Social Credit Monetary Theory

Few people are familiar with the concept of Social Credit by Clifford Hugh Douglas. In his book, by the same name, his theory is presented.

“Douglas explains (particularly in Part 2, Chapter 2) that, if the money supply is not increased, dollars/pounds become more valuable, such that prices drop. But, if the money supply is increased just enough, the value of each dollar/pound – hence prices – can be left unchanged. Finding it desirable to keep prices unchanged in this way, Douglas then explains that, essentially, a decision has to be made about who gets the additional dollars/pounds. Under our current fractional reserve system, the banks do, by creating and lending out extra credit. Under a “social credit” system, the extra dollars would be divided up and given to all citizens in equal portions as a “dividend”. His rationale: that increases in productivity – resulting as they do from innovation and technological advancement over time – are a “cultural heritage” that belongs not to banks but to all members of society. His message is clear: the citizenry are prevented from benefitting from their own cultural heritage, and this leaves them increasingly indebted to banks, and unable to reduce, over time, the portion of their lives that they spend working and simply trying to survive. Under social credit, Douglas foresees a decrease in work and an increase in leisure or, at least, the opportunity to work less if one so chooses.”

With the approaching collapse of the global financial system, it takes courage to start a debate on alternatives to the Banksters debt-created monitory formula that bears the ultimate responsibility for the economic slavery that imprisons every non-elite who is not plugged into the money scam.
Anthony Migchels describes accordingly.

“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.”

For an in-depth analysis, the often underappreciated economic proponent of a populist economy, Dick Eastman, makes his case in two videos, Dick Eastman monetarist social credit economics ANSWERS Austrian School Pt 1 and Dick Eastman monetarist social credit economics ANSWERS Austrian School Pt 2.
In a lengthy and well documented answer to critics of Social Credit, Eastman takes on LaRouchonomics and the Fabian socialists.
For the purpose of this introduction essay, Eastman (additional archives) offers his solution. What will fix the economy is the American populists’ version of social credit:
1) Repudiate debt to the bankers who have defrauded us with their system where all of the money is loans that have to be paid back as principal plus interest. The terms are impossible to meet in the aggregate; and the bankers know this. That is fraud.
2) Switch to a fiat currency and a banking system that requires 100 percent reserves for loans. Banks can loan what savers put in time deposit savings accounts, but not a penny more. That is how we eliminate the fractional reserve banking system.
Having created a fiat currency and having ended the fractional reserve money system, we next completely separate money creation from the banking function. Banks will have nothing to do with money creation.
3) Originate all new money in the household sector, as the National Household Dividend will be issued to each citizen by the Department of Commerce. The household – that is, the consumer – will be the first spender of all new money. In this way, consumer demand will direct the market economy. Consumer sovereignty will be a reality, rather than Rothschild sovereignty and Rothschild theft.
4) Break up monopoly power, primarily through ending the corporation structure – the legal personhood of corporations. Instead, we will have exclusively the single proprietorship or the partnership – with full liability for the owners in all that they do. There will be none too big to fail, because there will be none very big. And there will be no central planning, because the consumer with money to spend will be the force and direction who signals to the entrepreneur, and who holds out ample reward for the entrepreneur to make rebuilding the American economy a profitable and satisfying thing.
5) Draft all corporations involved in the war industry – an idea of Warren Harding’s – so that no corporation makes a penny, but all of its officers and staff make soldier’s pay until the war is over and the corporation goes back to peacetime production – and conversion to non-corporation structure.
6) End government deficit spending. The people will have cash; and if the people want a public good, such as a bridge or a giant project to water the plains or flood Death Valley to make a mini Mediterranean Sea and enough hydroelectricity to power both L.A. and San Diego – or not, as they choose – they will be able to afford a lobby for the common interest. They will have money and leisure enough (not having to work to pay interest on the national debt and their own debt as well) to become a force in politics and elsewhere. We will have a Jeffersonian Republic – not a Hamiltonian/LaRoucheian Marriage of Big Bank, Big Government and Big Corporations.
This is a lot of information to digest, let alone critique if such a system is possible politically. Yet the value of encouraging a rational discussion on the nature of money is more important now than in any other time in memory.
To facilitate serious discourse, the following questions are germane.

• Is Constitutional money possible in today’s economy?
• Can any fiat money issuance method be entrusted to government on any level?
• How would it be possible to rally public support for the replacement of the central banking debt money creation?

This New Year, 2015 is poised for a major financial upheaval. Unless political and economic realities are faced before the inevitable day of reckoning, nothing positive will ever change for the better. Reactions to this Social Credit concept are encouraged.
James Hall – January 7, 2015
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