Finance in one form or anothet has mostly plagued mankind for over 5000 years. Private creation of money in the form and paradigm of Debt Only must end, and a publicly administered national banking system based on the new monetary, economic and financial paradigm of Direct and Reciprocal Monetary Gifting must guide it for the benefit of all.

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?

Life is a zen koan to resolve and enjoy.

DM: Craig,  I would rather say that some mathematical models do encapsulate a complete understanding of, for example, some theory of physics, but that however good the mathematics one can only say that the theory is one of many that is internally credible and not falsified by experience. (Think of Euclidean Geometry before Relativity.) It may in some sense be the best of those considered so far, but (at least in physics) there are always always hords of people trying to falsify it and there can be no mathematical reason why they might not succeed.

We agree that economics would be improved if economists were more like scientists in appreciating what you say, but I would add that one sometimes needs to check that the ‘insight’ is credible. This seems to require logic, and in so far as we are interested in numbers seems to require mathematics. My beef with mainstream economics is that from a mathematical perspective it looks like numerology or what Keynes called ‘pseudo-mathematics’, not the real deal. I speculate that economics would need to embrace mathematics more fully if it is ever to get sufficient clarity. Either that, or pray!

Insight plus mathematics, not either alone?

Me:  Dave M,  “I would rather say that some mathematical models do encapsulate a complete understanding of, for example, some theory of physics, but that however good the mathematics one can only say that the theory is one of many that is internally credible and not falsified by experience.”

I would agree that this is true, because some things/theories can only be falsified or confirmed by philosophy….before they are implemented…and then everyone says, “oh yeah, this is obviously true and good….because everything makes sense and works better now.” In other words truth or falsification is impossible with human sensorial experience alone and philosophy/conscious self actualization must suffice. Quantum Mechanics is one such example, and so is my contention that the nature of the cosmos is a flowing dynamic, interactive, integrative and puzzling state of grace just sitting there waiting for us to discover and then find ways to apply to our temporal systems.

Much would become more clear in economics if we’d consider what I have said here before:

1) Both micro and Macro-economics have fallaciously accepted that private finance is a legitimate profit making business model

2) Economists recognized that the pricing, money and accounting systems all follow the rule that equal debits and credits sum to zero and the point of retail sale is where policy can be implemented to resolve modern economies’ chronic problems and best benefit all agents.

“Insight plus mathematics, not either alone?”

Yes, this also rings true because it is a duality to integrate to the point of thirdness greater oneness that results in actual change and progress. The integrative ethic/my cosmic code of wisdom stated as an integrated duality within an integrative trinity-unity-oneness-process is the formula that mere science and economics needs to embrace so that it is less prone to becoming confirmation bias like neo-liberalism has become.

There is no permanent truth except graceful continual change and the only way to actually understand that paradox is to embrace it via the integration/resolution of the koan that is our temporal existence.

While I applaud the determination to finally actually try to implement monetary reforms why utilize a new or alternate payment system that doesn’t actually deal with the monopolistic paradigm of finance for the creation, form and vehicle of monetary distribution?

This effort still needs to be further simplified, more integrally implemented and enabled to have immediate beneficial effects for both individual and commercial agents.

All of this could be accomplished by recognizing the triple power points of retail sale and the fact that the pricing, money and accounting systems all utilize the same equal amounts of debits and credits summing to zero.

Retail sale is:

1) the terminal economic ending point for every consumer item or service including homes/mortgages and other “big ticket items” and so

2) it is the terminal summing point for all costs (including profits and capital and depreciation costs) and so all prices for every item or service

3) it is also the terminal expression point for all forms of inflation for these same items

Hence a 50% discount policy for every item or service at retail sale that was rebated back to the enterprise giving the discount by a monetary authority specifically mandated to do just that would immediately double everyone’s potential purchasing power, double the business revenue available for any enterprise participating in the policy and its rules…and so slay the deepest and most chronic problems of modern economies, namely systemic austerity, individual income scarcity and price/asset inflation.

Money, debt and banks’ monopolistic paradigm of Debt-Burden Only are the problem and Monetary Gifting is the solution.

Simple, elegant and effective….just like every other paradigm change has been.

The history of all models is that they are incomplete until someone discovers/stumbles across an entirely new insight that comes from a new breakthrough or from an old tool or analysis.

In reality and for all practical purposes the cosmos is a flowing eternity….of everything.

That may be a tautology, but there’s insight to be had from it nonetheless because you can’t very well buck the cosmos and its nature. And if one contemplates that nature until they thoroughly understand it and can put a word to it and then compares it to the state of whatever is under analysis….it may lead the way out of the problem under discussion and the way home…to where one has always been….and didn’t know it.

Science is fragmentary analysis.

Paradigm Perception/Wisdom is the ability to see both essence and function, philosophy and policy, it’s looking and seeing, induction and deduction….at the same time. Paradigm Perception/Wisdom is the integrative mindset, process and ethic. It’s the wholeness/spirituality of a subject or situation. It’s both deep simplification and pattern recognition/workability/applicability at the same time. It’s the integration of ethics and pragmatism. It’s the history, present moment and likely possible futures of whatever is under discussion. It’s the best integration of the truths in opposites. It’s the superior human mental discipline. It’s the walking state of cognition known as grace, satori-kensho, samadhi, atonement, the perception of anything via the nothingness with qualities known as consciousness itself.

Man thinks he’s conscious, but he’s actually barely so. Intellect, abstraction and sensation are epi-phenomena of consciousness not the other way around. Better to wall gaze until you come so thoroughly into present time for the first time since you were 1 year old that you have reality on it (consciousness itself) and then rigorously examine the temporal universe from that re-discovered utterly unbiased experience.

The last thing economic theory needs is the orthodoxy looking for justification known as scientism. Good inclusive truly open minded science which is a secondary mode of the superior discipline of wisdom would be welcome because good open minded science and its integration with an aspect or aspects of human consciousness is the signature of scientific breakthrough. Combine that with the signatures of wisdom: deep discernment, actual problem resolution as opposed to palliatives and mere reforms and radical de-constructions that eliminate problematic factors and invert current orthodox or enforced temporal realities…..and economics will be able to reflect the dynamic, interactive and integratively graceful flow of the temporal universe in which it is thoroughly embedded instead of the haltingly dominated and manipulated form of hypnotism it has come to be.

KZ:  Economics as you describe it is just one of the “results” of a movement in
knowledge, political standardization, and social organization that began in the
18th century and expanded rapidly after WWII. Where science flourished the
appeal of numbers, which could be and were converted into objective facts
allowed the construction of civilizations where decisions could be made
scientifically and endorsed democratically. Such decisions appeared fair and
impersonal and thus impartial. So while democracy ensured all had a voice,
science in numbers ensured certainty about the actions needed to carry out
democratically made decisions. In the words of Theodore Porter, “Quantification
is a way of making decisions without seeming to decide. Objectivity lends
authority to officials who have very little of their own …. Knowledge, then does
not diffuse uniformly outward from the place of its discovery. It travels along
networks to new nodes, and what appears as universal validity is in practice a
triumph of social cloning.” After WWII science is the most powerful, admired,
and envied way of life on earth. So economists wanting to copy it is not
surprising. Historians, sociologists, psychologists, and even that staunch
member of the humanities, Anthropology took the leap as well. Now after 60
years History, sociology, and the others have reached a balance so that
numbers and “objective facts” are only parts of diverse fields of knowledge.
Economics did not reach such a balance. It is wholly and fully dominated by the
cult of numbers and objective facts. For those of us who study science, including
economics the research is focused on answering why economics remains
situated so. One explanation offered is the limited understanding of mathematics
by economists. Another is the desire of economists to distinguish themselves
from the other sciences which seemed to already cover everything proposed for
inclusion in economics. My own view is that the prime motivation was the same
as voiced by the 1960s founders of quantitative history (cliometrics), “…to establish history
as a social science dedicated to the rigorous, consistent, and precise application
of social theory and social scientific methods in the study of past human
behavior.”(Robert Fogel)

Me:  Science has been applied, albeit primarily to human consciousness, for over 7000 years. It and technology have arisen as the primary thrust over the last 300 years, that is true.

The most subtle and consequently unperceived problem of economics is its mistaken notion that either private or public finance can be harnessed and made to serve humanity….unless the domination of its paradigm of Debt Only is integrated into and primarily replaced by Monetary Gifting….which is an aspect of the natural philosophical concept of grace….which being nothing more dogmatically and certainly nothing less than love in action in the temporal universe where we all exist….is therefore the supreme expression of ethics, and so the only concept able to balance the supreme power of the economic factor of money.

Resolve this philosophical and ethical problem and utilize the well known simplifying concept of Occam’s Razor to create a publicly administered national banking system guided by the above concept of grace instead of the destabilizing coterie of dominating and ethically conflicted private banks….and the leading edge economic insights of Keen’s financial instability, Hudson’s financial parasitism and MMT’s money mechanics will fall back into and fit seamlessly within the new paradigm theory of Wisdomics-Gracenomics and the philosophical concept behind it.

C3000:  Banks must increase their loans exponentially in order to have sufficient money in the economy to pay interest on the loans. The only other sources of money to pay loan interest is senioriage spending by the government which has been systematically reduced over the past five decades and open market operations by the Fed…

Me:  “The only other sources of money to pay loan interest is senioriage spending by the government which has been systematically reduced over the past five decades and open market operations by the Fed…”

Presently, yes….and that’s the problem because deficit spending still won’t resolve the problem….only a new monetary and financial paradigm that intelligently, insightfully and specifically applied at the point of retail sale inverts the realities of chronic price inflation, systemic austerity and individual monetary scarcity into abundance and painless and beneficial price deflation.

P: Many a wag has noted grinning that correlation does not imply causality. Two points:
1. It is no accident that correlation is displacing multivariat analysi like ANOVA notwithstanding this.
2. Time has an arrow. Events in the future cannot affect (cause events) in the present.

Combing these, if there is a high cross correlation with time lag as a parameter, the leading factor pretty much has to be causing the lagging factor directly or indirectly.

Last I looked excel offers no cross correlation macro as a standard function. They should.

Me:  As the person you often refer to here, Steve Keen, has shown…it’s a monetary economy not “a veil over barter”, and the three things DSGE doesn’t get right/ignores are money, debt and banks. It’s apparent to anyone who looks that the current paradigm for the creation of money and sole form for its distribution of Debt Only controlled and enforce by the private banks IS THE PRIMARY CAUSATIVE ECONOMIC PROBLEM.

As I have posited here before the mental problem inhibiting the full realization of this fact is that macro-economics is a new body of knowledge which consequently has a very short cultural horizon combined with the fact that the paradigm of Debt Only has not changed….since the beginning of human civilization and hence has become ingrained in human culture and thinking.

De-constructing and changing the paradigm of Debt Only via an analysis of the signatures of imminent and actual paradigm change, AND AN EXEGESIS OF THE OPERANT CONCEPT BEHIND EVERY HUMAN PARADIGM CHANGE, namely the natural philosophical concept of grace….is precisely what is required….NOW.

DT: Craig summing up: “Abstraction reigns in economics and direct present time observation has atrophied in same”.

What I’ve contributed is an abstract version of Blaug’s map showing Ken’s network. Craig is rightly pursuing an integrative wisdom, but his Blaugian imagery and seeing it in accountancy and “morals also known as ethics” shows why he hasn’t found it. He doesn’t understand it lies in learning to read abstract maps (Graph Theory) and taking in the implications of the abstract Four Colour Theorem (that only four colours are needed in a map for all adjacent areas to be of different colour). He doesn’t understand the difference between ‘generalisation’ (leaving arbitrary characteristics out) and ‘abstraction’ (leaving everything out).

Me: Dave,

As the process of wisdom is the INTEGRATION of truths etc. how can I be anything but advocating the integration of the abstract and the temporal? And if the natural philosophical concept of grace is the pinnacle integrative truth/concept of wisdom how can its aspects expressed in policy not be the object and goal of economics and undoubtedly every other of humanity’s systems?