What finally and thoroughly cuts The Gordian Knot that seemingly ties enforced monetary austerity to preventing inflation, and without having to resort to either sketchy liberal orthodoxy that significant inflation will not return after the debt overhang is severely reduced, or to equally sketchy conservative/libertarian orthodoxy about general equilibrium and its ability to quash the same.

This policy actually also overcomes what I refer to as “the tyranny of numbers and accounting identities”, and enables the full integration, thorough saturation and the full economic expression of the new monetary paradigm of Direct and Reciprocal Gifting. 

It seems to me that if one simply gets the ideas of inherent and inevitable factors diminishing the circular flow of money, (are we going to eliminate individual saving, business profits, re-investments, pooling of money in stagnant and only slightly re-circulating financial vehicles like bonds?) additional costs above the costs of total finance (depreciation, interest, repairs to productive facilities) and becoming more aware of the costing/expensing/pricing circuit which insures that any money actually re-circulating back through the economy is vastly diminished simply because the nominal amount of money being paid to business/commercial agents is transformed by that “re-circulating” into business revenue….and so becomes no where near an equivalent amount of individual income…..that the moment to moment scarcity ratio of total individual incomes to total costs/prices…would become much more apparent.

It requires that one think like a cost accountant and a macro-economist at the same time.

*********************************************

EB: Thanks. I don’t really see the part about depreciation, but I definitely see there is a gap. There is a gap because some of the recipients of the money put it under the mattress or otherwise don’t spend it, or invest it in speculative ventures in the financialized economy where it just grows exponentially like a parasite without ever getting returned to the consumer economy. I don’t see the part about the money being extinguished. Let’s say I borrow $1000 from my grandmother, who takes it out of her safe; I pay workers and materials and a bit to myself, set the price to cover all those costs, all the money is spent on the product, and I repay the loan to my grandmother, who puts it back in her safe. How is that any different from borrowing from a bank that gives me bank credit in my checking account, I pay workers and materials and a bit to myself, set the price to cover all the costs, all the money is spent on the product, and I repay the banker, who zeros out the debit in my account. Even if I spent the money on a sewing machine long before producing the product, the seller of the sewing machine would have the money and could spend it on my product when it was finished. I can see the problem if the banker charges interest, but you all don’t want me to talk about that!

Me:  Of course running a business is a lot more involved and difficult than that…because of all the reasons Douglas enumerated as the costing aspects of the gap like depreciation that have to be figured into your prices. That’s and the fact of the scarcity ratio insight about individual incomes is why 80% of new start ups go “belly up” within 3 years.

**************************************************

Joe and Manu,

…which is Debt, Loan and For Production Only, and has gone on unaltered for over 5000 years.

Posted To A Steve Keen YouTube video on Austrian economics:

The Austrians have some good insights, but fall into terminal orthodoxy. Their valid insights however do not penetrate to the deepest problem of modern economies namely the curious, glaringly obvious and, in an allegedly free market competitive economy, the contradictory monopolistic monetary paradigms of Debt, Loan and For Production ONLY. These have gone on for over 5000 years and so are the least innovative and most stagnant aspects of the economy.

This dictum is correct, and perfectly reflective of the trinitarian nature of the temporal universe, the economic cycle of action known as Start, Change and Stop and the stopping and summing points known as sales of the pricing system.

of an idea/concept/reality. Hence it is deeper than any structural, regulatory, piecemeal or even philosophical reform. Consciousness is an integral part of the change and consciousness itself is so basic to humans and human systems that you cannot “get behind it”.

Likewise the dual policies of Wisdomics-Gracenomics are philosophically based on a natural concept/experience, i.e. grace, is just another word for the ultimate inward experience pointed at by all of the world’s wisdom traditions; the only difference being the word used to describe it like satori-kensho, samadhi or atonement.

Grace and its temporally aligned applications, no matter whether one ascribes the origin of its experience to a transcendental God or to nature and the cosmos itself, is about consciousness and hence cannot be supplanted or deepened by other analysis than its many aspects themselves.

…is on its face unethical, and especially unethical when it allows the continued dominance of, in this case, the business model of Finance which dominates every other business model and probably 97% of the general populace with its monopolistic paradigms of Debt, Loans and For Production Only.  Domination as an act or systemic condition, like slavery,  IS a priori unethical.

All reform movements whether they be Public Banking, crypto-currencies, MMT, or Disequilibrium theory being legitimate cost cutting procedures and/or more valid economic thinking could be incorporated into the policy solutions of Wisdomics-Gracenomics, but the latter’s insights and policies bring new consciousness to and provide the overall and actual solution to the problem while the former have only partial consciousness of and so only piecemeal and incomplete “remedies”. This is extremely important to understand.

…to change the nature and character of a sale. In other words and for example, instead of the consumer paying $1.00 plus taxes and taking possession of the merchandise the merchant would have to say, “Oh, no, the price is now $2.00 plus taxes. This would be a fundamental dishonesty that would destroy faith in commercial exchange.

The point of sale is where costs and prices are terminally summed and is an ending point of the productive process between two economic agents where production is transformed into consumption. That’s how fundamental the phenomenon is, and why implementing monetary policy at those points throughout the entire productive process is equally fundamental and powerful. Add to this the insight that the pricing system and the money system are both digital (debit and credit) in nature and a reciprocal process of gifting the consumer a discount to price (a credit) and gifting/rebating that discount back to the merchant giving the discount (a credit) enables price deflation to be beneficially integrated into profit making systems. In other words Minsky’s dictum that “the fundamental vector of capitalism is up” is overthrown….to the benefit of all agents. This reciprocal discount also effectively integrates macro-economic policy with the fundamental purposeful occurrence of the micro-economy.

You would think that theorists like Austrians would hail this as a tremendous economic breakthrough, but it is my experience that they will cling to their fanatical allegiance to the market as God and that we must not intervene in that process in any way….even if it enables what they themselves want to see occur by inaction…and at tremendous pain to both consumer and producer.  Strange.

Finally, the physical/temporal universe is characterized by the continuous trinitarian cycle and flow of Starting, Changing and Stopping.  Actually looking at, recognizing this cycling and focusing on the stopping points and, in the economic process, the summing points of costs and prices, enables one to cut through all of the incredibly complex and possibly confusing flow of the overall economy and so see the precise point where the chronic and inherent problems of modern economies, i.e. the moment to moment reality of a scarcity of total individual incomes in ratio to total costs/prices….can be resolved by the above monetary  policy.

As the alleged goals of science are the objective observation (actual looking) and deciphering (recognizing) of truths and integrating/formulating them into theoretical models, the above temporal and economic insights are quintessentially scientific, data wise….and as they are also complementarily integrative of macro and micro-economic truths they are holistically true and significant as well.  The integration of such fundamental and overall insights are the very signature of both scientific and paradigmatic breakthroughs.