A Social Credit Debate among Friends #8 
>Date: Tue May 11 01:14:42 1999
>From: bfowler@NetRevolution.com
>Subject: [lets] Usury, interest, and banks
>John Turmel: Greetings to all:
>Here are some of my comments on this debate:
>Baron Fowler >>BDF
>>WBR: Interest is merely the name assigned to the service charges 
>BDF: I agree with Jonh that there is a big difference between a 
>service charge and interest or 'usury' in this case.
>If the bank lends out $1000 with a 10% service charge, I pay back 
>$1100 and that is all. PERIOD! I have no objection to this.
     JCT: Actually, if you borrow only $1000 and have to pay back 
$1100 and that it all, it is still problem to be objected to. 
     It's only when you borrow $1100 interest-free and pay the banker 
his service charge of $100 can you be happy about. Find a banker as 
William Ryan sees it who will allow you to borrow both the principal 
and the interest which he charges up front. I'd always heard that 
there were such "perfect" loans but never had any proof. 
     If it were true, it would really be goods news because we would 
then have the choice to borrow the loan and the upfront service charge 
(which I'm sure has been computed to equal the interest they would 
have gained), then handing over the service charge to the banker 
doesn't destroy the money and all the prices can be recouped. 
     So remember the cardinal rule of Adelard's Axiom #1 "Money has no 
babies." If your money has a to produce babies to meet the debt, you 
have a problem. If your money has its babies produced at the time of 
the loan as the up-front bankers' service charge, then it doesn't have 
to have any more babies and is thus not an immoral interest-bearing 
     As for Socreds who insist that a Social Credit government would 
permit interest to continue, I can only ask them how they respond to 
Adelard's Axiom #2: "Interest is theft." I'm sure the whole of the 
Quebec Social Credit movement would be happy to hear their answer to 
one of Quebec Louis Even's greatest tenets. 
>If the bank lends out $1000 at 10% interest/year, then I pay back 
>$100 for each year that the total is outstanding. If it is 10 years, 
>then I owe $1000 in interest plus the principal. The difference in 
>this case is $900 and that is usury. Since the 'interest' does not 
>exist in the money supply, it cannot ever be paid without some other 
>problems arising elsewhere. This gets complex!!!
     JCT: Okay, so for sure you see the problem and have to realize 
that accepting a debt for $1100 when you only got $1000 had to be a 
>>But in characterizing interest as "usury" that is the "feedback 
>>loop" causing the world's problems you are flat-out wrong.
>BDF: John is correct about the 'feed-back' loop of usury being the 
>fundamental cause of most problems.
     JCT: Thanks for the agreement. I'm tired of people who won't look 
at the circuitry. It really is such an elementary problem. It is 
actually so elementary that in Chapter 4.1, Laplace Transformations, 
from "Advanced Engineering Mathematics" (Third Edition) by Erwin 
Kreyszig, in the very first lesson on page 148, he derives the two 
most basic Laplace Transformations, example #1, the easiest of all is 
the equation for linear interest-free local currency systems (1/s). 
Example #2 is the next most basic equation for the exponential 
interest-based banking systems (1/(s-i). 
     One system has the interest positive feedback circuit switched 
and LETS has it turned off. 
     Sure using differential equations to explain these exponential 
effects can be done but are very complicated as some recent debate has 
shown. But Differential Equations are inferior tools compared to 
Laplace Transforms. A differential equation that takes an hour to 
solve is solved in minutes by converting into the imaginary numbers 
plane with Laplace Transformations, doing the mathematical 
manipulations in that plane algebraically and transforming back into 
real number plane with the answer. 
     After spending most of second year engineering mathematics doing 
these long differential equations, when I learned Laplace Transforms 
in the Third year, I was almost irate at having the easy way of doing 
it put off until the last. And yet, I understand that the theory 
behind the differential equations had to be taught before going on to 
the hi-powered model. 
     In the final analysis, anyone who considers the nature of the 
problem via the Laplace Transformations, has a much clearer picture 
that the solution must be i=0%. It might be an elementary insight 
denied to those who refuse to look at the electrical circuitry in the
     Or those who refuse to try out the two games. I can tell by your 
previous statement that you see the full problem of the interest 
charge but may not have seen the full benefit of the service charge. 
Try playing the game with only a few friends and I guarantee you'll 
all have a fun exploratory experience. 
     Then ask yourself if you saw any black-hole elastic nodalities 
absorbing any of your money in either game. 
>>Profit is called "exploitation." Saving is called "hoarding."
>>How is your argument different?
>BDF: True enough, the banker does pay all these people and expenses 
>as any other business. But, the fundamental difference between a bank 
>and any other business is the mathematics of the system that is used. 
>The math does not work in the end. We can never get to infinity. 
>Interest is an exponential growth system and the 'feed-back' loop 
>eats someone alive!!! These are called 'the poor' and the bankrupt. 
>It cannot be avoided!!!
>That is the point. Poverty is the by-product of usury.
     JCT: I'm glad you stressed this point. It's not how the interest 
taken in is spent, it's how the interest charged affects prices at the 
moment of the contract. 
>>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 month. He gives you his cashier's check for $10,000, 
>>representing the discounted value of your note. 
>BDF: I have NEVER signed for a loan for more than the principal.
     JCT: But wouldn't it be wonderful if you could? They all we'd 
have to do is make all future borrowing in this way and inflation and 
involuntary unemployment will drop to zero. 
     Bill says that this is the way it's done somewhere to rebut our 
point that bankers use back-loaded loans. If he's right, then great. 
It will be easier to fix. So now it's up to Bill to actually get us 
one example of a bank which will make such a loan.  
>>g. It is now his money to spend as he so chooses. He spends it.
>BDF: No such thing takes place. The loan is made. I get the credit in 
>my account. The bank puts the debit in their loan account. Then it is 
>in balance. When I repay the loan, the debt is eventually reduced to 
>zero and the loan is extinguished and the principal vanishes from 
>whence it came. nowhere! The interest is then added to the bank's 
>income statement and is usable for expenses.
     JCT: Which means that if you borrowed $1000, they ended up with 
$100 in interest and $1000 paid off the principal, you got that extra 
hundred by having get it from one of your neighbors in the mort-gage. 
Your neighbor had to walk in owing $1100 but only having $900. But if 
you think about it, since every borrowed the money into circulation 
under the same conditions as you, owing more than you got, your win at 
paying off your death-gamble necessarily had to come at the expense of 
the losers the banker was not foreclosing on. 
>>The banker has now "printed" $11,000 which is in the hands of 
>>the community, equaling the amount you have contracted to pay.
>BDF: Not so!!! The bank creates only the principal and NOT the 
>interest. I have to find the interest on my own by 'competing' in the 
>market place with all other debtors for the non-existent interest. 
>That is why it cannot work for all. Someone must fail and go broke 
>to provide the money for the others to pay their interest. John's 
>formula  I/(P+I) is the magic number of bankruptcy.  
     JCT: But wouldn't it be wonderful if the banker did "print" the 
whole $11,000 of your loan taking his $1000 service charge out of it 
rather than you getting $10,000 and owing $11,000. 
>>>JCT: I only wish it were. If he did, then it would exactly as I 
>>>state service charges work and the system would be in balance.
>>IN REPLY: 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 
>BDF: What does this mean???
     JCT: His assumed elastic balloon nodalities absorbing our money 
which seem to not arise in the operations of local currencies. 
>>3. WBR: Credit is the independent control variable that is not now, 
>>but in Douglas' theory can be, consciously adjusted and augmented to 
>>greatly increase system efficiency, in accommodation of dynamic 
>>growth vectors in population and technology. 
     JCT: Isn't it funny that this is exactly what I say that LETS 
social credits do too. So Douglas's social credits can be adjusted to 
increase efficiency while LETS can be set to optimal efficiency. 
>>This control variable is presently usurped by a private caucus 
>>acting in their perceived though not actual self-interest.
>BDF: I argue that if the 'ZERO-INTEREST' credit was injected into 
>the economy at a rate equivalent to the TOTAL interest on all debts 
>at any given time, then there would exist sufficient money in the 
>system to pay all interest on all debts. 
     JCT: Baron, this is what Social Crediters call their dividend. 
And their compensated discount to merchants. And their government 
spending "debt-free" money with no need to tax it back. These 
injections would balance the imbalance in the prices and result in 
equality between money and purchasing power. 
     Our only disagreement with Bill is that he would measure the gap 
assuming it's caused by several factors while we would expect the gap 
knowing it's caused by only one of those factors. But at least we see 
the correctness in Douglas's solution if not the total correctness of 
his diagnosis of the disease. 
     But we've challenged Bill repeatedly to explain how one of his 
nodalities would affect LETS currency and he hasn't responded. We keep 
getting more sophisticated analysis but it can't be referred to the 
real world. And saying that looking at it with differential equations 
changes things is not good enough. We have LETS models operating all 
around the world experiencing none of the imbalancing B costs Douglas 
predicted but also experiencing perfect stability with only the 
elimination of one feedback loop. The solution should be obvious. 
>You are correct about this being 'usurped by a private caucus'. This 
>is accomplished by the government spending money for public works and 
>the 'National Dividend' of Douglas that abolishes poverty and taxes 
>at once. Seems that any reasonable person would see the sense of it, 
>once the mathematics is understood. Regards, Baron Fowler
     JCT: One problem I've run into is that people refuse to believe 
anything as simple as local currency is all there is to the global 
solution. With hundreds of thousands of economists scratching their 
heads over the malfunctioning money system, people cannot believe that 
they therefore have acquired an understanding missed by all these 
"exalted" philosophers. People feel more comfortable thinking "Too 
good to be true," than facing the obvious conclusions from seeing the 
simple nature of the malfunction. They've been scammed out of a 
wonderful world and someone scammed them out of it. Won't they feel 
silly the day after the global bank computeres are upgraded to LETS. 
>Date: Tue May 11 12:19:26 1999
>From: william_b_ryan@hotmail.com ("William B. Ryan")
>John Turmel
>A + B Theorem
>[1] Elementary Interpretation: The manufacturing sector is
>simultaneously making two types of disbursements which enter into 
>costs in the sense of cash flow. A payments are made to people in the 
>form of salaries, wages and dividends. B payments are loan repayments 
>to the financial sector, which have the effect of cancelling 
>purchasing power. 
     JCT: We're not arguing that the problem is with rate of flows, 
we're arguing that the problem is with the effect on participants at 
the start. 
     As Baron pointed out, we know and expect principal payments to be 
cancelled out down the financial drain. But not the interest. But it's 
the other B costs that Douglas talks about that we say are not 
destabilizing B costs, the taxes, the overhead, the payment to other 
firms. We've asked you over and over to show why those payments do not 
get into the hands of consumers all the while excusing any delays 
since we have our LETS credits to use until the federal comes through. 
As yet, Bill, you have not responded and when you do respond, you only 
treat with the financial loan-payment charges, and not even the 
destabilizing interest charge. And I repeat, LETS does not experience 
any shortages due to the fact that Greendollars earned and used to pay 
down commitments also cancels purchasing power but has no bad effects 
given there are ready taps of purchasing power to fill the gap on an 
instant's notice. 
>A + B are disbursements, but only A is in the hands of consumers. The 
>cycle of production and consumption therefore requires the 
>availability of continuing loans from the financial sector to keep 
>the process going. The elementary equation of macroeconomic exchange 
>is therefore: A + B = A + credit. If this credit is not forthcoming 
>for any reason whatsoever, mass production halts.
     JCT: And with LETS, there is never a shortage of credit, so it 
seems pretty clear that the problem you discuss won't occur with this 
ready source of interest-free credit.      
>[2] Compound Interpretation: Statistically, each firm or equivalent
>accounting entity is making A payments to people as final consumers, 
>and B payments to other firms in the course of business. These 
>payments accumulate into the consumers' and manufacturers' funds, 
>which, if the economy is growing, are expanding nodalities. 
     JCT: No. Manufacturers' accounts do not act like ever absorbing 
nodalities. The system equation of such accounts is 1/(s-i). You can 
get it out once it goes in. You can't get the interest out until they 
take from the account of a negative to put into yours. But these do 
not act like the nodalities earlier described. 
>From the consumers' fund, goods, services and securities are 
>purchased from the manufacturing sector--A receipts. From the 
>manufacturers' fund, continuing payments are made to consumers and 
>firms, which are B receipts to the sector. 
     JCT: Which enter the A in the numerator. That's why they are not 
B costs, only the interest is the legitimate B cost. 
>Since inputs must exceed outputs from expanding nodalities, the 
>compound equation of macroeconomic exchange is: A+B payments = A+B 
>receipts + credit. 
     JCT: Again we hear about your expanding nodality balloons. 
Theorize them all you want but I'm not going to do battle and try to 
compensate for your nodality balloons until you show me how your 
imaginary balloons affect the flows.  
>If this credit is not forthcoming for any reason whatsoever, 
     JCT: How many times do I have to repeat that LETS is a credit 
machine that each individual can turn on at their discretion to 
finance any need. 
>economic growth stagnates.
     JCT: So the economy stagnates when credit isn't there to counter 
any imbalances. It's a stupid way to run a financial system. But 
bankers make great profits on the the cycles of boom and stagnating 
economies so their tight-fistedness with the credit would seem 
>[3] Labor Displacement Interpretation: If growth is labor displacing, 
>the ratio of B payments is increasing to A payments. 
     JCT: I don't see where they get the money to have increased B 
payments. I see the new labor but I haven't seen the new money. So 
you're referring to the energy system, not the financial system. 
>This could be accommodated by credit expansion into the B circuit; 
     JCT: No, the National Dividend, Compensated Discount, debt-free 
government spending, these are all inputs to the numerator, the 
purchasing power in existence. Credit expansion adds money to the 
numerator, not the B circuit. How can you confuse an increase in 
denominator prices as an increase in numerator purchasing power?
>or, it could be accommodated by reducing A payments, and diverting 
>these funds into the B circuit. In neither case would it be possible 
>for increases in proportional B payments to derive from consumer or 
>manufacturing sector saving. 
     JCT: And LETS credit bridges the gap automatically so why are we 
still talking about problems due to lack of new credit mechanism? 
>But the second case would require the manufacturing sector to sell to 
>the consuming sector at a continuous loss on a cash flow basis. 
     JCT: Not once the buyers have a sufficient source of credit until 
the lagging money flows into their federal accounts and they can 
settle up. 
>It is credit expansion in a growing economy that enables the 
>manufacturing sector to sell to the consuming sector at cost, plus 
     JCT: Which is, repeatedly, what has been found to do. 
>For an economy in assumed even rotation, this should correspond to 
>the real increase in consumable goods and services. 
     JCT: People don't borrow hours to pay for hours not delivered.
>The dilemma is that while credit expansion into the B circuit is 
>occurring, the manufacturing sector's market is contracting due to 
>labor displacement, resulting in a falling rate of profit. 
     JCT: Both the credit expansion A circuit in the numerator and the 
Prices expansion B circuit in the denominator are shown in Fig. 10 of 
the http://turmelpress.com/bankmath.htm 
     Fig. 9 shows the A currency and B debt circuits in the LETS 
     If you've gone past the differential equations section, how have 
you failed to see that credit expansion is in the A circuit?
     Talk about all the circuits you like but first know the 
blueprints of the circuits we're talking about. If you have 
differential equations, you have not excuse not to have a better grasp 
of the Laplace Transforms and system circuitry than many less educated 
people who have understood the easy plumbing explanation. 
>Date: Tue May 11 13:35:44 1999
>From: bfowler@NetRevolution.com
>Subject: Re: [lets] A Debate among Friends
>What is needed below is Zero-Interest credit from the Central Bank to 
>make it all work. Relying on commercial banks only results in slavery 
>and implosion of the economy. Regards, Baron Fowler
     JCT: Well, if we always had the choice of up-front service charge 
loans and usury-bearing loans, then we were the idiots who chose the 
death-gamble over the sure thing. We'll see if Bill can deliver any 
information on these service charge all-created loans. 
>Date: Tue May 11 13:55:12 1999
>From: paul@amc.ab.ca (Paul Dumais)
>Subject: Re: [lets] TURMEL: A Social Credit Debate among Friends
>John Turmel wrote:
>>JCT: I think there is. If you can find it in a Physics textbook,
>>then keep democracy out of it.
>Great, if there is a universally accepted dividing line, then a vote
>would give us a unanimous result. If we don't get a unanimous result,
>then there is not a universally accepted accepted dividing line. 
>Can't you see you are wrong?
     JCT: We've already got sufficient laws to ban interest. In 
Canada, I've tried the gaming house and the genocide laws and since 
almost every country in the world have signed up to the genocide laws 
and have pretty standard murder laws, then it should be pretty simple 
to use the courts to enforce the death laws against the death-gamble. 
Since they've already voted that murder's not okay, I just have to 
convince people that taking away poor people's life-support tickets 
often kills them to make the use of the genocide law automatic. 
     I'm quite proud to have argued before the Supreme Court of Canada 
that interest is the genocide of the poor. Three times personally with 
the genocide issued raised in threee other Turmel anti-genocide cases:
See: http://turmelpress.com/scc3.htm 
>I'm glad to hear that experts have never been wrong. I doubt this is
>true, but if it is, I'm comforted.
     JCT: Sure experts can be wrong. But good engineers can't because 
it can never be wrong when you're doing the best. And operations 
research tells us what is optimally best. I've you've regulated the 
profession of engineering, you should trust them as the already 
qualified experts who are doing the job required without any need of 
extra control. Have you heard of many people demanding that the 
engineering profession be better-regulated? No. Or doctors? Do you 
really want people to vote on what techniques the doctors should be 
using? Why would you for engineers? System doctors? 
     So I'm a banking systems doctor. The most powerful in a long list 
of banking system doctors. I'm not talking of the High Priests of 
Economics, I'm talking about the High Priests of Monetary Reform, 
often engineers and technologists. It's no accident that both LETS 
labor social credits and Technocracy's Energy Certificates should bear 
the same system equation. Douglas and Scott were technical experts, 
not financial ones. And I've been the first banking system doctor not 
only armed with superior mathematical tools but several perfect 
models, casino chips and LETS labor timedollars. 
>>JCT: The workable system is for the voters to keep their noses
>>out of engineering and stick to policy.
>How does your system prevent voters from hiring a "non expert" to 
>decide such issues.  
     JCT: The system already does that by testing its engineers. If 
he's got an engineering degree, he's pledged to do it right and 
safely. Canadian engineers have a specific ceremony, the Calling of 
the Engineer, where we all swear an oath to engineering integrity 
before they give us an iron ring. I always hope that history will 
judge I have fulfilled my oath to my iron ring by throwing myself full 
time into correcting the unsafe engineering design of the money 
system, which is almost accomplished. 
     Interest-free barter is taking over the commercial and now 
personal financial worlds. With the Internet, banks no longer have 
any transactional advantages. Electronic barter units as as valid ad 
electronic money units and the merging of both databases to squeeze 
out the banking monopoly is inevitable. 
>This is our disagreement. I don't want voters to decide directly such
>issues either. 
     JCT: Good. We'll simply leave our trust in the oaths of the 
engineers intact with the already existing quality control. And since 
the only issues I didn't want voters meddling with were the technical 
ones, there are no issues that I want to be undemocratic about. Our 
only problem is that people have the erroneous impression that how to 
fix money is a political decision when it is an engineering decision. 
Fixing the money already has an optimal blueprint and needs no input. 
>However, there is no way to prevent this in a democracy. 
     JCT: Luckily, we've already done this in our democracies. 
Politicians leave the engineering decisions to those whose 
qualifications licenses them to proceed without such supervision. 
>That is why I'm begging you please to prove me wrong. 
     JCT: I really think I did a pretty good job. You're the one who 
now admits you don't want voters directly deciding that the issues I 
wanted excluded from voters' considerations, why should there be a 
problem. You now either the rationale or you don't. 
>I want to learn about this 
>beautiful system that you envision that will allow experts to decide 
>such issues without any possibility of democratic interferance.  
     Walk down the the Ontario or Quebec Professional Engineers' 
Societies and be reassured democracy is not necessary in doing the job 
>Do you or Douglas have a workable plan to impliment this? What if 
>people vote for the implimentation of direct democracy? How will 
>direcect democracy be prevented under this plan (which you have yet 
>to describe in sufficient detail)? 
     JCT: Direct democracy in engineering has been prevented by the 
creation of these societies already. Complain to them. 
>This statement is a little ambiguous for me. Are you saying that 
>voters must be preventeed from discussing engineering techniques? 
     JCT: No, but I'd bet a panel of engineers would be less than 
interested in your opinions of the voters unless there was a pretty 
spectacular discovery they didn't know about. But about the building 
of things they do know about, ask some panel to let you comment and 
tell me what they say. And if they don't invite you in, does that lack 
of democracy in any affect the quality of the familiar design? 
>Let me make myself clear. The only thing I disagree with is that 
>voters must be prevented from deciding. 
     JCT: Of course I understand that you want them deciding. Whether 
it's on the things they should be deciding upon or the things they 
shouldn't be deciding upon seems to imply you still haven't seen the 
difference you said you did. 
>If you say that voters must be prevented from deciding, please 
>carefully describe how this system will work. If you cannot do this, 
>then there is nothing more to discuss.  
     JCT: As I've pointed out, it's already been done. But unless 
you're claiming something new, the engineers aren't really going to be 
enthused at needing to hear your opinions about something that's 
already described in their books of natural law. 
     I guess a better way of describing the delineation between what 
they should and should not be deciding upon would be Natural Law 
versus Human law. Let them vote on human law and let them not vote on 
natural law. That is a distinction I can easily settle on which should 
also agree with you. 
>>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?
>When you say you don't think "many" would agree, do you mean many
>workers or engineers or voters?
     JCT: As I said, I doubt the project engineer would be too 
thrilled with the arrival of the "democracy-in-engineering" advocate. 
I'd bet the workers wouldn't be too thrilled about voting on 
techniques they themselves have made work. And I don't think any of 
the voters using that bridge would be too thrilled if they ever found 
out that the unlicensed guys ordered the licensed guys to do something 
the licensed guys said was wrong. 
     It's the reason I castigate the Shuttle engineers in my poem. It 
was their engineering duty to stand up and protest the life-
threatening threat of the cold to the rubber seals. They knew the odds 
were now highly in favor of it blowing up rather than being highly in 
favor of not blowing up. Going up with frozen seals was a catastrophe 
waiting to happen and these system doctors let the financial doctors 
tell them what to do. 
     I know of no better way to explain my notoriously high-profile 
political, legal and personal behavior than to cite it as in reaction 
to the life-threatening danger of usury to our world. 
     In the Great Canadian Character Anthology, my old engineering 
math prof and gambling professor Walter Schneider noted it best:
     "He went from totally apolitical to running for everything. One 
day his interest in interest rates was nonexistent, the next day it 
was the single motivating factor in his life."
     JCT: He thought I was nuts to give up a lucrative high-stakes 
gambler's life to try to use my winnings to finance my political, 
legal, barter activities. But I did see it as my engineering duty to 
correct the unsafe engineering design of the money system and after 20 
years on the project, I do see lots of light at the end of the tunnel. 
The conversion of the international commercial barter system to the 
same Hours value of the personal ones will do the trick. And it's 
almost here. 
>So what if the people disagree with God? Will God smite them? Who 
>will prevent the voters from deciding?
     JCT: If they disagree with what's in the books of God's natural 
laws, then yes, their bridges will fall down more often. He sill smite 
them, he said so. No one can prevent them from overruling their 
engineers and maybe enough funerals will deter them from using voting 
to decide issues of Natural Law ever again. 
>>JCT: And I'm saying that determining the field of expertise is
>>not something voted on, it is something determined by the facts.
>So what if the voters disagree with the "facts"? Who will prevent 
>them from deciding?
     JCT: The number of funerals they end up attending. 
>>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?
>No. However, it is a much better thing to have the people endanger
>themselves than to have a dictatorship. Paul Dumais
     JCT: Is the dictator of the Natural Law system doctors really 
such a bad thing? Sure the dictatorship of the Financial Economists 
argues against such system dictatorship but should that preclude the 
care and control by truly qualified system doctors? The engineers? We 
haven't been given a chance to run a money system for you, that field 
was usurped by the high priests in the banking temples. But engineers 
are working at getting that system control back from the incompetents. 
And setting alternate models while we fight for eventual complete 
control with no one deciding anything on the system and everyone 
deciding everything on the policy. 
>Date: Tue May 11 18:15:41 1999
>From: william_b_ryan@hotmail.com ("William B. Ryan")
>Subject: Re: [lets] Kelso's two-factor model
>To: sustainable-economics@csf.colorado.edu
>Despite Kelso's denial, his theory was very much patterned after but
>simplified from that of C. H. Douglas.  Douglas, the founder of
>Social Credit, had said that there was a fourth factor of production,
>what he termed "cultural heritage" or "the increment of association"
>which by rights should be beneficially owned in common. This was his
>moral justification for the National Dividend concept.
     JCT: Sounds really good to me. Our Abolitionist Party's Share in 
the Corporation of Canada is Douglas's idea, straight and simple. The 
benefit that accrues from technological innovation, the robot 
paychecks, is assumed to be the dividends on your share. That's how 
the Abolitionist Party wants to fund the real dividend after we've 
diverted the interest for the initial dividend. 
>>From C. H. Douglas, *The Monopoly of Credit,* published 1931, pp.
>"The general principles required of any financial system sufficiently
>flexible to meet the conditions which now exist and to continue to
>reflect the economic facts as these facts change under the influence
>of improved process and the increased use of power, are simple and
>may be summarized as follows:
>"(a) That the cash credits of the population of any country shall at
>any moment be collectively equal to the collective cash prices for
>consumable goods for sale in that country (irrespective of the cost
>prices of such goods), and such cash credits shall be cancelled or
>depreciated only on the purchase or depreciation of goods for
     JCT: Okay, how do you see that this does not occur in a LETS 
economy when I say it does? 
>"(b) That the credits required to finance production shall be
>supplied not from savings, but be new credits relating to new
>production, and shall be recalled only in ratio of general
>depreciation to general appreciation.
     JCT: That's what LETS does. New credits relating to new 
>"(c) That the distribution of cash credits to individuals shall be
>progressively less dependent upon employment. That is to say, that
>the dividend shall progressively displace the wage and salary, as
>productive capacity increases per man-hour.
     JCT: The wonderful vision Douglas first gave me of life with a 
dividend from my Share in the Corporation of Canada. 
>"It seems quite possible that the form of organisation which would
>easily adapt itself to the embodiment of the foregoing principles
>would be that of the limited company. 'Great Britain Limited' as a
>beginning for the 'British Empire Limited' might form an organisation
>n which natural-born British subjects would be bond-holders. An
>elaboration of this conception would enable a transition to be made
>without shock and without any alteration in the existing
>administration of industry."
     JCT: Yes, that's the statement that enthused me and I've fought 
for my dividend in 46 of my 47 elections. I haven't learned about the 
it till right after my first election though I had diagnosed the 
unemployment and inflation disease and prescribed the elimination of 
the usury from the diet. 
     Bill, I don't know if you've been doing Social Credit a service 
or a disservice. There have been times where you were really really 
right but others where you are really really wrong. I find suspect 
your refusal to try some of the more sophisticated techniques like the 
Laplace Transformations, electrical circuitry and game theory. You've 
chosen then language of differential equations which is most likely to 
confuse while avoiding the ones where flows are really clear. 
     I've presented you with many arguments and am still waiting for 
your response. Please, no more assumptions like nodalities unless 
you're prepared to show us one. The Douglas texts are always welcome 
but they seem new and do not bear on our topics of disagreements. 
     Until you show any of these malfunctions in LETS, I'll be called 
away from this debate for a while due to several upcoming events. 
     I'm running in the Ontario general election so LETS Candidate 
reports will be on the agenda. And I'm going to be going to the Local 
Currencies Conference in Chicago  U.S. 1999 Local Currency Conference at 
Congress Plaza Hotel in Chicago on June 11 and 12.
     Then Pauline Morrissette and I will be attending out third 1999 
TOES conference in Cologne Germany and spend 6 weeks touring 
LETSystems around Europe with special emphasis on France checking out 
my French relatives and in Poland checking my Polish relatives. 
     And if I can't get enough speaking engagements booked during the 
six weeks we'll be there, I'll play Poker at one of the casinos 
everywhere and make it a working trip. I'd like to test out the tuna 
and the talent in the European clubs and see how they feel about the 
Great White Shark from Canada. 
     I was thrilled to watch the new Poker video, Rounders, and found 
it to offer an eminently fair portrayal of the life of a professional 
gambler. The hands were realistic, he blows his initial bankroll with 
second best hand facing best hand only 1 time in 360, eventually comes 
back to win with a 75:1 flopped straight. It was a wonderfully played 
and very believable hand. And best of all but the bad guy at the 
table, the Russian mobster who'd kill you as soon as look at you, blew 
his cool but ended up being the perfect gentleman that any true 
sportsman would be. Some might rip you off in innumerable ways but 
paying an honest win ends up being a matter of honor. 
     I found his always-in-trouble friend was an extreme caricature of 
some of the characters I've met over the years in the gambling 
profession and the breakup with the non-gambling university girl-
friend was also something that happened to me. Paths can part so 
quickly. I too had to turn professional gambler than professional 
engineer. It was a challenged that would be fun to take. I've enjoyed 
it immensely though I hadn't realized it would be only 5 years of fun 
and games in Vegas until I was called to the Abolish Interest Rates 
Project, a sacrifice of time I always consider myself having been 
priviledged to make at this particular point in time. 
     To see the total eradication of exponential debt across the whole 
planet is an Eden I hope to soon behold. 
     So let's get away from the discussions of what we think is going 
wrong with the old system, what some think might go wrong with the new 
system and get onto maximum promotion of it on the basis of perfect 
performance over the 15 years so far. How many years will it take to 
convince people the LETS banking equation is ideal? That no one need 
ever worry theirs or their corporation's debts ever again.
     I see it and get a real thrill at its prospects. I just wish more 
people could see it too. 
Social Credit Debate among Friends #9
>Date: Sat May 15 16:06:23 1999
>From: william_b_ryan@hotmail.com ("William B. Ryan")
>1. You may not realize that you have made several concessions. You 
>wrote May 11, 
>>"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, 
>>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."
>The question then becomes empirical rather than theoretical: What is 
>the actual behavior of the banker? Does he "hoard" interest, or does 
>he spend it? He of course spends it.
     JCT: These are not concessions. They are simply pointing out that 
what you were objecting to I had already drawn in the circuit. So how 
could I have been disagreeing with my own circuitry and now be 
agreeing with it and you? 
     It doesn't matter what he does in the later cycle with his 
interest, the problem under discussion is the effect of the interest 
on prices during the game. 
>The A + B Theorem is incomprehensible at the observational level of 
>individual transactions. It is very much a statistical concept 
>looking at economic aggregates and sectors.
     JCT: It may seem incomprehensible to you at that observation 
level but remember that Von Neumann said that complex economic 
question arise in a more elementary fashion in the theory of games so 
I haven't found the difficulty you infer. 
>It is meaningless to speak of cycles that begin and end. That is the 
>fallacy of the chicken or the egg. 
     JCT: Okay, if you don't want to look at the end of the cycle when 
you come short with that last bit to pay off your debt, you don't have 
to but please do not suggest we should forego such an insight. 
>The reason is that in dynamic systems there are many overlapping 
>cycles. People are born and they die, but as a general rule the 
>population as a whole grows. People individually save today so that 
>they can spend later. For the economy as a whole, spending and saving 
>are going on simultaneously. Loans are being granted and loans are 
>being repaid, all at the same time. 
     JCT: So no one is disagreeing. 
>Zeno knew quite well that Achilles would indeed overtake the 
>tortoise. By using the geometrical mathematics of his era, he was 
>able to "prove" that Achilles would never catch up. Zeno thereby 
>demonstrated two things: 1) that mathematics can, if misused, prove 
>the absurd; and 2) the existence of a more complete mathematics as 
>yet undiscovered.
     JCT: Other than the odd logical paradox, I've never seen anyone 
able to use mathematics to misrepresent or prove the absurd. Claiming 
it can be done in some instances certainly is no proof that has been 
done in the issues under discussion here. 
>That discovery occurred twenty-three hundred years later by Galileo, 
>Newton and their colleagues.
>Through exhaustive experimentation mostly with the inclined plane, 
>but some from Pisa's leaning tower - Galileo proved that the speed of 
>a falling object is proportional to the TIME it has fallen, not the 
>distance it has fallen.
     JCT: Sure one of the most elementary physics equations which 
links velocity v to time t is v=at where a=acceleration. This shows 
that velocity is proportional to time. So what. You know grade 11 
     The other equation which links velocity to distance is 
v=(2as)^.5 which shows that it's proportional to the square root of 
the distance. 
     Again, so what is the purpose of this example? 
>Douglas' Endogenous Money Theorem does not refer to individual loans 
>but the RATE-OF-FLOW of loans in the aggregate for the economy as a
>In respect of financial institutions, let deposits=D, loans etc.=L, 
>cash in hand=C, and capital=K. Then: assets=L+C, liabilities=D+K, so
>that L+C=D+K. Differentiating with respect to time: 
>dL/dt + dC/dt = dD/dt; K being fixed, dK/dt = 0. Assuming cash in 
>hand is kept constant, dC/dt = 0.  Therefore dL/dt = dD/dt, which 
>means that loans create deposits and the repayment of loans cancel 
     JCT: No one has ever challenged that bank loans are new money. IN 
this discussion group, it's a given. So how is citing Major Douglas's 
proof of what we already take as a given proving anything. 
>2.  The following argument requires the acknowledgement of simple 
>concepts from differential calculus:
>A:  The rate-of-flow expressed in terms of dollars per unit time of 
>ALL payments firms make directly to people as final consumers.
>B:  The rate-of-flow of ALL payments firms make to firms and 
>equivalent accounting entities, including government.
     JCT: Here we again have stated my fundamental disagreement with 
Douglas's B flows. I only accept the interest and none of the others. 
After 8 previous exchanges, Bill still hasn't once faced our demand 
that he show once instance where money to government or other firms 
doesn't get into the hands of consumers. And he's repeated the same 
thing almost 8 times despite not answering our question once.  
>If the economy is stationary, neither growing, contracting or 
>changing -A and B are constants. Therefore, dA/dt = 0; dB/dt = 0; and 
>d(A + B) = 0, so that d(A + B)/dt = dA/dt.
     JCT: And now you complete forget about the one instability that 
makes this erroneous. If you'd read the math under discussion, you'd 
have seen that if the economy is stationary, neither growing or 
contracting, A is constant but B includes interest whose clock is 
always ticking. So your assumption is wrong and the equation of your 
assumption is also wrong. 
>But if A and B are changing, it would be unlikely for d(A + B)/dt to 
>equal dA/dt.  For example, if B is increasing but A remains constant, 
>dB/dt would be greater than 0, in which case d(A + B)/dt would be 
>greater than dA/dt.  
     JCT: That's what's happening. B costs increase with interest over 
time while the A purchasing power in people's hands stays fixed. 
>And if both A and B are increasing, then again d(A + B)/dt must be 
>greater than dA/dt.
     JCT: Stating an obvious truism is of no help.  
>This difference is bridged by credit supplied rationally or 
>irrationally. Bill Ryan
     JCT: Whatever difference by whatever cause is solved by credit 
supplied rationally through LETS. Why won't you admit this? 
>What credit means in the macroeconomic sense is that it is an 
>injection into the circular flow. 
     JCT: It's not into the circular flow. It's into the numerator 
representing the purchasing power and into the denominator 
representing equivalent debt. Now add the interest to the debt to the 
denominator and you'll soon see what has caused the imbalance.
>And to the extent that there is an injection into the circular flow, 
>the economy is not in circular flow.
     JCT: Sorry Bill, but this you were wrong about your circular flow 
and I have no idea what you mean what you mean by an economy in 
circular flow but I'll have to assume that it makes as little sense 
with respect to the economy as it did with respect to the purchasing 
>And to the extent that the economy is not in circular flow, the law 
>of supply and demand is repealed.  And to the extent that the law of 
>supply and demand is repealed, the dogma of free markets becomes a 
>mirage. Bill Ryan
     JCT: Based on one false assumption, you can sure draw a lot of 
>This reflux from A must be augmented by credit for the firms sector 
>to make a profit on its sales to consumers. Bill Ryan
     JCT: Thank you for again pointing out that the LETS credit 
augments the purchasing power in the numerator to allow the goods to 
all be sold at a profit. That's our whole point. Why is using using 
our own diagnosis contradicting what we've said? 
     I'm getting the feeling you're jerking us around. You have not 
once responded when we point out your mathematical errors and when you 
confused flows other than to introduce red herrings like the physics 
of velocity which has nothing to do with our discussion. My only 
consolation is that your words are etched his history for posterity to 
     You've tried to impress by the use of big words and equations 
which not only prove nothing but are not even connected to the topic. 
I have trouble accepting that the Social Credit Secretariat could 
vouch for your interpretation of Social Credit even if they also won't 
vouch for my statement that LETS timecurrencies are social credits. 
     So it's been interesting but it can't really be called a debate 
when our arguments are faced with the physics of velocity or expanding 
money nodality balloons. 
     You're obviously unconvinced that even though you can't find one 
flaw in the LETS, it's still got to be flawed so they can use the 
Social Credit cure to cure the anti-social credit disease. Once you 
accept that LETS already are not anti-social credits, you might see 
why they don't need any social credit cures. 
>Date: Sat May 15 16:51:38 1999
>From: tedeumlaudamus@email.msn.com ("Joe Zealand")
>Subject: Re: [lets] A Debate among Friends
>To: lets@onelist.com, pkt@csf.colorado.edu
>What you dudes are angling towards is the total 'remission' of the
>international debit situation and the dissolution of the IMF as it is
>currently structured! In the 'Peace' of The Holy Spirit. Joe Zealand.
     JCT: The IMF could run a global LETS and I'd welcome it. Even 
they couldn't screw it up. Though I think total remission is possible, 
it's not an issue we need face as Jubilee 2000 seek to do. We can 
simply park the old financial books in a vault, everyone start fresh 
with a LETS account and decide after a couple of decades if we really 
want to pore over and try to correct for the imbalances in the old 
>Date: Sat May 15 18:53:44 1999
>From: bfowler@NetRevolution.com
>Subject: Re: [lets] A Debate among Friends
>Hi Joe: Yes, you are about right. But, it will not happen until some 
>sort of global financial implosion demonstrates that the system is 
>unstable as George Soros, the speculator, claims.
     JCT: And I'm hoping that the Earth's poor need not have to suffer 
from the effects of such a financial implosion. The rich suffer last 
after all. I'm hoping that the International Commercial and LETS 
barter networks merge and take over long before any implosion of the 
system everyone's leaving. 
>What is needed is 'zero-interest' credit in massive amounts to 
>liquidate all debts, but it won't happen. Regards, Baron Fowler
     JCT: Actually, I'd use the word stabilize all debts, not 
liquidate. We liquidate the debt service so that all payments 
eventually liquidate the debt but we don't liquidate the debt until 
we've "worked it off."
>Date: Sat May 15 21:12:23 1999
>From: tedeumlaudamus@email.msn.com ("Joe Zealand")
>Subject: Re: [lets] A Debate among Friends
>Baron: There is always hope. The current world economic scene can 
>only lead to more poverty and desperation -- especially in the 
>so-called third world! Joe Zealand.
     JCT: But oases of LETS credits are being set up all around the 
Third World and no matter how small their databases might yet be, they 
can spring into large-database operations in an instant. They can grow 
as fast as members join and if it's the only source of currency around  
once the bankers have all the federal currency locked away, then they 
will be forced to jump on these LETS lifeboats if they want to 
>Date: Sat May 15 22:44:54 1999
>From: bfowler@NetRevolution.com
>Subject: Re: [lets] A Debate among Friends
>Hi Joe: Yes, I agree completely. The third world must be bankrupted 
>in order for us to pay the interest on our debt.
     JCT: I'd guess they're already officially bankrupted and it's only 
the rollover of the debt into new loans that's making them seem alive. 
>I assume that you are aware that 'interest' does not exist because it 
>is never created anywhere. Thus, some must go broke...no other way. 
>Unfortunately, they starve too... Baron
     JCT: That's the way to explain it well. But the way to explain it 
best is always with the Interest Island game. I urge all of you try to 
run it at least once. It will give you a clearer more elementary 
insight into the problem and the solution than any amount of 
discussion. Notice that Bill has assiduously stayed away from the 
simple game theory preferring to stay in the confusing differential 
equations. There's a good reason. He can't push disconnected topics 
like physical velocity where the math is so easy to understand. 
>Date: Sat May 15 23:58:18 1999
>From: tedeumlaudamus@email.msn.com ("Joe Zealand")
>Subject: Re: [lets] A Debate among Friends
>'Sounds like 'survival of the fittest' a truly Hobbesian approach to 
>the world scene.  If that is as it appears to be we live in a virtual 
>hell! In the 'Peace' of The Holy Spirit... Joe Zealand.
     JCT: The mort-gage death-gamble is rather the survival of the 
richest and then the fittest. Sure many of the fittest and strongest 
do get to the top in this game where they meet up with guys who got to 
the top by virtue of no other talent than having been born rich. So 
the richest get first survival places on the boat and then the others 
get to fight it out for the rest of the survival spots with the 
fittest surviving. 
     And it's this competitive battle for those last seats as the 
fittest that confuses people into thinking that it so many losers 
around them is a natural phenomenon. It would be so if the fix weren't 
in for the rich. But it's a serious omission not to point out that the 
winning seats in the game of survival of the fittest are not allocated 
on the basis only of being fittest. There's are automatic survival 
berths set aside for the richest first before it becomes a game of 

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