Sunday, April 29, 2007

Money and Banking

By: Socred - B.A., SCMP

If the public is unfamiliar with the techniques of money and banking, then they will never understand how the current monetary system governs them. Further,if a monetary system governs individuals, then we have a system controlling men, and since men are above all systems, it is essential that we, as individuals, control the monetary system. In order to control a system, we must understand its techniques. Before trying to understand the techniques of money creation, we must first ask ourselves what is money, and what is its purpose?

"It is absolutely vital to realize that the essential part of money is the belief that through its agency you can satisfy your demands. (C.H. Douglas, "The Control and Distribution of Production")

Money is essentially effective demand. We place our money down in the faith that another will depart with a good or service in exchange for it. It allows us to carry on trade without barter. Money makes it possible for men to associate together in a manner which is beneficial to everyone. Therefore; money is essential to our economy. But, our demands can only be satisfied if money delivers goods and services. Therefore; the basis for the quantity of money, or the limit to our demand, is the ability of the productive system to deliver goods and services when and where they are needed. What does this mean? For one, it means that the basis upon which the quantity of money is determined has nothing to do with any of the physical properties of money itself.

"The best definition of money with which I am acquainted is that of Professor Walker, which is that "money is any medium which has reached such a degree of acceptablility that, no matter what it is made of, and no matter why people want it, no one will refuse it in exchange for his product." You will see that this definition rules out any physical properties in respect of money. The properties that are left, therefore, are not physical. They can be summed up in the word "credit," which is, of course, derived from "credere," to believe. The essential quality of money, therefore, is that a man shall believe that he can get what he wants by the aid of it. This is absolutely the only quality that it is required to possess, although, of course, certain minor attributes, such as convenience, have a bearing on the decision as to what particular description of money, if it fulfils the major requirements, is likely to come into the most general use. The cheque, no doubt, owes its popularity to this latter attribute." (C.H. Douglas, "Warning Democracy")

Money's value does not derive from its composition, but by the capacity of the economy to produce goods and services. This automatically rules out gold as an appropriate determination for the quantity of money. There is no real resemblance between the quantity of gold in existence, and the economy's ability to produce. Reality must reign supreme lest an abstraction have precedence over it, and money is an abstraction. Money should be a measure of wealth, and should never control our creation of it. Whatever is physically possible is financially possible.

"Money is nothing whatever but a ticket system which has nothing whatever to do with all these abstract descriptions of it such as a medium of exchange, or a storehouse of values or any of these other things. It is a ticket system and nothing else." (C.H. Douglas, Testimony before the Alberta Agricultural Commission)

Douglas compared money to a ticketing system, because it is a means of distributing production. The only real limit to the amount of railway tickets issued is the number of seats on the train. The number of railway tickets should never be a limit on the number of people who board the train, for the latter is an inversion of reality. In other words, money should never be a limiting factor on production: production should be a limiting factor on money.

"There is also a nebulous idea involved, I think, to the effect that the man who grows, e.g. a ton of potatoes, also grows the purchasing-power of a ton of potatoes. The facts are far otherwise, as no doubt large numbers of potato-growers could testify. Given a fixed amount of legal tender, and assuming legal tender to be the only purchasing-power, no amount of production would increase it. Probably a minimum of nine-tenths of the immediately available purchasing-power in the world arises out of bank loans or their equivalent in bills discounted. These loans and the purchasing-power which they create have no automatic relation to either production or consumption. " (C.H. Douglas, "Social Credit")

Many people have a vague conception that the production system somehow manufactures money, and in so doing, create enough money to liquidate all costs of production. This idea is perpetuated by the belief that firms "make money" when they earn a profit. Of course, if companies literally "made money", they would be engaged in counterfeiting. The truth is money is not created by production, but is created by the banking system. Central banks are responsible for creating cash, and commercial banks create the majority of the assets used as money. The amount of cash in existence is determined by people's desire to hold cash. As Douglas states above, probably 90% of the money supply is created by commercial banks in the forms of loans to businesses and individuals. This money is called bank credit. Below are some quotes about banks and their ability to create money:

"In the normal course of their operations, banks create money" (Blomqvist, Wonnacott, and Wonnacott, "Economics First Canadian Edition"pge. 201)

"The actual process of money creation takes place primarily in banks." (Federal Reserve, "Modern Money Mechanics")

"Commercial banks and other financial institutions provide the greater part of assets used as money through loans made to individuals and businesses. In that sense, financial institutions are creating money. " (Bank of Canada, "Bank in Brief")

"The process by which banks create money is so simple that the mind is repelled." (John Kenneth Galbraith)

This idea may be novel to some, so it is important to understand exactly how banks create deposits. The process is known as deposit expansion. Many mistakenly believe that banks loan deposits. They believe that when they deposit their money in a bank, the bank somehow loans all, or part, of their deposit to another. This would only be true if a bank debited the depositor's account when they made a loan. Sceptics should ask themselves if they have ever had their bank account debited by any bank because the bank loaned their deposit to someone else. In reality, banks do not loan deposits but create them. Or, as Mr. McKenna, Chairman of the Midland bank, said, "every bank loan and every purchase of securities by a bank creates a deposit, and the withdrawal of every bank loan, and the sale of securities by a bank, destroys a deposit (AGM Midland Bank, January 25, 1924.) The process is explained by the Federal Reserve below assuming that the Fed's open market operations create $10,000 in cash reserves:

"How the Multiple Expansion Process Works
If the process ended here, there would be no "multiple" expansion, i.e., deposits and bank reserves would have changed by the same amount. However, banks are required to maintain reserves equal to only a fraction of their deposits. Reserves in excess of this amount may be used to increase earning assets - loans and investments. Unused or excess reserves earn no interest. Under current regulations, the reserve requirement against most transaction accounts is 10 percent.(5) Assuming, for simplicity, a uniform 10 percent reserve requirement against all transaction deposits, and further assuming that all banks attempt to remain fully invested, we can now trace the process of expansion in deposits which can take place on the basis of the additional reserves provided by the Federal Reserve System's purchase of U. S. government securities.

The expansion process may or may not begin with Bank A, depending on what the dealer does with the money received from the sale of securities. If the dealer immediately writes checks for $10,000 and all of them are deposited in other banks, Bank A loses both deposits and reserves and shows no net change as a result of the System's open market purchase. However, other banks have received them. Most likely, a part of the initial deposit will remain with Bank A, and a part will be shifted to other banks as the dealer's checks clear.

It does not really matter where this money is at any given time. The important fact is that these deposits do not disappear. They are in some deposit accounts at all times. All banks together have $10,000 of deposits and reserves that they did not have before. However, they are not required to keep $10,000 of reserves against the $10,000 of deposits. All they need to retain, under a 10 percent reserve requirement, is $1000. The remaining $9,000 is "excess reserves." This amount can be loaned or invested. See illustration 2.

If business is active, the banks with excess reserves probably will have opportunities to loan the $9,000. Of course, they do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers' transaction accounts. Loans (assets) and deposits (liabilities) both rise by $9,000. Reserves are unchanged by the loan transactions. But the deposit credits constitute new additions to the total deposits of the banking system. See illustration 3.

Expansion - Stage 1
3.Expansion takes place only if the banks that hold these excess reserves (Stage 1 banks) increase their loans or investments. Loans are made by crediting the borrower's account, i.e., by creating additional deposit money. back

Assets Liabilities
Loans....... +9,000 Borrower deposits.... +9,000

This is the beginning of the deposit expansion process. In the first stage of the process, total loans and deposits of the banks rise by an amount equal to the excess reserves existing before any loans were made (90 percent of the initial deposit increase). At the end of Stage 1, deposits have risen a total of $19,000 (the initial $10,000 provided by the Federal Reserve's action plus the $9,000 in deposits created by Stage 1 banks). See illustration 4. However, only $900 (10 percent of $9000) of excess reserves have been absorbed by the additional deposit growth at Stage 1 banks. See illustration 5.

The lending banks, however, do not expect to retain the deposits they create through their loan operations. Borrowers write checks that probably will be deposited in other banks. As these checks move through the collection process, the Federal Reserve Banks debit the reserve accounts of the paying banks (Stage 1 banks) and credit those of the receiving banks. See illustration 6.

Whether Stage 1 banks actually do lose the deposits to other banks or whether any or all of the borrowers' checks are redeposited in these same banks makes no difference in the expansion process. If the lending banks expect to lose these deposits - and an equal amount of reserves - as the borrowers' checks are paid, they will not lend more than their excess reserves. Like the original $10,000 deposit, the loan-credited deposits may be transferred to other banks, but they remain somewhere in the banking system. Whichever banks receive them also acquire equal amounts of reserves, of which all but 10 percent will be "excess."

Assuming that the banks holding the $9,000 of deposits created in Stage 1 in turn make loans equal to their excess reserves, then loans and deposits will rise by a further $8,100 in the second stage of expansion. This process can continue until deposits have risen to the point where all the reserves provided by the initial purchase of government securities by the Federal Reserve System are just sufficient to satisfy reserve requirements against the newly created deposits.(See pages10 and 11.)

The individual bank, of course, is not concerned as to the stages of expansion in which it may be participating. Inflows and outflows of deposits occur continuously. Any deposit received is new money, regardless of its ultimate source. But if bank policy is to make loans and investments equal to whatever reserves are in excess of legal requirements, the expansion process will be carried on." (Modern Money Mechanics, U.S. Federal Reserve)

Any individual bank is not concerned with what stage in the process of deposit expansion they exist when making loans, because the inflows and outflows of deposits occur continuously. The important point to note is that bank loans create deposits/money. The loan is an asset to the bank because the borrower owes the bank the amount of the loan, plus interest. The deposit is a liability to the bank because the bank must now be able to supply cash for the deposit upon demand. Commercial banks cannot create cash, but have to borrow it from the Central Bank, so there is a limit to how much money, or how many deposits, a commercial bank can create, and that limit is based upon the ratio of reserves to deposits. As to the banking system as a whole, including Central Banks, there is absolutely no limit to the amount of money, or credit, that can be created. Cash is an asset to the bank, and along with its securities, forms the banks reserves. In most nations, the government mandates, through law, the amount of reserves a bank must keep in ratio to its deposits. In Canada, changes to the Bank Act in 1992 did away with any legal obligation of Chartered Banks to hold reserves in ratio to their deposits. However; all banks keep a certain amount of reserves in ratio to their deposits for liquidity purposes. When banks are unable to meet their clients' demand for cash, this is known as a "bank run". Because of the possibility of bank runs, the Canadian Deposit Insurance Corporation, and the Federal Deposit Insurance Corporation in the United States, insure deposits up to a certain limit. In order to understand how banks obtained the power to create money, we must understand the history of fractional reserve banking.

"It started with goldsmiths. As early bankers, they initially provided safekeeping services, making a profit from vault storage fees for gold and coins deposited with them. People would redeem their "deposit receipts" whenever they needed gold or coins to purchase something, and physically take the gold or coins to the seller who, in turn, would deposit them for safekeeping, often with the same banker. Everyone soon found that it was a lot easier simply to use the deposit receipts directly as a means of payment. These receipts, which became known as notes, were acceptable as money since whoever held them could go to the banker and exchange them for metallic money.

Then, bankers discovered that they could make loans merely by giving their promises to pay, or bank notes, to borrowers. In this way, banks began to create money. More notes could be issued than the gold and coin on hand because only a portion of the notes outstanding would be presented for payment at any one time. Enough metallic money had to be kept on hand, of course, to redeem whatever volume of notes was presented for payment.

Transaction deposits are the modern counterpart of bank notes. It was a small step from printing notes to making book entries crediting deposits of borrowers, which the borrowers in turn could "spend" by writing checks, thereby "printing" their own money." (Modern Money Mechanics, U.S. Federal Reserve)

The goldsmiths realized they could issue more notes than the amount of gold coin they had on deposit, because only a portion of the notes they had outstanding would be redeemed for gold coins at any point in time. This is also true with cash today. The banks realize that only a portion of the money that people have on deposit with the bank will be redeemed for cash at any point in time, so they create more deposits than they have cash. This works so long as everyone does not demand cash for their deposit.

We see from above that the productive system, and the banking system, are two distinct factors in the economy. The productive system is responsible for producing goods and services, and the banking system is responsible for creating the money necessary to act as effective demand to mobilize those goods and services. The banking system is the distributive system, and far from money originating from the productive system, like the scent from a rose; money originates from a completely separate system; as such, there is often no correspondence between these two systems. Therefore, " it is necessary to transform the basis of the credit-system entirely away from currency on which it now rests, to useful productive capacity." (C.H. Douglas, "The Control and Distribution of Production")

Money's role is to distribute the goods and services that people demand. It's an order system. Since there is no limit to the ability of banks to create money, the only limitation that should be imposed on the amount of money in existence should be the ability of the economy to deliver goods and services when and where they are required - i.e. the real credit of the community. Our ability to produce is based on the physical assets of our nation. Money's role is the monetization of those assets in order that they can be mobilized for production. Douglas created a hypothetical balance sheet for Great Britain in the "Monopoly of Credit", which is reproduced below:

Great Britain Limited


(Population. Education Morale) i.e. Human potential



Natural Resources

Developed Power

Plant (Railways, Buildings, Tools, etc.)

Public Services

Goodwill (Tradition, reputation etc.)

Work in Progress

Consumable Goods


National Debt

Bankers (Potential creators of effective demand)

Insurance Companies (Mortgage and Bondholders)

Cash at Call

Taxation for Public Services

Notice that cash is a liability, so the amount of credit created by the current banking system is based on a liability, not on the assets of the nation. However; the amount of credit created should be based on the real credit of the community, which is reflected in the nation's assets.

"We know quite well that the core of this problem is in the disparity between the real wealth available and the monetization of that wealth; that it is within the power of monetization of real wealth that this power of credit lies." (C.H. Douglas, Testimony before the Alberta Agricultural Commission)

The power of credit creation, or the monetization or wealth, has been appropriated by a monopoly of credit - the banking system - which is a body of unelected people responsible solely to their shareholders, and who have been centralizing their power since the creation of the Bank of England in 1694. This centralization process continued with the creation of Central banks around the world including the Federal Reserve Bank in 1913, the Bank of Canada in 1934, and culminating with supranational banks like the IMF and World Bank, which were created in 1944. Not only is the basis of our current money system fundamentally flawed because it is not based on the real credit of the community, but the system itself has become a form of government which has been centralizing its power to the point of being above any national power. Therefore; the real government is not the one that is elected by ballot box every few years, but is a centralized body of unelected officials which dictate monetary policy from organizations which are beyond any national law.

Saturday, April 21, 2007

Systems and Social Credit

By: Socred - B.A., SCMP

C.H. Douglas claims that the self-development of man is above all systems. Therefore; any economic, political, or theological system which does not allow individuals the freedom to express themselves in a manner leading to self-development is tyrannical. Douglas believed that there exists three alternative polices for an economic system:

"In regard to (a) the policy of the world economic system amounts to a philosophy of life. There are really only three alternative policies in respect to a world economic organisation: The first is that the end in itself for which man exists. The second is that while not an end in itself, it is the most powerful means of constraining the individual to do things he does not want to do; e.g., it is system of government. This implies a fixed ideal of what the world ought to be. And the third is that the economic activity is simply a functional activity of men and women in the world; that the end of man, while unknown, is something towards which most rapid progress is made by the free expansion of individuality, and that, therefore, economic organisation is most efficient when it most easily and rapidly supplies economic wants without encroaching on other functional activities." (C.H. Douglas, "Warning Democracy")

Since Douglas did not see economic systems as an end in themselves, but only as a means to meeting the end of individual self-development, the first policy is not consistent with Social Credit. The second alternative posits a policy of the way the world ought to be, but again, Douglas claimed that, "so far as the word 'ought' has any meaning, it postulates the existence of a force so far undemonstrated", and therefore, we must conclude that an economic system as a form of government is not what Douglas had in mind. Social Credit economics is positive, and contrasts with any economic theories which are normative. Consequently; it is the third policy that Douglas extrapolates which is consistent with Social Credit. This implies that our needs and wants are best satisfied when an economic system allows the free expansion of individual activity.

"That is to say, we must build up from the individual, not down from the state." (C.H. Douglas, "Economic Democracy")

The antithesis of Social Credit policy is the exaltation of the state, together with the financial methods in which it is maintained, over the individual. This policy is fundamentally anti-Christian. When John F. Kennedy said, "And so, my fellow Americans: ask not what your country can do for you - ask what you can do for your country", this was not only contrary to Social Credit policy, it is contrary to his statement in the same speech in which he said, "the rights of man come not from the generosity of the state, but from the hand of God". Individual rights come from God, not the abstraction known as the state. Therefore; it is the state that should be asking what it can do for us. John F. Kennedy's famous quote is fundamentally anti-Christian.

"The modern theory, if it can be called modern, of the totalitarian state, for instance, to the effect that the state is everything and the individual nothing, is a departure from those principles, and is a revamping of the theory of the later Roman Empire, which theory, together with the financial methods by which it was maintained, led to Rome's downfall, not by the conquest of stronger Empires, but by its own internal dissensions. It is a theory involving complete inversion of fact, and is, incidentally, fundamentally anti-Christian, in that it exalts the mechanism of government into an end rather than a means, and leads to the assumption that individuals exist for the purpose of allowing officials to exercise power over them." (C.H. Douglas, "Tragedy of Human Effort")

The exaltation of the state over the individual is an inversion of fact, because the state is merely an abstract representation of the individuals which comprise it. The individual is the basic building block from which all systems derive. Any political, economic, or theological system which represses the free expression of individuality is doomed to failure. We see this with examples such as the later Roman Empire, to the dominance of the Catholic Church in the Middle Ages, to the Soviet Union. Individuals will ultimately break free from any system which seeks to dominate them. This is a good lesson to the West in terms of its foreign policy towards the non-democratic states in the Middle East. These theocracies try to repress individual expression, and these states are doomed to failure via their own internal dissension. It is a mistake to unite them against a common enemy other than the theological system which is imposed upon them. The western world should to be a beacon of light for others to follow, not a force of darkness for others to hate. Unfortunately; a hidden form of government has led to our own fight against a system imposed upon us from above.

"When a monetary system dictates your actions, then you are governed by money, and you have the most subtle, dangerous and undesirable form of government that the perverted mind of man - if it is the mind of man - has ever conceived." (C.H. Douglas, "Approach to Reality")

Money is the most subtle form of government, because people don't realize that they are being governed by a monetary system. There are few people who comprehend how money is created, let alone, how it is used to govern them. If the public is ignorant as to the techniques of money and banking, they will never realize how the monetary system governs them. The current monetary system is dangerous, because as Douglas said, "money is an abstraction", and an abstraction should never have authority over the extant. This is an inversion of reality, and as an old saying goes, "Demon est deus in versus - the devil is God upside down " The world is being ruled by a monetary system which deprives man of the ability to achieve self-development, because it does not accurately represent the reality of the economic conditions upon which it should be based.

"Considered as a means of making people work (an aim which is common both to the Capitalist and Socialist Party politics) the existing financial system, as a system, is probably nearly perfect. Its banking system, methods of taxation and accountancy counter every development of applied science, organisation, and machinery, so that the individual, instead of obtaining the benefit of these advances in the form of a higher civilisation and greater leisure, is merely enabled to do more work." (C.H. Douglas, "Warning Democracy")

Technology, improvement in processes, and increases in the amount of physical capital are constantly reducing the amount of hours necessary to produce goods and services. This means that we can continue to produce the same amount with less labour; we can produce more with the same amount of labour, or any combination of the two. This fact has significantly increased in importance since the beginning of the industrial revolution, which resulted in the replacement of human energy with solar energy. The current economic system fails to reflect this fact. The invention of technologies such as the computer, which should have freed us from many hours of work, has simply been a tool enabling us to do more work. This is because the existing financial system, whether governed by a political party from the "left" or the "right", is ultimately governed by a policy of full employment. This policy is an inversion of the facts, and as a result, is both anti-Christian and tyrannical.

"In regard to the objective of policy, as applied to human affairs, I can say nothing to you which has not been better said by the great teachers of humanity, One of whom said "I came that you might have life and have it more abundantly." So far as I am aware, no great teacher of humanity has ever announced that he came that we might have better trade or more employment, and I am wholly and irrevocably convinced that while we exalt a purely materialistic means into an end, we are doomed to destruction. (C.H. Douglas, "Tragedy of Human Effort").

Douglas believes that most men, left to their own devices, would choose a less materialistic, and more spiritualistic existence. It is only through the efforts of anti-Christian forces that a materialistic end to man is sought. Given the freedom to choose between a materialistic existence based upon work for its own sake, or a spiritual one based upon leisure, Douglas believes that most men will choose the latter. Leisure is often confused with the concept of "loafing". The Greeks understood that leisure differed from rest. Leisure is the freedom to pursue activities that lead to self-development. The statement that "idle hands are the work of the devil" is a perversion of means and ends, and the most established form of anti-Christian propaganda today: often championed by so called "Christians" themselves. As Soren Kierkegaard said, "Far from idleness being the root of all evil, it is rather the only true good."

Saturday, April 14, 2007

Metaphysics of Social Credit

By: Socred - B.A., SCMP

The term philosophy is derived from the Greek words "philo" - to love - and "soph" - knowledge. Literally, philosophy is the love of knowledge. C.H. Douglas claims that the policy of Social Credit derives from its philosophy. He refers to this philosophy as "Practical Christianity". In order to understand the meaning of this term, we must distinguish it from other philosophies, and other forms of Christianity.

"It must be insisted that Christianity is either something inherent in the very warp and woof of the Universe, or it is just a set of interesting opinions, largely discredited, and thus doubtfully on a par with many other sets of opinions, and having neither more nor less claim to consideration." (C.H. Douglas, "Realistic Position of the Church of England").

In order for Christianity to be seriously considered, it must represent something which is inherent in the very essence of the universe; otherwise, it is merely opinion, and does not differ from any other opinion with regard to the nature of being. Why does Douglas feel that Christianity represents a system which is the very essence of the Universe? What concept, which is unique to Christianity, separates it from other religions and philosophies?

"It is not too much to say that one of the root ideas through which Christianity comes into conflict with the conceptions of the Old Testament and the ideals of the pre-Christian era, is in respect of this dethronement of abstractionism. That is the issue which is posed by the Doctrine of the Incarnation. " (C.H. Douglas, "Social Credit")

The Doctrine of Incarnation denies that God is some abstract being beyond human comprehension. The Doctrine of Incarnation teaches us that God existed in time in the persona of Jesus Christ. Jesus said, "I and my Father are one" (John 10:30), and further "though you do not believe Me, believe the works, that you may know and understand that the Father is in Me, and I in the Father." (John 10:38). A philosophy based upon reality must be rooted in existence. If God existed in time in the form of Jesus Christ, then we have a concrete building block from which to test the validity of Christianity: Jesus's word. "In the beginning was the Word, and the Word was with God, and the Word was God" (John 1:1), and "The Word became flesh and made his dwelling among us. We have seen his glory, the glory of the One and Only, who came from the Father full of grace and truth" (John 1:14) The Doctrine of Incarnation is the belief that God is the Word, and Jesus Christ is the Word made flesh.

Douglas's conception of Christianity is fundamentally Trinitarian. And it is Jesus's Word which is the very "warp and woof" of the Universe. It is also essential to distinguish between what Douglas termed "practical Christianity", and other forms of Christianity. What exactly does Douglas mean by practical? In order to understand this term, it is necessary to understand Douglas' differentiation between two schools of thought - the classical and the modern.

"The classical system is the embodiment of an attractive and artistic ideal or conception of the nature of society, and the conditions under which society lives, moves, and has its being. It is above, outside, possibly in advance of, facts. The modern school, of which inductive natural science, based upon the experimental ascertainment of fact, is the backbone, has not essentially to do with ideals at all. It is realistic; its first postulate is that forces act in a similar manner when placed in a similar relation to each other. It refuses to admit, as a fact, anything which cannot be demonstrated, and as a theory, anything which does not fit the facts. For example, the classical ideal contends that men "ought" to be good, brave and virtuous. The modern, that it does not understand the meaning of goodness, that bravery and virtue are not capable of exact definition, and, that so far as the word "ought" has any meaning, it postulates the existence of a force so far undemonstrated." (C.H. Douglas, "Social Credit")

We see that Douglas believes the classical conception of nature, or the Universe, is "above, outside, possibly in advance of, facts"; whereas, the modern conception is "based upon the experimental ascertainment of fact". It is this modern school of thought which Douglas deems to be best for understanding the universe. So, in order for Christianity to be practical, it must abandon the Aristotelean conception of the universe, and replace it with a conception based on modern inductive science. However; Douglas was careful to differentiate between a Christian conception of the Universe developed with the aid of modern inductive science, and a materialistic conception of the universe.

"The tendency to argue from the particular to the general is a special case of the sequence from materialism to collectivism. If the universe is reduced to molecules, ultimately we can dispense with a catalogue and a dictionary; all things are the same thing, and all words are just sounds - molecules in motion." (C.H. Douglas, Perthshire 1945)

Materialism is the foundation of collectivism, and some believe the very foundation of the universe itself. Ultimately, materialism fails to recognize the unique characteristics of each individual, because it reduces everything to "molecules in motion". Being that we can all be reduced to "molecules in motion", it follows that all human beings must be equal. Equality means to lack quality. With this in mind, there are probably very few human beings who would proclaim to be "equal". But the power of persuasion is pervasive, and we are fed a steady diet of dialectical materialism from the time we enter our public school system. The science classroom has become the pulpit for materialism. What are the long term consequences of this phenomenon?

"It is a curious fact, which may or may not be coincidental, that the type of society which is induced or produced by this type of thinking, bears marks resembling the workings of the thermodynamic principle of entropy - the tendency of energy to deteriorate from a potential to a latent and unavailable state - to "run down." (C.H Douglas, "Brief for the Prosecution")

Many complain that this current generation is apathetic; more concerned with the level attained in some video game than what is actually going on in the world. However; if we feed them a steady diet of dialectical materialism, is it any wonder why they tend to follow this philosophy to its logical conclusion? What is there to strive for if everyone lacks quality? If I'm equal to all other human beings, what difference do I make? If I do not have free will, what is the purpose of liberty, and what is the meaning of responsibility?

In order to answer these questions, we must begin with a set of axioms, or what I consider to be "self-evident" truths. Some may disagree with these axioms, and as Douglas said, we must then "agree to disagree". These truths will form the basis for a philosophy. I believe, and I believe that Douglas believed, that these "self-evident" truths are the basic metaphysical foundations of both the Universe and of Social Credit.

These self evident truths are 1) man has free will, and within the boundaries set by Universal laws, man has the ability to choose, and 2) time flows from past to future.

These truths are not proven by reason, but form the basic axioms upon which reason can be applied.

"Reason," as I understand it, is nearly synonymous with logic, of which mathematics is a special example. It is a pure mechanism, just as a slide rule is a mechanism, and as such, is deterministic. You put into the mechanism practically anything you please, and you get out something which was inherent in what you put in, but nothing further.

If I say that (a+b)2 =a2+2ab+b2, I can apply that very useful piece of information to a number of concrete problems, but they must, on each occasion, concern similar objects. It is no use saying that the square of a apples plus b oranges gives you some information about bananas. It does not.

The whole validity of the Christian Church rests upon the acceptance of certain premises. Those premises are not provable by reason, or they would not be premises. But they are provable or disprovable by experience, and to my mind, quite a surprising number of the Christian premises will stand that test." (C.H. Douglas, "Realistic Position of the Church of England").

Therefore; axioms cannot be proven by reason, but by application of experience. Experience tells us that we have the freedom to choose, and that time exists. Some people erroneously believe that reason itself is the basis upon which a metaphysics can be constructed. This is a complete misapplication of reason, and is abstractionism in its most absolute form. Therefore; this belief, along with any other belief in deterministic philosophy or theology, is the antithesis of Social Credit. Deterministic philosophy ultimately leads to human entropy, and this is exactly what anti-Christian forces desire.

The "mass" is unsaveable, just as a mob is insane (" without health"); the object of Anti-Christ is to keep mankind in ever larger mobs, thus defeating the object of Christ, to permit the emergence of self-governing, self-conscious individuals, exercising free will, and choosing good because it is good. " (C.H. Douglas, "The Realistic Position of the Church of England" )

Douglas said, "freedom is the ability to choose one thing at a time". This implies that freedom, choice and time are all interconnected. But how are they interconnected? Jean Paul Sartre said that "consciousness is freedom, and freedom is a nothingness in the heart of being" (Being and Nothingness). Therefore; freedom and time are connected through human consciousness. Douglas does not explicitly talk about consciousness, but he does allude to it when he speaks about the connection between the physical sciences and theology.

"The Church as such, does not appear to be properly much concerned with physical science, and the incursions of Bishop Barnes would seem to confirm that view. But one subject of mathematical science does come clearly within its province - that of Time. I am sitting by my desk. It ,is five o'clock. I get up. The fact that I was sitting by my desk at five o'clock, is now what we call a memory. But, humanly speaking, I know that my desk will be there in five minutes, that is to say, at five minutes past five, so it is difficult to believe that both the desk, and five minutes past five, are not together in existence now." (C.H. Douglas, "The Realistic Position of the Church of England")

Douglas understands that the past and the future exist together now through memory and foreknowledge. Since consciousness is what relates these concepts, it is important to understand the nature of consciousness, and its involvement with time.

"Immediacy is reality; language is ideality, consciousness is a contradiction. The moment I make a statement about reality, contradiction is present, for what I say is ideality." (Soren Kierkegaard, "Philosophical Fragments")

If consciousness is both freedom and a contradiction, then freedom is a contradiction. This is exactly what we should expect to discover, since reason is deterministic. Contradiction forms the basis of movement. Movement is the antithesis of entropy, and movement, or change, forms the basis of time. It is from consciousness that freedom, movement and time derive. Consciousness brings the future and the past together by bringing together the necessary and the contingent.

What type of policy derives from these axioms? Since human consciousness is unique to each individual, policy must always exalt the freedom of individuals in order to be consistent with Christ's Word: the very essence of the Universe. The ultimate foundation of Social Credit policy is best summed up by Douglas himself when he said,

"Systems were made for men, and not men for systems, and the interest of man which is self-development, is above all systems, whether theological, political or economic." (C.H. Douglas, "Economic Democracy")