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Cheques simply shift credits from one bank account
to another bank account, as registered in ledgers. Economic Democracy is based on
Bank deposits make up most of the money in three principles (like a tripod)
circulation. These deposits originate through the 1. Money issued without
credits granted by the banks as loans, discounts, interest by society
overdrafts, or the purchase of bonds. The banks are
the creators of money. But they destroy this money 2. A dividend to every citi-
by the recalling of loans, by the reduction of over- zen
drafts. If the creation of money exceeds its recall, the 3. A discount on prices
money in circulation increases; if the recall of money compensated to retailers
exceeds the creation of money, the money supply
decreases. There is no equilibrium sought between
production and money. Banks do not aim for equilib- pensated discount finances a reduction of prices in
rium. Their aim is profit. favour of the consumer.
Moreover, it is at the production level that monet- If the available production is $12 billion, and the
ary advances are made. But the rate at which produc- purchasing power in front of it adds up only to $9 bil-
tion credits become consumer credits is less than the lion, the National Credit Office decrees a 25 percent
rate at which retail prices appear, the latter rate be- reduction on all prices, a discount on all products at
ing that of production. It is impossible to manage the the time they are sold to the consumer. This serves to
present monetary system in accordance with both reduce prices to the level of purchasing power. The
the needs of the population and the production cap- discount is compensated to the retailer, that is to say,
acity to satisfy those needs. the Credit Office gives him the money he lost when
The nationalization of banks would correct noth- he granted his customers a discount. This money is
ing on its own. Changing rulers will not suffice; we created by the Credit Office the exact same way that
must change the policy which governs control. In banks create money today. This new money favours
other words, control must pursue another end; it the consumer, provided he buys something; it goes to
must seek constant equilibrium between prices and the retailer, provided the sale was made. This is money
purchasing power. which allows production to be sold by lowering prices.
This satisfies everyone: the buyer, the retailer, and the
The National Credit Office producer who is only too glad to sell his products.
Money cannot be controlled socially in accord- The national dividend
ance with the facts of the country’s production and
consumption unless it is on a national level, with The national dividend, as its name implies, is the
respect to national accounting. There needs to be a distribution of a dividend, of a sum of money repre-
national monetary body, the same way there is a ju- senting a surplus or the revenue from a capital, to
dicial body to administer justice. all members of society — therefore to each man,
Private banks can maintain their “for profit” oper- woman and child in the country.
ations in return for the services they render, but they must This dividend is based on the existence of the
no longer have the right to increase or lower the money cultural heritage or social capital which belongs to
supply. This function must be exercised exclusively by a everyone, capital consisting of the discoveries and
national monetary body, the National Credit Office. inventions of science. The part this capital plays in
The National Credit Office registers the statistics production is increasing, while the part played by
human labour is decreasing. Labour needs to be
of production and consumption, and acts accord- rewarded, but so does capital, even social capital. We
ing to facts in issuing money so that all of produc- are all heirs of generations past, all capitalists, and
tion might be sold, if it answers true needs. The NCO everyone has a right to a dividend large enough to
enjoys all the powers it needs to attain this end. It shield himself from poverty.
answers to the nation. In order to understand the feasibility of the monet-
The technique set forth to reach the two ends of ary system advocated by Social Credit, one must not
Economic Democracy — equilibrium between prices lose sight of the fact that the world has entered into
and purchasing power, and the doing away with pov- an era of abundance; that, if there are poor people, it
erty — consists in distributing new money using two is not because of the rich and wealthy, but because
methods: the compensated discount and the dividend. abundance is not distributed. There is no need to take
The compensated discount away from the rich in order to give to the poor; we
The compensated discount’s goal is aimed at simply need to instill technology into the monetary
making prices and purchasing power equal to one system. We cannot be contented by saying that money
another. Money would be created and distributed is made for man. We need to establish a system that
without creating inflation. The money from the com- truly puts money at the service of man, of all men. v

www.michaeljournal.org MICHAEL August/September 2021 21