PEOPLE For  Mathematically Perfected Economy™ (PFMPE™)  :  mathematically perfected economy™ (MPE™) is the singular integral solution to 1) inflation and deflation, 2) systemic manipulation of the cost or value of money or property, and 3) inherent, irreversible multiplication of debt in proportion to a vital circulation, engendering inevitable systemic failure at a finite system lifespan defined by an inevitable, terminal sum of insoluble debt. Mathematically Perfected Economy™ is every prospective debtor's right to issue their promise to pay, free of extrinsic manipulation, adulteration, or exploitation of that promise, or the natural opportunity to make good on it.

MORPHALLAXIS, January 14, 1979.

What's Wrong With Social Credit and Douglas' A + B Theorem?

mike montagne

Solo bow hunt, self portrait, 7 miles into the North Fork Wilderness.

Rare is the candidate who doesn't exalt the ghost of greatness we once were, as if mountains of perpetually multiplying, insoluble debt, tens of millions of families losing their homes, our vanished industry and overwhelming trade deficits, and our fallen stature as an intellectual power and bedrock of liberty and justice... are not a testament to the opposite.

Ron Paul won on many tangible fronts, because he showed America that even as an unassented central bank's media sought to deny our quest for vital monetary reform, there is a chance to save America from itself. He denied himself and his supporters the ultimate prize, because of a technical deficiency. A quite serious one.

Thomas Jefferson

"The Bank of the United States is one of the most deadly hostilities existing against the principles and form of our Constitution. I deem no government safe which is under the vassalage of any self-constituted authorities, or any other authority than that of the nation or its regular functionaries."

"The system of banking is a blot [defect] left in [unsolved by, and unfortunately tolerated by] all our Constitutions [state and federal], which if not covered [eventually solved and revoked] will end in their destruction. I sincerely believe that banking institutions are more dangerous than standing armies; and that the principle of spending money to be paid by posterity is but swindling futurity [on the greatest possible scale]."

"The end of democracy and defeat of the American Revolution will occur when government falls into the hands of the lending institutions and moneyed incorporations."

If the American people ever allow banks to issue their currency, first by inflation and then by deflation [by having to maintain a vital circulation by perpetually re-borrowing principal and interest as subsequent sums of debt, increased perpetually so much as periodic interest], the banks and [bank owned] corporations which will grow up around them will deprive the people of all property, until their children wake homeless on the continent their fathers conquered.

The usual citizen can and should want on the one hand never to have to wade through material which will never serve them; and on the other, if they are to be served, they must be vigilant against what may interpose itself against their service, or what might tie the hands even of well intended representatives as they might be forced to wade through yet another set of illusions and delusions to the truth. Much as the members of the Social Credit forum attacked mathematically perfected economy™ on the purported grounds that the very idea of mathematic solution is flawed then, I hold as a consequence of their persistent rejection on that false premise, and particularly on the costly consequences of it, that we who may be able to show the answer have a responsibility to do so.

When the presumed validity of a simple postulate is debated by its adherents and rejected otherwise for most of a century for faults yet readily raised in gentlemanly discussion, we have to wonder about the viciousness with which those who spend forever at the postulate attack contending theories, not on their merits or obvious resolutions of propositions such as singular solution for inflation and deflation and inherent multiplication of debt, but on purposely destructive and wrong assertions, such as the purported universal impropriety of mathematics as a tool for analysis, proof, or disproof of something truly so simple as true economy.

The ad hoc rejection of math and the viciousness of attacks against qualified mathematic application are particularly suspect. Do they erupt out of plain jealousy when math most of us master in the second grade disproves lackluster lifetimes spent defending indefensible postulates, only because so many have agreed on the initial error that the one useful tool to resolve their debate is mathematics itself? Is it a proper defense to dismiss all possible applicability of math to develop something which is not even a discipline then?

Why attack after all, simple, obvious, and perfect resolutions such as the fact of a singular solution for inflation and deflation, when the very definitions of the terms predicate their absolute mathematic solution? What quality of adherent continues the debate of a conflicting proposition, never even developing a basis of formal proof and theorem to their purported discipline then, only because they first impose the errant precept that mathematics cannot apply?

I frankly am instead tired of Austrian and Social Credit "adherents," who cannot even answer why mathematics purportedly cannot develop the singular solution to inflation and deflation or inherent multiplication of debt — particularly when I weigh the human consequences of their belligerence.

When a single person can establish such solutions by veritable elementary math, what does it say about a vast multitude who dress like penguins and stand together with their feet stuck in the ice... erupting forever in such an incessant chatter against math that Alex Jones or Lou Dobbs or a political candidate who might matter, will never even notice the answers to these simple questions unless they look to what the penguins attack for the possibility it holds the very answer?

A decade ago, which followed on the heels already of decades which could have saved all of us the costs of decades of artificially multiplied debt, I was invited to the Social Credit forum, whereupon I received such a deluge of vicious mail for submission of mathematic solution of inflation, deflation, and artificial multiplication of debt, that until years later when I bothered myself sufficiently with their precious A + B Theorem which they defend by ad hominem and attacks against math, I didn't understand what could explain such dedication to obstruction of solution.

Social Credit, which is based on Douglas' A + B Theorem, thus is one such interposing theory; and particularly as its members such as William B. Ryan have attacked mathematically perfected economy™ in such numbers and with such unwarranted viciousness as has produced no resolution better than Mr. Ryan's purported disproof of mathematically perfected economy™ and my response to his... a few relevant and peaceful observations regarding Social Credit and Douglas' A + B Theorem can separate the wheat from all the chaff.

What's Wrong With Social Credit and Douglas' A + B Theorem?

Mathematically Perfected Economy™ versus alternate propositions

We are all at least intuitively familiar with the principle that a proposition is only true if no interdependent aspect of it can be disproven. If we could prove for instance that it is not necessary to maintain at sufficient intervals a circulation which is equal to the remaining value of related assets to eradicate inflation and deflation... then we disprove the proposition of a singular solution. No one has disproven the proposition because there is one case only which neither comprises an increase or decrease in circulation relative to the assets for which currency is loaned into circulation; and that one case is equality between the circulation and remaining value of the related asset.

Similarly, if interest inherently multiplies debt in proportion to a circulation, then only eradication of interest eliminates inherent, irreversible multiplication of debt to collapse; and if the cost or value of money and property can only be systematically be manipulated by inflation, deflation [relative to intended commerce], and inherent multiplication of debt, then only a combination of the solutions of inflation, deflation, and inherent multiplication of debt further solve manipulation of the cost or value of money or property.

These are simple concepts which do not depend on human behavior for their truth, because the subject human behavior must maintain a sufficient circulation to service debt, and the rules we have developed simply allow them to do so. Moreover, they comprise the singular environment in which we can procure the production of others for whatever we deem to be an equal measure of our own production, because no extraneous cost whatever is imposed upon the system.

SOCIAL CREDIT

Given the plausible perfection of mathematic solution, one may wonder why adherents persist in defending anything contrary to it without an iota of disproof.

According to the Social Credit topic at Wikipedia,

"Social Credit (often called Socred for short) is an economic ideology and a social movement which started in the early 1920s. Social Credit was originally an economic theory developed by Scottish engineer Major C. H. Douglas. [1] The name Social Credit came from his desire to make the betterment of society (Social) the goal of the monetary system (Credit)."

THEORY

[2] C. H. Douglas proposed that because rate of flow of income received in any period of production was less than the prices generated in the same period there arose a deficiency in purchasing power in that period. [3] He demonstrated this ostensible flaw with his A+B theorem, which states that if A is the payments made to all the consumers in the economy (through wages, salaries and dividends) and B is the payments made by producers that are not paid to consumers (such as the overhead costs of buildings and equipment as they wear out) then the price charged for all goods must be at least A+B , but as only "A" payments are received as income, then incomes received were less than prices generated in the same period of production.

For such a system to sustain itself Douglas asserted that some or all of the following must happen:

  • [4] People go into debt by buying on credit;
  • [5] Governments borrow and increase the national debt;
  • [6] Businesses borrow from banks to finance expansion, in a way that creates new money;
  • [7] Businesses sell below cost, and eventually go bankrupt;
  • A state wins a trade war, putting foreigners in debt to it for its surplus of exports;
  • A state has a real war, "exporting" goods such as tanks and bombs to the enemy without ever expecting to be paid for them, financing this by government borrowing.

If these things don't happen "businesses are forced to lay off workers, unemployment rises, the economy stagnates, taxes go unpaid, governments cut back services, and we have widespread poverty, when physically all of us could be living in plenty."

[8] Douglas believed that Social Credit could fix this problem by ensuring that there was always enough money (credits) issued to buy all the goods that could be produced. His solution is outlined in three core demands:

  1. [9] For a "National Credit Office" to calculate on a statistical basis the amount of credit that should be circulating in the economy;
  2. [10] For a price adjustment mechanism that reflects the real cost of production (aggregate consumption in the same period of time);
  3. For a "National Dividend" to give a basic guaranteed income to all regardless of whether or not they have a job.

The engineer argued that this last demand makes sense now that automation and labor-saving devices have reduced the number of workers we need to produce our goods, and the hours they would have to work.

Douglas' ideas enjoyed great popularity during the Great Depression, although not enough to realize his plan.

Some prominent groups and individuals, most notably the poet Ezra Pound and the leaders of the Australian League of Rights, have subscribed to Social Credit as an economic theory. [11] Social Credit lays the blame for many economic woes at the feet of private banks, most especially those that practice fractional-reserve banking.

ANALYSIS AND DIFFERENTIATION OF Social Credit and Douglas' A + B Theorem

Very much as in my own work then, C. H. Douglas perceived there are critical flaws in the world's imposed monetary systems. He tried to identify and solve those flaws; and likewise ultimately places blame on the private banking system.

  1. As subsequent elements explain (8...10), the conclusions of Social Credit are distinguished from mathematically perfected economy™ in that the former impose social institutions which attempt to account for what mathematically perfected economy™ resolves by solving inflation, deflation, and inherent multiplication of debt (which together further eradicate systemic manipulation of the cost or value of money or property). The distinguishing elements therefore are that mathematically perfected economy™ takes the minute further steps to ascertain and solve root cause, thus avoiding the need for social constructs which cannot solve the problems.
  2. While I commend Douglas for looking for the problem, and while I must agree that the root problem may be difficult to discern, I do not see that "income received in any period of production" is "less than the prices generated in the same period," and I believe that by such lenient definitions as "prices generated in the same period," he may have given himself reason to believe he had discovered something which is not there. If anything, we might agree however that overall, income is perpetually eroded by the imposed obligation to service perpetual multiplication of debt by interest; but if this is what Douglas means, it is certainly an ambiguous way of expressing it.
  3. The fault of the A + B Theorem is it does not account for interest. It attempts to explain that industry is not inherently solvent, but fails to prove so by omission of the ramifications of interest from the equation.
  4. Douglas nonetheless correctly observes that as a consequence of the ever greater dedication of the circulation to interest, that "For such a system to sustain itself," People go into debt by buying on credit;
  5. and that "Governments borrow and increase the national debt." Both however (4, 5) are compelled by inherent, irreversible multiplication of debt.
  6. The next assertion is that "Businesses sell below cost, and eventually go bankrupt." The explanation for this as well is inherent, irreversible erosion of profit margins by systemic multiplication of debt. The fact of simultaneous marginal solubility or bankruptcy as engendered by the first Great Depression demonstrate that the cause is systemic, unless some characteristic malpractice simply manifests itself on such a scale. Douglas needed to look a bit deeper to land on the inherent processes of interest as the root cause. His next assertion further confirms this.
  7. A consequence of interest's inherent erosion of solubility to ultimate collapse is, "Businesses sell below cost, and eventually go bankrupt." Obviously, they do not do this voluntarily; but thus unless A + B identifies the root cause of erosion, Social Credit cannot solve the root of the problem (by eradication of interest, inflation, and deflation).
  8. Douglas believed that Social Credit could fix this problem by ensuring that there was always enough money (credits) issued to buy all the goods that could be produced. But Douglas himself objects to the ever-expanding circulations and devaluation of the currency which he attributes to fractional reserve monetary practice; yet to account for the ever escalating erosion of solubility attributable to the processes of interest, it is impossible to solve the issues unless we eradicate interest, and solve inflation and deflation.
  9. There is no need then for calculating what credit is required, if we finance all desired endeavors requiring finance by a mathematically perfected circulation.
  10. Douglas' price adjustment mechanism therefore is not required under mathematically perfected economy™, because inflation and deflation are solved (eliminating the undesirable practice actually of perpetual price adjustment). Nor can Douglas provide the intended mechanism without solving inflation, deflation, and inherent multiplication of debt by interest, because the necessarily constant ratios (which mathematically perfected economy™ alone maintains) are perpetually undermined by interest's inherent, irreversible erosion of solubility until ultimate collapse.
  11. Whereas Douglas arrives at fractional reserve monetary practice as the cause, the root cause is two-fold: A) a fixed, finite monetary standard must be violated to sustain commerce requiring a greater circulation; and B) thus it is not the amount of money which is the enemy; it is the disposition of the money to engender ever greater, more destructive sums of debt which the circulation is inherently committed to an ever greater degree to servicing.

    As I have said (and hopefully sufficiently shown), only mathematically perfected economy™ solves these issues.

Mathematically Perfected Economy™ therefore can be taken to a substantial degree as vindication for Douglas' thinking if we only concede that the missing piece of Douglas' puzzle is inherent multiplication of debt by interest. Although mathematically perfected economy™ is socially inert in contrast to Douglas' temptation to impose social reform to account for effects he would instead have eradicated by solving inflation, deflation, and inherent multiplication of debt (and cannot resolve by the social constructs), we have more in common than we have apart. Although it was developed wholly independent of Douglas and others' work, mathematically perfected economy™ can be taken in their common regards as a furthering of Douglas' work.

RELATED EXTERNAL MATERIAL

RELATED PRIMARY ARTICLES

RELATED REFUTATIONS/REVIEWS OF CONTROVERSIAL MONETARY PROPOSITIONS

"To find the players in all the corruption of the world, 'Follow the money.' To find the captains of world corruption, follow the money all the way."

mike montagne — founder, PEOPLE For Mathematically Perfected Economy™, author/engineer of mathematically perfected economy™ (1979)

While 12,000 homes a day continue to go into foreclosure, mathematically perfected economy™ would re-finance a $100,000 home with a hundred-year lifespan at the overall rate of $1,000 per year or $83.33 per month. Without costing us anything, we would immediately become as much as 12 times as liquid on present revenue. Transitioning to MPE™ would apply all payments already made against existent debt toward principal. Many of us would be debt free. There would be no housing crisis, no credit crisis. Unlimited funding would immediately be available to sustain all the industry we are capable of.

There is no other solution. Regulation can only temper an inherently terminal process.

If you are not promoting mathematically perfected economy™, then you condemn us to monetary failure.

© Copyright 1979-2008 by mike montagne and PEOPLE For Mathematically Perfected Economy™. ALL RIGHTS RESERVED.Copyright 1979-2008 by mike montagne and PEOPLE For Mathematically Perfected Economy™. ALL RIGHTS RESERVED.

PEOPLE For Mathematically Perfected Economy™, Mathematically Perfected Economy™, Mathematically Perfected Currency™, MPE™, and PFMPE™ are trademarks of mike montagne and PEOPLE For Mathematically Perfected Economy™, perfecteconomy.com. The trade name, Mathematically Perfected Economy™, may only be used, and may freely be used, only by permission, and only by countries complying with the prescription for Mathematically Perfected Economy™ herein.

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