L: Hi Steve,
I found this post both insightful and illuminating. I never noticed that social crediters want to tie everything to a metric to freeze everything to a stop; but it is a true observation. If you stop a river so you can measure its flow at that point in time, it will overflow. I am also mindful of John’s recent post about money being continually created and destroyed – and yet I saw the intention of the point. Here is the concept that came to my mind. Picture a container with a siphon on the bottom. We are always concerned with the volume of water (i.e. money) in it. If you add water faster than it drains out, you have “inflation” but if it drains out faster, you have “deflation.” Of course we do care about how much water (i.e. money) we have in the system but what we need to be mindful of where the water comes from and where it goes. That was John’s point.
Me: Thanks Liam. Yes, a mere statistical equilibrium is a stop in time. What we need is free flowingness through time and not only the elimination of the scarcity ratio of total individual incomes in ratio to total costs and so prices…but an inversion and transformation of that scarcity ratio…into an abundance one. Inversions and transformations are signatures of paradigm change. The Helio-centric paradigm change was nothing more and nothing less than the inversion of the positions of the earth and the sun and it transformed the entirety of the viewpoint on cosmology.
Social Crediters never quite recognized the power of the CRP, what I refer to as the discount/rebate policy whose nature mimics the digital nature of the pricing, debt based money and accounting systems. If you implement a high (say 50%) percentage discount at the point of retail sale which is both the very end of the economic process where production becomes consumption and is also the terminal expression point for all forms of inflation you can invert the entire system from inflationary to deflationary…and everyone’s potential purchasing power gets doubled in the process because $50 now buys $100 worth of goods and services. And you’ve created a better, more potentially profitable and free flowing alternative for individuals and for commercial agents to raising their prices when they see more money coming into a system that is chronically scarce of individual incomes/business revenue. Only garden variety 3-4% inflation can occur because raising one’s prices by more risks losing market share so there is no risk of hyperinflation which only occurs when wars have destroyed productive capacity, indebtedness is overwhelmingly onerous and the central bank is complicit with speculators who short the currency and create the hyperinflation. Under normal conditions money is not the deepest or even actual cause of inflation, rather it is that there is no insightful and more profitable alternative to the understandable attempt by commercial decision makers to garner more revenue in a system chronically short of it.
If you create price deflation at the end of the economic process with a high percentage discount/rebate policy….you can pour virtually as much money as you want into the system and not have to worry about inflation. It’s inversion/transformation and paradigm change.
Here are the “knock on” effects of the two policies I am now advocating:
1) with a $1000/mo universal dividend distributed to everyone 18 and older for life that potentially purchases $2000/mo with the 50% discount at the point of retail sale….why would both individuals and enterprise have to pay transfer taxes for welfare,unemployment insurance etc.? And you could rapidly also eliminate the taxes every agent pays for social security where few get more than $2000/mo and you have to wait until you’re 67 to collect it. Economic democracy and the end of poverty would be immediately a reality with the dividend and if a two adult household had mere part time jobs that made them $20,000/yrwith the two policies they’d now have $24,000/yr of dividend x 2 or $48,000 plus $20k + $20 k employment income that would give them $80,000 potential for a total of $128,000/yr. Finally, you could get rid of the corresponding bureaucracies that administer these programs. These two policies integrate the best aspects of the agendas of the left and right
2) MMT advocates claim that income taxes would not be necessary if their theory was adopted. While it’s true that the government issues a deficit before taxes are collected and so it effectively trashes the taxes we pay, it is mere liberal orthodoxy that we could stop paying taxes and simply directly issue the monies to fund government without inflation occurring….unless of course we implement the 50% discount/rebate policy at the terminal expression point for all forms of inflation at the point of retail sale which would reduce prices by 50%. Then it’s no sweat because you could not possibly have garden variety “monetary” inflation which at most is in the range of 2-3% under normal circumstances (and close to 0% while you have to wallow through 10 years of debt deflation). And if you had rational, effective and ethical control of prices and inflation and a guaranteed $2000/mo in purchasing power with the dividend, THEN you could directly fund government on all levels and reduce income taxes to say a minimal 4-5% simply to establish government as both sovereignly powerful and yet benevolently sovereign as well.
3) As we know politics is largely a power struggle mostly involving who gets the most money. When these policies democratically and abundantly settle that problem our politics can finally extricate itself from that overweening obsession and become much more statesmanly….and we will have much less stress and much more leisure time in order to consider the real political issues that are best for everyone.
There are other positive effects as well, but that’s a real good start.
GA: Steve, I do not advocate MMT. I have not yet formed an opinion. However, this is what an MMTer believes. He does not fear deficits. He also opposes universal basic income, UBI. He also believes hyperinflation could happen.
Me: Yes, I’m familiar with Billy Mitchell. I used to post there quite often and still do occasionally. MMT does have the mechanics of money creaton correct, but they still operate mostly within only the current monetary paradigm for the vehicle and form of credit creation and its distribution, namely Debt Only and that is why they think a job guarantee is preferable to a UBI/universal dividend. They are thoroughly liberal progressives and cling to some of liberalism’s orthodoxies like “monetary” inflation and re-distributive taxation. Of course wisdom being the integration of the truths in opposites they’re just as arrogant and ignorant of what needs to be mentally done as conservatives and libertarians who still believing in macro-economic general equilibrium continually and mistakenly wave the bloody shirt of their motto “There ain’t no free lunch” as if it were a solution….instead of it being an excellent statement of the deepest problem that needs to be resolved….by the discount/rebate policy in conjunction with a universal dividend.
When you understand what a paradigm change actually is (a singular concept that fits within and yet transforms and creates an entire new pattern) and cognite on it you begin to feel like the one eyed man in the land of the blind.
Hyperinflations are extremely rare and again require the specific circumstances I have listed here before. They could not occur with the two policies I advocate because not only do the circumstances for hyperinflation not exist here, if an enterprise’s decision makers do not opt into the obviously more beneficial effects of the policies (a doubling of effective demand for their products and services plus tremendous cost savings from elimination/reduction of taxes)…they can go out of business trying to get full price for their products and services without the discount/rebate policy…while their wiser and more rational competition would only need to get 50% from their consumers and the other 50% from the monetary authority. So it’s a benevolent “offer businesses cannot refuse.”
JD: Doesn’t the existence of monopolies (which have been rapidly expanding in the last few years) allow such companies to raise their prices without having to worry about losing market share?
Me: Yes, but still only a relatively small percentage. They also benefit from economies of scale, but even they must compete with other relative monopolies, and a truly sovereign government with actual monetary sovereignty
(aligned and empowered with grace as in caring but unmistakable power to defend the individual and individual enterprise against domination) would be willing and able to intervene against them if necessary to maintain the paradigm changing nature of the system with the policies and regulations I have posted.
GA: Always funding half a purchase with Fed money would seriously swell the money supply.
Me: Precisely. And as it was monetary gifting it wouldn’t add any debt to the total and because it was subtracted from price at the terminal expression point for all forms of inflation (even the hyper variety which as I have pointed out does not occur without specific and exceptionally rare circumstances) there would not be any inflation, but rather an inverse and hence paradigm change rhyming price deflation.
Rules and regulations of Wisdomics-Gracenomics: Every enterprise must publicly declare whether or not they intend to opt into the policies, rules and regulations. It’s pretty much a no brainer however as the policy effects of doing so are all upside for them.
Businesses will pledge not to raise their prices in exchange for the cost reduction benefits of eliminated and greatly reduced taxes, the more than doubling of potential purchasing power that the dividend and discount/rebate policies will insure and the generally stabilized state of the economy as a result. They will consent to a rigorous examination of their books if they do raise their prices. If an enterprise does have legitimate increased costs that will be fine after determination of such, however considering the huge reductions as per above and actual overall inflationary increase should be very seldom the case. There may also be positive incentives for businesses who do not inflate and do not deflate further for merely self intersted reasons (for instance multi-national corporations using pricing power to dominate smaller enterprise).
If an enterpise is determined to be inviolation of their pledge they will be sin taxed by a rate of 100% for any increase in revenues resulting from the violation(s). If they persist they will lose their ability to participate in the discount/rebate policy.
Financial services at retail sale will be allowed to continue and reasonable and limited speculative activities may be allowed so long as the monetary authority/nation public bank determine that it is not de-stabilizing, corrupt in intent or criminally originated. However, private finance will be unwound in as fair a way as possible and then no longer be able to create new credit/money, only be an intermediary for already created and saved incomes and profits. The new national banking system will be publicly administered and will under virtually all instances charge no interest. The public bank in conjunction with the monetary authority may consequently be able to participate in the 50% discount/rebate policy and therefore become the new ending point of the legitimate economic/productive process instead of retail sale thus even further decreasing indebtedness for the individual and currently operating enterprise and tremendously cutting debt costs for new business start ups.
The new banking and money system will genuinely assist individuals and enterprise not parasitically dominate, manipulate and rip agents off.
An integral aspect of implementing Wisdomics-Gracenomics would include a total ban on the ability to lend/leverage up to speculators in order to short the currency whether from a domestic or foreign source and any such attempted action would immediately be declared null and void.
Any enterprise would be free to withdraw from the discount/rebate policy.
Also, an integral aspect of implementing Wisdomics-Gracenomics would include a total ban on the ability to lend/leverage up to speculators in order to short the currency whether from a domestic or foreign source and would be declared null and void.
Foreign enterprise may participate in the discount/rebate policy, but as it will now be easy for domestic entreprenuers to rapidly re-industrialize the domestic economy they would be wise to either move production here and/or lobby their elites to implement the policies of Wisdomics-Gracenomics in their own domestic economies.
Ecologically sustainable and sane developement, further technological research on same, and healthy competitive entreprenuerialism will be the financial objects and the rule.