Jan. 26, 1980

                           WACHITSUH HUSSLE

By John C. Turmel, B. Eng.

     Bankers and economists tell us that they've been fighting with
inflation, wrestling with it. The truth's out. They've been dancing
with it. To the Wachitsuh Hussle. They tell us that they use interest
to fight inflation. That is not true. Interest causes inflation.
     The Canadian Cattlemen's Association complained to the Commons
Finance Committee that "the current interest interest rates are
themselves inflationary, adding to the cost of Canadian produced goods
and the risk of doing business." These interest costs are passed right
along to the consumer in the direct component of inflation and since
more producers are put out of work due to the increased risk, there
are fewer goods produced and the prices are again bid up in price.
They note "that the answer to inflation lies in increased productivity
and the current monetary policy works in direct opposition to this
central objective. "The root problem is our productive capacity. Lower
interest rates would allow expansion of plant capacity and
productivity. The policy enunciated by the Bank of Canada is flawed on
every front. It is preoccupied with using a few puny levers in bank
policy and not looking at the whole engine. It's like fiddling with
the instrument panel of one's car and not recognizing that the
carburetor is fouled, the battery is weak and the gas gauge is
registering empty. It is time to worry about the whole machine." It's
time to call in the engineers. Economics is a question of production
and delivery. Engineers are best qualified since they study the
workings of the engine. Economists study the workings of the dial, the
monetary reflection of our power. They say bolster the dollar and
strangle the engine. Engineers say bolster the engine, bolster the
dollar. The name of the engineer's game is to maximize production of
the engine. The name of the economists' game is to maximize profit on
the dial. Worse, their reading on the dial is not even accurate.
Their dial misrepresents the real wealth of the national and hence
misrepresents our real power. They constantly tell us that there is no
money to do things that are desirable and physically possible.
     It's the same line they gave people during the depression. There
was no power to grow food, make clothes, houses, tolls and tractors.
Then happened the war and they found the power to grow new food for
their boys, make them new clothes, house them in new barracks, arm
them with new weapons and mount them on new tanks to take part inn the
European butchery. They had an industrial boom delivering bombs for
free to the Germans when the year before, they couldn't deliver food
for free to themselves! Where did the power come from to finance the
war that wouldn't finance production?
     The answer is to be found in the faulty engineering design of the
banking system. Bankers know that when they make a loan to an
industrialist in order that he might get the financial power allowing
him access to the real power to build a factory, he would only use it
a bit at a time as the plant gets built. Most of that money would find
its way back to the bank as the people who receive the money in wages
and sales put it in the bank. The bank then relends the same money to
him over and over again. The number of times it can be relent is
called the banker's reserve ration. It is their fudge factor. They
make it up. It has nothing to do with the real state of affairs and is
not in harmony with nature. Yet, the economy of the nineteen twenties
experienced a boom because credit is as good a monetary medium as
money in order to facilitate production. People were rich in real
wealth energy. Factories and goods.
     All real wealth is energy. It is the sum total of the energy
expended in its fabrication. It is the cost in energy units of man,
material and tool while interest is not an energy cost.
     This period of outstanding material prosperity experienced by the
U.S.A. was terminated by the action of the Federal Reserve Banking system
by foreclosing on most overdrafts. President Hoover drew attention to
the disastrous consequences and requested reconsideration. He was
ignored. The demand of the banks for repayment in cash of loans that
existed only as entries in their ledgers caused the financial credit
system to collapse. Yet, the real credit of the people hadn't changed.
This proves that financial credit is a misrepresentation of the real
credit. Those factories, raw materials and skilled people were still
there but the money that represented them had disappeared. The people
were so used to trusting their banker's money dial that when the dial
read empty, they turned off their machines rather than check the
engines.
     John Von Neumann, one of this century's top mathematicians, in his
book `The Theory of Games and Economic Behavior' ' states that
"important questions in economics arise in a more elementary fashion
in the theory of games." I will not examine the banking
misrepresentations in the context of games.
     Any casino is an example of inflation-free banking at work. The
casino banker knows that the fundamental rule for avoiding the
inflation of his chips is to make sure that all wealth coming into the
game gets its own chips to represent it. There is no limit to the
number of chips issued so long as wealth is stored to back them up.
Present day bankers  violate this simple law of good accounting. They
insist that savings, money already backed up by a previous set of
goods, be used to represent a new set of goods. The investment of
savings means the reappearance of the same money in a fresh set of
prices for a fresh set of goods. There is always more wealth on the
table than there is money to represent it since the same money
represents old and new goods at the same time. All the goods cannot
get bought which explains the anomaly of a half idle production
system with a half-starving population. If we wish to to now trade
our wealth with other nations, we have an insufficient amount of money
to accurately represent the wealth actually in our possession. This
use of savings to finance new goods means that someone must deprive
himself of his  current purchasing power and hence creates his demand
for interest. The industrialist who finances his plant with someone's
savings must pay it back quicker than it depreciates and when it is
paid off, again, there is real wealth in the game but no money to
represent it. Again, the barter of that wealth is hampered because it
is unrepresented by money. Keeping money in short supply deludes
people into believing that wealth is in short supply.
     The flaw is in the dial and not in the engine. The arithmetic
mistake in the unsafe engineering design of money was first presented
at the 1929 World Engineering Congress in Tokyo in a paper by Clifford
Hugh Douglas, B. Eng., the founder of the Social Credit Party. It
was entitled `The Application of Engineering Methods to Finance.' In
his book, `The Monopoly of Credit,' he points out that most financing
is done not by savings but by credit. Money born of a banker's pen.
There is an artificial limit placed on this financial power. Our power
is a function of what we have done times the banker's fudge factor,
and not a function of what we can do.
     In Arnold Tustin's book, `The Mechanism of Economic Systems,' he
points out that "time series methods used by economists may introduce
unstable high frequency modes that are essentially spurious,
counterfeit, false." Methods used by engineers based on continuous
functions such as Laplace transformations are free from this defect.
The time series approach tends to obscure the significance of the
general analytical form of the solution.
     All the misrepresentations and obscurities point to interest as
the culprit.
     Interest is a non-linear function. When a man owes another some
money, if they get into an accident and both go into comas, only when
there is no interest in their relation will the debt remain linear.
(Fig. A) The moment interest enters into the equation, the debt will
double in time T, then double again in time T, and again and again.
(Fig. B) That is how an exponential function works. The line is
crooked. A crooked line is complicated, a straight line is simple.
Maybe we should start the Engineering Party of Canada. You don't have
to be an engineer to join, but you will have to think straight. People
believing in social credit already think straight. Bankers hook up
this non-0linear function to their money dial and marvel at the
resultant misrepresentation of the real wealth in the game.
     When interest plays part of the agreement, and if you're the one
who owes, you'd better not get laid up or you'll find yourself between
a rock and a hard place. It is downright dangerous. That's one reason
why the Bible, Deuteronomy 23:20 says "to a foreigner you may lend
upon interest, but you shall not lend upon interest to your brother."
Then Christ came along and told us that we are all brothers. That
tells us that we should not lend upon interest to anybody.
     Another reason is that when the banker lends each of ten
brothers ten dollars to get in the game and demands that they pay back
more than was borrowed, he creates an economic competition to the
death since if I succeed, the other must fail because we are not both
able to repay back more money than  was put in the game. We must
constantly try to capture each other's markets since both of us can't
survive and unfortunately, economic war inevitably leads to real war.
     John Maynard Keynes likened it to a game of musical chairs where
al know that when the music ends, some will remain unseated and will
be knocked out of the game.
     In the interest arena, it is kill or be killed. Who can blame
people for turning into liars, cheats and thieves given such a jungle
rule. Because of the interest rule, it is unsafe to lend your brother
some of your credit since you might need it yourself. Since you run a
real risk, you demand your interest for the use of that spare credit.
     Note that if the banker did not ask for interest, there would
always be enough dollars in the game to allow everyone to survive at
all times. When there is no interest, it is safe to lend your spare so
that your brother may play.
     To play is to work. The game is work. To score in the game is to
produce wealth. To win is to produce more wealth than you consume in
the process. Where there is not enough money to go around, the
weakest, the young and the old get knocked out the fastest. I'm tired
of hearing of old people eating dog food and seeing babies die of
starvation on TV just because of a faulty system of distribution that
can easily be fixed.
     Because of the flaw in the distribution system, the Government
promotes less production and even destroys crop energy. When we claim
that this is silly, the economists answer "destroying corps is a very
vexing moral problem when millions are starving but if the stored
crops are given away or sold at a fraction  of their cost to other
countries, the government's plan will now show a deficit." I supposed
avoiding a deficit let them sleep a little better after they destroyed
those crops while fifty million babies died of starvation last year.
     The solution to the starving babies and underfed old people is
to simply recuperate the real energy costs of the food by selling to
the starving babies and letting them owe us that food interest-free.
Ask only for the food energy that we lend and the babies have a
chance. Insist on interest and the babies' debt doubles and doubles
till we know that they won't even be able to pay back the interest and
so to lend them enough to survive would not be as profitable as
putting it in the bank where it'll (earn?) interest, and so the
government's plan would show a deficit. In the name of economic
priorities, we let them croak. Croaking babies is the inevitable
result of a system flawed by the use of the interest device.
     To lend that food to the baby with no interest attached is to
perform barter of energy between generations. Keep the baby alive now
and he will keep you alive when he's older and you are retired. The
strong take care of the weak as opposed to the strong killing off the
weak. Pretty easy choice. Those babies now become a market for all the
food that our farmers can produce and since in an interest-free system
where what you is what you get credited for, there is the incentive to
work. And it is a pure incentive to work. Under the interest system,
there is a hysterical need to work in order to survive. And all can't
survive. Interest is the main cause of unemployment. This is how it
affects the working population. Let the average return for an
enterprise be $14,000 and let threshold survival be $12,000. When the
Bank of Canada raised interest rate it meant that those who were just
breaking even are now losing and get knocked out of the game for a
purely financial reason.
     Understanding the devastating effects of interest in an economic
system sheds a different light on the old slothful servant story in
the Bible Matthew 25:19. That's the servant who, being the weakest of
the servants is given only one credit and proceeds to bury it rather
than take part in the game of trade even knowing that his master is
one "who reaps where he does not sow" and expects at least the
interest. He returns too his master "what is yours" and is branded
slothful and is cast out with the rule defined as: "to everyone who
has will more be given; but from him who has not, even what he has
will be taken away." That servant's action was was a gesture of
defiance against the rules of a game where all must work to survive
but all may never survive. There must always be losers in a game
with the interest rule.
     Interest perpetuates the notion that in order to exist, one must
work. This is inconsistent with our future since as the lever of
technology gets longer and longer, the burden of man will get lighter
and lighter. Television and computers will replace bank clerks, store
clerks, insurance clerks, librarians, assembly line workers and many
others. This terrifies most people because the only way they have
access to purchasing power is through work. Only those with work get
the money to buy the food to get the strength to work to get the money
to buy the food to get ... We know that there is abundance but it is
kept under key because only those who have the privilege to contribute
to its production can share.
     If we stick to the present system and step fifty years in the
future, only those three men who press the buttons will get any money
and the only way for the rest to get any is to tax them. The present
system of distribution is unacceptable. There is the better way.
     All shall have a share in the Corporation of Canada. They will
receive a dividend on the power of the machines. As the machines
replace more and more workers, that condition will be a release from
work if the extra energy wealth scored by the more efficient machines
is shared. It will not be economically punished as it now is. If the
machines score twenty million pairs of shoes, the dividend for
everyone will go up since there is now more energy to be shared. The
dividend will progressively displace the wage as the machines
progressively displace man.
     To continue to insist that the only way man will ever get the
title to goods is to work, will only get us deeper and deeper into the
bog of job creation schemes. If the creation of jobs is the only way
we now have to get money to the people, the solution is very simple.
Replace every bulldozer by twenty men with shovels, and if there are
still those who need work to get the money, take away their shovels
and give them spoons. It is readily obvious that the purpose of an
economic system is not to provide jobs but to maximize goods  and
services with the minimal effort.
     The Tory plan for the sharing of Petro Canada is the forerunner
of the Social Credit National Dividend. Those shares must be non-
transferable in order that the mechanism be ready so that each will
receive his due.
     There are those who will be content to live on their dividend
and there are those who will have the talent for the earning of new
wealth. All new wealth that they score will be credited to them and
made available to anyone who wishes to buy it. Houses will now be
bought and repaid only as fast as they depreciate. That creates a
whole new market for houses. All those who in  the past could afford
to pay for a forty thousand dollar house but couldn't afford to pay
for the use of the money to get it, can now buy since all they need
pay is one thousand a year over forth years. Pay as you use. It
maximizes the market for houses. The market for everything that is
physically desirable is now maximized since if it can be done, it is.
We will have the perfect barter of energy wealth between people and
over generations. If workers were paid in what they produced, there
would be no strikes, depressions, shorter work week, unemployment,
poverty. They would trade some of what they produce for better and
better machines to produce more and more to trade and so have work for
themselves. There would be no trouble getting that tractor if we
didn't use money as an exchange medium. Good old barter.
     They would give some produce in return for fire and police
protection but they would make sure that none of it is wasted.
     They would give some to the less fortunate but would first insist
that these people try to help themselves. Workmen would then have the
balance to trade for whatever comforts and luxuries they want. Then
everyone could work because everyone would want more to trade for more
things wanted with better products. Who would strike?
     Any slowdown, tax, interest device, old machine which prevents
you from having more of your best to trade is destroying your standard
of living.
     Because you spend your pay on what society produces, you can't be
paid in any other way than with production or title to it. It is
trucks and TVs for oil and bananas. The solution to the trade deficit
is to create more wealth, not less as advocated by the banks.  They
tell us to our face that they're trying to slow down the economy too
match what their money dial says we can do.
     Just as the demand for a railway ticket furnishes railway
management with a perfect indication of the capacity required, so does
money furnish industry with demand for the capacity of goods required.
It makes no more sense to argue that because there are only one
hundred tickets printed, only one hundred may travel while the other
seats remain unused, than to say that because there is insufficient
money, many desirable things can't be done. The proper business of the
bank and ticket department is to facilitate the distribution of the
product in accordance with the public;s desire and to transmit that
desire to those operating the industry.
     There can be no interest in the efficiently structured economy of
the future since that would be taking the credit from the man who
scored it and giving it to a man who didn't. That's stealing.
     I suppose interest got started when a father left his estate and
gave each son a bag of seeks saying "Go forth and prosper." The first
son found good land and reaped enough to feed his two children, save
next year's seed and have a reserve. The others all go broke. The
first gets hit by a storm, the next by a tornado,  the other has eight
kids who eat all his grain. At planting time, they ask "may we use
your credit, your reserve?"

     In his right ear, the rich brother hears whispered "Give the use
of your credited seeds. It's the best bet that you all survive." In
his wrong ear, he hears whispered "Why dive the use of your credit?
It's yours. You earned it. Rent your credit and you will increase your
store with no extra work and who knows, some day you may have so much
coming in on the rental of your credit, you won't have to plant any
yourself. You can be unemployed and live off the interest. You won't
have to pull your weight. You'll get some of his credit. After all, if
the weak want to survive, they'll agree. It's their choice. It's their
hell."
     When the rich brother decided to demand interest from his
brothers, he created the economic game to the death described earlier
and acquired so much so soon that all soon lost sight of the optimal
strategy: `Love Thy Brother.'
     If we are to pursue optimal strategy, the exponential function
that perpetuates poverty amidst plenty must be dismantled. Then
inflation will disappear as the misrepresentation disappears and
unemployment disappears as the maximum number of workers get to pull
their weight. There is no satisfactory reason for preventing even the
weakest from contributing what they can. There will be no such thing
as scoring too little wealth to continue to try. Let every little
power source be working and we will score the brightest light.
     We need simply to revert to the physical realities so that all
men may exercise their power to produce their energy and the total
power of the nation is maximized. Our power should be bounded only by
physical constraints and not by some banker's fudge factor of what
we've saved.
     One need only study the function of a stationary engineer to see
how a properly run industry should work. When the machines produce a
lot and the steam pressure goes down on his meter, he adds coal to the
furnace. If the machines produced less, he would put in less coal. The
amount of steam delivered is decided by the industrial demand.
     The banker delivers the financial credit that enables industry to
obtain the real credit, the materials, tools and people needed for
work. The banker, like the engineer, should deliver that credit energy
too maintain industrial activity and leave up to the competent
authorities the care of guiding the consumers in their choice. If
either the banker or the engineer doesn't deliver credit or steam
energy according to demand, if either raised or lowered the delivery
according to their wish, they could regulate industrial activity. If,
as in the boom of the twenties, they delivered lots of credit power,
the machines would work. If, as in the depression, they restricted
delivery, the machines would slow down, even stop. They would make of
steam or credit a power that dominates and not that serves.
     The engineer has learned to make the steam serve, the banker has
learned to make the credit dominate. All it takes is the good sense of
the engineer to understand that the industrial demand should regulate
the delivery of power and not the delivery of power regulate the
industrial demand. The problem exists because keeping the less
fortunate short of funds assures bankers their jobs and profits.
     The solution is at hand. Once computers start to accurately keep
track of the wealth in the system, the misrepresentations will be
impossible. Yet, we need not wait. Any monetary system that does not
use interest is necessarily linear and trivial to implement. They
could have easily avoided the depression by having every manufacturer
who owned collateral issue receipts for that wealth, verified by an
accepted official. As that asset depreciates, the receipts must be
retired out of circulation. Those receipts are just as good as money
while the asset is there to back them up. Better. They won't inflate.
A banana grower in Brazil would readily accept those receipts because
he knows that with enough of them, he can collect the wealth backing
them them up. Just like a properly banked casino game. So the
essential question is "Why represent our wealth with their receipts
for a fee when we can represent our wealth with our receipts for
free?" When that banana grower buys our wealth, he is paying for the
energy cost of the man, the energy cost of the materials and the
energy cost of the tool. No more will he have to pay for the
non-energy cost of interest.
     We now have the simplest definition of inflation. When the Bank
of Canada raised interest rates, they raised the non-energy cost of
our living and when we pay more for no wealth, that is inflation.
Paying more for real energy costs is a barter effect, not inflation.
     If a casino banker tried to tell his players that their chips had
inflated, odds are they would beat him up. I don't suggest that we go
and beat up the bankers for having distorted the real energy picture,
but the secret's now out. The power reading on their money dial is
distorted and must be corrected. It makes no sense to adjust the value
of our wealth to the number of their dollars through inflation or
deflation when we can adjust the number of dollars to the value of our
wealth with neither effect.
     As a Canadian money systems engineer and professional gambler
with ten years inflation-free banking experience, I protest the
banker's mismanagement of the industrial machine and the
misrepresentation of the real energy wealth in the game. What baffles
me is how the banker's strategy of slowing down the industrial machine
can go unchallenged by men of science and engineers who know the real
potential has yet to be harnessed.
     No system of  counting our money will stand in the way of the
liberation of our industrial power. After all, we're only wrestling
with the banker's bad arithmetic. A scientific monetary system will be
trivial to implement. Unrestrained by financial fetters, the resources
of modern production will be sufficient to provide plenty for all at
the expense of less and less labour.
     The problem at hand is the harnessing of all the power. All those
unemployed are proof that bankers and economists don't know how to
harness all the power. The economic ship is going down because their
money dial says "no power." They are wrong about the real power.
Engineers handle the real power rating of the engine; economists
handle the money power on the dial. I understand both, the engine and
the dial. Watch out, banks, there's an engineer working on your
faulty dial.
     While a minority opinion is not necessarily right, a right
opinion on a novel problem always begins with a minority of one!
     It's time to say Amen when the engineer asks for your support in
order to fix the engine that keeps you wealth. I need your `So be
it.' I need your Amen.
The Engineer

WATCH IT ALL YOU WANT, SIR. IT'S NOT A HUSTLE!

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