EOnation: The Whole Divine Law Now, Or Apocalypse Later

[WesBurt@aol.com]

To: A few friends on the Internet

Merry Christmas folks,

In a recent post which discussed the global model at URL
 http://www.freespeech.org/darves/bert.html,
 I wrote, among other things:

>>
* How much money is used to run the US economy?  Is it M1,
 M2, M3, L, Federal Debt, or total national debt?
<<

A loyal Devil's Advocate replied on mail list SocialTechnology@egroups:

>>
 Define "run" in this context.
<<

Maybe I should have rephrased the question this way: 

>>
How much money is used to produce the annual output of goods 
and services which we call the US gross national product?  
<<

But, being without any formal training in logical debate, I simply 
answered the question at some length, as follows:

<<
The only "money" in the economy is M1, which circulates 
in two paths.  About 60% of the total annual flow of M1 is 
from one business or government agency to other businesses 
or government agencies as payment for goods or services.  
The other 40% of the total annual flow of M1 is from 
businesses or government agencies to the people, as wages, 
salaries, interest, and dividends.  The amount of M1 needed 
to "run" the economy, is the amount of money necessary to 
enable the collective national Paymaster and collective national 
Purchasing Manager to sustain the total flow of M1 without 
having their checks bounce for lack of funds.  

A rough estimate of M1, good enough for engineering work, 
is the sum of: the GNP (40% of total) divided by 52 (weekly 
payroll), plus, the purchased material transactions (150% 
of GNP or 60% of total) divided by 12 (monthly settlement 
of accounts).

>From Figure 6 of Burt's global model, in which the US GNP 
per capita is raised to the 1994 Swiss level of $37,180/year
GNP ...........= $8,426 billion/year divided by 52 ...= $162 billion
Bus. Trans. = $12,643 billoin/year divided by 12 = $1,053 billion
M1 on Fig. 6 = $1,473 billion....... Eng. estimate = $1,215 billion

That engineering estimate is close enough to show that the 
US economy "runs" on M1, not on M2, M3, L, Federal Debt, 
or total national debt.  To the best of my knowledge, only one 
of the many "monetary reformers" on the Internet has taken 
notice of the fact that M1 in 1999 had declined by about 5% 
from the 1994 level of $1,148 billion shown on Figure 2-3 of 
Burt's global model.  That serious reformer is  Stephen 
Zarlenga, of the AMERICAN MONETARY INSTITUTE, at URL: 
http://www.monetary.org

As periodic payment by check is displaced by wire transfer 
payments in real time, I would expect the amount of M1, 
needed to "run" the US or any other economy, to continue 
its downward trend unless offset by high growth rates.

Thanks again, loyal Devil's Advocate, for helping to bring this 
question into the day light. 

Warm regards,

Wes Burt
<<

>>>>>>>> End, answered at some length <<<<<<<<<

My loyal Devil's Advocate then commented as follows:

>>
WHAT I ASKED FOR, quite simply, was A DEFINITION OF YOUR 
USAGE OF THE WORD 'RUN' IN CONTEXT.

I cannot understand your oblique Obscurantist response. More 
Inductivist talking in riddles? Or just self indulgent pontification? 
Because, communication has not been achieved by you.

Again, you need to state your hypotheses clearly and explicitly, 
and then present the supporting evidence, and actually explain 
it's relevance and pertinence. Otherwise, only your own expert 
in crowd, if any, will even care, much less understand or agree.
<<

Fortunately for me, my only potential audience on the Internet 
is the ten and eleven year olds who have mastered sixth grade 
arithmetic but have not yet become masters of logical debate.  
Today, as in 1541, when Rene Descartes wrote to The Faculty 
Of Theology at Paris concerning his "Meditations DE Prima 
Philosophia:"

>>
"It is different in philosophy, where it is believed that there is 
nothing about which it is not possible to argue on either side.  
Thus few people engage in the search for truth, and many, 
who wish to acquire a reputation as clever thinkers, bend all 
their efforts to arrogant opposition to the most obvious truths. 
----- That is why, Gentlemen, since my arguments belong to 
philosophy, however strong they may be, I do not suppose 
that they will have any effect unless you take them under 
your protection."
<<
>>>>>> End, 1641 world view of Rene Descartes <<<<<<<

Now, few friends on the Internet, having clearly in mind just how 
much of M1 flows from corporations and government agencies 
to the people (Dollars per year) and back to the corporations 
and government agencies in the continuous process of producing 
the annual output of goods and services (GNP), we can acquire 
a better understanding of the two hundred year profile of the US 
Consumer Price Index shown in Figure 10 of the global model.

>From colonial times to the 1890s there was a steady increase in 
the value of our circulating medium of exchange M1, and inflation 
occurred only while the US was at war.  That was a stable, 
self-regulating, mode of economic operation which was unique to 
the US, and quite natural to a nation of small proprietors where 
land was plentiful and ownership of real property was encouraged.   

To the contrary, since the 1890s, the value of the dollar has 
declined steadily at 2-3%/year accompanied by 4-10% 
unemployment with a net 5% of GNP deficiency of purchasing 
power among the lower income part of the workforce and among 
the businesses which supply goods and services to the lower
income part of the workforce.  It is this "deficiency of purchasing 
power" which makes "alternative currencies" appear so attractive, 
and has engaged the attention of every economist and reformer 
of the last four centuries.  But that "deficiency of purchasing 
power" has not been caused by defects in the monetary system, 
at any time during the last four centuries.  The US monetary 
system has always been as nearly perfect as human ingenuity 
could make it.  There are no bankers putting guns to people's 
heads to force the public and the government to incur the levels 
of debt we see today.  M1 is the only money measure which 
acquires its value by being spent into circulation at market 
prices by corporate or government employers.  

All of the other money measures are titles to wealth already 
produced, or, titles to a specific rate of flow of outstanding M1 
(interest, dividends, or usury) for a specific period of time.  
The value of these titles may vary due to supply and demand 
or speculative activity, but these variations do not signify the 
issue of new M1.  Nevertheless, the trend of the twentieth 
century as shown on Figure 10 of the global model has been 
based on a sustained increase of real GNP per capita, a 
sustained increase in population, and a sustained increase of 
he combined quantify and velocity of M1.  But the worm turned 
in 1994, according to Stephen Zarlenga, of the AMERICAN 
MONETARY INSTITUTE, http://www.monetary.org, and M1 is 
now down about 5% from its 1994 high.

The subject does get complicated at the macro level, but the 
root cause of the trend becomes easier to identify when viewed 
at the micro level as illustrated in Figures 7-9, The Whole Divine 
Law, and expanded Figure 8b, "The US Systemic Defect Of 
Omission."  The only significant and independent variable in 
the whole national economy is the burden of support and 
education for dependents which falls as an annual expense 
on each member of the workforce.  Notice that members of 
the workforce generally increase their earning power over 
the first 25 years of their working careers, and would be 
better able to properly support elderly dependents later in their 
careers than they are able to properly support children early in 
their careers.  The conclusion to be drawn from Figure 8b is that 
the absence of an adequate family allowance from the US public 
revenue, for the support and higher education of dependent 
children, diminishes the effective demand for locally produced 
goods and services because families give top priority to the 
support and education of their children.  So the workforce gets 
fewer jobs, employers get a declining work ethic, and the world 
gets inflation even though Germany, Japan, and the other 
western European nations installed family allowances after World 
War II, because the US economy is still the largest economy in 
the global economy.  But, Germany, Japan, and the other western 
European nations now enjoy capital formation rates of 25% 
of GNP while the US lags behind with a 16% of GNP capital 
investment rate, according to my 1996 World Bank ATLAS.  

I can appreciate why the Europeans do not discuss this 
interesting topic, but I cannot understand why the American 
banking and business community submits to being demonized 
by radical mobs, rather than open a public debate on this 
issue and correct what ails the American economy.  Surely a 
US economy running at full employment and zero inflation 
would be more profitable for the banking and business 
community than our present condition is.

Cheer up folks.  In a few years I'll be dead and the Not Invented 
Here (NIH) syndrome will no longer be an obstacle to an open 
evaluation of Burt's global model at 
http://www.freespeech.org/darves/bert.html, and still the only 
technically valid global model on the Internet.

Kind regards and a happy new year,

Wes Burt