<**>Admittedly, the social [crediters'] program does not entail a 100% subsidy.<**> -------------------- In 1920s and 30s social credit propaganda the subsidy was generally portrayed as an anti-inflation measure, which it indeed is, because it effectively lowers prices that consumers would otherwise have to pay. The theoretical argument for the subsidy is more sophisticated and abstract analytically.
When the individual saves he is purchasing from his income something other than goods and services for his personal consumption. In the broad model he is purchasing "investments" which will prospectively bring him future income. That future income is income that is "unearned" as opposed to income that is "earned." He isn't saving in any physical sense nor is the community as a whole saving in any physical sense. The relationship is contractual between creditors and debtors. It is however true that much debt will masquerade as equity.
Looking at the economy in statistical whole, the steady state condition is where the saving from current income (earned and unearned) by those who are saving equals the spending from past income by those who are spending. In such a condition effective demand equals income.
Furthermore, in steady state income equals the accounted for costs of production of goods flowing into final consumption at the point of retail.
Dropping money into such a situation would be purely inflationary and completely senseless.
But--
If spending from past income is falling in respect to saving from current income, effective demand is falling in respect to the costs of production flowing to the point of retail. --
Do you follow the argument so far? If you don't there's no point in continuing because step by step it becomes more elusive. I'm not asking that you agree with any aspect of the argument; I'm simply asking that you understand it. If you do not, I would welcome further discussion so that we might come to a consensus as to its meaning--not necessarily its validity. Until we reach that consensus, I would prefer to confine our discussion to the elements preceding the "but" above. We can take them sentence-by-sentence, point-by-point.
In the steady state condition as described before the "but," social credit would recommend a *zero* subsidy because anything else would impact the general economy negatively--exactly as you and your colleagues say.
In a situation in deviation from steady state as described after the "but," social credit would recommend a subsidy that would allow the costs of production to equal effective demand plus the subsidy. --
----Original Message Follows---- From: Pat Gunning <[EMAIL PROTECTED]> Reply-To: [EMAIL PROTECTED] To: [EMAIL PROTECTED] Subject: [SOCIAL CREDIT] Social creditors and the Ponzi game Date: Thu, 13 Nov 2003 10:48:33 +0800
What would happen if the government adopted and successfully implemented the following policy of subsidizing retailers. It compensates them completely – 100% – for their costs.
[snipped]
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