Dear Larry,

Congratulations on a generally fine article. While I would like to debate you on a few of its points, even in disagreement I commend your thoughts as excellent starting points.

One of our supporters sent me to your page in response to my own criticism of Ron Paul’s “Comprehensive Economic Revitalization Plan.”

I hope it’s OK if I post the URL for reference, particularly if we are to have a constructive debate. You are certainly welcome to comment on my critique and post a URL back to these pages. (In fact, I suppose I will blog this response in our pages, linking back to your article from moment one.)

[CLICK HERE for my critique of Ron Paul’s “Comprehensive Economic Revitalization Plan.”]

As a student of Jefferson, and even much moreso as a student of mathematics, I would first like to challenge your re-assertion that, “because, as Ron Paul reminds us often, our knowledge is imperfect, even, for example, if we are that giant of the Revolution, Mr. Jefferson. We are not infallible pontiffs or divine right kings. We are just honest and diligent men.”

Yes, we are fallible; but this does not mean that “economics” cannot be resolved into a true, infallible science, quite unlike what we are confronted with today. Jefferson himself postulated about the perfection of economics. There are cases where he all but arrives upon the true form of theorem which present “economics” is wholly bereft of.

In any discipline subject to finite elements and operations, not only can we know all outcome, we can even readily determine (therefore) the scope of possible outcome. The Austrian School however, which Dr. Paul is so fond of, is disposed against all such thinking, because it wholeheartedly rejects the application of mathematics. It assumes wrongly that mathematics must only or can only be applied to *human behavior*. And in many cases where mathematics cannot rightly claim to account for human behavior, indeed Austrian School thinking may be correct in their assumption.

But in alternate cases, where human behavior is not estimated at all, Austrian School zealots still coldly reject math, as if they are adhering to a sacred principle of Mises or Bohm-Bawerk.

A vital example of the latter, and an issue I believe Jefferson was working on, was a fitting analysis not of human behavior, but of the *environment* which a monetary system comprises, to which all human behavior is subject. If a person or persons were to engineer a perfect economic system, this of course is the first issue we must tackle, for what is money to represent to us; and how is it to represent whatever we intend of it?

Most people, and certainly the supporters to now of the Ron Paul Revolution, would desire that money represent a handful of just properties; and certainly Dr. Paul’s initiative seems to pursue these objectives, but on certain other planes it obstructs us from achieving them. Most of us desire for money to retain its value, or vital saving is defeated. Most of us desire that our money not be subject to involuntary servitude, or our commerce will cost more to us: Money therefore must be *only* a medium of exchange; it cannot involve unassented processes; and particularly it cannot involve unassented, unearned profit taking from us.

Here too, Austrian School economics thus swerves from solution, because it embraces interest and purported “markets” which are means of taking from, and thus impeding, real industry. We can only begin to appreciate these detrimental effects therefore when we evaluate the ramifications of privatizing the currency for the sake of unearned profit, for it is the nature of the currency which predicates the environment which is produced by any currency involving the inherent processes of interest.

Thomas Jefferson said, that “If the American people ever allow banks to issue their currency, first by inflation, and then by deflation, 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.” It is my presumption that he was thinking what I am about to present regarding the environment a privatized currency comprises. Certainly his observations can only concur with true observations of the present, for his prophetic projection is on the verge of completion.

In any purported economy where the currency is subject to “interest,” it is mathematically impossible/impractical to maintain a circulation without suffering inherent, irreversible multiplication of debt in proportion to the original circulation. This is the most critical issue Dr. Paul fails to address, because it is the issue which ultimately terminates the purported economy. Ultimately the process engenders a sum of debt so great that we can no longer afford to service debt and sustain commerce.

The process is simple. To maintain a circulation, we must perpetually re-borrow whatever we pay against principal and interest obligations. Subsequent sums of debt therefore equal the previous sum of debt plus so much as periodic interest. It is impossible to pay down the sum of debt, because, to maintain the vital circulation, we must re-borrow principal payments as subsequent debts equal to the former. Because we must likewise re-borrow what we pay against interest obligations, thus as we maintain a vital circulation, what we borrow back in the way of servicing interest comprises the increment by which debt increases.

Thus, the sum of debt increases by ever greater increments of greater sums of periodic interest on an ever greater sum of debt. The sum of debt increases by ever escalating increments then, until an eventual sum of debt is so great that we collapse under the weight of it.

In the early 1980s I provided the Reagan Administration with mathematic proofs that his proposed 10% per year, 3-year tax cuts would even offset double-digit inflation, much less solve it; and that he would impose the greatest multiplication of debt so far seen in the history of our country (after denouncing Carter’s $150 B accumulation of federal debt as “unforgivable”). I also provided the Reagan Administration computer models which calculated the future accumulation of debt by said process, and which therefore forecast the maximum possible lifespan of any purported economy involving a currency subject to interest.

The collapse projected from the first years of the Reagan Administration is now upon us.

So this brings me full circle to what is *definitely* wrong with the Paul plan. It shows no engineering at all; and it is a huge mistake for Paul supporters (of whom I am one) to presume it is “good” because of the modest steps in a direction it may purport to take. By the time it gets there (if it ever gets there), further multiplication of debt may already have consumed the “potential” benefits.

I formally proposed solution to these issues in 1979 (morphallaxis) in what we now call mathematically perfected economy™. Mathematically perfected economy™ is the singular integral solution to inflation and deflation, intrinsic (systemic) manipulation of the cost or value of money or property, and inherent, irreversible multiplication of debt by interest.

We have a shot (possibly) of getting the Paul Camp to pursue mathematically perfected economy™. It is a shame we haven’t succeeded in doing so already. But if you want our candidate to succeed, he can only do so with a real solution. As you will see if you visit the furnished URL, we can shoot holes in his plan. If you would like to try to shoot holes in ours, you are welcome to visit our forum and blast away.

[CLICK HERE to debate my critique in the MPE™ Forum.]

But, like you Larry, I present these issues with a positive attitude, hoping that in the very nearest future Ron Paul’s supporters can and will influence him to adopt a truly comprehensive plan.

Great presidents, like a great republic, must recognize sound principles. I’m just trying to save my country.

Regards,

mike montagne — PEOPLE For Mathematically Perfected Economy™

RELATED MATERIAL

1. Larry Ward’s NolanChart Article, “Challenge to Ron Paul Economic Revitalization Plan”
2. MY CRITIQUE OF RON PAUL’S ECONOMIC REVITALIZATION PLAN
3. DEBATE/DISCUSS MY CRITIQUE OF RON PAUL’S ECONOMIC REVITALIZATION PLAN IN OUR NEW MPE FORUM !
4. WHAT IS SOUND MONEY? WHY PRECIOUS METAL MONETARY STANDARDS CAN ONLY FAIL
5. Ron Paul 2008’s Posting of RON PAUL’S ‘COMPREHENSIVE ECONOMIC REVITALIZATION PLAN’
6. PARABLE OF PERFECT ECONOMY — HOW USURY COMPELLED THE AMERICAN REVOLUTION
   
   [MOST POPULAR PAGE, MANDATORY READ, AND A GOOD ALTERNATE STARTING POINT BEFORE JUMPING TO TOP.]
7. PROBABILITY OF WORLD-WIDE ECONOMIC COLLAPSE AS A CONSEQUENCE OF INTEREST
   
   [A PRINCIPAL REASON FOR MPE™; POPULAR PAGE.]
8. WHAT IS Mathematically Perfected Economy™?
   
   [POPULAR PAGE.]
9. WHY AND HOW USURY HAS BEEN IMPOSED ACROSS THE WORLD
10. PURPOSES OF THE DECEPTION THAT INFLATION IS CONTROLLED BY INTEREST (USURY)
    
    [MANDATORY READ.]
11. RELEVANT HISTORIC QUOTES
    
    [POPULAR PAGE; AN EXTENSIVE HISTORIC PATTERN.]
12. THE FALSIFIED ARGUMENT THAT RISK JUSTIFIES INTEREST (USURY)
    
    [MANDATORY READ.]
13. WHAT IS FREE ENTERPRISE?
    
    [MANDATORY READ.]
14. WHAT IS SOUND MONEY? WHY PRECIOUS METAL MONETARY STANDARDS CAN ONLY FAIL
    
    [MANDATORY READ.]
15. WHAT IS USURY?
    
    [MANDATORY READ; EXPLAINS THAT INTEREST CAN ONLY ENGENDER USURIOUS DEBT.]
16. Why Pre-MPE™ Austrian School *Thinking* Can Never Solve Our Issues
17. A FATAL FLAW OF AUSTRIAN SCHOOL ECONOMICS — COMPLETE REJECTION OF MATHEMATICS?
    
    [MANDATORY READ; RELEVANT TO CURRENT ELECTION.]
18. REGARDING INTEREST THEN, DOES AUSTRIAN SCHOOL ECONOMICS NOT HAVE TITLE TO LIBERTY AND RIGHT REVERSED?
    
    [MANDATORY READ; RELEVANT TO CURRENT ELECTION.]
19. Austrian Economics
    
    Deborah L. Walker, Library of Economics and Liberty, Concise Encyclopedia of Economics
20. Capital and Interest: A Critical History of Economical Theory
    
    B?hm-Bawerk, Eugen von (1851-1914)
    1. The Opposition to Interest in Classical and Medieval Times
    2. The Defence of Interest From the Sixteenth Till the Eighteenth Century
    3. Turgot’s Fructification Theory
    4. Adam Smith and the Development of the Problem
21. Google Austrian School Economics in a separate tab or window

This entry was posted on Tuesday, February 5th, 2008 at 1:04 pm and is filed under Mathematically Perfected Economy, RON PAUL, events and politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.