America as well as humanity suffers from the laws of the dead and dying of which necronomic monetarism is a part. Necronomic monetarism involves monetary policies which cause a regression production per capita and the associated standard of living. Among these necrotic policies are the pursuit of inflationary income by acquisition loans instead of production profits by capitalistic loans. Another is constricting the money supply and production in the belief that inflation will thereby stop, despite the historical role of production shortages in generating the overall inflation rate.

A more productive form of monetarism is needed and should be so titled. As a monetary policy, productive monetarism should retain the viable elements of necronomics while laying to rest the necrotic parts. The premises of productive monetarism are logical and should become legalities.

Piecemeal Productive Monetarism Is Not Productive

On occasion, the Federal Reserve System directly channels some of its freshly printed sopps into the federal budget. These occasions occur when private individuals find some financial instruments paying more interest at the moment than the Treasury is willing to pay in interest for its bonds. Treasury bonds are used to finance deficit spending when tax revenues are insufficient. In August of 1980 the Fed held nearly $125 billion in Treasury issues which comprise the $1 trillion National Debt. This action by the Fed in not productive monetarism. Rather, it is "piecemeal monetarism", using the budgetary/taxation process not to eliminate taxation but to compensate for missing taxes.

Piecemeal monetarism aggravates the counterproductiveness of necronomics in general. Piecemeal monetarism allows those financial speculators to have an additional source of non-productive inflationary income. For no reason are they committed to buying T-bills. If they can't get their non-production return, they'll stick the Fed with the buying of the Treasury-issue. So far the Fed has injected $150 billion into the money supply because the private inflation chaser chose to swim elsewhere with their liquid assets.

When private levels of inflationary income are insufficient relative to T-bills, the inflation chaser buys T-bills. If T-bills were not available, the inflation chaser might on occasion direct some of his volatile liquidity into production. As is, necronomic monetarism provides an additional non-production field in which to speculate.

Gambler's Discount Window for Playing the Spread

Another example of necronomic monetarism previously discussed in other chapters is the Discount Window of the Federal Reserve System. The discount window is where banks can borrow some of the money which the Fed prints out of thin air. There is one big difference between the Fed and its counterparts in other countries:

the discount rate charged by the Federal Reserve banks on such borrowing is not ordinarily put at punitive or severe penalty levels--thus, contrary to practice in many countries, the central bank does not always maintain its interest rate well above those prevailing on marketable money market instruments.

This quotation (which the necronomists should read more often) means that the Fed lends money to bankers at interest rates below the interest rates in other markets. How productive is this? Does it promote responsible banking in which the bankers are sensitive to the needs of the small saver who might remove his few dollars from the loan pools that bankers assemble? No. Bankers can always borrow from the Fed without having to inconvenience themselves with the small saver.

The previous quotation (on how the discount rate is consistently below the rates in the other money market instruments) means a certain kind of window is open. The disparity between the discount rate, the prime, and the Treasury issues opens a window for much abuse of the expansion of the money supply. If one had access to loans from the Federal Reserve System, one could borrow from one branch of the government so as to purchase other governmental-issued sopps with a higher interest rate. For example, there have been times when the discount rate has been as much as 4% points below the accepted prices for Treasury notes.

The unusual nature--no other industrial nation keeps its discount rate below the prime interest rate, e.g., Germany,--allows the existence of a very exclusive club. The members have the privilege of borrowing from one branch of the government and transferring to another branch with a huge service fee. For example, if a bank borrowed a million dollars from the Fed at 13% and bought T-bills at 17% the bank would have a gain of $40,000 on a yearly basis. Not bad for merely touching a few buttons every two weeks. Not bad for doing something that the Fed could have done itself and, by so doing, saved the tax-payers some interest costs on the national debt.

This exclusive club is a gamblers' paradise with a 'can't lose' spread or window for those lucky enough to play. For their gain the gamblers do nothing more than make two Electronic Transfers of Funds. The no-lose intermediate did nothing more than what the Fed could have done itself. The gist of this necronomic monetaristic "discount window" for the well-fixed is that the interest costs on the National Debt is a lot more than what it otherwise would be. Concomitantly, the Debt itself is larger than it should be.

Who pays for this gamblers' paradise. After all, it is an illusion that someone can get something for nothing. Who pays? The tax-payer pays through the nose with all the retched elements of inflation, unemployment, over-taxation, and violence. Of course, a previous quotation in this chapter expressed how there is "continuous surveillance of the borrowing banks" against abuses. What a conceptual and practical farce. One need only recall certain other quotations to realize that "Big money usually finds a way." Or, consider some of Chairman Volcker's double-talk on how the more the banks borrow through the discount windows, the more the Fed is in control ... or mere contact? Volcker confuses rate of contact with degree of control. Using his rationale, one could say that the person who was mugged most frequently was the person with the greatest control over muggers.

Bankers Like Small Savers?

Beware of the bankers' argument that they want small savers because of the lower interest cost on borrowing money through the small person's savings. This PR bunk, and the perusal of the Wall Street Journal provides increasing examples of bankers avoiding small saver services or worse:

Banks all over the country are pursuing a marketing strategy known as "segmentation." In its crudest application, segmentation involves figuring who the richest and biggest customers are, showering them with favors, freebies and other inducements to open their accounts and, if necessary, as it often is, raising rates and fees to the less-affluent to pay for it all.

The $50.6 billion Morgan Guaranty Trust Co. did not abandon its retail clients completely; it simply instituted a $60 monthly fee on checking accounts with balances of less than $5,000, a quick way of brushing aside all but the well off.

The necrotic consequences of these private, monetary practices are economic instability for those squeezed out from banking services. Sure, they can go elsewhere but not without losing some of the benefits that come from having had a long-standing account. As for segmentation, it is necrotic for the small saver to subsidize the wealthy.

Besides these two negative aspects of private, monetary policies, the small person who saves with a bank must consider the greater necrosis of what the Does the bank where you lend your money in the form of savings and checking make productive or destructive loans, capitalistic or acquisitive loans? Did you contribute to the acquisition loans that went to Seagrams, Texaco, or Dupont in which your job or buying power was squeezed?

More Qualifications by Necronomic Monetarism

In 1980-81, much private and public talk centered around tax-cuts, both general across-the-board tax-cuts and specific tax-cuts for certain individuals and industries. All these ideas amount to more qualifications of necronomics, as a theory for describing a system of production and for prescribing cures to any developing illnesses. That necronomics consistently needs additional qualifications indicates that it is dying the death of a thousand qualifications; in other words, necronomists have a few basic faulty premises which they must consistently qualify in order for the premises to remain acceptable. Unfortunately, necronomics is used to direct actual human production; civilization, too, is dying the death of a thousand qualifications.

Our sick economy has a festering wound burdened with layers-upon-layers of old, stale bandages. These rags (sopps) are not only festering and rotting themselves but prevent the fresh air needed to heal the wounds--recessed production suffers from the resources tied-up in speculation and acquisition of old, stale stocks. Many of the necronomic suggestions--further qualifications--are merely new bandages that will one day become obscured under later bandages. The wounds continue to be untreated, to fester, and to become gangrene. As such, necronomic cures are not only worse than the previous treatment, but totally obscure an awareness or diagnosis of the original disease.

One example of their misdiagnosing the illness is how they categorize people who merely acquire, streamline, and reduce production as being capitalists who capitalize, engineer, and expand production. As noted in the chapters on stockflation, less than 10% of the volume on Wall Street actually capitalizes new production or new levels of productivity. The vast majority of the brokerage activity is competition to "acquire" old existing production, e.g., take-overs or speculation. This gradual, unacknowledged shift from capitalizing production to acquiring production has been going on in the banking institution, e.g., Seagram's $3 billion 'no strings attached' acquisition loan. This necrotic monetary act but a sore thumb tip of a necronomic hand that is chilling all the human systems of production.

The abandonment of capitalism for acquisitionism inappropriately under the banners of capitalism is the original wound which the necronomists misdiagnosed or ignore. Their ignorance is showing up in their prescription for our economic ills. Foremost of their new band-aid solution is the tax-cuts epitomized in the Kemp-Roth bill based on the necronomic tinkering called the Laffer Curve. The gist of this package of necronomic skullduggery is that a tax-cut will stimulate business and increase the tax-base so that tax revenues will increase. How much of the acquisition activity is taxed that is monopolizing the money supply? The necronomists do not take into account that the people receiving the largest tax-breaks will not be the small person or the big productive capitalists. Rather, the big breaks will under the Kemp-Roth bill go to the acquisitors, to the streamlining decapitators of industries and individuals.

Productive Monetary Principles

The following principles are repetitions or derivations of the previous assumptions on how a money supply, a nation's currency, should be productively changed. Comparison to their absence in necronomics is presented.]

1. Currency Stability: Neither Inflation Nor Deflation.

The currency in a system of production should suffer neither inflation nor deflation. The lack of currency stability leads to people diverting their human resources away from more useful production into pursuing income from speculating into either inflation or deflation.

2. Currency Should Correspond to the Amount of Production.

To prevent the counterproductiveness of currency instability, the expansion of the currency should correspond to the amount of production in a system of production. If the currency supply expands faster than production, then inflation will result. If the currency supply does not expand at a rate corresponding to the production system, or the system's potential, production will be retarded and eventually reduced as the evils of deflation begin to take their toll. Necronomics has a long record of rocking production through periods of deflation (1930s) or inflation (1960s, plus as well as previous times).

3. Currency supply per system: Sum of currency worth per capita.

The expansion of a currency supply should parallel, mimic, and sum-up the individuals' increased worth within a system of production. As a person should not be paid more than he is "currently" worth, nor should a system of production expand its money supply faster than what it is "currently" worth. At face value, it would seem obvious that a nations' money supply should not only reflect the principle of individual compensation for one's current worth, but should be a summation of current worth of each of the persons within the system of production.

Necronomics divorces the connection between the individual's current worth and what he should be compensated. Similarly, it fragments the association of a nation's current worth with variations in the currency supply, i.e., provides the basis for monetary colonialism by one nation of many other economies. If necronomists married the symbols of worth to the substance of worth, they would have to pay damages for their counterproductive "fine tuning" of the human systems of production.

4. Money Supply Growth Determinants.

The currency of a nation should be expanded simultaneously with the expansion of production or productivity. It should not be expanded at a rate faster than the potential of production with the mistaken belief that production will automatically follow. This is what the necronomists believe as they concern themselves with setting money-growth "targets" without any previous assessment of the economic production levels.

If allowed to become inflated by counterproductive use of currency, then the currency supply cannot be expanded because inflation due to production short-falls is occurring. The Federal Reserve System under Volcker failscha to understand this very crucial point. Even 1% monetary growth is bad when sinflation is occurring due to misuse of the existing currency; at times of sinflation, any monetary growth (monflation) merely multiplies the problems.

5. Where Money Circulates Today Determines Product Worth Tomorrow.

It must be realized that in order to prevent inflation, part of the battle is controlling not merely the quantitative size of the money, but the qualitative nature. Namely, what quality of production is being stimulated at the expense of another quality or kind of production. If non-essential busynesses have a growing monopoly on the money supply, as is the case 1980-81, then the essential production will fall as it is cash-starved; the essentials are crowded out of the money markets. Nowhere within their quantitative computerized models do the necronomists give thought to quality. Nowhere do the necronomists realize the shortage nature behind most inflation, both historically and today. Nowhere do the necronomists make the simple, common sensical observation that

where the money circulates today,
determines the product worth of currency tomorrow.

If money does not circulate in production, fewer products will be produced tomorrow; consequently, the currency will be able to buy fewer products. Said another way, it will take more currency to buy a given product because there will be fewer products: sinflation.

It is a sin when production is mismanaged so that a system of production becomes imbalanced. Sinful are policy makers who laden a system with expanding, non-essential busynesses when essential busynesses are collapsing. Sins have occurred against humanity when acquisitors metastasize while production capitalists falter.

Specific steps by which productive monetarism can be instituted will not be written herein. Reasons for the lack of specificity stem mostly from the track record of the modern politicians and their sidekicks, the necronomists. In addition, and more importantly, it is futile to offer the benefits of democracy if there is not a democratic, policy making process whereby

divisions of people can rule

on the acceptance or rejection of solutions to their inflationary, time-wasting problems.

Warning: Anyone found stealing lifehours will be forever banned from participation in and rewards of Better Democracy and Capitalism.


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