MONEY SUPPLY IS CREATED AND CANCELLED CONTINUOUSLY

Hello everybody,

My contribution to the present debate

Henry Raynel

http://www.mondopolitico.com/library/socialcredit/appendix.htm

Presented to the “Louis Even Institute for Social Justice”  during their week of education by Henry Raynel September 2006. Lecture 2.

Today we are going to discuss:

SOCIETY’S MONEY SUPPLY IS CREATED AND CANCELLED

CONTINUOUSLY --- AS IT FLOWS THROUGH EACH CYCLE

OF PRODUCTION & CONSUMPTION – OF ALL

GOODS AND SERVICE

Yesterday we discussed a few facts about money that should have been taught during our years of basic education in our schools. But of course if the truth of money creation, ownership and management were taught in Schools that would let the cat out of the bag and bankers could very well soon lose their financial and economic power to rule the people of the world.
There is only one thing bankers like more than money and that is the power, the power that the control of money gives them.
It is my duty and privilege today to progress our discussion to get understanding beyond Money Creation.

Earlier we discussed the ownership of Society’s money supply and the importance of enacting legislation to confer the right of creation, ownership and management – to THE NATION - GOVERNMENT - AND THE PEOPLE OF OUR NATION. - Our address and discussion illustrated the tremendous benefit that would result for every individual in society.

·         Today I want to discuss a little deeper --- about enacting legislation to establishing Society ownership and management --- of its money supply

·         I also want to briefly comment on two aspects --- ONE about savings for investment. And SECOND about the ability for society to repay its debts to bankers!

·         FIRST our priority right now is TO PROGRESS OUR DISCUSSION BEYOND MONEY CREATION --- TO TALK ABOUT MONEY FLOW AND MONEY CANCELLATION ---

SOCIETY’S MONEY SUPPLY IS CREATED AND CANCELLED

CONTINUOUSLY --- AS IT FLOWS THROUGH EACH CYCLE OF PRODUCTION AND CONSUMPTION ---

OF ALL GOODS AND SERVICES

I have endeavoured to illustrate this with the attached elementary illustration --- I would like to talk to the illustrations and answer questions after I have made this presentation.--- Some of the main points of this lecture are related to my next Lecture, that deals with:

“The Gap  Between Incomes and prices”.

My experience teaching Social Credit  - plus extensive political campaigning with Social Crediters has proved to me --- that the flow and cancellation subject --- is a stumbling block for many of our conscientious supporters.

Most people in the Social Credit Movement find it difficult to understand and accept that money cancels automatically when it is paid into commercial business bank accounts. My personal business use of bank borrowing with bank demand for early repayment has helped me understand flow and cancellation.

Lack of importance of understanding Flow and Cancellation is one of the reasons why many Social Creditors have not got the confidence to advocate and campaign for society to actually own, create and manage its money supply. Understanding gives confidence and enthusiasm to become a crusader.

Society’s money supply flows continuously.

Our army of crusading voters are dependent on the understanding of us leaders of our Social Credit Reform Movement. Because us leaders have good faithful understanding of the philosophy of Social Credit, because we have honest conviction that there is an alternative economic system that can provide freedom with financial security, --- the grass roots the “will of the people” - the voter’s army - will follow their leaders. The voters army must first pressure and gain political democracy, which is the weapon needed to force Members of Parliament to enact legislation to bring in economic and financial democracy!!!

Confusion or lack of understanding is a main cause and reason for Social Crediters supporting general Socialist Monetary Reformers organizations, who advocate Government should create and manage Society’s Money Supply.

C H Douglas and his staunch disciples claim there is only one thing worse than a private banking money monopoly and that is to marry bankers money creation with politicians and Government, - and thereby, - create a complete government dictatorship of both politics and finance.

History of the performance of Socialist Governments has proved Douglas correct.

RIGHT NOW OUR NATIONS ORTHDOX MONEY SUPPLY - CONTINUOUSLY FL0WS --- AS IT IS CREATED FOR PRODUCTION --- AND CANCELS ON CONSUMPTION --- PUT SIMPLY --- THIS IS WHAT IS MEANT BY CREATION FLOW AND CANCELLATION.

The present commercial banks operate the present system of money creation and cancellation that is very simple and fortunately very efficient. There would be no need for a Government operating the New Economics of Social Credit to change this aspect of how money functions.

The change we must demand is that Ownership and Flow of Society’s Money from the beginning of the money pipeline is Society Owned and Independently Managed. I will explain this clearly in some detail later.

NOT as now with bankers owning and managing Society’s total money supply flow as unrepayable permanent interest bearing debt compounding exponentially. --- “The Peoples Money Supply must be Managed Independently by a Peoples Independent State Monetary Authority”

Lets talk quite precisely about Creation Flow and Cancellation of Society’s Money.

Commercial Bankers lend to businesses, - as an example, - bankers lend to our bakers - to bake today’s bread, and when the consumers have bought the bread in the days ahead, the shops return the money to the commercial bankers and it is cancelled, against yesterday’s business loan arrangement --- and if there is still a demand for bread in the days ahead the process will be repeated.

Private enterprise businesses fluctuate production and distribution according to consumer demand. Money flows: --- it is created as bank loans for production and is cancelled as production is purchased and the businesses bank the sales money in their banks on consumption. The old saying is --- money is made round to go round --- and it’s meaning is still basically true. Commercial Banks function and duty, is to create loan credit (money) for production and to cancel credit (money) as production is consumed.

This creation and cancellation process is a logical and efficient system and will continue in Social Credit modernised New Economics.        Graph!

What is meant by a “cycle of production and consumption”?       This involves a series of stages of production, and the time needed to convert nature’s raw materials --- natures free raw materials --- by the application of energy --- free harnessed solar energy --- plus any needed human energy --- into finished goods and services from where they are purchased by consumers. The cycle may take one year, one month, or less.

This “free” portion of energy, which is all energy except human energy, is our Natural Cultural Inheritance that produces gift production for Society.

C H Douglas stated the fact as follows quote: … “economic production is simply the conversion of one thing into another, and is primarily a matter of energy. It seems highly probable that both energy and production are only limited by our knowledge of how to apply them”. End quote.

Statements by Banking Authorities

A large number of eminent banking authorities could be quoted but for professional proof of this. I will limit myself to one only.

The Rt. Hon. Reginald McKenna, one-time British Chancellor of the Exchequer, and Chairman of the Midland Bank, addressed a meeting of shareholders of the Bank on January 25^th, 1924, and said (as recorded in his book Post-War Banking):

“I am afraid the ordinary citizen will not like to be told that the banks can, and do, create and destroy money. The amount of finance in existence varies only with the action of the banks in increasing or decreasing deposits and bank purchases. We know how this is affected. Every loan, overdraft or bank purchase creates a deposit, and every repayment of a loan, overdraft or bank sale destroys a deposit.”

This distinguished authority is acknowledgement and proof of my above statements that banks create and cancel the flow of money as it daily flows into banks reducing loans, and if needed for the next cycle of production it is created and flows to finance the next cycle of production.

Have I made the point perfectly clear? I must emphasise-

All sections of our community’s business people, all industry and commerce, obtain their financial requirements directly or indirectly from the commercial banks.

There is no other creating and cancelling authority.

Even legal tender is brought into circulation by the trading banks that purchase it with their own bank cheques.

Only a small number of registered banks carry out this creating and cancelling function with their cheque clearing facility. All our commercial business companies, and even savings and lending institutions and financial companies, --- must process all their cheques and other financial transactions through the commercial banks cheque clearing house. It is an efficient system.

I now wish to further advance my previous lecture about “Ownership Of Money” and the constitutional establishment of a Society’s Independent State Monetary authority.

The following extract states the development excellently.

MY  AUTHORITY:

I am quoting an extract from - one of a series of reliable Social Credit booklets: co-authored by The Social Credit Secretariat Chairman Donald Neale and successor Secretariat Chairman Alan Armstrong economist with an honours degree.

SUSTAINABLE PROSPERITY - CHALLENGE AND CHANGE – MONEY: --- ” Booklet 3 page16.

Published in 1994 by the “The Social Credit Secretariat” Edingurgh.

Reform of the Money Supply System

“The power to create money must be withdrawn from the commercial banking system. The creation of the community’s money supply, debt-free, must revert to a governmental authority—a National Credit Authority—charged with the duty of maintaining a strict relationship between the volume of money supply and the volume of real wealth production, allowing for imports and exports and for capital depreciation and appreciation—thereby ensuring that there is always ‘effective demand’ sufficient to clear markets in each productive period. All the statistics necessary to do this are already available within the Central Statistical Office.

The Authority would need to be so constituted as to be accountable to Parliament but to be insulated from any form of political manipulation. In this respect it would be similar to the Weights and Measures Office which is responsible for maintaining and enforcing observance of correct weights and measures in all trading, while being free from political pressure to tamper with those standards for political advantage.

Critics who may object that money created under government control would inevitably prove inflationary must be able to say why that must be so, when it would be created by precisely the same means and from the same source—the national credit—as the banks, and yet there is no allegation that bank-created money is inevitably inflationary.

As Clifford H Douglas insisted, ‘Money is only a mechanism by means of which we deal with things—it has no properties except those we choose to give it. A phrase such as “There is no money in the country with which to do such and so” means absolutely nothing unless we are also saying “The goods and services required to do this thing do not exist and cannot be produced; therefore it is useless to create the money equivalent of them”. For instance, it is simply childish to say that a country has no money for social betterment or for any other purpose, when it has the skill, the men and materials to create that betterment.”!!!

This key to reform the money system would open the way to further measures designed:

• To eliminate all possibility of inflation through the introduction of a scientific or Just Price;
• To eliminate the chronic deficiency of aggregate purchasing power with aggregate prices, through the introduction of a National Dividend.

“The National Dividend

“The National Dividend would be provided from part of the new money created on government account and would be distributed as purchasing power to each member of the community as a right. It would be unrelated to earnings and would be sufficient to ensure a ‘certain standard of respect, health and decency which is the first desideratum’.

“The National Dividend would break the age-old link between employment and income, a necessary reform when, through technological progress, employment can no longer be regarded as the sole claim to income”. --- End quote! (See Booklet Two.) !!!  

As soon as understanding becomes clear then it becomes logical that Society’s total money supply can, - and should be, - distributed in two flows, - one portion of the flow to Government Treasury to finance all Government spending free of debt - and the second portion of the flow as loans free of interest to bankers for them to finance industry and commerce with low cost loan finance.

This shows clearly in the diagram attached.

(The money flow cycles illustrated in this paper are relevant to the matter discussed and must not be taken to encompass all money flows in the economy).

Government borrowing would cease, and the National Debt along with taxation could be progressively eliminated in a reasonably short time.

We who understand our faulty private banking money system, ---

our pre-the age of machines --- business pricing system --- and the reason for the inadequacy of our Society’s present incomes system --- , we who understand, have a responsibility to build - in a democratic way, - a grass roots “will of the people” voters army, to pressure and force MP’s to work in Parliament for genuine natural policies that voters want --- and to insist on the enactment of legislation appropriately.

Parliament and our local MP’s are our Society’s present bosses supporting and causing evil economics. MP’s are guilty puppets responding to their Political Parties’ bosses and State Bureaucrats who are receiving policy instructions from bankers’ visiting economists!!!

Voters must insist that MP’s represent policies wanted by voters not policy foisted on us by banker’s economic travelling salesmen ---

THE KEY THAT WILL BRING SUCCESS IS THAT THE PRESSURE FROM THE VOTERS CAMPAIGNING ARMY MUST BE GREATER THAN THE PRESSURE FROM ECONOMISTS. THIS IS SIMPLE BUT FACT.

HISTORY HAS PROVED THAT “THE WILL OF THE PEOPLE” CAN BE THE GREATEST POWER ON EARTH.

The sham democracy we have is precious and we must use it.

The basis of freedom is financial security.

A FALSE ARGUMENT IS PREVAILING --- THAT CONSUMERS MUST SAVE TO FINANCE INDUSTRY & COMMERCE.

IT IS A DECEITFUL WHITEWASH OF THE WORST TYPE.

The serious permanent shortage of total consumer income illustrates the falseness of the often-repeated statement that the main source of money to finance industry and commerce comes from peoples’ savings.

This false propaganda perpetuates the lie that the main source of general investment finance is provided from peoples’ savings.

Every dollar saved from immediate use to buy today’s goods and services available in shops and offices, causes those goods to remain unsold. Only by somebody, somewhere else in society borrowing extra bank created debt dollars, can it be made possible for the goods represented by the saved dollar to be sold.

The savings propaganda not only helps to shroud the fact that the banks own and create all of society’s debt money supply, but also it very effectively portrays the false belief that there is no alternative and that we must pay taxation robbery out of our wages, salaries and dividends.
The international financial oligarchy’s well educated - well paid - economic managers, their economists, are continuously traveling advising the State Bureaucrats, Government Treasury officials and leading politicians of the Nations of the World, the policies that suit the international bankers’ present evil economic system.

THE IMPOSSIBILITY OF PAYING BACK SOCIETY’S DEBT TO THE BANKING DEBT OWNERS

All money every dollar that is circulating in society, is a borrowed dollar from the commercial banking system. Bankers create all of society’s money as debt – there is no other money in existence.

Savings argument is a deceitful whitewash.

It is therefore absolutely illogical and completely unrealistic for economists, university lecturers, politicians, and senior highly positioned bankers to tell society that it must or even can pay back its debts. It must be an absolute impossibility, because of the very simple fact that all money is debt. If we could imagine all of our commercial bank loans to be repaid, there would be NO MONEY IN SOCIETY AND THE ECONOMY AS WE FUNCTION TODAY WOULD COLLAPSE.!!!

What a sobering fact to think about. Why do economists and highly positioned bankers carefully nurse the secret?

It is our job and responsibility to blow their secret sky high.

For common justice Truth must prevail

If I get another session I intend talking about why businesses generate prices faster than they generate or pay out incomes. - Graphics here!

Please note:

The money flow cycles illustrated in this paper are relevant to the matter discussed and must not be taken to encompass all money flows in any economy.

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