Re: Four Demands--reply to Shann

11)  First of all, Shann, the concept is macroeconomic and does not apply
to individual investors or what they individually expect.

Secondly, the comment that commercial investors expect  productive assets
to be self-liquidating  "as they cannot make a profit" "until they
recover their investment" reflects a profound lack of understanding of
double entry accounting.
Through double entry accounting investors can and do book a profit from
day one through such techniques as depreciation, which allows them to
book TODAY'S disbursements as "expenses" against TOMORROW'S sales which
are prospectively greater than today's sales. 

Remember that Douglas was not only an engineer but an experienced
cost-accountant who solved important technical problems at Farnborough.

Look again at the diagram attached.

Let the curve at T1 represent increasing entrepreneurial disbursements or
"investment" in an expanding economy.

Let T2 then represent in reflux increasing sales or "effective demand."

Let T3 represent "expenses" charged against sales through the conventions
of accounting.

The "profit" at TX is instantaneously measured T2 - T3.

The dynamic relationship through time is T1 > T2 > T3.

Double entry accounting was the singular financial innovation that made
possible the Industrial Revolution.  It's theoretical basis is poorly
understood by even most accountants. 

If you are too hard headed to at least investigate this the discussion is
indeed futile.

Bill





On Sat, 01 Sep 2001 09:42:56 +1000 Shann Turnbull
<sturnbull@mba1963.hbs.edu> writes:
> At 04:15 AM 1/9/2001, you wrote:
> 
> >8)  Before I forget let me also thank Rodney for the copy of his 
> book 
> >which he so graciously sent.
> >
> >In that book he makes the following statements:
> >"Capital can distribute the income to purchase its output within an 
> open 
> >private property system on market principles."
> >"Capital can buy itself on credit and pay for its cost of 
> acquisition out 
> >of its future earnings."
> >Of course Social Credit disputes both these assertions.
> >
> >Douglas was not the first to observe that the financial system is 
> not in 
> >fact "self-liquidating."  There are empirical, inductive and 
> analytical 
> >demonstrations that this is so.
> 
> The information contained in the rebuttal by Bill Ryan to Rodney 
> Shakespeare has discouraged me from trying to learn any more about 
> social 
> credit unless there has been a misunderstanding.  All commercial 
> investors 
> expect productive assets to be self-liquidating as they cannot make 
> a 
> profit until they recover their investment. If this is not accepted 
> then 
> discussion becomes futile.
> 
> I cannot locate details of the "four demands".  Could someone 
> restate them 
> or provide an archivial reference please?
> 
> 
> 
> 
> 
> 
> 
> Shann Turnbull  Ph.D.
> P.O. Box 266 Woollahra, Sydney, Australia, 1350
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> Life long E-mail: 
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> Papers at: 
> http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=26239
> with other papers & book at http://cog.kent.edu/library.html