It is amazing to me how much ego, orthodoxy and as a result closed mindednesss still exists in even cutting edge economic and monetary thinking. Scientism and the mistaken belief in reform also play into the problem. Scientism is plodding and reform enables a thousand steps forward (or backward) between point one and point two when the dramatic nature of paradigm change is necessary.

Steve Hummel 03/09/2018

People of Earth Unite!

You have nothing to lose but the meaningful leisure and self development that technology has bequeathed you…and the monetary means to enjoy it!

In other words what is real in the present moment is what is true for both. If a person believes they are worthless their reality in every moment is that they are worthless and this belief will guide and enforce their activities, and if in every moment there is a scarcity of individual incomes in ratio to total costs and prices then there is a continual scarcity of individual incomes and all of the economic consequences thereof.

Furthermore, the purpose of human life and of economic activity at the point of retail sale are also analogous and reflective of each other  in that when one’s attention comes fully into  the moment they experience whatever is in present time as vibrantly real as opposed to at least once and abstractly removed, and retail sale is the purpose of the entire economic process, that is that production become consumption. In other words the most basic purpose of human life is to awaken to/become completely aware of one’s own beingness/self awareness and the most basic purpose of the economic process, i.e. production is consumption which occurs at the moment of retail sale.

Finally, full human consciousness is only present in the moment where no other consideration of other realities exists and can possibly distract or detract from it, and this realization is generally an incredible experience known as satori-kensho, samadhi, atonement or grace by the world’s major wisdom traditions, and retail sale/consumption is the satori-kensho etc. of economics.

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.

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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.

Me:  As I said, all of this discussion is a bunch of hide bound neo-classical, equilibrium, figure-figure…or the slightest tweaking of same. It goes no where and resolves nothing. It’s a bunch of erudite non-confront, a perturbation, an epicycle “solution”.

Sorry.

And the same goes for every other reformer, “new” theorist or de-bunking economist.

Public Banking? Insightful of the incredible amount of money and profits that Finance skims off the top of the economy, but isn’t consciously aware of the present monetary paradigm of Debt Only that enforces systemic austerity. Looks at the keystone problematic business model, but It’s just another reform that splashes around on the surface of the real problem.

Michael Hudson? I love his fire in the belly attitude and his focus on Finance as the parasitical illegitimate and problematic part of the economy, but he lacks the knowledge of the fact that both the money system and the pricing system are digital and that retail sale is the terminal summing and ending point of the entire legitimate economic process and so is THE POINT AND TIME to implement monetary policies that will literally implement the new paradigm…immediately, and with a few new paradigm aligned regulations and policies do more for the individual, enterprise and the system than any other reformer and both political parties have done in a hundred years.

Steve Keen? His de-bunking of DSGE is worthy of a Nobel itself and he keeps saying we need a new economic philosophy, a Copernican paradigm change but he doesn’t recognize that he’s re-discovered C. H. Douglas’s A + B Theorem in saying that as soon as the rate of change of credit creation dips the economy must enter a recession…unless of course you INDIRECTLY and inefficiently run fiscal deficits. Problem is that’s just another palliation of the most basic systemic problem which is that the rate of total costs and so total prices exceeds the rate of total INDIVIDUAL incomes. To actually resolve that problem you have to break up the monopolistic financial paradigm of Debt Only with DIRECT monetary gifting means of increasing individual incomes in ways that simultaneously not only prevent inflation, but integrate price deflation painlessly and beneficially into profit making systems. Like for instance a universal dividend and a high percentage discount/rebate at the point of retail sale. This would affirm Keen’s debunking of equilibrium theory, create “a higher disequilibrium” and also align with the signatures of paradigm changes which is the transformation-inversion of a ratio and/or a problematic duality and/or a change in primacy of the old and new paradigm.

If you perceive the old paradigm and you also see the new discovery that always accompanies a new paradigm, like the telescope and the ellipse, and in this case is the economic and monetary significance of policy implemented at the point and time of retail sale….then recognizing the new paradigm, which is always in certain ways conceptually oppositional in nature to the old, becomes relatively easy….if you aren’t egocentrically involved with and/or blinded by fallacious orthodoxies and/or palliative reforms….and aligning policies and regulations with the new paradigm is a straightforward rational process.

The business model of Finance has become an incredibly problematic cost increasing post retail sale phenomenon and so integratively parasitical that most of us, including most economists, believe it to be legitimately economic. Instead it is a life dominating, stability destroying and ethics disintegrating force that must become a public utility guided by the natural concept of grace and its many multi-dimensional and ethical aspects if the economy and western civilization is to survive. Failure to see this by continuing to attempt to reform, palliate or promote private profit making finance may be erudite, but in the end will be seen as erudite non-confront.

Finance is at the base of most of the rest of the attending socio-economic and political problems we face. It is like a giant and complex neurosis that beleaguers and blinds us with chronic stress, and that when fully recognized results in a huge life changing cognition and an equally large increase in consciousness that boosts confidence, hope for the future, opens us up to our native ability to feel compassion  and a concomitant increase in our willingness and ability to actively express that compassion for others.

Making the economy retail again instead of dominated and manipulated by finance is the answer. This does not mean the end of finance of course, but it will become a publicly administered utility that no longer is infected by profit, power and dominance, but rather infused with the superlatively humane and benevolent ethic of grace that fits within and greatly frees the economy that ends at the point of retail sale with the new paradigm and policies of Monetary Gifting.

Not even a republic, let alone a democracy can long survive without a sufficiently broad and well contemplated survival ethic. And we all know what the pinnacle philosophical concept of wisdom is…so let’s go for it.

We’ve become unconsciously stuck in obsessive and contentious duality and are barely conscious of the thirdness-greater oneness that has always been the signature of wisdom, completeness, solutions, social harmony and graciousness. This applies to those stuck in political conflict theory as much as those unwilling to come off the dime of absolutist interpretations of the 2nd amendment and gun “control”. The nation and the world cries out for the integration of truths known as wisdom, but the polarized issues fall in a forest of the deaf, dumb, blind and unconscious.

We fall for demagogues and their erudite but insightless counselors who only know how to smash ideas together in hopes that some sketchy “fourth turning” will create renewal instead of chaos, and do not realize that fourth turnings are actually just the result of the failure or refusal to integrate the truths of opposing dualistic perspectives. The Martians and those who do not wish us well must be laughing.

Me:  Trade wars historically rhyme with actual war. Second rate conservative and neo-liberal thinking about trade is…second rate, and third rate populist “intellects” like Trump do not have a clue of course either.

If you implemented a 50% discount/rebate at the point of retail sale and a sufficient universal dividend to everyone 18 years of age and older you’d be able to eliminate the transfer taxes that both individuals and enterprises pay for welfare, unemployment insurance and probably quite quickly Social Security, and their associated bureaucracies as well…and you wouldn’t have to worry about unemployment either which means you could dispel the financial wet dream of globalization, re-industrialize America in the most efficient and ecologically sane way possible and thus have no need for tariffs and trade wars.

The heterodox had better quickly rise above the nit witery of Trumpism and the coalescing power of finance dominated neo-liberalism…or the war that destroys modern economy’s productive potential may “happen” and then in the pain and confusion Finance will be happy to lend us the money to re-build.

JB:  I sympathize, therefore, with those who would minimize, rather than with those who would maximize, economic entanglement among nations. Ideas, knowledge, science, hospitality, travel–these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national. Yet, at the same time, those who seek to disembarrass a country of its entanglements should be very slow and wary. It should not be a matter of tearing up roots but of slowly training a plant to grow in a different direction. (“National Self-Sufficiency,” The Yale Review, Vol. 22, no. 4 (June 1933), pp. 755-769.)

Me:  This is largely a good assessment, however, Keynes like everyone else apparently, thought finance was a legitimate private business model. It isn’t. It isn’t a legitimate public one either unless its based on, and its primary ethic is monetary grace as in gifting. That doesn’t mean that you should give business start ups money as a gift, but as a new publicly administered paradigm that ends private finance’s monopoly paradigm of Debt ONLY and enables the economy to become integratively free flowing….it’s a no brainer…when you look at it just a little…..so if you want to evolve economics and the money system….don’t you dare look at it.

RR:  Economics is a social science and is embedded within human social networks and societies social institutions — which includes the political realm. It is a false dichotomy that thinks economics can be separated from the political and that somehow doing so is true “science.” This is really scientism masquerading as science and attempting to treat the social science of economics with the same assumptions of methodologies as those used in the physical sciences. It is referred to within the literature as physics envy (p-envy) for short 😉 Such naïve philosophical reductionism won’t sit well with the younger generation I suspect.

Me:  The paradigm change I advocate in economics and the money system would not be physics envy, but it would be a huge stabilization and evolution of both systems by virtue of the fact that it would resolve the economy’s chronic problem of inflation and the money system’s monopoly paradigm of Debt Only…at the same time. The realization that the natural concept of grace denotes and is by definition a fundamental integration of the static and dynamic, of philosophy-thought and policy-action ends the arrogance of the mindsets of both science Only and religion Only, but there will be no end to history and change may succeed that paradigm…..hopefully by further acculturating into the ethic-zeitgeist of grace.

RR:  I was not referring to your vision at all. I find your ideas clearly transcending current paradigms.

Me:  Ah, yes, I should have understood that with your use of the words “philosophical reductionism” which indeed tends to be a problem, at least until one fully understands the natural philosophical concept of grace in its many aspects probably the highest of which is unity-oneness, and others which are aligned with economic thinking like dynamic balance, integration and flow/free flowingness.

JK:  Hey Craig…

I thought I’d make another attempt to explain to you why your gifting proposal would be far more inflationary than you’ve been hoping it would be.

I base my argument on the observation that suppliers in most markets will charge the highest price that the market will bear, period. In contrast, you are arguing that sellers will not do this, but will for some unexplained reason choose to limit their price increases to only a 2%-3% rate of increase.

How is it possible to tell if the sellers in a limited-quantity-available market are selling their product at the highest price the market will bear? You simply look to see if there are any lines/queues/waiting lists that buyers in that market must deal with.

If there is a l/q/wl associated with some market, it is only because that seller is choosing to keep his price lower than the market will actually bear. More people can afford the thing being sold than there are things available. The seller ‘sells out’ quickly and cannot obtain sufficient quantities to satisfy the demand at the chosen price.

Only if/when the seller then raises her prices sufficiently to the point where the l’s/q’s/wl’s disappear, then we can say that the seller is charging the highest price that the market will bear. It’s really quite simple.

You advertise that your gifting proposal will increase the purchasing power of individual demanders, but that can only be true if those individuals are able to buy items that they could not afford to buy previously.

The day before your proposal gets enacted, the BMW dealer will have a certain quantity of autos available for sale. If the day after the gifting initiative takes affect, the same number of BMW’s will be available for sale, but many more people will believe they can now afford them IF the price that is being charged for them has not been changed.

The dealer will quickly sell out if she has not increased her prices sufficiently to price all the extra buyers out of the market. Being advised that it would be best for the economy if the price increases are limited to a 2%-3% range would be meaningless.

The only other possibility that could limit the price increases is if only a few of the beneficiaries of the gift choose to try to buy any of the things they previously could not afford. Such a possibility would be in defiance of everything we know from observation of human economic behavior.

I’m afraid that your hopes that inflation as a consequence of the gift would be limited in the medium- to long-run are ultimately unrealistic.

It is true that at the first iteration, when the purchasing power gift is first ‘bestowed’ on buyers and sellers, prices would not increase (since the government would be paying/subsidizing to keep them low)…but thereafter, buyers would find themselves with more disposable dollars/pounds/euros to spend and that is what sellers would respond to, when the rather dramatic burst of inflation would kick in…

Me:  Some of what you say may well occur….if you allow the paradigms of profit, power, control and “free” markets ONLY to remain in force. I reject that idiocy. The wise realize that in the temporal universe there is only freedom amongst known barriers, and that the above paradigms are a fundamental confusing of freedom with chaos wherein nothing resembling a genuine sense of ethics is enforceable and even recognizable.

As I have said certain regulations and structural changes will need to be made in addition discovering the new paradigm of monetary gifting and the significance of monetary policy tied to the point of retail sale.

Grace as in benevolent monetary and economic policy, but utterly just and ethical power to reward and punish would be the conscious expression of sovereign political and economic authority…and the leaders and owners of enterprise would need to bow to that paradigm and ethic….and despite the fact that they would greatly benefit from the policies of gifting and grace they would be FREE to reject or try to undermine it…until they were forced to get their best competitive price without the benefit of the 50% discount/rebate.

DT:  Hence, Craig, the need for the Copernican revolution of making it costly to make or hold money. Sellers or financiers ripping folk off gives them no reason to be grateful and hence react gracefully, but ssafeguarding the ecology by living economically, and having your debts written off because you’ve done your job, gives you at least satisfaction.

Me:  Yes, the idiotic private monopoly on credit creation must end….after 500 years of trying to make it work and behave it’s getting to the point where we must recognize that effort as the definition of insanity. Public monopoly of course is potentially equally dumb…unless it’s guided by the new paradigm of direct to the individual gifting and the ethic-zeitgeist of grace.
Also, a public monetary utility and authority has no need for profit as it creates money ex nihilo. As finance for large assets like mortgages, autos etc. is post retail sale which is the terminal end of traditionally productive economics it exposes the fact that that private finance is fundamentally parasitical and anti-economic.

I don’t really care very much whether people would hold money because the Gordian Knot of inflation (supposedly) being tied to the supply of money will have been exposed as not the operative reason for such, and would be cut and resolved by tying monetary policy to retail sale with the discount/rebate.

Hence, the more people save the less they’ll need to borrow, even from the sovereign monetary authority, when they inevitably want to purchase a large asset, and so finance rather than the government guided by graciousness will tend to “wither away”. Of course investing in something actually productive is always an option for them. Pooling it in a savings account at 0% would still be available…just not profitable and no longer an economic vice.

You’re exactly right that it borders on criminal that economists and politicians have been so confused and/or complicit with vested interests and private finance to deny/obscure the mechanics of sovereign money. Now all MMT needs to supercharge the significance of same is to recognize the incredibly powerful effects of tying monetary policy directly to the point of retail sale with a discount/rebate policy. This recognition is not just some data point, it is a summing point and ending point for total costs and so total prices for every consumer product or service including all capital costs. Pair that insight with the fact that both the pricing system and the money system are both digital and a 50% discount to consumers at that point that is rebated back to the merchant giving it by a monetary authority specifically mandated to do so and you’ve immediately doubled everyone’s potential purchasing power, created the possibility of enterprise to double their sales, eliminated the possibility of price and mortgage asset inflation and done what has been considered impossible, namely the integration of price deflation painlessly and beneficially into profit making systems. This single policy would so stabilize the economy and make for a great employment and investment climate that it would be recognized as a virtual paradigm change in economics and money systems, and in fact it would dramatize the very expression of the new paradigm of direct and reciprocal monetary gifting.