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Social Credit - A DP Open Discussion

Please give me your feedback.

I have been thinking and researching ways to offset the collapse of the dollar in my home state. Of course I understand competeting currencies will have to be the number 1 priority, but what about Social Credit?

I got the idea from researching the effects of Lincoln's "Greenback" as a compete ting currency, to be the "Kindle" to start my States economy back up, and use the time for awareness to rebuild.

Engineered by C. H. Douglas,
Individual freedom, primary economic freedom, was the central goal of Douglas's reform.

From Wiki:
Social Credit[edit]

It was while he was reorganising the work of the RAE during World War I that Douglas noticed that the weekly total costs of goods produced was greater than the sums paid out to workers for wages, salaries and dividends. This seemed to contradict the theory put forth by classic Ricardian economics, that all costs are distributed simultaneously as purchasing power.

Troubled by the seeming disconnect between the way money flowed and the objectives of industry ("delivery of goods and services", in his view), Douglas set out to apply engineering methods to the economic system.

Douglas collected data from over a hundred large British businesses and found that in every case, except that of companies heading for bankruptcy, the sums paid out in salaries, wages and dividends were always less than the total costs of goods and services produced each week: the workers were not paid enough to buy back what they had made. He published his observations and conclusions in an article in the English Review where he suggested: "That we are living under a system of accountancy which renders the delivery of the nation's goods and services to itself a technical impossibility." [4] The reason, Douglas concluded, was that the economic system was organized to maximize profits for those with economic power by creating unnecessary scarcity.[5] Between 1916 and 1920, he developed his economic ideas, publishing two books in 1920, Economic Democracy and Credit-Power and Democracy, followed in 1924 by Social Credit.

Freeing workers from this system by bringing purchasing power in line with production became the basis of Douglas's reform ideas that became known as Social Credit. There were two main elements to Douglas's reform program: a National Dividend to distribute money (debt free credit) equally to all citizens, over and above their earnings, to help bridge the gap between purchasing power and prices; also a price adjustment mechanism, called the Just Price, which would forestall any possibility of inflation. The Just Price would effectively reduce retail prices by a percentage that reflected the physical efficiency of the production system. Douglas observed that the cost of production is consumption; meaning the exact physical cost of production is the total resources consumed in the production process. As the physical efficiency of production increases the Just Price mechanism will reduce the price of products for the consumer. The consumers will be able to purchase as much of what the producers produce that they want and automatically control what continues to be produced by their consumption of it. Individual freedom, primary economic freedom, was the central goal of Douglas's reform.[6]

At the end of World War I, Douglas retired from engineering to promote his reform ideas full-time, which he would do for the rest of his life. His ideas inspired the Canadian social credit movement (which obtained control of Alberta's provincial government in 1935), the short-lived Douglas Credit Party in Australia and New Zealand's rather longer-lasting Social Credit Political League. Douglas also lectured on Social Credit in Canada, Japan, New Zealand and Norway.[7]

In 1923 he appeared as a witness before the Canadian Banking Inquiry, and in 1930 before the Macmillan Committee.[8] In 1929 he made a lecture tour of Japan, where his ideas were enthusiastically received by industry and government. His 1933 edition of Social Credit made a reference to the Protocols of the Elders of Zion, which, while noting its dubious authenticity, wrote that what "is interesting about it, is the fidelity with which the methods by which such enslavement might be brought about

can be seen reflected in the facts of everyday experience."[9]
Douglas died in his home in Fearnan, Scotland. Douglas and his theories are referred to several times (unsympathetically) in Lewis Grassic Gibbon's trilogy A Scots Quair. He is also mentioned, together with Karl Marx and Silvio Gesell, by John Maynard Keynes in The General Theory of Employment, Interest, and Money (1936, p. 32). Douglas's theories permeate the poetry and economic writings of Ezra Pound. Robert Heinlein's first novel For Us, The Living: A Comedy of Customs describes a near future United States operating according to the principles of Social Credit. While Heinlein's talent was still developing, and the story's rough edges reflect that, Heinlein saw Social Credit as the path to a utopia where poverty is eliminated and we live in a more balanced and less abusive economic and social settlement.

My question is can we issue this in an open competition, knowing the Market will make it obsolete in time.
I think this would give my State (over 50% unemployment) a chance to survive a monetary collapse.
Could this work in an open competition?
Would it be better for full commodity backed banking or fractional reserve?
How would you set the value of the currency?

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Socialism like Anarchism are often confusing terms

We are social beings. That form of socialism is mostly invisible thanks to persistent propaganda that rejects individual beings and embraces a collective strawman that makes laws that favor followers and punishes dissidents.

Helen Keller called herself a socialist, perhaps because one person's endeavors to be social rescued her from a world of deafness and blindness.

Jack London called himself a socialist. The short stories in Call of the Wild explored the nature of our sociability.

Likewise, John Steinbeck wrote about social issues.

Did any of them make the mistake the more government is the answer?

Social credit as a competing currency is and interesting concept. I need to understand it better.

My father in law had talked about a similar concept. Can't ask him, since he died in 1976. But I'll ask around the family.

Free includes debt-free!

To answer the OP's questions:

1. "Could this work in an open competition?"

Private irredeemable currencies? Hayek thought so, I don't. See Mises' Regression Theorem. There's no reason for anyone to ever accept irredeemable paper money unless they are compelled to by legal tender laws et al.

2. "Would it be better for full commodity backed banking or fractional reserve?"

FRB is entirely legitimate ethically. It is not fraud, as some libertarians wrongly believe. If anyone disagree, I'd be happy to explain exactly why this is the case. As for whether it is desirable, that's up to consumers. If got rid of the Federal Reserve System, allowed open entry into banking, eliminated FDIC and all other banking regulation, fractional reserve banks and full reserve banks could compete on the market. I suspect the fractional reserve banks would win, because most people are willing to accept the minor risk of bank failure in exchange for receiving interest on their deposits (rather than paying storage fees as with full reserve banks). Also, fractional reserve banks in a free market (without the Fed or other government support/control) is not prone to boom and bust, it is stable.

3. "How would you set the value of the currency?"

To get from here to there you would do the following:

(a) define the dollar as a certain weight of gold. This weight would be national gold reserve divided by money supply (all physical currency, all demand deposits).

(b) give the bank golds in proportion to their demand deposits (they would then be on a 100% reserve, so there would be no risk of massive bank failures during the transition period - and thereafter they would be free to drop to lower reserves if they chose)

(c) allow anyone holding physical cash to covert it to gold at the treasury - once this and (b) are done, the US gold reserve is gone, it is now in private hands, and all US currency would be retired

(d) the banks would be able to issue banknotes against their demand deposits, and this would replace US currency

(e) The "value of the currency" at this point depends on the market. The currency is just a weight of gold. It's value depends on what it can buy you in the market.

"Alas! I believe in the virtue of birds. And it only takes a feather for me to die laughing."

Thank you

Lets see if it makes more sense if we make these changes.

1.) As a transitional currency (while others are starting up)in my state the perceived value would be there, because they were not able to exchange it for anything but debt before.

2.)I think fractional reserve may be the fast track to getting our economy back on track. I like your idea of having both. I would also like to participate in Crypto Currencies, but with public warning of course.
I think the majority of created currencies should be created by fully banked bullion banks, but maybe the market should decide. That is, if we could trust the public to make the right decisions.

3.) I would not want this currency backed. Just like the Greenback. I would like to maybe "Peg" it to a price, rather than back it. I would want it issued straight to the public, even those with no jobs. This would discourage inflation, and help it last longer. The longer the better, but I figure other currencies will make it obsolete in time.

Hopefully, the State Treasury could be opened the same time the dollar collapses, whether or not the competition in currencies is in place yet or not. The Treasury would then define the value (based on what?) and deliver a typical "years ration" worth of money, which they can spend however they need to. This should keep the economy going, instead of failing completely.

I would call it, the People's credit.

Ron brought the Liberty movement together, Rand is expanding the crap out of it! :)

What does this crap mean?

"if we could trust the public to make the right decisions"

I know, let's nominate ctkelly85 as the head decision maker for everyone because as we all know the people, that make up the public, are just too stupid to make the 'right' decisions. hahaha You're such a joke, another know it all central planner, wake me up when you get a real job.

Dude

I worked my ass off to get the Tech job that I have now. Before that I slaved in the food industry trying to make ends meet for my family.
"trust the public" It wouldn't matter either way. The currency will fail, their actions will determine how long it lasts. Either way, the objective is achieved.

I am trying to figure out a way to save lives, and you are being a dick and I am not sure why.

Ron brought the Liberty movement together, Rand is expanding the crap out of it! :)

Yes the currency will fail,

Yes the currency will fail, so what? I'm doing what I can to prepare myself, family, business, and friends for that even though it may not fail in my lifetime.

Seems to me your way to 'save lives' is to forcibly take from some and then give to others. That's what I call a dick. Maybe you should worry less about other people and concentrate on your own sphere of family and friends. There are always going to be people that fail at life and if you subsidize that failure by forcibly taking from the successful then you'll just have far more failures out there.

I don't think you're trying to figure a way to save lives at all.

So tell me

How does this "Take" from anyone?
There are no taxes attached.

Ron brought the Liberty movement together, Rand is expanding the crap out of it! :)

A Prayer: "O God, protect us from the monetary cranks, Amen"

Freeing workers from this system by bringing purchasing power in line with production became the basis of Douglas's reform ideas that became known as Social Credit.

A shortage of demand, a shortage of purchasing power, oversupply, overproduction - these are all a way of saying the same thing: unsold surplus.

In a free market, unsold surpluses appear from time to time, but quickly disappear, because sellers lower prices and the surplus is then sold. This is called market clearing. It is fundamental to the functioning of a free market economy. Markets always clear if the price mechanism is left unfettered.

But cranks through the ages have misunderstood this.

For example, there was a huge and enduring unsold surplus of labor in the 1930's (i.e. high unemployment). Keynes saw that wages were not falling, and therefore the labor market was not clearing, so he concluded that wages are inherently unable to fall in nominal terms, wages are "sticky." So he proposed inflation as a means to lower real wages, and thereby clear the labor market. Keynes made two unforgivable errors. 1) The reason wages were not falling (and therefore the labor market was not clearing) was that government policies were deliberately propping up wages. Wages weren't just magically "sticky." 2) His proposed "solution" of inflation would further prop up wages and further delay the clearing of the labor market. Keynes didn't understand the problem, and his solution made it worse.

Also, Keynes was no revolutionary in this regard, his theories were rehashed version of monetarist crankery that had been circulating since at least the 18th century.

To reiterate: there can be no such thing as a shortage of demand, shortage of purchasing power, overproduction, or oversupply in a free market - at least not for long. Because prices adjust downward until unsold surpluses are sold. Markets clear. Every measure proposed to combat "demand shortage" et al only makes the problem worse and prevents the market from clearing properly.

"Alas! I believe in the virtue of birds. And it only takes a feather for me to die laughing."

Economic Underworld of Social Credit

The familiar anti-capitalism argument today is that the free market economy is flawed because the commercial banking system does not create sufficient money to enable consumers to buy the economy's total output. It is an old idea stretching back to John Law early in the 18th century and the French Revolution at the end. This idea undergirds modern Keynesianism but it also undergirds the teaching of the right wing "funny money" movement, from Gertrude Coogan to the Social Credit movement. The founder of Social Credit, C.H. Douglas, presented this idea as early as 1917. Keynes actually referred somewhat favorably to Douglas's basic idea in the General Theory. The Social Credit movement still exists in Canada, Australia, and New Zealand, and its ideas are still used to defend the creation of a State controlled fiat money system totally divorced from gold and silver. These ideas are quite widely accepted in the fringe movements of the far right, including the Christian right. This book refutes this "shortage of money" idea, especially the supposedly Christian versions of it.

Here is an audio of a speech on Social Credit the foremost expert on the fallacies of this movement. Pick it up around the 29 min mark using the left side clock….you’ll see it.

http://mises.org/media/6533/The-Economic-Underworld-of-Socia...

So

you are still missing the point. I is not that, nor like that. COMPETITION IN CURRENCIES. THAT IS WHAT I AM ADVOCATING.

Ron brought the Liberty movement together, Rand is expanding the crap out of it! :)

what you want is to eliminate time preference

Good luck with that.

The reasons that workers get paid less than what their products are worth is because they want to be paid NOW, rather than when the products sell. The investors and/or owners of the means of production are willing to wait. The higher price reflects their return on investment. The difference reflects their time preference. There are other factors of course, such as that the workers just want a pay check, they don't want the hassle of running the business. But it boils down to the time preference of the workers.

If I offered to pay you $100 today for mowing my lawn today, or $105 in a month for mowing my lawn today, which would you take?

“Although it was the middle of winter, I finally realized that, within me, summer was inextinguishable.” — Albert Camus

I should not have posted

all of the article because it misses the point. I don't care about this part of the currency, because the free market will decide those values.
I want it as a cushion, that implodes by design, but lets the Free market operate. The point is to give everyone a chance in the new economy, instead of those dependent on government (over 50% in my state) would not just die.

Ron brought the Liberty movement together, Rand is expanding the crap out of it! :)

So melodramatic!

50% of your states population would die without Gov't handouts? LOL I highly doubt it. More likely these useless tax feeders would actually try to work for a living to support themselves, and if they didn't then who cares if they die, obviously not you, their family, or their friends.

So not logical

You think that those who have no jobs and no capital will survive? Do you realize how long it will take before the market can provide those jobs?
Please use logic here, DOLLAR COLLAPSE.

Ron brought the Liberty movement together, Rand is expanding the crap out of it! :)

Well maybe people with no

Well maybe people with no jobs or capital should get a job or learn a trade. If they can't do that then maybe those people should ask for help from family, friends, or volunteer organizations. Heck maybe YOU can send them some of your money, but don't force me to give my property to others because it makes you feel better. If I want to help these people then I will volunteer.

I see what you are saying

I just don't know how I or the government would be taking anything from you.

Ron brought the Liberty movement together, Rand is expanding the crap out of it! :)

You can issue it in a free market if you like...

..but inflationary ("spent into existence") Social Credits are as destructive and unreliable as any other strictly fiat currency. In a free market, an objective and substantial currency (likely gold and silver, or whisky and cigarettes) will always clobber the faith based stuff.

dynamite anthrax supreme court white house tea party jihad
======================================
West of 89
a novel of another america
https://www.smashwords.com/books/view/161155#longdescr

Good point but...

That is the way it is designed. I don't want my state dependent on this currency, I won't to use it as a crutch, until the private competition in currency can be established.
The inflationary nature will not be the same. You see, if you give the money directly to the citizens, instead of spending it into the economy, you take the politics out of it, and inflation actually benefits the people, not the government.

Ron brought the Liberty movement together, Rand is expanding the crap out of it! :)

"[I]nflation actually benefits..."

..the FIRST recipients alone. It injures EVERYBODY ELSE. And its distribution, as a creature of government, is ALWAYS political.

dynamite anthrax supreme court white house tea party jihad
======================================
West of 89
a novel of another america
https://www.smashwords.com/books/view/161155#longdescr

the FIRST

recipients are the people.
Inflation would only happen if you expanded the number of people from the original print. What other reason would cause inflation?
The government would not benefit, nor would an individual benefit. It would effect everyone simultaneously.

Ron brought the Liberty movement together, Rand is expanding the crap out of it! :)

We had a "Social Credit" government

We had a "Social Credit" government in Alberta for 35 years, they certainly did not believe in personal freedom.

That is not what I am proposing

I am proposing that in a Free Market with an open competition in currencies. This would offset those dependent on government, for a while. Then the currency would collapse by design, while hurting no one. This could act like a cushion if the dollar collapses, instead of letting them all die.

Ron brought the Liberty movement together, Rand is expanding the crap out of it! :)

I'm gland more and more

I'm gland more and more people are thinking along the lines of planning for the inevitable collapse of our monetary system and what to do to restart the system better than it was.

Thanks to Dr Ron Paul, many of us will give proper instruction on what to do.

Value added is the fruit of your labor that you are entitled to keep 100% of, and voluntarily share with others as you see fit.

It will turn out most people won't need to work as much because they won't be subject to the ravages of inflation, high prices, or excessive taxes. That's good because there won't be much work to go around and there'll be a lot more leisure time.

People always

sound crazy at first, when they come up with new ideas.

I am not speaking about any type of political philosophy other than Libertarianism. No communism, just a principle that needs tweaking to adapt to the Free Market.

Ron brought the Liberty movement together, Rand is expanding the crap out of it! :)

First please allow me to say

That if you think the Greenback is a competing currency you don’t understand the concept.

Second allow me to ask…..you wrote this,
the sums paid out in salaries, wages and dividends were always less than the total costs of goods and services produced each week: the workers were not paid enough to buy back what they had made.

The total cost of goods and services produced each week……

the difference is the profit the owners and or investors made for investing the natural, human and financial capital……you do believe that a return on these resources is “just” in a capitalist society….right, because what you described is pure communism.

From wikipedia

Communism is a revolutionary socialist movement to create a classless, moneyless and stateless social order structured upon common ownership of the means of production, as well as a social, political and economic ideology that aims at the establishment of this social order.
According to Marxist theory, higher-phase communism is a specific stage of historical development that inevitably emerges from the development of the productive forces that leads to access abundance to final goods, allowing for distribution based on need and social relations based on freely associated individuals. Marxist theory holds that socialism, or lower-phase communism, being the new society established after the overthrow of capitalism, is a transitional stage in human social evolution and will give rise to a fully communist society, in which classes and the state are no longer present.

Yes

I understand the flaw of this post is including all of the wiki article on the original concept. Just take out the socialism and communism out of it, and look at the concept of printing a currency and issuing it directly to the public, in a FREE MARKET.
This does leave the question of how to set the value of said currency.

"That if you think the Greenback is a competing currency you don’t understand the concept."

I understand the concept, it would make the proposed currency obsolete within a short time... That is exactly what I want it to do, letting the other Private currencies flourish.
The reason behind this, is so that when dollar dies, those who are currently dependent on the government (over 50% in my state) would have a way up, or at least a warning to make it in the new paradigm.

Ron brought the Liberty movement together, Rand is expanding the crap out of it! :)

how do you take the communism out of communism

ok you are almost there.....private banknote flourish, but the wouldn't be printed by the USG they would have to be printed by "private banks" within the context of a gold standard, that how the value is determined by the free market.

here i posted this a couple weeks ago ...check it out

"DEBT FREE MONEY"

(and I put in quotes for a reason) is nothing more than legal tender issued by a government to pay for things that the government want. It has no value and provides no more a service then fiat issued currency based upon debt. It’s still a tax of the productive resources of the people. Neither system provides the security of keeping the government in check and prevents it from living beyond its means. Whether the government issues the currency itself or pays a central bank to do it does not matter……..we want a government to live only on what it taxes the country in the year when the funds are needed…….then we as citizens will pay attention to what our government is spending…..which it the source of the real problem in this country. The only way to fix the problems is to get the government out of the money business completely.

Here’s how we fix the problems of this country.
1. Phase out the Fed in a two year time frame while we reestablish the gold standard. Allow the market place to re-establish the TRUE price of gold.
2. In two years money becomes private bank money back by whatever the re-established price of an ounce of gold is in that time. The gold standard exist not to value the paper money….it’s exist to keep in check the amount of private bank issued notes. If for instances a bank has 1 billion dollars in gold and over issues it private bank notes and people see this( and with the advent of the internet it could become very transparent) the bank notes would fall in value, then the market place( through money brokers) would scoop up the devalued currency and present it to the bank for gold……the bank in turn would recall it’s over issued currency back in check…..through the free market ( this system existed once in this country and worked well look up Suffolk Bank system Rothbard History of money and banking).
3. Close the IRS ( esp after this week) and institute the National Retail Sales Tax advocated by Neal Boortz. This would return us to our roots as far as tax history in the country. It does not tax production but it does tax consumption….in the only agreeable way.

4. Implement the 1% rule to repay the national debt.
5. If the USG does not want to do these things to save our country, then they don’t have the country’s best interest in heart and should be removed from existence. The only legal and non-violent way (which is the only way I am an advocate ) is to have 38 States Houses amend the Constitution to nullify the Constitution and return to the "ARTICLES OF CONFEDERATION!

"ok you are almost

"ok you are almost there.....private banknote flourish, but the wouldn't be printed by the USG they would have to be printed by "private banks" within the context of a gold standard, that how the value is determined by the free market."

No, the Greenback had no backing. The other currencies that are in competetion would be backed. This would leave the TREASURY printed money to fall victim to the Free Market and perish.... BY DESIGN. No private banks and no backing.

The sole purpose of introducing Social Credit after a monetary collapse, is to put money into THE CITIZENS HANDS, by the treasury printing the money and giving it directly to the citizens (the opposite of a private bank). This would help keep our Labor force intact, and would not kill all of those in my State that are dependent on the government.

You said I cannot take the communism out of communism. Where am I advocating that? I am talking about a Free Market, not sure why people cannot look at the actual question and not get hung up on things that are irrelevant. Letting the market set the value is anything but communism.

The difference in your plan and my plan, is my plan will start the economy quicker, by allowing everyone to have money. Your plan, still requires a major recovery, where most people have no money, nor will the ever earn money. This stiffles the economy and kills most of those people. So, by giving them a currency, even if it only lasts a year or two, they have the opportunity and a warning, which the dollar collapse.

Ron brought the Liberty movement together, Rand is expanding the crap out of it! :)

please read the Act

Please read the Act that authorized the issuing of greenbacks, and you will see in section 2 that "to enable the Secretary of the Treasury to fund the Treasury notes he is hereby authorized to issue on the credit of the United States coupon bonds bearing interest at the rate of six per centum per annum"

United States Notes were promises to pay coin, and eventually did pay coin

it's just the same old song and dance

central planning.......if you believe in the free market......trust the “invisible hand” and allow the free market to work. Stop trying to play God.