*******Dutch Barter System Challenges Bankers
"Believe it or not, but De Nederlandsche Bank (Dutch central bank,) run by Nout Wellink (who is on the board of BIS and a member of the Trilaterals) shut down my on-line telebank service. A clear sign I was on the right track :-). "
By Anthony Migchels
03 November 2009
My name is Anthony Migchels and I am the initiator of the "Gelre," the first Regional Currency in the Netherlands.My organization is a foundation, not for profit, not a company, because I believe credit should be a public facility, serving the people that actually OWN the credit, instead of milking them dry with what is rightfully theirs. The Gelre foundation is run by a board of three.
We now have almost a hundred companies participating and the break even point should come at about 300, after that we can get an income out of it. But the real goal is, to hook up 66% of all companies in Gelderland, a province in the Netherlands with 1.2 million inhabitants and 60k companies. A GDP of about 40 billion Euro.
It is clear that interest bearing debt to a bank as money is a vicious hoax, but strangely enough, few have been developing a viable alternative.
Ellen Brown and the Money Master people, whom I both regard very highly, have reasonable
propositions, but they are still considering reform at the state-level and that is simply not going to happen. Not here in Europe and not before having survived WW3, anyway.
State Level real money implies the end of the New World Order Central Banking Vampires.
There is Bernard Lietaer, but his biggest point seems to be that 'complementary currencies' complement the 'national' (banking, really) currencies. He has correctly analyzed the negative aspects of interest, but is completely oblivious (or pretends to be) to the nefarious nature of the powers behind the printing press. It is clear that real alternative currencies have only one goal: to destroy the credibility of humanities greatest plague and its metal based successors. The goal is clearly NOT to play second fiddle.
I like Thomas Greco, who is very knowledgeable. He suggests mutual credit, facilitated by Market Players as a solution, but even he has not pinpointed what is to my mind the most crucial challenge for anybody wanting to create a viable currency, able to truly compete with Dollar or Euro
That challenge is as follows:
Barter units allow for interest free credit, but are not convertible to major currencies and convertible units don't allow for non interest bearing credit.
Combining these two features, convertibility and interest free credit, is essential for non state/non bank monies to have a real impact.
It is the way of the not so distant future :-)
Most barter schemes have prohibitive transactions costs. Also, and even more importantly, they are not convertible to Euro/Dollar. They usually are OK for swapping excess inventory or goods and services with low marginal cost, but not for high powered capital intensive industry.
The Euro/Dollar/Pound based Berkshares (http://berkshares.org/) , Lewes Pound
(http://www.thelewesPound.org/) and German Regional Currencies (www.regiogeldverein.de) are stronger, because they are based on national currencies: you give up a Dollar and in return you get a Berkshare, that can be spent within the network. In effect the Dollar remains in the network. Because there is a Dollar in the bank, companies can convert excess local currencies (units that they cannot usefully spend in the network) to Dollar/Euro The problem is, there can never be more of the local currency in circulation, than the supplying organization has Dollars/Euro in the bank. Therefore they cannot supply any credit.
This is also the basic architecture of the current Gelre. Another conceptual problem with this approach is that you are basing real, loving money on the most toxic commodity known to man: interest bearing bank debt as money.
There is also a legal problem here, in Europe, anyway:
Believe it or not, but De Nederlandsche Bank (Dutch central bank,) run by Nout Wellink who is on the board of BIS and a member of the Trilaterals) shut down my on-line telebank service. A clear sign I was on the right track :-). They did so because of a prohibition on collecting 'reclaimable money' (a direct translation of judicial lingo, I'm not sure an English speaking lawyer will know what this means).
You can, however, manage reclaimable money if you give a paper voucher in return. This is a loophole designed for book vouchers and the like.
Now we have only paper money in circulation. Of course, this law is to 'protect consumers' (wink wink). You have to realize this was going on last year, 2008. The people from the Dutch Central Bank are telling me they are very worried about the couple of thousand Euro that we manage as deposits for circulating Gelres. The same people that have been supervising and in effect organizing the credit crunch that has cost taxpayers in the west trillions of Dollars.
Now, being confronted by men and women (kind and intelligent people!) in expensive suits destroying and enslaving the people I love, including myself, who are telling you they are protecting consumers by putting me out of business, kind of pisses me off BIG TIME.
Brainwashed or not, you start to dislike them even more than you already did.
Its probably not the same with everybody, but if somebody starts playing with my family jewels,
smiling all the time and speaking very correctly gets me thinking. To be honest, it was an experience that inspired.
By creating a unit that combines both strengths, cheap credit AND convertibility, we believe it is possible to actually compete with Euro Creating money out of thin air that will buy Euro and eventually gold, it sure gets me excited :-)
We'll buy the world back :-))). we won't, but the people using the Gelre will!
The only problem is: how to do it and inspiration makes answering this elusive question easy: you create convertibility not by reclaimable deposits, but by creating an open marketplace where your unit can be traded!
In this way, you create convertibility not by having Euro or Dollars deposited, but by more classical means: foreign exchange markets have been around for quite some time, but only for bank money Speculation is out of the question, because in the network 1 Gelre=1 Euro always.
My foundation simply always sells Gelre for 95 cents, so it is no use offering your Gelres for more.
And because 1 Gelre has a purchasing power of 1 Euro in the network, there is always a natural demand for Gelre because its buyer gets a de facto discount of at least 5%.
Of course you want a stable rate for the Gelre, close to its target of 0.95 cents. This is achieved by correctly managing the amount of Gelre you issue. If you issue to many, people will dump it on the market and your unit goes down the drain: nobody will accept it if its rate goes down too much.
But you can, and we have, create a stabilization fund. Because we sell Gelre for 0.95 cents, we have Euro. We could simply pocket them, but then we would be ripping off the system. It would be a goldmine. Nobody would even notice, people are gullible, but the idea is to help, not to steal. No, the Euro we get in this way go into the stabilization fund and we use them to buy back Gelres if the rate goes down to much.
In effect this means we can almost guarantee a stable exchange rate. Almost, because every adult has to awaken to the fact that there is only one guarantee in life: you die.
It is childish to look for guarantees from institutions. That is part of what is called 'arrested
At this moment we are programming the on-line exchange. Its not complicated at all, thankfully.
Naturally all this needs to be managed correctly. And of course the idea is very simple. But also revolutionary. A breakthrough that has the potential to create very powerful currencies that can compete globally and locally in many diverse networks against the far too expensive (because of interest) '(supra)national' currencies.
We have chosen a regional scope, because one of our main goals is to stop centralization of power. Since most local economic area's are 80% self sufficient, it is natural that they are monetarily as well.
And because 'The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it' and also because 'the process of money creation is so simple, it repels the mind' transparency is essential in any real money system.
Therefore we have created the Gelre monitor, which reports real-time to all parties involved, on-line, all the key indicators of the Gelre. Turnover, amount in circulation, percentage that is taken by the issuing organization for costs, number of participants, etc, etc. All this information will be available with just a few mouse clicks.
End of this year, maybe early next, our new system will be on-line, hopefully. And it is going to work. Despite the many unknowns to the public. You know why?
Because we are going to print some money and GIVE IT AWAY!
We are going to give away millions of Gelre (1 Gelre = 1 Euro). Why not? We print it for nothing! We don't use that money to stuff these piggybanksters, but we hand it over to the people!! And they can spend it at the businesses that join. These businesses can actually convert their Gelre income to Euro (at a small cost).
We are going to play Santa Clause and all that money is going to circulate forever, continuing to create business. A skyrocketing Gelre Economy in the depths of a very severe depression.
Nobody can get a Eurodime, but we give away millions of Gelre!!
Of course most of the Gelres we put into circulation will be lent out (without interest, but of course with some (very cheap) price, we have bills to pay) in a mutual credit kind of scheme, or sold for Euro (for the benefit of the stabilization fund), but a reasonably small percentage can be simply given away.
You know, the Dutch have a reputation, well deserved, for being the Jews of the Gentiles. If GIVING THEM MONEY FOR NOTHING is not going to convince them, I'm just gonna give up and let the wolves do their thing.
As a final note: one of the most painful delusions many well informed and well intentioned people suffer from, is that the problem is paper money. And that gold is the solution. It is not. Gold is controlled by the same scoundrels that control the current printing presses.The problem is inflating and deflating an interest bearing money supply. By fraudulent criminals. This is the same for gold as it is for paper. Where do people think all the depressions before 1913 came from?
Of course, gold DOES have a function as the great, eternal tell tale of paper manipulation. That is why it has been manipulated at an unimaginable scale. If it had not been, gold would probably already be at 5k Dollars per ounce. Real inflation (as opposed to the FED figures) has been that bad, the last few decades.
But as a means of exchange it is worthless. Impractical and with an unstable, non-transparent supply. Stable, transparent supply is a core indicator of high quality money.
To be honest, the bankers couldn't care less about the paper, if they can replace it by gold.
Money is one of the few commodities that we can produce infinitely at virtually no cost. The art of the trade is to create plentiful money, without overdoing it. Even a limited amount of inflation is OK, as long as people are aware of it, are compensated for it and don't save the money.
Saving money is always a bad idea anyway, because it withholds money from circulation, but that is another story.
The point is, that if you have a reasonable entity issuing the money, its supply will be stable and cheap.
The Gelre will also prove that gold is as big a hoax as is interest bearing debt.
You can tell I'm excited about it, I can hardly believe we are actually going to do this, and sometimes I am afraid, not only of success, but also of the banksters.
We are going to do it, though.......
Your publishing of the article last week has produced dozens of reactions! Very inspiring. So much so, I opened a blog in which I intend to participate in the debate on currency.
I will be focusing on monetary matters, not so much on the wider conspiracy which is very competently handled by other people, you in particular.
I believe the subject is of such crucial importance (banking being our masters core business), that we have to get it out of the way, at least within the aware part of the community.
For your info: the blog can be found at realcurrencies.wordpress.com.
Bartering: Have Hotel, Need Haircut
By William Lee Adams Monday, Nov. 02, 2009
When the check arrives at the Patpong Thai restaurant in Chingford, England, Reg Burrows usually pays with plastic. But Burrows, the owner of an industrial-storage-supply firm, doesn't pull out Visa or American Express. He pulls out Bartercard. As a member of the Bartercard trading network, Burrows receives "trade pounds" instead of cash whenever his firm, Global Equipment Trading, works for fellow Bartercard clients. He can then spend that credit at any of the 75,000 member businesses around the world, including Patpong Thai, where he frequently entertains clients. So far this year, Burrows has exchanged around $410,000 in goods and services, helping to offset expenses and keep cash available for other outgoings. "Using barter we've purchased everything from air-conditioning units, computers and desks, to lorries, forklifts and security gates," he says. "It's a phenomenal tool that can enhance almost any company."
As businesses battle to get through the recession, more and more are turning to third-party-exchange networks like Bartercard. According to the International Reciprocal Trade Association, the industry trade body, more than 400,000 businesses transacted $10 billion globally in 2008 — and officials expect trade volume to grow by 15% in 2009. Bartercard, the world's largest exchange network, is leading the charge. So far this year trades through its network are worth more than $2 billion, up by 20% over 2008. Founded in Australia in 1991, when the country was mired in recession, the firm now does business in nine countries — including New Zealand, Sri Lanka, Thailand and the United Arab Emirates — and boasts clients as diverse as advertising firms, electricians, hotels, paper suppliers, restaurants, translators and even zoos. (See 10 big recession surprises.)
Barter, of course, isn't new: firms routinely arrange exchanges on their own. But cultivating those relationships takes time and presents numerous hurdles. "Many direct-barter transactions don't succeed outside of our network because businesses have to match one another in timing and interest," says Wayne Sharpe, Bartercard's founder and chief executive. While a restaurant owner may need $10,000 worth of printing services in the next week, it's unlikely that any printshop owner will need the $10,000 worth of fish and chips that the restaurant can provide in return. "With our service, the transaction is complete," Sharpe says. "The restaurant owes $10,000 to the network, not to the printer."
Bartercard's bank-like system — which includes monthly statements and an interest-free line of credit — also provides security and accountability that informal bartering can't. Members must pass a credit check and sign a contract pledging to deliver goods in a timely manner. In terms of barter rates, a service that costs $600 is equivalent to 600 trade pounds; members constantly police one another, ensuring that their advertised barter rates match the rates they charge the public. (See 10 ways your job will change.)
Members are not obliged to accept barter clients all the time. "There are times of the year when our hotel is full and we know we can generate cash payments," says Stephen Hill, the owner of the 24-bedroom Hotel Penzance in Cornwall, southwest England. "There are other times when we can't — and that's when Bartercard comes into its own." Whenever Hill has unfilled rooms, he places an appeal for barter business on Bartercard's online site or through the firm's brokerages — there are currently 100 offices around the world to help connect members. If the hotel is 70% full, the cost of filling an otherwise empty room is virtually nothing. Plus, it brings in customers who may return to the hotel in the future — and spend cash. Hill, who trades roughly $100,000 a year through the service, uses his credit to pay the hotel's $650-a-month flower bill, and recently refurnished eight of the hotel's rooms without spending a penny. He's also purchased jewelry through barter and then resold it to hotel guests for a profit. The system works for personal use, too. Hill's wife has spent the hotel's barter credits on cosmetic dental work and perms, and the family recently went on a ski holiday in France on barter pounds.
All that trading means more profit for Bartercard. The privately held company charges a one-time membership fee — $1,200 to $2,400, depending on the size of the business — and a 5.5% cash and 1% trade fee on each transaction. Sharpe is confident the firm will continue to expand even as the economy improves. "Companies will need to hire new staff and restart advertising and marketing campaigns which they pulled during the recession," he says. "Bartering frees up cash for that." It's a concept he obviously believes in: the firm uses its trade credits to pay the rent on its U.K. headquarters.
When It Comes to Cash, A Thai Village Says, 'Baht, Humbug!'
By James Hookway
January 7, 2009
The villagers of Santi Suk began creating their own cash here on the sun-bleached plains of northern Thailand following Asia's financial crisis a decade ago.
Decorating their money with children's sketches of water buffaloes and Buddhist temples, the villagers conceived it as a do-it-yourself attempt to protect themselves from the whiplash of vast outflows of speculative money which undermined local currencies and threw Thailand -- and much of Asia -- into recession in 1997-98.
At the time, some villagers faced questioning before Thailand's central bank and were accused by local government officials of plotting a secessionist revolt.
Now, with Thailand's economy slowing sharply, the DIY cash is beginning to flow freely again.
"We need our own money more than ever now," says Phra Supajarawat, the wiry, orange-robed abbot of the local Buddhist monastery, who doubles as a "governor" of Santi Suk's tiny, one-room bank. "Things are turning bad in Thailand and people need something they can believe in," he says.
One of the more successful programs has been in Berkshire County, Mass. Residents there pay $10 to get 11 "BerkShares," which are widely accepted in local stores, encouraging people to shop at home instead of using dollars to buy goods online or at large retail chains. Launched in 2006, BerkShares are still being used.
The idea is that by using local currencies, residents don't spend so many dollars, Thai baht or euros, thus helping to keep more resources within their communities. And because local currencies can't be banked away to earn interest, users keep spending it, providing a boost to their area's economy.
Many villagers -- who use the local notes as a means to barter for everyday goods -- corroborate Ms. Pattamawadee's analysis. A visit to the village's early morning market reveals a brisk trade in freshly harvested vegetables and a couple of butchers are hard at work selecting cuts from a side of beef. Shoppers haggle and gossip, clutching scrip depicting local rural scenes.
"We've learned to depend on our own work," says Buasorn Saothong, a robust 54-year-old rice farmer, who also dabbles in creating herbal hangover cures. ("Just chew on this paste and five minutes later you'll throw up and feel much better," she says.)
Over the years, there has been stiff opposition among Thailand's authorities to the Santi Suk villagers' experiment. The central bank, the Bank of Thailand, declared the villagers' currency "a threat to national security" in 2001 and brought Phra Supajarawat and other villagers to Bangkok for a scolding. "If groups in the country issue something that might become a currency, it's not allowed," says Chatumongkol Sonakul, who was governor of the Bank of Thailand at the time.
The villagers of Santi Suk launched their currency, which they called "bia," the local dialect word for "seedling," in the wake of the 1997-98 crisis. At the time, many were struggling with debt problems and were receiving fewer and smaller remittances from relatives working in the Bangkok area because of the financial crisis.
Two young foreigners from international volunteer organizations, Canadian Jeff Powell and Dutchman Menno Salverda, visited the area and suggested the villagers adopt a local currency to better manage their problems.
A few months later, in 2000, local government officials and police officers arrived in the village. Phra Supajarawat went along to see what the fuss was all about. Government officials told him he was treading on the toes of the central bank. "I thought, 'Oh no, the police are going to arrest me for counterfeiting,'" he recalls, laughing.
That didn't happen. But over the following months villagers, including Phra Supajarawat, were regularly taken to Bangkok to explain their rogue currency to the authorities. In the meantime, Santi Suk's "bia" notes went underground, used in secret by a handful of families.
In 2001, Nakorn Chompoochart, a lawyer with Thailand's Law Society, offered his services to help the villagers start circulating their currency again. "I told the villagers that people in other countries also had their own local currencies, and that if anybody tried to prosecute them, I'd defend them," he says.
Phra Supajarawat says Mr. Nakorn's offer of legal support gave people of Santi Suk the confidence they needed to persevere. To this day, no legal cases have been filed against them, although to make their currency absolutely legal, Thailand's Ministry of Finance would have to officially authorize its use. That still hasn't happened. A spokesman for the Finance Ministry declined to comment.
A breakthrough came when Phra Supajarawat learned from the central bank that one of its biggest objections to the villagers' currency was its name. The term "seedling" -- "bia" -- was the same as the word for "money" in the central Thai dialect used by the central bankers in Bangkok.
So the villagers changed the name of their currency to the Thai term for "merit" instead, and circulation began to steadily increase. The government dropped its objections, and Santi Suk-style currencies have since begun to slowly spread across the rest of northeastern Thailand as neighboring villages adopt the idea. Other villages are switching to barter trade for business instead of using Thailand's national currency, says Ms. Pattamawadee, the economics professor.
Today, interest in Santi Suk's monetary experiment is picking up again. Visitors from other parts of Thailand and nongovernment organizations are streaming into Santi Suk to see how it works, despite the currency's murky legal status.
"It was a big coup for us when the local rice mill began accepting it," says Ms. Buasorn, the hangover expert. "The mill is the focal point of the local economy. It means other people now realize our money is a real alternative."
Write to James Hookway at email@example.com*******
The Money Myth Exploded
The financial enigma resolved — A debt-money system
by Louis Even
“The Money Myth Exploded” was one of the first articles of Louis Even, and remains one of the most popular to explain how money is created as a debt by private banks. It is available in the form of an 8-page leaflet (tabloid format) that you can order from the “Michael” office, in several languages: English, French, Spanish, Italian, German, Polish, Portuguese.
Hour after long hour their eyes searched the horizon. Would some passing ship sight them? Would their make-shift raft finds its way to some friendly shore?
Suddenly a cry rang out: “Land! Look! Over there, in the direction the waves are carrying us!”
And as the vague silhouette proved itself to be, in fact, the outline of a shore, the figures on the raft danced with joy.
They were five. There was Frank, the carpenter, big and energetic. It was he who had first cried, “Land!”.
Then Paul, a farmer. You can see him, front and left in the picture, on his knees, one hand against the floor, the other gripping the mast of the raft.
Next is Jim, an animal breeder; he's the one in the striped pants, kneeling and gazing in the direction of land.
Then there is Harry, an agriculturist, a little on the stout side, seated on a trunk salvaged from the wreck.
And finally Tom, a prospector and a mineralogist; he is the merry fellow standing in the rear of the picture with his hand on the carpenter's shoulder.
2. A providential islandWhen they had dried and warmed themselves their first impulse was to explore this little island on to which they had been cast, far from civilization.
To our five men, setting foot on land was like returning to life from the grave.
To our five men, setting foot on land was like returning to life from the grave.
A quick survey was sufficient to raise their spirit. The island was not a barren rock. True enough, they were the only men on it at the moment. But judging from the herds of semi-domesticated animals they encountered, there must have been men here at some time before them. Jim, the animal breeder, was sure he could completely domesticate them and put them to good service.
Paul found the island's soil, for the most part, to be quite suitable for cultivation.
Paul found the island's soil, for the most part, to be quite suitable for cultivation.
Harry discovered some fruit trees which, if properly tended, would give good harvests.
Most important were the large stands of timber embracing many types of wood. Frank, without too much difficulty, would be able to build houses for the little community.
As for Tom, the prospector, well, the rock formations of the island showed signs of rich mineral deposits. Lacking the tools, Tom still felt his ingenuity and initiative could produce metals from the ores.
So each could serve the common good with his special talent. All agreed to call the place Salvation Island. All gave thanks to Providence for the reasonably happy ending to what could have been stark tragedy.
3. True wealth
Here are the men at work.
The carpenter builds houses and makes furniture. At first they find their food where they can. But soon the fields are tilled and seeded, and the farmer has his crops.
As season followed season this island, this heritage of the five men, Salvation Island, became richer and richer.
Its wealth was not that of gold or of paper bank notes, but one of true value; a wealth of food and clothing and shelter, of all the things to meet human needs.
Each man worked at his own trade. Whatever surpluses he might have of his own produce, he exchanged for the surplus products of the others.
Life wasn't always as smooth and complete as they could have wished it to be. They lacked many of the things to which they had been accustomed in civilization. But their lot could have been a great deal worse.
Besides, all had experienced the depression in Canada. They still remembered the empty bellies side by side with stores crammed with food.
At least, on Salvation Island, they weren't forced to see the things they needed rot before their eyes. Taxes were unknown here. Nor did they go in constant fear of seizure by the bailiff. They worked hard but at least they could enjoy the fruits of their toil.
So they developed the island, thanking God and hoping for the day of reunion with their families, still in possession of life and health, those two greatest of blessings.
4. A serious inconvenience
Our men often got together to talk over their affairs.
Under the simple economic system which had developed, one thing was beginning to bother them more and more; they had no form of money. Barter, the direct exchange of goods for goods, had its drawbacks. The products to be exchanged were not always at hand when a trade was discussed. For example, wood delivered to the farmer in winter could not be paid for in potatoes until six months later.
Sometimes one man might have an article of considerable size which he wished to exchange for a number of smaller articles produced by different men at different times.
It was agreed that a system of money would indeed be very convenient. But none of them knew how to set up such a system. They knew how to produce true wealth - goods. But how to produce money, the symbol of this wealth, was something quite beyond them. They were ignorant of the origin of money, and needing it they didn't know how to produce it. Certainly, many men of education would have been in the same boat; all our governments were in that predicament during the ten years prior to the war. The only thing the country lacked at that time was money, and the governments apparently didn't know what to do to get it.
5. Arrival of a refugee
One evening, when our boys were sitting on the beach going over their problem for the hundredth time, they suddenly saw approaching a small boat with a solitary man at the oars.
They learned that he was the only survivor of a wreck. His name: Oliver.
Delighted to have a new companion, they provided him with the best that they had, and they took him on an inspection tour of the colony.
“Even though we're lost and cut off from the rest of the world,” they told him, “we haven't too much to complain about. The earth and the forest are good to us. We lack only one thing — money. That would make it easier for us to exchange our products.”
“Well, you can thank Providence,” replied Oliver, “because I am a banker, and in no time at all, I'll set up a system of money guaranteed to satisfy you. Then you'll have everything that people in civilization have.”
A banker!... A BANKER!... An angel coming down out of the clouds couldn't have inspired more reverence and respect in our men. For, after all, are we not accustomed, we people in civilization, to genuflect before bankers, those men who control the lifeblood of finance?
6. Civilization's god
“Mr. Oliver, as our banker, your only occupation on this island will be to look after our money; no manual labour.”
“I shall, like every other banker, carry out to complete satisfaction my task of forging the community's prosperity.”
“Mr. Oliver, we're going to build you a house that will be in keeping with your dignity as a banker. But in the meantime, do you mind if we lodge you in the building that we use for our get-togethers?”
“That will suit me, my friends. But first of all, unload the boat. There's paper and a printing press, complete with ink and type, and there's a little barrel which I exhort you to treat with the greatest care.”
They unloaded everything. The small barrel aroused intense curiosity in our good fellows.
“This barrel,” Oliver announced, “contains a treasure beyond dreams. It is full of... gold!”
Full of gold! The five all but swooned. The god of civilization here on Salvation Island! The yellow god, always hidden, yet terrible in its power, whose presence or absence or slightest caprice could decide the very fate of all the civilized nations!
“Gold! Mr. Oliver, you are indeed a great banker!”
“Oh august majesty! Oh honorable Oliver! Great high priest of the god, gold! Accept our humble homage, and receive our oaths of fidelity!”
“Yes, my friends, gold enough for a continent. But gold is not for circulation. Gold must be hidden. Gold is the soul of healthy money, and the soul is always invisible. But I'll explain all that when you receive your first supply of money.”
“How much money will you need to begin with in order to facilitate trading?”
They looked at one another, then deferentially towards the banker. After a bit of calculation, and with the advice of the kindly financier, they decided that $200 each would do.
The men parted, exchanging enthusiastic comments. And in spite of the late hour, they spent most of the night lying awake, their imaginations excited by the picture of gold. It was morning before they slept.
As for Oliver, he wasted not a moment. Fatigue was forgotten in the interests of his future as a banker. By dawn's first light, he dug a pit into which he rolled the barrel. He then filled it in, transplanting a small shrub to the spot about which he carefully arranged sod. It was well hidden.
Then he went to work with his little press to turn out a thousand $1 bills. Watching the clean new banknotes come from his press, the refugee turned banker thought to himself:
“My! How simple it is to make money. All its value comes from the products it will buy. Without produce, these bills are worthless. My five naive customers don't realize that. They actually think that this new money derives its value from gold! Their very ignorance makes me their master.”
And as evening drew on, the five came to Oliver — on the run.
8. Who owns the new money?
“Before distributing the money,” said the banker, “I would like your attention.
“Now, the basis of all money is gold. And the gold stored away in the vault of my bank is my gold. Consequently, the money is my money. Oh! Don't look so discouraged. I'm going to lend you this money, and you're going to use it as you see fit. However, you'll have to pay interest. Considering that money is scarce here, I don't think 8% is unreasonable.”
“Oh, that's quite reasonable, Mr. Oliver.”
“One last point, my friends. Business is business, even between pals. Before you get the money, each of you is going to sign a paper. By it you will bind yourselves to pay both interest and capital under penalty of confiscation of property by me. Oh! This is a mere formality. Your property is of no interest to me. I'm satisfied with money. And I feel sure that I'll get my money, and that you'll keep your property.”
“That makes sense, Mr. Oliver. We're going to work harder than ever in order to pay you back.”
“That's the spirit. And any time you have a problem, you come and see me. Your banker is your best friend. Now here's two hundred dollars for each one of you.”
And our five brave fellows went away, their hands full of dollar bills, their heads swimming with the ecstasy of having money.
9. A problem in arithmetic
And so Oliver's money went into circulation on the island. Trade, simplified by money, doubled. Everybody was happy.
But now, let's see... Why does Tom, the prospector, look so grave as he sits busily figuring with a pencil and paper? It is because Tom, like the others, has signed an agreement to repay Oliver, in one year's time, the $200 plus $16 interest. But Tom has only a few dollars in his pocket, and the date of payment is near.
For a long time he had wrestled with this problem from his own personal point of view, without success. Finally, he looked at it from the angle of the little community as a whole.
“Taking into consideration everyone on the island as a whole,” he mused, “are we capable of meeting our obligations? Oliver turned out a total of $1000. He's asking in return $1080. But even if we bring him every dollar bill on the island, we'll still be $80 short. Nobody made the extra $80. We turn out produce, not dollar bills. So Oliver can take over the entire island, since all the inhabitants together can't pay him back the total amount of the capital and the interest.
“Even if a few, without any thought for the others, were able to do so, those others would fall. And the turn of the first spared would come eventually. The banker will have everything. We'd better hold a meeting right away and decide what to do about it.”
Tom, with his figures in his hand, had no difficulty in proving the situation. All agreed that they had been duped by the kindly banker. They decided upon a meeting at Oliver's.
10. The benevolent banker
Oliver guessed what was on their minds, but he put on his best front. While he listened, the impetuous Frank stated the case for the group.
“That's the interest, my friends. Has not your rate of production increased?”
“Sure, but the money hasn't. And it's money you're asking for, not our products. You are the only one who can make money. You've made only $1000, and yet you ask $1080. That's an impossibility!”
“Now listen, fellows. Bankers, for the greater good of the community, always adapt themselves to the conditions of the times. I'm going to require only the interest. Only $80. You will go on holding the capital.”
“Bless you, Mr. Oliver! Are you going to cancel the $200 each of us owes you?”
“Oh no! I'm sorry, but a banker never cancels a debt. You still owe me all the money you borrowed. But you'll pay me, each year, only the interest. If you meet the interest payments faithfully each year, I won't push you for the capital. Maybe some won't be able to repay even the interest because of the money changing hands among you. Well, organize yourselves like a nation. Set up a system of money contributions, what we call taxes. Those who have more money will be taxed more; the poor will pay less. See to it that you bring me, in one lump sum, the total of the amount of interest, and I'll be satisfied. And your little nation will thrive.”
So our boys left, somewhat pacified, but still dubious.
11. Oliver exults
Oliver is alone. He is deep in reflection. His thoughts run thus:
“Business is good. These boys are good workers, but stupid. Their ignorance and naivety is my strength. They ask for money, and I give them the chains of bondage. They give me flowers, and I pick their pockets.
“True enough, they could mutiny and throw me into the sea. But pshaw! I have their signatures. They're honest. They'll honor their pledges. Honest, hardworking people were put into this world to serve the Financiers.
“Oh great Mammon! I feel your banking genius coursing through my entire being! Oh, illustrious master! How right you were when you said: `Give me control of a nation's money, and I won't mind who makes its laws.' I am the master of Salvation Island because I control its money.
“My soul is drunk with enthusiasm and ambition. I feel I could rule the universe. What I, Oliver, have done here, I can do throughout the entire world. Oh! If only I could get off this island! I know how I could govern the world without wearing a crown.
“My supreme delight would be to instill my philosophy in the minds of those who lead society: bankers, industrialists, politicians, reformers, teachers, journalists — all would be my servants. The masses are content to live in slavery when the elite from among them are constituted to be their overseers.”
Meanwhile, things went from bad to worse on Salvation Island. Production was up, and bartering had dropped to a minimum. Oliver collected his interest regularly. The others had to think of setting money aside for him. Thus, money tended to clot instead of circulating freely.
Those who paid the most in taxes complained against those who paid less. They raised the prices of their goods to compensate for this loss. The unfortunate poor who paid no taxes lamented the high cost of living, and bought less.
If one took a salaried job with another, he was continually demanding increases in salary in order to meet the mounting cost of living.
Morale was low. The joy went out of living. No one took an interest in his work. Why should he? Produce sold poorly. When they would make a sale, they had to pay taxes to Oliver. They went without things. It was a real crisis. And they accused one another of wanting in charity, and of being the cause of the high cost of living.
One day, Harry, sitting in his orchard, pondered over the situation. He finally arrived at the conclusion that this “progress”, born of a refugee's monetary system, had spoiled everything on the island. Unquestionably, all five had their faults, but Oliver's system seemed to have been specifically designed to bring out the worst in human nature.
Harry decided to demonstrate this to his friends and to unite them for action. He started with Jim, who was not hard to convince. “I'm no genius,” he said, “but for a long time now there's been a bad smell about this banker's system.”
One by one they came to the same conclusion, and they ended up by deciding to have another conference with Oliver.
13. Enslaved by Oliver
A veritable tempest burst about the ears of the banker.
“Money's scarce on the island, fellow, because you take it away from us! We pay you and pay you, and still we owe you as much as at the beginning. We work our heads off! We've the finest land possible, and yet we're worse off than before the day of your arrival. Debts! Debts! Up to our necks in debts!”
“Oh! Now boys, be reasonable! Your affairs are booming, and it's thanks to me. A good banking system is a country's best asset. But if it is to work beneficially, you must have faith in the banker. Come to me as you would to a father... Is it more money that you want? Very well. My barrel of gold is good for many thousands of dollars more. See, I'm going to mortgage your latest acquisitions, and lend you another thousand dollars right now.”
“So! Now our debt goes up to $2000! We are going to have twice as much interest to pay for the rest of our lives!”
“Well, yes — but I'll lend you more whenever the value of your property increases. And you'll never pay anything but the interest. You'll lump all your debts into one — what we call a consolidated debt. And you can add to the debt, year after year.”
“And raise the taxes, year after year?”
“Obviously. But your revenues also increase every year.”
“So then, the more the country develops each year because of our labor, the more the public debt increases!”
“Why, of course! Just as in your country – or in any other part of the civilized world for that matter. The degree of a country's civilization is always gauged by the size of its debt to the bankers.”
14. The wolf devours the lambs
“And that's a healthy monetary system, Mr. Oliver?”
“Gentlemen, all sound money is based on gold, and it comes from the banks in the form of debts. The national debt is a good thing. It keeps men from becoming too satisfied. It subjugates governments to the supreme and ultimate wisdom, that which is incarnate in bankers. As a banker, I am the torch of civilization here on your little island. I will dictate your politics and regulate your standard of living.”
“Gentlemen, I deeply regret this very ill-advised decision of yours. But if you break with me, remember, I have your signatures. Repay me everything at once — capital and interest.”
“But that's impossible, sir. Even if we give you all the money on the island, we still won't be square with you.”
“I can't help that. Did you or did you not sign? Yes? Very well.
“By virtue of the sanctity of contracts, I hereby seize your mortgaged property which was what you agreed to at the time you were so happy to have my help. If you don't want to serve willingly the supreme authority of money, then you'll obey by force. You'll continue to exploit the island, but in my interests and under my conditions. Now, get out! You'll get your orders from me tomorrow.”
15. Control of the press
On occasions, Harry, the most neutral of the five, considering that all had the same needs and aspirations, had suggested the union of the people to put pressure on the authorities. Such a union, Oliver could not tolerate; it would mean the end of his rule. No dictator, financial or otherwise, could stand before a people united and educated.
Consequently, Oliver set himself to foment, as much as possible, political strife between them.
The refugee put his press to work, turning out two weekly newspapers, “The Sun”, for the Liberals, and “The Star”, for the Conservatives.
The general tenor of “The Sun” was: “If you are no longer master, it is because of those traitorous Conservatives who have sold out to big business.”
That of “The Star”: “The ruinous state of business and the national debt can be traced directly to the political responsibility of those unmentionable Liberals.”
16. A priceless bit of floatsam
One day, Tom, the prospector, found on a small beach, hidden by tall grass at one end of the island, a lifeboat, empty except for a trunk in good condition lying in the bottom of it.
He opened the trunk. Among the articles within, a sort of album caught his eye: “The First Year of Social Credit”. Between the covers he found the first of a Social Credit publication.
Curious, Tom sat down and began to read the volume. His interest grew; his face lit up.
“Well, just look at this!” he cried out loud. “This is something we should have known a long time ago.”
“Money gets its value, not from gold, but from the products which that money buys.
“Simply put, money should be a sort of accountancy, credits passing from one account to another according to purchases and sales. The sum total of money will depend upon the sum total of production.
“Each time production increases, there is a corresponding increase in the amount of money. Never at any time should interest be paid on new money. Progress is marked, not by an increase in the public debt, but by the issuance of an equal dividend to each individual... Prices are adjusted to the general purchasing power by a coefficient of prices. Social Credit...”
But Tom could no longer contain himself. He got up and set off at a run, the book in his hands, to share this glorious discovery with his four comrades.
17. Money — elementary accounting
So Tom became the teacher. He taught the others what he had learned from that God-sent Social Credit publication.
“This,” he said, “is what we can do without waiting for a banker and his keg of gold, nor without underwriting a debt.
“I open an account in the name of each one of you. In the right hand column are the credits which increase your account; to the left are the debits which subtract from your account.
“Each wants $200 to begin with. Very well. We write $200 to the credit of each. Each immediately has $200.
“Frank buys some goods from Paul for $10. I deduct $10 from Frank, leaving him $190. I add $10 to Paul, and he now has $210.
“Jim buys from Paul to the amount of $8. I deduct from Jim $8, leaving him $192. Paul now has $218.
“Paul buys wood from Frank for $15. I deduct $15 from Paul, leaving $203. I add $15 to Frank's account, and it goes back to $205.
“And so we continue; from one account to another, in the same fashion that paper banknotes go from one man's pocket to another's.
“If someone needs money to expand production, we issue him the necessary amount of new credit. Once he has sold his products, he repays the sum to the credit fund. The same with public works; paid for by new credits.
“Likewise, each one's account is periodically increased, but without taking credits from anyone, in order that all may benefit from the progress society makes. That's the national dividend. In this fashion, money becomes an instrument of service.”
18. The banker's despair
Everyone understood. The members of this little community became Social Crediters. The following day, Oliver, the banker, received a letter signed by the five:
Oliver was in despair. His empire was crumbling. His dreams shattered. What could he do? Arguments would be futile. The five were now Social Crediters: money and credit were now not more mysterious to them than they were to Oliver.
“Oh!” said Oliver. “These men have been won to Social Credit! Their doctrine will spread far more quickly than mine. Should I beg forgiveness? Become one of them? I, a financier and a banker? Never! Rather, I shall try and put as much distance between them and me as I can!”
19. The fraud unmasked
To protect themselves against any future claim by Oliver, our five men decided to make him sign a document attesting that he again possessed all he had when he first arrived on the island.
An inventory was taken; the boat, the oars, the little press, and the famous barrel of gold.
Oliver had to reveal where he had hidden the gold. Our boys hoisted it from the hole with considerably less respect than the day they had unloaded it from the boat. Social Credit had taught them to despise gold.
The prospector, who was helping to lift the barrel, found it surprisingly light for gold. If the barrel was full, he told the others, there was something in it besides gold.
The impetuous Frank didn't waste a moment; a blow of the axe, and the contents of the barrel was exposed.
Gold? Not so much as a grain of it! Just rocks — plain, worthless rocks! Our men couldn't get over the shock.
“Don't tell us that he could bamboozle us to this extent!”
“Were we such muttonheads as to go into raptures over the mere mention of gold?”
“Did we mortgage all of our possessions for a few pieces of paper based on a few pounds of rocks? It's a robbery, compounded with lies!”
“To think that we sulked and almost hated one another all because of such a fraud! That devil!”
Furious, Frank raised his axe. In great haste, the banker has already taken flight towards the forest.
20. Farewell to Salvation Island
After the opening of the barrel, and the revelation of his duplicity, nothing further was heard of Oliver.
Shortly after, a ship, crusing off the normal navigation route, noticed signs of life on this uncharted island, and cast anchor a short distance offshore.
The men learned that the ship was en route to America. So they decided to take with them what they could carry, and return to the United States.
Above all, they made sure to take back with them the album, “The First Year of Social Credit”, which had proven to be their salvation from the hands of the financier, Oliver, and which had illumined their minds with an inextinguishable light.
All five solemnly promised to get in touch with the management of this paper, once back in America, and to become devoted and zealous apostles of the Cause of Social Credit in their country.
From parable to reality
A debt-money system
The debt-money system introduced by Oliver into the Salvation Island made the little community sink into financial debt in proportion as it developed and enriched the island by its own work.
This is exactly what happens in our civilized countries, is it not?
Canada of today is certainly richer, in real wealth, than it was 50, 100 years ago, or in the pioneers' age. But compare the national debt, the sum of all public debts of Canada today with this sum 50, 100 years, three centuries ago!
Yet the Canadians themselves produced this enrichment by their labour and their know-how. Then why should they be collectively indebted for the result of their own activities?
For example, consider the schools, the municipal aqueducts, the bridges, roads and other fabrics of public character. Who build them all? Builders of the country. Who supply them with the needed materials? Manufacturers of the country. And how come they can be employed in public works ? Because there are other kinds of workers who produce food, clothes, shoes, who supply all the things and services required for the wants of the constructors and manufacturers.
Thus the whole population of Canada by its work of different kinds, produce all those developments. If we must obtain goods from abroad, we send other goods abroad in counterpart of them.
Now, what do you see? Everywhere the citizens are taxed to pay those schools, those hospitals, those bridges, roads and other public works. The Canadians, as a collectivity, are thus compelled to pay what they produce as a collectivity.
You pay much more than the double price
And this is not all. The population is made to pay more than the price of what it produced. Their own production — a real enrichment — has become for the Canadians a debt burdened with interest. When years add to years, the sum of the interests can equal or even exceed the amount of the debt imposed by the system.
It happens that the population may have to pay two, three times the cost of what its members produced.
In addition to the public debts, there are industrial debts, also loaded with interests. They compel the manufacturers and contractors to increase their prices beyond the cost of production, in order to reimburse the capital and the interests; otherwise they would become insolvent, bankrupt.
Both public and industrial debts are paid, plus interest, by the Canadian population, to the financial system. We pay taxes for the public debts, and a surplus of price for the industrial debts. Prices are swelling while the purse is flattened by taxes.
A tyrannical system
These and many other facts are indicative of a money system, a financial system which controls instead of being a servant; a system to dominate the people — as Oliver dominated the fellows of the Island before they rebelled.
And if the money masters refuse to lend, or if they make their conditions unbearable for the public bodies or for the manufacturers, what happens? It happens that the public bodies give up many projects, no matter how urgent; and the manufacturers give up development or production plans that would answer to real needs of Canadians. This is a cause of unemployment. And those who still have something, or who earn a salary, must be taxed to prevent the unemployed from starving completely.
Can you imagine a more tyrannical system, with so baneful effects on every Canadian?
A bar to distribution
And this is not all. Not only the money system indebts the producers, or paralyzes the production it refuses to finance, but it is a wretched financial tool for the distribution of the goods.
Notwithstanding the fact that stores, shops and warehouses are full, and that everything is at hand for an even greater production, the distribution of the goods already produced is stinted.
You can obtain only what you can pay. In face of an abundant production, there should be an abundance of purchasing power, of money in the wallets of the people. Such is not the fact. The price of the finished goods is always higher than the amount of money distributed as purchasing power in the course of their production. This is inherent to the accountancy of the present system of finance which has no mechanism to fill the gap.
The capacity to pay is not made to equal the capacity to produce. Finance and reality do not work at the same rate. Reality means an abundance of goods easy to produce. Finance means a lacking money hard to obtain.
To correct what is wicked
Thus the present money system is truly an oppressive one, when it should be a system of service.
This does not mean that we must do away with it, but we must correct it. The application of the financial principles known as Social Credit would make this correction magnificently. (Do not confound Social Credit with the political party which usurps that name while pursuing other ends and practising an adverse policy.)
The principles of Social Credit, when applied, would make the money system a servant instead of a master. They were discovered and enunciated by a genius, C. H. Douglas (deceased in 1952). His first writings on this subject were published in 1918.
Not a Political Party
The first idea that comes to the mind of too many people living in Canada, when they hear the words Social Credit, is the idea of a political party. But no. Social Credit is not a party, although there was a party by that name. Social Credit is no more a party than Christianity is a party, even if, in some countries you find political parties with such names as Christian Democrats, Christian Party, Christian Center, etc. A political party exists purposely to seek power, to be or strive to be the group that rules the country.
Social Credit works in the very opposite way. Social Credit will set the individual free; it will place the individual in a situation where he can himself be the ruler of his own life. Social Credit will thus distribute power to individuals not the power to boss their neighbours, but the power to order the goods they want from the potential production of their country.
Social Credit. Exact. Logical. Humane
Social Credit considers realities. It refuses to be hypnotized by the halo with which finance has been surrounded.
The economic realities are, on one hand, the production; not only the existing production, but the production immediately possible, the production capacity; and they are, on the other hand, the human needs.
Social Credit gives priority to the realities over the financial signs that are not realities, that must simply represent, and faithfully represent, the realities.
Real credit and financial credit
This is why Social Credit makes a distinction between real credit (a reality) and financial credit (a representation).
The word "credit" comes from the Latin word "credere" and bears the idea of confidence. Even in everyday language, to give credit to someone, is it not to indicate that we have confidence in him?
Social Credit calls real credit of a country what really gives confidence in that country, confidence that one can live there without too much difficulty. The real credit of a country is its production capacity. It is its degree of possibility to produce and deliver the goods to the needs.
And Social Credit affirms that financial credit must be the exact representation of the real credit.
It is therefore the production capacity that must determine the movement of finance. It is absolutely not for finance to command, paralyze or limit the production capacity.
This is why Social Credit demands the establishment of a credit office that would keep an account of national (or provincial) credit. Any production, those of consumption goods and those of capital goods, would then be entered as an increase of wealth. And all consumptions (or destruction, or depreciation) would then be entered as a decrease of wealth. The net increase in wealth would be production minus consumption.
With very few and passing exceptions where a country would live at the expense of another, the production of a country surpasses its consumption. The country is becoming richer. It is therefore absurd to say that it is going into debt. The public debt is an absurdity.
And when a country is getting richer, its citizens must certainly draw advantage of it. This is what Social Credit recognizes, when speaking of a dividend to all, instead of debts and taxes on everyone.
Money without inflation
The present system is subject to inflation. Inflation means rising prices.
When money cannot begin without, as today, creating a debt, it is necessary that ways be found to draw from the public more money than there was put into circulation, so as to refund the debt plus the interest of the debt. Whence taxes, that are added to prices or that diminish the purchasing power before the prices. Whence also increases of prices by industrials, who must draw from the public only the money to pay for the products, but also for the financial charges, the interests on the industrial loans.
Social Credit would suppress this cancer, this tumor upon the prices, since the production would be an increase of wealth, and not an indebtedness.
And, Social Credit would lower the prices to be paid by the buyers, since it would have the community pay only what it consumes, and not all what it produces.
If, as an example, in the whole country, the consumption was only equal to three quarters of the production, the buyers would only pay, on any article bought by them, only three quarters of the accounting price. The Credit Office would take care of compensating the retailer so that he may recuperate all of his accounting price.
This means that the amounts of money included in the prices, but not having reached the hands of the public, or directed towards saving or investment, are not applied to the purchase of the production, would be by the organism of credit replaced to the benefit of those who are in need of the products. This would prevent the accumulation of products in the face of needs. And the mechanism to do it would have the advantage of operating with a decrease in prices, therefore in eliminating all possible inflation.
A dividend to everyone
The periodic dividend to everyone, recommended by Social Credit, is also in conformity with the economic realities.
The modern production, in fact, is more and more the result of applied science, of inventions, of improvements in production techniques, and of all these things that constitute a common good: an heritage transmitted and increased from one generation to the other. The modern production is less and less the result of individual labour.
Hoping to distribute the production only through the reward of human labour, is therefore contrary to the facts. It is at the same time impossible, for the money distributed as recompense for work can never buy the production that contains other elements in its prices.
Seeking salary increases with decreases in human labour, is also to change the meaning of the word salary. It is no more a recompense for work; it is the inclusion in the salary of the hired persons of what should be a dividend for all, since it is the fruit of progress and not of labour. This deviation is a hindrance to the desired goal, since in becoming a salary instead of remaining a dividend, these additional amounts go into the prices.
Social Credit would distribute the dividend to everyone, directly, without charging it to industry. It would truly raise everyone's purchasing power.
Besides being the recognition of a very productive community capital, this social dividend would at the same time be an excellent way of satisfying the primitive destination of the earthly goods. "Earth and its riches were created for all men" (Pius XII). This is totally ignored by the present economic regime in its financial technique of distribution.
Social Credit would thus directly establish an adequate repartition of the goods of nature and of industry, instead of leaving the task to the surgery of taxation, that amputates and grafts continually, without ever healing the disease.
A share to each and everyone, guaranteed by the dividend to each and everyone from birth till death; and this share should be sufficient to at least insure what is necessary for life.