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: ECB favours underground press over Fed's helicopter drop
PostPosted: 24 Jun 2009, 10:06 pm 

Joined: 29 Jan 2008, 6:06 pm
Posts: 731
Published: 5:07PM BST 24 Jun 2009

Ian Campbell wrote:
Drop money from helicopters to avoid depression. So said Ben Bernanke, president of the US Federal Reserve. Helicopter money-drops are highly visible. And when the descending cash is simply printed money, it can attract widespread criticism.

The European Central Bank prints money too, but it also distributes it to banks through underground tunnels. It pumped them a tidy €442bn (£376bn) on Wednesday, an unprecedented one-year deal at a record low interest rate of 1pc.

The US and Europe are fighting the forces of recession, deflation and even depression. The world's attention has focused on Fed money-printing. The Fed's balance sheet has risen rapidly to $2 trillion. But the ECB's balance sheet has also expanded - to an even bigger €1.7 trillion in the past two years. Wednesday's lending will swell it further.

The two central banks have adopted different approaches. The Bernanke-led Fed has hovered its helicopter over markets such as mortgage-backed securities, commercial paper and, most controversially, US Treasury bonds. Its plan to buy $300bn in Treasuries to bring down their yield troubled creditors. The Chinese were especially vocal in their criticism.

The ECB, meanwhile, has kept well away from government bonds and concentrated its efforts on keeping banks liquid - aside from a €60bn foray into the covered-bond market. The support to banks is on a mammoth scale. It reflects the size of their problems and the enormous difficulty of reviving the eurozone economy.

The results may look modest. But European banks might have failed otherwise. Credit is being squeezed. Annual growth in loans to the eurozone private sector dropped from 5.8pc at the end of 2008 to just 2.4pc in April. The hazardous areas European banks have mined - Spanish and Irish property, eastern Europe - have left them hugely vulnerable.

And they face a downturn that is far deeper than in the US. The OECD has forecast that the eurozone will contract by 4.8pc this year and not grow in 2010. In the US, it expects a 2.8pc contraction this year and growth of 0.9pc in 2010.

The banks are likely to hoard the ECB's cash rather than lend it on within a collapsed and dangerous eurozone economy. But without the funds passing through those tunnels, the eurozone's recession might have been worse still - and with a financial system tumbling down.

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 Post subject: Re: ECB favours underground press over Fed's helicopter drop
PostPosted: 26 Jun 2009, 10:51 am 
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Yep. Of course to claim to be privy to the "balance sheet" of either, and to so simplify it, is suspect. But this is the thing the Austrians (and Ron Paul) just don't get: In any purported economy subject to interest, you *have* to lend ever more money into circulation just to maintain the circulation! You lent "money" (defined differently, depending on the application) into circulation by monetizing the debt/commitment of the people; you simply published their promise to pay; and, rather than removing it from circulation (properly) when the debtor pays what has already been given to the actual creditor who produced the subject property, you let the uninterested/uninvolved 3rd party *KEEP* the payment; then, as if their mere publication of our promises to pay constituted earned wealth, at risk of so much earned wealth even (while the only thing that is risked is the cost of publishing the promise to pay, if any)... you let the banking system collect interest as well. This obligates us to maintain a vital circulation, because from the outset our obligation is to pay out of circulation more than (principal + interest) was introduced to circulation (principal); and so we must perpetually re-borrow principal and interest paid out of the general circulation (our possession), as subsequent debts, perpetually increased so much as periodic interest, until the whole thing falls down when the costs of servicing an eventual, terminal sum of debt exceed the circulation.

What Ron Paul either doesn't understand, or hopes we never will, is that you can't stop loaning more and more and more "money" into circulation until you make money *merely* the obligation to pay the principal. Ending the Fed therefore will accomplish no more than Andrew Jackson did — it will still leave us with "a banking system" which can only multiply debt into terminal failure; and as we're already on the brink of that failure, certainly that preposterous concept of solution is not going to have any positive ramification whatever, particularly as Mr. Paul even advocates higher rates of interest, purportedly to subdue the amount of borrowing new debt. If of course his half baked idea worked, the circulation would thus disappear all the faster under his higher rates of interest, and the system would collapse completely all the sooner.

So, from the work I published in 1979 we can understand that these higher rates of loaning are only an inevitable consequence of usury/interest, which inherently generate usurious sums of debt. No one can fix this without adopting mathematically perfected economy™.



"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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