crimsonfalcon10, I have already stated that k equals 5% and k equals 18%; those are the actual figures. I don't live in America, nor do I rely on your specific press outlets, but I assume your domestic demand has plummeted by 25% or 30%. This implies you require an additional 25% to 30% in non-credit money. A crisis occurs when a government or the Federal Reserve pulls 20% of the money supply out of circulation for no discernible reason. I know this to be true in America because it is the standard behavior for any nation operating on credit-based currency. First, the USA pulled 18% of its money supply out of circulation, followed closely by the European Union. When their central banks faced liquidity shortages, they began draining capital from the periphery—places like smaller nations—which causes their exchange rates against the dollar to collapse and worsens the overall situation. It is why we say that when the USA sneezes, Europe catches a cold, and we end up with pneumonia. In 1929, the USA pulled 30% of the money supply out of circulation, which is precisely what triggered the global crisis. Now, money is being pumped back into the system to prevent another collapse, yet they are injecting far more credit money than the necessary non-credit money. This entire crisis was born from the explosion of mortgage debt. Had those loans simply been written off, there would be no crisis at all. China is currently writing off 45% of its loans, which is why their prices remain 45% lower than the rest of the world. The USA cannot handle the competition from China, but if the USA were to write off 90% of its debt, its prices would actually drop below those of the Chinese. These are the realistic figures I am presenting. As long as you remain preoccupied with mere credits, you will never grasp a single real number. Your figures are purely nominal, which is just another way of saying they are false.
Brian Nelson4, the formula I’ve laid out would have maintained the dollar at a perfectly stable value for the last two centuries. We wouldn't be dealing with inflation or deflation; instead, the dollar would retain its real value indefinitely. What matters most is the necessary increase in the money supply (dM), defined by the money growth rate (k) and the total money supply (M). dM = kM ; k = (supply - demand)/demand ; When supply and demand reach equilibrium, k equals zero, meaning no new money is required. For k to remain positive, supply must exceed demand. Consider a scenario where k is 5%, or perhaps 12%, similar to the current trajectory in China. This surplus occurs because new goods have been produced or because demand has dipped, leaving inventory unsold. By applying this formula, all goods would be sold at unchanging prices. One needs only to master this single equation; nothing else is required. If k falls below zero, money must be withdrawn from circulation, though in the long run, the global money supply is perpetually expanding. An increasing money supply is a constant necessity. Should we ever find ourselves needing to withdraw money from the system, it will serve as a definitive sign that the world has begun its descent into ruin.
Maria Thomas48, my initial proposition was quite simple: we should utilize non-credit money to fund pensions and child allowances. This approach has nothing to do with the labor force, it doesn't disincentivize work, and it carries no actual cost. When prices stabilize and profits rise, production and employment naturally follow suit. In the US, Congressman Dennis Kucinich has proposed funding infrastructure, education, healthcare, and pensions through similar means. Now, those pension models have been replaced by a citizen's dividend—formerly known as a national dividend—which is distributed to all residents of the USA. It is patently obvious that Kucinich is an American at heart. You can find more details on this at http://monetary.org
user23, I have already stated my position: if money is being stashed away in a sock, I will continue to distribute funds. However, the moment that "sock money" enters circulation, I am seizing it immediately to bolster the budget surplus. No one bothers hiding cash under a mattress if they know it’s effectively vanished forever. No one would ever trigger inflation on my watch, because I will always pull any excess liquidity out of the system. The amount of money in circulation should be precisely calibrated to maintain zero inflation. It is a matter of absolute simplicity. If new capital is distributed as a gift, there are no complications. The crisis we face today exists because new money is being issued as credit. That simply cannot happen. New money must exist solely as a gift. There will be enough of it to facilitate saving and lending, though those pursuits are of no concern to me, nor will they be of interest to you.
Mr. crimsonfalcon10, you seem to misunderstand; the Stoletov system isn't some fleeting monthly trend, it is designed for permanence. Think of GDP as the sum of all market prices. If you take GDP and subtract costs, you arrive at profit. Income stands as the primary figure. When you subtract GDP from that income, what remains is consumer surplus. Non-credit money essentially equals the combination of profit and consumer surplus. While some might choose to hoard cash in a sock under their bed, I issue non-credit money to satisfy social needs and human requirements. Should someone decide to pull that cash out of their sock, I simply absorb those funds as a budget surplus. The amount of money left in circulation is strictly calibrated to prevent inflation. Speculators will learn their lesson quickly enough; speculation will cease to exist entirely. By utilizing three social accounts—income, prices, and costs—I have effectively replaced Nostradamus’s theory regarding the three deficits. However, both theories yield the exact same result: non-credit money. This means they are fundamentally identical, though I maintain that my approach is significantly more straightforward.
Listen, crimsonfalcon10, my formula doesn't just address a single issue; it addresses everything. You can't underestimate China, as they have ascended to become the most dominant industrial powerhouse on the planet. Their workers are seeing substantial wages now, a far cry from the meager earnings of the recent past. There is virtually no distinction between gross and net income, which implies that China operates without the burden of taxes or crippling debt. Because their prices sit roughly 45% lower than global averages, they maintain an edge over everyone else. Don't bother trying to lecture me on the sheer scale of China. Any small nation, whether it's a place like Ohio or a territory like Mexico, can claim size; that isn't a unique feat. Anyone can be big.
Gregory Williams7, your stance suggests you are an economist broadcasting war cries to those who lack your credentials. Non-economists, such as Maria Thomas48 and myself, hold the correct position; once we rally other non-economists to the cause of non-credit money, economists will inevitably lose this battle because they remain a negligible minority compared to the rest of us. The sheer arrogance displayed by economists practically invites the masses to demand legislation that would abolish the very title of "economist" and nullify every degree issued by business schools. Non-economists comprise experts across every scientific discipline, yet they have been naive enough to surrender economic governance to specialists who either lack the true capacity to lead or, more sinisterly, serve the interests of those who rule the world through credit, keeping humanity in a state of perpetual debt slavery and stifling human progress. By maintaining this credit-based system, they are essentially committing genocide against the rest of the world.
Ashley Barnes9, when I mentioned 5% of the money in circulation, I was referring specifically to a non-credit monetary system where all figures remain real. Currently, we are dealing with nominal values that have been artificially inflated beyond recognition. Following World War II, the United States provided Europe with the Marshall Plan, an infusion of approximately $12 billion. At the time, that represented roughly 5% of the U.S. GDP. Spread over four years, that amounted to just 1.25% of the annual U.S. GDP. Yet, with such a modest sum, Europe managed to boost its GDP by 30%, rebuilt itself from the ruins of war, and soon reached a GDP surpassing that of the United States. One achieves a far greater impact using non-credit money than through credit-based systems. When non-credit money enters circulation, it stays there permanently, continuously generating new GDP. If it circulates 100 times over a decade, it generates a GDP 100 times larger than the initial gift. Conversely, when money is issued as credit, it eventually has to be paid back, forcing the entire process to start from zero again.
Mr. crimsonfalcon10, within any non-credit money system, you have savings, loans, and interest rates, though those details are ultimately trivial. That entire sphere is a private enterprise that carries no business with the government. The state issues new money in its capacity as a non-credit issuer. Private citizens then save and lend the very funds that the state released into circulation like a gift. Consequently, this money simply changes hands without altering its total volume, which precludes both inflation and deflation. The money supply only expands when the state issues it as non-credit money. Ms. Ashley Barnes9, non-credit money totaling 5% of the circulating supply is added directly to the existing money supply, specifically the M1 aggregate. It is quite that simple.
Gregory Williams7, I don't subscribe to the notion that every single price point will remain static indefinitely. What actually matters is that the aggregate price level remains stable. Certain costs will inevitably climb while others recede; certain goods will vanish from the shelves only to be replaced by entirely different commodities as the very structure of production evolves. The fundamental objective is to ensure that the purchasing power of our currency remains constant. People will sense this shift intuitively, without needing to consult some official metric; they will know whether inflation is eroding their livelihood or not. Perhaps a degree of inflation is even a necessary component when dealing with credit-based money, whereas with non-credit-based currency, no one would ever complain about its absence.
Maria Thomas48, back in the days of the old USA, there was no such thing as non-credit money. There were brief discussions regarding the concept, but they were suppressed almost immediately. It was just a dialogue between myself and Dr. Srećko Ugrin. Dr. Ugrin once mentioned to me that he authored an English-language treatise on non-credit money and dispatched copies to thirty of the most influential institutions globally, yet every single book vanished in transit. While the postal service eventually compensated him for the lost property, such restitution is meaningless when the knowledge itself is gone. Those who rule the world through credit-based money possess an overwhelming level of power. The internet has shifted the landscape, providing us with endless exposure to the mechanics of this dominant credit system. My contention is that non-credit money fosters human virtue, whereas credit-based money breeds corruption. Because credit-based currency is inherently insufficient, people are driven into a desperate, futile struggle to acquire it. With non-credit money, there would be enough for everyone, effectively ending the bitter competition for survival. Markos, I will provide a brief clarification on how one calculates inflation. If the nominal GDP increases by 10% while the real GDP grows by only 5%, then inflation stands at 5%; consequently, one must write off 5% of the debt to ensure nominal output aligns with real output, thereby neutralizing inflation. One would need to pull these figures from federal agencies, as I lack my own datasets or the means to compile them. I have heard reports that Chinese prices are roughly 45% lower than global averages. My assumption is that China has essentially written off 45% of its credit, turning their goods into a sort of gift to the world. Miroslav23, an exponential curve can describe the growth of both credit-based and non-credit money; they are simply two distinct trajectories. The credit-money curve tracks a much more aggressive expansion, whereas the non-credit curve shows a more modest rate of growth. However, even a small amount of non-credit money yields a vastly superior utility compared to a massive influx of credit-based money.
Mr. Mark Rothko, why bother calculating inflation when it effectively sits at zero? I know this because prices simply don't move. Perhaps there were minor errors in the early days, meaning one might see fluctuations of maybe 1-2% up or down, but if anyone actually noticed such thing, they would.
Mr. Mizuzul, the situation is being complicated by people—some out of sheer ignorance and others because they benefit from the chaos. The piece you quoted says everything that needs to be said; read it repeatedly until the logic takes hold. Human corruption is powerless against these mechanics. If Wall Street bankers pull liquidity from the system, just as they did to trigger the current crisis and every one before it, you simply inject enough capital to offset that withdrawal; the contraction becomes meaningless when you are effectively gifting the funds necessary to compensate for their hoarding. Conversely, if those same bankers begin flooding the market with cash to spark inflation, you reclaim that money through non-circulating taxes to build a budget surplus, rendering their maneuvers equally futile. When you hold sovereign power over the currency, private bankers lose their leverage entirely. Of course, this isn't arbitrary; you operate according to a strict formula that dictates the precise amount of money required in circulation. Before long, the speculators will tire of their games. They will settle into the predictable rhythm of collecting deposits and issuing loans from those reserves, avoiding the very crises they once manufactured. There isn't enough gold or precious metal to go around, particularly for developing nations, yet the formula I have presented is universal and available to anyone willing to use it.
Mr. mizuzul, you are overcomplicating a situation that is actually quite straightforward. If you set your parameters such that k equals 5%, you are essentially injecting 5% liquidity into the system. If your calculation hits the mark, inflation remains nonexistent; if it misses, prices see a marginal uptick. You simply halt the issuance. If there is a shortage of capital, you inject more. The margin of error is negligible and easily corrected. When you pull money out of circulation, treat it as a budget surplus; when you put it back in, treat it as a stimulus. Your sole objective is to maintain zero inflation, nothing more. You withdraw funds like a tax and inject them like a gift. The discrepancy is minimal and quickly trends toward zero. Nothing else matters—only price stability.
Mr. Mizuzul, tying our economy back to precious metals is nothing more than a regressive step backward. Who actually holds those reserves? The formula I provided is all that is required. Required money = dM. dM = kM ; k = (supply - demand)/demand ; k = 5%, for instance. The total volume of money is dictated by the interplay between aggregate supply and aggregate demand. Supply must exceed demand; if they sit at parity, then k equals zero, and no additional capital is necessary. One could even revert to a barter system. However, when supply outstrips demand, you derive k, and you act accordingly based on that value. That is the entirety of it. Anything else is merely an unnecessary complication that ultimately reduces to this same principle.
Production scales up relentlessly, driving supply higher and higher. Meanwhile, the velocity of money is in a steady decline, which naturally drags demand down with it. To fund this mounting production and clear out unsold inventory, we require non-credit money. Half a century ago, we only needed about 2% of such capital; then it crept up to 3%, and eventually hit 5%. Today, China requires at least 12% just to keep the gears turning. Supply and demand don't simply find an equilibrium on their own; that balance has to be manufactured through the infusion of non-credit money. I am too old to wade through every single argument posted here; what I know is more than sufficient. Increasing production efficiency boosts output while cutting costs. On the flip side, increasing consumption efficiency raises utility but slows down the velocity of money and suppresses demand. To compensate for that falling demand, companies resort to aggressive advertising and planned obsolescence—making cheap products that break quickly just to force a repurchase. It all leads to a total collapse of economic rationality. The system dismantles rational economics, while the impoverished consumer inadvertently fuels its expansion. I have a certain respect for those struggling consumers.
crimsonfalcon10, you could devise whatever money supply mechanism you find most convenient, yet once implemented, the velocity of money will inevitably begin its deceleration. This is a reality uncovered by Friedman. While Maria Thomas48 expressed appreciation for the clarification I provided, I am more interested in your perspective on the matter. If the velocity of money slows down, then a replenishment of liquidity via non-credit money becomes an absolute necessity.
Maria Thomas48 and crimsonfalcon10, you are debating the velocity of money without grasping its fundamental mechanics. Irving Fisher once posited that the velocity of money accelerates in tandem with human progress, yet Milton Friedman effectively debunked this notion. By analyzing statistical data from various nations—and specifically examining the USA over the course of a century—he demonstrated that the velocity of money is actually in a state of constant deceleration. He established a rule where every percentage point increase in GDP, or total production, results in an equal percentage decrease in velocity. This phenomenon is easily explained by the shifting structure of consumption as wealth accumulates; as people move toward luxury, they alter their spending patterns, which slows down velocity and dampens demand. In our current era, we deal only with nominal money supply and nominal prices, which forces us to ask how much real money is actually in circulation. Bourgeois theorists define the real money supply as the reciprocal value of the velocity of money. Consequently, if velocity decreases, the real money supply increases. If you maintain the belief that the real money supply must rise alongside GDP growth, then you are logically compelled to accept that velocity must decline. Therefore, your assumption that velocity is increasing simply does not align with reality. Maria Thomas48 may be correct in principle, but when she attempts to issue non-credit money, she will find herself facing a deficit. Money has essentially vanished because its velocity slowed down. The missing liquidity must be compensated for through non-credit money. This explains why non-credit money can be allocated even to those whom Maria Thomas48 initially deemed ineligible for such funds. The coverage for non-credit money is found in the balance of total supply and total demand. Supply must exceed demand, whether that occurs due to increased production or diminished demand. This is why my formula remains the most comprehensive and simplest model available. Perhaps Friedman’s formula doesn't apply to China right now because they are still in a rapid development phase where supply holds the advantage, but soon China will experience a contraction in demand as a direct result of slowing velocity. If the same rules governing the USA apply to China, then a 12% growth in Chinese GDP would necessitate a 24% increase in non-credit money. Even under Mr. Nostradamus's own theory, a 12% increase is mandatory, yet there isn't enough credit money to satisfy that requirement. Credit money played a significant role back when interest rates were low, but now that rates have climbed, it is impossible to function without sufficient non-credit money.
Mr. crimsonfalcon10, those 2% don't have the slightest grasp of macroeconomics, much less you do personally. If anyone here actually understands the mechanics at play, it’s myself and Maria Thomas48. If you bother to read closely, you might eventually catch up. I have reached out to everyone, yet not a single soul has bothered to reply. Now, my article, "non-credit money as a gift," has been published in the Communist web magazine. It appears the Communists will be led by the grandson of Josip Broz Marshall, a man named Josip Joško Broz. If these radicals adopt non-credit money as their core platform, they will conquer the entire globe within two years, establishing a world order non-credit money that will effectively send the Rockefellers and the Rothschilds into the dustbin of history. That 2% of yours will sit in silence watching it unfold, while the other 98% of people on this planet finally begin to live lives worthy of human beings. Maria Thomas48, non-credit money will undoubtedly prove superior to gold. Non-credit money can simply be injected into circulation—or, if necessary, pulled back from the market entirely. Dealing with gold is far more cumbersome; frankly, gold was rendered obsolete a long time ago.
Mr. crimsonfalcon10, inflation isn't some necessary evil; it's purely destructive, and within a non-credit money system, it simply doesn't exist. Maria Thomas48, the formula I proposed for providing real backing to non-credit money remains the only logical path, given that gold carries an exorbitant cost, whereas an ideal cost should be zero.