WHAT PRODUCTION? WHAT PRODUCTS?
Tomorrow's Currency Value, What Production, Of Course, We're?
In reflecting on the vast range of stock activity, the activity must be assessed whether it is productive or counterproductive. The proof of the pudding will show up in the value of the currency, in the value of the common intermediate product by which producers exchange their products, their production time, their goods and services. It must be recalled that
the value of the currency tomorrow
If currency is used to merely acquire old products or old production, then it cannot be used to capitalize new production, to engineer new levels of productivity. Consequently, the product value of the currency will be cheapened, reflecting the drop in production; in other words, the currency will suffer inflation.
The cause of inflation is not the printing of money but the misdirection of human busytime away from actual production time. A human system of production suffers when polticians legalize greater income for merely handling the symbols of production than for actual production. Stockflation is a specific example in which the modern politicians and their necronomic advisors have stacked the odds against the capitalist, against people pursuing production profits through actual production.
By divorcing production symbols from production substance, necronomics allows more income for an hour of busytime pursuing inflationary returns from acquiring production rather than from capitalizing production with one's money. As a result, the human systems of production are less viable; economies are imbalanced. They lose real time while the symbols of time multiply.
The necronomists do not realize how the future value of the production system, the producers, and the products is tied to what type of production, producers, and products are stimulated today. In their narrow belief that inflation is from money presses or bond presses, they ignore the greater press which causes the vast, massive black hole of inflation: the special-interest press for legalized inflationary returns (legisflation). Legisflation transfers money through both the private and public coffers away from anti-inflationary production into inflationary activity.
The Special Presses Burdening the Well-wells
The special-interest press allows people to get more income without producing anymore goods or services, which is a nuance of the classical definition of inflation. By virtue of the special interest press, and the modern politicians of both parties people are rewarded for not productively using their busytime. The income is divorced from production. They respond to such reinforcement by ignoring production even more, despite the inevitable inflation.
The system of production is increasingly ladened with people imbued with the special-interest mentality: life owes them a better existence for producing no more than they presently are producing. This is true of the well-fared and the well-fixed, as well as the well-wells in the middle who pay for it all and foolishly think they can cope by striking or job-hopping. (Well-well? As in "Well, well, that's to bad.")
The well-wells need to wake up; they are producing all the legisflated, transferred wealth; their time is expropriated publicly by political taxation and privately by necronomic ratcheting. Only when the well-wells stop distracting themselves with ill-relevant, non-survival information will they start to own more of their production time. Only when they wake up to the simple ways of ignoring the politicians and avoiding the necronomists will they cease suffering inflationary erosion of income and savings. They, like all people, must continually ask the questions,
What production? What products? What producers?
And keep in mind that
of course, we're busy,
Since the dawn of the computer age, what have they been used for and who has been able to afford them? Computers can be programmed to do a lot of repetitious tasks to save people time. Who has been able to afford computers to save time? The large companies. They have constantly made inroads into more distant and smaller economic communities by virtue of computers cutting their overhead and allowing them to underbid local competition. Examples of this can be seen in the General Motors Acceptance Corporations (GMAC), the "convenient stores" and company-owned gas stations.
What disappeared? Most evidently the local savings and loans, the mom-and-pop stores, and the service stations disappeared. Less evidently, tax support for all levels of government disappeared with the advent of virtual economic colonialism that was not subject to many levels of taxation. Computers have served not only to centralize many services, but have done so in a counter-productive way. They have been used to put the local merchant out of business while simultaneously removing the capital not only from the local economy, but from the taxation structure. This process of reducing per capita income and the capita base of taxation is best described as "de-capitation."
As to the effect of computers on tax-supports, consider the following questions. Which would pay more tax-support for the same amount of income:
Ten Citicorp--"the friendly people"--outlets or ten locally owned savings and loans?
This computer-assisted activity removes money from communities which reduces local production and generate inflation.
Economic Colonialism: Absentee-Acquisitors
When income is ratcheted up to tax-exempted and tax-sheltered levels, more than taxes are lost from the communities. Local economic stimulation disappears as people allow money to be drained. The Keynesian lubrication of production with borrowed or printed money is negated--no products or production can multiply. Looking again at the previous comparison, which communities will thrive better? Another way of saying this question is: Will a community become economically productive or depressed if the services are subject to local-ownership or absentee-acquisitorship?
The role of computers in creating a nation-wide economically depressed zone can be described in terms of the concept of "velocity of circulation." Economically, America can be regarded as a lot of small economic units which are parts of larger economic units. The following progression should be easy to recognize: block, neighborhood, town, congressional district and nation. Prior to computers, money would circulate longer at the lower levels before it was "ratcheted" away to a distant or higher economic level. For example, before GMAC had computers, they could not compete with the local lender; consequently the money would stay in the local economy lubricating it the fashion of
Grandma's Law of Product Multiplication.
However, as computers have grown, the velocity of product circulation within the economic units has decreased. Computer technology has allowed the money to be drained away more quickly.
The irony of GMAC and the analog at Chrysler is how the drained economic blood has eliminated the demand for the automobiles produced by the auto industries. Each day that the subsidiaries of the auto industries drain economic blood from the distant communities is an additional day in which the demand for the automobiles will decrease. The following quotation shows how the pursuits of soppy income by draining local economies has resulted in imbalanced earnings and imbalanced economies:
The source of GM's profit for the year consisted of two nonoperating items--a $123 million tax credit and profit of $348 million from General Motors Acceptance Corp., the company's financing arm. Without each of those, GM would have had a $138 million loss for the year.
The same picture is true for General Electric: its financial arm drains the wealth that is needed to circulate and stimulate demand for appliances. For the fast buck, the manufacturing giants have lost the long buck.
Will the auto industry realize this and take corrective measures? No. These computer-assisted subsidiaries not only have a better return, but are now providing needed income for the overall balance sheet of the auto industries. However, eventually the economic demand for not only the cars will disappear as will the demand for loans. The auto industry is in a bigger mess than they realize, and management as well as labor must take the blame. The same is true of General Electric and its financial subsidiaries affecting a drop in local demand for GE appliances.
Where has the money gone? Where are products more rapidly circulating? The money has gone not only to other economic units distant from the economically colonialized local unit, but to tax-brackets that are able to use tax-exemptions or tax-shelters for de facto regressive tax. The effect is less taxes for the locally drained communities as well as the national community
More important than where the velocity of product circulation has increased is what kind of products have increased in circulation. A person can only eat so much or cut his hair so much. With his excess dough he stimulates non-essential busynesses that competes with the essential businesses for the available human resources. This competition initiates coflation.
Coflation is the inflationary process by which essential production must raise its prices in order to retain human resources (labor or management) in the face of counterproductive competition. Counterproductive, non-essential busynesses are most often funded by economic colonialism, or any form of inflationary returns; there are no production profits--products--behind their capitalization. Non-essential production imbalances a system of production when it is not capitalized with production profits.
Economic colonialism is grounded in the daily shopping habits of short-sighted people. Comparing only the immediate price savings, people often think they are getting the best deal by buying the cheaper of the two ... without considering the future consequences. Is it wise to save 10% by buying a distantly owned product with profits that will compete for essential goods and services. It is not wise because one will find his life plagued with coflation, the coflationary competition will cause a combination of product and employment shortages.
Would you give a gun to someone who might use it on you? Would you give an arsonist the match that would put you unwillingly out of work? No! Nor should you give or spend your money in ways that will generate acquisitionism instead of capitalism, that will generate coflation instead of currency stability. Instead of more freedom, you will have more foreign domination. The politicians, the necronomist and you who need to understand that
how currency is used today,
How have computers negated Keynesian Economics? The tax-dollars collected by the politicians from the well-wells no longer circulate very long in either the lower-class well-fared or the middle-class well-wells.
The economies of the middle-class are not stimulated when computers drain wealth away. Computers have allowed the tax-dollars to be drained (ratcheted) from the well-fared through increased absentee-acquisitors. The computer-assisted acquisition by-passes the middle-class, depriving them of the income which they previously had and were taxed for. The Keynesian lubrication--money originating as tax-dollars from the middle-class well-wells--ends up with the tax-exempted, tax-sheltered well-fixed.
The Causers Have Never Been The Saviors
Nowhere are computers being more counterproductively abused than in the manipulation of sopps: currencies, stocks and laws. All these sopps (and their political, necronomic manipulation) represent a ratcheting of wealth away from the productive to the least productive people in America per dollar of income. These sopphistic non-producers are the ones able to buy the politicians and able to arrange more legisflation. And November 4, 1980, will go down as a hall-mark for the acquisitor forces, i.e., the least productive individuals per dollar of income. They gained control of the economic apparatus for their own benefits. As noted earlier, the Reagan/Regan team cut manpower and jurisdiction of the SEC, the agency empowered to regulate the stock exchanges. Deregulating or elimination of a half-solution to a problem is no solution if the original problem behind the regulation is not simultaneously solved.
The Grand Acquisitor: Donald T. Regan
The Reagan appointment of Donald T. Regan, former head of Merrill Lynch, as Treasury Secretary shows which way the wind blows. Talk about letting the wolf into the chicken coop. Regan's millions are mostly in tax-exempt issues which he acquired as CEO of Merrill Lynch, acquired as an aficionado of tax-exemptions and tax-shelters. As Treasury Secretary he can't push tax-exemptions for everyone to fulfill his espousal of supply-side economics and tax-cuts. So who will he fight for? Will he fight for acquisitors like himself, for the non-capitalists who make killings of millions of dollars through acquiring production? Or will he fight for the small person in the middle class who produces a locally needed good or service? The writing should be on the wall; it is not dark before the dawn; rather, today's economic darkness is the dark before darker. How often are the causers also the saviors?
How does Merrill Lynch views its role in using the vast pool of capital which it controls? As the head of Merrill Lynch, Regan's acquisitions fit the mold, as the following quotation succinctly and colorfully describes:
The "Thundering Herd" of Wall Street is midway into expansion into the real estate, insurance and personal banking fields, among others.
But Regan is no longer in the private life. He is no longer actively re-organizing the ownership of production rather than capitalizing new production in a private way. His new, pivotal position in public life is more ominous for those suffering from production shortages due to money lubricating production acquisition rather than production expansion, as the following details.
And as Treasury Secretary, Mr. Regan is thought likely to advocate the easing of certain regulatory restrictions on both banks and brokerage firms, a move that could ultimately lead to a major restructuring of the way financial services are offered in this country
In better words, we will have more economic colonialization within a continually regressing system of production, more production shortages rather than expansion. All of which should make it quite cozy for Regan when he returns to private life.
When Regan is called an "Economic Broker", as one Wall Street Journal article was titled, the proper interpretation of the entitlement is that he will continue to "break" the American Economic System Of Production. Regan will promote a general centristric monopolization of a declining economy. Who by? By him and his, by those who control the symbols of production. Economic brokerage and breakage go hand in hand when production acquisition rules out production capitalization. Brokerage and breakage is something which Regan did to Wall Street itself on a small scale. He initiated "a step that led to a wave of mergers and insolvencies in the brokerage industry."
As his record shows, Mr. Regan's idea of fair and free competition is to deregulate the restrictions against the acquisitors who enslave Americans to a lower standard of living by decapitalizing production.
Will Ronald Reagan defend the small local capitalists against the acquisitive impact that are the targets of take-overs or price-underbidding? No, for a "Reagan Group Suggests Ending Programs Favoring Small Firms." Between Reagan and Regan capitalism per capita will decline as capitalism for a fewer few grows.
Mr. Regan, a manipulator of production symbols, neither understands nor could survive free and fair capitalism. For his necronomic record, without parallel, Donald T. Regan is worthy of the title
The Grand Acquisitor.
The Grand Liquidator: Never An Adult Production Dollar
When was the last time that Ronald Reagan earned a dollar of production profit? A movie production dollar is an entertainment dollar, and does not count. Could America survive if we all became entertainers? What did Reagan do in the years before his election? "He was in the business of giving speeches," noted one adviser. Were Reagan's speeches on how to increase productivity, to increase production profits, especially in those essential goods and services?
Mr. Reagan also told how he did well by buying and holding stocks in the 1950s and 1960s, but he advised his listeners that volatile conditions at the time of the seminar made it more prudent to build liquidity.
Liquidity? What if everyone pursued liquidity? People pursuing liquidity only make economic situations more "volatile"!
Liquidity means avoiding long-term investment for short-term liquid assets. Not only did Ronald Reagan preach the economic philosophy of the late 1920s, but he "put his money where his mouth was." More specifically, "Mr. Reagan sold virtually all his stock last year--$935,975--and put the money in a bank." What would happen if every American played follow-the-leader with Ronald Reagan preachings and actions? We would have a real soppy economy with production diluted to the point of being non-existent.
Furthermore, it is bunk that Reagan made his money. As another article on the same page reports, Reagan became a millionaire as a result of a very questionable land deal. A month before assuming the office of Governor in California, Reagan sold 236 acres of "very steep to precipitous land", i.e., no commercial value, to Twentieth-Century Fox for $8,178 per acre--a profit of 3,400%. Quite questionable is how the land was later sold to the State of California as a park by Fox.
Furthermore, Reagan's financial dealings were not his own dealings; they were the wheeling dealings of his long-time financial advisers. They became his political advisers--the same ones who told him to cool it during the campaign, that he talked too much.
Any claims by Reagan to esoteric economic knowledge is a lie as well as an illusion. Reagan himself has dispelled in growing steps any past claims to knowing ecos nomos. First, he stated that he had no "magical wand." Next he stated that the economy was in worse shape than they thought, followed by 'look at the problems we inherited'.
In conclusion, and to the detriment of all human systems of production, Ronald Reagan is no dumb actor. Having only achieved B-grade movie status, he is merely a would-be actor. Having questionable financial dealings in his past makes him a legal, but corrupt would-be actor. Sadly for the solid capitalists, Reagan has developed over the years an economic attitude that can be best described as financial hydrocephaly. Given his predilection in speech and in action for diluting production and given his presiding position, Ronald Reagan will go down in history as
The Grand Liquidator.
Ronald Reagan will preside over the greatest liquidation of a human system of production--America--that history has ever seen. As President, he presided over the dilution and liquidation of your job, your standard of living, and possibly your life. The causers have never been the saviors.
The Four Grand Necronomists: Nobelists, Not Nobilis
The December 15, 1980, issue of U.S. News and World Report contained excerpts from interviews with four American Nobel-prize winners. If the reader wants to have a better idea how America is unlucky when it comes to economists, read the interviews. Search for any relevance in the suggestions of these economists who represent the creme of the crop. If you read the article, actively search to see if any of these grand necronomists make the important distinction between acquiring and capitalizing production. See if any of them had the nobilis (knowledge) to come out against people acquiring production at the expense of capitalizing production?
One Nobelist--Klein--says that we need greater capital formation and suggest that we "tilt the tax system to encourage capital formation." As argued many times, if the capital is not used privately to engineer new levels of production or productivity, all the capital formation in the world will be less than for naught. If pooled capital is not restricted to productive capitalization, it is best that it never be pooled or formed. Klein does not realize this.
Klein, however, is not as far off base as the widget-wizard: Milton Friedman. Old "freedom to choose" has the simplistic, monetary attitude toward inflation. Note how he contradicts himself in the following statement.
Events such as crop shortages and oil-price increases send the price of those goods up relative to other things, but they don't produce inflation.
Are not price rises instances of inflation? The widget-wizard apparently will not semantically equate price rises due to shortages as an instance of inflation. He does not understand that inflation can be due to a reduction in the production of goods and services. That is the gist of not only the previous quotation, but the following blanket categorization by the Nobelist: "Controlling the growth of money is important because, ultimately, inflation is a monetary phenomenon--nothing else." Bullshit! Inflation existed before money was invented (see "Moneyless Inflation" in NOBILIS).
Our inflation rate today has consistently outstripped the growth of the money supply. Why has the inflation rate consistently been higher than the percentage growth of the money supply? Because the growing shortages of production relative to the demand. Why the production reduction? Because the Nobelists lack nobilis; they lack the knowledge to see that the policies affecting human busytime affect the future worth of currency. They do not understand how the money is used today affects the worth of the money tomorrow. They are full of cow droppings.
Not only are they full of counterproductive information, but the American people are stuck with these Nobelists using their accolades to influence further destruction of the American Economic System Of Production. A letter to the editor a few weeks after these interviews sums it up nicely.
It's obvious that you should have interviewed the Nobel Prize winners in economics from Japan, West Germany and Switzerland for the answer to prosperity without inflation. Or could it be that they owe their success to not having any noted economists guide them?
In a very real sense, the burden of these Nobelists rest on how their titles and accolades are merely symbols taken for substance long after the time when the symbols were granted ... if there was any substance to begin with. No, the causers have never been the saviors.
Minor Necronomists Hissing in the Wings
Some young turks have cropped up in the field of economics. However, since they are not practitioners of "ecos nomos", they must be questioned as to whether they are not merely a new breed of old necronomists. For the sufficiently read reader, do Laffer, Kemp, Roth, or Stockman say anything about the diversion of human resources from the capitalization of production to the mere speculative aquisition of production? No. Do they argue against the financial transactions on Wall Street--over 90%--that are decapitalistic in nature? No. Do any of these front page gurus understand, let alone propound, how currency use today affects the product value of currency tomorrow? No. For whom do these petite necronomists work? The people as a whole? No. Working only for a part at the expense of the whole makes them carcinomic necronomists like all the rest.
Arthur Laffer became famous for a curve which shows how his understanding is either limited in perception of the whole or biased to portray the whole in terms of qualified terms benefitting his corporate angels. Laffer says that the rate of taxation can be compared to the total amount of taxes collected by the government. At the minimum extreme of the tax rate, the government would collect nothing because zero taxation yields no tax receipts. At the other extreme taxation rate--100%--the government would collect nothing because no one would work if the government took all they earned in the form of taxes.
Laffer states that with rising taxation the government collects more revenues up to some undiscernible point beyond which revenues decline as the tax rate increase. Within its stated boundaries, Laffer's curve is plausible. It's limitations become evident if restated in terms of how the human resources within an economy are directed. Taxes are collected in the first place to hire people to solve problems which the taxed people do not solve themselves. The rate of taxation is inconsequential compared to whether the government directs the money into solving problems more efficiently than the people can themselves. Laffer's Curve loses meaning when a given rate of taxation is qualified by whether the government efficiently or deficiently uses the money, for if the government does not efficiently use the money, then the people still have the burden and cost of unsolved problems. Oppositely, if the government directs the pooled money of the people into solving more problems than if they paid no taxes at all, then a given rate of taxation is a bargain for the people. Rhetorically stated: Would you rather pay 0% taxation and live in a violent jungle, or would you prefer a 75% tax rate in which you had no problems at all? The issue is not rate of taxation, but efficiency of tax usage. As productive policy makers, the corrupt and incompetent legisflators of both major parties fail.
Laffer's Curve is a nuance of a more important economic curve, one reflecting how human time is directed and whether time is directed in productive or destructive ways. Efficient use of tax dollars is organizing people to solve rather than ignore problems. As increasing amounts of human resources switch from productive activity to counterproductive activity, the teeter-totter of civilization approaches the point where more resources are being consumed than are being produced. This is true not only of how tax-dollars are used but the dollars in the citizens' hands.
At the point of more consumption than production, humanity is running out of time; the creation of more time has stopped. Rather than being merely Laffer's Curve of counterproductive over-taxation, this is larger curve--depicting both the private and public usage of human resources--is the Sadness Curve.
The Sadness Curve
The Sadness Curve contains not only Laffer's little, distracting, cocktail-party joke, but the more important and massive economic black hole in the private sector that misdirects human resources. By this, it is meant the tolerance of old production acquisition rather than new production capitalization with pooled capital. It is the Sadness Curve because of the human tragedy caused by misdirection of human resources.
On Wall Street the Sadness Curve is expressed in how less than 10% of the pooled money capitalizes new production. Of that minute sum, very little is directed into expanding or maintaining production/productivity in the coflated essential goods and services.
The new money venture-capital companies get from public stock sales likely will go mostly to high-technology companies because they've shown the biggest payoff.
Payoff in what? Dollars? Inflation? Shortages? Unemployment? Taxation? Violence?
Consider how Salomon Brothers, a brokerage firm much smaller than Merrill Lynch, "currently trades an average of $4.6 billion in securities a day." In a trading year of 250 days, that is $1.15 trillion or almost twice as much wealth as the Federal Budget--and Salomon Brothers is but the fourth largest brokerage firm, eclipsed by Merrill Lynch, Shearson, and E.F. Hutton. The biggest diversion of human resources into counter-productive activity, the biggest and fastest sacred cows are in the private sphere where more money is misdirected.
Summary: The Biggest and Fastest Redistribution
The toleration and institutionalization of production acquisition, in place of production capitalization, is part of the greatest, biggest, and fastest redistribution of wealth that has ever taken place. Transfer of wealth through the government doles is small in comparison. All the new, nebulous financial instruments, with which the necronomists bombard the under-educated people, provide means for the sopphist to ratchet wealth away from the unsuspecting. Has humanity ever since such a well-organized rush to destroy a system of production?
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