ANSWER TO A QUESTION FROM NEW YORK — HOW TO DETERMINE THE VALUE OF MONEY “EXACTLY”

Among many good questions, Patrick Hedemark of New York is concerned with how (or whether) to determine the value of money “exactly.” I explain that no such method really exists (not even in a precious metal monetary standard), and that it’s not critical that we lack such a method:

1. The first thing to remember is that until a perfect system of determining the value of productive efforts is ascertained, it cannot be a just object of a monetary system or a government to impose an imperfect method of evaluation.

   Even if you make the value of a unit of money ostensibly equal to a fixed quantity of a finite substance such as gold, the truth is that the costs and derived value of every produced unit of gold are not equal.

   Some period of conditions may justify producing gold as necessary. Others may not. Why not let a truly free market determine the relative value of gold?

   In some cases, the market might justify producing more expensive gold for instance, after the less expensive gold is occupied by existent consumption. Yet if some day we intended to justly determine that it generally requires at least so much cost or effort to produce an ounce of gold, and if we make that the “value” of “money,” then that money thus cannot be a market-determined token of value of all things; nor can it be a market-determined value of gold.

   But if we have fixed the value of gold below a later, higher cost of production, we will have made it un-cost-worthy to render the production the market may yet later need. Thus, even by fixing a value which once was just, later, more expensive conditions of production may preclude prospective producers from mining gold for a future market, simply because the fixed price is insufficient to cover the costs of production.

   Can the whole valuation system change so that the fixed price can be accommodated by the market for gold?

   It is pretentious to assert any system has such a capacity unless all values and monetary commitments are perpetually adjusted to all such developments. In fact, no system but mathematically perfected economy™ provides such a mechanism, because only mathematically perfected economy™ provides truly free markets, and because only mathematically perfected economy™ makes it possible for each market both to determine and to fetch just prices, without affecting the value bases of all other markets.

2. Nor is any reasonable method of evaluation critical to mathematically perfected economy™.

   If the cost of productive effort is justified to both the consumer and producer, MPE™ alone sustains (without inflation/deflation or multiplication of debt) not only the transaction, but the work necessary to repay the monetary obligation.

3. Thirdly then, because the development of expedient and comprehensive methods of evaluation is useful to all of us in every prospective endeavor or transaction, we can and should develop and debate ideas, and we can refine an agreeable concept by solving for our differences.

   But even then, unless our ultimate method of determining value is perfect, have we a right, or is it even necessarily useful, that we impose it?

Just about anyone on the planet has spent most of their adult years again and again conjuring how to conceive of the relative value of what we do, in respect to the value of whatever each of the rest of us does. This thinking is all that justifies any endeavor or transaction. Some of us take the thinking seriously. Sometimes casual consideration suffices.

We may have heard ridiculously uncomprehensive concepts which are purported to account for value. In a certain case, a claimed 400 or some odd “scientists” for instance have endorsed making “energy” the currency of trade, without the first explanation of how we would justly do so; and so, as the following arguments invalidate the proposition of making time the unit of currency, so to do they invalidate mere energy as a singular basis of value. In the least, we are to understand that both are inappropriate because they do not account for all the vital factors which comprise value or justify production.

You want to consider making *time* the unit of the currency. Why won’t that work?

Let’s say you have X number of children, and you need them to weed the back yard. Being a fair man, you do your best to divide the yard, despite its different numbers and kinds of weeds and terrain, into an equal task for each.

How would you do this so that the ostensible value of their labors is equal? How would you take into account the exact difficulty of the makeup of the soil and the mixture of weeds so that indeed you gave them each an equal job?

Suppose you gave me an answer to your quest for a method of “exactly” determining value. The first thing I would ask you then is how you measured each of these things exactly? Did you count the weeds? Did you divide the yard into areas where the borders of the areas explicitly included the intended weeds? Did you test the difficulty *and time* required to pull each *different* weed out, complete with the roots of each?

You would probably answer, No, of course not. Why?

Practically without exception, we don’t even ascertain or measure the criteria exactly as would be vital to determining value “exactly”; and so in fact, no matter what you had answered, the principle of an ostensibly “exact” method of determining the alloted tasks isn’t even applied to the units of area, varied matter or conditions, or even the number of weeds. Likewise, do we count the studs in a home we are about to buy?

There is a good enough reason we don’t even try to account for all things exactly: First of all, we regularly can’t; but if you did, the job of accounting exactly for exactly all factors might be far greater than actually pulling all the weeds yourself.

So, because you can’t divide the yard into X areas that result in *an equal effort* for each of your children, which in turn results, with ostensibly equal work, in your children all *finishing in the same time*, neither can you say that you have figured the job so that *time* spent on the different parts of the job is of equal value. After all, your X children, starting at the same time, will not finish at the same time, because you haven’t even determined a way to make their time spent at the job of equal value/volume. But neither too, unless the production of each is the same periodically, would they finish at the same time, even if you had divided “the job” “exactly,” because neither is the effort they spend across time of exactly equal value.

Using time as a standard therefore does not determine equal work. Only in the most exceptional case in fact does it determine equal work, because people rarely work at exactly the same rate, or render production of exactly the same quality.

A perfect system of evaluation must take all these things into consideration, and account for them “exactly.”

After all, if one welder puts 4 10-inch Schedule 40 joints together in a day’s work, and if a second welder puts together 20, and if 1 of the first welder’s daily welds generally fails an X-ray at the refinery in which every weld must prove worthy, the re-doing of the first welder’s one failure a day may be more costly than the sum of the rest of their work (3 welds). If no one else is working to that standard, to the contractor who has bid on the job, that welder’s work is worth nothing, or it may even be rightly considered to have a negative value.

If on the other hand everyone else but the second welder works to that standard however, then generally, as it may generally be necessary to do the work of 8 welds (2 days’ production) to get 4 good welds (1 days’ attempted production), that’s the price of the labor/production the contracting outfit may be forced, by the trials and tribulations of welding, to contend with.

But that means the second welder — who comprises the lone exception — is doing 40/4 days of the general volume of production of “work” every day (per time). For the productive volume of their efforts then, are we not to pay them 10 times the wages of the other welders, which is indeed the comparative value of what they are producing for the contractor?

Well, in certain even potentially prevalent cases, this might not happen because the *hour* might be a selective simplification which serves the employer to cheat labor from justified pay. By bidding jobs on the low end of labor costs, and not rewarding productive labor, contractors can take substantial unearned profit.

The quality of the second welder’s work might be 10x as great as the usual welder’s as well. Shall we pay them 100 times as much as the usual welder then?

If the quality of the work exceeds the requirements of the job spec, then the contractor is not justified in doing so. But the contractor *is* justified in at least rewarding the more productive second welder relative to how much work they perform daily — especially as this reduces the risks of weld failure, and potential later, consequent costs to the contractor. The second welder is valuable. Their time is worth far more to their employer.

The welders are also exposed to dangerous gases, and to asbestos. Do we simply give them the same wage per hour that we award a student who hands pre-packaged hamburgers thru a drive-up window?

Anyone therefore who tells you they account for all factors exactly, which determine the value of productive effort exactly, is yanking your leg. In fact, in any system such as this, where the relative value of one thing can only be known by the relative value of all other things, until we have a comprehensive system for determining the “exact” value of everything, we do not have a comprehensive system for determining the “exact” value of anything.

In fact, we find that given values often are rightly even in flux if we account for the difficulties of production, which comprise periodic differences in the job of production. Therefore a purportedly “exact” method of determining value must account for these differences in the job of production.

Personally, I figure I’ve given as much quality effort to determining the value of production as anyone; and what I’m about to tell you is I see little sense, or benefit in trying to determine value with purported exactitude, particularly because even determining all the vital factors of each instance becomes such an intensive job itself — making the necessary determination of the relative value of all things ever more elusive and costly.

Ballistics for instance is a relatively exacting science; but it is not perfectly exact. We *can* determine the relatively exact minimum velocity of a throw a third baseman might have to make to first base. But is it necessary or conducive for the third baseman to make that determination in the midst of the play? No. Instead, by experience and training, they recognize when they must hurry a throw, and thus how much routine carefulness they must forfeit to try to make the out.

There are for us likewise, rules or principles we should follow.

I dismiss the idea that we should account for supply and demand, because on the contrary, the idea of supply and demand is merely a tool of exploitation: It does not determine the value of production; instead it determines the stress it can impose on a market deprived of the opportunity to decide the value of the work of production. The concept of supply and demand determining “value” therefore is a destruction of the concept of determining the value of production. That destruction can and will usurp earnings from the deserving while multiplying unfair prices to whatever degree the market can stand.

Supply and demand therefore is utter corruption both of the idea of determining real value, and of appropriate distribution of wealth (or just reward for production).

Your question is pertinent, and it is a goal we should have, at least in some cases which I mention subsequently.

But in my estimation, at least 3 things will go awry in the best efforts we can reasonably make to determine “exact” value:

1. no way will we truly account for all things exactly;
2. nor will the other guy with whom we’re trading;
3. and finally then, neither will *we* have any real basis to determine equality in the other’s work.

All we can do then is the best we can, with reasonable dedication to determination of approximate value.

Largely in fact, we are best assisted in this effort by the integrity of the society.

Only in a society where no one is seeking unearned profit, and where instead everyone is conscientious about the relative value of their own work, can we trust in the price they ask of their work.

Integrity therefore is the most valuable and expedient tool for determining value as “exactly” as is practical.

For ages, except as compelled by usury to seek unearned gain ourselves, we’ve settled for integrity determining value, because it gives us the opportunity to forego repeating all that determination ourselves without access to the many vital facts which would determine value.

Where there is integrity, instead we can trust that suspicion will be raised by some clue that the principle of integrity is violated. *Then* we the buyer can roughly determine approximate value, in fact actually appraising the integrity of the price asked.

The more unearned gain usury demands of us on the contrary, the more the subjects of usury themselves are driven to corruption, and the more we can trust instead that price involves maximal possible unearned gain.

An obvious penalty of usury therefore is destruction of integrity, because integrity is least likely to survive the penalties of usury.

In mathematically perfected economy™ therefore, the only penalty we suffer is whatever errors we make in trying to determine equivalence.

In the end, just as in dividing the task of weeding your yard, as the extra effort we may make in *trying* to determine exact equal value may very well exceed the small difference we are trying to determine “exactly,” we do better in terms of the time we give up by taking the loss of our rough estimation. Let your kids pick or draw the lots, or determine them among themselves.

So we resolve the issue more effectively be settling for what we cannot determine exactly, but can determine roughly or to sufficient satisfaction by simple means.

We know for instance that carpenters and plumbers and electricians and dry-wallers and roofers and so forth are involved in building the home we want to buy. None of these are equivalent to our own trade; neither if they were, is our work worth exactly what these practitioners’ is. But perhaps we are that second welder; and although the many contractors who gladly employ us keep us working all we need, no, they don’t pay us but a pittance of what we’re worth to them but by giving us a few overtime hours here or there. We accept that or we don’t. But if we do, we’re not going to get equal production for our production, are we?

Absolutely not.

But because we are paid at least somewhat better for our demanding class of work, at least we can buy our house for substantially less *time* than the workers who produced it put into it; and we don’t have to pay the bankers 3 houses to get our 1… for publishing a promise to pay we should issue ourselves.

If you or anyone else in history has a better idea, I’m all ears. But it isn’t to make time the unit of currency.

It is not the job of an economic system therefore to impose a method of determining value. Nor are markets free to determine value, if they are subject to usury or market manipulation by cost and demand through vehicles such as commodities trading.

The only truly free market therefore is mathematically perfected economy™, because only mathematically perfected economy™ eliminates all the redundant, unearned factors which exploit price to the detriment of the producer and ultimate market.

It is hogwash for instance that Austrian Economists — who in fact advocate interest — assert that if we leave determination of price to markets which are subject to interest or buyers of futures, “the market” resolves value.

On the contrary, unnecessary cost is imposed by exploitation. Only a market free of predation, and subject only to the real costs of production, is free first to determine the value of production, and secondly to distribute wealth justly (to acquire just reward for its endeavors).

Thus I do believe we should leave it to truly free markets to determine value; and I’ll tell you why:

First of all, that’s what the market wants to do: it wants to be free of predation; and it wants to be free to determine value. So why not let it?

Secondly, what’s going to happen with our second welder?

Given the minimal costs of mathematically perfected economy™, with the opportunity to readily afford going into business for himself, he can tell each contractor he works for that he will settle for a wage say 8 times the going rate for his fellow welders (taking 80 percent of his demonstrated value to make the working situation quite comfortable to his employer); or, to base his wage on production, making it even more conducive to the sanctity of his employers, he can divide a day’s wages by the usual 2 effective welds per day, and offer to take something like 80 percent of that per weld. In either case, the contractor is making an extra 20% profit over usual wages, and our second welder can at least make 80 percent of what he’s worth in terms of volume of production.

On the other hand, if the contractors refuse to give him that, he can buy a welding truck for a pittance under mathematically perfected economy™ and compete with the contractors by under-bidding their welding costs by 20%, and they can’t touch him while he makes a due comparative fortune for the efforts which make him excel at his craft.

A truly free market can indeed determine just value.

But where contracts can be purchased by corruption, or the dollar is subject to interest, or futures traders might fix the value of his work without any consideration whatever for its costs or real value — or denying him the opportunity to acquire the value of his work — just value and reward are only made impossible.

So to summarize…

1. No one determines value exactly;
2. If we had to wait for a perfect method of determining “value,” we would never have mathematically perfected economy™;
3. Not only is that prospective delay unnecessary then, it would be quite pretentious of us to conceive it is even worthwhile to try to determine value “exactly,” given even the likely errors of the many who would have to correctly apply the method, and the even higher costs of just trying.

You and all the rest of us have made do in terms of determining the relative value of our money, even as that money can only multiply debt into terminal debt, and even as that money is constantly devalued by the process which does so.

The most real possible value of money which is strictly a token of wealth however, is still merely relative, and approximate.

The best we can do so that the approximate value of money we have decided to our relative satisfaction is enduring however, is to eliminate multiplication of debt in proportion to the money, and to maintain a circulation which at all times is as equivalent as we can rightly determine, with the remaining value of the property which, across time, we intend for it to represent. This is why these are goals of mathematically perfected economy™, which of course have long been recognized goals of real producers, even if they have been made impossible by ages of usury.

Shall we continue paying “bankers” 3 houses for printing *our* promise to pay on *their* paper until the sum of debt was terminal yesterday?

Or shall we cut our losses to the small inconsistencies we have so far found agreeable in determining approximately equivalent value… especially as there may not even be any overall benefit in the potentially impractical task of “determining value exactly”?

“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)

RESPONSE TO BLACK MONDAY — Business Spectator’s ARTICLE, AUSTRALIAN BANK TO SHOCK WALL STREET

While on some accounts it is wise of National Australia Bank to cut losses ahead of other world banks, obviously, as NAB is in the same business, and as that business can only multiply debt in proportion to a circulation as we are forced to maintain a circulation by re-borrowing principal and interest as subsequent sums of debt, perpetually increased so much as periodic interest… just the same then, National Australia Bank’s business engenders the same consequences within Australia.

Because interest multiplies debt in proportion to a circulation, any purported economy subject to interest ultimately terminates itself under insoluble debt. As we saw from the beginning, the issue in the United States is not “sub-prime mortgages,” but that “interest” inherently and irreversibly destroys credit-worthiness by imposing ever more unserviceable sums of debt.

Which then is the horse; and which is the cart?

The only solution to inherent multiplication of debt in proportion to a circulation is mathematically perfected economy: See our article, Probability and Timeline for World-Wide Economic Collapse as a Consequence of Interest.

RELATED EXTERNAL ARTICLES

1. businessspectator.com.au, NAB will shock Wall Street, 12:40 PM, 25 Jul 2008

“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)

Many people, and particularly many ostensible economists, presume to our peril that the First Great Depression was caused by the stock market crash.

The peril of this presumption is that in thinking a consequence is the cause, we fail to perceive the real cause, or its solution.

The stock market crashed in 1929 because of the same multiplying indebtedness per real value and potential capacity to service debt which spans the breadth of the pretended economy now.

Although the Great Depression precipitated from healthier statistics than plague us now, rather than saving, people were “investing” their spare money in so called securities on short term credit. The purported success of the market coerced the people to do so, because the temporary returns on “investment” far exceeded the returns for saving, and because devaluation of the dollar under multiplying indebtedness further reduced the relative value of savings.

But as is the present case, the dollar was not devalued by inflation. Rather, it was devalued by price inflation, resulting from multiplication of debt by interest and dedication of ever more of the circulation to servicing debt, versus sustaining the commerce which is obliged to service the debt. The underlying nature of the “money” therefore was the root cause of both erosion of the value of money, and the mounting probability that the subject commerce would fail under the unsustainable obligation to service a sum of debt which multiplies perpetually, as we necessarily replenish a circulation by re-borrowing interest and principal as ever greater sums of debt.

People therefore wagered their spare earnings in speculation. Having a small margin of typically say, 10 percent, they could borrow the remaining 90 percent to purchase “securities” on debts such as represented by 7, 10, 15-day promissory notes. At the conclusion of the short-term debt, they would sell the “securities,” and re-coup substantial unearned profit at the expense of the producers of wealth, as for instance if the artificially inflated value of the securities rose 10 percent, this would double the money they had invested.

We don’t have to be mathematic geniuses to see that in not long, this artificial inflation of the value of stocks/”securities” would create to the unwitting a deception that a magnitude of prosperity existed, while the prosperity itself was a small fraction of the debt the subject people had so multiplied upon themselves.

Seeing this disparity, or perhaps acting for the sake of their superior position to take, one day the private banks which comprise the so called Federal Reserve withdrew the further “credit” (perpetually self-multiplying debt) necessary to sustain the waiting “accident.” Oh, sure, in partnership with the so called Federal Reserve, the people had over-extended their credit-worthiness.

So suddenly having to market their “securities” to a market having only the margin in circulation… of course the market immediately crashed.

But why did it take down the rest of the purported economy with it? That’s the question.

The market crash took the rest of the purported economy down with it, because the whole system was so subject to debt. The collapse of this one sector, pushed the sector passed the brink of solubility; and so it was a collapse under excessive credit which brought the rest of the system down.

What are we to learn then from these combined conditions of falsely inflated values, sustained by perpetual excessive “credit”?

It is no more the sector which collapsed which signifies the probability of overall failure than it is a certain wave which crashed on the beach which caused the sun to set. No more can we find that wave to be the cause of sunsets the following day, than we can expect the pretended economy to fail but for any other reason than the nature of the currency, which inherently multiplies debt in proportion to the circulation.

Because a currency subject to interest multiplies debt in proportion to our potential to service debt, ultimately every such system fails under a mountain of insoluble debt it eventually can no longer service. And so, when any sector breaks, it may take all further sectors of a highly jeopardized system with it.

The peril of failing to understand the root cause is, that we may never be compelled to do anything about the nature of the currency.

We know for instance that the so called Federal Reserve has, for several decades, artificially buoyed stock prices — often even buying “government securities” with money these private banks publish at virtually no cost or risk whatever. Seeing this seems to sustain “markets,” we are lulled into a very false sense of security by this narrow range of “evidence,” for as we can readily see, behind the backs of those whose barometer is the “markets,” private and public debt both have multiplied to incredibly unsustainable magnitudes, to the detriment of the generations now and in the future, which are to pay the consequences.

If you were the first players to take turns at the Monopoly Board after the First Great Depression, you might think how wonderful all the unearned profit which can be taken by the first generation player, while the rest of us pay 50 prices just for rent, and while you might leave us too with all the public and private debt which has been accumulated to perpetuate the false, temporary proposition that the people benefit equally, generation after generation under usury.

Before or after the Second Great Depression then, we can finally come to understand that dispossession is the very purpose of the imposed, pretended economy; and that while “interest” inherently multiplies debt into terminal sums of debt, the reason the unassented systems are retained upon us is their original purpose — which is to take from us without justification, by perpetual multiplication of debt.

This Depression may or may not look like the last one to you. And you may think we have time because the so called markets are falsely sustained by infusions of cash. But the real issue is multiplying indebtedness.

Ron Paul supporters are after the problem; but they have yet to round out the principles of solution. Here’s to that objective.

An Alex Jones article, “How to stop the Great Crash of ‘08” (Spengler / Asia Times | July 1, 2008), reiterates the fatal errors of the Ron Paul spiel.

The article tries to draw together a probability of failure by observations of consequences, rather than unraveling the root cause in the nature of the currency. To support Mr. Paul’s drumming that circulatory inflation is the cause devaluing the dollar, the article tells us largely that monetary movements/creations are responsible for an “excess” of circulation:

The oil price has doubled in the past year because the US Federal Reserve panicked over risks to the over-leveraged financial system and flooded markets with excess liquidity.

In the pattern that Mr. Paul has followed, the article doesn’t even cite relevant data which would necessarily, by definition, demonstrate that the years of such purportedly inflationary increases in circulation have rendered a circulation exceeding the value of the wealth we have produced. In other words, we do not have inflation; we suffer deflation, because the circulation is far less than the remaining value of the wealth we have produced. Yet the article harkens back to the dawn of the Reagan failures, falsely claiming their success as a model of solution:

Under parallel circumstances, then Fed chairman Paul Volcker did precisely that [raise interest] in 1979, bringing the central bank’s lending rate up to 20% over two years of tightening. Inflation under the Carter regime had run out of control, the dollar collapsed, and the price of oil rose to a then menacing $40 per barrel. After Volcker tightened monetary policy the dollar’s trade-weighted exchange rate doubled and the price of oil fell sharply.

At the same time, the Ronald Reagan administration cut marginal tax rates sharply, and the American economy began a quarter-century growth cycle.

Whatever “growth” an “economy” subject to usury succeeds in, essentially prevails only over the redundant costs of interest. What the article hails as a success refers in fact to a prevailing over 7 years that saw us descend from “the greatest creditor nation” in the world to its lowliest debtor ? a position from which we have sunk further ever since.

Interest obstructs growth and success, because it makes either more expensive. Elevated interest rates thus are more preclusive than more tolerable rates.

The article yet draws from its misperceptions of the past to advocate saving the purported economy by raising interest.

Nonetheless, the reason why you can’t raise interest in the later stages of the lifespan of any purported economy subject to interest is simple:

A circulation is only maintained by re-borrowing principal and interest paid out of the circulation in the process of servicing debt. The re-borrowing necessary to replenish the circulation of its perpetual deflation thus preserves the previous sum of debt in the principal which is re-borrowed, and converts what periodic interest is re-borrowed into new debt. The sum of debt under interest therefore grows at an inherently escalating rate of ever greater sums of periodic interest on an ever greater sum of debt. The higher the rate of interest, the faster the multiplication of debt, and the greater the cost of servicing debt.

In the later stages of the finite lifespan, as far greater debt exists in relationship to the circulation, to extend the lifespan against the prospect of near term failure (as would be evident in present housing foreclosures), it is necessary to relax interest rates so that the heavily burdened system can sustain itself against the weight of servicing a far greater mountain of ever growing debt than before.

But the proposition that price inflation is controlled by interest was always a lie.

Rather than Mr. Paul’s non-existent or non-attributable “inflation,” it is interest which multiplies the cost of all things as industry is forced to account for the costs of ever greater debt in preserving necessary margins of solubility. The degree to which elevated interest purportedly exceeds in holding prices down is only by making money so expensive to the market that the market cannot afford the price increases which are necessary to maintain margins of solubility. Moreover, there is no real benefit at all: the cost which would have manifested in increased prices instead manifests in an equally damaging increase in the unearned profit of usurers, in the form of unearned “interest.”

After all, we are claiming a benefit from an imposed cost, only by suffering at least an equal magnitude of cost somewhere else!

So, not only is the whole idea an intended deception; the least conducive time to try to return to this facade of rectitude is a time when the system is so marginalized that the market can least afford a higher cost of money and faster multiplication of debt, while the little industry which has survived multiplication of debt too is so marginalized, that it can least afford not to maintain margins of solublility.

Under the present mountain of far greater debt, and under the very prospect of catastrophic failure the article purports to address, we have exactly those dubious conditions ? against which to weigh the prospects of the damaging facade of the past.

Obviously then, unless someone can refute these facts of detriment, we would be quite ill advised to follow the advice of the article.

Because there is one solution only, I left the following post:

You have us further treating consequences without treating the cause. I suppose, because Alex rubs elbows with so many Austrians, that nobody here accepts the fact that interest multiplies debt in proportion to a circulation. Thus you can have households putting away whatever you want to let them for retirement, but if you can’t protect the value of the dollar, why should they put the first cent there?

There is one way only to solve this mess, and that’s mathematically perfected economy?:

Alex believes the dollar is devalued by “inflation.” If we have inflation, then everywhere you look, the circulation exceeds the remaining value of the related assets. But au contraire, everywhere you look, nobody has any money.

Why is that?

Because there is a constant deflationary phase to the cycle of money, in which we are perpetually paying interest and principal out of the general circulation in the process of servicing debt.

What drives up the costs of all things then?

Servicing an ever greater sum of debt. Worse, as ever more of the circulation is dedicated to servicing debt, ever less remains to sustain the commerce which is obligated to service the debt.

This is the systemic cause of price inflation. We don’t have circulatory inflation.

Beyond systemic price inflation, we have artificial multiplication of cost by every conceivable form of unearned gain ? commodities trading for instance. Either one can kill us. But systemic multiplication of debt in proportion to potential means of servicing debt *inevitably* kills us, because multiplication of debt in proportion to a circulation is irreversible so long as we maintain a circulation, and the banking system consumes less of our production than we pay periodic interest on debt.

But make no mistake then Alex; the cause of the collapse is inherent multiplication of debt by interest; and the only thing that will save us is eradication of interest.

Furthermore, if you want to preserve the value of the dollar so that we can succeed in all other directions, then you have to solve inflation and deflation; and the only way to do that is to introduce so much circulation as the original value of the related asset; and to pay off a monetary obligation equal to no more than that at the rate of depreciation or consumption. Thus neither can we solve inflation or deflation or achieve that abstract goal that Ron Paul and Alex call “sound money” if we pay interest as well, because then (as now) the deflationary cycle exceeds the replenishing cycle.

Only mathematically perfected economy? achieves these goals.

Or maybe you’d like to debate otherwise on your show, Alex?

RELATED EXTERNAL ARTICLES

1. How to stop the Great Crash of ‘08

The new nation was faced with obfuscations of how to pay the debts of the revolution. Alexander Hamilton proposed to concentrate otherwise undue power in a central government, which he asserted should “establish credit” by going into sufficiently impressive further sums of debt to private banks of foreign nations.

Never elaborating on the consequences of usury, or invalidating the plausibility of the people or government issuing its own, unsubjugated promises to pay… Alexander Hamilton simply insisted that “establishing credit” was necessary, particularly to acquire further “credit” to prepare for and engage in further conflicts.

Wisdom will immediately see the danger in this arrangement then; that vast wealth would be perpetually and exhaustively multiplied to certain private, foreign banks, which are simply forfeited the people’s right to contract between each other (which is all that money is); thus that by imposing involuntary servitude together with interest’s obligation to maintain a vital circulation, and particularly then, together with the power to withhold the further credit necessary to sustention at ever greater cost, these unassented “banks” are endowed outside and averse to any regular vehicle of representation, with the vast, unaccountable, limitlessly manufacturable power to dictate altogether the disposition, might, and therefore even the prevalence and failure of oppositions. The power so carelessly given then, is even the power to destroy all resistance to the untethered purposes of the power to perpetuate itself against us.

This illimitable, unassented access to power and wealth is what Hamilton’s so called Federalists actually wanted by his advocations that we borrow with the purported ambition of establishing credit.

But of course, because there is but one consequence of a currency subject to interest, Hamilton’s insisted course would make it ever more impossible to sustain the form of debt under which he sought to subjugate us. There would be practically nothing important eventually which such banks would not own or control, directly or indirectly.

Because Hamilton’s course could never compete with a truly representative monetary system… so, under the intentional guise of “necessary credit,” Hamilton misleadingly advocated what actually amounted to multiplying indebtedness, which he sought by simply evading the prospective fact of a singular genre of perpetually redeemable, representative, and readily available money. By the designs of this evasion, Hamilton promoted a tunnel vision disposed to self-multiplying indebtedness, with its attendant subversions of representation and deteriorations of social infrastructure. Pretending to understand himself that credit subject to usury is an advantage, Hamilton further sought to deceive us of the ever more destructive further proposition of actually seeking indebtedness, to the purported advantage of the impossible and destructive goal of proving a capacity to sustain ever greater self-multiplying debt.

In the pattern of all servants of usury and its attendant forms of unearned gain… Hamilton thus sought, by simply evading any genuine consideration of the one rectified design of money, to sell us to a form of debt which could only compel us to perpetually re-borrow interest and principal as ever greater sums of debt, merely to maintain a circulation. In the end, as Jefferson would project truly, this illegitimate and unassentable power above all others would make the banks the direct or indirect owners of all industry; would indebt our progeny to bankruptcy — and so, by the process of dispossession inherent to an inherently usurious currency… would ultimately leave our children homeless on the continent their forefathers had conquered in a revolution dedicated actually to liberation from all those attendant forms of unearned gain.

Fortunately then, Thomas Jefferson resisted these ulterior intentions, asserted by Hamilton on behalf of “banking” interests who hoped only to gut a sufficiently naive or un-united nation.

Because the intellectual challenges of Hamilton’s evasion and obfuscation were largely beyond President Washington and Vice President John Adams, Jefferson was the light by which to see, dragging along the weight of others, who, walking in their sleep, represented the naivete Hamilton hoped to exploit. But so, we might not have been a country long if President Washington had tended to any greater degree to reinforce Hamilton’s intended monetary miscarriages, even as Hamilton dedicated much effort to gaining and preserving not only Washington’s favor, but putrifying Washington’s and Adams’ cabinets until President Adams fired Hamilton’s relentless and probably well rewarded lackeys.

A hundred years later, we would see this same kind of effort succeed by betrayal of political promises, acting outside the intended channels of representation within the formation of the naive Wilson Administration. The later subversion of course would result in the creation of the falsely named “Federal Reserve” System — even exceeding Hamilton’s vehicle as a confederation of 12 private banks which are neither federal nor real reserves of anything.

Amidst these similar, earlier events, the back-stabbing, traitorous Hamilton would eventually be mortally shot in a duel with Jefferson’s Vice President, Aaron Burr — but not until Hamilton so succeeded in discouraging Jefferson from further enduring his relentlessly unjust assaults, that with Jefferson so much as retired from the senseless public bickering, Hamilton had his first “national bank” — the very kind of vehicle necessary to the destruction of the fledgling nation.

That bank of course soon failed under its intended, relatively unrestrained offenses against the people. But Hamilton sought, and to a substantial degree succeeded, in a triangle of evils: to indebt us, to militarize us, and to involve us in foreign conflicts which the record shows would have preserved the interest of the usurers he served.

Had Hamilton had his way across eternity, we would never understand that the people are the ostensible final authority, only instrument, and most deserving beneficiary of the one possible design for a perpetually redeemable currency. Hamilton instead would have had private, extrinsic parties issue our promises to pay each other — as Jefferson warned, at the perpetual cost of escalating dispossession, ensurance of usurpation, and gravest probability of ulterior strife.

How then should we have paid our debts to France?

The answer to this question rests not in perfect hindsight, but in principle: If in separating ourselves from subjugation to the Bank of England, we had re-financed all debt without interest and scheduled its payment according to the depreciation or consumption of the related assets, then not only could we alone in the world have guaranteed our creditor repayment, protected from devaluation by inflation, deflation, or multiplication of debt by usury… at the same time, at virtually no cost whatever, we could have financed all the industry and prosperity we were capable of, that we could have repaid our debt by retiring our additional promises to France from circulation with the least taxation of a perfectly sustainable, far superior volume of industry.

We would also of course have precluded private banks from multiplying their wealth all the further at our equally great cost, into the usurpation which eventually manifested in the so called Federal Reserve System.

In other words still, if mathematically perfected economy™ had emerged with the revolution, there would have been no actual monetary debt to France, because we would have paid for whatever we needed by issuing promises which would have been perpetually redeemable in the products of our industry — the integrity of which notes would have co-survived with the emergence of our nation.

As history therefore attests, the only solvent principle before us was to issue promises to pay to France; allow those promises to pay to be naturally redeemed in terms of our industry/wealth wherever those promises to pay would be honored; and to retire the notes from the circulation by taxation, to apply the costs of war justly, without redundant cost, and ultimately, without inflation.

At the end of Adams’ term, the country was deadlocked over the ensuing election. As he had already assaulted the character of many others for his masters’ ulterior purposes, Hamilton published a broadly read letter laced with rude ad hominems to discredit Adams, hoping the so called Federalists too would prevail over usury’s greatest rival, Jefferson. By a slim margin, Adams, the sitting incumbent, would not be re-elected.

Despite Hamilton’s vicious disinformation campaign, Jefferson achieved a tie of the electoral vote, and the decision between the eventual President Jefferson and Vice President Burr fell to Congress. Jefferson privately warned Adams that if the “Federalist conspirators” prevailed, violence would erupt. After thirty-three consecutively tied votes, hoping only to appease or disarm Hamilton’s destructive following, President Adams asked the popular Jefferson to honor a national debt subject to usury, asserting what they both knew — that this would defuse the ulterior thrust for unearned gain championed by Hamilton’s intended obfuscation, that the government would fall not to Hamilton’s “Federalists,” but to the ever honorable Mr. Jefferson.

Yet even to this reassurance Jefferson replied, “I will not enter office with imperfect freedom to follow the dictates of my own judgment.”

Surprise, surprise. Employment is taking a little nose dive moreso than the rate of unreported unemployed can hide.

Under the imposed central banking systems of the world, employment and potential wages are extinguished to an ever greater degree as the costs of multiplying debt perpetually reduces what portion of the circulation can be devoted to employment or wages.

The system inevitably collapses because its subjects cannot even maintain a circulation without multiplying debt upon themselves: They must perpetually re-borrow what they pay against principal and interest obligations; and so debt increases so much as interest, until the debt is so great that the system caves in under the weight of servicing debt.

All along the way to the inevitable collapse of such a system, while costs are driven up by interest, the ever diminishing remainder of circulation available to devote to any other purpose but servicing debt means ever less is available for employment and wages. Labor is the odd man out in the squeeze between industrial survival and usury. Labor always loses.

SUSTAINABLE LABOR, EMPLOYMENT, AND WAGES UNDER Mathematically Perfected Economy™

1. Because whatever finances industry requires are readily loaned into circulation and readily paid under mathematically perfected economy™, we can readily afford new industry.
2. As the debts of industry are not multiplied by interest, there is no squeeze play in which labor loses. Reasonable wages can be maintained, as there is no multiplication of costs and perpetual reduction of the spending power of markets.
3. As the spending power of labor per wage is approximately 12 times greater under mathematically perfected economyâ„¢ (see previous MPE 101 topics), the markets to which industry can peddle its wares are likewise 12 times as solvent. Thus industry has 12 times the probability of survival or prosperity under mathematically perfected economyâ„¢.

RELATED MATERIAL

PROBABILITY OF WORLD-WIDE ECONOMIC COLLAPSE AS A CONSEQUENCE OF INTEREST

WHY PRECIOUS METAL MONETARY STANDARDS CAN ONLY FAIL — PROOF OF A SINGULAR CONSTITUTION OF SOUND MONEY

THE FALSIFIED ARGUMENT THAT RISK JUSTIFIES INTEREST (USURY)

PURPOSES OF THE DECEPTION THAT INFLATION IS CONTROLLED BY INTEREST (USURY)

Economists React: ‘Looking for a Bunker to Hide in’ (REUTERS)

As we know, we have a housing crisis — some 14 million American *families* are in immediate danger of losing their homes; only emergency measures preventing scheduled increases in interest rates stand between putting these people on the street. The present spin on this issue is that these consequences result from a “sub-prime” mortgage bubble, which of course could only burst.

In truth, the so called housing crisis is not a housing crisis at all; and far more of us are in jeopardy of losing our homes if the purported economy teeters into a prolonged or pronounced “recession.” The phenomenon is an artifact of the fundamental flaw in the Federal Reserve currency, which can only multiply debt in proportion to a circulation until we suffer collapse under insoluble debt.

Similarly, the so called housing crisis is not a recent artifact of this multiplication of debt. We started seeing great numbers of homeless people in the early 80s under the Reagan Administration, as private debt escalated to such magnitudes that we could not afford the equally escalating costs of federal government. This resulted in federal deficits which tripled the national (federal) debt of the United States in just 7 years, over which the United States descended from the greatest creditor nation in the world to its “greatest” (lowliest) debtor.

One of the carrots dangled in front of the sheeple by the media of the usurers is that “the value” of our homes appreciates.

Of course, this is a lie. The value of a home — as does any asset which is being consumed — is actually depreciating.

The purpose of the lie is obvious: If the central banks can promote the false idea of appreciation, then they can indebt us (through the middlemen of the banking graft) to the greatest extent that we can afford to service debt.

Thus it is the cost of our homes which is increased; not their value; and the intended consequence of course is maximized unearned profit. Remarkably, “economic” pundits even use the unearned profit (which is to our cost) to portray a further falsification of vitality of the “economic” system.

The system isn’t economic at all; and the purported vitality is actually an expression of how much we are suffering by usury.

We can understand that easily in the facade’s most rudimentary terms: The result of the purported price appreciation is that we pay lifetime after lifetime to usurers who produce nothing, for homes we produce by but a few months of human labor.

CONSEQUENCES OF HOSING UNDER THE SO CALLED FEDERAL (PRIVATE) RESERVE (FALSE RESERVE) SYSTEM (OF STEALING FROM US)

The only possible consequence of the inherent multiplication of debt by interest, together with this false carrot of housing value appreciation, is multiplication of housing costs in proportion to possible means. The so called sub-prime mortgage anomaly is not a matter of incidental malpractice; it is a matter of the only practice possible when we must try to house people in homes… the cost of which are inherently multiplied beyond our means.

School book covers we used to put on our books in the 1950s and 1960s for instance used to tell us that by the year 1980, our industry would be so productive that we would have so much free time on our hands, that an actual concern was the question, “What would we find to do with all this free time?”

Instead, while a single “bread winner” easily supported a home and large family in the 1950s, 60s, and 70s, in the 80s the multiplication of costs by the so called Federal Reserve System required 2 bread winners to support a home. As the further multiplication of costs can only require more; and as the multiplication is a multiplication in proportion to our income or means, of course this cost “appreciation” thus resulted in homelessness, where our nation should have been *prospering* — and would have been prospering just as our book covers foretold, if it were not for the stealings of the so called Federal Reserve System.

THE TRUTH ABOUT HOMELESSNESS UNDER USURY

Nothing fixed the cause of homelessness which we saw rising so dramatically during the Carter-Reagan era. The causes of homelessness have only increased, and can only increase under the inherent multiplication of debt in proportion to means of the so called Federal Reserve System.

People aren’t returned to homes under usury; further people are deprived of them (as Jefferson taught).

What happens to these people?

They die, and we sweep them off the streets.

HOUSING UNDER Mathematically Perfected Economy™

Under mathematically perfected economy™ our debts are not subject to usury (multiplication by interest); and we pay against our debts at the natural rate of consumption or depreciation (which are equivalent).

Thus a $100,000 home with a hundred year lifespan costs us $1,000 per year or $83.33 per month.

Furthermore, our prescription for immediately converting a usury system to mathematically perfected economy™ credits debtors for all that they have paid against their present home, up to the current remaining value of the home.

What then are the ramifications of immediately adopting mathematically perfected economy™?

1. *MANY* people still paying against their homes will have paid fully for their homes.

   In terms of their home, they will immediately be debt free.

2. Those without homes will be able to purchase a new $100,000 home with a 100-year lifespan at the overall rate of $83.33 per month.
   1. Even people with part time, minimum wage jobs will be able to afford homes.
   2. Against a cost under usury of $1,000 per month, the scale of savings under mathematically perfected economy™ thus frees up 11/12 (91%), or $910 of every $1,000 dollars currently being paid toward homes, which monies then of course can be devoted to promoting commerce and prosperity.
3. With short term debt being re-financed under mathematically perfected economy™, even greater savings in interest are realized, because short term interest rates are higher (often *much* higher).
4. With over 90% of our personal earnings being freed up to sustain further commerce, immediate adoption not only means avoiding collapse under insoluble debt; it provides for immediate realization of approximately 12 times present prosperity.

I’m told that Cuba produces many more doctors per capita than does the United States, and that their health care if far less expensive, and even generally far better in many ways than the care we can procure (if we can afford to procure health care in the United States).

But imagine if we printed up a bunch of mathematically perfected currency™ — a currency which could neither engender inflation or deflation — a benign currency which could not multiply costs. And imagine that we loaned this currency without interest to finance the education of doctors at schools which too neither suffered perpetual re-multiplication of costs by interest.

Imagine that while enjoying such an education, the eventual doctor could afford to own a brand new home working only part time, because the student doctor only had to pay for the home; and only had to pay for it as they consumed of it. For instance, a $100,000 home with a hundred year lifespan would depreciate or be consumed at the overall rate of $1,000 per year. Thus the home only costs the student $83.33 per month — far less than an apartment today; perhaps even less than a shared dorm.

They can graduate at their leisure; and when they graduate, they can readily afford to go into business, because the costs of office space and necessary equipment are likewise decreased for eradicating interest.

How much would health care cost us then; and who couldn’t afford it?

The costs of the real property involved come out to 1/12th present costs, while spendable income is 12x as much, and employment and wage prospects soar.

Ron Paul keeps saying that the government just prints money, as if this itself is bad. Well, it is bad if you are doing it because you can’t solve a fundamental problem, and the consequences of the printing are unnatural or bad.

But first of all, it’s incorrect that the government is issuing this money; it is the private Federal Reserve Banks.

Secondly, he says that it is the falling dollar that is the inflation. This is way wide of the necessary mark.

The problem is the nature of the money. The Federal Reserve Note intentionally multiplies debt in proportion to our means, and this is the one intrinsic reason government must borrow ever more to make up the difference in what we cannot afford to pay in taxes, as multiplication of private debt inherently makes us ever less capable of affording government. Certainly, fiscal irresponsibility and corruption are further contributing factors — and even huge factors at that.

But even without them, we would suffer the present multiplication of debt, because merely to maintain a circulation, we must re-borrow whatever we pay against principal and interest obligations as subsequent debts, increased so much as periodic interest. As Jefferson said, “If the American people ever allow the banks to issue their currency, first by inflation and then by deflation [which inherently means ‘by paying out of circulation more than whatever we have to borrow into circulation’], 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.”

Interest is the agent of the adverse process; and the adverse process is multiplication of debt in proportion to the circulation.

To paraphrase Bill Clinton (who didn’t solve anything) with a twist toward resolution: “It’s the interest, stupid.”

The falling dollar is not the inflation: The dollar held its ground until recently, yet all the present problems have been mounting for decades.

On the contrary, the dollar is falling because of the inherent faults of the system culminate in economic collapse. The dollar can only fall, because the fools the Federal Reserve is selling our debt to are going to take a huge fall with us, if they hang onto those dollars.

The dollar is exposed as a bogus currency; and so it will tumble.

The present currency isn’t a dollar. Indeed, it is a pretender, which usurped the dollar. It was imposed upon us u