on their own manpower, then they are no longer disempowered. Look at any report on LETS and it's the empowerment of the poor that they like best.
>Usury exacerbates the problem, but removal of usury will not >completely solve the problem. JCT: No but it will make it a fair game so that wealth accumulation is no longer a problem.
>In place of usury we need a methodical decentralisation of power, and >a culture which relates individual people to place in a way that has >never been done before. JCT: But this is exactly what giving everyone equal access to credit does. It eliminates the real problem as stated by Major Douglas which is the "Monopoly of Credit."
>What will it look like? I don't know. Reason goes where reason goes. JCT: It will look like a LETS where everyone is on the database.
>Date: Mon May 3 18:34:23 1999 >From: firstname.lastname@example.org (Paul Dumais) >Subject: [lets] Re: TURMEL: A Social Credit Debate among Friends #2 >I'm referring to a democracy never before seen (and rarely heard of) >- monetary democracy. Democracy won't eliminate centralization of >power, but it will allow people to vote money into their pockets when >combined with a democratically controlled currency. This is a theme I >will keep in mind as an interest free currency develops. The >"have-nots" will vote to keep enough money in their pockets as long >as such people outnumber the rich. In this way, wealth will be >equalized. JCT: And LETS is the software that permits exactly this.
>Lets take an example: >Suppose we have a global interest free currency with democratic >control. The Maximum Uncollarteralized Debt Limit (MUDL) is defined >as the credit line given to each person at birth. It is the maximum >they can borrow at any one time. JCT: I personally wouldn't worry about credit limits since everyone's dividend will grow to astounding numbers with the robot production expanding. And I see no reason why a sick child shouldn't be able to afford the most expensive care.
>Suppose also that we have a situation where the currency is stable, >but large concentrations of wealth still exist. Wealth concentration >is not a problem as long as the common person can afford to sustain >themselves. JCT: My point exactly.
>Suppose however, that the majority of people can't afford their own >land and wages are too low to generate the required money. This >situation would be quickly rectified by the voting members. First, a >vote would take place to increase the MUDL. The liquidity would then >be used to buy land and tools required to feed and house the all >interested people. JCT: Makes my point about LETS.
>These "interested" people could form a farming/housing co-op and >proceed to live prosperously. Or if you were already well off, you >could spend or save the extra liquidity however you wanted to. If the >situation was really bad, such influx of liquidity might devalue the >currency somewhat (to the detriment of those with alot of savings). JCT: Stop worrying about devaluing the time currency. It can't happen.
>This effect would be one time however and would serve as a deterent >to those who want to save far more than the average person. >In other words increasing the MUDL is like increasing the total >number of shares in a corporation. However, the same number of shares >is given to each person regardless of how many shares they already >own. The result is that the holdings of those with less than the >average number of shares increases in value while those with more >than the average number of shares have the value of their holdings >decrease. The result is an equalization of wealth and power. JCT: It will always result in an equalization of wealth and power but since all new money is backed up by either the collateral of the person's assets or their manpower, an hour of time will always be valued at an hour of time.
>This activity would be moderated by the fact that most people want to >maintain an incentive for the entrepeneur. Centralization of wealth >or accumulation of wealth will always be allowed/encouraged to some >degree to ensure that there is an incentive to provide services for >your neighbor. JCT: Yes, you've seen all the advantages. Now you've just got to stop worrying about the non-existent disadvantages like inflation to appreciate what a perfect system we will soon have.
>My opinion is that it is real democracy we seek. This kind of >democracy has never been seen before. That is why many of us don't >believe in it any more. Paul Dumais JCT: And my final point is that another of Major Douglas's books complementing his "Monopoly of Credit" is "Economic Democracy!" Neat isn't it how abolishing the monopoly of credit provides the democracy of economics. I'd suggest, Paul, that you'd love those two books. I did. As I say, I consider Major Douglas my greatest teacher. But nowhere does it say that the student can't exceed the professor. I say he'd be proud of LETS social credits, not disappointed as are so many of his Socred adherents. -------------------------------
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