The problem with both DSGE and SFC models is they only splash around on the surface of accountancy examining debits and credits instead of looking into the empirical data of its more relevant subset cost accounting. Doing the latter one discovers how inherently dis-equilibrated and riven with unethically dominating institutions and enslaving ideas modern capital intensive economies actually are. And if they keep examining the present time economic and monetary realities therein they might even re-discover modernity’s biggest and most subtle menace….the habituation to abstraction at the expense of actual self awareness.

Technology should be deflationary and would be if Finance’s monopoly control of credit creation, their equally monopolistic and restrictive control over the type and purpose for its distribution (only as loans and only for additional production) and its claim to ownership of the money/credit they distribute…..did not sabotage the free flowingness of the economy and usurp Mankind’s Cultural Heritage of innovation and productive capabilities.

Economists and economic pundits have to recognize that while the Banking system is certainly allowed to profit from it, the money/credit that they distribute does not and should not actually belong to them. They must also recognize that “systems were made for man, not Man for systems”, and thus have the conscious philosophical clarity and the rationally logical policy follow through that aligns them with that bedrock ethical understanding. And without these a priori most basic understandings anyone speaking about economics and the economic and monetary systems should immediately be understood as either confused, bought by some interest or, no matter how erudite….an ethically “challenged” individual.

Money is the temporal expression of power. Power unbound to the above understandings is tyranny waiting to occur. Only a philosophy grounded in grace and graciousness, which is love in action and hence temporally the intention of taking power in order to return it to and enable the individual, can resolve the problematic nature of money.

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.