Follow Economist Ambedkar: Fwd: [bangla-vision] Social Crediter Peter Haines answers the difficult questions Fw: Questions for Peter Haines

---------- Forwarded message ----------
From: Dick Eastman <oldickeastman@q.com>
Date: Mon, Oct 25, 2010 at 6:24 PM
Subject: [bangla-vision] Social Crediter Peter Haines answers the difficult questions Fw: Questions for Peter Haines
To:

I am not a very good exponent of Douglas Social Credit. I have read Douglas by when I came across a difficult passage I did not stop to figure out what he means. (You can see the lack of diligence in the poor spelling and miswording that you see in every post of mine.) But never fear. I know where I am deficient and have a social crediter who has fully earned his right to that name to explain the points I fail to grasp. It's never too late to finally get it right.

From: Peter

To: Dick Eastman

Sent: Sunday, October 24, 2010 11:58 PM

Subject: Re: Questions for Peter Haines

Howdy Dick,

I will answer you questions as best I can. I will use colour below your comments-.

I did not know that Vic Bridger had written a book.

Here is the source of the excerpts quoting Douglas and Keynes.

An Exchange Between C.H. Douglas and John Maynard Keynes

Evidence Submitted to the MacMillan Committee of Finance and Industry. Reprinted from the Official Minutes of Evidence, 24th day, 1 May 1930

http://www.cooperativeindividualism.org/douglas-c-h_exchange-with-keynes-1930.html

Thank you for your example as a tireless persevering worker for  Douglas Social Credit.

----- Original Message -----

On Sat, Oct 23, 2010 at 4:12 AM, Dick Eastman <oldickeastman@q.com> wrote:

Dear Peter,

I have fastened onto the problem of 'how does the principal pay the principal and interest?'

Exactly what component of "B" is left out of that formulation that B is the bank loan interest payments.    (The formulation that interest payments are not making it back to the loop to pay for the products the prices of which include those interest payments as cost?)

This is a bit of a curley question because the B payments are all payments made to businesses, that is not to the consumer and that remains within the working economy in the main.

The payments made to banks are obviously included in these which includes interest. In terms of the Douglas A plus B theorem you are leaving out most of them and concentrating on what you want to prove is the big villan. As the theorem says all these are effectively not making it directly back into the circulation that effects/aids consumption as does the disposable incomes of the wages and salaries. Obviously banks make payments to consumers who are bank staff and pay dividends to comsuming investors in the banking Corporations. I wouldnt suggest for a minute that these cover the interest on debt, however this preoccupation with the interest on debt isnt considered by Douglas to be way to solve the problem.

I can only suggest that the interest burdon is a representation of the power of the banks and that the Douglas anlysis and remedy deals to this power of the banks which is a greater victory to be had than neutralising the interest burdon and leaving them with the same power to effect a whole new ball game to outflank you!

The fundamental dynamic that is endlessly and effortlessly building the banking systems power is the natural inflation in costs that cause the economy to chase the goal of equalibrium via bank loans. Douglas' remedy includes neutralising this dynamic so the banks dont remain indispensible to the extent they can screw everone to the point of economic and social collapse, if it suits them. Currently there is an indication it just may be suiting them right now to complete the achievement of world government.

And I have another question.   Why is the rebate to producers necessary? Isn't it enough that the households have the additional "B"-compensating social credit purchasing power and will spend it on the producers' products? I do not see the necessity for this added bureaucracy and temptation for corruption in making payments.

The 'dividend' is a natural born right to a dividend in the progress on mankind over time and is effective to counter the natural inflation in costs and prices, however why should the consumer pay for the industrial structures and infrustrature of society, unless they become formal shareholders in the 'real economy' assets also? The rebate stops the cost of the assets and the financial costs naturally as well inside their aquisition costs, which might interest you, from being passed onto the consumer. I observe Douglas was a man with both eyes open and not moved by prejudice or passion. This made him more dangerous!

I offer the following as the basis for my use of   B = Bank Interest

In the General Theory Keynes makes reference to an analysis offered by a non-economist Major C. H. Douglas. Earlier, during the MacMillian Committee hearings, 24th day, 1 May 1930 Keynes also directly asked Major Douglas the primary question of chronic insufficient purchasing power.

4471. [Mr. KEYNES] The cost of production to the manufacturer is A plus B. Of that A goes to the public and is spent by them on manufactured goods, but B goes elsewhere? --

[Major DOUGLAS] Yes.

4472. [Mr. KEYNES] Where does it go? --

[Major DOUGLAS] "Group B. All payments made to . . . bank charges. . . . The real weight to be attached to this undoubted statement of fact -- as it stands it is simply a statement of obvious fact -- is whether the transfers from one firm to another are financed by either trade credit or from the firm's own credit, let us say its working capital, or by a bank's credit. . . .   If the B payments are really financed from working capital then that working capital must, I think, inevitably have been obtained by the process of investment . . . "

I havent looked it up on the site you gave because Vic Bridger didnt include it in his book. The season being that the MacMillan Commission was focused on monetary policy only on the basis of the gold standard, and not any alternative proposal which clearly means they werent going to waste time examining alternatives to the gold standard system. That means they werent discussing or examining the Douglas theorem, and clearly Keynes didnt intend to. He was inviting the Douglas perceptive as found in the theorem to look a the issue of lack of purchasing power in the system. This small quote doesnt allow the issue to be shown in full - do justice to the subject of the Commission itself.

The last reply quoted above was discussing the means of credit available to businesses from and to one another. Douglas said it was transparent as to what the three main ones were  - profit on trade in the current trading/economic cycle, accumulated profits reserved through many trade/economic cycles as a fixed asset for investment and outside of these buinesses commonly use banks for new debt creating loans ( bank credit). This clearly isnt an anaylsis of the B payments in the Douglas theorem. They are discussing liquidity in relation to sufficiency of purchasing power in the current system not in another system that Douglas would propose.

Two thoughts -- which you can ignore if you just want to dispose of my questions and leave it at that.

1. Banks require interest because interest must be paid to make obtaining that IOU worthwhile for the lender over all other possible investment undertakings generating IOUs that he could have undertaken.  "B" is the incentive for prying bank money from its next most profitable use. Thsi bribe for credit is an extortion. It is the B payment that upsets Says Law and causes constant deflation.

This argument is based on the fiction that banks lend deposits ( insinuating they lend savings). Since banks create new money specific to every opportunity they wish to justify that very loan, to the very lender, means its just another corporate lie and not true what you have started the above statement with. The cost of lost opportunity is if they turn down a prospective borrower who then goes along to the next bank and gets the loan created against the borrowers assets and does well with it, increasing the profits of that second bank.

'B' payments are payments by industry to other businesses which go into costs which effect the price of finished goods but dont directly help dispose of them by consumption. They are clearly defined by Douglas but if anyone uses his language but changes the meaning there can be no consensus but confusion. The Douglas perception isnt based on orthodox reasoning or theory and thus the 'manufacturers manual only applies to its products not someone elses' is the commonsense not prevailing when you change his meanings.

One can chose or chose not to accept the Douglas anaysis but one cannot refute it, only distort it or misrepresent it.

2. It seems that Douglas in the quote above is ruling out the possibility of internal investment from realized profit. But of course where there is profit for one firm, there is loss for another. So on the whole investment from profit and deterioration of firms from loss cancel, and so we are left with bank credit being the villian responsible for going and not coming back (because in a deflationary condition -- which is normal for usury economies -- it will not be worthwhile to invest.)

I disaggree, Douglas did clearly speak of liquidity within the business world is from trade ( profit) not just bank credit. The A plus B theorem very clearly shows that the inflationary dynamic within the economies costing practice is what causes the reliance on a steady stream of bank credit to allow the system to function in reasonable continuity. It isnt possible by the natural flow of liquidity between businesses trading alone as economic theory insinuates. This is why he addressed the liquidity problem ( lack of purchasing power from within the ecomony itself) from a source other the banks.  They still had a very important role as servants but not as dictators.

Hope to hear from you on this question -- as I am feeling the lonliness when I depart from Douglas -- and I know if there is a way back to the fold you are the shepherd to lead me there.

With Warm Regard,

Dick Eastman

Regards gold, its a naturally deflationary system and thus lack of purchasing power was systemic within its own nature separate from the banking system of bank credit ( fiat) creation. This is a historical fact from the days it took over barter thousands of years ago. Unfortunately this fact is unconveniently buries by those who harp on like parrots about 'usury'. Just like every one harps on about 'greed'! Likewise 'fighting terrorism'. We cant win against emotional abstractions.

The gold system effectively captured free enterpise (barter) of the day. A simple illustration of the type of dynamic was the Temple practice in Jerusalem. The citizens had to buy the Temple currency to tithe, give alms, buy sacrificial items, within the Temple. The cost in the currency transaction increased costs unnecessarily and the quality of the products ( animals and grain etc) purchased dropped in value or weight - classic rip-off.

In scripture the fundamental issue regards 'currency' or means of trade and exchange was actually about the honest weight and measure not usury. People can argue all day about a definition of usury but no one argues about honesty when weights and measures are made crooked.

In conclusion, I have to say the quote from the MacMillan Committee meetings are invalid to support your interpretation of the Douglas theorem because it wasnt being discussed specifically, or your version of how to address the problems using Douglas' language but changing the concepts to fit your orthodox educated mind.

If Douglas is so soft on usury, why wasnt he one of more quoted in the orthodox world among reformers instead of the least and most ignored (exposure denied) ? Sometime the best recommendation comes via the enemy reaction. I am not aware of any other opponent to the orthodox system that has been challenged by some of the best minds in their system as Douglas was.

There is no way back to the fold if one is creating a lookalike fold.

All rights and respect reserved Dick,

Cheers,

Peter