for the Social Credit
Bad fruits from a system of unpayble debts
Taxes, income tax, unemployment, poverty
The solution: finance without debt through an honest monetary system
Rich country, indebted country
What is, materially speaking, the richest country in the world?
It is, without doubt, the United States of America. The United States is the country which is the best equipped, that produces the most, that has the most products to offer others, and the one who is the most able to increase its production even more.
The United States sends more products to other countries than it receives from them. Whether it is under the Marshall Plan, or through aid to the organization for the defense of the West, the United States puts millions of American dollars at the disposition of other countries, who can buy American products for the value of these millions of dollars.
What is the country that is the most indebted in the world?
It is the United States of America. Now in 2008, their national debt is over 9,200 billion dollars.
The trick of a false financial system
Is this not a contradiction? How can the richest country have the biggest public debt?
Speaking logically, it is certainly contradictory. But with the actual financial system, this is what must happen. In reality the more a country augments its potential for production, the more it enriches itself; but at the same time, it indebts itself more financially.
It is not any different in Canada. Compare on one side, the actual riches of the country now to what they were 300, 200, 100, 50, or 25 years ago. You will find that the actual riches have always increased. On the other hand compare the national debt with what it was in the beginning, such as 200, 100, 50, 25 years ago; you will see that the debt has also augmented.
It is the same thing for the debts of the provinces and the municipalities.
But how can this be?
It is because the more there is production, the greater the amount of money that is needed to represent it, to permit the transfer or flow of products. Therefore the increase of money cannot be made without an increase in the debt, in a system where all new money comes under the form of loans which constitute a debt.
Loans and reimbursements
What do you call "new money"?
All increases in the volume of money in circulation.
If in a country there was 5 billion dollars in circulation last year and if there are 6 billion in circulation this year it is evidently because, at some point, we added one billion. This billion which did not exist last year and which exists this year, is a new billion.
This billion did not come by itself, because there is no money that is created spontaneously.
It did not fall from heaven: there is no money that falls like rain or snow.
It was not made by the Government: the Government proclaims to those who want to listen that there is no other money than the money which comes from taxes and loans.
This billion was not manufactured by farmers, the working class, or by the industrialists. These people manufacture agricultural and industrial products but they do not manufacture money.
This extra billion came about because borrowers (individual borrowers or public borrowers) obtained loans from banks amounting to a billion dollars. (These loans consisted simply of amounts inscribed by the banker in credit, not by investors who brought cash, but by a borrower who came to get some.)
To be more exact, it would be necessary to say that there was more than a billion dollars in loans during the year, because during this period of time there were also reimbursements.
These reimbursements remove money from circulation, and loans put money into circulation. If the amount in circulation went up by one billion, it is because the sum of the loans surpassed by one billion the sum of ‘the reimbursements.
Loans constitute debts to be reimbursed, and these reimbursements discharge debts. If the loans surpass the reimbursements by one billion, the debts contracted exceed by one billion the debts paid off.
And this is how all increases in money create an increase in debts.
But could it not happen that the sum of the reimbursements would be greater than the sum of the loans?
Yes, for a limited time. This is what happens; for example, when banks make it harder to lend and are demanding of reimbursements. When that happens, the money in circulation decreases and we soon have a depression. Less money to pay for products and less money to pay salaries, so it is a true crisis.
But never can the total of the debts disappear completely: it is impossible to reimburse them completely, even by taking all the money which has been put into circulation through loans. This, for the good reason that he who borrows indebts himself for more than the amount of the loan. We call this interest on the loan.
Since money enters into circulation through loans and since money disappears through reimbursements which must be larger than the loans, this signifies that we would have to globally reimburse more money than what is in total circulation. It is a mathematical impossibility.
That is why the total debt is unpayable. This is why the world becomes more and more indebted, and as mankind develops; necessitating loans from the Financiers.
In that case, should not the sum of the debts be even bigger than it is?
The sum of the debts would be even bigger in effect; if there would not be debts which are discharged in other ways than by reimbursements.
There are debts which are discharged through bankruptcies. The debt therefore, is not reimbursed or is only partially reimbursed but the guarantees of the loan are seized.
Bankruptcies, closed factories, abandoned farms, and all the miseries which ensue for the deposed owners or for the unemployed workers are the fruits of the stupidity of a system which demands reimbursement of more money than it has created.
A paralyzing load that is not removed
But there are industries which reimburse their loans, including the interest. There are others who develop their enterprises without loans from the banks. There are governments which in certain years diminish their public debts.
All this is true because like you say there are reimbursements, there are some who do it: but altogether they cannot. Those who succeed in finding 106 where there is only 100, take the additional 6 from the sums put into circulation by the loans of others. These others will only have more difficulty in trying to make their own reimbursements.
The success of one makes the plight of the others more desperate.
As for the industries which finance their developments without loans, they do so with money extracted from the public through higher prices to finance the amount. We call this auto-financing. But it is not at all an automatic financing; it is financing at the expense of the buyers, the result is that buyers are obliged to deprive themselves of products which are offered and which they need because the higher prices are over their budget. This is another bad fruit of a financial system which is false and unhealthy.
As for the governments who succeed at times in diminishing their public debts, it is because they also extract from the public, through taxes, more money than they put back into circulation through their expenses.
What they give in reimbursement of their debt, the citizens no longer have to buy the products which are offered to them. The result is again the same: less purchases, products not sold, total or partial unemployment for many, establishments closed because of the bad flow of their products.
A bad tree can only give bad fruit. And the fact of passing the weight from one shoulder to the next does not lessen the load: it only succeeds in creating conflicts. And we know there are many conflicts today.
What is true between those in debt in the same country is true among other countries which are in debt. And the source of conflict among individuals and classes are also the source of conflict among nations, it always ends badly.
Is it possible to have a financial system that does not indebt as we become richer?
Yes there is one, it was proposed to the world in 1918: Social Credit.
Social Credit does not create unpayable debts, because it would cause money to be created to the rhythm of production and to disappear to that of consumption.
If it is somehow possible in a limited time, to consume more than we produce, because of earlier surpluses it is impossible on the whole, to consume more than that which is produced. No one can make a loaf of bread, a pair of boots, or a pin disappear, that was not first produced.
If therefore money would arrive according to production and disappear according to consumption, the system of progressive indebtedness would be inconceivable.
An individual or a group of individuals could certainly still indebt themselves but on the whole, the common debt would not exist. On the contrary real total enrichment would express itself by a total financial enrichment; and instead of taxes and surcharges on prices, individuals would receive dividends and discounts on prices.
The actual system is a lie; it is a false accounting. Social Credit would be a just accounting, an exact financial expression of economic realities. The first can only give rotten fruit. The second would produce good fruit, in abundance for all.