TURMEL: Social Credit Stream #1 97k
                    TURMEL: on SOCIAL CREDIT

     Though Social Credit has been labeled a "failed experiment"
and study of it has been virtually abandoned to the glee of the
world's bankers, I think it's time that an in-depth analysis of
Major Clifford Hugh Douglas, P. Eng., was done in fairness to
many who have believed he made sense.
     Major Clifford H. Douglas, a mechanical engineer who
presented the first engineering analysis of the unsafe
design of the banking system to the 1919 World Engineering
Conference in Tokyo concluded that the world's salvation was
going to be dependent on a war between economists who hold us
back and engineers "who can make 200 blades of grass grow where
one grew before." He stated that interest-free credit should be a
social service and called his theory "social credit."
     What shocks me are the number of people who will publicly
dismiss his work without having ever having read any of his
literature and based only on writings from his detractors. To
correct that problem, I'm going to post some of the best quotes
from Britain's Major Douglas and Quebec's Louis Even for you to
compare with writings of LETSers on different world conferences.
It shouldn't be long before the similarities become apparent to
     Credit can only be social when there's no interest and I've
developed some equations in algebra, exponential functions,
differential equations and Laplace Transformations proving that
an interest-free token system, like a casino chip bank, suffers
no inflation nor unemployment.
     Though I agree with Douglas that prices are greater than
purchasing power, I disagree on the cause of the price rise. He
theorizes that INTEREST, taxes, material costs, etc are part of
the problem he calls "B" costs. I say that only INTEREST is the

     The word "mort-gage" is derived from the French word "mort"
meaning "death" and "gage" meaning "gamble". Bankers create the
money supply when they make loans. Producers are forced to gamble
by borrowing newly created Principal(P) to pay for production
costs and then inflating their prices to earn back the Principal
and Interest(P+I) in sales.
     Because total goods priced at (P+I) can never be sold when
consumers only have P dollars available, a minimum amount of
goods must remain unsold and a minimum number of producers must
fail and suffer foreclosure. The economist Keynes likened the
mort- gage death-gamble to the game of musical chairs. Just as
there are insufficient chairs for all to survive the musical
chairs death-gamble, so too, there is insufficient money for all
to repay (P+I) and survive the mort-gage death-gamble.

P < principle, I < Interest, i < Interest Rate, t < Time

                               PERCENT    ALGEBRA   EXP. FUNC
Production costs (principal)     100         P           1

Production prices (Debt)        100+I       P+I       exp(it)

Purchasable Value                100         P           1
or ratio of money to prices     -----      -----      -------
or survivors                    100+I       P+I       exp(it)

Unpurchasable value               I          I             1
or forced unemployment     U=  -----      -----    1 - --------
or non-survivors                100+I       P+I         exp(it)

For U=0, let                     I=0        I=0      i=0 or t=0

     Much can be learned by looking not only at the purchasing
power and ratio of survivors but by also looking at the remainder
as the loss of purchasing power and the ratio of losers. The odds
of survival are always set by the interest rate(i). P/(P+I)
survive, I/(P+I) do not.

                     DOUGLAS' "A+B" THEOREM

A < money, t > time, B < Price increases due to various causes

                               PERCENT    ALGEBRA   EXP. FUNC
Production costs (principal)     100         A           1

Production prices (Debt)        100+B       A+B       exp(bt)

Purchasable Value                100         A           1
or ratio of money to prices     -----      -----      -------
or survivors                    100+B       A+B       exp(bt)

     Major Douglas had discerned that there was insufficient
purchase power in the numerator to balance the prices in the
denominator which had grown by the sum (B) of INTEREST, taxes,
material costs, etc.
     Assuming no control over the B factors in the denominator,
he suggested balancing the supply in the money in the numerator
by financing a national dividend and government expenditure and
rebating merchants through a Compensated Discount with the

Purchasable Value or          100+ND+CD   A+ND+CD
ratio of money to    = 1 =    ---------   -------
prices or survivors             100+B       A+B

     The injection of new money (ND+CD) tries to come as close to
balance B as possible and is injected "debt-free" with no need
for the government to tax it back. Calling it "debt-free" has
confused some into believing that debt-money is bad when it's
just as good as credit money as long as there's no interest
     There's nothing wrong with debt money. Every chip taken out
at a casino on a marker is debt money but as long as everyone is
willing to work for it and there is no imbalance between debt and
money, there is never any problem. There have been many
successful debt money systems. English tallies allowed the King
to borrow tallies from the Treasury, spend them and tax them back
to repay to the Treasury. Socreds who believe that the difference
between prices and money are automatically imbalanced talk of the
government issuing money without debt but when there is no
imbalance, debt is necessary to balance monetary emission.
     This injection of new money to balance the growth of prices
on store shelves was automatically dubbed "Funny money" by those
with a vested interest in the current "Not-so-Funny money"
     That taxes and other factors cancel out in the denominator
is demonstrated by what I call the "splashing in the pool costs"
versus "pumphouse" costs. It's best explained with this example.
     "A salesman goes to a hotel in the morning and pays $50 for
his night's stay. The hotelier goes to the butcher and pays his
$50 bill for beef. The butcher goes to the baker and pays his $50
bill for bread. The baker goes to the auto mechanic who pays his
$50 bill for a tune-up. The mechanic goes to the hotel and pays
his $50 tab. The salesman comes back and says that he can't stay
the night and asks if he can have his deposit back. The hotelier
gives him back his $50."
     Due to velocity, the volume of money in circulation should
really be immaterial. If 10 people all buy-in for $10 with
average $10 pots, the same chips will be used over and over and
people will buy them from each other at the table. If they all
buy-in for $1000, the velocity may be reduced to once or twice.
If they all buy-in for $1,000,000, it may be possible to use a
new chip for every bet all night with a velocity less than 1.
Despite all three money supplies, the players participated in
identical games with identical action and few observable
differences. Start charging interest to use the chips and people
will try to make do with as few chips as inconveniently possible.
     Thus the growth of prices from activity in the economic pool
is never a problem. The problem is that more money is demanded
pumped out of the pool than is pumped in from the banking pump-
house. No amount of splashing in the pool is relevant and prices
rises not caused by the pump-house are immaterial. The problem is
the growth of prices from activity in the banking pump-house and
in only in the banking pump-house. All other costs are movements
of funds in the pool and they tend to cancel. Only Interest is
the illicit cost in our productive enterprises. So, another
solution is to, rather than compensate for the growth of prices
in the denominator with funny money in the numerator, eliminate
the original imbalance in the denominator obviating the need for
any funny money compensation in the numerator.

     With the Laplace transform, it is also possible to draw the
electrical blueprint of a bank account in the usury banking
system (1/(s-i)):
                       | Interest = 10% |
                  |<---|   Rate         |<---------|
                  |    |----------------|          |
                  |                                | Old
                  |                   |<-----------| Balance
                  |                   |            |
                + |                 + |            |
           |------------|       |------------|     |
  Input  + |  Addition  |     + |  Addition  | New |
---------->|    Node    |------>|    Node    |--------------->
           |------------|       |------------| Balance

     Douglas's solution was a compensating negative feedback
loop (1/(s-b+cd+nd):
                       | Interest = 10% |
                  |<---|   Rate         |<---------|
                  |    |----------------|          |
                  |                                | Old
                  |                   |<-----------| Balance
                  |                   |            |
                + |                 + |            |
           |------------|       |------------|     |
  Input  + |  Addition  |     + |  Addition  |     | New
---------->|    Node    |------>|    Node    |--------------->
           |------------|       |------------|     | Balance
                - |                                |
                  |                                |
                  |    |----------------|          | Old
                  |    | Nat. Dividend% |          | Balance
                  |<---| Com. Discount% |<---------|

     Though this would have worked with constant vigilance, there
is an easier way. Cut the original interest positive feedback and
no compensation or vigilance to counter price rises is necessary.

                                     |<-----------| Old
                                     |            | Balance
                                     |            |
                               |------------|     |
                      Input  + |  Addition  | New |
                    ---------->|  Node      |--------------->
                               |------------| Balance

     The better engineered no-feedback design has been
incorporated into the software of the Greendollar and Timedollar
Local Employment Trading Systems in the United Kingdom with over
350 branches serving over 30,000 accounts, about 200 branches in
Australia, 60 in New Zealand, dozens across Canada and the United
States, more in the United States operating under the software
name "Time Dollars" and starting out in Europe and elsewhere.
Greendollars, as interest-free credits, show us how New Social
Credit world work.
     Why are Time Dollars and Greendollars Social Credits?
     1) Because all credit system which bear no interest are
social friendly credit systems. Since LETS is an interest-free
credit system, there's no way to deny that lets belongs to the
generic family of credit systems which are social.
     2) Because I travailed Canada under the banner of Social
Credit Engineer advocating monetary reform and I financed Michael
Linton in the development of the LETS system after approving the
design as an interest-free credit system. As far as I'm
concerned, with the growing success of the Greendollar social
credit system around the world, I've done a good Socred's duty
and accomplished the monetary reform that Social Credit has
always advocated.
     The point is that any social credit system is the anti-
thesis of the anti-social usury credit and now that the LETSystem
is universally proven, the question is now optimizing growth.
     I'm happy to read of systems that use no computers and no
telephonic exchanges, etc. There was strenuous argument over
whether modified systems were really LETSystems or not. The point
is they are all social credit systems since the credit in all was
     Since Australia, New Zealand and the United Kingdom have
large numbers of people who have voted for Social Credit, it is
their political duty to join a system they have themselves
advocated. I appreciate that their numbers must be helping in the
present growth but there's no reason they shouldn't be enrolled
en masse.
     Finally, Douglas made mention of a Dividend every citizen
should receive as a share of the robot production. Douglas stated
"As the lever of technology gets longer and longer, the work
necessary is less and less" and so people should not have to work
for purchasing power if there are robots to do it for us.

     So that is the theory of Social Credit, balance prices in
the denominator with new money in the numerator. Though it's not
optimal, eliminating the imbalance permanently is, it was
workable even if untested and difficult to understand.
John C. Turmel, B. Eng.

Subject: Re: TURMEL: On Social Credit
     On Aug  6 1995, one reader wrote:
:How much economics have you studied? There are large gaps in your
:logic; you should ask a local economics professor to review your
:ideas. If you cannot state 5 good effects of inflation, you
:really do not understand undergraduate level economics.
     I answered:

:Why don't you post for us the beneficial effects of keeping
:inflation and unstable money. I'd bet none are worth it.
:How many books on money tokens do you think I need to read
:to understand such a trivial subject.
:When one considers money from a casino cage point of view,
:the complexities seem created for the purpose of confusing.
:I posted to all those nations because they all had Social
:Credit movements at one time.
:I posted to the science and engineering fora because Douglas
:himself did a scientific analysis.
:So I'll wait to hear how the advantages of inflation
:compensate for the disadvantages of inflation and I'll argue
:that the disadvantages are greater.
:John Turmel
     He responded:

:: Why don't you post for us the beneficial effects of keeping
:: inflation and unstable money. I'd bet none are worth it.
:If you were discussing mathematics and showed a lack of understanding of
:calculus, I would tell you to study it. I would not have to waste my time
:giving an exposition which is in hundreds of textbooks. I might
:point out just one idea that an understanding of calculus would
:give you. Similarly...
     I'm not going to go search his hundreds of text-books to
find his five beneficial effects of inflation. All I asked him to
do was list the five he was citing.

:: How many books on money tokens do you think I need to read
:: to understand such a trivial subject[?]
:Everyone thinks he or she understands economics except
     Everyone who understands Poker chips thinks he or she
understands economics except economists who are sure they don't.

:You are clearly not an economist, so you should get
:help from one, or else you will continue to make basic and banal
:mistakes. To answer your rhetoric, it would only take half a
:dozen books, depending on how intuitive the subject is to you.
     All I want is to know the five beneficial effects of
inflation. I don't want to go look at 12 books for five effects.

:: When one considers money from a casino cage point of view,
:: the complexities seem created for the purpose of confusing.
:Then perhaps you should study those complexities more until you
:understand them.
     I'm saying that when one considers money from a casino cage
point of view, the complexities are more easily exposed.

:: I posted to all those nations because they all had Social
:: Credit movements at one time.
:: I posted to the science and engineering fora because Douglas
:: himself did a scientific analysis.
:At worst, you should post to them individually. Now, all of those
:newsgroups will see much irrelevant and erroneous commentary.
     No. They will see much relevant commentary. What's

:Conservative estimates of the cost of storing one post to a well-
:distributed group are about a dollar per line. Do you get the
:point yet?
     Get real. Most of the newsgroup host computers have plenty
of excess capacity. Telling me how much radio air-time costs says
nothing about the air-time not sold. But go ahead and show us
your data.

:: So I'll wait to hear how the advantages of inflation
:: compensate for the disadvantages of inflation and I'll argue
:: that the disadvantages are greater.
:Why don't you think about them or read some academic economics
     You read them, why can't you tell me the five things they

:If you wish to be viewed as a crank or crackpot, continue
:to post to too many newsgroups, use nonstandard terminology and
:reference yourself, and declare revolutionary ideas in areas
:where you make basic errors.
     Basic errors should be easy for you to point out. I'll be

:Here are some cases where your ideas fail, in case you want to do
:some research: Poland, now; Slovakia, now; US, late 1970's; and
:Germany, just after reunification.
     Though I can tell you where the LETS idea is not failing,
Great Britain, Australia, New Zealand, Canada, United States, I
have no knowledge of Greendollar banking systems failing in
Poland, Slovakia, Germany or the U.S.
     Now you can't expect everyone reading these messages to run
around looking for the twelve economics books to find out what
you think the five advantages of inflation are.
     And I'd prefer that you post your answers for the others to

     On Aug  6 1995, campbell@mdd.comm.mot.com (Duncan Campbell)
:Gee Jon, I've seen this before too.  In fact this is a rerun of
:one of your posts from the last couple of weeks.
:Look here.  If you think Engineering is useful as the major
:paradigm for an economic system, then you should go have a good
:long look at the ex-ussr.  They tried the stuf you're talking
:about, *really*.
     *Really*? Tell us more and we'll compare it to the operation
of the Greendollar LETSystem.

     Now it's your turn and we'll decide it there should be a

     In article #70814 in newsgroup uk.politics,
<dave@wmnccl.demon.co.uk> wrote:

::      Credit can only be social when there's no interest and I've
:: developed some equations in algebra, exponential functions,
:: differential equations and Laplace Transformations proving that...
:  The types of mathematical tools used, while showing you know your math,
:do nothing to prove whether or not the theory fits empirical observation.
:  I can't see why interest is so different or inferior to other tradings.
     With you pay for other tradings, you get people's time,
their goods and services. With you pay for interest, you get
money's time and money does not do work. You are getting nothing
of substance and that's why it is different and inferior to other

:  Example#1. My family have cleared some land, planted crops, built a home.
:With our surplus labour, we build an extra cabin for guests and, later, we
:rent it out to someone (in a non-money system: in exchange for two days work
:a week in our fields).
     Perfect, you go positive for $100 Greendollars when they
stay and negative when they pay back with work. This is trading
your work for someone else's. This is not usury. This is trade.

:  Example#2. As we have a surplus of crop production, we trade it for some
:bigger & better farm machinery. Actually this is wasted just for our needs,
:so we hire it out to our neighbour (in a non-money system: for 2% of the
:corn he harvests with it).
     Again, you are trading your work for the mechanic's work and
trading some of it's depreciation to a neighbor for 2% of the
work he harvests with it. This is not usury. This is proper trade

:  Example#3. We have a stored surplus in some durable form e.g. stacks of cut
:timber---we don't plan to use it for new capital goods for a couple of years,
:it will just sit there. But our neighbour has this wonderful suggestion:
:he could develop his farm so much faster if we traded it for the 2nd hand tractor
:he needs, so as to hire that out to him. We get the hire charges on what we
:bought for him to use; and, at the end of two years, the surplus value is
:returned to us in some durable form to trade to fund our own capital purchases.
:Sure sound like lending at interest to me.
     Here you have the basic decision behind interest. Remember
first that interest is the demand for increase in live-stock
while usury is the demand for increase in sterile gold or money.
     But the question begs:
     Your abundance could at the present time been a supply for
his want. You could have just lent him the stacks of timber which
he would trade for the tractor himself. After developing his farm
faster, your wealthier neighbor pays you off and offers you the
same deal of an interest-free loan if you ever need it.
     Or because you have abundance will compensation be given
from those who have no abundance.
     I'd prefer to drop off my spare timber at the Greendollar
cage and have it credited to my account and my neighbor can go
get his tractor there with the system as a whole taking a risk on
my neighbor.

:   In each case, we have accumulated some surplus value in capital goods or
:tradeable materials, and we earn rent / hire / interest income for loaning
:out its use.
     You can call it interest for loaning out its use, I call it
payment for depreciation and owner's organization. And payment
for work and work's depreciation is the only payment I say is
valid. Nowhere did you mention payment for money's time. Come up
with an example for money's time and we might disagree on more
than nomenclature.

:: ...an interest-free token system, like a casino chip bank, suffers
:: no inflation nor unemployment.
:    Ahm, the usual reasons given for money inflation i.e. increasing amounts
:of token money being needed to trade for the same goods are decrease in
:supply of goods or increase in supply of money tokens.
     Say this again but I state that the inflation we are
experiencing now is Shift B inflation, the foreclosure of
collateral behind the money and not Shift A inflation, the
increase in monetary tokens. If that were the case, people would
have full wallets and the stores would be empty. Today, people
have empty wallets and the store shelves are full.

:Of course it ain't purely that simple when the banks can "print"
:more money by allowing more loans,
     Right you are on how the banks create more money by allowing
more loans but wrong you are if you think that this addition of
new loan money causes inflation. Most new money issued by banks
through loans are based on pledged collateral, just like casino
     When you borrow your $100 at the bank and walk around with
it for a year in your wallet, when you return to the bank to pay
it off, the debt grew to $100 but the $100 in your wallet didn't
     It's this disparity between money and debt that causes
inflation and now how much money is in circulation. Velocity
takes care of that.

:and you cain't just say "I'll stop this by supplying less money"
:(the remedy for a supply-push) when the cause is demand-pull.
:But that's pretty much the nature of it.
     I'm saying "I'll stop this by supplying less debt" so that
it matches the supply of money." Quite different proposal so it's
not the nature of it.

:   Perhaps your casino tokens were free of inflation because no
:one was either in the business of printing more & more of them
:to chase the same goods, or having to offer more & more of them
:to get the same amount of goods as those goods became in short
:Dave Bird,
     And if some cashier ever did more and more of them to chase
the goods in the cage so that players would have to offer more
and more of them to get the same amount of goods as those goods
became in short supply, we'd fire that cashier and call in cops.
The prime rule of banking is you can't issue a chip out of the
cage until someone pledges an asset into the cage. Anything else
is fraud and easily detectable.

     Before jamming my mail-box, anakin@pinc.com (Rajiv K.
Gandhi) contributed:

:Hey John, I have to say that I disagree with 100% of everything
:you have written in here.
     And if he can explain it in more than 2 lines, the world
should know.
     I'm still waiting for those who like to think of Social
Credit as a failed experiment to speak up. I say it would have
worked even if today we have a better way of doing it.
John C. Turmel, B. Eng.

Subject: Re: TURMEL: On Social Credit {-I know I shouldn't but...}

     On Aug  9 1995 in article #71398 in sci.econ,uk.politics,
SDobney@acorn.co.uk (Saul Dobney) wrote:

:In article <DCvHxz.LDr@freenet.carleton.ca> johnturmel@yahoo.com (John Turmel) writes:
::     The word "mort-gage" is derived from the French word "mort"
::meaning "death" and "gage" meaning "gamble". Bankers create the
::money supply when they make loans. Producers are forced to gamble
::by borrowing newly created Principal(P) to pay for production
::costs and then inflating their prices to earn back the Principal
::and Interest(P+I) in sales.
::     Because total goods priced at (P+I) can never be sold when
::consumers only have P dollars available, a minimum amount of
::goods must remain unsold and a minimum number of producers must
::fail and suffer foreclosure. The economist Keynes likened the
::mort- gage death-gamble to the game of musical chairs. Just as
::there are insufficient chairs for all to survive the musical
::chairs death-gamble, so too, there is insufficient money for all
::to repay (P+I) and survive the mort-gage death-gamble.
:This is confused.  Costs, prices and budgets are mixed up.  A cost is what a
:company has to spend to produce a good.  A price is what a company charges
:for a good.  Prices > Costs (in general).  Prices are not necessarily a
:function of costs.  The discussion which followed failed to make this
     I'm not talking about splashing in the pool. I can
liquidate a $500 debt to you with a $50 bill if I can find one of
your creditors who owes me $500. I pay you $50, you pay him $50, he pays
me $50, I pay you another $50, you pay him another $50, he pays
me another $50, I pay you another $50, you pay him another $50, he pays
me another $50, etc, ten times and splashing funds in the pool
can trade our profits to each other in this way.
     I'm talking about the cost of credit to the pumphouse. I
don't care how many profit enough splashing in the pool to pay
off the pumphouse cashier, but there will always be a shortage.
     So I'm not taking into the equation the splashing in the
pool which cancels out but I can therefore reduce the equation
down to the actual flaw. And it's not profits.

:If a company chooses to produce then they make the assumption (very
:simplistically) that:
:      Demand           * Price P > Sales * Costs
:           at price P
     Define your units and throw in an example with numbers.

:      Demand is budget capped.
     And that says nothing about whether prices are larger than
budget capped, does it?

:If there is not enough money (surplus of production) to be made the product
:will not be produced. The cost of production also includes a capital
:(upfront) cost.
     Sure, I'm not going to pay for the depreciation of the
capital (upfront) costs of my enterprise if there's no profit
left over. The same criteria applies in both a system with no
interest costs and a system with extra interest costs.

:Which leads to the question:  For optimum social utility shouldn't:
: [snip]
:     Or Price P = Cost?
     Yes. Whenever Price P = Cost, you have stable money.

:ie the owner of the capital should not take any benefit from
:delivering the product to the market.  This is effectively
:communism or socialist economics.
     No. The owner of the capital should take benefit from
delivering the product to the market. Therefore, you should
conclude that it is effectively not communism or socialist
economics. Yet, letting everyone be a capitalist by basing his
credit to get into the game of production with a killer rake-off
does seem to represent the better aspirations of communism and
socialism. But just because everyone benefits doesn't mean it is
necessarily socialism or any other "ism." Capitalism can be a
fair game too.

:Removing the incentive to create the capital (ie the surplus of production
:in the first equation) nullifies any production and technological innovation
:as there is no driver to create new products or production methods (because
:there is no money in it) and requires a managed society with a centrally
:determined demand and supply (as otherwise capital is always facing a net
:expected loss).
     I never said I don't want money earned in production. I say
production is where money should be earned. I'm saying I don't
want money being made in money-lending.
     Please do not equate capitalistic profit with interest from
money-lending. Capitalistic profit comes from production of
energy while interest from money-lending has traded no work and
has resulted in no new energy production.
     I do not think that the incentive to create capital would be
reduced by not getting interest on your money at the bank. Your
pile of inflation-free chips at the cage grows as you work and
save and that should be incentive enough to keep making your bank
account grow through your work. But it won't grow or shrink by

:If you allow capital to earn money from the supply and demand (ie products
:you sell are charged that the value to the customer which is more than the
:cost to make them) then producers are willing to take risks to generate new
:products to fill new and various market needs.
     That's exactly what I propose to do.  That's exactly what
the Greendollar system is facilitating now. There are 350
Greendollar branches in Britain serving 30,000 interest-free
accounts. They don't seem to have lost incentive to trade their
time for that of others.

:The effect is that capital itself earns money by funding innovation and the
:creation of new products and bringing them to the relevant markets and
:benefiting from the surplus (demand*price - sales*costs).  Interest is
:ultimately the payment for the risk of innovation.
     Yes, profits from splashing in the pool are fine but I don't
equate interest as a legitimate cost for the risk of innovation.
Profits already do that. The middle-men don't deserve to make 10
times the money the guy who built your house made. Think about
that. The workers made $20,000 profit while your banker makes
$200,000 on your 30-year mortgage for credits from his computer.
Bankers make not bad profit for a few clicks on the keyboard and
the services of their collection branch.

:If we pay zero interest (and so gain no benefit from ideas which
     How does paying interest help you gain benefit from ideas
which work? Doesn't paying the principal buy the ideas which

:we end up with a net expected _loss_ over time, as some ideas
:will not work.
     Where losers can repay their negative score from future

:[Expected return = sum               (return * probability of return),
:                      all investments
:since no return is >0 and some returns are <0 with probability >0, the net
:expected return is negative]
:No-one will invest if the expected return is not positive.
     Again, you're only looking at the net expected _loss_ over
time of the ideas that will not work. You also have to add the
net expected _win_ of the ideas that do work.
     I'm saying that there will be more winners than losers
without the interest rake-off.

:The government, by borrowing money at a given interest rates to cover the
:costs and capital expenditure of running the country, sets the base cost of
     And how stupid of them to give the license to create money
to private banks and get in line when they used to use Treasury
money in the past. Being a Brit, you must have heard of the Tally
system used between 1100 and the late 1600s. You didn't see those
wise British kings sucker up to the money-lenders for a loan.
They used wooden Treasury Tallies for over 500 years.
     Unfortunately, since the late 1600s, the Royalty of Britain
have been in financial bondage to the world money-lenders. That
you could find a King who could give you an interest-free
computer Tally system is my wish for you. He could use the same
software being used in all the LETS Greendollar bank branches
sprouting around you.

:If the interest rate from the government is low, more money will
:be spent on funding innovation.  If the interest rate is high, more money
:will be given over to the government, and less for investment.
     The interest rate "from" the government is low? Government
doesn't set the interest rates, the global money markets do.
Central bankers jerk rates up and down to suit money-market
decisions. Please, true money hasn't come "from" your Royal
Family in 300 years.

:Now if we are profligate in our use of funds then the tendency will be to
:fund too many speculative ideas which do not work (cf South Sea Bubble).
     You can't fund too many speculative ideas. Period. Whether
they work or not, you cannot exert more entrepeneurial activity
than there are people and resources available. You can't do more
than you can do and you can't properly fund more than you can do.

:Low government interest rates encourage (more) profligate use of funds and
:so make more money available in the economy - the money supply and the
:circulation of money increases.
     And zero interest would encourage not only (more) but the
(maximum) use of funds.

:The government can also increase the amount of money available in the
:economy by printing more - which also raises the money supply.
     No, the British government can't print more money. That what
they used to do with their tallies but since the, banks print the
money and the Government borrows it. If they printed it, they
wouldn't be in debt like everyone else.

:However, by
:increasing the money supply, the number of internal demand/supply
:market transactions increases therefore increasing the apparent level
:of demand in the country.  Since demand and supply are matched (in a
:total sense) this only leads to an increase in prices and costs. Hence
     I draw a distinction between price rises due to free market
demands and price rises due to interest. But knowing that your
tokens are based on a certain value of collateral in the
cashier's cage eliminates the inflation due to interest and other
price rises I call supply and demand and not inflation.

:But, if more money is available and so more speculative ideas are funded,
:there is an increased likelihood of any individual investor losing money.
     And the increased likelihood of winning investments too.

:Which is why poorly managed economies swing from boom-bust -
:investors move from over-eager to over-cautious and back again.
:Where interest rates are too high we will overprice the availability of
:capital for innovation (as the costs are too great to develop new ideas).
:Development and investment will reduce.  The number of demand/supply
:transactions will decrease, leading to greater levels of unemployment.
     Right. That's what my math says too. Interest rates create
greater levels of unemployment.

:In traditional banking, the bank acts as a clearing house matching
:investment capital to development opportunities.
     This is false. Banks do not lend out their depositors funds.
Take a look at the bank piping for a pictorial description of
where funds for new loans come from.

:Interest is charged to non-producers to cover the lost
:opportunity to gain by investing in something else.
     That's the cover story. But how does it apply when banks do
not lend out their depositors funds?

:The amount of interest charged is also subject to a
:supply-demand model and so relies on what the customers are willing to pay,
:and is available according to whether this exceeds the lost expected value
:of investing in something riskier.
     The problem is that usury creates a risk all by itself
independent of the risk of success or loss from the investment
opportunity itself. I call the risk you're talking about Risk #1
and I call the risk I'm talking about Risk #2.
     There has been some discussion of this risk in the sci.econ
and alt.conspiracy newsgroups if you'd like to catch up.

:As banks are in effect dealing in risky transactions where there is the
:possibility they could lose money (eg Barrings), the Government acts as the
:"bank of last resort" to enable banks to overcome short term liquidity and
:temporary losses (though loss coverage is rare).
     The Government does not act like a bank of last resort in UK
or anywhere else other than Guernsey Island. The government is
nothing but another borrower from those to whom they have
licensed the power to create the money.

:In this way the Government sets the interest rates for the
:economy as a whole (as the banks will always charge more than
:the government would charge them).
     Again, the government not only does not loan out any money,
it does not set the interest rate either.

:By setting interest rates, or by managing the money supply, the government
     Everything that follows is incorrect if the government does
not set the interest rates as you say.

:The problem with your casino model is that it makes the tacit assumption
:that the economy is closed, and that it cannot grow - the number of chips
:in the casino is a fixed amount matching the amount of initially invested
:capital.  The money in the casino actually does nothing save move from one
:pocket to another.
     Again, you seem not to understand that a casino can never
run out of chips. Therefore, there is no tacit assumption that
the economy is closed and cannot grow because the number of
chips is fixed to collateral. Though the number of chips can't
grow, the amount of collateral can and ergo, so will the chips.

:In a real economy, innovation and investment actually increase the value of
:the money in the economy.  If you are considering this from the point of
:view of a casino it seems extremely odd - there is only a fixed amount of
:money available.
     Same error again. A casino never runs out of liquidity.

:But in an economy, the money actually creates something
:- value can be added to a commodity.  For instance a lump of steel becomes a
:car - the price of the steel in the car shape is higher than the price of
:the lump of steel.  The net resources in the economy have not increased, but
:the addition of labour and innovation to the lump of steel have increased
:its value.  Business spends its time looking for areas to innovate and add
     And as that new human energy is added to the products, new
chips should be issued to both reflect that added value but to
make sure that the initial chips retain theirs.

:Inflation also has a demand side effect - it's not entirely manageable from
:the supply side.  As the range of products and services entering the market
:increases the prices of the goods in the economy have to adjust to
:continually meet the changing levels of demand.
     And if the products and services entering the market were
matched with new chips issued into circulation as those new
products and services are pledged to the cage, the prices
wouldn't change. Prices can never change from demand when prices
equal demand as a rule of issuance.

:Supply sides of economics are far, far easier to model than demand side.  It
:is working out how to match demand and supply which makes economical
:measurement an art and not a science.
     That's the problem. If supply is matched to demand from the
start, it's not art, it's science.

:Demand is not manageable and only predictable in the short term
:(for instance, consider the effect of the weather on the demand
:for ice-cream).
:All investment is therefore risky as the demand-side cannot be wholly
:predicted or managed.  Interest rates are the price paid to meet this risk.
     That's the cover story. Again, this is Risk #1 which I
accept while I'm objecting to Risk #2 generated by the interest
rates themselves which I do not accept.

     You should check out the topic Banking Systems Engineering
Analysis in the other conferences for a fuller explanation of the
math behind an interest-free casino-style Greendollar banking

     Lab.User@anu.edu.au (Lab User) wrote:

:your scheme was tried by mr lang in 1934 and failed then .. take
:it from an old timer
     Who is Mr. Lang and what did he do in Australia that failed?
And why aren't Greendollar systems failing in a similar way.

     And finally, rxc@bcwcs20 (Ruth Civil) objects to our
discussing this material by repeatedly jamming  my mail-box with
copies of our discussions.
     I've never heard her contribute anything of her own but
objections to our making our contributions to our discussions.
     You'd wonder why she just doesn't leave our discussions
     Hey, Ruth, if you're reading this, why don't you tell us
what it is you object to in our discussing Social Credit?
John C. Turmel, B. Eng.

Subject: Re: TURMEL: On Social Credit

     On Aug 10 1995 tenhove@chip.itron.com (Ron Ten-Hove) wrote:

:My recollection of history is a little hazy, but didn't the
:Social Credit government of Alberta implement some of Major
:Douglas's policies during the Great Depression?

     I've read up several books on Aberhart and Douglas and it's quite
a good story. Now, remember, I've read these books knowing not only
where they're going wrong but where they're going right. It's an
interesting interplay of personalities.
     There had been much agitation about Major Douglas's monetary
theory which promised people freedom from their depressing lack of
currency. Nothing stood in the way of manpower, a wealth of materials
and engineering capacity but a lack of paper money.
     Major Clifford Hugh Douglas from Scotland had noted that prices
were always more than the money you had to spend. That's why there
were so many products on the store shelves but no money to buy them
with. He reasoned the price to money differential was an essential
problem that had to be overcome by adding money in the numerator to
match the prices in the denominator by having Government spend the
difference without debt -- that is not having to tax it back like a
loan -- or dividing it up so everyone gets a National Dividend.
     Economists have been trained to scream "inflation" any time they
hear "new money." But if the price differential can be eliminated at
the source, there would be no need to give everyone money because
everything could be sold with what they have. So, there would be no
economists screaming "inflation" because we're not increasing the
money, we're decreasing the debt.
     It seems that Bible Bill Aberhart was a star all his life. A star
pupil, a star athlete and eventually a star high-school principal.
After the suicide of a former start student over the poverty of the
Depression, he was introduced to Social Credit. He was also a star
radio-Bible thumper, one of the first and flamboyant speakers listened
to by tens of thousands every week. You never forgot Aberhart once you
heard him. The Bible is loaded with anti-interest and anti-loanshark
verses and he used them effectively. Though his weekly radio show,
Bible Bill started his oratorical opposition to the Usury Slavery
Money System and eventually a star politician. He was a winner all the
     Conversely, Major Douglas, an engineer, was quite stiff and a
very sedate professorial speaker. The first time they met, they were
both to give speeches that night. For some reason, they didn't hit it
off too well. I think Douglas gave the first speech and bored them
intricate instruction on how to measure how much money will be needed
to balance the prices.
     Aberhart had told them about their $25 a month Dividend and
that's what they wanted to hear about. Not an engineering analysis,
just the pay-off. These people were there to hear about the hope of
financial relief. A $25 dividend would go a long way. They wanted to
hear bankers bashed, those who had done this to them. They were
desperate and they were excited about the prospects of debt-free
living. Social Credit was their way out of the clutches of the Eastern
Money boys who were foreclosing on all their farms.
     The crowd got restless. Douglas spoke for 2 hours! Who can blame
them? They started getting noisy and some started to demand Aberhart.
Eventually, he came on to thunderous applause of his supporters and
that might have certainly hurt Douglas. I know I'd be hurt.
     Social Credit organized study groups in everybody's kitchen. Up
till the provincial election, Aberhart had said he didn't want to
enter politics, he only wanted the politicians to provide a social
credit system. When they wouldn't, he called his supporters to order
and they mounted a quick campaign in 1935.
     Big Money mobilized against them. The major newspapers, the
politicians, the Boards of Trade, laughing at the poor rubes who
thought they could understand esoteric economics and get a $25
dividend without causing inflation. The nay-sayers got front pages.
But with the mass of Paupers having a vision of a better way, no
amount of false propaganda got through. Social Credit swept all the
old parties out of office capturing around 90% of the parliamentary
     Douglas wired "Congratulations. There may be many social credit
governments but only one first." And only one last. Aberhart cabled
back to Douglas "Come help us set up a social credit system."
     But Douglas never came.
     Since Douglas was working on a numerator solution, adding money
to balance prices in the denominator, he needed information on prices,
expected values, etc. and this may be one reason he didn't go. Not
enough info. I find that hard to accept. Politicians had given him the
go ahead to test out his theory and I'm stumped why he didn't go and
fix it as best he could. Maybe balancing the errant system from the
numerator looked like more of a task than he was willing to face?
     So Aberhart tried to pass legislation to help the poor. Anti-
foreclosure legislation. Struck down by Ottawa. Provincial
Greendollar legislation. Struck down by Ottawa. Any piece of
legislation which would have in any way financially benefited the
victims of the banks was opposed and defeated by the Supreme Court of
Canada. They were looking for numerator solutions and the Govt said
"You can't fudge with the numerator. The government has given the
licence to manufacture and lend money to the private banks and no one
else creates numerator money.
     I could do the research about how many pro-poor-people bills were
defeated but Aberhart was a Prince of the Paupers, an extraordinary
man who came to understand the 1/(s-i) money system's deadly effects
and became a champion to poor people. Social Credit in Alberta could
truly be called the first rise of the Paupers to power.
     If you understand what banks do and you want to read an inspiring
book about the rise to political power of a bunch of ordinary people
who had been pauperized by larger financial interests, the story of
the rise of Social Credit in Alberta is truly inspiring. If poor
people get to vote in heaven, I know where Bible Bill is sitting.

:Alberta had at
:that time a largely agricultural economy, so the parallels with
:todays mixed, service-industry oriented economy may be shakey.
     We're not talking the economy here, we're talking the tokens. I
don't care if you're playing Poker or Baccarat, the game has no
effects on the tokens. Similarly, a sound money system is not affected
by what type of economy it is.

:Never-the-less, didn't the Socreds eventually depart from Major
:Douglas's advice, and adopt more conventional strategies to
:battle the effects of the depression?
     As I said, Douglas wouldn't come and Ottawa killed every
important bill he presented until he found a loophole and did pull off
some actual financial relief. The province issued Alberta Prosperity
Certificates which provided an alternate medium of exchange to deal
with. They couldn't call it money but somehow got around the law by
making people put a stamp tax on each bill every month. Hence the name
"funny money." But do people who have no money, it did the job of
money and interest-free. Sounds like a sound interest-free service-
charge-only (1/s) token system to me. They opened bank branches and
started on their way out of the Depression before the rest of the
     Aberhart died unexpectedly and the premiership was passed on to
his "right-hand-man" Ernest Manning, another Bible thumper. That's
when they got away from monetary reform. The Province quickly became
quite wealthy due to oil finds. With the bankers turning on their
printing presses to finance the war years, Manning effectively negated
any more work towards monetary reform. He may not have delivered on
monetary reform and may even have sold out the ideal but he never had
one financial scandal in his cabinet while he was premier. He was
rewarded with a Bank Directorship and a Senate seat for having done
such a good job. The questions is which good job and who was happy.
     His son Preston, a former Socred who learned his Social Credit at
the feet of his father, is now leading a new political called Reform
which offers every reform but monetary reform.

:One lasting legacy of Social Credit in Alberta: to this day,
:bankers are about as well liked as skunks!
     Nothing's changed but the lack of similar desire of the Paupers
to do something about it.

     rbrown@blues.uucp (R. Brown) wrote:

:After converting to Social Credit in the 30s, the radio evangelist
:William ("Bible Bill") Aberhart managed to win the first victory in
:the history of Social Credit. He never fully understood Douglas's
:political theories (but then neither has anyone else)
     Not a fair comment after I spent so much time detailing the
differences between Douglas's version of Social Credit and the new
version of Greendollar social credits. I wonder what opinion the
people who have studied his books have of my understanding of his
engineering analysis.

:and broke with Douglas during the campaign. Even the Social Credit
:policies he did try to put in place (still remembered as
:"Funny money") were impossible to implement because (as he had
:been repeatedly warned) Social Credit made even less sense
:than it otherwise might at a provincial (rather than federal)
     Not a fair comment. Anyone who has studied his legislation can
attest that it was not impossible to implement because it didn't make
sense but because the Supreme Court of Canada restrained them from
doing anything in the monetary reform area, a federal-only
jurisdiction. Engineers learn that you can't say something is a failed
experiment when it was never tried.

:Canadian Social Credit swung sharply right after that
:initial victory, but, despites its _long_ dominance of Alberta
:politics and its success in B.C. and to some extent as a
:Federal party in the 60s, it never had a coherent policy of any kind.
     Of course, Chinese seems incoherent to someone who doesn't know
Chinese. To the many of us who found his solution quite coherent, your
failure to see what we see is quite revealing. Unless, of course, you
haven't yourself read any of his work and are assuming your economics
professor is right?

     jim@styx.equinox.gen.nz (Jim McCaughan) wrote:

:New Zealand came out of the Great Depression quicker than most other
:countries because the Labour Government of the day used Social Credit
:ideas to get the economy moving again. Unfortunately they then moved
:away from these ideas and eventually were put out of office.
     I and another reader are interested in details.

:: One lasting legacy of Social Credit in Alberta: to this day, bankers
::are about as well liked as skunks!
:Not only in Alberta.

     p.walker@econ.canterbury.ac.nz (Paul Walker) wrote:

:I *must* go and re-read my NZ econ history! But in the meantime I look
:foward to
::New Zealand came out of the Great Depression quicker than most other
:the evidence to back up this statement, and
::because the Labour Government of the day used Social Credit
::ideas to get the economy moveing again.
:precise details as to what these social credit ideas are and the evidence
:that the Labour government of the day accepted social credit thinking.
     I'll tell you one great idea by a New Zealand Socred that would
have worked wonders had it been adopted. I've been saying that the
best Greendollar system is one where the government also has an
account. Any Greendollars spent by government would have been used as
"rates vouchers."
     I recently read that Bruce Beetham, the first really influential
Socred leader in Parliament, while he was mayor of Hamilton, had
wanted to finance municipal projects with interest-free "rates
vouchers," tax-credits, but couldn't even get it on the agenda of the
Hamilton city council who were too busy passing a 20% tax increase.
That's the essence of social credit, government paying for its
expenses with its own paper, not bank paper.
     When he later got elected to Parliament, he organized a large
barter trade with Fiji island but Prime Minister Muldoon scuttled the
deal preferring to borrow money and pay interest to international
banks. Talk about having the banker's interest at heart.

:PS: Read Hayek!
     Please, don't ask us to read your books. Why don't you tell us
what he had to say that applies to these discussions.

From: olwen.williams@welcom.gen.nz (Olwen Williams)
Newsgroups: nz.general
Subject: Re: TURMEL: On Social Credit
Date: Mon Aug 14 03:08:00 1995
: -=> Quoting Paul Walker to All <=-
: PW: precise details as to what these social credit ideas are and the
: PW: evidence  that the Labour government of the day accepted social credit
: PW: thinking.
: I understand that the ideas referred to are the use of Reserve Bank
: Credit (the so-call funny money policy).
     Correct. Governments and banks or people should borrow directly
from the Reserve Bank which should be operated on a service charge
basis under a Greendollar or casino chip accounting software.

:I understand from family
: hearsay that my grandfather, Morgan Williams, M.P. for Kaiapoi from
: 1935 to 194? in common with other Labour members had a letter from
: Social Credit saying that they would never stand a candidate against
: him because he supported their policy.
     And of course, since Old Socreds were talking about "printing
money" to balance the prices in the denominator, the "inflation" scare
word was always in the way. But it's evident that your grandfather may
have found what he heard quite coherent.
     It's evident Douglas's social credit solution was feasible and
it's evident that Bruce Beetham saw the way to eliminate the growth of
the debt in the denominator. Mr. Beetham may be out of office and
though he may not have ever been on a winning team, he was one of that
select minority who were part of the winning idea.

     Phil Kerry <pkerry@fieldeng.demon.co.uk> complained:

:Listen, no-one objects to you discussing Social Credit at all ! What
:we do object to is you discussing it in inappropriate newsgroups !
:I read THIS in sci.engr.safety, which has nothing to do with social
:credit ! Followups set elsewhere !!
:Phil Kerry
     So Douglas's engineering analysis presented to the 1919 World
Engineering Conference in Tokyo on the unsafe engineering design of
the monetary system doesn't belong in sci-engr.safety? I disagree.
Money is the common denominator control system that affects
everybody's lives. My whole point in bringing Douglas's analysis to a
discussions group for safety engineers is to point out that it is the
duty of engineers to reassert jurisdiction over this last wayward
mechanical token and faulty software system.
     Douglas, the engineer, has been laughed at long enough. What
engineer would deny Douglas his hearing before his latest peers.
     This is a real problem. Since money affects everyone and
everything, people tell me to take it to "politics," "economics"
"Christnet" "barter." Anywhere but there. Because they don't see
relevance, they assume no one else does.
     I see relevance to discussing Social Credit in engineering fora
and until someone gives me a good reason why Douglas doesn't deserve
to be considered here, here I'll be staying.

     Finally, I'll tell you a little of my Social Credit roots. I was
born in Quebec Social Credit country. My grand-dad Adelard Turmel was
stalwart supporter of Quebec-style Social Credit since the early
1930s. He is most proud of having gone against with his many Blue and
Red brothers to be the only person in the poll to vote Social Credit.
He couldn't say he was proud of being on the winning team, because he
wasn't, but he knew that the true victory to be proud of was being
part of the winning idea.
     I had figured out that there was something wrong with the money
chips before I found out about Social Credit and the fact Adelard had
been fighting against the banks all his life. Was he proud of me for
having assaulted the banks in mid-stride during my first election --
I'd originally run to legalize gambling, that first election and the
last 38 times I've run for large-database-office, fixing the banks has
always been number one priority with both of us. And was I proud of
     And there are a lot of you out there who had older relatives who
voted for FRIENDLY CREDIT. And no matter how much they were laughed at
for complaining about the interest-bearing UNFRIENDLY CREDIT, and how
much they wanted their FRIENDLY SOCIAL CREDIT, I say they weren't
stupid at all. They just saw that simpler could be better while those
who assumed it has to be complicated just couldn't see it at all.
     Adelard Turmel needed to say only one thing for me to understand
that he understood Money Madness in the same way.
     So even though technology is such that the problem positive
feedback loop in the current banking system can be eliminated, Douglas
had devised a valid patchwork jury-rigged feedback loop in the control
system to balance the positive feedback in the prices with the
positive feedback in the purchasing power.
     In lay terms, a positive feedback makes the right wheel on your
two-wheel cart inflate while the left wheel stays stable. There are
two engineering solutions. Douglas's solution is to balance by
inflating the left wheel. Today's software solution is to eliminate
the imbalance in the accounting in the first place.
     I must admit that in Douglas's day, there wasn't the
international banking technology which would allow for the upgrade of
the world money software from the 5,000 year old Usury Slavery version
to the 1995 LETS Greendollar version overnight.
     It all comes together in LETS. LETS is the proof that FRIENLY
CREDITS work. Socreds should be overjoyed. No more need to bug the
government to get you an interest-free bank account, there's a
Greendollar one open down the block. And if there isn't, like credit
unions, form your own Greendollar Credit Union. Greendollars are just
like forming Credit Unions with no real money, only your worth valued
in "play" money.
     So, though I think there is a better way than Douglas's way, I
will still defend that his was would have helped immensely if not
     I'll soon post some of Douglas's best quotes on money.
     When I was with the party, I used to sign myself:
John Turmel, the Social Credit Engineer.

Subject: Re: Social Credit

     I noted a perfect example of Orwell's "double-think" in one of
the articles. Double-think was defined as the ability to
simultaneously accept two contradictory points of view as both true.

     On Aug 24 1995, wfhummel@netcom.com (William F. Hummel) wrote:

:A bank loans money that it receives from other depositors...

     In the next paragraph, he says:

:The money supply increases whenever a bank creates a new loan, and it
:decreases when the loanee pays off the loan.
Can anyone else see the double-think here?
John C. Turmel, B. Eng.

Subject: Re: Social Credit

     I must point out that several people have complained about our
topic's distribution. The following posts were made to 23 various
engineering, economic, politics and general newsgroups:

119. Re: Social Credit                                         Levant Tinaz
122. Re: Social Credit                                     Frangois Mottier
123. Re: Social Credit                       NDF130000-FarleighSEDR9818)226
124. Re: Social Credit                                      Roger M. Wilcox
128. Re: Social Credit                                          Gary Forbis
134. Re: Social Credit                                        Michael Burke
135. Re: Social Credit                                        Ken Zagzebski
136. Re: Social Credit                                     Eric Muetterties
137. Re: Social Credit                                     Eric Muetterties
139. Re: Social Credit                                           Nick Rossi
140. Re: Social Credit                                        Lynn Prentice
141. Re: Social Credit                                           James Hess
143. Re: Social Credit                                    Undergrad Student
146. Re: Social Credit                                         Joe Thornton
147. Re: Social Credit                                           Peter Sulc
148. Re: Social Credit                                        Susan  Garvin
149. Re: Social Credit                                          Matt McLeod
150. Re: Social Credit -- watch the Newsgroups: line                 TJ Nye
151. Re: Social Credit                                           Peter Sulc
152. Re: Social Credit                                    Undergrad Student
153. Re: Social Credit                                        Susan  Garvin
157. Re: Social Credit (Original Post)                          John Turmel
159. Re: Social Credit (Original Post)                           David Moss

     The complainants feel that some of our newsgroups are not
relevant and should be removed.

:From: tjnye@calum.csclub.uwaterloo.ca (TJ Nye)
:Subject: Re: Social Credit -- watch the Newsgroups: line
:The Newsgroups: line of this thread seems to be returning to its
:Turmel-esque proportions (i.e., 17 groups):
:     Newsgroups:
:     tor.general,ont.general,can.general,can.taxes,can.politics,
:     alt.conspiracy,sci.econ,nz.politics,sci.engr,aus.general,
:     ncf.sigs.business.freedata,sci.systems,sci.philosophy.tech,
:     sci.math,sci.engr.safety,sci.engr.control,alt.politics.economics
:I wonder if posters could keep an eye on the Newsgroups: line when they
:follow-up articles, and trim accordingly.  For instance, the current
:thread isn't topical to any of the sci.* groups except sci.econ.

     On Sep 10 1995, I received a message which said:

:This has nothing to do with sci.engr.control or sci.math. Please delete
:those newsgroups from your responses.  SoCred is of great interest to
:some Canadians, so why not specify "ca" rather than world... please.
     I answered him:

:Social Credit was an Engineering Analysis of the Monetary Control
:System presented to the World Engineering Conference in 1919.
:After all the pillorying Major Douglas received at the hands of
:orthodox economists, I think he deserves a chance to have his
:work judged by his peers in Engineering. Would you deny this
:joked-about engineer his chance at scientific approbation?
:That's why I include these discussions of Social Credit
:engineering in the menu offered engineers.
     Having received no response, I hope that he has rethought his
original impression that Social Credit Monetary Engineering design
should not be considered by people who frequent sci. newsgroups.
     After all the discussion of Control Systems Analysis, Laplace
Transformations, differential equations, exponential functions, and
algebra, I find it hard to treat objections to the analysis being
included in sci newsgroups worthy of serious consideration.
     Of course, the boo-birds are causing problems with complaints to
the news administrator of my freenet whose recent unilateral and
surreptitious cancellations of my posts has forced me to reduce the
number of newsgroups to 10.
     Here's a typical complaint about our discussions from a person
who has never commented or participated in our discussions:

:Date: Sun Sep 10 00:03:24 1995
:From: anakin@pinc.com (Rajiv K. Gandhi)
:Subject: Re: Social Credit (Original Post)
:To: johnturmel@yahoo.com (John Turmel), postmaster@freenet.carleton.ca
:(A copy of this message has also been posted to the following newsgroups:
:To John Turmel: You posted this article to TWENTY THREE newsgroups. This
:is yet another gross violation of USENET ETTIQUETTE. I have forwarded a
:copy of this posting to your postmaster.
:TO THE POSTMASTER: I wish to register this as a formal complaint. John
:Turmel has consistently posted material to an excesive number of
:newsgroups, often to non-relevant newgroups. He has been informed about
:the concept of netiquette by  many, and has been given numerous
:suggestions as to how to preven such flagrant abuses in the future. He has
:responded to each with nothing but indignation and a dogmatic refusal to
:cooperate. The Usenet survives only by cooperation.
:Again, for the record, the article which follows was posted to the
:following newsgroups:
:This cannot be tolerated.
:I do not wish Mr. Turmel to be prevented from posting entirely to the
:newsgroups. I do recognize that what he says may have some validity and
:appeal to a group of people. However, by the same token, Mr. Turmel must
:be properly and formally educated as to the rules of conduct on the
:I would like some form of action to be taken against Mr. Turmel in order
:to prevent him from repeatedly spamming the Usenet. I would suggest that
:Mr. Turmel's account at NCF be temporarily suspended, until such time as
:he can demonstrate that he is willing to follow the rules of conduct.
:Perhaps, if it is permissible per the NCF Charter, MR. Turmel could be
:required to enroll in and complete an introductory course about the
:internet which will teach him what is considered proper and what is not.
:I would like to make it clear that I do not wish either Mr. Turmel or the
:content of his postings to be censored. I want him to understand and to
:learn that his material should be disseminated only in a responsible
:The Usenet is a collective effort between people to exchange ideas,
:opinions, and information. It is a valuable source which cannot be, and
:should not be, abused.
     Notice that this complaint is from a guy who has never made an
effort to exchange ideas, opinions, and information with us. I hope
you notice that there was no complaint about others who had been
cross-posting to the same 23 newsgroups while I was off-line. Only
when I joined the topic and posted my first response to the same
newsgroups did we start getting feedback from people who don't even
participate in our topic.

     Unfortunately, these members of the "bandwidth patrol" cause so
much trouble with nothing better to do than to criticize the
communications of others that I have no choice but to ask you to help
decided which newsgroups we're going to have leave.
     I've tried to explain that posting to extra newsgroups doesn't
involved posting the whole article but an entry to an index page with
a pointer to the article but it just hadn't sunk in how little
bandwidth cross-posting really uses.
     Yet, the danger in continuing posting to all the newsgroups you
started with is that the news administrator of my freenet recently
cancelled all my posts to all topics without notice and cancelled
everyone else's responses too.
     In order to avoid his cancelling our articles again, we're going
to have to reduce the range of our discussions. I'm still going to
post this to the 23 newsgroups to elicit feedback but I'd ask you to
be quick with your responses in case my news administrator decides to
cancel all our posts again. If you participate in the discussion from
can.politics or aus.general, please speak up and we'll keep those
conferences. It would be funny to receive responses from more than 10
newsgroups though.
     I'd especially challenge the boo-birds to suggest which
newsgroups are not relevant and which are. And perhaps they could tell
us why.

     Now on to responses to many of your submissions:

***  On Aug 18 1995, levant@isgtec.com (Levant Tinaz) wrote:

:Are there any social credit (charging 0% interest) banks in Canada
:that could give me an interest free mortgage?
     The only interest-free banks I know of in Canada are LETSystems
which issue Greendollar social credits.

:If I have to earn more to pay for my home
:due to a mortgage with interest, don't I have to work harder and earn
:more and thus contribute more to the economy?
     Not to the economy that spends it. You contribute more to the
"already-have-too-much" class who can't spend it.

:On another note, doesn't the profit made by lenders from charging
:interest eventually get spent on goods and services and thus
:contribute to the economy?
     Most of the profits to those who already have more than they need
are not spent but re-loansharked. I like Francois Mottier's Aug 22 1995

:Owning the money is what gives them pleasure. Spending money just does
:not enter their mind. So, rejoice in the knowledge that you are
:privileged to contribute to the joy of a collector!
:By the way, the lenders are the only ones that are not working,
:everybody else has to work hard to feed the joy of the lenders.
     It's the difference between earning your income and not earning
your income. Unearned income is the theft.

***  On Aug 24 1995, rogerw@cisco.com (Roger M. Wilcox) wrote:

:   When you need to borrow money from a bank, and that bank doesn't
:have enough money lying around to lend you, the bank can turn around
:and, for a lower rate, borrow the money it's going to lend to you from
:an organization called the "Federal Reserve".
:   Although the money "lent" to the bank by the Federal Reserve
:eventually has to be paid back with some interest, the Federal Reserve
:doesn't actually have a "stockpile" of existing previously-circulated
:money lying around that they use for lending to the banks.
:   What they do is, they print it.
:   Every time a bank borrows money to loan out, the Federal Reserve
:puts more money into circulation.  When that happens, there are more
:total U.S. dollars in circulation, so every existing dollar is worth
:slightly less. This is what causes inflation.

     This assumes that the only source of new money in the economy is
the FED and when the FED issues new money, it dilutes the old.
     It is not necessarily correct to say that "because there are more
total U.S. dollars in circulation, so every existing dollar is worth
slightly less." Economics fails to note the relationship between the
increased collateral pledged and the increased liquidity issued. Just
because there are new chips issued into circulation in a Poker game
does not mean that the value of the other chips necessarily goes down.
It would only go down if there were no new collateral pledged at the
casino cage.

***  On Aug 24 1995, wfhummel@netcom.com (William F. Hummel) noted:

:Borrowed money is the life blood of the economy.
     Money is the life blood of th e economy whether the tokens are
"borrowed" into circulation or the chips are "bought into"
circulation. The problem is that the life blood put into circulation
is infected with financial leukemia, the cancerous growth of debt by

***  On Aug 25 1995, forbis@cac.washington.edu (Gary Forbis) noted:

:If I borrow x dollars and am required to pay back x+y dollars how can
:this not be inflationary?  Where am I to get these extra dollars.  If
:all the dollars were repaid to the banks there would still be a debt
:owed to the banks, that is unless the feds have been spending dollars
:without accounting for them as a debt.

     In my usual analysis, I use Principal (P) instead of "x" and
Interest (I) instead of "y" for the debt owed (P+I) from the loan
of (P). I'll soon republish the Mathematics of Usury for you going
into further detail.

     But notice the answer Gary received to his question about where
the Interest is going to come from.

***  John Monroe aw486@FreeNet.Carleton.CA wrote:

:The y dollars you pay the bank is for...

     Without dealing with the fact that you're asking where you are to
get the y dollars from, he spends most of his post telling you what
the bank spends it on.

:In this way the interest
:you pay the bank finds its way back into the economy, just as the
:rent you pay on a car or the money you pay your house painter.
     Though some or even much of the interest does find its way back
into the economy, I think we've previously explained how many of the
people who receive interest are not able to spend it back into the
economy since they already have too much to spend in their and their
family's life-times.

***  wfhummel@netcom.com (William F. Hummel) suggested:

:: If I borrow x dollars and am required to pay back x+y dollars how
::can this not be inflationary?  Where am I to get these extra dollars.
:Your first question appears to assume that the money supply has
:increased as a result of the interest charge (y) on the loan (x).
:It also assumes that an increase in the money supply automatically
:results in inflation.
     No. I read his question as assuming that the prices he had to
charge for his product have increased as a result of the interest
charge (y) on his loan(x). I did not hear any mention of the money
supply in generating inflation but noted that the increase in the debt
he had to pay results in a price rise which had only to do with the
interest (y) and nothing not the mass of money (x).

:I'll address both points separately.
:Say you need a short term loan of $1000 and a friend offers to lend it
:to you to save the bank interest charge.  You accept his offer, but
:when it comes time to pay him back you include a gift of $50.  Where
:did that extra $50 come from?  Obviously it came from the same source
:that the $1000 came from, namely your paycheck.
     You and Gary are on an island and he lends you his $1000. You
accept, pay him back and include a gift of $50. Where did the $50 come
from? We had to assume another source of money on the island from
where he could obtain the lacking $50. If you're going to have another
player on the island, you should specify not only much your boss has
but also how much more interest he owes too.

::If all the dollars were repaid to the banks there would still be a
::debt owed to the banks, that is unless the feds have been spending
::dollars without accounting for them as a debt.

:Was the money supply
:increased by that gift?  No, it was just a transfer of money from you
:to your friend rather than to the bank.
     No. the money supply was not increased by the gift. But it was
increased by the assumption of another source we had not originally
taken into account or defined. Nevertheless, Gary's point is still
valid. Assuming everybody pays back their principal with the principal
they initially borrowed, it's obvious that everybody still owes their

:The question of what causes inflation is not nearly as simple.  But it
:is definitely not proportional to the size of the money supply.
     And again, Gary was pointing out that it seemed that the
inflation was proportional to the interest. My calculations predict
that the expected minimum inflation generated by a demand for "y"
interest is "y/(x+y)" representing the ratio who fail so others can
survive and who lose their collateral.

:idea that inflation is caused by too many dollars chasing too few
:goods is simplistic.  The price of a single commodity, like coffee,
:will certainly rise when the SUPPLY is reduced.  But will it rise
:because there are more dollars in circulation?  Only if there is a
:very substantial and well-recognized increase in the money supply.
     Again, this always looks at monetary increases independent of
collateral base. Using a casino as a model, any substantial increase
in the token supply is always matched with the same increase in
collateral base. That Economics studies the liquidity mass independent
of any relationship to collateral pledged is overlooking the most
important relationship of sound money.

:Inflation, as it is usually defined, means an increase in the average
:price of a basket of goods and services over time.
     And if you double Gary's interest rate for his industrial  loan,
that increased manufacturers' cost will be recovered in higher prices.

:Its causes are far
:more complex than too much money chasing too few goods. According to
:the Keynesian vew, the primary cause of inflation is wages rising
:faster than productivity.
     Not a word is mentioned about the price of money which affects
every facet of economic activity.

:The fluctuation is related to the business cycle.  When business is
:very active, it borrows heavily and increases the money supply.
     So businesses, like Gary, borrow the Principal and have to repay
both the Principal "x" and the Interest "y". Since loans are the only
way for new money to get into circulation, this means that for every
dollar borrowed and used in production, "x+y" has to be charged in
prices for that business to survive.
     Aggregate industrial borrowings are X and aggregate industrial
prices are X+Y. Since there is insufficient aggregate money in
circulation to purchase the aggregate prices, some businesses must
fail so that others sell and survive. The fraction who fail and are
foreclosed on is "y/(x+y)." Again, see the Mathematics of Usury.

:Conversely, in retractions the money supply decreases.  But inflation
:does not go up and down in synchronism with the size of the money
     Once again, that's because the inflation is not a function of the
money supply but a function of the interest demanded on that money

:Your last point about the Fed being involved in adding the "missing"
:money to pay the interest on the bank loan is, I think, answered above.
     Actually, it isn't. Gary wondered if the missing money "y" was
issued by the FED to balance the missing money "y" he needs to pay his
debt of "x+y". It's a logical question.
     And it happens to be the original Social Credit solution. Socreds
have always proposed that Government simply spend whatever money is
necessary to balance the debt that Gary's trying to pay off with the
sale of his product. And having Government expand services with new
money to balance the interest demanded would work. Only it wouldn't
work with the greatest ease.
     The easiest way to balance the money and the debt is to stop the
growth of debt with interest by paying bankers with a service charge
(and if someone says they see no difference, I do). The perfect
monetary models are the Greendollar-Timedollar systems now spreading
around the world.
     If Gary considers his predicament, his only way out is to out-
sell his neighbor and get some of his "x" principal. That's why the
name of the game of who pays off their "x+y" where everybody only got
"x" is called mort-gage from the French words for 'mort" meaning death
and "gage" meaning gamble. If ever there was a device that was
properly named, it was the enslavement contract bearing usury called

***  forbis@cac.washington.edu (Gary Forbis) pointed out:

:In what other industry is the exchange made in the media's denomination?
:I don't exchange my labor for so many houses painted or cars. I exchange
:my labor for dollars.
     Good point. There would be no problem if banks did accept the
interest in products or if there were a collateral based chip system
which would facilitate payment to the banks. They end up spending
their interest on products anyway, don't they? So why force everyone
to go through a middle-man?

:I engage in economic activity at the whim of those who control access
:to the media in which my labor is valued.
     Which has been the fate of those enslaved by usury throughout the
ages of civilization.

***  Scott Walker <73134.3463@compuserve.com> wrote:

:Do you think they really "print" this money? I doubt it. More likely
:in todays age they simply "create" a fund transfer to the bank. All
:money is fictional and merely a marker after all. When the money is
:paid back is can be removed from circulation, or "deleted".

     When you were little, did you ever dream of printing cash?
Of filling up your wallet with some money in a flash?
     Creating money accurately means TO HAVE THE PLATES,
The stamping of some paper into notes best demonstrates;
     Or stamping metal into coins; or blips computerized,
Into your bank account deposits, checks now authorized.
     So whether paper, metal, volts of electricity,
TO HAVE THE PLATES is printing money, absolutely free.

***  ericm3@ix.netcom.com (Eric Muetterties) wrote:

:    When I bought my first home with a mortgage (Var. 10 % I think it
:was) I received a loan for $ 72,000 after 30 years I would pay back $
:250,000 total. Now if I were to make 40,000 a year I would net after
:all taxes about $20,000 - 25,000 which would take up 10 to 12 years of
:my full complete income to pay off what would take 3 - 4 years if I
:could save that amount up first. In other words I am BOUND or ENSLAVED
:by my signing that paper for 7 -8 years of work. Of course it costs me
:to live during this time.
:    Consider that for a moment... 7-8 years of my productivity goes to
:some bank in the form of usury. Hmm! I willingly am a slave...
     Considering you pay $250,000 in 30 years, 8,333.33 a year, if the
loan had been in interest-free Greendollars, you'd have paid the
$75,000 off in 9 years, $72,000 for the house and $3,000 for the
bankers' service charges. So you don't lose 7-8 years to usury, you
are enslaved to your usury chains for 21 years.

:    7 -8 years of saving that 20,000 - 25,000 = about 140,000 to
:200,000 for the original sum of 72,000 would do a lot for me if I were
:to keep it. I could own 2-3 houses!!
     That's right which means that those few who manage to survive and
keep what they've won have 2/3 to 3/4 of their estates wasted on debt

***  In another article, (Eric Muetterties) adds:

:break the debt cycle that enslaves us and our estates would be twice
:or thrice what they are...
     And we have to realize that it is not the debt that's the problem
because debt is necessary for those who are starting out, it's the
positive feedback growth of debt due to usury which creates the

***  voyager@eskimo.com (Nick Rossi) wrote:

:Debt allows individuals to own things they couldn't otherwise own and
:allows many companies to get off the ground.  It's not harmful unless you
:don't pay it back...
     Just because it seems good for the winners doesn't mean it isn't
really bad for the losers, the Y/(X+Y) ratio who fail to sell to an
economy with insufficient money. Actually, credit is really only
dangerous when it comes infected with the cancer of usury.

:>In other words I am BOUND or ENSLAVED
:>by my signing that paper for 7 -8 years of work. Of course it costs me
:>to live during this time.
:Why not rent an apartment then?  Choose not to be bound or enslaved if
:you don't want to be - if that's how you look at it.
     But you are still paying the interest on the housing except that
the landlord is the one who takes the death-gamble. Whether your
landlord pays interest or you are your own landlord who pays interest,
the banks are still getting the interest on the housing so there's no
escaping interest slavery. It's just that some people don't bother to
try and others don't have the means to try to play death-gamble.

:You're forgetting that every dollar you put into the house gives you
:more equity in that asset.
     As he explained, of the $250,000 that went into the house, only
$72,000 of it was for the house payment and the other $178,000 was for
the debt slavery payment.

:If you chose the house wisely, it will appreciate
:in value beyond the amount you borrowed.
     And even though any pygmy can explain that the older his hut
gets, the less it's worth, even he can see that if you value his hut
in so many sea-shells at the time of construction and somehow later
value the sea-shells at half their former rate, that it would seem to
him that his older house is going up in value. I hope he'd be astute
enough to realize that there must be something wrong with a sea-shell
system that keeps telling him the older his house is getting, the more
it's appreciating in value and if so, I'm sure he'd find it funny how
our civilization can use our devaluating sea-shells to make ourselves
believe that our huts are appreciating over time.

:If it appreciates faster percentage-wise than the interest rate on
:the loan, then you come out ahead. There's no guarantee of that, of
:course, but there are no guarantees in life...
     So if your money loses its value faster than your house really
depreciates, then you come out ahead. I don't know if I'd call that
coming out ahead.

::    Consider that for a moment... 7-8 years of my productivity goes to
::some bank in the form of usury. Hmm! I willingly am a slave...
:To be a slave means to be forced to work without compensation.  a) you
:weren't forced to buy the house, and b) the house is your reward for the
     To be a slave if to work under compulsion and end up without
compensation. Don't the majority of Earthlings work all their lives
under compulsion of financial need and end up with nothing? Aren't
chains of hunger and deprivation enough to force them to their labors?

:>    7 -8 years of saving that 20,000 - 25,000 = about 140,000 to
:>200,000 for the original sum of 72,000 would do a lot for me if I were
:>to keep it. I could own 2-3 houses!!
:But in the time it would take to save up that money, inflation will have
:eaten it away to the point where you could only own one house again, unless
:you have it invested - and a house is one way to invest it.
     If you look at it that way, it seems that there is no way out.
But if you compare your situation with an interest-free Greendollar
loan for your housing, what Gary says is correct. Interest will rob
him of 75% of his estate and only the price of the money is the cause.

:'tis better to own a house than to rent, in the long run...
     Not if you're going to be one of the losers included in the
Y/(X+Y) group. I doubt if the ulcers and financial devastation of
being ruined and losing everything is worth the death-gamble. I think
admitting it's a rigged game with a fixed number of losers out of all
who try makes it a pretty unattractive gamble. All you have to do is
get sick or lose your job and you lose everything. Until the money
system is fixed, I'll have no unrealistic hopes and I'll rent.

***  Joe Thornton <jthor@freenet.calgary.ab.ca> wrote:

:On Tue, 5 Sep 1995, Undergrad Student wrote:
:>   Economics is the science of allocating scarce resources.  Scarce
:> resources are allocated by the price that you pay.   Having a 0 % interest
:> rate means there is no cost to borrow money, which implies money is not
:> scarce.  As you can see Social Credit economics will not work.
:Hate to differ but the above is not the best example of Social Credit
:Economics although its an interesting thought akin to Islamic Banking
:which does work in those countries.
:The whole scope of Social Credit Economics is instead at the Government
:level where government initiatives should be totally financed by the
:issuance of currencies designated for that purpose.  As it stands now, a
:government issues a Bond which is sold to Institutional Investors or
:banks both domestic and foreign.  This means that indeed the same amount
:of money is available to spend by the government as if it had actually
:issued "real dollars", only problem is that the country now has to pay
:interest on the bonds sold off to the investors.  If the same amount of
:funds were released to pay for the project in hard currency the citizens
:would soon reach a need for nearly zero taxation......
     Well answered.
     I would further point out that the problem with Islamic banks is
that most of them are not banks of issue but are more piggy banks.
Though they are interest-free, they are dependent upon interest-
bearing money from the interest-bearing banks of issue.
     I would further point out that scarcity of liquidity is not
necessary for it to be valuable. If one day I enter a casino and see
few chips on the tables and on the next day see many chips on the
tables, I don't think that because they're not scarce they're not
valuable. Again, if one's understanding of money is divorced from the
collateral backing it up, then it might seem that it's the scarcity of
the money that makes valuable rather than what you can get for it.
     Trying keep money scarce to give it value is purely dependent on
the notion that money is not linked to collateral and that inputs of
new money result in inflation. This is not necessarily true.
     Finally, to conclude that because money would not be scarce in a
Social Credit financial management system means that it wouldn't work
is certainly not true. Given a chance, it would work though with much
more supervision than necessary than either Green or Time dollar

***  setInPrefs@cs.auckland.ac.nz (Undergrad Student)
:In article <42nplk$pn0@nyx10.cs.du.edu>, psulc@nyx10.cs.du.edu (Peter
:Sulc) wrote:
:> If economics is the "the science of allocating scarce resources", what,
:> pray tell, is the science of allocating abundant resources?
:The _entity_ that allocates scarce resources is the free market (sorry I
:did not make it clear).   And the freer it is, the fairer it is as
:everyone has a chance to participate.
:Vin Reft
***  100026,2150@compuserve.com (Eric Stevens) wrote:

:setInPrefs@cs.auckland.ac.nz (Undergrad Student) wrote:
:>The _entity_ that allocates scarce resources is the free market (sorry I
:>did not make it clear).   And the freer it is, the fairer it is as
:>everyone has a chance to participate.
:Clever! Neat!!
:  ... but you still have not answered the question.
:" what, pray tell, is the science of allocating abundant resources? "

     I agree that the question still remains valid. There is no
science of allocating abundant resources. The gas gauge was designed
to register only scarcity and can't handle abundance. So it destroys
the abundance which it fails to register. With no money to purchase
all the abundance, it must be destroyed so that only enough products
are left to draw whatever money is available. Sick, actually.

***  adm@ccadfa.cc.adfa.oz.au (David Moss) wrote:

:It will take me quite a while to digest the content of this detailed
:posting but in the meantime a comment on the feasability of interest
:free credit.
:I understand that lending money for interest is illegal under Islamic
:Law. In certain Muslim countries banks are regularly set up to provide
:interest free loans between Muslims. I understand that these banks
:regularly fail losing the principal "invested" by the depositors.
:It would appear that social credit has already been tried and failed
:in practice in these countries.
     Again, before you take the Islamic banking system as the model
for interest-free credit, I'd point out that Major Douglas was trying
to correct a problem in the banks of issue.
     I'd further urge consideration of the LETS Greendollar or
Timedollar systems or casino banks as ideal interest-free models.

***  sef@rebecca.dr.att.com (NDF130000-FarleighSE(DR9818)226) Scott E.
Farleigh wrote:

:Just remember, Jesus used a whip to chase the money lenders out of the

***  mburke@pcug.org.au (Michael Burke) added:

:And look what happened to him.

***  zagz@ix.netcom.com (Ken Zagzebski) noted:

:Yeah, but that was just a momentary set back.

***  matt@toaster.hna.com.au (Matt McLeod) added:

:Was it?  So who is winning now?
:(I'll give you a hint - it ain't Jesus)
     His system may not be winning now but it's coming on strong. As
I'm fond of pointing out, the LETS software is also chasing the money
lenders out of the temple by giving people an opportunity to join an
interest-free outlet.

     In my next post, I'll go over my previous question on Economic
Double-think with respect to the real source of bank loans.
John C. Turmel, B. Eng.

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