Maria Thomas48
RegularOP
329 messages
joined Jan 2014
I see things are heating up in this thread. Since none of us are professional economists, we’re probably throwing out a bunch of wrong numbers from their perspective.
The equality of the three deficits shows that in a closed monetary community, the total sum of monetary profits and losses equals the budget deficit. That holds true without credit. Depending on whether there is credit expansion, stagnation, or contraction, you could say that specific sum increases or decreases. The budget deficit shouldn't be financed by credit, but rather by non-credit money.
To clarify the subjects involved: these formulas apply to everyone. Kids, retirees, workers, corporations, government agencies, freelancers, etc. Anyone performing any kind of transaction involving money. It’s also perfectly expected that failing companies will accumulate monetary losses—more expenses than income. Will those be included in the current statistical sum of profits? Probably not. And cash stashed under a mattress isn't captured in statistics, though it definitely exists within the shadow economy.
When people talk about GDP and say we need a certain amount of growth, they're usually talking from the standpoint of state revenue. Since the government taxes transactions, a large GDP helps fill the federal treasury. The other question is how that increased GDP is actually achieved. If we account for inflation, it’s logical to expect a GDP that is, on average, 4% higher just to stay ahead of inflation. If we look at population, then logically, GDP should fall when there are fewer employees, and economic analyses suggest GDP falls twice as fast as unemployment rises. Also, GDP won't grow significantly without an influx of money. And that most often happens through credit. From what I've heard, you need to increase the money supply by 10% just to get a 5% increase in GDP.
However, you can't issue non-credit money based solely on GDP. That's where fraud becomes possible. For example, Company X has a valuable painting. They sell it to Company Y. Y sells it to Company Z. Z sells it back to Company T, who sells it back to Company X. Every single time at the exact same price. We’ve created quadruple the turnover, but the actual profit is zero. The painting didn't even have to move. Clearly, you don't need to issue non-credit money for a stunt like that. A better metric would be something like the sum of sales tax bases. Sales tax is paid by end consumers and businesses on the difference between revenue and expenses. If that difference is negative, the base would be negative and reduce the total sum.
When we discuss a 5% increase of non-credit money relative to the M1 money supply, it might seem small. There's a reason for that. Banks have used secondary issuance to deploy money and enable a larger GDP. It stands to reason that by using money from secondary issuance, earnings should be higher than 5% of the M1 mass.So, if it's clear to everyone that there isn't enough non-credit money to satisfy banking appetites, yet people claim this is a massive amount that would negatively impact prices, I have to ask: how do you intend to pay back those loans? It has to come from earnings, and people seem afraid of earnings?! Something is definitely wrong here—either bank profits are too high, or our earnings are too low. I'd say it's the former.
I think George Washington might be thinking a bit too naively if he believes he can compete with bank secondary issuances using non-credit money. My math shows that banks can achieve high returns on deposited funds through multiplication and charging interest on the total volume of issued credit. It’s obvious that there won't be enough non-credit money available if we stick to a fraudulent banking system (based on fractional reserve). First, because it generates inflation, and second, because it creates debt out of thin air. The banking system would need to transition to "real" banking—lending the bank's own money and the depositors' money without multiplication. An exception could be the Federal Reserve, which could produce money out of nothing.
The fear that injecting non-credit money would cause instant inflation is pretty much unargued. You can look at money supply movements since 1994, which show massive growth in the money supply without seeing that level of inflation. We also see major corporations taking out massive loans to buy up other companies without any automatic spike in prices. Why doesn't that happen? It’s obvious that there is currently more money in circulation, and if there weren't, prices would have jumped immediately.
There is this big fear that money saved under mattresses might suddenly turn into a massive wave of spending, but we really need to look at this realistically. That kind of capital could be placed back into banks that actually engage in real banking. We are talking about savings and investments here. How can stock offerings even happen if there aren't enough savings to buy them up? Once inflation drops, investing in stocks becomes a very bright prospect because profits would be drawn from non-credit money, rather than from someone else's credit that just adds more debt to the future. Of course, savings and profits can't just be any arbitrary number. Over-issuing non-credit money devalues everything, but holding back too much chokes production because people can't afford even the essentials—reports say the average wage just isn't cutting it right now.
For those who apparently can't be bothered to read my articles on my website, I'll explain once more why the Federal Reserve interest rates are high, even though they really should be lower. The Fed has an issue with the issuance of the dollar because those dollars are constantly being spent on imports. And when you spend that, you're draining foreign exchange reserves. That is why they have to use high interest rates to curb the dollar's circulation. Honestly, this crisis actually works in favor of the Fed, allowing them to maintain the dollar's exchange rate without a hitch. If there were a non-credit issuance of dollars, it would also create pressure to shrink reserves by spending them on foreign goods. This is a problem that needs to be solved through a collective awareness regarding the unnecessary purchase of foreign products. We could achieve a lot just by exercising restraint when it comes to buying stuff from abroad.
It is obviously difficult to move from a deep state of debt to a positive position, especially since we’ve been played by a banking system built entirely on partial reserves and a pure credit-based model. I think we should be considering a drastic cut in interest rates via a government mandate. These same interest rates create a massive cost, and credit is what triggered the inflation and the explosion of debt tied to the money supply in circulation (I've mentioned before how debt tends to grow by compounding both interest and inflation).
I think expectations are a bit too high—expecting a handful of us who realize the current system is a scam leading toward long-term ruin to provide a perfect solution immediately. I will never feel like such a genius in any job, let alone in a field where I am just a layman.
That doesn't change the fact that our evidence proves the current system is a sham and a betrayal of all citizens, as it violates constitutional rights (like Article 55 regarding fair wages).
As some might say, it isn't a question of what the government can do for me, but what I can do for the country. Each of us can take a small step for ourselves that becomes a huge leap for America—first, convince yourself, and then explain to others what kind of system we are actually living under and why it has to change. It also needs to be understood that imported goods should be bought out of necessity, not as a first choice.
We need non-credit money so we can convert part of our labor into monetary profit and continue investing and developing without creating endless cycles of debt. Non-credit money won't magically turn every loser into a winner, but it will prevent cash shortages and the bankruptcy of promising companies and smaller, less profitable firms.
Non-credit money seems to be our only real way forward. Transitioning from the current setup to a system based on non-credit money is something we shouldn't worry about until it's actually intended to happen, or rather, until we force the government to make it happen. There is no future in a purely credit-based system because we are buried in so much debt that there's no way to see how we'd ever earn our way out of it. Most importantly, this exact same problem exists in hundreds of other countries, which tells me the fault isn't with us, but with the system itself.
Best,
sites.google.com/site/financijskisustav/home/
