While that is the mathematical problem, there is also the question of how did it originate? The original government, while issuing its own currency, also contracted to pay the debt of the rebellion to the Dutch. ($22 million, if I remember correctly.) This is where the mathematical doomsday machine starts. The government never issued money for the people to use; it issued money for the government to use to settle the government's debts. It is hard to underestimate the importance of this fact! Had the government issued a trading-only currency for the people to use, it might have worked. But once the government tries to collect a tax (which is taking back the same money that it itself created) the system is doomed to the geometric progression. The people are then forced to charge one another more profit to satisfy the tax burden, but the government is simultaneously the unbalancing force. Thus the more it gives, the more it tries to collect. As the economy grows and compounds valuations, the deficit must grow and compound, too. This is inevitable because the government is such a large part of the economy. But, even if government didn't exist at all, my theory still explains how inflation would still be created. This explains the failure of primitive times, too, who also tried to trade for an advantage, or of empires, that all issued a currency and a tax. Therefore, it is not just the government that needs reform but also personal behaviors. We need to agree on a new idea to have progress. Taxes and inflation are symptoms of a flawed economic model, as are the deficit, trade wars, poverty and pollution.
The free market and invisible hand theory is based on the idea that things naturally balance. The growth of hedge funds, etc., is based on the theory that the market is inefficient, and takes advantage of the inefficiency. Both ideas are wrong. The economy is a machine, and like a machine it must be engineered and operated properly. Both engineering and operating require the conscious application of reason. Government and businesses both need a new understanding of their responsibilities and of how the economy operates. An economy without debt or inflation is easy to engineer. There needs to be a recognition that an economy with debt and inflation is bad, and a recognition of what has caused it to appear. We can be reasonably certain, that if we continue on the same course, the rises and swells of boom and bust will get considerably worse. Zero still acts as a fixed point. The bigger the numbers, the wilder the ride. If we do not collapse mathematically, we may well poison ourselves to death by destroying the environment trying to keep up with inflation. This is something the animal kingdom could never do.
The gap that we call profit is not healthy; it is the problem. Values become more important than the objects, and objects become more important than people. Everyone is conscious of the deficit. Everyone is aware of profit and inflation. What they need now is to understand how they are linked together:
The National Debt is the inverse of the profit/inflation in the private economy. Follow the math!
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Steve grew up in a family business, was a history major in college, and has owned a small business for 25 years. Practical experience (mistakes) have led him to recognize that political rhetoric and educated analysis often falls short of reality. (
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