'MPE™ 103' — HOW MUCH MONEY TO CIRCULATE 'OUT OF THIN AIR'?

"Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves." William Pitt the Younger, speech on the India Bill, November, 1783

mike montagne

In the final analysis, Reagan had doggedly moved ahead with a plan that couldn't possibly work. Despite my appeals, he left an imposed process to destroy the house by further irreversible multiplication of debt to the eventual terminal state. In that, he may be no more guilty than any and every president since the 1912 campaign. But too, these events certify we require a higher genre of leadership — at least capable of resolving the intellectual challenges of identifying, presenting, and prevailing in solution.

Sunday, April 6, 2008

'MPE™ 103' — HOW MUCH MONEY TO CIRCULATE 'OUT OF THIN AIR'?

Talk is circulating that "creating money out of thin air" has caused the falling dollar... rising prices... the long term disappearance of our once remarkable industry... insoluble public, private, and foreign debt... the "sub-prime mortgage crisis" (case of the most artificially marginalized debtors)... and a far broader multiplying indebtedness, manifesting in a far broader and deeper failure just ahead.

The saying ascertains nothing which answers for the effects attributed to it; for again, what injury could a costless currency inflict, if it merely represented wealth in a monetary system which ensured its currency is always interchangeable with that wealth?

As costlessness is non-injurious, we must look further than the saying for useful explanation, because in fact it is impossible the expression identifies the crime against us.

Typical utterances of the saying imply that malpractice of one kind or another engenders an anomalous circulation. If we are to understand this is the case, then we must first ascertain a proper circulation and how to maintain it.

Because consistent value and perpetual interchangeability are virtues of a currency against which lack thereof the sayers rightly complain... let us suppose that "money" is *just* an interchangeable, consistent representation of wealth in such a monetary system as ensures we can always exchange it for the respective wealth.

How much currency then should we circulate?

1. What if we circulated no money whatever?

   Obviously, we could do nothing requiring money to exchange or to expand our capacities to further produce wealth.

2. What if we circulated more currency than wealth?

   Then when the excessive circulation was issued, someone would have gotten something for nothing.

   While this would be a transgression against a system in which money is intended to be a medium for exchanging like wealth, nonetheless it is impossible to suffer this condition if the money is loaned into circulation, because we can only borrow so much as the value of the wealth. Thus although there are those who assert that "inflation" results in price inflation, the condition to which they attribute a result itself cannot exist without circumventing the intended conduit for regulating the circulation.

3. What if we circulated less currency than wealth?

   Technically, such a circulation is deflated; and we suffer such a circulation.

   How can you know we suffer a deflated circulation? Look around you. For all the wealth you see around you, there would be an equal quantity of money in circulation if the circulation were not deflated. There of course is far less than that.

   What are the consequences of a deflated circulation?

   Overall, a deflated circulation makes it more difficult for the subjects of the system to obtain due reward for their creation of wealth, because there is a general lack of sufficient circulation to sustain due reward across the system. This does not mean it is impossible to obtain due reward in explicit cases, or across many explicit cases even at once. The greater the disparity between the circulation and overall wealth however, the greater the obstruction of possible, simultaneous due reward.

   The general effect can be understood from the extreme case. If everyone wanted to exchange all their wealth simultaneously, it would be impossible to do so with a deflated circulation because someone has not received monetary reward equivalent to the wealth they have rendered. Those such persons must do further work to earn the money necessary to purchase their part of such a whole simultaneous transaction, even though the only reason they are unable to participate in the simultaneous transaction is that there is insufficient circulation to represent the wealth they have produced (and not been rewarded for).

4. The only further option is to circulate so much currency as wealth.

   This is the only condition which is neither inflationary or deflationary.

   Only a circulation which perpetually equals the remaining value of existent wealth *is always redeemable* in the very wealth itself. The only way to achieve the necessary constant relationship between units of money in circulation and remaining value of related wealth is to pay off debts equal to the original value of the wealth at the rate of depreciation/consumption. If the debts are subject to interest therefore, this cannot be accomplished, because more must be paid out of circulation than was introduced to circulation to sustain the wealth.

   So again we find that eradication of interest and a schedule of payment which solve inflation and deflation are the issues; and that the resultant prescription results in mathematically perfected economy™.

SUMMARY OF CASES

All but the last case are anomalous circulations, and, rather than shouting "creating money out of thin air" is the problem, or any problem whatever, we can rightly draw only two overall conclusions related to that proposition from the whole of the cases:

1. the only circulation which does not injure us is that of mathematically perfected economy™ (4); and
2. there is no detriment whatever from creating representative money "out of thin air."

   In fact therefore, a money without cost is only conducive to a system which itself is intended to cost us nothing.

WHAT THEN IS THE CAUSE OF THE INJURIES TO WHICH THE EXPRESSION "CREATING MONEY OUT OF THIN AIR" COMPLAINS?

All of the consequences to which the expression "creating money out of thin air" complains therefore are instead ramifications of interest (usury), because interest inherently dedicates ever more of every dollar to servicing debt, as we are forced to maintain a circulation subject to interest by re-borrowing whatever we pay against principal and interest obligations. This intrinsic and wholly unavoidable ramification of interest of course systematically, perpetually, and irreversibly ("if" we maintain a circulation) multiplies the sum of debt in proportion to the circulation (or the commerce which can be sustained by the circulation), as subsequent sums of debt equal the previous sums of debt plus so much as periodic interest.

This inherent, irreversible, perpetual multiplication of debt at inherently escalating rates (of ever greater increments of periodic interest on an ever greater sum of debt) therefore inherently destroys the purchasing power and thus the very integrity of "the dollar" not only to an ever greater degree, but at an ever escalating rate, not only until the dollar is soon enough destroyed altogether... but until the whole of the system caves in under the weight of a sum of debt it can no longer afford to service.

After all, in inherently multiplying debt, ever more of the circulation is dedicated to servicing debt, and ever less of the circulation *can* be dedicated to sustaining the commerce which is obligated to servicing the multiplying sum of debt.

Because it is impossible to maintain a circulation subject to interest without re-borrowing payments against principal and interest as subsequent sums of debt increased so much as periodic interest, *interest* then is the cause of the injuries to which the expression "creating money out of thin air" complains.

It is the interest and improprieties of the schedule of payment which are the cause of all the issues — not the conducive cost of the currency, or an excessive circulation which does not even exist.

The sky is not falling "because we created money out of thin air."

The sky is falling because 1) when you hold in your hand "a dollar," it actually represents a *dynamically* *multiplying* obligation to pay... and because 2) that *eventually impossible* obligation to pay is *already* so incredibly far much greater than the wealth most of us hope that false dollar could otherwise represent.

The purported "confidence" in "the dollar" therefore ultimately tumbles because there was no real basis for "confidence" in the first place.

The lie of the false dollar was always a deception; and it was never the inexpensiveness of the lie which hurt us. The sky is falling instead because of the inevitable ramifications of a purposed process, which in fact was the original, principal intended object of a privatized currency.

From the very beginning, the issue — and the only distinguishing process even — was "interest."

RELATED PRIMARY ARTICLES

1. [ KEY SUMMARY ]  HOME — SOLUTION, PURPORTED MONETARY REFORM, OR INHERENT FAILURE BY INTEREST?
2. PROBABILITY AND TIMELINE FOR WORLD-WIDE ECONOMIC COLLAPSE AS A CONSEQUENCE OF INTEREST
   3. [ KEY ]  ABOUT INTEREST, KEY TO THE CYCLE OF USURY: 'IT'S THE INTEREST, STUPID, IT'S THE INTEREST'
   4. ARTIFICIAL SUSTENTION — RELEVANCE OF PROJECTION AND CAPACITIES TO ARTIFICIALLY EXTEND THE LIFESPAN OF USURY
   5. INHERENT PATTERN OF FAILURE OF ANY PURPORTED ECONOMY SUBJECT TO INTEREST
   6. CURRENT SHAPING OF THE FAILURE — PRELUDE TO SECOND GREAT DEPRESSION OR MATHEMATICALLY PERFECTED ECONOMY™
   7. [ KEY ]  WHY AND HOW PRECIOUS METAL MONETARY STANDARDS [THE GOLD STANDARD] CAN ONLY FAIL. WHAT IS SOUND MONEY?
   8. [ KEY ]  THE PURPORTED QUESTION OF WHO SHOULD ISSUE THE CURRENCY — WHO WOULD LOAN MONEY IF IT WERE NOT SUBJECT TO INTEREST?
   9. [ KEY ]  DOES RISK JUSTIFY SUBJECTING THE FEDERAL RESERVE NOTE TO INTEREST (USURY)?
   10. PURPOSES OF THE DECEPTION THAT INFLATION IS CONTROLLED BY INTEREST (USURY)
   11. WHY INFLATION ITSELF IS A LIE; WHY IT IS IMPOSSIBLE TO SOLVE THE REAL CONSEQUENCES OF A CURRENCY SUBJECT TO INTEREST
   12. WHAT IS USURY?
   13. WHAT IS FREE ENTERPRISE?
14. WHAT IS Mathematically Perfected Economy™?
    15. 'MPE™ 101' — BASIC IMPLEMENTATION OF Mathematically Perfected Economy™
    16. [ KEY ]  'MPE™ 102' — 'FIAT CURRENCY.' WHAT ABOUT IT?
    17. [ KEY ]  'MPE™ 103' — HOW MUCH MONEY TO CIRCULATE 'OUT OF THIN AIR'?
    18. 'MPE™ 104' — TAXATION UNDER MATHEMATICALLY PERFECTED ECONOMY™
    19. 'MPE™ 105' — DEBT ONLY EQUIVALENT TO THE PROPERTY WE HAVE POSSESSED AND NOT PAID FOR, OR THE COSTS OF SERVICING DEBT PERPETUALLY MULTIPLYING IN PROPORTION TO OUR MEANS; WHAT IS THE REAL ENEMY?
    20. [ KEY ]  'MPE™ 106' — 'MONEY OUT OF THIN AIR': IT IS NEITHER AN OFFENSE OR DISADVANTAGE THAT TOKENS OF WEALTH COST NOTHING
    21. 'MPE™ 107' — PARASITIC 'MARKETS' CAN ONLY MAKE KILLINGS AT *OUR* EXPENSE — 'INVESTMENT' IN Mathematically Perfected Economy™
    22. 'MPE™ 108' — CIRCULATORY INFLATION AND PRICE INFLATION EXPLAINED
    23. 'MPE™ 109' — CIRCULATORY DEFLATION AND THE CONSEQUENCES OF DEFICIENT CIRCULATION
    24. 'MPE™ 110' — DEPRECIATION AND EQUITY IN MATHEMATICALLY PERFECTED ECONOMY™
    25. 'MPE™ 111' — UNINTRODUCED CIRCULATION AND EQUITY IN MATHEMATICALLY PERFECTED ECONOMY™
    26. 'MPE™ 112' — NATURE OF MONEY IN MATHEMATICALLY PERFECTED ECONOMY™
    27. 'MPE™ 113' — UNEARNED GAIN — PROFIT WITHOUT REAL, COMMENSURABLE CONTRIBUTION TO THE POOL OF WEALTH
    28. 'MPE™ 114' — LAND
    29. 'MPE™ 115' — RETIREMENT
    30. 'MPE™ 116' — PURPORTED SUPPLY AND DEMAND
    31. 'MPE™ 117' — MATHEMATICALLY? PERFECTED? ECONOMY? WHY TERMINOLOGY TO WHICH SOME OBJECT?
    32. 'MPE™ 118' — HOW WE READILY COMPUTE FUTURE ACCUMULATION OF DEBT WITH GREAT PRECISION (TO THE NAYSAYERS OF PROJECTION)
15. [ KEY MODEL ]  PARABLE OF PERFECT ECONOMY — HOW USURY COMPELLED THE AMERICAN REVOLUTION
    35. HOW MATHEMATICALLY PERFECTED CURRENCY™ EXTENDS THE INDIVIDUALISM OF THE PARABLE

"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)

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