Jim,

I obviously have much to agree with what Joe Bangiovanni has to say, most especially regarding the stupidity and wrongheadedness of austerity, the necessity of awakening politicians, economists and most importantly the general populace to that same wrongheadedness and particularly his belief that a guaranteed income is a necessary aspect of monetary reform. However, his (and Marc Gauvin’s) continuing belief in the validity of the velocity of money actually adding purchasing power to the system is mistaken and here is why. The classic example of the velocity of money has a man giving a hotelier (a business and businessman) $30 dollars for a room and then the hotelier taking that money to the baker (also a business and a businessman) and spending it and then the baker spending the $30 at the Butcher (business/businessman) who then pays off the hotelier for the $30 room he paid for his escort :)…well maybe I’ve altered the story a bit. Anyway, what Gauvin and Bangiovanni have missed is that the $30 the hotelier received…was business revenue and NOT individual income that he was commercially and legally free to claim and use as individual income. And of course the same is true for each of the merchants in that line of purchases. So what actually is the result of each of these merchants misusing their business revenue as individual income is that (assuming they all work on a 5% net profit margin) they have spent $30 of revenue…without paying a cent of the $28.50 they must come up with…in order to pay their loans and other overheads and thus successfully stay in business. That also means that in order to make his 5% profit (the businessman’s actual individual income) each of those businessmen is going to have to come up with $28.50 (19 times $1.50) of business revenue…before he can commercially and legally begin to claim a cent of actual income again. Business revenue cannot and does not escape the costing system of commerce and individual incomes are not increased by even a cent by however many times money changes hands. The only way incomes are increased is through borrowing as the money system is endogenous, or to a small degree and percentage the deficit spending of governments…but even that deficit Keynesian stimulus is only circulated into the economy which, considering the additional costs of commerce over and above initial finance costs, like the costs of replacing capital equipment and facilities, waste, normal business costs like insurance etc. incidental and unforeseen costs and finally labor costs which of course are always only a subset of total costs …means that individual incomes are woefully inadequate to liquidate total costs…and then considering the cost accounting convention that all costs must go into price is always enforced…the rate of flow of total consumer prices will thus always tend to exceed the rate of flow of total individual incomes with which to liquidate those prices….and that is the most basic reason why (there are other reasons as well) the economy is almost always in a radical state of monetary disequilibrium. And that is also why we must have a new and additional monetary paradigm of DIRECT to the consumer Gifting…so that the economy is actually able to be stably equilibrated. Nearly every economist and most monetary reformers are completely unconscious of this costing/expensing system of commerce and its monetary effects.

Listening on in your interview regarding the Guardian article…it is an excellent litany describing the ways in which humans attempt to free themselves from the onerousness of the system. My wife is from Romania where they made an art of surviving in the austerity of socialist realities and this is how nations survive the austerity of Finance capitalism however bleakly, even with such underground economies. But why must we settle for such piecemeal and halting measures…when we already have the exquisitely utilitarian tool of money to remedy the scarcity of total individual incomes in ratio to total costs/prices…if we will only cognite on the new monetary paradigm of consumer Gifting….which is the solution coalescing in the minds of all those piecemeal attempts to deal with the current onerous unbalanced and unopposed monetary paradigm of Debt ONLY.

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Correction. The businessman will have to come up with $570 (20 X $28.50) in business revenue before he gets back to even let alone actual business profitability. So the difficulties of staying “a going concern” are even greater.

And bingo! I just heard you guys mentioning C. H. Douglas and the new monetary paradigm. Excellent.

One quibble with his description of the total problem..it isn’t just P + I > P its Total costs > Total Individual Incomes which is an even bigger problem because there are other costs than merely interest. Plus you have to factor in the diminutions to individual incomes as well like Rent and the extractions/pooling of incomes via Financialization, so the problem is even worse than P + I > P