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Axiomatica Blog

Description of my blog
Tags >> Economic
Jan 08
2011

Social Credit or Libertarianism? What's wrong with the latter

Posted by admin in Economic

Dear "Old Politico,"

Re: Skousen and others reply Social Credit or Libertarianism? 

You brush off social credit, with the comment that should read Gary North's book, Salvation through Inflation: The Economics of Social Credit.

A few remarks.

I've been a fan of Gary North for 30 years -- very helpful to my family following his advice on family finances.

Cleon Skousen wrote the Naked Capitalist, the very important  book that showed the real conspiracy of the international elites -- Rockefeller power in the US -- as part of a greater conspiracy against common people having to much economic power, political power or general knowledge.  I've corresponded with one of his sons, including Joel  -- who has written to me about his reasons for preferring a gold standard over fiat currency and for having the financial sector using banks with 100% reserve requirements for gold certificate money -- rather than the social credit idea of  money in equal amount being created free and clear  in the hands of householders -- so that household demand will call the price signals to entrepreneurs for orgaqnizing production in the unhampered market system.

I have met Austrian economics leader von Hayek, heard him lecture in the late 1970s, corresponded with him.  I have all of von Mises books that were translated into English up to that time  -- Human Action, Theory of Money and Credit, Socialism, The Free and Prosperous Commmonwealth, Theory and History and  others.  When in the doctoral program in economics at Texas A & M I attempted with a current member of the Mr. Pelerin Society to get approval for a course Austrian economics.

Gary North's arguments against social credit as being inflationary were of course right when describing the effects of inflation -- how they rob savers.  However, North does not even discuss deflation or debt or the basic problem that   LOAN < PRINCIPAL + INTEREST  , that the flow of loans by the banking system that provide money for households and businesses to buy and sell in a market economy based on entrepreneurial profit and loss  is less that the amount of money being drained from household and business in the form of repayment of principal plus compound interest.  This means deflation -- less purchasing power  - less purchasing power to reward production that makes best economic  use of resources to satisfy the consumer.  Gold backing does not change this situation.  Under the 100 percent gold system purchasing power can only exist from two sources, either 1) a gold owner spends his gold, or 2) a gold owner saves his money in a bank savings deposit which  lends then that amount of gold out at interest for businesses.  Note however that even though the money multiplier from fractional reserve banking is gone -- the net drain from the use of lending of 100 percent reserve gold certificates by banks is still there --   LOAN is still less than the return to bank and gold saver of PRINCIPAL + INTEREST.  The gold system carries the fatal flaw of tendency to deflation, underconsumption, depression and increased burden of already-contracted debt due to the fact that more labor is controlled by a dollar after deflation and that nominal debt, unlike prices and wages, does not fall in deflation.  (To prevent distortion (maladjustment) of markets all prices must adjust to changes in amount of purchasing power supporting househould and business buying and selling -- when all prices and wages and other costs go down but nominal debt burden does not adjust downward  - then there is injustice and theft by the holders of gold IOUs. 

 If I take out a loan when gold holders have a lot of gold in savings deposits and purchasing power is therefore relatively more plentiful and I take out the loan because business prospects appear promising given the strong consumer demand -- I will be cheated if the gold  monopolists later withdraw their old savings forcing banks to call in loans contracting the loan-source money in circulation.  This is important. The gold standard does not fix the biggest problem that needs fixing.  There are still contractions and expansions of credit even under a gold system!!!  For example, say the gold coins or gold certificates when I first borrowed them can buy 80 bags of cement and 80 hours of the labor to mix and pour the cement --  now, after the gold owners have pulled their gold from banks, the contraction of gold savings will precipitate  a purchasing power contraction and deflation.  This is reasonable to expect because a very few people own very large amounts of gold, amounts large enough to have macroeconomic (entire economy)  price effects when they do so -- which means they can profit from making such manipulations by positioning themselves to profit from first a contraction and then an expansion of credit  -- even on a 100% reserve requirement gold standard.  So when I borrow gold money to buy 80 bags of cement and 80 hours of labor  --  the principal that I must be paid back after a gold-system deflation is enough to by 100 bags of cement and 100 hours of labor  -- and that is without paying the NOMINAL interest.  The lender gains 25% REAL INTEREST just from repayment of principal.    But even the burden of interest that must be paid back also grows after the loan is made due to deflation.  Debt burden increases under manipulation by banks and gold owners.  Gold is now relatively more scarce relative to those things -- not by natural market forces but by manipulation by the monopoly holders of gold who supply banks with reserves.  Thus all of the ills of deflation, including insufficient purchasing power demand for current products to cover costs which including NOMINAL financing costs which do not fall in deflation.

Walk away with this fact:  Under the gold system manipulation by gold owners can create deflationary depressions that profit them much more so than they can profit from sharing in the profitability of entrepreneurs who take out loans because they have invented a better mousetrap, a prettier dress or a more comfortable pillow.

Only social credit solves the problem.  Only social credit makes the market system work the way the Austrian School economists and the libertarians say an economy should work.

The Financial System is an inferior product.  I am offering a better product -- and I am offering it "for free" because I personally gain immeasurably when I see everyone happy, self-sufficient and self-respecting and looking forward to a future where their best ideas can be financed, where there a plenty of things being designed and built and expanded and improved so that labor can bargain -- not from the threat of untion coercion -- but from the shear strength of real labor demand that bids up wages in the domestic economy -- where foreign trade is allowed insofar as our exports pay for our imports.

I know you see the logic, the validity of the premises, the support of recent economic history in support of what I say above.  But the Austrian School of economic theory and the Libertarian political movement have the money backing of the "special interest" of the creditor and gold holding class -- they reward people for being gold advocates and opponents of social credit against their own better private judgement.  It is the difference between being an honest student of economics or a prostitute and liar and betrayer of the people for the sake of membership in a club of murderers and theives.    Sorry to put it in such stark terms, but that is the way it is.

I am not sure what posting of mine you are responding to -- but I hope you have read the following one, which I think lays out the isse very well.

Dick Eastman
Yakima, Washington
Every man is repsonsible to every other man
Feb 01
2010

Funny Politics Video!

Posted by admin in Economic

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Jan 20
2010

The Republican Offensive

Posted by admin in myblog , Economic

The failure of the recent Copenhagen convention on the fraud of manmade global warming (1) has presented us the two diametrically opposing reactions to the collapse of the present international financial system. On the one side, a British empire who has been at the heart of practically every political and economic destabilization globally since the beginning of the 7 years war (1756-1763) to the present phenomenon known today as "Globalization". This group of international financial interests based out of London is aiming at destroying national sovereignty through policies of vicious austerity, de-industrialization, and depopulation. On the other side, we've seen a grouping of nations, led by China and India, who have stood up for the sovereignty of every nation, and who have asserted their right to the development of their population. This population has been engaged to this end, in the development of immense infrastructure projects, using advanced technologies, beginning with nuclear energy.

As stated clearly and loudly by American economist and statesman Lyndon LaRouche since July 2007, the complete meltdown of the global financial system is unavoidable. The policies of usury, deindustrialization and Malthusianism which have swept the world over the recent 40 years herald an untimely end to our present civilization if we were not to acknowledge the requirements of survival. Only an alliance between the United States, Russia, China and India for the replacement of this monetary system with a fixed exchange rate credit system, based upon respect for national sovereignty, would permit the financing of a true recovery of the world economy by way of great infrastructure projects. However, this alliance is impossible unless the United States breaks with the British inspired policies of the current Obama administration(2), which run completely against the American constitution: Whether by Nazi healthcare rationing or the infinite bailout of banks. The United States must urgently renew its anti-colonial tradition best exemplified by Franklin Delano Roosevelt and Abraham Lincoln.

Canada and Nuclear Energy

From this perspective of real economic development, we have no choice but to develop nuclear energy. Since man's first creative use of fire, an act which distinguishes him from the beast, humankind has progressed by continuously increasing the energy flux density of power sources in use. Today, the fact is, that only nuclear fission (transiting to nuclear fusion) is capable of sustaining 6.7 billion and more human lives. In this respect, Canada would assume a leading role in the necessary global recovery but alas, this present government's intention to auction off this vital Canadian nuclear technology (AECL) exposes the tragic behavior of our political and economic elite; To rid ourselves of these technologies for a quick financial gain is

comparable to a man who sells his children to pay his gambling debts.

The Sky is the Limit

The long overdue great projects, which Canada must play a leading role in building, have been halted continuously due in part to the financial monopoly on the control of credit as also due to decades of environmentalist propaganda of the British Empire. If we seriously consider the planetary needs for the next 50-100 years, it is clear that the development of a global system of high speed rail, and magnetic levitation, built across the Bering Strait tunnel uniting the world as one continent, holds the key to unlocking our greatest potential. This orientation also looks to developing the vast natural resources of Siberia, Alaska and the great Canadian north, along with the construction of advanced arctic cities which will transform minerals on site. The long overdue NAWAPA project (3), would significantly increase hydroelectric and irrigation capacities to the North American territories and must be considered an integral part of these promising transformations of the great Canadian north.

Yet we must set our sights still higher than the great Canadian north. Humankind must return to space, although not by simply sending a few robotic soil samplers, but with human explorers, and engineers who will take part in the development of the Moon. This would not only permit our access to the Moon's bountiful (but terrestrially rare) helium-3 which is the best fuel for thermonuclear fusion, but greater still, this endeavor would lead into the permanent establishment of a manned based colony on Mars, whereby the solar system and the universe beyond will then be finally accessible as man's rightful sphere of activity.

A true political economy is before us; a new system to build the future is within reach. It needs from us a commitment to begin to resolve today the problems of tomorrow. It is this policy for the future, which differentiates the human from the monkey, and which will inspire within the population the moral force and optimism that would finally allow for the successful rejection of imperial ecological and financial policies, and let us get on with real development, a physical economy, elevating man to his most dignified expression as a willful creative force acting on the universe for the general welfare.

(1) www.copenhagenscandal.org

(2) www.larouchepac.com/healthcare

(3) North American Water and Power Alliance