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What is Social Capital?

phattonez

phattonez

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Distributist Review said:
In the domain of economics, this meant that the rules of the economic game and the institutions necessary for giving them effect should be determined not by what is most beneficial to the powerful few, nor by what enhances the status or aims of any collective, but by the common good of individuals. That ‘common good’ consisted in the fulfillment of the true purpose of economic association: the delivery of those goods and services that people can use with profit to themselves with the least amount of human labour and resource consumption.
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Social Credit: An Introduction for Distributists

I would hope that we can all agree that this should be the basic goal of any economy.

So what are the problems according to Social Credit theory? And what are the solutions?

CH Douglas Institute said:
What we normally think of as money, i.e., notes and coins, are typically printed and minted by a government authority; but these merely constitute the economy’s small change, as they represent 5% or less of the monetary aggregate at any given moment in time. For all intents and purposes, the creation and issuance of money in the form of credit is the prerogative of the private banks. This means that the private banks, or the private banking system as a whole, exercises a monopoly on credit and since credit constitutes most of the money supply, this bank monopoly is a near total ‘money-*‐monopoly’. But where is it written that all money must come into existence and be injected into the economy in this manner? What if at least some of a nation’s money supply could be created by another agency, let’s say a government or state agency, and be delivered in another form, let us say in a form that is free of debt (or the necessity of repayment) and of any other costs, i.e., in the form of ‘debt-*‐free’ credit?
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And what does this lead to?

Instead, what we see is that the debts owed to private banks tend to increase exponentially over time, as governments, businesses, and consumers are forced to borrow more and more money into existence in order to make up for the lack of cost-*‐liquidating consumer purchasing power or income that has been distributed in the normal course of production. The economy’s circular flow can only attain equilibrium between the flow of consumer prices and the flow of consumer incomes by continually increasing society’s collective ‘mortgage’, if you will, by borrowing additional money from the banks for the purposes of distributing more incomes and profits (via additional production) and of providing increased purchasing power in the form of consumer loans. Without the continual injection of new and additional debt-*‐money the economy would collapse.
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Which is precisely what we saw during the financial crisis. So what is the alternative?

According to the proposals presented in the interwar years by the founder of the Social Credit movement, Major C.H. Douglas, the most effective, efficient, and just method of returning the financial system to a position of self-*‐liquidation, wherein these massive debts are not allowed to pile up, would be to a) break the private banks’ monopoly on money creation and issuance by b) establishing a National Credit Authority, an organ of the state, to calculate the volume of ‘debt-*‐free’ credit that is needed to balance incomes with prices and to distribute that credit directly to, or indirectly on behalf of, the consumer. This would allow the producer to recover all the costs of production with a fresh flow of adequate cost-*‐liquidating income, leaving no residual debt behind and hence contributing nothing to an ever-*‐increasing mountain of societal debt, while ensuring the full and easy distribution of goods and services to consumers.
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The Distribution of the Community's Credit - The Clifford Hugh Douglas Institute for the Study and Promotion of Social Credit

I wanted to start a thread to get a discussion on this topic. I'm still not fully sold on the idea of a national dividend, or compensated prices, but I think it's worth talking about, especially the subject of the creation of money. I think most people do not fully appreciate how most of our money is created, and how a debt based currency is inherently unstable.

So what are your thoughts, or questions?

EDIT: And I botched the title of the thread. Ugh!
 
phattonez said:
I think most people do not fully appreciate how most of our money is created, and how a debt based currency is inherently unstable.
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very very simple actually.
1) Money is created by what we call Federal Reserve Board.
2) They create enough money to keep prices stable so we can comparison shop for best buy.
3) Debt is critical to insure money is invested well enough to earn a return. If they gave money away with no debt away it would be wasted.

Do you understand?
 
James972 said:
very very simple actually.
1) Money is created by what we call Federal Reserve Board.
2) They create enough money to keep prices stable so we can comparison shop for best buy.
3) Debt is critical to insure money is invested well enough to earn a return. If they gave money away with no debt away it would be wasted.

Do you understand?
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It's not wasted now? Tell me, who is benefiting from these interest payments? It's not typical hard working Americans.
 
James972 said:
very very simple actually.
1) Money is created by what we call Federal Reserve Board.
2) They create enough money to keep prices stable so we can comparison shop for best buy.
3) Debt is critical to insure money is invested well enough to earn a return. If they gave money away with no debt away it would be wasted.

Do you understand?
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Actually, the Fed creates a very small amount of new money. The vast majority is done by private lenders with the Fed backing them up when they lack reserves.
 
Vadinho said:
Actually, the Fed creates a very small amount of new money. The vast majority is done by private lenders with the Fed backing them up when they lack reserves.
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I don't know if I'd call it small. The Fed has a balance sheet equal to 23% of M2.

But it doesn't really matter anyway since the Fed and banks all act in concert. They're not totally separate institutions.
 
Vadinho said:
Actually, the Fed creates a very small amount of new money. The vast majority is done by private lenders with the Fed backing them up when they lack reserves.
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so?? does anybody dispute that?? Do you know why are pointing it out???
 
phattonez said:
It's not wasted now?
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no money is not wasted when it has to be paid back with interest. If they gave it to you with no obligation to pay back with interest it would be wasted.
 
phattonez said:
Tell me, who is benefiting from these interest payments? It's not typical hard working Americans.
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??? whoever borrows money figures they are better off with the loan and interest payments so they are benefiting as is the bank who also feels it is better off. Do you understand??
 
phattonez said:
I don't know if I'd call it small. The Fed has a balance sheet equal to 23% of M2.

But it doesn't really matter anyway since the Fed and banks all act in concert. They're not totally separate institutions.
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so you have no point here?? you started a thread about debt based currency being unstable?? Why is it unstable? Do you know?? What is more stable??
 
James972 said:
very very simple actually.
1) Money is created by what we call Federal Reserve Board.
2) They create enough money to keep prices stable so we can comparison shop for best buy.
3) Debt is critical to insure money is invested well enough to earn a return. If they gave money away with no debt away it would be wasted.

Do you understand?
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This is all false.

1.) Money is created in banks via lending

2.) The Fed sets the short term cost of borrowing

3.) Debt is the primary instrument the Fed uses to conduct monetary policy. For the most part, when the Fed wants to make lending easier, it buys Treasury bonds thereby creating additional reserves at the stroke of a key. When the Fed wants to make lending tighter, it sells Treasury bonds thereby draining reserves from the system. These two levers help accelerate or decelerate monetary creation.


Do note, it's more complicated than this. We haven't even begun to discuss Repo, IOER, etc....
 
James972 said:
why not cut the BS and tell us your fool conspiracy theory. Fed is second to only CIA is this category
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I have no conspiracy theory. I simply state the truth. Money creation was originally intended in the constitution to be the sole domain of the government. It became the sole domain of banks with the creation of the Fed. Our entire economy is dependent upon banks and we gave them the right, with very little control, to create as much money as they want every single day of the year by putting one of us into debt. That is our system.
 
Vadinho said:
I have no conspiracy theory. I simply state the truth. Money creation was originally intended in the constitution to be the sole domain of the government. It became the sole domain of banks with the creation of the Fed. Our entire economy is dependent upon banks and we gave them the right, with very little control, to create as much money as they want every single day of the year by putting one of us into debt. That is our system.
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And it's out of control:

fredgraph.png
 
phattonez said:
And it's out of control:

fredgraph.png
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It is and to be honest, until I fully realized how the banking system works, I would have said comments like ours were conspiracy theorists waxing nightmares. I am now a bit more informed and it is true, we are completely controlled by banks.
 
Kushinator said:
This is all false.
..
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"Money is created by what we call Federal Reserve Board".

who do you think creates it if not the fed?????????????????? Girl Scouts????
 
Vadinho said:
Money creation was originally intended in the constitution to be the sole domain of the government.
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Fed is controlled by govt, fed in turn contols how much the banks can lend. If you have a problem with this say exactly what it is or admit to BSing
 
Vadinho said:
we gave them the right, with very little control, to create as much money as they want every single day of the year by putting one of us into debt. That is our system.
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if they create more than they can lend out profitably they go bankrupt so the control is very very tight. It is just like a car company making too many cars. Do you understand?
 
James972 said:
"Money is created by what we call Federal Reserve Board".

who do you think creates it if not the fed?
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I've already explained it to you. Money is created in banks. The Fed does not create money, the fed creates reserves. More reserves the cheaper the cost of borrowing. Less reserves the more expensive the cost of borrowing.

Why is this so difficult? It's as though you're purposefully trying not to learn.
 
James972 said:
Fed is controlled by govt, fed in turn contols how much the banks can lend. If you have a problem with this say exactly what it is or admit to BSing
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The Fed is not controlled by the government. The Fed doesn't really control how much banks can lend, either. They only control how much reserves they can hold.

Banks aren't reserve constraint, they're only capital constraint.
 
Hedgology said:
The Fed is not controlled by the government. The Fed doesn't really control how much banks can lend, either. They only control how much reserves they can hold.

Banks aren't reserve constraint, they're only capital constraint.
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astounding illiteracy, Fed was created by act of Congress for specific purpose. Govt appoints chairman and will instantly remove if he does not do what he is supposed to. Do you understand???
 
Kushinator said:
I've already explained it to you. Money is created in banks. .
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obviously Fed exists to determine how much they want banks to create. 1+1=2
 
James972 said:
obviously Fed exists to determine how much they want banks to create. 1+1=2
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Again, false.

The Fed exists to be a lender of last resort, regulatory arm, and a stabilizing presence for financial markets.

You are entirely ignorant of everything and anything in this thread.
 
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