Social Credit News

Silvio Gesell believed that the two great economic evils were stagnation and inequality. He attributed stagnation to hoarding (the “retention” of money that slows circulation) and inequality to both hoarding and the payment of interest on money. His remedies were therefore twofold: demurrage (a carrying charge that makes money lose value if held, forcing it into rapid circulation) and interest-free credit.

     From a Douglas Social Credit standpoint, Gesell’s take on monetary reform rests on a fundamentally flawed diagnosis and thus the remedies he proscribes are inadequate, in addition to being coercive and counterproductive.

Dr. Oliver Heydorn, founder of the Clifford Hugh Douglas Institute for the Study and Promotion of Social Credit, introduces Douglas Social Credit as a comprehensive monetary reform model that addresses both justice and functionality in the financial system: "Douglas Social Credit: Restoring Honesty and Functionality to the Financial System".

Geoffrey Dobbs’ chemical metaphor casts a brilliant light on Douglas’s Social Credit, revealing that the debt-money system is, in conjunction with an unbalanced price system, an acidic force—corrosive, unstable, and conflict-inducing. Social Credit, by contrast, provides the base money that neutralizes this acidity, infusing the economy with debt-free purchasing power (OH⁻) to balance the H⁺ of debt-laden prices. The National Credit Authority, as the economy’s alchemist, orchestrates this equilibrium, ensuring financial flows mirror real production.

In The Monopoly of Credit (1931), C.H. Douglas presents his second proof for the A+B theorem, arguing that the two core accountancy cycles of an industrial economy: the creation and destruction of money (Cycle 1) and the creation and liquidation of costs (Cycle 2) are misaligned, resulting in a systemic deficiency in purchasing power. The money cycle (Cycle 1) operates at a faster pace than the cost creation and liquidation cycle (Cycle 2), creating a gap between prices and purchasing power that widens with greater dyssynchrony and narrows with greater synchrony. Indeed, if the cycles were perfectly aligned, money creation/spending and cost creation/liquidation would occur simultaneously, eliminating the gap entirely.

[1] C.H. Douglas, The Monopoly of Credit 4^th edition (Sudbury, England: Bloomfield Books, 1979), 46-50.