A Social Credit Debate among Friends #6
>Date: Thu May 6 11:56:12 1999 >From: firstname.lastname@example.org (Paul Dumais) >Subject: [lets] Direct Democracy - mostly in respose to TURMEL: A >Social Credit Debate among Friends #5 > >Here's a good info source regarding Direct Democracy. >http://www.npsnet.com/cdd/ >See this link to read about the (brief) aims of the Canadians for >Direct Democracy Group http://www.npsnet.com/cdd/aims.htm >There's a lot of info on this site with offsite links and articles. I >hope this helps to show you why I believe we don't have a democracy >in North America. JCT: I must agree that we our democracy is corrupted by money and media control. I've been complaining about being cheated over and over for years. But that's not the point. The point is that everyone is in favor of democracy. No one has ever argued against it. When it's used in determining policy. But not on how to carry it out. I just happened to have brought along a copy of Douglas's book Social Credit with me and bumped into his exact words on the topic:
Douglas on Democracy: From Social Credit First edition (1924) Fifth and Douglas Centenary edition (1979) Page 124
A further example of the perversion and misuse of the words, in order to obtain the defeat of the concrete embodiment of those words, is in regard to the common use of the word democracy, and its glorification as an end in itself. In so far as the word is used to suggest the detailed administration of public affairs by the majority, it is a pure fantasy, and not only never has existed but it would seem probable, could never in the nature of things exist. In any kind of world of which we have any conscious experience, it would be a nightmare. If ten men be selected at random, and problems of graded difficulty be submitted to them, it is possible that the very simplest problem will be solved by all of them, but a point will rapidly be reached at which a decreasing minority will have any grasp of the subject at issue. In so far as the matters submitted to their judgment are not matters of precedent (and progress consists in a constant departure from precedent) it is certain that the minority of our selected ten will tend to be right, and the majority will always be wrong. On matter of policy, however, in sharp contradistinction to the methods by which that policy should be carried out, the majority may be trusted to be right, and the minority is very frequently wrong. To submit questions of fiscal procedure, of foreign affairs, and other cognate matters to the judgment of an electorate is merely to submit matters which are essentially technical to a community which is essentially non-technical. On the contrary, broad and even philosophical issues, such as for instance, whether the aim of the industrial system is to produce employment or whether it is to produce and distribute goods, are matters of policy, and it is noticeable that such matters are kept as far as possible from the purview and decision of the general public. In fact, the aim of political wire-pullers is to submit to the decision of the electorate, "only alternative methods of embodying the same policy." The domain of policy comprises the removal of executives if the results achieved are unsatisfactory. JCT: So Douglas certainly wasn't against democracy. He was only against it meddling in areas of engineering expertise. That's my only point. When it comes to discerning God's natural laws and applying them, experts are available which a democracy should not interfere with. Not whether it's because they have money or because they love voting on everything.
>>>There is no safe way to impose "rules from above" without choosing >>>a minority to rule over the majority. >>JCT: Sorry but when the "rules from above" have been laid down by >>God in his natural laws, even a majority risks plenty when ignoring >>the minority project engineer's calculations. >It sounds like we agree once again. We agree that there are natural >laws (call them rules from above). These are the set of laws which >many of us claim to know but which we still disagree upon. JCT: I know of no one who disagrees over the natural laws as discerned by scientists and applied by engineers. Get any two physics books and they will both contain exactly the same laws. You either know your natural laws or you don't, it's not a question of claiming it.
>No man has the power to know all these laws. JCT: But every man has to power to know all the laws that we have found out about.
>Even those who were sure they were correct about these laws turned >out to be wrong. JCT: Then they were called theories. But once the theories were replicated and proven with testing, then they bet that they were right and would not turn out to be wrong.
>You could be such a man, I could be such a man. That is why we have >a democracy. A democratic body will be able to choose from any >number of engineers to do its bidding (as in building a bridge). JCT: My whole point is that all engineers know exactly the same natural laws. Every engineer knows acceleration due to gravity is 9.8 meters per second per second. Every engineer knows exactly the same laws as every other engineer. It is not therefore a question of which engineer knows the same laws best. They are accredited once they know the same laws as everybody else. The only difference then are aesthetic ones, not natural ones.
>In this way the engineer is not a minority as long as he is hired by >elected representatives. JCT: Whether he's hired by a majority or a minority makes no difference since he'll do the same job for both.
>This does not prevent the democratic body from hiring an engineer who >designs poorly. JCT: Any engineer who designs poorly, meaning who violates the laws of nature, is not an engineer. He's a fraud. All engineers follow the same rules though their competence at applying those rules may be in question. But not the stated understanding of the laws being applied.
>I suggest that we must educate the voters about decisions that they >want to medle in. If we don't, they may hire the wrong engineer. Who >is to say who is the right engineer anyway? The answer is the voters. JCT: No, it's another panel of engineers. A panel of voters are not competent to evaluate one person's understanding of scientific laws, much as non-physicists are not competent to judge a physicist's understanding of nuclear physics. The voter's job is to determine what they want, not how it's to be built. But I've already said that several times.
>I think that is what we're doing here in our own small way. We are >telling people that: "if you hire me, I will use these principles to >administer the currency". JCT: No, you are saying that "if you hire me, I will use these principles to administer the currency to provide something: a) full employment, b) no inflation, c) maximum industrial efficiency. I don't expect the voters to understand the principles, I just want them to understand whether they're getting what they ordered from me.
>So the voters do have to decide in the end which principles are more >sound when they choose thier monetary engineer. JCT: They're not qualified to judge the principles, only the results of the application of those principles by the specialist they've chosen.
>If we were both applying for the job, we'd both might say that we >were following the natural laws of economics and nature. JCT: Not "we might say," but "we'd do say" we follow the same naturals laws. Otherwise, there should be a debate between specialists judged by specialists, not by laymen.
>The voters would decide which person is most believable. JCT: As Douglas pointed out, I can't see voters deciding which of the two nuclear physicists is correct.
>I think everyone on this list knows basically how I would run things >(democratically with lots of info and debate to educate voters). JCT: That's not the issue. The problem is that you would have them vote on things they aren't competent to decide. I wouldn't let them vote on those. I would only let them vote on whether they're satisfied with the results.
>I also think they have an idea about how you would run things. Our >debate serves a good purpose (with this limited audience). My point >is that no matter how you slice it - the people must choose. Paul JCT: But our question is not whether people should choose, it's what issues they should be involved in choosing. There is a place for democratic decisions and there is place not for democratic decisions. You don't seem to want to accept that there are certain things that a democratic electorate are not competent to be deciding. That's our point of disagreement.
>Date: Thu May 6 13:03:47 1999 >From: bfowler@NetRevolution.com (baron fowler) >Subject: [lets] Re: Turmel on National Debt, etc. >To John Turmel et al: >Thanks for your reply John. >Yes, you are correct that the Bank of Canada could simply purchase >all outstanding Debt-Bonds with money created with new >ZERO-interest-Bonds. The vast majority of the old Debt would then >simply disappear into nothing from whence it came. The banks would be >furious of course and the bullets would fly for sure... >But suppose it happened for the sake of debate: >The total Federal debt is about C$580 billion. If they also took on >all the Provincial debt (no idea what it is) the total is probably >about C$1 trillion. The interest on this must be about C$100 billion >or so. JCT: In 1993, the Fraser Institute estimated the total government debt at $1.8 trillion and personal and commercial debt at $1.4 trillion. Now you've indicated that they both add up from $3.2 trillion to to $4 trillion, a expected growth over 6 years. So the interest on the $1.8 trillion could be up to $180 billion.
>This saving in interest alone is sufficient to do wonders!!! This can >either be spent into the economy or used to reduce taxs considerably. >Then a National Dividend can be issued to all or just the poorest to >begin with and phased in over 5-10 years. Also financed by >Zero-Interest Bonds or simply issued into circulation. JCT: It's already in circulation for the government to be sending it to the banks. I want to divert that money to the dividend without touching any of the tax mechanisms at all. Leave the taxes the same and give the interest now going to the banks to the people. Or reduce their taxes. But promising to reduce taxes is a standard promise made by all political parties which no one believes anyway so I prefer to not make that promise but to instead promise the diversion of the interest from one set of bankers pockets to a set of voters' pockets.
>Re: the 'Compensated Discount' system of Social Credit. >Thanks again for clarifying this point. I suspected that this was not >really necessary as I could not see how inflation could be really >prevented with out some sort of price control system as well. >But, when the average interest in the nation drops due to the >Zero-Interest Bonds mentioned above, the inflation rate must also >drop accordingly. Sales tax can likewise be cut or abolished, which >has the same effect. Lower end price. JCT: Yes, I'd like to get rid of all taxes so that don't have to account for every transaction but only have to count their chips once a year to chip in their share of the asset tax. Just imagine the simplicity of a world where no one has to keep receipts anymore?
>This is how it is on Guernsey. No sales taxes at all and very low >flat income tax (20%). The island is operated on debt-free money. JCT: I hate the use of the word "debt-free" money as I find nothing wrong with "debt" money. Once we use a stable LETS, all money borrowed creates a corresponding debt to remain stable. "Debt-free" money is only used by Socreds to balance the growth in prices if they don't solve the imbalance in the first place.
>All inflation is imported from the UK with goods (80% of imports). >The standard of living is about double that in the UK for the same >reason. No debt for 180+ years since they started the system in 1816. >Best regards, Baron Fowler JCT: Yes, Guernsey Island is a great example but they too retire the money through taxation as a LETS would do. So they aren't using "debt-free" money, they're using "interest-free" money with an "interest-free" debt paid for with their taxes.
>Date: Thu May 6 21:16:41 1999 >From: email@example.com ("William B. Ryan") >Subject: Re: [lets] A Debate among Friends >John Turmel: >THIRD REJOINDER >>I'd say that much of the money ends up in >>the hands of consumers in months if not weeks. >IN REPLY; That's correct, every dollar paid to suppliers does >eventually resolve into a dollar paid to consumers - but not >necessarily at the same rate. JCT: If we have access to interest-free credit, a la LETS, then the rate of flows don't matter anymore. No money-price gap can exist.
>A pipeline metaphor is useful to understand the concept. Every >molecule entering the pipeline at the wellhead eventually exits at >the refinery. For an ordinary pipeline, >the instantaneous flow rate at the wellhead equals the flow rate at >the refinery, though it takes time for any particular molecule to >transit the length of the pipeline from input to output. If we plot >input and output as curves against time, they will be identical with >no time lag. >But imagine a pipeline with expanding dimensions, so that the volume >contained within the pipeline is increasing. Again, plot the input >and output curves as before. The curves will still be identical but >the output curve will lag in time proportionally to the rate of >increase to the pipeline's volume. JCT: So use LETS credit to fill the gap and when the lagging money finally turns up, us it to pay off the LETS credit used.
>In the dynamic economy, payments are made into account balances, from >which flow continuing payments. If accounts are accumulating--which >must be the case if the money supply is expanding-- the flow rate of >outputs measured instantaneously must be less than inputs. JCT: Again, rates of flow are irrelevant once instantaneous credit creation is available to fill the gap.
>Therefore, if increasing salaries, wages and dividends are paid to >the consumer sector, the instantaneous REFLUX from these payments >must simultaneously be less than A. This discrepancy or gap is >bridged by CREDIT in some form or another, whether rationally >introduced or not. JCT: That's what I've been saying LETS credit does. But with out the problems caused by the interest positive feedback on currency credit creation. And you still have defined "reflux" which is a term I have not encountered in the mechanical engineering study of flows.
>The reflux from A payments plus credit granted to >consumers constitutes the totality of EFFECTIVE DEMAND from the >consuming sector used to purchase goods, services and securities. >Credit is the independent control variable that can be consciously >adjusted to greatly increase system efficiency, to accommodate >dynamic growth variables in population or technology. JCT: And LETS credit is consciously adjusted to optimally increase system efficiency, to accommodate dynamic growth variables no matter what they are. That's why no LETSystems have ever reported any of the problems you assume will still exist in an interest-free economy. The proof is there to see. The only difference between the current banking system (1/(s-i)) and the LETSystem which does not exhibit any problems (1/s) is that there is no "i". Not that there are no taxes, not raw materials payments, no overhead payments. The LETS model proves my point better than any theoretical discussion ever could.
>>JCT: Yes, I say you can't pay 11 with 10. You say you can. >IN REPLY: Interest is merely the name assigned to the service charges >paid to the banker for the services he provides to the community, his >customers. It is gross profit, from which he pays his expenses, wages >to his employees, and salary to himself and dividends to his >stockholders. JCT: You're simply repeating yourself and the fact you repeat that interest is just a name for service charges indicates that you have not grasped the difference between interest and service charge shown in the elementary game theory example. Since you can't seem to see it, why don't you play both games and ask your fellow participant if they can see what you don't.
>You say that 10 cannot pay back 11. >Implicit is the false premise that this is how the loan and repayment >process actually works. >In the mass production economy, there are thousands upon thousands of >simultaneously overlapping loans. I'll describe just one. >You go to the banker for a $10,000 loan. He asks you to execute and >assign to him your promissory note in the amount of $11,000, payable >in eleven equal monthly payments of $1000 each, the first installment >being due in one month. He gives you his cashier's check for >$10,000, representing the discounted value of your note. >After you leave the bank, he instructs his bookkeeper to credit his >profit-loss equity account $1000.00 in accordance to the standard >principles of double-entry accounting. It is now his money to spend >as he so chooses. He spends it. JCT: So you're saying that not only is new money created when banks make loans but it is also created when bankers credit their accounts. Nowhere in any economics textbook will you find anyone to agree that this is true. I only with it were. That's what Professor Flaherty keeps arguing, that bank expenses and newly-created money even though in the next breath, he states that bank expenses are paid for with the interest taken in, the interest which is formerly created money. Evidently, it's either new money or old money but it can't be both. So you're wrong when you say that the banker creates the the extra money needed to match the interest demanded. If he did, then it would work exactly as I state service charges work and the system would be in balance. Looking at the world, it's obvious that it is not.
>The banker has now "printed" $11,000 which is in the hands of the >community, equaling the amount you have contracted to repay. JCT: This is what the banker does when he creates the $11,000 in loans and takes his service charge. It is not how interest works.
>Date: Thu May 6 23:27:19 1999 >From: firstname.lastname@example.org ("Paul Dumais") >>From: "William B. Ryan" <email@example.com> >>Therefore, if increasing salaries, wages and dividends are paid to >>the consumer sector, the instantaneous REFLUX from these payments >>must simultaneously be less than A. >What's this REFLUX? JCT: Good question. I have no idea either.
>If it is the rate at which it exits the account >to which it has been paid, then I would say it is the same as the >rate at which it entered the account (on average) as long as credit >increases the money supply to keep up with the increasing number of >accounts (people).
>>IN REPLY: The banker has now "printed" $11,000 which is in the hands >>of the community, equaling the amount you have contracted to repay. >I agree. Here's another way to look at it. Some LETS advocate the use >of a positive balance system such that after debts are repaid, there >exists a positive balance. JCT: No, accounts always balance in a LETS. It's the Socreds who advocate injections of debt-free money but never to the point where there's a positive balance. They seek have found a way to properly balance the money to prices equation too. It's just not as efficient as LETS which is not imbalanced in the first place.
>It's like issuing money without accounting for a debt anywhere. JCT: And that works when there's an imbalance to correct.
>This system can and does work. Alternately we could have a negative >balance currency. This is what we have today. When we add -debts + >money, we get a negative balance. This system also can and does work. JCT: You're right that we get a negative balance when we add up total global money and total global debt but wrong to say that this system works. It may work somewhat but not without many flaws.
>So what's the real difference? A promise to pay $10000 is as >valuable as $10000 itself. What the real issue is who controls the >creation of such currency. Democratic control solves the problem. JCT: As I explained previously, democratic control of a money system with interest would just mean that the democracy would be foreclosing on the victims and a democracy would be allowing inflation. That a democracy is screwing it up doesn't allay the fact that it's still screwed up. Only getting rid of the imbalancing feedback, whether by democracy or dictatorship, can solve the engineering difficulties in the system.
>Interest is just a word that describes how there is more debt than >money. Both are theoretically the same since one is a >promise to pay and one is the actual currency. The promise to pay can >be circulated as a form of currency as well (though practically only >banks are permitted to do this). So the issue of interest is >practically irrelevant. It is who benifits from the money creation >system that needs to change (from banking elite to the world >citizens). Paul Dumais JCT: Well, you might think that the positive feedback on one side of the ledger is irrelevant, I'll continue to believe that the positive feedback imbalancing the equation is not irrelevant but is actually the only instability, as proved by LETSystems not operating in a totally balanced way.
>Date: Fri May 7 02:33:58 1999 >From: firstname.lastname@example.org ("Charles Michael") >Subject: Re: [lets] Turmel on National Debt, etc. >From: baron fowler <bfowler@NetRevolution.com> >>Yes, you are correct that the Bank of Canada could simply purchase >>all outstanding Debt-Bonds with money created with new >>ZERO-interest-Bonds. The vast majority of the old Debt would then >>simply disappear into nothing from whence it came. The banks would >>be furious of course and the bullets would fly for sure... >This may be so in Canada but in the US it may not be so simple. Much >treasury, state, and local debt is not funded from newly created bank >fiat money. Heaps of people buy such bonds direct or through mutual >funds and many investors and wealthy folks overseas have been buying >a big share of the treasury market as a percieved safe haven. JCT: Part of the Canadian debt is too. It just means that instead of having savings that gets them interest but inflates away, they would have savings that would get them no interest but which would appreciate in purchasing power as the technology increases. I've explained this appreciation several times before. Don't seek more money for your savings, seek more food for your savings.
>>Then a National Dividend can be issued to all or just the poorest to >>begin with and phased in over 5-10 years. Also financed by >>Zero-Interest Bonds or simply issued into circulation. >Again, I think there is a difference between US & Canada. I know >Canadian deficits in the 80s and early 90s were really big so there >is a staggering interest bill that can be eliminated via zero >interest bonds etc. In the US, despite our wailing about deficits in >the 90s, the total federal interest burden only amounts, I believe, >to about $1500 per person per year. JCT: And assuming the same ratio of government debt to personal- corporate debt of 1.8:1.4, the American dividend would be closer to $3000 per person per year. But somehow, I think the American total debt is higher than that though it may not be. Still, $250 every month from everybody that could be diverted from payment to the banks to payments to the citizens should still please everyone anyway. And in other countries where the debts are much much greater and which are really raped by their debt service, especially the Third World, then the dividend would really really matter and would essentially be a life-saver.
>Date: Fri May 7 11:56:29 1999 >From: bfowler@NetRevolution.com >Subject: Re: [lets] Turmel on National Debt, etc. >From: "Charles Michael" <email@example.com> >>This may be so in Canada but in the US it may not be so simple. >BDF: Yes, this is a problem here as well. There are many small >investors that purchase Canada Savings Bonds from the Government >directly. This is of course created out of nothing but paper and ink. >It is about C$30 billion I believe. Then there is also Treasury Bonds >which are likewise on the market both in US and Canadian currency. >Redeeming the US currency is a bit of a problem as the International >Banks could easily collapse the canadian dollar overnight. I would >fully expect them to do this. JCT: But if the Canadian dollar is linked to the Hour of time so that everyone knew that Canadian dollars bought so much collateral from now on, I don't think they could collapse it. And if they did, it would just mean that they're saying our timecurrency is worth less than we know it is and they would be accepting collateral for it than we are willing to pay. If that's what they'd do, great. If they want trade away their Canadian dollars at half the hours we promise for them, they're the losers, not us. So any attempts to reduce the value of our Hours means they want less goods than we were originally willing to offer. A pretty sucker move if they should try it. We'd be out of debt that much faster.
>That is why I suggest that slowly redeeming the Bonds as they mature >over 30 years will make the least waves. The banks have even now a >big problem of investing money, since the Feds and all but two >provinces are now paying down the debt. It would be a catastrophe >for them if we actually paid it all off as they think we should. >They obviously have not thought it through. Or simply know that it >cannot be done in any case, except with interest free money. JCT: I don't mind riding one big wave and stabilizing our currency to time in one fell swoop. Anything they try to do to counter our move costs them goods and services we were prepared to give them.
>>Again, I think there is a difference between US & Canada. I know >>Canadian deficits in the 80s and early 90s were really big so there >>is a staggering interest bill that can be eliminated via zero >>interest bonds etc. In the US, despite our wailing about deficits in >>the 90s, the total federal interest burden only amounts, I believe, >>to about $1500 per person per year. >BDF: That's 'only' US$375 billion per year. A triffle... JCT: When you consider that the exchange rate, then they're only paying debt service of about $4000 Canadian while we're paying closer to $13,000. Boy, are we ever getting raped compared to them. But compared to the Third World, we're only being raped with kid gloves. -------------------------------
A Social Credit Debate among Friends #7
>Date: Sat May 8 03:23:31 1999 >From: firstname.lastname@example.org ("Paul Dumais") >>JCT: The point is that everyone >>is in favor of democracy. No one has ever argued against it. When >>it's used in determining policy. But not on how to carry it out. >Who is to decide. What is policy and what is "how to carry it out". I >do agree (as most people would) that you cannot run an a government >by referendum. My point is that a democracy has no choice but to >allow the people to medle in whatever policy/how-to's it wants too. JCT: And I say it's not up to the democracy to meddle in the "how-to." More from Major Douglas's Social Credit:
p168 The decision of objectives is the domain of policy. The decision of methods is technics, and the carrying out of those methods is technique. With the latter two, the general public can have nothing to do, and therefore the submission of detailed schemes to the consideration of the public is a mistake where it is possible to avoid that course. It is sound proceeding to submit a proposal to make a railway between A and B to the public as such; but to submit the engineering details of construction to the same general criticism would be absurd.
Page 181 Just as a political majority is likely to be right on a matter which truly comes within the domain of policy, but is very probably wrong in its ideas as to how that policy can be made effective, so, conversely, it is undoubtedlyy true that the industrial technician (the "intelligent minority") is very apt to hold distorted views on the objective of the producing process in which he is so keenly interested; while being unquestionably the right and proper person to decide on the technique to be applied to a given program of production. The parallelism extends with sufficient completeness to the proper relationship between the consumer (the "majority") and the program of production, the consumer being only legitimately interested in its results. Finance directs, and always has directed, the program of production. Finance is the technique of credit; and the origin of credit (though not the whole basis of credit) should be the consumer. It is not for lack of technical ability, but for lack of effective demand, that civilization today stands on the brink of irremediable catastrophe. Industry fails to achieve the aims of industry for a simple reason - the individual is divorced from the credit which is his, and, in consequence, does not duly function as a consumer.
Page 184 It is the business of the scientist, the designer, and the inventor, to place before the individuals who compose the public the achievements which are considered possible. It is the business of the public tosay in what quantity and in whats priority it considers those achievements desirable, and it is the business of the producer to act in accordance with their verdict. ---
>My reasoning goes like this: there is no universally accepted >dividing line between policy the engineering details. JCT: I think there is. If you can find it in a Physics textbook, then keep democracy out of it.
>Sure we could come up with examples where everyone would agree that >the issue belongs to experts or that the issue should be voted on. JCT: And I think the physics textbook would be the issues you mention.
>But who is to say "no this cannot be decided by the voters". JCT: God does. You do it his way, as interpreted by the scientists, or you suffer the consequences.
>There is no way to do this. Absolutely none. I defy you to come up >with a workable plan that effectively prevents citizens from >deciding on whatever issue they see fit. JCT: The plan is to keep your votes away from God-given techniques.
>You see, whatever you propose will fall into one of two >categories: 1. dictatorship or 2. democracy. JCT: 1. Project engineers are qualified dictators.
>I cannot fathom any system that keeps people from deciding whatever >engineering detail they want. JCT: If that's what you believe...
>The only thing that prevents such people from doing so is >the people themselves in a democracy. >I think we must agree that there is no middle ground. The people >allow themselves to be represented by the experts. If the people >disagree with the experts, there is no way that we can allow the >expert to decide. JCT: That's what's so dangerous about the people meddling with the engineers. When they do disagree with the experts, the are wrong.
>There is no workable system that could be proposed that would allow >the expert to defy the wishes of its citizens. JCT: The workable system is for the voters to keep their noses out of engineering and stick to policy.
>The only recourse that the expert has is to earn the trust of the >voters. This is easily done. Switzerland has had a direct democracy >for over a hundred years and citizens aren't telling the engineers >how to build bridges there. JCT: But you want them to be able to. I don't.
>My point in all this is that in a democracy no one other than the >citizens themselves can decide what issues they want to tackle via >referendum. I think we must agree. JCT: Douglas and I don't agree.
>>Douglas on Democracy: From Social Credit Page 124 >>The domain of policy comprises the removal of executives if the >>results achieved are unsatisfactory. >My point is that even if I agree with the above (which I think I do), >a democracy must allow the citizens to decide whatever issues or >decisions they want to participate in. JCT: Only policy, not technique.
>There is no other way to do this. We must rely on the common sense >of the majority to trust that some things are better left to the >experts. I feel like I'm reiterating something about which we all >agree (though John continues to suprise me). JCT: That I don't want you to have the right to vote on engineering details is surprising? Given what Douglas said, you shouldn't be surprised. I stand by his statement that voters have no business in the discussion of engineering techniques.
>>JCT: So Douglas certainly wasn't against democracy. He was only >>against it meddling in areas of engineering expertise. That's my >>only point. When it comes to discerning God's natural laws and >>applying them, experts are available which a democracy should not >>interfere with. Not whether it's because they have money or because >>they love voting on everything. >I think we still agree as long as there is no way to prevent voters >from interfering in whatever detail they wish, because as soon as you >propose that voters are prevented from deciding, you propose >dictatorship. JCT: If you went up to the workers on an engineering site and said that the project engineer was a dictator and they should be able to vote rather than obey his specifications, I don't think many would agree. Why not ask a few?
>>JCT: As Douglas pointed out, I can't see voters deciding which of >>the two nuclear physicists is correct. >I agree, but there is no way to prevent voters from deciding if >they so choose. JCT: Sure there is. Just don't allow them to discuss techniques.
>>JCT: That's not the issue. The problem is that you would have >>them vote on things they aren't competent to decide. I wouldn't let >>them vote on those. I would only let them vote on whether they're >>satisfied with the results. >Not so. I would allow the people to decide whatever detail they see >fit. Only the voters can decide what things they are competant enough >to decide. 95% of the decisions would be made by the elected reps or >hired experts (this percentage is the proportion of issues that the >voters cared not to medle in, though they had every right to). JCT: I don't think they have a right to disagree with the laws of physics if I have to use that bridge too. But if it's your bridge in your municipality, then by all means, I won't object to your voting on the amount of cement you'll use. But remember the great danger that you might find an economist in the bunch who'll argue that it's better to use less cement because you'll save money.
>>JCT: But our question is not whether people should choose, it's what >>issues they should be involved in choosing. There is a place for >>democratic decisions and there is place not for democratic decisions. >We agree as long as these "places" are determined by voters. JCT: These places have been determined by God, not the voters.
>>You don't seem to want to accept that there are certain things that >>a democratic electorate are not competent to be deciding. That's our >>point of disagreement. >I think you misunderstand me. That is not our point of disagreement >at all. I'm contending that the voters must decide which "certain >things" a democratic electorate is not competent enough to decide. JCT: And I'm saying that determining the field of expertise is not something voted on, it is something determined by the facts.
>I'm not sure if you agree. This is the whole point of the direct >democracy movement. Paul Dumais JCT: And if the voters decide they want to vote on how much cement to put in the bridge, will that make it all right?
>Date: Sat May 8 19:23:57 1999 >From: bfowler@NetRevolution.com >Subject: [lets] Reflux, democracy, etc... >Dear Us: >Re: Reflux: Had to go to the library to find it. Means ' a flow back >or return' >So, I assume that Bill Ryan means that the money somehow flows back >to the beginning, but I really don't know either. >The USSR Foreign Minister Molotov (famous for the' Molotov cocktail' >or gasoline bomb) when asked if he knew about social credit said, >'We know all about social credit, its the only thing we fear.' JCT: That's because the power of the purse wouldn't be centralised and people would be free.
>A socialist couple in the Labor Party told Douglas after he had >debunked their objections that they really disagreed with his >'objectives'. Meaning that economic democracy for all is not 'on' >because the people could not be controlled by the elite. JCT: I guess it's a threat to all centralization of power.
>Likewise, Economist Keynes admitted that Douglas was the greatest >economist of all time, but 'if he had to choose between Communism >and Social Credit, he would choose Communism.' Another good elitist! JCT: And I guess that statement is almost getting him laughed out of Hell.
>They really don't want real economic freedom for the masses because >they would not be needed. What they really want is 'Power Over.' >Masters need slaves. Slaves need masters... Regards, Baron JCT: And with a system of social credits, they lose the power of the Monopoly of Credit.
>Date: Sun May 9 20:17:38 1999 >From: email@example.com ("William B. Ryan") >Subject: Re: [lets] A Debate among Friends >John Turmel: >FOURTH REJOINDER >When I challenged you to this debate I did not have any expectation >that I could change your opinion about anything. You are what the >longshoreman philosopher Eric Hoffer called a "True Believer." You >are like the magician who has come to believe in his own magic, that >what he is doing is real magic, not smoke and mirrors. The purpose >was to help those who suspect you are wrong to better structure their >arguments and thinking. JCT: Not many people qualify an engineer who is a true believer in science as a believer in magic. As for helping people who suspect I'm wrong when I'm right, helping them structure their arguments and thinking to retain that erroneous conclusion must be detrimental.
>Having said this, I do have great respect for you. You have devoted >and sacrificed the better part of your life for the past two decades >to the cause you believe in. For that you are to be commended. I am >actually in agreement with much of what you say. >But in characterizing interest as "usury" that is the "feedback >loop" causing the world's problems you are flat-out wrong. >We're not dealing with rocket science here, though commonsense to >many of us might as well be rocket science. JCT: Actually, you are. The same Laplace Transformations used to model rocket systems is used to model banking systems. I'm quite proud of my use of these advanced engineering techniques to the banking system and it's the use of these sophisticated techniques which does make the question so very elementary.
>The banker is not only a recipient of interest, he PAYS interest. If >that is the case, and it most definitely is the case--then who is the >ultimate "usurer"? The banker just doesn't sit on his interest >receipts, thereby "sucking the lifeblood" from the community, he >spends it--exactly like the recipient of any income. He pays >interest to his savings account depositors. He pays wages to his >employees. He pays dividends to his stockholders. He pays a salary >to himself. He pays the electric company and the telephone company >He pays taxes, just like everybody else. JCT: I don't know why you keep repeating this. Go look at Fig. 2 in the engineering analysis and you'll see that the pipe for the interest coming in from the public goes to the reservoir and not the drain. My whole point is that it's not what he does with it or where it goes but it's effects on the prices, as shown in the game theory examples which you refuse to discuss, that's the problem. So look at the diagram and realize that what you keep telling me is something I must know since I've drawn what you say accurately. So if I have accurately drawn what you are telling us, then what I'm talking about must be something you aren't aware of yet.
>There are analogues to your fallacious argument. Profit is called >"exploitation." Saving is called "hoarding." How is your argument >different? JCT: Nowhere have I, the ultimate "capitalism for everyone" advocate, denounced profit or saving. Have I? Show me one place where I have and I'll immediately admit I'm wrong. So how is my argument different from advocating this? Because I didn't advocate this, it is.
>I am not saying that the system is in balance. C. H. >Douglas' economics is the economics of dynamic disequilibrium. I am >saying that interest per se is not the source of the imbalance, that >the source of the imbalance are inadequately and irrationally >accommodated growth vectors in population and technology. JCT: Even Douglas lists interest as one of his imbalancing B costs, doesn't he? Now you tell us we're both wrong?
>You object to my banker example above, where the banker credits his >profit-loss account up-front, at the beginning of the loan. This is >really quite common in the financial industry, it's simply a matter >of accounting convention for the particular form of loan. The banker >can take his profit up-front--it's called "discounting" or "points." JCT: I have no problem with the banker creating the full amount of the loan and then collecting his fee out of it at the front. That's what I call a service charge as opposed to the interest (usury) charge which creates the principal but not his fee. I have no problem with this kind of lending practice at all, I just don't see very much of it. And regardless, the problem is that it's not all all done this way. I find it hard to understand why you can't see the difference between service charges taken out of money created and interest demanded as money not created.
>Bonds, for example, are usually purchased at less than their face >value. Notes are purchased in "factor" markets for less than their >face value. He could credit his profit-loss account as each >installment is made. Or he could credit himself at the end. It makes >no difference in the macroeconomic sense when there are many >overlapping loans, as there indeed are in the real economy. JCT: It does make a difference if he takes money he created or demands money he did not. Showing us that they also take money they created does not alleviate the problem of when they demand money they did not.
>Let me try another example, where the bankers credits himself his >profit as your loan is repaid. >You ask the banker for a $10,000 loan. He asks you to execute and >assign to him your promissory note in the amount of $10,000 plus >interest, payable in ten equal monthly installments of $1100 each, >with the first payment due in thirty days. JCT: Now you're stepping into several cycles and I've never said that they can't balance the system by spending all the interest they collect back so people have it to pay in the next cycle. But I keep pointing out that we are looking at the problem caused in the one cycle, just as Major Douglas admits that it's in the first cycle that we have the problem, the lag in money getting to the people to buy the prices. My point is that we can have a perfect system which does not depend on the good graces of the banker to allow us to survive. If he chooses to not spend what he collects, then the deathgamble occurs permitting him to foreclose, something that can't happen in a purely service charge island.
>You pay your first installment. The banker credits himself $100, >which he spends. He loans $1000 to a friend of yours. At this point >there is still $10,000 in circulation in the community. JCT: As long as the banker spends all his interest, as do any of those who collect it too, the system can be balanced in later cycles. But should be choose not to, then he can create the devastating cycle of poverty and foreclosure we wee now. You might trust the good intentions of the bankers, I don't and won't let them have the opportunity to oppress the debtors when LETS bankers don't have this power and always have a balanced system.
>After each installment, he spends the interest you pay him and >reloans the principal. $10,000 remains in circulation. JCT: That's all he has to do. If you want to leave him with the power to do it or not, that's your business. But I'm not going to leave him with that power.
>And after you have made your final installment, and your loan has >been paid in full, $10,000 remains in circulation, for others have >borrowed the principal. JCT: Actually, when you get down to your last cycle, you'll always face the fact that there's a component needed from the next cycle to pay the interest of the last cycle and have to face the death gamble problem then. Do it. Actually do it and you'll see. You borrowed $1000 at 10% over 5 years and make $200 payments.
Year Ybeg Int Yend 10% P+I Pay Bal Prinpayment 1 1000 0 1000 100 1100 200 900 100 2 800 100 900 90 990 200 790 110 3 700 90 790 79 869 200 669 121 4 590 79 669 67 736 200 536 133 5 469 67 536 54 590 200 390 146 6 336 54 390 39 429 200 229 161 7 206 39 229 23 252 200 52 177 8 29 23 52 5 57 52 -5
You start with your $1000 (Ybeg) at the beginning of the year and at the end of the year (Yend), you have your money plus the interest the banker spent. So at the end of the first year, you have the $1000 plus no interest from any previous cycle pay $200 leaving the banker with $100 interest and you with a debt of $900 and $800 in cash and 100 down the drain. At the end of the second year, you have the $800 and earned the banker's $100 and now owe $90 more for $990 less $200 payment for balance of $790 and $110 down the drain. At the end of the third year, you have the $700 and earned the banker's $90 and now owe $79 more for $869 less $200 payment for balance of $669 and $121 down the drain. At the end of the fourth year, you have the $590 and earned the banker's $79 and now owe $67 more for $736 less $200 payment for balance of $536 and $133 down the drain. At the end of the fifth year, you have the $469 and earned the banker's $67 and now owe $54 more for $590 less $200 payment for balance of $390 and $146 down the drain. At the end of the sixth year, you have the $336 and earned the banker's $54 and now owe $39 more for $429 less $200 payment for balance of $229 and $161 down the drain. At the end of the seventh year, you have the $206 and earned the banker's $38 and now owe $39 more for $429 less $200 payment for balance of $229 and $177 down the drain. Now comes the interesting point. Principal payments so far equal $948 dollars leaving $52 in circulation. You have $29 and the banker has $23 which he spends in your store. By the end of the 8th year, you have all the $52 in your possession. But also by the end of the year, you now owe an extra 10% interest which you can never pay and the banker forecloses and takes your business. The deathgamble component of usury will always show itself in the final cycle of the any game. It's just that everything seems to balance all the way until you run up against the deathgamble component and end up failing for want of that last 10%. That's why looking at the deathgamble in 1 cycle is effective in considering the deathgamble for the last cycle of any number of cycles game. This is the first time I've ever taken the time to run through all these cycles but the game theoretic analysis over 1 cycle is validated for a game of any number of cycles. The interest in the last cycle of any game can never be paid. So you're back with the same predicament that to avoid the banker foreclosing you you, you have to try to win some of your neighbor's principal so that you can pay your interest just as he's trying to win some your principal to pay his interest in the "death-gamble." Amazing isn't it how it seems to be in balance every step of the way with the banker's spendings always making the money equal to the debt but there's a trick to it and I hope this demonstrates finally why the name "mort-gage" is so aptly named as a "death-gamble." There is an inevitable component of failure. And they can keep the failure rate down by spending their interest but hoarding it in any way and keeping out of the hands of the borrowing businesses inevitably forces them to raise their prices and play deathgamble with far more losers.
>Date: Mon May 10 16:00:49 1999 >From: firstname.lastname@example.org ("William B. Ryan") >Subject: [lets] financing >To: email@example.com >Jeff Gates: You wrote: >Yet Kelso himself spoke of the creation of "pure" credit to fund the >purchase of newly issued stock of major corporations by shared >ownership trusts. JCT: Yes. That's exactly how LETS credit would allow the workers to pool their credit to buy their own factories and benefit of their labor for themselves.
>He said that 1) corporations should be required to disburse earned >profits as dividends to stockholders rather than retaining them for >other purposes; and 2) that corporations be required to raise all new >capital by selling stock, rather than borrowing or issuing debt. As >now, banks would be prohibited from purchasing stock directly to their >own account. Care to comment? Bill Ryan JCT: All of this is unnecessary once credit is finally available socially for all workers and not just the favorite credit risks of the bankers.
>Date: Mon May 10 19:18:45 1999 >From: firstname.lastname@example.org ("William B. Ryan") >Subject: Re: [lets] A Debate among Friends >John Turmel: >FOURTH REJOINDER >Notes: > In a system of continuous flow, let N be a nodality which >contains a volume V defined by the dimensions of N. Let the rate of >flow of aggregate inputs to N be designated dI/dt. Let aggregate >outputs be designated dO/dt. Let the rate of change in V be >designated dV/dt. Then dI/dt = dO/dt + dV/dt. Now if N's dimensions >are fixed, dV/dt = 0, so that dI/dt = dO/dt. But if N's dimensions >are expanding, dI/dt must be > dO/dt, which means that inputs to >expanding nodalities must exceed outputs.
JCT: I'll try to paraphrase this for our English readers.
> In a system of continuous flow, let N be a nodality which >contains a volume V defined by the dimensions of N. JCT: Let his nodality N be a sphere with pipes in and pipes out which contains a volume which is a function of the radius of the sphere. So you can shrink or enlarge the sphere by changint its radius.
>Let the rate of flow of aggregate inputs to N be designated dI/dt. JCT: Actually, the rate of flow of the aggregate inputs would be I, not dI/dt. dI/dt would the rate of change of flows. dI is the change in flow, dt is the change in time. You can't do this stuff if you don't do your properly distinguish between flows and rate of flows. Sorry but so far, this doesn't make sense.
>Let aggregate outputs be designated dO/dt. JCT: Similarly, dO/dt represents the "change" in outputs, not the outputs themselves. The outputs should be labeled "O".
>Let the rate of change in V be designated dV/dt. JCT: This is okay. Notice that now he's talking the rate of change now.
>Then dI/dt = dO/dt + dV/dt. JCT: This is wrong. He's saying that the "rate of flow in" equals the "rate of flow out" plus "the "rate of change of volume" adds up to something. You can't add up "rates" with "rates of change." It's like adding miles with miles per hour. Also, this would violate a very basic law of electrical engineering, If I remember correctly after 25 years, I think it's called "Kirchoff's Law", which states that the current into a node must always equal the current out of a node. And it makes sense. Unless you have battery or a new flow within the sphere. juggle with the size of the sphere all you want but the flows into the sphere have to equal the flows out of the sphere. All that would happen if you enlarged the sphere is that the water pressure (voltage) within the sphere would go down but would then go back up to where it should be when it constricted to exit the output pipes. You can't create excess flow by playing with the size of the pipes.
>Now if N's dimensions are fixed, dV/dt = 0, so that dI/dt = dO/dt. >But if N's dimensions are expanding, dI/dt must be > dO/dt, which >means that inputs to expanding nodalities must exceed outputs. JCT: This has to be wrong too because you can't add up "rates" with "changes of rates." Sorry Bill, but you get an F for this try.
> Assert axiomatically that in respect of an expanding nodality in >a system of continuous flow, the rate of flow of aggregate inputs >must exceed outputs. JCT: And Kirchoff's law states that without any new source of flow, changing the volume the flow passes through is like changing the resistance. it has no effect current, only on pressure (voltage).
>Now let there be one such nodality P with inputs dX/dt and outputs dY/dt. Then configure P in a closed circuit with a second such >nodality Q so that the outputs of P are the inputs of Q, and the >outputs of Q are the inputs of P. JCT: I'll imagine a nodality P with inputs X coming from nodality Q's outputs and outputs of P going into Q. But nothing should happen if you don't put in a battery, a source of flow somewhere.
>Consistent with the assertion above the following conditions must >simultaneously obtain: dX/dt > dY/dt and dY/dt > dX/dt, which is >impossible. JCT: Actually, since the rates of change should be 0 in all cases, you're right that it's impossible for any to be larger than any other. And even if you did have a variable battery in the circuit providing some flow, Kirchoff's law still states that all the currents have to be the same no matter how much you enlarge or decrease the radii of the P and Q spheres.
>It is therefore concluded by implication that for such a circuit to >function, it must contain within its structural complex a >counter-nodality that has outputs greater than inputs. JCT: Such a circuit cannot function and can never have outputs greater than inputs or inputs greater than outputs. Sorry but you get another F on this analysis too. -------------------------------
A Social Credit Debate among Friends #7 Reconsidered
I was hasty in jumping on Bill's terminology and way of expressing himself. I had said:
>> In a system of continuous flow, let N be a nodality which >>contains a volume V defined by the dimensions of N. Let the rate of >>flow of aggregate inputs to N be designated dI/dt. Let aggregate >>outputs be designated dO/dt. Let the rate of change in V be >>designated dV/dt. Then dI/dt = dO/dt + dV/dt. Now if N's dimensions >>are fixed, dV/dt = 0, so that dI/dt = dO/dt. But if N's dimensions >>are expanding, dI/dt must be > dO/dt, which means that inputs to >>expanding nodalities must exceed outputs. > > JCT: I'll try to paraphrase this for our English readers. > >> In a system of continuous flow, let N be a nodality which >>contains a volume V defined by the dimensions of N. > JCT: Let his nodality N be a sphere with pipes in and pipes out >which contains a volume which is a function of the radius of the >sphere. So you can shrink or enlarge the sphere by changint its >radius. > >>Let the rate of flow of aggregate inputs to N be designated dI/dt. > JCT: Actually, the rate of flow of the aggregate inputs would be >I, not dI/dt. dI/dt would the rate of change of flows. dI is the >change in flow, dt is the change in time. You can't do this stuff if >you don't do your properly distinguish between flows and rate of >flows. Sorry but so far, this doesn't make sense. JCT: If you want to call the rate of flow dI/dt, okay. "I" would therefore be the matter being moved, say grams of water in. Then dI/dt would indeed be the rate of water grams flowing in.
>>Let aggregate outputs be designated dO/dt. > JCT: Similarly, dO/dt represents the "change" in outputs, not the >outputs themselves. The outputs should be labeled "O". JCT: Okay. If "O" is the grams of water Out, the dO/dt is the rate of flow of grams of water flowing out.
>>Let the rate of change in V be designated dV/dt. > JCT: This is okay. Notice that now he's talking the rate of >change now. JCT: A better example than a sphere would be a balloon so that as the water gets pumped in, then the balloon expands.
>>Then dI/dt = dO/dt + dV/dt. > JCT: This is wrong. He's saying that the "rate of flow in" equals >the "rate of flow out" plus "the "rate of change of volume" adds up to >something. You can't add up "rates" with "rates of change." It's like >adding miles with miles per hour. JCT: Since he had qualified dI/dt and dO/dt as rates in, he can make this statement. Rearranging the terms into the order engineers usually use them, what is boils down to is that: dO/dt = dI/dt - dV/dt. Same thing except that it now means that the rate of water coming out equals the rate of water going in less the water remaining in the expansion of the balloon. This makes sense. So I was wrong to jump on the difference in how we would have worded our definitions and how we would have set up our equation.
> Also, this would violate a very basic law of electrical >engineering, If I remember correctly after 25 years, I think it's >called "Kirchoff's Law", which states that the current into a node >must always equal the current out of a node. And it makes sense. >Unless you have battery or a new flow within the sphere. juggle with >the size of the sphere all you want but the flows into the sphere have >to equal the flows out of the sphere. All that would happen if you >enlarged the sphere is that the water pressure (voltage) within the >sphere would go down but would then go back up to where it should be >when it constricted to exit the output pipes. You can't create excess >flow by playing with the size of the pipes. JCT: But assuming an ever expanding balloon, then Kirchoff's law wouldn't apply as the balloon would represent a kind of capacitance storing up some of the flow.
>>Now if N's dimensions are fixed, dV/dt = 0, so that dI/dt = dO/dt. >>But if N's dimensions are expanding, dI/dt must be > dO/dt, which >>means that inputs to expanding nodalities must exceed outputs. JCT: Again, it would have been clearer had you stated that the outputs must be inputs less the the storage in the balloon.
> JCT: This has to be wrong too because you can't add up "rates" >with "changes of rates." > Sorry Bill, but you get an F for this try. JCT: Sorry bill but so far your hypothesis is still "holding water."
>> Assert axiomatically that in respect of an expanding nodality in >>a system of continuous flow, the rate of flow of aggregate inputs >>must exceed outputs. > JCT: And Kirchoff's law states that without any new source of >flow, changing the volume the flow passes through is like changing the >resistance. it has no effect current, only on pressure (voltage). JCT: Again, with an expanding balloon storage device, Kirchoff's law is not applicable and your statement is correct.
>>Now let there be one such nodality P with inputs dX/dt and outputs >dY/dt. Then configure P in a closed circuit with a second such >>nodality Q so that the outputs of P are the inputs of Q, and the >>outputs of Q are the inputs of P. > JCT: I'll imagine a nodality P with inputs X coming from nodality >Q's outputs and outputs of P going into Q. But nothing should happen >if you don't put in a battery, a source of flow somewhere. JCT: Other than a battery, I'll grant you a pulse of current so we don't' need a battery in our circuit. So I can see that both balloons would tend to expand and end up absorbing the whole of the charge until the flow is reduced to zero.
>>Consistent with the assertion above the following conditions must >>simultaneously obtain: dX/dt > dY/dt and dY/dt > dX/dt, which is >>impossible. > JCT: Actually, since the rates of change should be 0 in all >cases, you're right that it's impossible for any to be larger than >any other. And even if you did have a variable battery in the circuit >providing some flow, Kirchoff's law still states that all the currents >have to be the same no matter how much you enlarge or decrease the >radii of the P and Q spheres. JCT: Actually, the second dX/dt occurs at a later time and must be less than the original pulse. So the statement, given is true. Think about it. Say the original current through your P balloon is dX(p1)/dt or 100 grams per second. Let the balloon take 50% so that the original current out of your P balloon is dY(p1)/dt or 50 grams per second. Now that dY(p1)/dt is dX(q1)/dt, the rate of flow into your Q balloon which also absorbs 50% so that the flow out of your balloon is dY(q1)/dt or 25 grams per second. This now becomes your new dX(p2)/dt. So the second dX/dt happens to be 25 grams per second and not the impossible 100. You must keep in mind that the second dX/dt into P occurs at a later time and is usually tagged with a subscript (2) while the first dX/dt is tagged with the subscript (1) as I've done. It helps engineers keep things clear and avoid this kind of mistake.
>>It is therefore concluded by implication that for such a circuit to >>function, it must contain within its structural complex a >>counter-nodality that has outputs greater than inputs. > JCT: Such a circuit cannot function and can never have outputs >greater than inputs or inputs greater than outputs. > Sorry but you get another F on this analysis too. JCT: I see no problem in understanding how such a circuit functions as long as you use subscripts to keep the different rates of X at the different times in mind. It is true that with balloons that keep expanding and damping the current flow, we would need to include within its structure some kind of battery which adds to the flow if we want to keep it up. Now after all this, what in the world has it got to do with the money system? If you're saying that there's some kind of black hole balloon into which money disappears so that we need injections of new flow to keep it working, I'd point out that LETS can provide such injections. But the fact that LETS doesn't have to do this is testament that there aren't such nodalities keeping the flow of money out of circulation. So I have to criticize your technique for not differentiating between the original flow of X(1) and then the second cycle's flow of X(2) and I'll wait to hear how you explain where the money in the balloons ends up such that there needs to be a built-in compensation with injections of social credits. -------------------------------
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