FEDERAL RESERVE: IT CUTS THE WORKWEEK!
Inflation: An Inflated Word
To assess a person's naivete, ask the nature and source of inflation. If the answer is "cheapening of money" then the cheapening of human life will not end. Inflation of money is an index of human suffering from many sources. Why is inflation of money merely an index? It is a form of currency, the common intermediate product by which producers exchange their time in producing goods and services.
Inflation figures are to human suffering as a thermometer is to a cold house. The thermometer is not the heating system. It merely indexes coldness, e.g., no furnace, no fuel, open doors, no insulation, broken windows and gapped ceilings. Inflation figures index a whole range of human theft, dishonesty, greed, ignorance and naivete. Some ways to increase inflationary suffering are:
These human actions cause more inflation than interest rates. To think one can cure inflation with interest rate changes is like thinking one can melt the Arctic icecap by raising the thermostat setting on an empty Coleman heater.
The United States has had an artificially booming economy because of its ability to export inflation and unemployment through the dollar. The dollar is the de facto world's currency. In effect, we colonize other countries through our money: Monetary Colonialism.(2)
The United States, through the actions of its habitual politicians, has become an "economic junkie" addicted to extracting real goods and services in exchange for paper money. Countries accepting our dollars suffer a loss of needed goods and services that undermines and imbalances their economy. As dollars become concentrated in the hands of a few at the top, these people have left their unstable economies to relocate elsewhere.
This cannot last. Monetary colonialism is like a cancer extracting needed nutrients from organs upon which the whole body depends. The undermined, imbalanced foreign economies will collapse, no longer able to export goods and services the U.S. has come to depend on. The U.S. will collapse when monetary colonialism has destroyed enough countries in the world community.
When the rest of the world can no longer be colonized by our money, then we will face a most terrible day of reckoning. We will suffer delirium tremens like the worst drug addict in withdrawal. We will experience social unrest and upheaval on an unprecedented level. Violence and crime will rule our lives.
It need not be. The reforms of 24 in 4 can prevent it.
Problems at the FED
The Federal Reserve System's main role is to help the economy by managing the money supply, a task it performs in several ways. If its members had a human understanding of inflation and currency, the FED would be a better financial institution. What can the FED do better?
First and foremost, stop using higher interest and unemployment rates to fight inflation; start using a reduction of the workweek.
Secondly, expand the money supply through citizens who help America with community service rather than banks; the banks will get the money as deposits. With the offered universal, telecommunication timeclock and payroll, people can do community work. On a regular basis, tax credits would be given as a profit-sharing dividend to community servers.
Thirdly, introduce a national credit card with the interest receipts being used to pay off the national debt; banks make great returns which they use to buy other banks.
The proposed first step to a 24-hour workweek (one percent loan refinancing) recaptures the lost opportunities that the Federal Reserve System squandered each time it stifled a robust economy with high prime interest rates instead of workweek reduction. The U.S. should follow the example of all major religions in limiting usury.
Usury: Useless Loans
Why do religions have strictures against usury (i.e., use fees on loans)? They know that as interest rates increase, counterproductive loans increase and the productivity of people decreases. Usury is, in essence, an unnecessary legal Ponzi scheme, a pyramid. Should a society tolerate a financial arrangement that reduces production and producers?
Counterproductive loans. If you could not receive interest on your money, would you lend your money to farmers or drug dealers? Which loan would lower or inflate the price of basic foodstuffs? Which loan might cause farmers not to have money for planting? Which loan might cause farm workers not to work? Suppose farmers were able to pay 10% interest while drug dealers are willing to pay 100%. Who would you lend your money to? Do you think that some people will overlook the big picture of lost farm production and workers to have the 100% return on money? Will food prices increase or decrease?
The farmer/drug dealer analogy shows the production and inflation impact of higher interest rates. One could draw a graph comparing interest rates against loan efficacy. Loan productiveness is defined here as activity that solves real human problems and creates real human wealth. Loans measured solely in dollars generated could lead a lender to say to starving people, "Let them eat the good interest rate!" As interest rates increase, more and more counterproductive, speculative loans are made. The Savings and Loan Collapse is a case study of the continuum between zero interest and unlimited usury rates.
Legal Ponzi Schemes. As loans take on a speculative, counterproductive nature, there is less creation of real wealth that solves human problems. At a certain point in interest rates, people are not getting interest from newly created wealth but from other people's investing money in the scheme. Social Security is a legal, enforced, Ponzi scheme. Unlimited interest rates are a legal Ponzi Scheme based on ignorance. Currency-based derivatives are another legal Ponzi Scheme based on ignorance: promised high interest rates based on paper speculation. All Ponzi schemes collapse. Usury is the most subtle and pervasive scheme with an inevitable collapse if it is continued beyond a certain point--like Las Vegas slot machines, the house will ultimately win, not the players.
Investing Money. As a member of society, would you rather people invest in high interest or high productivity? Consider tithing, giving 10% of one's income to one's church. Believers give money because they know the money will be used to make their lives better. Strictures against usury would prompt people to consider the full, long-term, big picture impact of their loans as they evaluate the churches and charities to which they give. Charitable giving is investing without expected return of interest or principle.
If no interest were allowed on money, then people would lend money only if they knew the loans would make their world better. Without limits on interest rates, people will make loans that might be harmful to others because of the high return (e.g., a 100% interest loan to a drug dealer who can make 500% on selling drugs.)
Established religions look at all of humanity. Politicians who control interest rates look only at their own re-election. We would not have had the Savings and Loan collapse if the politicians had not taken the lid off of interest rates for their friends, campaign contributors (e.g., the Keating Five.) As a result, S&L's competed for available money by bidding up interest rates with increasingly highly speculative loans. As loan interest rates increase, speculative, counterproductive loans increase with a detrimental impact on the society. This is why religions have restrictions on usury. This is why an enlightened society should have restrictions. Will the habitual politicians who benefit from high interest rates change the laws?
As interest rates increase, people turn from creating wealth to speculating in the symbols of wealth. Pragmatically, the higher the interest rate allowed on the symbols of wealth, the less people look to creating wealth to survive. Creating wealth comes from solving problems. With high interest rates, people speculate on old symbols of wealth for income. As interest rates rise, production becomes limited and imbalanced. Producers turn to counterproductive activity. An enlightened society limits usury.
We should have 1% loans with a gradual reduction of the workweek as the key to time-savings technology and expanding population. The continual, gradual drop in prices (productive deflation) will give people increased buying power for their earned income or passive principle. In a lifetime, which system would you rather live in:
Current system: Unrestricted loan interest rates and 5% interest on savings with 5% inflation, or,
Proposed system: 1% loan interest rates and 0% interest on savings with productive deflation (-1% to -2%) on total income?
With option A, a person loses buying power each year. With Option B, a person gains buying power. At retirement, the savings of Option B will have more buying power without interest income.
Accumulated dollars are irrelevant. Relevant is how much labor, work time, or lifehours* of buying power you have stored in your savings. Would you rather have as a savings: the equivalent of 5,000 or 10,000 hours in labor? Said another way, which is more important, dollars or buying power. Which is a better savings and retirement environment?
A. $1,000,000 in savings with wages at $200/hour--a savings account of 5,000 average lifehours at labor, or,
B. $10,000 in savings with wages at $1/hour--a savings acccount of 10,000 average lifehours at labor?
Would you rather have bread cost 10 minutes or 1 hour of average labor when you retire? Option A is counterproductive compared to Option B. Which option do the the Federal Reserve System and the politicians promote? Sadly, most people will opt for higher interest rates like a captain trying to save a sinking ship by trying to remove the water by drilling another hole in the bottom.
The Evolving Battles
A number of social issues are evolving to the point of great political debate.
I. The basic issue of social security is whether the younger generation should be taxed to fund the monthly checks that exceed the dollars saved through Social Security. If another pension system is not started, Social Security will reform itself through collapse.
II. Another issue is who should benefit from the money supply: the nation or the banks.
III. Similar is whether those with money should get high passive returns at the expense of those who are actively working. In other words, how much should the symbols take from the substance of time at work?
The core theme in the above issues can be summed up in one question: What is a person's time worth?
The flaw of Social Security is that everyone's time is worth more than it really is. People consistently get more from Social Security than they put in. This is a pyramid scheme that has to fail with the last forced contributors getting nothing for their pay-ins.
The flaw with the money supply is that bankers get first benefit from an expansion of the money supply: cheap dollars at the FED's discount window. An expansion of the money supply should go through the citizens with the inevitable deposit in banks.
The flaw in paying high interest on symbols is that people pursue the symbols of wealth rather than the substance of wealth. What is the substance of wealth? Solving real human problems. As interest payments rise, humanity has fewer problems solved. The most obvious is unemployment and recession from high interest rates. Less obvious is the diversion of the best and the brightest from solving food, shelter, medical, engineering and human problems into the manipulation of symbols for high income.
In Ten Years, do you want ...
If the FED had, over the years, reduced the workweek then we would have lower taxes and interest, less crime and debt. Why didn't it? Again, it has a basic flaw in its theoretical foundation, emphasizing symbols over substance. And, the people with big dollars want high interest return on their symbols. Thus, the FED suffers intellectual and political shortcomings. In ten or fifty years, do you want more taxes, crime, interest and debt, or a better quality of life with a shorter workweek in a safer, saner world?
Rapidly Re-Capturing Lost Workweek Reduction
When one understands the flaw in the FED's theoretical foundation and its political pressure, one recognizes that the years of lost workweek reductions can be recaptured quickly through the very tool that the FED wielded falsely: loan interest rates. The steps to a 24-hour workweek in 4 years begins with refinancing loans to 1% with the recipients working a corresponding shorter workweek: same disposable income after interest payments! Probably more disposable income since the recipient is in a lower tax bracket!
Why the FED Won't Change
Like all politicized bureaucracies, the politically appointed members of the Federal Reserve System fail to help Americans as a whole because the members are covering their derrieres. Self-serving greed and career concerns complicates the matter more. The original purpose of the FED was to serve the banking community rather than the American community. More problematic is how the FED does not understand that currency is a symbol of our time. This reflects the field of economics as a whole. As a result, the necronomists (bad economists) try to improve the quality of our lives by manipulating paper values.
Will the FED adjust its approach to fine-tuning the economy? No. It would require an admission of having been theoretically and morally wrong since its inception. In addition, "NIH" will affect their actions: Not Invented Here. Unbridled greed and political pressure will keep the FED converting the time-savings of technology into unemployment instead of a shorter workweek. Only the wholesale retirement of symbol-oriented board members through a political renaissance will help people own the sweat of their brows.
Historical and Cultural Commentary
Regarding the Great Depression, could we have recovered without war if the government had fought 25% unemployment with a mandatory cut in the workweek by 25%? Yes. Would there have been a Holocaust and Second World War if the national leaders in Germany had shared the hardship by sharing the work? Would Northern Ireland have its unemployment-catalyzed violence if work was shared? Probably not in both instances.
1. These are sub-chapter listings of "Inflation is...." in Necronomics: The Killing Laws, a 162-page book by the author--see inside back cover for more information.
2. This summarizes a chapter in Necronomics: The Killing Laws.
If you have questions or comments, you can democratize them at On-Line Forum as well as review others' input.
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