Effects of purchasing power of a customer due to discount

Hi


Effects of purchasing power of a customer due to discount:
The distribution of new money by the national dividend is therefore a means of
increasing the country’s money supply when it is necessary, and of putting this money directly into the consumers’
hands.

But to be beneficial to the consumer, this distribution of money must constitute a
real increase in the consumer’s purchasing power.

Now, the purchasing power depends on two factors: the quantity of money
in the buyer’s hands and the price of the pr
oducts for sale.

If the price of a product decreases, the consumer’s purchasing power increases,
even without an increase of money. So if I have $10.00 with which to purchase butter, if the price of butter is $2.50 a pound, I have in my hands the power to buy four pounds of butter; if the price of butter is lowered to $2.00 a pound, my purchasing power goes up, and I can buy five pounds of butter.

Moreover, if the price goes up, it unfavorably affects the consumer’s purchasing
power; and in this case, even an increase of money can lose its effect. Thus, the worker who earned $200 in 1967 and who earned $400 in 1987, would lose out because the cost of living had more than doubled in those twenty years. In Canada in the year 1987 you could buy the same thing for $772 that would have been $200 in 1967.

The consequent increase in the prices of products is the reason why wage increases do not succeed in producing a durable improvement. The employers do not manufacture money, and if they have to spend more to pay their workers, they are compelled to sell their products at higher prices in order not to go bankrupt.

As for the national dividend, it is not included in prices because it is made up of new money, distributed independently of labor, by the Government.

However, with more money in the hands of the public, retailers could tend to increase the prices of their products, even if these products did not cost them more to produce.

A monetary reform which does not apply the brakes to an unjustifiable rise in prices would be an incomplete reform. It could become a catastrophe of runaway inflation.

The arbitrary setting of prices can also achieve a prejudicial effect by discouraging production. Now the reduction of production is the surest way of pushing up prices. The legislator thus achieves the contrary of what he seeks: he provokes inflation by clumsily fighting it; to escape sanctions, inflation takes place through the black market.

Social Credit puts forward a technique to automatically fight inflation: it is the proposed technique of the "adjusted price", or the compensated discount, which would be part of the way money is issued to put the total purchasing power at the level of total offered production.

The Just Price