Posted To RWER Blog Regarding Finance

Me:  It’s a monetary economy that’s perfectly obvious. The question is whether we want it to remain one that is dominated by private banks who mysteriously and stupidly are allowed to maintain their monopolistic paradigm of Debt-Burden for the creation and sole form and vehicle for the distribution of money/credit…..because economists are apparently unable to think outside of that paradigm and find effective, beneficial and much more ethical ways of integrating a new paradigm into the economic system.

Finance is needed of course, but it must serve humanity and the economic system not dominate, manipulate and destabilize it. As I have floated here before the best thing we could do is take away private banking’s money creating charter, create a national publicly administered banking system and central bank guided by the new paradigm of Direct and Reciprocal Monetary Gifting and its policies and then, because neither the government nor a public utility need to make a profit, make finance/the creation of a 0% note the new terminal ending point of the economic process for large purchases like mortgages, autos etc……and thus for those items it could also take advantage of the 50% discount/rebate policy making the 50% reduced $100k price for a $200k house….$50k changing finance into an angel instead of a demon. Ah, the inversion signature of paradigm change is not only just, but delightful.

TA:  The obvious instrument for transactions will be the mobile phone. There are technologies out there that works even on cheap non-smart-phones, already implemented in several poor countries with an excellent track record. Italy or Greece could buy and implement such a system off-the-shelf. But of course a debit card should also be available. And most shops have card readers.

Imagine a payment scenario under this regime: A shop offers an item for 20 €, or 15 € plus 8 EPM. The customer chooses the second option, pays 15 € and uses his mobile phone to top up with 8 EPM. A bit more cumbersome – yes – but a small annoyance compared to the economy remaining in today’s depressed and hopeless state. And after a while such payments will be executed fast and routinely.

Me: You’re adding to price at retail sale and not dealing with the actual cause of inflation which is not having a more beneficial alternative to raising prices in a monetarily austere system. I’m sorry, the idea that inflation will not occur if there is significant under capacity is as flimsy and errant a liberal orthodoxy as austerity is a conservative one. Money does not magically cause inflation, decisions by commercial agents in an austere system do. Inflation is actually built into your system.Hence inflation will continue and, pushed by regressive forces, will undoubtedly get even worse and then they’ll be able to say for the millionth time to the un-astute, “See, we told you the liberals didn’t know what they were talking about.”

If you implemented a 50% discount/rebate policy at retail sale instead the consumer gets $100 worth of groceries for $50 effectively doubling his purchasing power, the enterprise giving the discount gets his $50 discount rebated back by the monetary authority making him whole on his overheads and margins of profit while doubling the potential business revenue available to him.

You have to reduce price at retail sale sufficiently to significantly increase both individual purchasing power and business revenue AND make opting out of the policy economic suicide because what business can do so when their competition only needs to charge 50% of their best price and still gets 100%? Any garden variety inflation will be a smallish percentage so as to not lose market share and is dwarfed by the relatively high discount percentage effectively integrating price deflation painlessly and beneficially into profit making systems.

Add a 1000 dollar or euro/mo universal dividend and you can eliminate all transfer taxes for unemployment insurance etc. and you’ve got a system that the large constituencies of the small to medium sized business community and EVERYONE 18 and older can enthusiastically buy into.

Once you take intelligent, beneficial and effective control of the point of retail sale with a price deflationary policy….within reason….it doesn’t matter how much money you inject into the system.

Of course the human race not being entirely rational and ethical you’ll need some additional regulation and taxation rewards and punishments, but what else is new?

LS:  Proving things ‘rigorously’ in mathematical models is at most a starting point for doing an interesting and relevant economic analysis. Forgetting to supply export warrants to the real world makes the analysis an empty exercise in formalism without real scientific value.

Me: “Proving things ‘rigorously’ in mathematical models is at most a starting point for doing an interesting and relevant economic analysis. Forgetting to supply export warrants to the real world makes the analysis an empty exercise in formalism without real scientific value.”

Precisely. It’s mere abstraction and sophistry. It’s arguing over how many angels can dance on the head of a pin. What is required is a paradigm change which inverts and transforms realities in the body of knowledge under discussion. Such changes are the result of a new insight, and the new insight needed now is that if you take firm and rational control of the terminal expression point of all forms of inflation by implementing a relatively high percentage discount/rebate policy at retail sale you can inject virtually as much money into the economy as you please and not only eliminate inflation but beneficially integrate price deflation into profit making economic systems. Oh sure, you’ll need to do some further regulation humans not being entirely rational or ethical, but “It’s better to be roughly right than precisely wrong”, no?

 

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