Potlaching is gifting which is a primary aspect of the philosophical concept of Grace. If the modern technologically advanced economic system is inherently cost inflationary due to the additional and increasingly additional costs of capital depreciation, (and also increasingly erosive of aggregate demand due to AI), then, in a monetary economy, monetary Gifting/potlaching….is actually the only way to stabilize such an economy because Gifting does not incur additional systemic costs.

This philosophy and policies aligned with it (Social Credit) has been around for over 90 years awaiting re-discovery. The thing that I have added to it is the recognition that nature abhors a vacuum and/or a stasis/equilibrium, and hence for true economic free flowingness, requires a systemic vector of price deflation, what I refer to as “the higher disequilibrium” of more total individual incomes than total costs/prices….instead of the present inherent price inflationary state as diagnosed above.

The natural, linguistic and philosophical concept of Grace in all of its various aspects, particularly regarding Gifting, is the new philosophy economic theorists have been calling for, but so far comprehending only in a piecemeal, fragmented way.

TW:  Technology is deflationary, for production costs to capital. This drives capital to innovate technology for competitive edge, improved profit margin. See also, obsolescence function. And the Industrial Revolution. And Jevons paradox. Oh and see also, effect of discount rate on innovation.

Production functions’ dimensional analysis is bizarre.

Me:  Technological research, its productive means and its depreciation costs, being capital intensive, are cost inflationary as the cost accounting convention that all costs must go into price is never not in effect. Original pricing for innovation is also inflationary and generally has the appearance of being deflationary after market saturation, but considering the original inflation, is minimal or still inflationary. That’s why the nickel candy bar of my youth after 50 years of innovation is now $.89 at Wal Mart and $1.09 elsewhere. No one is saying that more productivity and profit is not made via innovation, but considering that both profits and re-investments of same are monetary diminutions to the circular flow of one financial and costing cycle and create new costs in proceeding ones where additional individual incomes are already and consequently even more scarce in ratio to costs….the inherently cost inflationary nature of modern economies remains. And that of course is not even considering the acceleratingly erosive effects on aggregate demand of AI or the largely unperceived additional costs of waste.

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Me:  Money is basically accountancy which is actual looking and recording. Abstract theorizing is at best once removed from present time reality and hence prone to missing/misinterpreting data.

I said a long time ago that Prof Keen was correct that (mathematically) interest can be paid. I am not an interest crank. But the only way that can be accomplished is by continuous build up of debt the COST of which is problematic as Prof Keen has also pointed out.

Interest is but one of numerous ADDITIONAL costs over and above the costs of finance which combined in each moment of modern economies creates a flow of total costs that always tends to exceed the flow of total individual incomes. Prices go up and prices go down, but the flow of cost accounting datums reveals this ratio is the deepest problematic reality missed/misunderstood by economists.

Systems have always tended to be restrictive, tyrannical and demoralizing. This is most basically because systemic philosophy and policies have been more concerned with the systems’ own power than empowerment of the individual, freedom of choice and promoting the most basic and powerful concept enabling the healthiness and enrichment of self actualization.

The concept to end this very negative and unwise condition has now been recognized as Grace, of which action is an integral aspect, and so both the mental contemplation and cultivation of grace-graciousness  and the alignment of systemic policies (which is the action of systems) with same, are necessary or one misses the mark of it.

Contemplate the various aspects of Grace and imbue our systems with policies that create the same…..and an increase and deepening of every healthiness will result.

Yes. The more I hear various economists the more it becomes clear to me that they have never penetrated to the empirical basis for the most underlying problem. Getting caught up in abstract theorizing that is at least once removed from the business and cost accounting realities that would enlighten them their calculus simply misses the mark. This is true for both right wing and left wing oriented economists. The right wingers are hung up in their false belief in general equilibrium and the irrational computation that government MUST ALWAYS be tyrannical. The leftists realize that general equilibrium is false, but are apparently unconscious of the costing/pricing system and its economic and monetary effects and so they “no sabe” direct monetary distribution to the individual and reciprocal price and monetary gifting at the terminal end of the entire productive process at retail sale as the only policy ways around the inherent scarcity ratio it (the costing/pricing system with its flawed convention that all costs must go into price despite the fact that costs exceed total money distributed and is also ever increasing due to increasing capital expenses and the elimination of aggregate demand by innovation/AI) creates in every moment of time.

Even smart guys like Steve Keen don’t get this. He has said himself that accounting is important and decried the fact that economists could get their degrees without so much as an elementary accounting course, but he himself only splashes around on the surface level of debits and credits never actually observing the dynamic and continual ratios to be found in the cost accounting data of virtually every enterprise…that would awaken him to the deeper cost inflationary nature of modern economies.

To observe a problem….you have to actually look at it, not relate to it via an orthodoxy, long held opinion or in a facile, shallow fashion. It tempts fascist or vulgar socialist idiocies….like we are seeing in both America and Europe. All because we cannot/refuse to account costs accurately. If it weren’t so tragic in its inevitable effects it would be funny. As the saying goes: The Martians must be rolling on the floor laughing.

RB:  It only took 3,000 words to explain the sentence.

Me:  Yes, but why is that? Because like Life the economy has many, varied and possible parts/experiences…and yet the one underlying “thing” that resolves both is self actualizing graciousness (Life’s experiences) and policies perfectly reflecting and continually effecting Grace as in Gifting (the economy’s deepest and ever present problem of the system is a scarcity of individual in ratio to costs/prices). Deepness applied has deep effects….especially when part of the nature of the deep concept is opposition integrated to the point of threeness-oneness, i.e. trinity-unity.

Great article Oliver.  I particularly like the illumination of the fact that due to the ever present, inherent and necessary costing/pricing system never is a true and actual equilibrium of costs and individual incomes attained, but rather the fleeting mirage of such due to  increased borrowing. Thus A + B is never not in effect. And thus both the “interest is the only problem” cranks and the “the interest can (ideally and mathematically) be paid” ethically challenged non-observers of the dominating position of the business model of Finance….miss the mark. 🙂

Me:  We can let things collapse and in he pressure and chaos not get actual solutions to our problems, or deal with them terminatedly before hand with Wise, gracious and ethical policies. But that takes people dropping orthodoxies and agendas and rising to actual Wisdom and actual solutions via integrating the best, most true, most workable and most ethical combinations of opposing theories.

JD:  The wise, gracious, and ethical thing to do is stop the immigration. Voluntarily destroying one’s society is sick. We need to start cutting ties with Europe. They are going down.

Me: Immigration is an effect of economic austerity and it’s consequent imperial foreign policy. It is an effect, not a cause and while I completely agree that high volumes of immigration are not a good thing being reactionary about it is the complete opposite of wisdom and graciousness seeings how the essence of grace is granting beingness to others, i.e. tolerance.

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Regarding the out of control healthcare system:

Me:  Grace as in Gifting integrated into profit making systems is the answer to the healthcare debacle we are facing. That and Grace as in the essence of consciousness and ethics, neither of which would tolerate the wild price gauging that we see by pharmaceutical corporations.

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Me:  “The alternative is socialism.”

No, the alternative is financial Distributism. Behind all economic instability is the financial monopoly on credit creation and that monopoly’s enforcement of the paradigm of Debt and loan only. If monetary Gifting were allowed to be integrated into the banking and financial systems via the policies of a universal dividend and retail discount to prices you’d have individual economic freedom, much less socialistic re-distributive taxation, much more business profits, systemic free flowingness and price deflation as a continuing vector of the entire economy. It would be all upside. In addition it would end the economic necessity of an imperialistic foreign policy due to insufficient systemic aggregate demand.

Government is stupid and bought, but the more underlying problem is the problematic monetary paradigm. And if we don’t fix that….a vulgar socialism or fascism will destroy or dominate profit making systems.

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Regarding Lay offs at Honeywell and Boeing:

Aggregate demand is going to increasingly be destroyed by technological innovation and AI way above the rate it has been doing so for the last 40-50 years. Along with the already inherent scarcity ratio of total individual incomes to total costs/prices this means there will be increasing economic instability without the integration of the monetary policies of a universal dividend and retail discount into modern economies.

Here is the url to an excellent explanation of the cost accounting basics that confirms the above inherent state of our economy:

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Me:  The vast majority of transfer taxes for individuals and businesses could be eliminated by a direct Distributist monetary paradigm that would simultaneously rectify both governmental idiocy and the monopoly on credit creation by the Banking system so glaringly in contradiction to an allegedly competitive profit making economic system.

And no, it would not be inflationary, but rather price deflationary….exactly like Austrian theorists would like to see occur.

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Me:  You’re flushed if you do (exit with a profit making economic system that is inherently non-self liquidating) or don’t (remain in the financial prison of the EU). The only alternative is a system that enables individual nations to self liquidate and hence be independent from both the dominating Banking system and a coalescing international financial/military system that has no qualms about instigating and/or manipulating economies into war in order to profit and maintain the non-self liquidating system.

One Orthodoxy does not invalidate another. The integration of a new economic and monetary paradigm is necessary to resolve all of the theoretical “missing of the mark” on both and all sides.

In other words the “emergent qualities” the best and most insightful macro-economists have recently re-discovered are still one abstraction removed from the actual problematic reality, a flaw in the cost accounting conventions that enforces individual monetary scarcity and cost inflation on modern capital intensive economies.

The solution to this problem is to see that a continuing and direct monetary gift to the individual is necessary, and as every business has a retail product, a discount to each and all of their particular retail products that is rebated back to them by the monetary authority, is equally necessary.

While I agree 100% with his call for the end of the current austerity mindset, in saying “Workers pay for rising debt levels in lowered wages share” Keen is essentially re-discovering and re-stating C. H. Douglas’s Social Credit and his A + B theorem. He just hasn’t fully cognited on the true and inherent cause, that is, that the rate of flow of total costs/prices always tends to exceed the rate of flow of total individual incomes produced…with which to liquidate such costs/prices. Neither has he cognited on Douglas’s elegant policy solutions yet. Here is a post by Wallace Klinck, an encyclopedic expert of Douglas’s policies: (not an actual response to Keen’s work)

“There appear to be some very serious misconceptions about the nature of our financial and economic system. (1) The purpose of a rational economy is not to create work, i.e, “jobs”, but rather to produce goods and services for society as, when and where required with maximum efficiency and an absolute minimum of inconvenience for all concerned. Perverting the economy to create work, rather than eliminate it, is irrational, entrenches inefficiency and derives from the false and domineering philosophy known as “Puritanism”, i.e., the desire for power over individual human activity. At worst it is the basis of tyranny; at best it is pure superstition. (2) It is sometimes wrongly implied that profit is the source of our problems and that a form of profit-sharing from the proceeds of industrial sales under existing conventions of price-making will ensure that labour derives its “fair” recompense for effort expended on the manufacture of goods or provision of services. This a major and fatal error insofar as it is based upon the false assumption that the price-system is essentially balanced, i.e., that the act of production distributes in each costing cycle sufficient consumer income to liquidate the financial costs of that cycle. This is a scientific, technical or analytic error. The financial price-system is not only not self-liquidating but increasingly not so as the economy is made more efficient by means of labour saving and eliminating technology and improved “tools” or real capital. The rate of flow of industrial costs and prices increasingly exceeds the rate of flow of consumer incomes which are required to liquidate the costs of production. Re-distribution of an increasing insufficiency cannot make a sufficiency. (3) Labour does not create all wealth and works with tools originating in past discovery and development to create both more consumer wealth and real capital or “tools”. Indeed, in the modern economy labour or human energy plays an increasingly diminishing role in production, per se. The notion that all wealth derives from labour is grossly in error and is Marxist in nature. The production of consumer and capital goods derives from the interplay of energy provided by nature, materials provided by nature, capital tools provided from past production and decreasingly from the current input of human energy. This productivity is enormously enhanced by knowledge and technique which has accumulated from the dawn of history and has become what we call the “cultural heritage”, which cannot be claimed by any individuals or classes and belongs to society as a whole. Labour from the past becomes crystallized capital which itself takes on over the passage of time a productive force of its own and becomes a much greater factor in production relative to human labour. (4) The assumed fact that “labour” is insufficiently rewarded is true only insofar as it is true also of all citizens which are entitled in aggregate to access the full flow of consumer goods as these emerge from the production line. Labour deserves it own remuneration but all citizens including labour are entitled to an inalienable and equal share or inheritance in the wealth that has been made possible by the “cultural heritage”. The existing financial methods of industrial costing and national accountancy have no mechanisms by which to deliver this inheritance or what we might call the “wages of the machine” to the community at large. (5) Currently, distribution is partially effected by means of earned incomes which are grossly and increasingly insufficient to purchase the product of industry in any given costing cycle. Costs and prices continue to spiral in excess of wages, salaries and dividends. We endeavour to overcome this difficulty by creating new purchasing-power in the form of bank loans extended to consumers, by increasingly irrelevant, wasteful and even destructive production such as war materials and excess real capital–and by promoting exports in excess of imports. While loans allow goods to be claimed, being a debt they do not finally liquidate the costs of production but merely transfer these as an increasing and inflationary mortgage on future production, which is no liquidation at all. The fundamental economic flaw is that the financial price-system is not self-liquidating and every genuine advance in efficiency which increases the capital component of cost and prices relative to labour costs make it evermore non-self-liquidating. (6) The primary cause of the economic problem is that the banking system claims ownership of the credits which they create to monetize the wealth of the nation, which wealth they do not create but will foreclose upon in the case of non-performance of a loan. The technical name for this is counterfeiting and governments legalize the process by issuing charters to the banks to create and issue the nation’s money in this manner as debt only. (7) Banks do what banks do. This results in accumulating private and public debts which increasingly burden society. What is required is that the Government must issue sufficient money without debt to bridge the widening chasm between consumer prices and incomes. The banks are doing this all the time, although in an irregular manner which causes cumulating debt and pendulum swings in the economy wherein they make large foreclosures when they contract credit and bankrupt both producers and consumers in an alleged attempt to slow or eliminate the inflation which they have caused in the first place by their wrongful claim to ownership of the community’s credit. What has happened is that the banks have appropriated the communal capital which actually belongs to society at large. The consumer is being quite properly charged with capital depreciation but wrongfully not credited with capital appreciation, which greatly exceeds capital depreciation. The solution to the economic conundrum lies in recovery of the communal capital and its restoration to each citizen as an inalienable inheritance. (8) The new consumer credits must be issued without debt, merely being debited from a properly and actuarially determined National Credit Account, being an estimation of the real credit of the nation, i.e, the available natural, capital and human resources which constitute its ability to produce goods and services and which if used might result in prices. These consumer credits must be issued: 1. as National (Consumer) Dividends equally and unconditionally as an inalienable inheritance to all citizens, and 2. to finance Compensated (lowered) Retail Prices at point of sale. Compensated Prices would be determined by application of a universal factor applied to all consumer sales, derived from the ratio of national consumption to national production in any given accounting cycle. (My note: This ratio if accurately assessed could easily exceed 50%.) (9) In this manner consumers at large would always have access to all final production as it flows from the production line, all retailers would be able to recover their costs and repay their outstanding production loans with the banks. Falling prices would reflect actual lowering of real costs through increasing efficiency. Having balanced price-systems would eliminate the need for increasing personal and public debt. Nations would no longer seek to compensate an increasing deficiency of domestic purchasing-power by producing an evermore superfluous and unnecessary volume of capital and consumer goods merely to distribute incomes available to purchase goods made in previous production cycles–nor would they be forced to compensate their internal lack of purchasing-power by engaging in futile efforts in increasingly competitive foreign markets to export more than they import–a practice which is the major cause of international friction and war. If we want “balanced” societies and a peaceful world, we must establish balanced price-systems. “Good intentions”, in and of themselves, will not suffice. Indeed, as the saying goes, they often pave the road to hell.”                             Wallace Klinck

As trying to “balance the books” of an inherently cost inflationary economy via austerity is mistaken, so trying to merely balance that existing imbalance is also mistaken because it ignores the fact that nature is dynamic and so abhors stasis and balance. The way out of this monetary, temporal universe and unethical Banking conundrum is what I refer to as creating a “dynamic higher disequilibrium” of more total individual incomes in ratio to total systemic costs/prices. Thus the economy will achieve orbital velocity, free flowingness and the end of the problematic, monopolistic nature of the business model known as Finance.

This Trinity-Unity solution [(Incomes X Costs/Prices)  X  Ethical Elevation] becomes apparent when one recognizes it fits perfectly within The Cosmic Code.

Actually, the real paradigm change that needs to take place is not just monetary and economic, it’s the one from Science as the only valid way of knowing to the integration of both Science and Spirituality, Science and Love, Science as the open minded process and Grace as in Love in action, in the midst of each individual’s life. This is The Cosmic Code, and this is what we must cultivate and learn. Even though it’s been said a trillion, trillion times, even though there be a trillion distractions from contemplating and knowing it, even though there be tragedy, injustice, stupidity and lack of will, the integrative process itself, Wisdom and its eventual pinnacle result of Grace, is the answer and the actual deeper reality.                                                                                                 Steve Hummel 08/28/2016