Me: Puzzling about reserves is just a side show. The entire problem can be understood by recognizing that the paradigm of Debt Only which Finance has a virtual enforcing monopoly on must be replaced by the primacy of Monetary Gifting.
I told Steve Keen over 5 years ago when he was de-bunking DSGE (Dynamic Stochastic General Equilibrium theory) that C. H. Douglas was the first disequilibrium economist. It was one of the few times he deigned to respond to me when he said he would have to investigate that. Shortly thereafter he came up with his current theory that when the rate of increase of debt dips the economy must go into recession. This is nothing more than a macro-economic restatement of Douglas’s A + B Theorem. When you put the fact that the only way currently allowed to increase incomes is to incur debt (Finance’s enforced monopoly product) with the fact that recession-depression occurs if you do not continually borrow you see how rigged the system is because you’re stuck between a rock (the necessity to continually borrow to avoid recession-depression) and a hard place (the continual build up of debt until it can no longer be serviced).
Keen doesn’t have the cost accounting insight that Douglas had that the way to resolve the problem is to implement monetary gifting policies at the terminal summing and ending point of the entire economic process known as retail sale because both the pricing and the money systems are digital and so a discount-rebate policy at that point can resolve and invert the problematic ratio that is the base of the problem. This blindness is mostly because he’s plagued by a reactionary orthodoxy of his own that came out of his de-bunking of DSGE and that is that macro-economics doesn’t need to be tied to micro-foundations. Hence he doesn’t look at the cost accounting convention that all costs must go into price and is unconscious of the significance of the point and time of retail sale. Social Crediters themselves did not fully comprehend the new paradigm they were advocating, and they also were hampered by the classical doctrine of equilibrium. They also apparently did not have a good understanding of the nature and signatures of paradigm changes which always are inversions and transformations of problematic ratios-dualities and changes in primacy between the old and new paradigms. Hence they only advocated “filling” the Gap instead of inverting and transforming it from a scarcity ratio into an abundance one, and as technological innovation and AI continue to reduce aggregate income the paradigm of Monetary Gifting replaces the primacy of Debt.
EB: Thanks, all good comments. I’m still a bit stumped on this issue though.
This of course sets up the necessity to continuously borrow which results in the business cycle and eventually debt deflation from the continuous build up of debt. And of course as its an INDIVIDUAL income problem NOT total money problem that is why the dividend and discount/rebate policies ACTUALLY RESOLVE THE PROBLEM, especially if you make the dividend sufficient and the discount percentage high enough…because it inverts the scarcity ratio so instead of the business cycle and eventual collapse you continuously have an abundance of individual incomes in ratio to costs/prices AND YET PRICE DEFLATION which translates into systemic free flowingness.
In other words the moment to moment continuing PRESENT TIME reality of the economy is a scarcity of total individual incomes in ratio to total costs/prices….and therefore “eventually” has no relevance or enforcing reality. “Eventually” is a delusional hypothetical that does not and by definition of the present moment CANNOT exist. Whether or not and to what degree we are aware of it, the present moment IS OUR REALITY, and the same is true of the present moment reality of the economy.
This is also the definition of economic inherentcy, and inherentcy can only be changed by a reality/policy that avoids, goes around or resolves the inherent reality/problem present in every moment within the economy.
The whole tariff thing is another side show. Yes, Gary Cohn formerly of Goldman Sachs resigned because globalization, i.e. the global coalescence of the integration of Finance’s paradigm of Debt Only is its goal, and nationalist policies momentarily slow that. However, tariffs are just more palliative policies and conservative/libertarian “change” which are just the flip side of Obama’s liberal neo-classical economic empty suit “change you can believe in”…so neither will resolve the actual problem.
For a real solution you have to recognize the real problem (the de-stabilizing unworkability of continuing the paradigm of Debt Only), recognize the significance of the digital (+, -) nature of both the money system and the pricing system, the significance of the fact that retail sale is the terminal summing and ending point of the entire legitimate economic process and that Monetary Gifting is the new paradigm that will integratively enable stable economic prosperity for both the individual and enterprise and true free flowingness as well.