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Social Credit: a major breakthrough

on Tuesday, 01 January 2013. Posted in Social Credit

Social Credit is one of the main achievements of the 20th century in terms of monetary innovations. It solves poverty and depressed economies and provides a basic income to all. It reclaims the currency monopoly in the hands of the banking cartel, without centralizing power in State hands.

Social Credit was developed by Major Clifford Hugh Douglas, who penned a book with the same name in 1924. Its major breakthrough in terms of economic understanding is the so called “Gap” or the A + B theorem. This refers to the gap between total income and total value of production, the latter being always higher than total income. As a result, society never has enough income to buy all of its own production. Not only does this lead to depressed economies and to ever mounting debt to compensate for this lacking purchasing power, it also creates a strong incentive for corporations to look for markets elsewhere.

The “Gap” is a crucial notion. It is undeniably true that there is a structural lack of purchasing power in the economy. This is fundamental part of structural unemployment, for instance. Please see the diagram below for quantification of the gap.

Douglas also noted another trend in the economy: automation. He foresaw a time when many people were basically no longer necessary in the production process. These people are called the useless eaters by our masters, but Douglas, being a real human being, understood that production serves consumption and that the economy exists to feed the people, not the other way around.

To solve the problem he came up with an eminently practical and simple solution: let the Government print debt-free money to be spent into circulation by the people. Everybody should get an equal amount of money, whatever their income or asset position. The amount of money to be printed should equal the lack of purchasing power in the economy. If this is done correctly, it could be done with stable prices: the inflation in terms of a growing money supply would serve to buy up production for which there are insufficient funds available and thus would not lead to price pressures...

 

Social Credit compared to the Greenback

With the Greenback I mean a debt free paper currency spent into circulation by the Government. Social Credit is vastly superior to the Greenback as a way for Government to provide currency. The fact that the cash is handed out to the populace to be spent into circulation not only ends poverty and solves the problem of the Gap, it also prevents the massive power centralization of the State that is associated with the Greenback.

When Government can print its own cash, not much good can be expected from it. True, it’s much better than letting a private cartel do it, but most people suggesting the State should print its own money equate that with the notion that the people would be printing their own money. This, to my mind, requires an extraordinary leap of the imagination.

Government is not the People. If kept small and in its cage it can be of use. But it is a threat always. It’s hard to think of a Government in human history that was not owned lock stock and barrel by the Plutocracy behind the scenes.

The simple fact is that Social Credit is probably the closest we will ever get to the notion of ‘the People printing their own money’, as they can spend it themselves. It truly is THEIR money.

The US Government, equipped with a debt free dollar would undoubtedly be an even worse threat to the world at large than a deeply indebted one.

Also, if Government can spend its own money into circulation, it would have a very strong incentive to badly inflate the money supply. This is what seems to have happened to the Chinese Emperor’s units and also to Washington’s Continental.

 

Conclusion

Social Credit undoubtedly was a major breakthrough. Its analysis is sound. Its solution provides a basic income to all, ending poverty and wage slavery. It does not empower Government, but the people.

It may be the best way for Government to provide currency. It certainly is the best debt-free unit there is... Modern Social Crediters have proposed combinations with interest free credit. Of course, a money supply based entirely on interest-free credit also looks like a very viable option.

Anthony Migchels

http://realcurrencies.wordpress.com

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