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mathematically perfected economy™ (MPE™)    1  :   the singular integral solution of  1) inflation and deflation,  2) systemic manipulation of the cost or value of money or property, and  3) inherent, artificial multiplication of debt into terminal systemic failure;    2  :  every prospective debtor's right to issue legitimate promises to pay, free of extrinsic manipulation, adulteration, or exploitation of those promises, or the natural opportunity to make good on them;    3  :  our right to certify, to enforce, and to monetize industry and commerce by this one sustaining and truly economic process.

MORPHALLAXIS, January 14, 1979.

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 Post subject: Uh Oh Monetary FLat Spin
PostPosted: 06 Jan 2009, 6:32 am 
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M1 multiplier has gone below 1.

Snip from article:

That has gone "just below" 1.0.

What is this?

I could go through the derivation of how money supply works in a fractional reserve monetary system (any), but won't, because most readers would have their eyes glaze over.

The important part of this graph is what it denotes. Bernanke has lost control of "N" (or velocity), which is the actual knob that he is trying to diddle when borrowing rates are changed (and in fact its the market that sets that, despite his protests.)

In fact the most useful tool in The Fed's box in terms of influencing monetary policy is the soapbox, that is, jawboning (whether it be by cajoling or threatening.)

The problem with an M1 multiplier below one is that the effect of printing money is of course multiplied by the velocity. That is, if you print up $10 into the economy the impact it has on economic activity depends on how many times that $10 circulates in a given amount of time. The more it circulates the higher the impact and the more your efforts do for the economy.

The bad news is that when the multiplier is less than one the more money you spew into the economy the worse the impact, as you get less for each additional dollar.

End Snip.

Rest of article at: http://market-ticker.denninger.net/arch ... -Spin.html

Anyone care to comment about the article?




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 Post subject: Re: Uh Oh Monetary FLat Spin
PostPosted: 06 Jan 2009, 2:59 pm 
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My bet is that while this chart is very important and generated by the Fed, it won't change their policy one bit. I disagree with Denninger in saying that they are too stupid or incompetent to alter their ruinous attempts to pour money into the economy. They are not incompetent, they are simply serving their own interests instead of the people. This conflict of interest has existed since the Fed took control of our monetary system in 1913.

My take is that the Fed is moving to consolidate with other central banks to form an omnipotent and supranational global central bank that will further enrich and empower them at our expense. So what if we go belly up as a nation? They are quick in buying our private assets cheap and they will be just as quick to seize our collateral after we collapse.

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Our debt is consuming our GNP as we are witnessing what Mike Montagne has predicted - multiplying debt is devouring our circulation and choking off the productive economy.




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 Post subject: Re: Uh Oh Monetary FLat Spin
PostPosted: 07 Jan 2009, 12:48 pm 
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I think Mario already posted this, and I've already responded. Maybe that was in an email. I can't find it without more effort than to answer again. Anyway, fine question.

Quote:
The problem with an M1 multiplier below one is that the effect of printing money is of course multiplied by the velocity. That is, if you print up $10 into the economy the impact it has on economic activity depends on how many times that $10 circulates in a given amount of time. [1] The more it circulates the higher the impact and the more your efforts do for the economy.

The bad news is that when the multiplier is less than one the more money you spew into the economy the worse the impact, as [2] you get less for each additional dollar.

[3] We're in uncharted territory folks, and the forecast is for dark-and-stinky storms.


There are problems with the fundamental deductions here.

1. The more a dollar circulates, does not necessarily predicate any "higher impact" on "the economy." Yes, it may sustain more commerce/industry the more often it changes hands in a given period, but the overall "impact" (this should be defined far more explicitly, if it is to have any meaning at all) is no greater in the sense for instance of accumulating profit; each successive profit comes at an equal cost somewhere else. The general circulation cannot for instance make profit from each other, which benefits it in paying down or averting further multiplication of the sum of debt. All that occurs on the way in and way out of the circulation, versus within it. So, this process dedicates more of every dollar to servicing debt, versus sustaining the industry which is obligated to do so. There is no cumulative benefit at all regarding this ever more obstructive/destructive process.

2. You get less for each additional dollar then because of the inherent multiplication of debt in proportion to the circulation (which further manifests in obligated price increases).

3. The computer models I furnished Reagan in the early 80s charted the waters and predicted all these very things. I've been assured that the Fed has copies of the source code (which I provided freely since the early 80s).

Why they need to increase re-inflation/replenishment of the circulation then is the inherently escalating deflationary aspect, predicated by inherent multiplication of debt at whatever rates of interest apply to the various debts comprising the sum of debt (versus the momentary "prime" rate). Why their little ratio/multiplier inherently declines is the resultant dedication of ever more of a given circulation to servicing debt, versus sustaining the industry/commerce which is obliged to do so. It's just that simple.

They're playing the edge, to preserve the system, while the system can only destroy itself and everything in its path. The purported new/world/global currencies of course will only do the same thing, but for the same reasons/purposes, will even be more insulated from public assent/disapproval — which of course explains the thrust of "globalization."




mike


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"When the freedom they wished for most was the freedom from responsibility, then Athens ceased to be free, and never was free again."



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 Post subject: Re: Uh Oh Monetary FLat Spin
PostPosted: 07 Jan 2009, 7:05 pm 
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Mike said:

Quote:
Why they need to increase re-inflation/replenishment of the circulation then is the inherently escalating deflationary aspect, predicated by inherent multiplication of debt at whatever rates of interest apply to the various debts comprising the sum of debt (versus the momentary "prime" rate). Why their little ratio/multiplier inherently declines is the resultant dedication of ever more of a given circulation to servicing debt, versus sustaining the industry/commerce which is obliged to do so. It's just that simple.


The Mathematically Perfected Economy™ model has correctly predicted our current deflation - which is compelling since most of the pundits and experts have been calling for inflation and even hyper-inflation for many months now.

Do you see deflation continuing - and if so, from here on out? Will they be be able to eventually flood the economy with enough liquidity to begin to inflation?

Larry




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 Post subject: Re: Uh Oh Monetary FLat Spin
PostPosted: 07 Jan 2009, 10:04 pm 
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I can only say that fundamentally, the cause of terminal conditions is multiplication of debt, with the terminal juncture defined by a sum of debt which we can no longer afford to service (we've been here a while already), and with a further consequence of that being insufficient credit-worthiness to borrow further, as is necessary to maintain a vital circulation. These are simple and singular possible ramifications, readily predicted from the fundamental process attached to the currency (interest); so there's no striking ingenuity in unraveling this much, particularly as we can see the same pattern beneath the developing termination of the First Great Depression.

After that, we get into gray areas, because we no longer have the simple fundamental processes to project from — instead, we're in waters charted, but with the course directed by madmen, looking helter skelter for ways to artificially sustain the circulation. The general necessity of artificial sustention (http://perfecteconomy.com/pg-glossary-of-terms.html#artificialsustention) is to increase the circulation, with the purpose of this being the mathematic possibility of appending new money, little of which is dedicated to servicing debt immediately, leaving the remaining, previous circulation to service pre-existent debt, as required of it.

Effectively, by dramatically increasing the circulation, the newer subset of the circulation is initially freer to sustain industry. The problem however remains fatal sums of debt, the servicing of which can consume/deflate the whole previous circulation, and thereafter the new as well, in very little time (as little as a few weeks). Furthermore, unless the efforts of artificial sustention are distributed to every corner in little time, the saviors of usury can hardly prevent vital sectors of subject commerce/industry from collapsing, which in turn brings down adjacent sectors. Being as the new money is largely so much as a give-away, soon/immediately to be consumed by servicing existent debt, the prospects of saving many vital sectors are dim. This is why our industrial output is plummeting to below 1980 lows right now. This too is a direct consequence of multiplication of debt by interest.

Ultimately then, we are living for an assumably brief while, while the further borrowing of artificial sustention contributes further to the sum of debt; cannot serve all sectors; and is apt to be rapidly consumed by further servicing of the further sum of debt. Where they pour the new money to replenish the circulation; whether that augments the circulation; whether it will sustain sufficient vital sectors so much as to give the system of exploitation much further, artificial extentsion of its lifespan, is impractical to predict except to anticipate, that unless a plan proves demonstrably to cover all the bases, the artificial extension of the lifespan will be negligible.

What are the prospects of the plans on the table?

Well, we've already lost most of the jobs Obama hoped to create in several years, and he hasn't even reached office yet. Then we're to afford the production of those jobs, while we can't afford it now and will be less able to afford it under the further debt we will be compelled to service if/when his far-fetched, costly proposition ever matures.

That's probably all we deserve, if the best concept we can come up with is "change." I'm about to charge him with criminal negligence for returning my proposition of mathematically perfected economy™ unopened. Just today, the NYT reports he projects *annual* federal deficits of $1 trillion +. All this is to preserve the system of exploitation at further cost, when we could fix this thing immediately, and for a few pennies.




mike


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"When the freedom they wished for most was the freedom from responsibility, then Athens ceased to be free, and never was free again."



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While 12,000 homes a day continue to go into foreclosure, mathematically perfected economy™ would re-finance a $100,000 home with a hundred-year lifespan at the overall rate of $1,000 per year or $83.33 per month. Without costing us anything, we would immediately become as much as 12 times as liquid on present revenue. Transitioning to MPE™ would apply all payments already made against existent debt toward principal. Many of us would be debt free. There would be no housing crisis, no credit crisis. Unlimited funding would immediately be available to sustain all the industry we are capable of.

There is no other solution. Regulation can only temper an inherently terminal process.

If you are not promoting mathematically perfected economy™, then you condemn us to monetary failure.



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