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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.

The only way to perfect an economy of perpetual, terminal multiplication of debt in proportion to the original circulation is to eradicate interest, because to maintain a circulation subject to interest requires perpetually re-borrowing whatever we pay against principal and interest as ever greater sums of debt. Every system involving a currency subject to interest therefore imposes a maximum possible lifespan on itself, as ever greater sums of interest on an ever escalating sum of debt eventually impose collapse. Thus there is no compromise or alternative to mathematically perfected economy™ which solves inherent, terminal, irreversible multiplication of debt by interest.

mike montagne

MORPHALLAXIS, January 14, 1979.

WALKING THROUGH THE ELEMENTARY MATH OF OUR SPREADSHEET DEBT PROJECTION MODELS

Monday, July 21, 2008

WALKING THROUGH THE ELEMENTARY MATH OF OUR SPREADSHEET DEBT PROJECTION MODELS

Recent, pre-crash data on debt as percent of GDP *DOES NOT* include public debt  the servicing of which itself approximates reported "GDP."

While our multiplication of debt spreadsheets have been downloaded scores of thousands of times over the years, it's remarkable that while no one has proven a refutation of the math (attempts are cited), certain simpletons simply dismiss the propositions that a) any purported economy subject to interest ultimately terminates itself under insoluble debt; or b) that we can perfect an economy of inflation, deflation, systemic manipulation of the cost or value of money or property, or inherent multiplication of debt by interest. As if any mathematic process could truly be validated without even measuring the ramifications of the process, a worst possible example of abandoned discipline is regularly asserted by Austrian School "economists," who in fact advocate interest while regularly claiming we can't account for interest mathematically. Yet of course, no mathematic process can be validated without accounting for its mathematic ramifications; and, as we see in the present spreadsheets, the relevant calculations of those critical ramifications require no more than to determine interest on debt. To defend this unqualified disposition yet, the Austrian simply further dismisses the very idea we can make this simple calculation, saying that mathematics cannot account for indeterminable human behavior, while of course, no human behavior whatever is accounted for, but the fact that the imposition of interest forces the subject humans to maintain a vital circulation, at cost of the very calculable ramifications of interest.

Multiplication of debt by interest nonetheless is merely one adverse process which is solved by mathematically perfected economy™; and it is highly unreasonable to doubt this process exists, as c) the present sum of existent debt far exceeds both the currency in circulation, and the remaining value of represented property; and d) the process of being compelled to maintain a vital circulation by re-borrowing principal and interest paid out of the general circulation obviously, perpetually increases the sum of debt so much as periodic interest on the sum of debt. Thus, both existent data and accountable analysis of the underlying process concur, and project such a sum of debt increasing in proportion to a circulation, that the costs of servicing an eventual sum of debt will impose systemic failure, in that at least the entire circulation will eventually be dedicated to servicing debt. In fact, recent St. Louis Branch Federal Reserve Data shows that for the first time ever, since October 2007, "non-borrowed reserves" (owned reserves) of depository institutions (banks) have not only gone negative, but have gone negative to a greater degree than positive owned reserves ever existed in the history of the data.

Free fall of "non-borrowed" reserves: April 2008 St. Louis BOGNONBR data. CLICK HERE to open the most recent St. Louis Federal Reserve report in a separate tab/window.

These, and a host of further developments therefore are striking, because they show clearly that phenomena such as the present "sub-prime mortgage" crisis are not causes of systemic failure, but consequences of the underlying fault of the imposed system  a system which can only multiply indebtedness in proportion to a vital circulation... which can only destroy credit-worthiness... and which can only engender systemic failure under an eventual insoluble sum of debt the circulation can no longer afford to service.

It is only by understanding this phenomenon that we realize both that we must solve inherent multiplication of debt by interest  and how to solve inherent multiplication of debt by interest, which of course imposes the further ramification of perpetually increasing the costs of all things subject to interest-bearing debt. Not only is it necessary to solve inherent multiplication of debt in order to avert eventual and probable near term systemic failure... it is necessary to solve inherent multiplication of debt in order to eliminate perpetual devaluation of the currency.

The present page relates to this phenomenon of inherent, irreversible multiplication of debt by interest. The process is inherent, because it is a product of interest, and because the calculation or projection of resultant debt is itself based on calculating interest on existent debt and re-borrowing this as necessary to maintain a circulation. The process is irreversible, because we must maintain a circulation to service monetary obligations (principal plus interest) which from the outset exceed the circulation; and because to maintain a circulation, we must perpetually re-borrow interest and principal as subsequent sums of debt, increased so much as periodic interest.

One of the most remarkable faults of certain would-be invalidators is the assumption that if we can disprove that interest multiplies debt in proportion to a circulation, this disproves mathematically perfected economy™ itself. As we see in the related articles below for instance, without even realizing that re-borrowing interest and principal increases the sum of debt so much as periodic interest, William B. Ryan attempts to disprove MPE™ by asserting that because the interest and principal we pay out of the circulation is equal to the subsequent debt we re-borrow to maintain a circulation, there is no multiplication of debt. Similarly, without accounting for the necessary scale, G. Edward Griffin attempts to disprove multiplication of debt by simply asserting that it is possible to earn back interest from a bank. Obviously, such a scale of earning back principal and interest never existed to any meaningful degree whatever. Obviously too, the necessary scale is wholly impractical, because the banking system produces nothing, and so, because principal is equal to the original value of the related production, to negate having to re-borrow principal and interest would require earning back not only all our production, but the further non-existent sum of our production times interest.

These amateurish deductions nonetheless are inept on the further account that they presume to invalidate mathematically perfected economy™ even by falsely asserting that multiplication of debt does not exist. Even if we could establish that interest does not multiply debt in proportion to a circulation, this would not invalidate that mathematically perfected economy™ is the singular solution to inflation, deflation, and systemic manipulation of the cost or value of money or property by the remaining processes which MPE™ alone solves.

The present page therefore relates merely to projecting multiplication of debt by interest. The subject spreadsheets show how we can readily project inherent collapse, simply by calculating interest for subsequent periods and adding that to the sum of accumulated debt until we find the system has produced an insoluble sum of debt which the circulation can no longer afford to service. This is the obvious basic process.

Anyone competent to dismiss the proposition that interest multiplies debt into a terminal sum of debt is competent to understand and wield spreadsheets  which for decades have been one of the most basic tools of mathematicians. Likewise, no one who cannot or has not invalidated the present math/process has invalidated my thesis that any purported economy subject to interest inherently terminates itself under an insoluble, unserviceable, terminal sum of debt.

WALKING THROUGH THE MATH

PFPE-Debt-Progress-Mockup-07---35-yr-chart-scale---003---high-interest-5pct-circ-growth.xls and corresponding chart, produced by the actual process of inherent multiplication of debt by interest. The subject calculation produces a maximum possible lifespan to collapse under a sum of debt which cannot be serviced at year 22.

INPUT CELLS  ROW 3

There are 3 basic input cells, which are readily identified by their lime background color:

  1. Periodic Principal Payments expressed as a percentage of beginning period debt.
  2. Periodic Interest Payments expressed as a percentage of beginning period debt.
  3. Rate of circulation growth expressed as circulation (100%) plus percentage of growth: IE., 5% growth in circulation and/or commerce is expressed as "1.05."

OUTPUT CELLS  ROW 7 AND BELOW

Using row 8 as an example, cell value is expressed, followed by mathematic functions given first by cell and then by literal expression of the equation:

  1. Period, generally taken as annual.
  2. Periodic PRINCIPAL OBLIGATION

    C8 = C3 G8

    Periodic PRINCIPAL OBLIGATION = Periodic Principal Payments expressed as a percentage of beginning period debt Period BEGINNING DEBT

  3. Periodic INTEREST OBLIGATION

    D8 = D3 G8

    Periodic INTEREST OBLIGATION = Periodic Interest Payments expressed as a percentage of beginning period debt Period BEGINNING DEBT

  4. PERIODIC COSTS OF SERVICING DEBT

    E8 = D8 + C8

    PERIODIC COSTS OF SERVICING DEBT = Periodic PRINCIPAL OBLIGATION + Periodic INTEREST OBLIGATION

  5. CIRCULATION, or Relative Commerce Sustained by Circulation

    F8 = F7 F3

    CIRCULATION = PREVIOUS PERIOD CIRCULATION Rate of circulation growth

  6. Period BEGINNING DEBT

    G8 = H7

    Period BEGINNING DEBT = PREVIOUS Period ENDING DEBT

  7. Period ENDING DEBT

    H8 = G8 + D8 + ((F3 F8) - F8)

    Period ENDING DEBT = Period BEGINNING DEBT + Periodic INTEREST OBLIGATION + ((Rate of circulation growth CIRCULATION) - CIRCULATION)

  8. Cell J6 identifies the maximum possible lifespan, determined by an eventual period (succeeding row) when the costs of servicing debt (obligated principal and interest) require the entire circulation. Such a juncture defines a maximum possible lifespan because to sustain the circulation by further borrowing requires exceeding possible credit-worthiness.

ACCOUNTING FOR BANKRUPTCY, CONSUMPTION OF PRODUCTION BY BANKING ENTITIES, AND FURTHER FACTORS WHICH REDUCE MULTIPLICATION OF DEBT BY INTEREST

Consumption of production by banking entities and further positive factors reducing multiplication of debt by interest are negligible. Therefore to provide a simple, comprehensive model of the overall process, and to avoid engendering the mistaken impression that sufficient such factors can negate multiplication of debt, no (negligible) calculations for reduction are made. Competent mathematicians can readily introduce such calculations to these models, respecting the following condition.

FALSE ARGUMENTS REGARDING POTENTIAL CONSUMPTION OF PRODUCTION BY BANKING ENTITIES

Because consumption of production by banking entities can be no greater than production, no practical consumption of production by banking entities is sufficient both to allow paydown of the sum of debt and negate multiplication of debt by interest. Furthermore, even if such a thing were practical, obviously this would comprise such an undesirable condition as for absorbing the mere costs of publishing a money in the form of interest-bearing debt, banking entities would not only acquire our entire production multiplied by interest, but leave us no operating funds upon which to produce the impossible sum of production.

GROWTH RATE CONSTRAINTS AND FALSE ARGUMENTS REGARDING POTENTIAL GROWTH

Without accounting for the necessary quantities, advocates of usury sometimes try to justify usury by asserting that it is possible for an "economy" subject to interest to grow at such exponential rates as to survive. In the least nonetheless, it is impossible to do so forever because resources and potential production are finite. In any case, practical instances of "economies" subject to interest do not sustain such rates; and furthermore, even if they can or have, they can only do so for nought, because multiplication of debt by interest nullifies the gains industry would make by any such growth.

"To find the players in all the corruption of the world, 'Follow the money.' To find the captains of world corruption, follow the money all the way."

mike montagne — founder, PEOPLE For Mathematically Perfected Economy™, author/engineer of mathematically perfected economy™ (1979)

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.

© COPYRIGHT 1979-2009 by mike montagne and PEOPLE For Mathematically Perfected Economy™. ALL RIGHTS RESERVED.COPYRIGHT 1979-2009 by mike montagne and PEOPLE For Mathematically Perfected Economy™. ALL RIGHTS RESERVED. TRADEMARKS: PEOPLE For Mathematically Perfected Economy™, Mathematically Perfected Economy™, Mathematically Perfected Currency™, MPE™, and PFMPE™ are trademarks of mike montagne and PEOPLE For Mathematically Perfected Economy™, perfecteconomy.com. ALL RIGHTS RESERVED.

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