“Debt”-Based Dollar; Life-Economic Associative Matrix (LEAM); China

Commentary by Richard Kotlarz


Due to the length and scope of this writing, topics below are linked by title within the document for the reader's convenience. Simply click to locate the section you wish to review or return to.

. 1 - The “Debt”-Based Nature of the Dollar
..2 - How the Monetary Problem Unfolds
..3 - Producers, Consumers and the Market Cycle
..4 - The Hydraulic Loop Analogy
..5 - A Necessary Caveat
..6 - Summation of the Monetary Problem
..7 - The Hobson’s Choices
..8 - The Micro-, Macro- & Meta-Economies
..9 - Step # 1 (Micro) –Choose the Spirit and Culture of Money
10 - Step #2 (Macro) – Create a Monetization Picture
11 - Step #3 (Meta) - International Currency Normalization
12 - LEAM – The “Life-Economic Associative Matrix”
13 - LEAM – Its Associative Nature
14 - LEAM - An Ocean Analogy
15 - LEAM – As Three-Dimensional Bookkeeping
16 - LEAM – Its Holographic Nature
17 - LEAM - What Prevents it from Working Now?
18 - LEAM – The Question of Currency Speculation
19 - LEAM - Contrasted to a Single Global Currency
20 - LEAM - Transcending Economic Disruption
21 - The Question of Tariffs
22 - A Transition Scenario for Monetary Reform
23 - Non-Invasive Character of the LEAM
24 - The Question of the United Nations & World Government
25 - The China Problem
26 - The China Solution
27 - A New Future for China and the U.S.

The “Debt”-Based Nature of the Dollar:
Virtually every dollar in circulation has come into existence as the principal proceeds of a “loan” from a private bank.  The money the banker disperses does not come out of funds on deposit in his vault, but rather he creates the money with the “writing of the check”.  The borrower takes the check, and then goes out and spends the proceeds for whatever purpose he took out the loan to satisfy.  By the terms of the contract, the banker will demand to be paid back over a prescribed time period, not only the amount of the principal proceeds of the loan, but also a compounding “interest” charge.  It should be noted that a quantity of dollars equivalent to the principal were issued and spent into circulation, and so these are available in the money supply.  The credits required to pay back the “interest”, however, were never issued, and in fact do not exist.

It should be noted further that virtually every dollar in circulation came to be so under similar terms.  The borrower can be any individual or corporate entity (individual consumers, corporations, state and local governments), and even the Federal Government.  In the private sector the form of such loans run the gamut from house mortgages, to car payments, to student loans, to payday lending, to revolving lines of credit.  It is not commonly realized that when a consumer swipes a credit card for a retail purchase, the total that pops up on the register is newly created money that did not exist the moment before the swipe.  It represents the proceeds from a “loan” which the card holder has just contracted with a bank (which is why every credit card has the name of a bank on it). 

The aggregate of the principal proceeds from all bank loans being borrowed and spent into circulation constitutes the money supply.  The period of time between the borrowing and the payback (i.e. the “float”) is what gives this money duration so that it is available to circulate, thereby facilitating the process by which the monetary pool is formed and maintained.  Theoretically, the amount of money in circulation should be sufficient to pay back all those loans, but there is a hitch, and the problems it spawns are legion.  While the money necessary to pay back the principal of such loans is by the nature of the process made available, the credits required to “pay back” the “interest” are not.  The upshot is that the participants in the economy cannot on the whole pay their “debts” (principal plus “interest”), while still maintaining an adequate money supply.

But, one could say, loans are taken out and paid back all the time.  Where, then, is this “interest” money coming from?  The answer is that as people make “interest” payments on loans that come due, the money to do so is being subtracted from the principal proceeds of loans still in circulation (the “principal float”).  This creates a particular problem, which is that when the time comes for making payments on these later loans, the money supply will have experienced a net shortfall of funds available to pay back their principal amounts equal to the amount that was subtracted to make earlier “interest” payments, plus the holders of this latter “debt” will have to search about to find the money to “pay back” their “interest” as well.

If one does a bit of math (and it’s not much math) is evident that there is only one way that this situation can be managed.  That is, participants in the economy are effectively forced to borrow more money into circulation on a continuous basis so that the interest payments on old debt can be cash-flowed, and a money supply sufficient for the needs of commerce maintained.  What is more, this debt rotation must not only be kept up, but increased on an exponential basis to accommodate the compounding growth of “interest due” inculcated in these debt-money contracts.  The economy as a whole, then, becomes caught up in an increasing “debt” spiral that it has no practical way of escaping as long as this private-bank-loan transaction remains the mode by which money is created.  This then becomes the engine of mammon which drives, directly or indirectly, virtually all problems in the world today.  This is true whether they are nominally economic or not.  Money isn’t everything, but in our global world it must be taken into account to do anything.

To be sure, this plays out in extremely complex ways, but the source of the resulting monetary churning can always be traced back to the slight of mind inculcated in the initial private-bank-loan transaction.  Outwardly speaking, the entire range of financial anomalies extant in the world today arise from this one simple cause.  The key to navigating the intricacies of the financial chaos, from local to global, is to not lose touch with this singular fact.

How the Monetary Problem Unfolds:

Let us track in greater detail what happens when a payment is made on a private bank loan.  The funds remitted are divided into two parts.  One portion is applied to reducing the principal (outstanding balance) on the loan, and the other is credited to the paying the “interest”.  The money that is applied to the principal goes back out of circulation, and is extinguished on the banker’s books.  It no longer exists.
The funds that are applied to the “interest”, however, are credited to the account of an “investor”.  In this case “investor” is a euphemism for a creditor who is holding, directly or indirectly, the “debt”-contract written against the loan.  Since this money is technically still in circulation, the “investor” could indeed spend it, but people who “invest” in such things generally don’t do so with the grocery money.  They are wealthy enough to have funds that they don’t need, and so are free to use the proceeds to buy still more bonds, stocks and mortgage contracts in the financial markets.  As the “interest” payments on their debt-paper portfolios roll in, the money is “re-invested” into more “debt”-based paper.  The net effect of this process is to transfer huge sums from the circulating monetary pool (where it was borrowed into circulation by people who need it to live on or do productive work), and into the hands of idyll speculators who are bidding to increase their wealth without the expenditure of productive effort.

The effect of this hoarding is twofold.  Firstly, it effectively causes the available monetary pool to shrink, thereby depriving it in the aggregate of the necessary funds to satisfy the loan contracts by which it was borrowed into circulation.  Secondly, the resulting downward spiral of available money deprives the economy of the ability to buy back the total output of what it produced.

Producers, Consumers and the Market Cycle:

There are fundamentally two types of players in the market cycle; i.e. producers and consumers.  Within a sound producer/consumer rotation, the costs of the producer are all accounted for in the form of wages and profits.  All the complexities and deceptive appearances notwithstanding, it really is that simple.  We pay people for their work; we don’t write checks to the earth for its resources.  When people pick up their paychecks and profits from the productive sector, they go home and become consumers.  Ideally the amount of money in their collective pockets should equal the cost to producers of bringing the available products to market.  Value-added will match money-available, exactly.  Prices will tend to find their own equilibrium (like water finding its own level) in the collective haggling between the producing and consuming sectors, and the market will be cleared of whatever is produced.

When an “interest” charge is attached to the issuance of money, however, this equilibrium is subverted.  Things have to be produced before they are consumed.  When the worker takes his paycheck, or the businessman his profit, home, the first thing he does typically is pay his bills.  A portion of his remittances will go to pay down the principal balance, which represents the actual purchasing credits borrowed for past consumption (the substance of his loan).  There will also be a portion that goes for “interest”.  This “interest” charge, however, is money that he does not receive anything tangible for, and constitutes therefore a net subtraction of purchasing power from what is available to the consumer to buy back the products of production.  After paying his bills the consumer will put the remainder of his wage and/or profit into his pocket where it becomes spending money for groceries, gasoline, entertainment, or whatever else.  The net result of this “interest” payment having been subtracted from his income stream is that the consuming sector will, in the aggregate, not be able to “afford” what it has itself produced.  There is no possible manipulation of prices that will remedy this shortfall.

So, the question becomes – “What happens to the money remitted to the bank in these “interest” payments?”  The answer is that it is retained as “earnings” by the “investors” who “own” the “debt instruments” that “back” these “loans”.  Such “owners” and “investors” could include stockholders in the bank, but more often are holders of private investment portfolios.  These “earnings” could be spent into the market cycle also, thereby filling in their part of the money needed to clear the marketplace of goods and services produced, but since generally this is money excess to the investor’s personal needs, it can be withheld from circulation until he finds the opportunity to “re-invest” it (i.e. “loan” it to someone).  He is in effect holding these funds back from the general circulation until someone is willing to pay him to release them (at “interest”, of course) back into the circulating stream.  It is certain that someone will in fact feel obliged to ask for such a loan, for a twofold reason: (1) the money has to come back into circulation if the productive sector is to sell the remainder of its product, and (2) it will be needed by the consumer to make up for his shortfall in buying power.

If people were to quit borrowing, the “investor” would be forced to spend his proceeds back into the monetary stream, effectively foregoing the chance to profit further by charging “interest” on a loan.  Theoretically, if this process went on long enough, the loans could be cleared without default on any contract, and all the money borrowed into circulation could go back to the bank.  What makes this scenario for all practical purposes impossible is that it would extinguish the money supply.  People need money on which to live every day, and so the possibilities for this winding down process to proceed very far are extremely limited, save at great human cost.  We have need of a circulating medium, but by the nature of how the system is set up, we are effectively locked in a casino and forced to use its chips (Federal Reserve Notes) under “house rules” (i.e. rules imposed by the banking system).

To be sure, none of this is done consciously.  For the most part people are merely trying earn a living, pay their debts, and carry out their fiduciary responsibilities (bankers and investors included).  Furthermore, since everyone’s “loan” money becomes quickly blended with everyone else’s when it is spent into circulation, the money that is being subtracted from the monetary pool to pay the “interest” on a given loan is not identified with any other specific loan.  It must be understood that what we are dealing with here are aggregate effects.  The upshot of the whole process is that the availability of funds in the money supply is constantly falling short of what is needed for the populace to carry on commerce and pay its bills.  It attempts to survive for a time by continually expanding into new areas of “economic growth” in search of an expanding collateral basis for “debt-money” expansion, but this is a dog-chasing-its-tail-faster-and-faster game that can only go so far before it collapses in exhaustion.  The cumulative “debt” compounds on an exponential basis, but physical and human enterprise that is trying to expand to match it cannot forever keep up.

The Hydraulic Loop Analogy:

To illustrate, the workings of a properly structured market cycle are analogous to a hydraulic loop.  We can liken the productive factor in the economy to the pump, and the needs of the consumer to the end usage where its energy is expended.  If there are no leaks in a hydraulic system, then every drop of fluid medium that leaves the pump will show up at the device which it drives, and in turn find its way back at the pump.  This is true as a matter of principle.  In fact, it is obvious.  It is a closed system.  In a similar vein, money is the fluid in the market cycle (which is why people of finance talk about the “liquidity” in the marketplace).  If it is not allowed to leak out, the market cycle too forms a closed loop in which the money that shows up in the collective pocket of the consumer matches exactly the aggregate costs incurred by the productive sector in bringing its products to market.

In a hydraulic loop, there is no particular action required to keep it running smoothly except to insure that the amount of fluid in the system is maintained at the right level.  Likewise, there is no particular manipulation of the market cycle required to keep it running smoothly, except to insure that the quantity of currency the in monetary stream is maintained at the level needed to service the demands of trade.

If, however, the hydraulic loop springs a leek, then a way must be found to continually add fluid to keep the circulating stream from dropping too low (which would cause stress and inefficiency in the system), or even going dry (leading to damage to the system, and finally breakdown).  If the leak is such that its flow erodes the breach over time and makes it larger, this task of keeping the loop supplied will become increasingly difficult, until at some point it becomes virtually impossible, and the system dries up and breaks down anyway irregardless of how much fluid one pours in.  Looking at our market cycle, if its monetary fluid finds a way to leak out, its level too will drop too low (causing stress and inefficiency to both producer and consumer), and eventually dry up (leading to economic depression, and eventual collapse).  Such leakage does in fact now occur in the form of the “interest” payments, which are effectively subtracted from the flow of the system between the production and consumption stages, and are therefore no longer available to purchase already produced goods.  The only way to prevent the market cycle from running low, and then breaking down, is to continually bring more money into circulation.  The only way to do this within the current system is for people in the economy to borrow more money into circulation; i.e. take on more “debt”.  This is not a simple matter of replacement, however, because the current banking practice of charging “interest” on a compounding basis causes the leakage caused by “interest” payments to grow over time.  The economy runs faster and faster, but at some point it becomes virtually impossible to keep up, and the system runs down and then implodes anyway.  In this case, of course, we are not talking about ruining mere machinery, but human lives.

One way that the life of an increasingly leaky hydraulic loop might be extended is to put a tub under the leak, and recycle the fluid through a pipe that transfers it back to the top of the loop.  This will work until this alternate leakage-replacement loop gets so large that it effectively short-circuits the primary flow of fluid necessary to service the output device.  Similarly, in the market cycle there is a sort of tub that is placed under the monetary leakage that can be used to catch it and return the lost currency to circulation where it becomes be available to buy back the equivalent of what it represents in production (thus completing the market cycle).  This tub can be visualized in the form the personal accounts of those wealthy investors who are privileged to hold portfolios of stocks, bonds, mortgages and other debt instruments.  The “interest” payments on these “investment vehicles” are effectively collected into the accounts (the tubs) of those holding them.  The net effect of this is to transfer monetary wealth from those who need it to pay their bills, to those who do not.  This creates a veritable monetary pipeline from the working poor, middle class and productive entrepreneurs to the passive holders of excess financial wealth.

Of course, these prosperous folk are consumers also, and they could spend or gift their largess back into the circulating currency stream where it would become available to complete the production/consumption cycle.  Indeed, sometimes they do, in the form of lavish spending on luxury goods, or through philanthropic gifting.  But, there has arisen in this nation, and increasingly the world, a culture of “debt” which makes it seem that the prudent, reasonable or even moral course to take is roll-over these excess funds into yet more “investments”.  After all, why should one give their own money away; did they not take a “risk” in “earning” it; are there not other people asking for these funds; by “re-investing” are they not providing needed access to them?  Within the ambience of such a “culture”, they will be inclined to withhold from the market cycle the proceeds from their interest-receipt gain until, that is, someone offers to “borrow” it from them, at which point it will reenter production/consumption loop in the form of yet more “interest-bearing” money.  This, in turn, will occasion the demand for yet more “interest” payments against the money supply payable to the privileged holders of “debt instruments”.

This interest-receipt/re-loaning/interest-payment cycle is a pernicious spiral that is driving the tendency for a growing gap between the middle-class-&-poor and the privileged (as opposed to entrepreneurial) rich; the earn-money and the have-money sectors.  In the end it will co-opt any and all healthy flow in the economy itself.  No amount of income redistribution will redress this imbalance.  Equity can only be achieved when the franchise for money creation and issuance is removed from the private banking sector and restored to the public domain.

A Necessary Caveat:

All the above notwithstanding, it is at this juncture important to state that this tome is not a blanket proscription against the making of investments, loaning at interest, the accumulation of wealth, or the practice of private banking.  Indeed, when performed in the right way in appropriate circumstances, these are necessary and noble undertakings.  Financial stewardship can be a right-livelihood, and indeed a high calling.  My purpose is to open up a cogent discussion in this area; not presume to pronounce over it any final dispensation.  The practice of private banks loaning money at interest for private enterprise (as has long been the practice of savings-&-loan associations and credit unions) is not the crux of the problem.  Nor is the problem investment per se.  On the contrary, the existence of mechanisms for the accumulation of privately-stewarded capital is a necessary and productive aspect of the free enterprise system.  Investment money, however, should be just that; i.e. money for productive investment.  It should not be a mechanism for borrowing the grocery money back into circulation in an economy that cannot complete its market cycle because it has neglected its own social monetization responsibility.

In an outward sense the root of the problem is the practice of allowing private banks to create money with the stroke of a pen via an ostensible “loan” process, and attaching to its principal proceeds a compounding “interest” charge.  By this, a sovereign power that belongs rightly and necessarily to the commonweal has been usurped as a private franchise.  Because this practice creates a situation whereby the national economy as a whole cannot complete its production-&-consumption cycle without descending ever further into debt to an amorphous extra-national entity, our supposedly sovereign nation in its entirety is relegated to the de facto status of a business in the portfolio of an extra-national corporation.  What is worse, it is obliged to conduct its business in the throes of an ongoing bankruptcy reorganization.  Within such a monetization scheme, “investment” that is not truly investment becomes the norm, and the culture within which it occurs is pervasively contorted to rationalize the practice.

There is a solution to this conundrum; that is, for We the People to re-assert our sovereign power to create, issue and regulate money itself.  The natural vehicle for us to achieve this end at present is our government.  This, to be perfectly clear, is not to say that we need government to “meddle in business”.  On the contrary it is the key to finally getting government out of the meddling game.  The very word “government” has become a pejorative in large part due to the long litany of abuses that have been perpetrated through its “good offices”.  I would assert, however, that our estrangement from this arm of our collective volition would begin to be healed if it were redeemed from being the agency of a corrupt monetary principle, and restored as an accountable executor of the common will.  What is more, the whole financial house within which we do business would be renovated from being a speculative casino in which the only viable strategy was to get in, make a killing, and get out, to one in which the practice of investment was genuine, open-ended and productive.  Such salutary change in the financial zeitgeist would play out in ways that would be truly transformative on many levels.

This leads naturally to a very big discourse that there is not space for here.  It behooves us to suspend the usual judgments on the subject of money long enough to explore that discourse.  Within the current paradigm, the mathematical inanity, lack of transparency and venal character of the monetary order makes any profound realization, reckoning and rectification with respect to government impossible.  But, if in our hearts and minds we can make the transformative leap on the subject of money and government, then we will not have merely re-formed the same old noxious system, but transported its taproot to fresh new earth.  The saving grace in this whole situation is that both the cause of, and the solution to, our monetary straits are eminently cognizable.  Indeed, it must be so at this providential juncture.  If humankind persists in its denial on this wise and continues lemming-like over the “debt-money” cliff, it will have done so with “eyes wide shut”.

The problems that have proliferated out of the current monetary order have become complex virtually beyond human reckoning.  Notwithstanding, this impenetrable knot can be cut by returning the basis of the system to sound principle.  So, how can this be done?  The deeper answer, of course, lies within each of us.  From an outer perspective the crux of returning to principle will be the restoration of the monetary power to the public domain.  This will not be the end of economic history, but a new beginning.  From there the dialogue on all issues will unfold in ways that are scarcely imaginable now, and a vast new frontier of human evolution will unfold.

Summation of the Monetary Problem:

Within the present system, money is “loaned” into existence through a private banking system with a compounding “interest” charge attached, but the monetary credits necessary to “pay back” this “interest” are not issued.  The only way the economy can be maintained with an adequate money supply, while consuming its own production, is to continually take on more “debt”, both public and private, at a compounding rate.  Unless this is changed as the operative principle by which money is created and issued, virtually all tangible assets in the nation will be effectively confiscated through default, the social order will be destroyed, and the earth itself will be ruined.  (for those with ears to hear)

The Hobson’s Choices:

There are essentially three ways the shortchanging of the market cycle caused by the “interest” charge attached to the creation of money within the present system can be coped with.

(1) – The ostensibly simplest option is to give up and “let the system correct itself”.  This “solution” is often heard in the blithe dogmatisms of ideologues or the Armageddic passions of religionists.  Some say we could just have another Depression.  After all, we had one not so long ago, and did we not come out of it as a victorious superpower?  It seriously behooves us to take note that the world has turned over since then.  We live in an unprecedented era.  Among other things, the farms, industries and fundamental skills that the nation subsisted on through the last Depression have effectively atrophied.  There is not much that remains in the way of subsistence capability.  Monetary collapse was bad last time; it would be unthinkable now.

(2) – A more tenable option (at least temporarily) is for enough people to go deeper into debt to keep the system going.  This could be done by private individuals, corporate entities or the government.  No one wants be the party to take on more debt, so behind virtually all personal, social and political contentions there lurks an effective agenda to clear one’s own debts, and oblige someone else to take on the burden.  The citizenry expects the government to take care of them (while “balancing the budget”), while our public servants try (amidst much hand-wringing about having to “balance the budget”) to pass the onus back to the citizenry.  The corporation sector attempts to recoup its share in by inflating the prices of its products, while consumer activists wax outraged at corporate greed.  The mavens of finance, academia and media weigh in with their own impressive obfuscations.  Saturation advertising induces consumers to slide unmindfully into debt to maintain lifestyles, and keep up with the Joneses.  For the most part, we don’t think about our affairs this way, but the engine of “debt” is always there subconsciously driving everything we do, including how we think.  The consequences are ubiquitous.

(3) – The third option is for the U.S. economy to earn the monetary credits lost through “interest” payments by achieving a positive balance-of-payments account with its “trading partners”.   This notion overlooks the critical fact that the national currencies of every other nation on earth have the same fatal flaw as the U.S. dollar; i.e. they are created and issued via loans from private banks.  This means that they also lack the ability to close their own domestic market cycles without resorting constantly to taking on more debt.  The logic of their situation, then, compels them to take advantage of the U.S. economy (which is where the money to underwrite their money comes from) to financially survive.  It is impossible, of course, for every nation on earth to beggar every other nation, and so in the domestic political life of each, recriminations inevitably ensue about the “unfairness” of foreign players that does not allow one’s own folk to recoup their own just due.  The impossibility of this working out in a world where the trading order is structurally a less-than-zero sum game virtually never seems to occur to anyone.  The practical reality is that the net indebtedness of the world to the extra-national private banking system, and now extra-national corporations, must in the aggregate keep going up virtually irregardless of other factors.  In the end, this is a lose- lose- lose- lose- lose- situation for all peoples.

None of these coping strategies are satisfactory as solutions.  They may offer temporary relief, but in the end only tend to compound the problems of the system.  They are the very roads to unintended consequences.  Clearly, another approach is needed, and one is offered below.  Before embarking on such a delineation, however, it is necessary to define three basic concepts.

The Micro-, Macro- & Meta-Economies:

Economics is a three-part concept, and for purposes of this discussion it would be useful to define a domain associated with each.   These are, respectively, the:

  • Micro-Economy – This is the domain that embodies the actions of individuals and their institutional proxies (businesses, families, foundations, associations, micro-governments, etc.) that are the participants in any economy.  In one way or another they include everyone, whether in the capacity of producers or consumers, and even those not officially “employed”.
  • Macro-Economy - This is the domestic economy as a whole.  It is set up by the body of law which defines how the “monetary system” operates; particularly the way money is created, issued and controlled.  In the American system the responsibility for this function is held by the Federal government.  There is a commonly held misconception which assumes that the Federal government is a business, and must therefore be run according to sound “business” principles (one can hear this on the political stump more-or-less constantly).  The truth is that the Federal government is not a “business” (businesses do not have the authority to create money).  It is, ideally, the sovereign macro-economic entity within which micro-economic enterprises such as businesses operate (Notwithstanding, that the macro-economy of the U.S. has de facto become a business in the portfolio of privileged financial interests due to the abdication by the Federal government of the money-creation power to an international banking cartel).
  • Meta-Economy – This is the global economy as a whole.  In a simple material sense it might be considered to be an aggregate concept; i.e. consisting of the sum total of all the micro- and macro-economic enterprise that makes up the whole.  From a higher perspective, however, it is a transcendent idea, because the economic activities that occur materially within the unity of the whole don’t simply add up arithmetically, but interact with each other to create a vast array of new connections.

It follows that an economic order that is triune in nature calls for a three-step process to remedy its defects.  Such a remedy is offered as follows:

Step # 1 (Micro) –Choose the Spirit and Culture of Money:

In the micro-economic realm we must make a fundamental choice between the two options concerning what is the very purpose of money.  These are - “Will money be used selfishly in the spirit of personal gain, or altruistically for the greater good?”  Another way of stating this is – “Is it the purpose of life to serve money, or the purpose of money to serve life?”  Which attitude is adopted will determine the character of culture that grows up around monetary ideals, which in turn guides monetary praxis.  Let us make no mistake.  This is a stark choice, and any tendency to come to a “nuanced” position will be unfruitful, if not counterproductive.  Upon this question the entire economic conundrum turns, and it rests squarely with the individual to make the determination.

In a practical sense a decision for the higher path will mean that people will be a great deal more disposed to look out for the needs of “the-other”, as opposed to one’s own.  This may sound more that a bit idealistic (though we often act privately in this spirit even now), but it will become far more prevalent as the social norm when the fear of lack is obviated by the transparency, directness and sufficiency of a rectified macro-economic order.

Step #2 (Macro) – Create a Monetization Picture:

The process for establishing a true macro-economic order depends up the creation of a sound “monetization picture”.  This “monetization picture” is the image of economic activity a society visualizes itself doing, and then gives financial expression to.  Confidence in such an image is always, in the final analysis, the “backing” for any currency; all the apotheoses of temple cults, precious metals or “eligible paper” (i.e. collateral for “debt”) throughout history notwithstanding.  To be sure, this is seldom a very precise or conscious process, but it needs to become so if humankind is ever to liberate its full potential.  The money-creation process, then, becomes guided by this monetization picture.

Permit me to give an illustration to show how this would work.  Suppose one wanted to construct a building.  One would first form an image in one’s mind of what one wanted to construct.  The next move is to take steps to make that image more visible and defined.  The purpose for which the building was intended might be researched to in order to conceive more perfectly what it would need to be.  Architectural plans would be drawn up, along with visual illustrations and construction details.  Presumably, lists of materials required for its construction would be compiled.  Contractors needed to do the work would be contacted.  Finally this would all be resolved into a monetary version of the picture which enumerated how much money was required to finish the job, how this amount is justified, and perhaps a schedule concerning when funds in various amounts would need to be made available.  This picture of the project stated in financial terms is what would traditionally be taken to the banker as “eligible paper” (i.e. justification for the loan) for his possible “approval” (i.e. monetization).  This financial statement is for this job its “monetization picture”.

Now transpose this same process to the national level.  The Congress would fulfill its mandate To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures” by creating the “monetization picture”.  It would, through its democratic legislative process, effectively form a picture of the economic edifice that the nation as a whole desired and had the resources to actualize.  This assessment would be fed by myriad sources, including input from people with expertise in the many areas of endeavor, reports from governmental departments on what is needed to fulfill their mandates, the requests of organized interest groups, the considered judgment of our elected representatives, and the thoughts and feelings of common citizens.  Stated another way, this would constitute an inventory of the actual resources available to the nation, and a realistic assessment of how ideally they could and should be used.  The process resembles a drawing up of what in business terms might be called a “budget”.  The term “budget”, however, is a misnomer in the context of an economic regime which doesn’t need income to monetize its actions.  I would suggest that it is more descriptive to call it a “monetization picture”.

And so, one might ask, is this not basically what our legislators do now?  In part, yes, but there are some critical differences.  The legislature performs this function within an assumption that the limit of what can be done depends on the amount of money available to fund it.  They know very well that the nation has far more capability than they can actuate within the ostensible fiscal constraints they are given to work with.  Within the context of a public monetary system, the only limits that they would need to give heed to are the actually physical and human realities available to do the work of the nation, and whatever desires and constraints would be exercised in their employment for actual true-life reasons.  Gone would be the illogical notion that this nation cannot “afford” to do the things that it has the resources waiting and willing to do, for whatever that it really needs.  Absent also would be the budgetary religion that there was some whopping “interest” on a supposed “debt” that would have to be satisfied before we could even begin to think about our needs.  This would all take place within a consciousness that recognized that actual productive enterprise is always its own backing for the money issued to finance it.

Once the monetization picture was enacted it would be passed on to the Executive Branch, which would, true to its title, “execute” it.  This task would be performed by the Treasury in a way similar to how the Federal Reserve does it now, with the critical exception that it would be monetized with currency that was issued directly out of the Treasury, instead of raised through taxation and the sale of bonds.  There would still be “taxation” (though with respect to the macro-economy this function should perhaps be given a different name), but the monies so collected would be extinguished as a way of regulating the amount of money in circulation.

I would hasten to stipulate that this is not some sort of socialistic planning process.  It is, rather, a setting of monetary parameters within which the private economy would operate.  There is a certain amount that would be issued to pay for directly the services that government agencies performed, but this also constitutes one of the main monetization streams that fills up the monetary pool, which in turn constitutes the currency available to the private economy.  One has to take into account the whole picture to see how this works.  This process is effectively what is done now through the Federal Reserve System, except that the current monetization picture is created through monetary speculation, and the corrupted matrix so created is monetized by going to privileged financial interests and foreign powers to buy the bonds which supposedly back the money.

It is the actual productive capacity of the real economy that backs the money.  This is true now, and has always been so.  Why, then, cannot the people’s economy be supplied with money issued directly out of the public agency constituted with the expressed power to do so?  Bonds are merely fancy slips of paper.  They produce nothing; therefore they back nothing.  Why, then have they been permitted to be interjected as some sort of essential link in this process?  As it is now the public Treasury prints both the money and the bonds, hands the money over to the Fed, and then “borrows” it back in exchange for these gilded promises to pay interest.  This is madness even run amok. 

There has been one historic episode where this ideal was at least remotely approached.  This was during the parity dollar period in America, which lasted roughly from near the beginning of WWII (February 1942), through the effective abandonment of parity economics following the Korean War (1953).  By this the monetization process was made subject to the economic needs of a nation, and indeed a world, wracked by depression, threatened by war and in need of rebuilding.  Under these circumstances the private bank-money agenda was temporarily set aside to a great extent, and more sensible heads from the farm belt in the United States had their say.  Through the late Depression era, three representatives of the National Association of State Agricultural Commissioners, who together gave more testimony to various committees of Congress than all other non-governmental witnesses combined, were instrumental in the adoption of the Steagall Full-Parity Amendment to the Stabilization Act of 1942.  It provided, by loans and other mechanisms, that 45 raw materials, including the 25 most basic agricultural products, be supported in the market at 90 to 110 percent of parity.  In addition, wages, salaries and profits to key war industries were guaranteed, and excessive import competition was cut off by the war.

The net effect of all this was to put the United States currency back on a sound basis, and inject enough of it into the economy to reactivate its potential.  The dollar was now effectively backed with real commodities that were fairly priced, and a national income adequate to complete the economy’s market cycle was assured.  Though it is virtually unrecognized, this was the third great monetary revolution in the history of the American nation (after the Continental Currency and the Greenback).  It pulled the US and its allies through what was the greatest challenge to humane civilization in world history.

So what was it that was done?  In effect there was created and implemented a sound “monetization picture”.  It was based upon the monetization of raw materials on a structurally par basis (price x units of production = income sufficient to cover the cost of production, plus a reasonable standard of living), which was then expanded via a “multiplier” (or “trade turn”) to arrive at the estimated aggregate worth of the macro-economy.  It was an operative picture of what was necessary to redeem the economy from depression, prevail in a world war, provide the wherewithal of its allies, finance demobilization and reconstruction, and fight the first major hot war of the cold war (Korea).  The real economy was thereby consciously restructured and re-monetized practically usury-free (interest on war bonds was kept down to about 1%), and other parameters were set up so that the full physical and human potential of society available for a concerted national purpose was activated.

This was the “economic equivalent of war” designed to complement the “moral equivalent and physical actualities of war”.  Why could not this sort of process be adopted as the “economic equivalent of peace” to match “spiritual equivalent and inherent actualities of human potential”?  It could be if we thought of the natural requirements of life first, and expressed that through the instrumentality of the spirit represented by the monetary system.  This macro-monetization process is the means available in the social dimension, in tandem with the right spirit in the personal realm, for the full exfoliation of human potential.  This creates the exchange worth which manifests in the factors of the LEAM (defined below).

The power to monetize allows for the creation in essence of an economic feedback spiral between a society and its members.  It is in a practical sense how we impart to our social structure essential shape and form.  That ability is an essential part of its role as a function of sovereignty and self-actualization.  The power to monetize is tantamount to the power of “self-government”.  It is an exercise, not only of “freedom” and “justice”, but also of securing the “means to freedom and justice”.  In a sense the behavior of people on a micro level can be said to be the initiator of the loop, but then again how the macro-structure is constituted profoundly affects the culture in which individuals and subgroups are nurtured.

In the final analysis, since the personal and social dimensions are two sides of the coin of human nature, it may be fair to say that the micro/macro dichotomy is a chicken-or-egg paradox.  If either pole is negated, as in acting from a spirit of avarice in the personal realm, or the co-option of the economic structure through usury in the macro, then a vicious cycle is initiated that takes the life-economic, and all that it touches, to an imploding scenario.  Unfortunately that is the dynamic that the world is for caught up in at present.  It is only by fiat of human will on the individual level, acted out in concert with like-minded spirits in the political domain, for altruistic purposes in the economic life, that this catastrophic spiral will be reversed.

Step #3 (Meta) - International Currency Normalization:

At Bretton Woods, New Hampshire in 1944, the U.S. dollar was designated officially as the “reserve currency” (“paper gold”) for every other macro-currency in the world.  Technically, this agreement has lapsed since President Nixon ended the redemption of dollars in gold for foreign nationals in 1971, but by then the structural preeminence of the dollar was so entrenched that it was deemed practically impossible (save at immense trauma) to change its reserve status.  The structural problems caused by the “debt”-based nature of the dollar, however, could be changed on a national level, thereby taking the world off the “debt” standard as well.  This singular measure would plant the seed for a worldwide rectification of the global economic order.  How, then, might this transformation be managed?

Almost anyone who has taken a year of high school algebra has been introduced to the concept that the relationship between “n” variables can be resolved if one can set them up in “n” simultaneous equations.  The simplest case of two variables in two equations may look familiar:

a1x + b1y = c1
a2x + b2y = c2

Any algebra text will outline a solution which involves arranging the constants a1, a2, b1, b2, c1 and c2 in arrays called determinants, which are then expanded by simple arithmetic operations to render specific values for x and y respectively.  This idea can be expanded to any number of variables in a corresponding number of equations.  This in a nutshell is the key to the solution of the global trade dilemma.

There exist in the world at present some 180 macro currencies.  Ideally the relationship between them could be set up as 180 equations with 180 variables.  These could then be resolved by setting them up in arrays, which would be expanded in an algorithm which was identical to that used for the smaller dimensioned problems taught in high school.  While the handling of the numbers would get a bit bulky, the calculation would present no challenge whatsoever to a computer.

The expansion would render a unique solution for each variable; i.e. each currency.  This number would not be a measure of value in any absolute sense, but rather a factor that was relative to the solutions for all other variables.  A comparison between any two factors would give a working ration between their relative values in the context of a world trading system that was in equilibrium.

The virtues of the simultaneous-equation solution are manifold.  Not the least of these is that the arrangement is utterly “associative”.  That is, it describes a matrix of relationships that pulses and floats with no fixed point or baseline of reference above the life-economic, as determined by transactions that are freely entered into.  The trading aggregates which the currency variables represent are determined in value-for-value exchanges, the values of which are expressed as “price”.  Moreover, it is in this value-for-value nexus that all factors of the life-economic, those calculable and those not, find their ultimate expression.

Another virtue of the scheme is its “transparency”.  Trading aggregates could be published, perhaps even in-progress in real time.  We can be confident that there would be geeks out there that would track this process, and make sure that the outcomes are what they are purported to be.  Such feedback looping would also entail an ongoing dialogue on the life-economic values the parameters inculcate.  Even if one were not personally able or inclined to do the math, the broad outlines of the procedure are still understandable and visible.  It would be extremely difficult to hide anything from the body public, or get off track in a major way.
Much like for the turning from avarice in the micro-economic dimension, or elimination of “debt”-based currency in the macro, this solution is so self-evident that it is inexplicable that the world has not yet seized upon the concept (though I suspect that similar calculations must be performed behind the scenes by financial institutions in their attempts to make sense of global trading).  In a public discourse where one hears expressed a great deal of longing for structural balance, stability and fairness in world trade, this represents its direct expression rendered mathematically.  There is no ideology in it.  Rather, it is how a competent engineer would straightaway solve the problem if he were presented simply with its parameters.  Why, then, don’t we see it?  What stands in the way of its implementation?  The answer in an outward sense may be approached in a systematic manner as laid out below.

LEAM – The “Life-Economic Associative Matrix”:

For purposes of this discussion, permit me to give the solution for international currency normalization a name; i.e. the “Life-Economic Associative Matrix” (LEAM).  This moniker is consistent with and descriptive of its nature and function.  To illustrate its workings in more detail let us assume a world in which there were 4 significant currencies.  This would necessitate a LEAM consisting of four simultaneous equations in four variables:

a1w + b1x + c1y = d1z   which is the trade equation re: currency z”
a2w + b2x + d2z= c2y   which is the trade equation re: currency y”
a3w + c3y + c3z= b3x   which is the trade equation re: currency x”
b4x + c4y + d4z= a4w   which is the trade equation re: currency w”

This is based on the assumption that the aggregate value of a currency which is passed to trading partners outside of its domestic market of origin within any given time period, is balanced inherently by the aggregate value of the currencies that enter.  This is justified because when all the factors are boiled down, all trade is essentially stuff-for-stuff (otherwise how would it be trade).  Naturally, there are many nuances to this idea that could be explored, and no doubt numerous questions that would be raised.  I think, though, that the principle is sound, and any perturbations that might arise are inherently compensated for in the matrix, much like the action of water finding its own level.

This set of equations can be rewritten as:

a1w + b1x + c1y - d1z = 0
a2w + b2x - c2y + d2z= 0
a3w - b3x + c3y + c3z= 0  
-a4w + b4x + c4y + d4z= 0

The next step is to plug in values for a1, a2, a3, a4, b1, b2 . . . d4, which represent the actual units of each respective currency that pass from one economy to another in the course of trading in goods and services (as per “balance of trade” as commonly perceived), and resolve the equations for each variable.  Since this determinant is a special form where each of the equations add up to zero, there will not be a solution in which any variable can be expressed as a definitive numerical value.  Rather, it will produce results that are unique in the sense that each variable can be resolved as a given ratio to any other variable, but not as a specific number.  The next step is to assign a value constant to one of the currencies (most likely a “1”). 

That then becomes the currency of reference, and all others could then be expressed as a specific numerical factor.  A comparison of any two factors would produce a true ratio of values between currencies that would be consistent with world trade which is structurally balanced as a whole.

It should be noted that, whatever numbers are rendered by this algorithm, they are not units of measure.  Moreover, it would not be proper to say that they constitute a global currency, whether individually (as say the reference currency) or as a solution set.  Such imprecise language would be a misrepresentation of the nature of the LEAM.  Accordingly, any resolution of the array associated with a given variable should be termed a “factor” to avoid slipping into a linguistic limbo.  For purposes of this discussion, I will dub the solution as the set of “Life Economic Factors” (LEF’s), with the particular ratio attached to a given currency its respective “LEF”.

To make this work in practice, there would need to be established a “Global Trade Registry” (GTR).  It would function as an account clearing house which would tally units of currency that cross any political demarcation in the course of trade between sovereign economic entities (i.e., those nations or economic unions that choose to express a sovereignty by issuing a currency), much as any “balance of trade” reckoning is performed at present.  To be certain, this crossing of boundaries is not limited to the geographical periphery of the economic entity which issued the currency.  For example, a British pound that passed from Brazil to the Argentina in the course of commerce would be duly registered as passing from Brazil to Argentina.

The method by currencies could be tracked is simple and straightforward.  An inventory would be taken on the prescribed fiscal date (suggest calling it the “jubilee”) of the amount of each currency on deposit in each bank for which there is a LEF represented in the LEAM.  These figures would be tallied to find the sum of each which actually resides within the respective political jurisdictions.  The net differences between these currency totals on deposit from one political entity to another when compared to the last tally would be the measure of the net movement of currencies over that period, and so constitute the constants entered into the LEAM matrix.  The requisite condition for this to work is that each bank reporting be identified with its actual geographical location.

This scheme, naturally, raises many questions as to what would happen in this or that particular situation.  I think, though, that they are answerable if we follow through with the logic of the LEAM principle.

One might ask, for example, would this new system proscribe the existence of banking entities that overlap boundaries.   In my view it would not.  A multinational bank would need to arrange its accounts such that the funds on deposit reflect in a bona fide way the political entity in which they are actually on deposit.  They could not be simply lumped in a manner that de-couples them from the physical location of the societies of which such currencies are the sovereign emissions.  This would mean that money issued in any given location would have to conform to the law of the political regime in which such emissions took place.  We could also assume, with very minor exceptions (mainly the float represented by pocket and shoe-box money), that they represented the actual areas were the units of currency were last spent.

One could also ask about how to handle micro-currencies which find their way across international boundaries.  In the basic LEAM these would be tallied in a lump with their country of origin.  The individual LEF’s in the basic global matrix may, in fact, represent economic markets which are served by multiple levels of currencies.  These markets themselves would be free to maintain their own domestic LEAM’s as represented by state, urban, county, regional or other jurisdictional boundaries.  The regular normalization of such matrices would assure traders on the international market of each currency’s worth.  This is not to say that a unit of a local currency would necessarily be linked on a one-for-one basis with the currency of its nation of origin.  Rather, its trading value could be made known in a very straightforward manner simply by publishing its respective LEF in its domestic LEAM.

I could go on with illustrations, and I am sure that a plethora of other questions would arise in the process implementing the LEAM principle.  One point to be emphasized is that by this process political boundaries would effectively function, not as demarcations of inequity, armored frontiers, or coercive lines control, but rather as socially determined detection devises that can serve to assure that those who engage in commerce can carry on in full confidence that it will transpire within a matrix of relationships which trends organically towards a just and equitable structure.  This is the Holy Grail of “level playing field” much talked about, but little understood, by the sincere proponents of “free trade”.

It also provides a naturally unfolding and seamless way by which individual micro-currencies can enter & leave the system, and expand or contract within a given marketplace.  For example, if a currency (like, say, the Berkshares of the Schumacher Society) introduced into a very local trading zone were, for whatever reason, to gain acceptance over a wider area, they would at some point start to show up on the other side of a political demarcation, and so generate another line in the matrix of the LEAM in which this demarcation is represented.  This would simply be picked up in the bank inventories and related calculations without requiring any particular regulation or legislation.  There could be minimum threshold levels of activity established in the law to prevent this phenomenon from becoming a nuisance.  Conversely, if a micro-currency fell out of favor and ceased to show up across jurisdictional lines beyond threshold levels, it would simply lose its equation in the LEAM, and revert back to being a strictly local scrip, or go peacefully out of existence altogether.  This would all transpire with no disruption to the monetary order as a whole.

The net change in the aggregates of currency units which had been traded during the specified intervals would be entered into the LEAM as the constants associated with each respective currency in reference to its balance of trade within each equation.  The resulting array would be expanded to yield a specific result for each currency relative to every other.  Designating one currency as a reference (value =1) would produce numbers that could be manipulated conveniently in the manner of positive values, but would actually represent normalized ratios.  Theoretically the closing of accounts could be done at any interval, perhaps even continually in “real time”, but it would likely make sense to do it annually, given that the predominant life processes, of which money is an emanation, generally have a yearly basis related to the seasons, agriculture, holidays and festivals, fiscal years, etc.  As a practical matter, it takes a full-year cycle to determine approximately what any currency is practically worth.

This would mean that any trade from one closing of accounts to the next would tend to drift a bit off the mark.  Assuming that trading patterns would settle into relatively stable relationships, this would be a limited problem, and the trading matrix would undergo a re-normalization the next year as a matter of course.

LEAM – Its Associative Nature:

The most fundamental virtue of the LEAM is its “associative” nature.  It is generated from the free association of economic entities in value-for-value trading, and has no fixed point or baseline of reference.  It pulses and floats over the interplay of macro and micro economic intercourse in a transcendent manner that faithfully mirrors the life-economic as a whole.  It is eminently determinable, and yet moves with and accounts for virtually every economic variation in life, from the minute to the all-encompassing.  The variables within the array are expressions of the net trading worth of each macro-economy, which in turn are true aggregates of the micro-enterprise activity within them.

The associative principle upon which the LEAM is constructed could be likened to one that has long been recognized by science in situations where net effects and equilibriums are relevant, but the factors from which they arise are unworkably minute, complex and chaotic.  This idea was summarized succinctly by French mathematician Jules Henri Poincare, who, when speaking of the difficulty of determining the pressure exerted by a confined gas from calculating the path of each molecule, stated – “If by ill-luck I happen to know the laws with govern them I should be helpless.  I should be lost in calculations and could never supply you with an answer to your questions.  Fortunately for both of us, I am completely ignorant about the matter.  I can therefore supply you with an answer at once.  That may seem odd; but there is something odder still, namely that my answer will be right”.

The problem of calculating anything in the life-economic is much like this, but with an additional complicating factor.  We are talking about a phenomenon which is not only physically complex, but the variables thereof are human, with all the capriciously indeterminable vagary that implies.  Nevertheless, using the LEAM we can perform precise calculations and arrive at sure determinations about the net factors of the whole of the life-economic, from the major to the minute.

LEAM - An Ocean Analogy:

By way of analogy, the principle at work could be compared to the proposition of determining the effects of pouring a liter-cylinder of water into the ocean.  While the nature of the molecular interactions affecting the case are largely known, any attempt to calculate results based on tracking them would be futile due to the virtually infinite complexity of the interactions that would take place.  We can be sure, nonetheless, that every molecule in the ocean will have to accommodate and adjust its relationships to all other molecules with respect to the tiny body of water contained in that liter.  What is most astounding is that the net change in ocean level could be readily calculated with great precision.  While it is true that vastly greater quantities of water are leaving and entering the ocean at any given instant, and that it is subject to powerful undercurrents and surface disturbances, we can be certain that the net affect of that single cup is still real, abiding and calculable.

In principle the LEAM behaves much like this.  A miniscule change in any macro-currency, which in turn is subject to subtle changes in the micro-activity of which each is the aggregate, would be faithfully reflected in the whole (howbeit in the n’th decimal place).  Moreover, these physical/life factors which affect the array are in part knowable, but for all practical purposes as incalculable as the darting of water molecules in the ocean.  This is true for reasons of complexity, but also due to the whimsical nature of human activity.  Any economic transaction is in essence the meeting of one infinitely complex universe with another in the persons of the parties involved, with the resultant “price” being an expression of the economic ocean seeking its readjusted level.  It doesn’t necessarily look that way in the mundane pre-priced retail purchases that we engage in every day, but the process is there as a governing context.  The LEAM is a self-leveling instrument of veracity and precision that absorbs these intercourses, as it reflects the vastly variable realities of the life-economic.  What could we even hope to be better?

LEAM – As Three-Dimensional Bookkeeping:

My ignorance of bookkeeping is profound (hope to remedy that in the future), but I would venture a thought on it anyway.  It strikes me that the mode of operation of the LEAM would be symbiotic with the idea of money-as-bookkeeping.  It would tend to draw the two-dimensional form of balance sheet up into the third dimension, and renormalize factors at a yearly closing.  Beyond that, I would venture that money-as-bookkeeping is not the culmination of economic history, and that the LEAM would be capable of acting as the perfect segue to what would follow.  To be sure, this is an idea that needs developing, and a hypothesis that needs testing, but in principle it looks sound to me.

LEAM – Its Holographic Nature:

The nature of the LEAM is holographic.  I would point out that while every particle in the ocean is obliged to adjust itself to that single liter, the water from the liter is accommodating itself to the ocean as well.  In effect the whole becomes an expression of the part, and the part becomes a manifestation of whole.  This symmetry is one of the fundamental properties of holography.  The parallel with the LEAM is a near perfect fit.  The quintessential elegance of this concept opens up a whole universe of economic contemplation, the implications of which can be only be hinted at here.  The shift from a money-over-life paradigm to an open-ended future where money-serves-life truly transforms the analysis, dialogue, story, mythology, dynamics, and other aspects of life in an all-encompassing manner.

For a contrasting “reality”, tune into virtually any economic discourse at present (whether in print, over the airwaves, in texts, or wherever) and one is subjected to what might be called “financial sports talk”.  This metaphor comes to me from watching the spectacle of TV stock-market reporters on the trading floor breathlessly trying to make some sort of sports-talk-like drama out of the capricious trends they are obliged to sort through as the source for their material.  It purports to analyze all the factors affecting the economy, how they play out in the economic indicators, what players are pulling which levers to right the economic ark, who are the “winners” and “losers”, etc.  What folly!  This is akin to a physical scientist proposing that the oceans can be controlled by manipulating and second-guessing the nano-reactions between the molecules that constitute its body.

Pundits who purport to analyze financial trends are enamored of the notion that the adjustment of one economic indicator can create more-or-less predictable effects in another.  To sanctify this predilection they have embraced some “laws” and practices which are of dubious veracity.  In the jargon of economics, these include the idea of “ceteris paribus”, the Latin literally for “all else equal”; and “Ockham’s razor”, or the cutting away all factors ostensibly extraneous to the question.  Another specious device is the ubiquitous Cartesian graphic which purports to represent visually two economically representative factors on opposing axes in the manner in which they are ostensibly related to each other.  The best-known example is the vaunted supply/demand curve, but there are many others.

One particularly bizarre rendition I can recall from the Econ. 101 course was when the professor drew on the blackboard something called the “Production Possibilities Frontier Curve”.  The supposed purpose of this exercise was to illustrate the limits of production for a hypothetical economy as affected by the playing off of two products against each other.  In this case he drew a graph with pantyhose on one axis vs. tanks on the other, the premise being that this represented a hypothetical economy whose only products were pantyhose and tanks.  The idea was to illustrate that if a society were to dedicate all its productive capacity to manufacturing panty hose, it could not produce any tanks, and visa-versa; but if it decided instead to divide its productive capacity between the two options in varying proportions, that would result in possible economic output totals represented by the shape of the resulting curve.

To imagine in this manner that when one economic indicator is changed, it produces a predictable response in another is tantamount to thinking that if one dumped a cylindrical container of a liter of water in the ocean it would sink as a un-dispersed unit into the body of water, and be compensated for by a liter-sized liquid cylinder popping up somewhere else.  That this is an absurd premise at best should be self-evident.

To be fair, those that invoke such devices would be quick to counter that they are only illustrating a principle, and should in no way be considered as looking at the matter so simplistically.  I would be obliged to concede a point on that.  Further, I would stipulate that I don’t necessarily proscribe the use of such abstract devices.  There are, after all, limits to all analogies, metaphors, imagery, and other expressions.  What could be said without them?

The problem is that when one is working in a field of enquiry which cannot arrive at solutions due to a hidden structural anomaly that has no way of being compensated for (as for example in an economy into which a cancerous usury charge attached to money creation has been insinuated), a peculiar reverse-alchemy takes place in the thinking process whereby the manipulation of such factors comes to be regarded, not as abstractions that illustrate an intellectual point, but instead as controlling parameters that determine “economic forecasts”.  The defect compounds itself into a veritable froth of “financial sports talk” that passes for sober analysis.  This becomes so ingrained in the culture that even best-&-brightest among us (and I mean that in a straightforward sense, without irony) can lose the ability to see out of it.  Out of this womb of befuddlement, the through-the-looking-glass world of “financism” is born.  Its very existence depends on remaining in deep denial about the holographic nature of the life-economic, the distorting effects of usury attached to currency creation, and the fact that changes occur in the body-economic only as a whole (just as the ocean changes as a whole when that liter of water is added). 

The upshot of this illusory state of the art is that the factors orthodox financial analysis purports to weigh are essentially phantasms.  Far from being the levers that guide the life-economic ship, they are in actuality straw men, euphemisms, and double-speak for the monetary dysfunction of a system based on “usury” attached to the issuance of money.  This is an audacious assertion, to be sure, but it is possible in my view to run down the gamut of econo-speak and demonstrate that this is so.  All this is not to say that financial stewardship does not have an essential role to play, but this should be practiced in a manner consistent with the self-leveling nature of the life-economic as expressed individually through the productive fruit of personal enterprise, structured equitably through a sound macro-monetary system, and related associatively in the Life-Economic Associative Matrix.

The mavens of finance would do well to give up the hubris that they are pulling the strings on life, especially when their abstract indicators are almost totally bereft of real-life factors.  While it might be fairly stated that money has come to do business of its own account, I would aver further that finance has come to do thinking of its own illusions.  These phenomenon are linked, and it is the bondage to shadow concepts in an ersatz-financial realm that, as much as anything, prevents liberation in the monetary universe from happening.

From a general inquiry, it appears that the emerging model for the new vision in all phases and disciplines of life science is holographic (three-dimensional; the whole implicit in every part; a transcendence of the divine and the profane), as opposed to a flat picture (two-dimensional; each fragment carries only its own information; projection of white-noise light through flat pattern).  I took a class in holography at a local university to gain metaphysical insight into what the phenomenon represents.  As part of the coursework we got to actually set up and photograph holographic projections of small objects.  It worked pretty slick.

The setup is something like this.  One starts with a source of pure synchronous light (a laser).  The beam is split, with one-half falling on the physical object being projected.  This object beam results in a reflected light pattern that is essentially chaotic, with no decipherable information in evidence whatsoever, until it is directed to intersect with the as yet pure half of the beam.  The resulting interference pattern is the holographic projection.  What is more, the entire holographic image is (unlike for flat film) encoded in every fragment of its whole.  This has many implications as a model for reality.  I am reaching for an analogy here for the relationship between the wild disorder in our mundane lives and the perfectly coherent light of the divine.  The dynamic analogue of our lives is a seeming free-thinking/feeling/willing chaos (it is not just code), until, that is, it intersects with the pure light of its source.  This generates a form that is a true manifestation of the real-life object in this plane of existence, but on a rarified level.

This concept can help us understand the economic life a deeply existential way.  First let us take a look at the personal dimension.  Notwithstanding whatever outer monetary dysfunction may exist in the world, there exists for each person every possibility of being one of the “winners” in the economic game (let us say, a member of the top quintile that supposedly holds the lion’s share of the “wealth”).  “But for grace”, as the saying goes, any one of us could also have been one of the “losers”; or worse yet, so abject that the whole notion of winning and losing would exist in an abstract universe beyond the pale of any practical reality in our lives (which is where, lest we forget, most of the billions of people in the world are forced to exist and still attempt to retain their humanity).   For all our carping about the “monetary system”, the ruling financial force in our personal universe is a hidden (karmic? providential?) hand that fixes our position in the spectacularly capricious firmament of possibilities, which, one is forced to admit, is out of the range of any final ego-hedged control (which is what makes it scary).  At some level then, all our complaints about usury, the Fed, the government, corporate predations, or whatever are really just projections of that inner ontological travail that keeps us suspended in whatever fiscal purgatory we are wont to occupy.

I am reminded of the character in the movie What the Bleep who attracts the spill on her dress.  It is to all appearances the most happenstance of occurrences, and yet it obeys (according to the film’s premise) a reality that she on the “quantum” level chronically projects.  Perhaps our relationship to money in our respective individual universes is something like that.  Such a causal relationship is not hard to concede in the amorphous abstract realm, especially for we spiritual dilettantes, but it is different when it is stubbornly personal.  It would be interesting to contemplate doing a “Bleep” film on the quantum metaphysics of money, and how our habitual monetary circumstance finds its source in the unfathomable innerness of our being.  Surely we would discover that our collective systemic dysfunction originates from there as well.  That would be a story worth telling if one could find the wit to understand and the artistry to express it.  Our personal lives are in a sense extended monetary moments of truth.  It is easy to give glib back-talk about how to change the world, but hard to realize answers about how to resolve the personal quantum self that projects that world.

One way the conundrum can be modeled is to imagine a pure light of the spirit which when manifesting through a human being is essentially bifurcated, with (#1) one portion remaining pure, and (#2) the other a chaotic beam resulting from its reflection off the riot of complexity, perturbation and contradiction that is the personal/individual human psyche.  While this reflected beam is scrambled beyond deciphering, when it reunites with the yet pure light of the spirit, the result is what may be termed a (#3) hologram of the soul.  This three-dimensional chimera is at once a non-substantive phantasm, and yet eminently real manifestation of our total self.  It is in this ephemeral construct that the indefinable existence of our personal life-economic as described above resides.

This would seem to circumscribe the economic question, but the truths of life are all ultimately paradoxical.  There is also a social/political obverse to the personal/individual side of the economic-life coin.  The process by which it manifests is similar, except to say that the body the spirit beam reflects off of is a collective one, and entails among its parts the social arrangements, political institutions, corporate entities, and even intellectual paradigms that are manifestations of that dimension.  It embodies chemistries of relationship that are beyond description.  This produces a veritable hologram of which the life-economic of any given cross section of souls is manifested on its indeterminable, yet ultimately deterministic, level.  We can see this, for example, in the characteristic life-economic of the various nations, classes, occupations, regions, and whatever other groupings.

Ultimately these two holograms themselves generate the (#1) micro-economic and (#2) macro-economic dichotomies that give rise to the sovereign social entities that constitute the world economic community as a whole, whose patterns of intercourse generate the relative values represented by the variables that are arrayed in the LEAM.

To take this idea a bit further, I would note that the respective (#1) micro and (#2) macro dimensions themselves represent cardinalities of triune holographic manifestation, as enumerated immediately above.  What is more, they are expressions of the (#1) personal and (#2) communal aspects, which in a worldly sense are commonly portrayed as being at odds with each other (which is the basis of virtually all left/right political ideology at present), but attain a unity within the circle of the whole (as represented by the LEAM).  The metaphysical implication of this is that if we were to lay the oppositely oriented micro and macro triangles over each other within the unity of the LEAM circle, we would have the economic representation of Solomon’s seal.  We would also have a graphic representation of the number seven, which is the number of completion in creation.  If we would be as wise as Solomon, perhaps we should know this.

All this should at least suggest that, though the concept is deceptively simple, the implications of the LEAM are vast.  My feeling is that the pattern it represents would constitute a worthy basis for contemplation and implementation of the life-economic.

LEAM - What Prevents it from Working Now?:

So let us assume that the Life-Economic Associative Matrix were recognized to be the inherent mathematical solution to the global trading order that it is.  Would that in itself allow it to work?  I would say “yes”, except for one factor; i.e. the effect of the unpayable “interest” charge attached to the issuance of money within the current monetary order.  Under this condition the simultaneous equations of the LEAM can no longer be made to reflect reality.  To be sure, one could still take an inventory of the amount of each respective currency on deposit in each bank at the designated time, but there would be inculcated into each total a major factor caused by the payment of “interest” which does not correlate with the actual aggregates of trade in goods and services.

Under such a condition there is there is no solution set of LEF’s which reflects reality.  This, I presume, is at the root of why an array such as the LEAM is never invoked under current conditions.  What we get instead is this incredible chatter of financial sports talk which purports to analyze the problem and propose solutions, but in reality strains to finesse with ideological props, emotional gambits, fuzzy logic and media dazzle a situation that is structurally impossible to resolve from the get-go.  This is at the core of how a whole world of presumably the most astute economists, financiers and politicians can put forth reams of argument that only dance around the problem in circles that spiral progressively away from any resolution.

Alternatively, for a domestic economy that uses currency which is not “backed” by debt instruments, the fact that it can clear its own domestic marketplace of what it produces is true by definition.  This is not to say necessarily that its production is materially copious in relation to the population it serves, or that it is efficient with respect to its internal processes, or that it is self-sufficient in a physical sense so as to not need to trade for anything.  It primarily means that the currency variables that are entered into the LEAM represent the actualities of trade, and the system of equations has bona fide a solution.

LEAM – The Question of Currency Speculation:

The question quickly arises – “Would the LEAM be susceptible to being undermined by currency speculation?”  My answer is that it would effectively preclude any opportunity for profiting from such manipulations due to several factors.  The first is that such a system is constantly and transparently converging towards a stable equilibrium.  It should be noted that the prospects for any sort of speculation depend on there being volatility in any market it would hope exploit.  As outlined above, a “debt-money” system is inherently unstable.  To avoid slipping into a contracting economic spiral the people within it are forced to look abroad in search of opportunities for a “positive trade balance”, or failing that, to “borrow” more money into circulation from whatever private cabal it has abrogated its natural power to monetize to.  It is a classic Catch-22.  This sets up a situation that resembles more nearly a perpetual bankruptcy reorganization, than a stable self-financing economic order.

The factor that fatally compounds the situation is that we, individually and as a people, cannot admit to what is really happening.  For many reasons we feel subconsciously that it is just too much to do anything about.  The result is the creation of a massively convoluted cultural paradigm to maintain the lie.  Lies themselves are fundamentally unstable, and require an ever-increasing investment in delusion to keep them going.  Under such a circumstance the whole mindset surrounding money becomes a churning vexation.  Financial markets, in turn, effectively degenerate into “group psychology”.  One has only to turn on the TV to behold the inscrutable “wisdom” of the stock market to see the result.  This sort of effect covers the gamut of what might be called financial punditry throughout the public “dialogue”.  Within such an indeterminate situation people are extremely fearful, and susceptible to being stampeded by whatever specious “analysis”, political bromide or half-baked economic theory comes along.  It is within the obfuscation of just this sort of monetary miasma that speculation finds its green-velvet field of play.

Concomitant with the putative necessity of “borrowing” currency into circulation is the attachment of “debt”-based financial instruments to that money.  These can take myriad forms, such as mortgages, certificates of deposit, derivatives, government bonds, etc.  These instruments, in turn, are themselves bundled together and traded like so many gambling chits on the international market.   Out of seeming necessity, consumers enter the fray in whatever way they feel competent to participate.  This may take the form of shopping for interest rates, buying and selling goods on a speculative basis, re-financing, purchasing goods before prices go up still further, hoarding, making heedless demands for future benefits at the bargaining table, and so forth.  The whole of the life-economic structure truly becomes a casino where each is betting to outwit the other, thought we strain to make it not look that way.

In such a situation the de facto ethic becomes get-in/make-a-killing/get-out.  This is a far cry from the vaunted “work ethic”, or a true entrepreneurial spirit that is willing to sacrifice to provide a good or service.  The cultural moral compass becomes confused, then points south.  The gamblers win and live in the Big House, while the suckers work and sink into “debt”.  Into the soft terrain of the American dream is cleaved a ‘have-to-work vs. hold-speculative-paper’ chasm.  Some will say that this is simplistic, and to some extent it is, as there are still many out there who swim against the tide.  I would even take it a bit further and say that most people in society struggle to occupy an economic niche they perceive as authentic, and not driven by avarice.  Notwithstanding, downward is the direction of the spiral we are in, and society has already spun a long way down that fatal vortex.

As a way to cope most persons in the society, to one degree or another, become speculators themselves.  To be sure, they are loath to think of themselves that way, and my experience is that most are offended to hear of it (a flapping red flag in itself).  They may be averse to speculation at heart, but they have to survive, and so imagine that they are obliged to play the game in some way to secure their just and necessary due.  To illustrate how this can work, it is common for “regular people” buy an obscenely priced house in the hope that they will get in on the housing-inflation balloon before it goes bust, and so reap a supposedly justly due profit.  Few stop to think that by accepting, operating on, and even glorying in such gains as a social norm, they are essentially becoming speculators against the prospects of their own children, who will, as a matter of course, be the unfortunate blokes who will be obliged to pay the inflated price on an equivalent abode when they aspire to a home of their own.

We as a people are disinclined to call “speculation” what it is when it applies personally because we are not ready to come to grips with the unpleasant implications of the word.  Aren’t we, after all, just trying to survive in a game we didn’t initiate?  A subconscious duplicity of character sets in, and the delusions that cover it have to be constantly re-upped to maintain denial.  If one were to think the problem out to its end, one would see that this becomes a moral cancer which eats its way into the joint-&-marrow of each person and all aspects of the culture.  Even religion, for millennia the bulwark against financial speculation (usury), has largely succumbed.  This sets up the license-of-madness by which our whole civilization is becoming hollowed out.

The LEAM would take the speculative margin out of the money markets because it would entail the recalculation at regular intervals of the normalized value of currencies as determined by actual trade.  Speculation requires the presence of a fog of indeterminable factors that can be leveraged and exploited.  This is effected by the structural anomalies innate to “debt”-money, and the culture of fear and self-interest that it engenders.  A system whose fundamental characteristic is to constantly converge to a stable condition serves to effectively squeeze out the “spread”.

Finally, I would venture that a society which has largely adopted on the personal level the ethic money-serves-life, and established a usury-free monetizing structure in the political life, is one almost by definition for which speculative larceny has in the main lost its allure, victims, moral disclaimer, legal sanction and cultural glorification.  I say “almost by definition” because there is still a possibility that its citizens might not get it right (and wind up more vexed than when they began, but that is a topic for another time).  Still, the quantum elevation of consciousness required to positively change the monetary system would tend to bode well for a life-economic transformation that of itself would preclude much of the tendency to avarice.  We have no viable option except to try in any case.  To live out one’s economic existence based truly on principles grounded in sound practices would of itself form a positive feedback character loop for the culture that would tend to reinforce itself over time.  This would be in stark contrast to a perverse cultural inversion that effectively all but forces people to engage in de-facto larceny to survive, and erects an edifice of denial to block any epiphanies that would permit us to see the proverbial pachyderm-in-the-room on the matter.

In the ambiance of a true LEAM, we might ultimately discover that much maligned “human nature” is not as corrupt as it has often been purported it to be.  There are many examples in life of the natural predilection in human nature to act in a giving manner if it has the opportunity.  It is effectively deflected from doing so if people are put in a position of not being able to pay their bills.  If they cannot reform the system solely on their own recognizance, then they are driven to compromising their soul forces to rationalize living off their brother or sister, and the impetus from that tendency in turn inculcates a spiritual decay that extends deep into the personal psyche and cultural zeitgeist in all areas of life.  In contrast, the very fact of the establishment of a usury-free monetary regime would be prima-facia evidence of a leavening of the whole.  Within such a context, currency speculation becomes a pointless idea.  I don’t believe that this is too much to say, and we would do well to ponder this line of thought carefully to its natural end.

Through the LEAM, transparency of the system is established.  People could see where their money was coming from, where it is going, and how the ends meet.  They would be empowered to make sensible economic decisions, both of the individual and social levels, from their own recognizance.  They would no longer be vulnerable to siren calls of “balanced budget amendments”, “paying down the deficit”, “supply-side economics”, “income redistribution”, “running the government like a business”, “cheap” big-box prices, and all the rest.  Obviating such inanities would be the realization that money can indeed serve life “debt”-free in the context of an economic ocean that normalizes on a recurring basis to its natural level.  This is the elixir of the Life-Economic Associative Matrix.  In such a world the would-be speculator would have no option except to find a “real job”, but that is not a problem.  Possibilities for the social monetization of purposeful and satisfying enterprise are endless.

LEAM - Contrasted to a Single Global Currency:

I recently downloaded and read virtually the entire content of the Single Global Currency Association (SGCA) website.  From home to end it was packed with the most erudite analysis of abstract economic parameters.  None of the dissertations made explicit reference to anything like the LEAM, although I would argue that it is implicit in virtually all arguments.  By this I mean there were frequent articulations of desiring to arrive at some just, equitable and stable world trading order.  Indeed, that is what the whole global-currency exercise purports to be all about (sincerely I believe).  I would assert that the LEAM is the straightforward mathematical expression of that ideal.  It is what a mathematician, scientist or engineer would invoke as a matter of course when confronted with a problem of “n” variables in “n” dimensions.  There is no ideology in this.

The very idea of a single global currency represents a bringing together of the economic means for structuring and animating world society under a single nexus of control.  This is the very negation of the associative/self-leveling/holographic/ leavening power of the economic life.  It is monoculture in a most virulent form, and the logic of the current perverse economic processes taken their catastrophic end.  Notwithstanding, current developments seem to be taking the world monetary order alarmingly in that direction.  I am referring in particular to the trend for coalescing of national currencies into giant monetary unions.

The first was the European Monetary Union (EMU), with its issuance of the Euro to replace European national currencies.  In addition there is a rising level of speculation in the media, both mainstream and alternative, which speaks of an impending North America Monetary Union (NAMU).  As widely reported, it is initially conceived of as a merging the currencies of the U.S., Canada and Mexico into the “Amero” (supposedly replacing the dollar), but such a union would likely expand over time to include Latin American nations to the south.  There is also increasing talk of the “necessity” for the East Asian block of countries to form their own union in response.  Other regional unions are talked about as well, but the emergence of this prospective “big three” would effectively divvy up the world trading matrix on a trilateral basis, effectively making the merging of the entire global trading order into a single nexus of control one next “logical” step away.

It was disquieting to read the entire SGCA website and see so many economists and financiers who where ready, in one degree or another, to acquiesce to the supposed inexorability of this trend (on the bright side there were a few voices in opposition as well, but a dearth of cogent arguments even from that quarter).  To my mind this is a telling sign that we are in economic peril, and the window for avoiding monetary hegemony is closing.  The antidote to this is a fully awakened consciousness as to the true economic sovereignty and potency of each individual, a concerted effort in the social/political realm to establish and implement a true “monetization picture”, and the coming together by consensus of a world association founded monetarily on a LEAM-like matrix.  The very idea of a single global currency should be allowed to join personal avarice and monetary usury on the scrap heap of economic delusions which have proven to be inimical to life.

LEAM - Transcending Economic Disruption:

Within the LEAM, unforeseen shocks to the world economy could be addressed with maximum alacrity.  Let us assume, by way of illustration, that there was a natural disaster somewhere in the world that caused major economic disruption.  An exception to the calculation interval could be made and values re-normalized based on estimated effects, say at mid-year.  Errors in the estimates of any corrective factors would come out in the wash, so to speak, at the regular year end and subsequent closings.  The ability to recalculate for exigencies imparts to the LEAM an extraordinary flexibility to compensate for untoward economic trauma.  Any real life breakdowns and stresses incurred could be met by a manifest human response both within and from without the affected area without undue regard to financial “affordability”.

Under the current order, much of the “disaster relief” would typically consist of “emergency loans” to and “debt-restructuring” of the affected nation, and the adding of more “debt” to the already-in-the-red budgets of the donor countries.  The ultimate burden, of course, is underwritten by the taxpayers of both donor and recipient of countries.  What is more, just like for any other usury-money injection, the “debts” so incurred initiate a snowball that will have to be rolled over ad infinitum.  They will never go away, and so the whole episode will never be truly healed.

Contrast this to the response within a true Life-Economic Associative Matrix.  Any financial adjustments occasion by the “disaster” could be accounted for relatively instantly, and would in fact not cause a rent or serious imbalance in the economic fabric.  This leads to a conceptual point which is important to take note of.  The founding premise of a soundly constituted economic scheme is that the physical/human realities of life form the basis for the abstract monetary matrix.  This monetary matrix, in turn, constitutes a mirror image of the life of the “real” economy.  Furthermore, it is a spiritual axiom that, however roiled life in this world becomes on the surface, there is an underlying continuity within which spirit is still in control and all things go well.  The fluid constancy of the LEAM reflects that deep reality, and so can be said to be a true spiritual image of natural life.  It inculcates a profound symbiosis of economic factors, which, in turn, creates an ideal training ground for the elevation of the spirit, which is what the meta-economic realm or the economic life should ideally be.  This goes to dimensions of life which are difficult to describe, impossible to define, and transcend nominal considerations of structural balance of the LEAM.

The Question of Tariffs:

It is inevitable that in any discussion of international trade the matter of tariffs will come up.  More specifically, how do does the issue of tariffs relate to the LEAM.  Tariffs have been imposed generally for three reasons.  These are:

(1) - To protect particular industries from foreign competition.
(2) – To maintain the general pricing level in the domestic marketplace
(3) – To raise revenues for the Federal government

In all the talk about “free trade” and “unfair trade practices”, there has been a tendency to lose appreciation for the fact that the levying of tariffs has proved to be a useful, and indeed necessary, measure in the development of the major economies of the world.  It might even be said those nations that managed to retain their political prerogative to impose tariffs are the ones that have evolved into the “first world” nations (the U.S., the major European powers, Japan, recently China), while those who did not (mainly because of a loss of political prerogative due to colonization) devolved into “third-world” status.

Speaking to point (1) above, from its beginning and well into the 20th Century the United States made liberal and targeted use of the measure to protect its emergent industries.  In fact, the second statute passed by the new American government was the Hamilton Tariff of 1879.  The American philosophy on tariffs was summed up in an apocryphal statement attributed to Lincoln.  When he was presented with the question of whether the U.S. should produce its own rails for the building of the transcontinental railroad, or import them at a lower price, he is reported to have replied -“If we buy the rails from a foreign country, they will have the money and we will have the rails.  If we buy the rails from ourselves, we will have both the money and the rails.”

Related to point (2), the U.S. has also pursued a general policy of maintaining tariffs sufficient to protecting the soundness of its own domestic marketplace.   There have always been cheap commodities and manufactured goods available from slave-wage lands; whether overt political colonies, or more recently so-called third-world nations.  The American body politic has traditionally seen the wisdom in not letting an influx of such wares to break the monetary parity in the domestic marketplace between production and consumption.  We as a culture have only forgotten that in the last half-century-plus under an onslaught of “free trade” propagandizing.

Concerning point (3), tariffs were the main source of revenue for the Federal government until early in the 20th Century.  They have since been largely replaced by the income tax, which was ratified (arguably) in 1913, effectively in conjunction with the Federal Reserve Act passed the same year.

The question now is – What is the proper roll of tariffs in this time?  The answer is that they are virtually not needed anymore to fulfill their traditional functions.  To understand this assertion, we need to assess the profound structural change that has overtaken the global economy.  To wit, the world has been transformed from one in which nation-state economies maintained themselves within economic frontiers, to an integral global trading order.

For example, in the 19th Century the U.S. was a solitary economic entity afloat in a sea of other nations and undeveloped areas beyond its borders, with respect to which it had no control, but also relatively little need.  Its most vital interest was in carving out a protected domestic space within which it could nurture its own development from its own resources.  The main factor that could threaten that vessel would be a rupture that would allow its own good currency to drain out, or cheap foreign money to flood in.  The effect of either would be to deprive the domestic market cycle of the ability to balance its own production costs with consumer income.  Some trade, of course, needed to be allowed, and this could be managed as long as the resulting inflow and outflow of monies did not cause a significant disruption of the level in the monetary pool. 

The erection of a monetary levy around the domestic economy in the form of a wall of tariffs was the effective way to regulate the inflow and outflow to a natural level.  They insured that products imported into the country would have to be purchased in the domestic marketplace at an American price, and those exported would need to be bought for same.   While it is true that there were, in fact, frequently recurring periods of monetary trauma in the nation, these were caused mainly by internally generated stresses in the money supply, and so could be handled with internal readjustments, while the country as a whole progressed steadily ahead.  Because America was largely self-sufficient in a material sense, and even then tended to be the higher-wage-and-price market, international trade resulted in a net source of revenue for the government which could be used as a sort of tax-collection system, the proceeds of which would flow in to Federal coffers.  This state of affairs persisted for a century-&-a-half as the result of certain differentials which between the domestic economy and the uncontrollable economic chaos beyond national frontier.

So, where are we now?  The frontier is gone and the world is now one economy.  This is fundamentally true even apart from monetary reasons.  The two great oceans are no longer insulating barriers.  There are many strategic goods that we need from the world, and that the world needs from us, not the least of which are food and oil.  In the developed world, subsistence capabilities are largely gone.  We have acquired foreign tastes, and foreigners crave American culture.  There is emerging a densifying global communications web. People by the millions jet about the planet in mere hours, and patterns of immigration and ethnic exchange have transformed the American melting pot into a churning polyglot.  Exacerbating this reordering is an extreme division of labor, resulting in a minutely fractured productive sector scattered literally over every nook and cranny of the globe, and the emergence of consumption patterns that are nearly as dispersed.  We could argue about how good or bad all this is, or to what extent it is a result of a natural evolution, as opposed to being forced by political, military or economic manipulations (and indeed it is good that we have that dialogue as there are many lessons to be gleaned).  The simple stark fact remains, however, that this is now one world, and there is no going back.

The question then becomes, how do we deal with being a one-world economy, as opposed to a collection of isolated economic entities nurturing themselves within national boundaries?  This requires an answer of many facets, but the topic of the moment is tariffs.  In a global economy that has become unified, it makes little more sense to try to resolve trade issues by erecting tariff barriers between nations, than it would for states in America to create a tariff wall between Illinois and Indiana.

How then do we accommodate this overwhelming trend to integration, and still maintain a sense of sovereignty, freedom and independence?  The only answer I can see is to establish a worldwide Life-Economic Associative Matrix as the basic architecture for global trade.  If one follows the arguments given in this treatise, I think one would find that this has the potential of preserving, and indeed actualizing, the virtues of being one world, while avoiding its horrific pitfalls.  Not all the potential questions have been covered, or course, but that is all the more reason to have this discussion.

All this given, I would still not rule out the use of tariffs.  A hallmark of the LEAM is that each entity represented in the matrix retains (and indeed is freed up to exercise) full sovereignty and control over its internal processes.  This means, by definition, that they could still impose a tariff on goods entering their economy.  I would not be so dogmatic to say that this could never make sense from a domestic perspective with respect to some aspect of a given sovereignty’s legitimate aspirations.  An occasion might arise, for instance, where a people might for cultural reasons want to protect, say, a domestic wine industry, or for developmental imperatives nurture the growth of some particular manufacturing base.  This is perfectly permissible, and would not cause a disruption of the LEAM.  It would only be incumbent upon a people exercising such an option to realize that any skewing of pricing thus incurred would as a matter of course be compensated for in the internal realities of their own domestic price structure, plus whatever modification of trading patterns that this might engender would be reflected in the LEAM.  In any case, a tariff could be seen as a free creative option, and no longer as a weapon in an arsenal for economic warfare.  In any case, since the franchise to create money would be restored to the Federal government, it makes no sense to look to the tariff as a potential source of national revenue.

A Transition Scenario for Monetary Reform:

It is one thing to build castles of a better world in the sky.  It is another to put foundations under them.  The world has survived to this point virtually in spite of itself.  Historically mankind could “afford” to indulge in its greedy machinations because his world was effectively bigger than what he could bring down.  There was always a frontier, both exterior and interior, that could absorb the extents of human mayhem so that the seeds of civilization could survive to have another go.  By “exterior” I mean that there was always a greater territory out there still to be conquered or exploited.  It could serve as a compensating buffer for whatever internal inconsistencies an economy might embody.  It could function as a source of distraction from problems at home, or a motivating bogeyman to justify economic measures that would otherwise not be acceptable (war is eminently useful on both these counts).  It is a place where a despotic regime could export its problems, or even restive population if need be.  It could serve as a refuge outside the existing order where a remnant might survive to reseed civilization in the event of economic implosion.  Moreover, it constituted a natural resource repository from which could be drawn the wherewithal to make a new cycle possible.

By “interior” I mean that in the past, even within the more evolved civilizations, there persisted sufficient subsistence skills and practice in the culture to tide over much of the population through extreme times.  I am sometimes confronted with assertion that even if we had another “depression” we would weather it like the last time, and emerge stronger than ever.  Let us take stock of the situation now.  If the monetary system went down, the farmer would be in the food line nearly as quickly as the urban dweller, infrastructure and skills which formed the substance of the industrial sector have largely been transferred to slave-wage maquiladoros, and the technocrats of the post-industrial world would find themselves to be helpless babes with the high-tech teat withdrawn.  In short, this is an unprecedented time in history.  The world has turned over.  We are collectively, all of us, out on one big limb, and even comparisons to ostensibly historic precedents still in living memory can be dangerously deceptive.  The exterior and interior and frontiers are substantially gone.

That this poses a life-threatening hazard is obvious, but it is also a marvelous opportunity.  That is it puts us into a position where we have to make the whole order work for essentially everyone, from one corner of the globe (a peculiar idiom) to the other.  There is no escape from others, nor from ourselves (nor from our Creator).  It is alike in the truest interests of the most prosperous man of affairs and the most destitute denizen of the hinterland that this rectification go forward.  Is it too much to say that the time draws nigh when this may be a life-or-death proposition for the race as a whole (I will let the reader decide that for him-or-herself)?

Generally speaking, economic and political ideologies have an implied death wish.  On the right they are waiting for Armageddon to arrive, and seem bent on using the place to exhaustion like God intended before it happens.  On the left they are waiting to the chickens of the evil system to come home to roost to validate their truth, not stopping to think that they are in a real sense helping to pull down the pillars of the very temple that we all live in.  There is a third way that purports to take the “high road” straightaway to sentiments of a new benign vision, but comes up short of conceiving of the bridge that must be built to get there out of the bricks and beams presently in hand.  My analysis here is simplistic of course, as virtually all arguments partake of combinations of these tendencies, and no person is utterly deluded by, nor completely free from them.  It is a struggle for all of us.

The question of transition ultimately rests on a two-step concept.  On the one hand, we must as individual souls act upon connecting with the spirit in ourselves that would transform egoism to altruism.  On the other, we must (with an active patience and without judgment) look and work for the same leap of consciousness in each other, even in those deemed most diametrically in opposition.  Many of my compatriots on the “left” argue that this is a naive delusion that keeps us from effectively going after the bad guys.  Sure it would be nice, they concede, if “W” came to his better self, but don’t waste your time on the idea.  His ilk, so they say, only understands pressure of the political sort, and we had best be about putting on the squeeze.  They lose sight of the fact that we share in every way a common humanity, and are in a sense all “of his ilk”.  We are also in need of correction and forgiveness on the matter if the full truth be known.  This is not to proscribe engagement in political activity.  On the contrary, such is a natural expression of a person’s social predilections.  We just need to not let our heads be turned by any tendency to think we are something that we are not.  Humility, humor (especially self-deprecating) and circumspection before the truth should be our touchstone companions.

From the “right” side, great emphasis is placed on the inherent potential of the individual, and the idea that it is from this politically atomized being with God in his corner that anything we might do collectively arises.  The contention is that it is foolish waste one’s precious energy reforming such hopelessly corrupt things as “politics”, the “government”, the “monetary system”, or social institutions at any level.  These things will, so the thinking goes, take care of themselves when individual freedom and potential are sufficiently rewarded.  I deem this to be effectively the “invisible hand” argument that is appealed to by conservatives of every stripe.  It is particularly operative in “libertarian”, “free banking”, “free trade”, “free-market”, “free-enterprise”, “buy-one-get-one-free”, and other “free-most-anything” monetary arguments.  What it fails to sufficiently reckon with is that the “individual” has both a personal and a social nature.  These are obverse sides of the same coin.  Just as one side of a coin cannot be spent and the other returned to one’s pocket, so is it impossible for a person to act individually without acting socially.  Even if one withdraws deep into the woods to do one’s own self-sufficient thing (I have literally been there), that withdrawal is in itself a profound social act.  There is no way to be a responsible being except to be so on both the personal/individual and social/political levels.

There is a long history of morphic splitting of mankind’s personal/social bipolar nature into dichotomous ideologies that may be described as right/left, conservative/liberal, individual/collective, etc.  Politically speaking, these bifurcations are generally expressed directly or implicitly in terms that imply that we are inherently economically divided against each other.  The effect of macro-monetary usury is to deprive the economy of the ability to complete its market cycle without being obliged to get the better of one’s foreign neighbor, or failing that, to “borrow” from privileged interests that control the system.  It is this fundamental dysfunction that is then exploited by the malicious spirit that would set brother against brother, or split persons internally within their own individual selves.  It also engenders myriad myopic stumbling blocks which influence those who would in good faith unite, to instead mistakenly divide.  This sets up a situation where various segments of society are pitted against each other in a struggle to see who will have to go into “debt”, be unfunded, remain unemployed, forego health care, or live in poverty to make the monetary ends meet.  It becomes the means for setting minority against middle class, wage earners against the unemployed, labor against management, farm against city, black against white, the environment against jobs, state against Federal, liberal against conservative, individual against the community, citizen against government, and all other demagogueries of the bipolar tendencies of human nature.

We ought not repeat the mistake of dividing the question in our deliberations.  Any transition strategy on the monetary scene needs to take the oneness of the personal/social or individual/political dichotomy fully into account.  It must not make a false distinction between the micro and macro economic dimensions.  It needs to address both polarities squarely, and not assume that one will in some vague way take care of the other. 

So the question arises, how should it be handled?  The answer will be unique to everyone, but I would state it his way. In the individual/personal arena, the case for change must be made in a manner that is not a personal attack, and yet challenge the spiritual inertia of everyone.  It should be intrepidly candid and bracing, and cut through the “bs”, so to speak, of everyone’s opinions, ideologies and interests.  It must express understanding for all, but quarter for none.  It dare not be motivated by the prospect of hurting or offending anyone, but also not be compromised out of the fear (certainty actually) that one’s message will be misunderstood.  It should deal with denial head-on.

This is not to force the issue, as no one has to listen to one’s message.  Let the attitude be, rather, of a Cassandra, speaking one’s truth to whomever may hearken.  The wakeup call may at times bear a resemblance to preaching, but it need not be sanctimonious.  It is unmistakably “tough love”, both with the other and oneself.  Indeed, that is the only way one can get away with a frontal approach.  People must be put fearlessly in touch with the fact that they are the authors of their own reality.  This is true in the economic realm, as much as in any other, all appearances of victimization notwithstanding.

In the social/political arena, the mind of an awakened individual will naturally turn not only to how he can empower himself, but also how that new awareness can be extended to the wider family and community in which he lives.  Institutional arrangements are an inseparable part of that.  Within this public domain are included such things as foundations, corporations, the government, the monetary system, and other artifacts of the political life.  Indeed, if a person’s concerns did not extend to these, that could be taken as telling evidence of an un-liberated self-absorption.

I have encountered many people who despair of the prospect for reform in the public sphere.  There is no one, they say, at the helm of the economic ship.  The financial life has taken on an inexorable momentum of its own, and there is no politician, CEO, banker, or anyone else that could effectively do anything about it regardless of how much he might like to.  What is more, things have gotten so abstract, convoluted and pre-programmed that there is not any effective way to deconstruct the system.  Reform is a hopeless task, so it is assumed, and we should tend to our business in the personal realm.  Things presumably will go better from there.  To be sure, there is much irrefutable evidence that could be cited to support this attitude.  I would, however, respectfully offer the view that there is a higher reality to which the case can be appealed where social transformation and political reform is not beyond hope.  It is, in fact, eminently doable and strictly necessary.

Permit me to make the case.  While it is true that no personage is in charge, and ‘money has come to do business on its own account’, it is also true that there has been elevated to lord and master a perverse principle.  In the micro realm I call that “personal avarice”; in the macro “monetary usury”, in the meta “globalism”.  If the impulse for this negative tendency can be reversed in the micro, then it follows that it can be implemented in the macro; and the result will exfoliate in the meta.  The micro and macro dimensions are two poles of a spiral that reinforces itself depending on which way the energy vortex turns.  The imperative to reverse the “debt-money” mechanism can be identified, understood and acted upon.  Anyone who understands cancer can see it.  To identify a problem in the exterior realm is not ipso facto a blame game.  Indeed, how could opposition to the usury-lion-seeking-whom-it-might-devour not be the impulse of an awakened soul?

But, it might still be asserted, what good would that do?  The financial system is too complex, entrenched and bound up with selfish interests anyway.  I would counter that while the monetary regime within which our economic life is enmeshed is indeed an impossible knot, it is a Gordian knot, and the overturning of usury is the sword that would cut it.  Thomas Jefferson said, “But follow the principle, and the knot unties itself”

This is sagacious advice for our predicament.  If money-serves-life were established as the operative principle of our monetary system, this nasty knot that co-opts our sovereignty and blocks our potential would begin to unravel quite naturally (“of its own accord”, I daresay).  What is more, the effect would extend into our personal economic lives in a process that is precisely the reverse of how the negative vortex came into being in the first place.  This is not to say that there would not be a transition to manage, and expertise to bring to bear.  On the contrary, the discipline of the financier would be urgently needed, but the impulse for the transition itself would rest upon a spiritual principle that all could comprehend.  Properly conceived, it would not be an “expert” or “executive” decision.

The broad outlines of how this transition should be managed are straightforward.  Under the current system the “debt” paper backing the currency is turned in periodically for redemption.  The way that “debt” is “satisfied” within the system is to forever roll it over with yet more money issued at usury, which only serves to compound the problem.  In contrast, within a usury-free regime these instruments would be redeemed, not with more of their kind, but with usury-free public money, more on the order of Continental Currency, the Greenback or United States Notes.  This process would necessitate the re-vesting of the monetary franchise in the national government and declaring all credits currently extant to be money.  The authority to write these things came from the people through their government in the first place, even if it is a constitutional function that has been effectively abdicated to private interests through the so-called “Federal Reserve System”.  The monetary franchise is legally, structurally and morally out of place now.  I see no problem in principle with restoring it as the political arm of the social order, which is what it should properly be.

From this point forward the money supply would no longer originate in “borrowing” at usury from private banks.  Instead, there would be two primary monetization streams of emission in the public domain.  The first would take the form of “spending” by the issuing authority (in this case the Federal government) of the money into circulation through whatever it purchased or paid out for the needs of its operations, or as elements of a social welfare base.   It would be effectively vitalizing the outline of the “monetization picture” that society had composed for itself through its democratic process.  Taxes at the Federal level would be a mechanism to draw excess money back out of circulation, thereby regulating the stream of the money supply injected via “direct spending” (or more properly speaking, “direct monetization”).  The second stream would consist of loans issued on a cost-plus basis to individuals, corporations and sub-Federal public bodies for enterprise deemed by the body politic to be most essential for society as a whole.  Money quanta issued via this mode would be effectively controlled by the payback of loans.  It should be obvious that both of these monetization mechanisms would be fundamental to the powers for economic self-actualization in the social sense.

For the duration of the deflation of the “debt” bubble, money issued to redeem the bonds issued against the dollar would effectively constitute a third and diminishing monetization stream that would automatically terminate with the redemption of the last bond.  The need to redeem this non-substantive ephemera would be in one sense a less-than-optimal monetization mechanism in that it would not allow for the same level of social control, but it would be necessary to deconstruct the old system in a systematic and orderly manner without trauma, default or recrimination.  Past injustices would in effect be recompensed by a deep justice in a transnational sense in that Third-World peoples who have been supplying our material wealth for decades, while collecting mostly paper bonds and poverty for their troubles, would then be effectively holding coupons against the productive capacity of America.  As these were redeemed over the course of a generation, they would constitute the buying power needed for their nation to at last reclaim the fruits of their very real labors.  Concomitantly, such demand would constitute the basis for rebuilding American industries in the course of paying this country’s material debt.  There would be a synchronous elegance and symmetry in the unfolding of this harmonization that relegates to inanities all the ostensible “free trading” schemes that are promulgated at present.

The establishment of these monetary streams would be instrumental in securing the “Social Welfare Base” (SWB) of the “Monetization Picture”.  This can be thought of as the segment of the economic pie dedicated to underwriting the human base of the economy.  Putting it in a religious parlance, it would include among other things the social response to the commandment to feed the hungry, clothe naked, provide for the widow, etc.  It would constitute in-proportion perhaps half of the macro-economy, but likely significantly less with the generation of sufficient value beyond that required to provide a modicum of adequate and dignified maintenance.  It would insure a level of life support such that people would in fact be poised to pursue their full potential without being intimidated by the prospect of social disempowerment, or pinned down by abject want.

There is a second piece of the economic pie that might be called “Private Enterprise Opportunity” (PEO).  It would include a private financial market where interest would be a factor (but not usury).  The critical distinction I would make on this wise between “interest” and “usury” is that the borrowing and paying-back of “interest” occurs within the context of money that already exists in circulation (and therefore does not deprive an economy of the money required to complete its market cycle), while “usury” is what is now deceptively identified as “interest” when it is attached to the “loaning” of money into the system (which of a practical certainty shortchanges the market cycle, and guarantees the emergence of a vicious “debt” spiral).  The PEO would comprise the arena where people would be free to act upon their beyond-subsistence potential (“liberty”) in the economic realm.  It would embody copious opportunity for personal development, expression and stewardship.  The PEO is where people could find the means to “give something back”.  To be sure, it would also present some opportunity for avarice, but that is the hazard that must be endured to accommodate free moral agency.  Besides, once out from under the morally corrosive influence and monetarily insatiable demands of usury, human nature might prove to be not nearly as perverse and in need of micro-control as is commonly thought.

As to whether the prospect of overturning usury is unrealistic, I would assert that it is the only realistic option.  I say this partly because, whether it seems attainable or not, the situation in the world today demands nothing less.  It is our “only choice”, so to speak, if we are to avert implosion.  Taking the though further, precipitous transformation, I would argue, is the only way that real change has ever occurred.  Witness the American Revolution.  Who could have predicted that this disparate collection of people could have risen up out of their straights to challenge the strongest nation on earth, and take control of their destiny in a way that ran utterly counter to whatever in the world would have been deemed prudent, possible, or even thinkable?  Notwithstanding the ever-present chorus of voices warning it can’t be done, the consciousness of mankind has gone through many quantum leaps whereby what was incomprehensible one day became self-evident the next.  At this Armageddic juncture, how dare we entertain a transformation that is anything less?

One thing that stands in our way is the manner in which we have allowed the terms, conditions and parameters of our existence to be co-opted and burdened with impossible meanings.  As an example, I would cite concepts which enumerate our powers in the public domain, such as “politics”, “government” and “monetary reform”.  These have become so loaded that we run from them in despair.  Yet, how can we believe in the efficacy of our better selves if we allow the fundamental institutions of our social selves to be wrested irretrievably from us.  To say that we as a free and sovereign people cannot deal with our realities in the public domain is to say that we are insolvent on the social level, and ultimately the personal as well.  I understand viscerally from personal experience the hazards of people’s penchant for looking to some “government” or other external agency to solve their inner problems.  As a political activist on the left for many years I have been as guilty as any of that delusion, and it took me some considerable time to wise up (assuming I have).

Turning it over, though, I have also come to realize that a people that has reclaimed its sovereign power in the collective, is a people that, virtually by definition, has attained a quantum edification.  From such an awakening, the outer manifestations (like monetary rectification) would naturally follow.  Properly understood and practiced, there is no “statism” about it.  All this is not to say that evidence of cogent reform is sufficient, but a lack of an impulse in that direction is telling evidence of continued spiritual slumber.
Taking the issue deeper, it is not only the “monetary system” that needs to be redeemed, but also the very language with which we think.  Indeed, it might be argued that freeing the language, arts, science and other artifacts of culture is the prerequisite to any true reform.  How, for example, can we expect to be sovereign in the public domain if “political” is a dirty word?  It should be the operative word.  Too often tagging an idea with the epithet “political” is enough to deflect the issue, and avoid rigorous thought.  If something is too “political” it must ipso facto be corrupt - right?  Why should this be?  Who made it so?  It would seem that the attempt to make it thus has been spearheaded by the malicious spirit that would deny the power of the social pole of humankind’s personal/social nature. 

It is true enough that “politics” can be problematic if not conducted with sufficient veracity, and that our practice of it has fallen to woeful depths, but to stretch that to the assumption that people have not sufficient power to conduct themselves in a ennobling manner in politics, the government, the monetary system or anything else is to say that they are bankrupt on the personal level as well.  Where is the free moral agency in that?

Taking the argument to its ultimate end, I would say that “government”, properly constituted and understood, is a truly “chaordic” body.  That it has been adhered to some partial interest is attributable to the fact that we as people have abdicated our power and permitted our sovereignty to become co-opted for purposes inimical to our nature.  The economic root of this problem is that we have allowed money to rule, as in the form of personal avarice and monetary usury, and this in turn has driven all the pathologies of the system.  If the monetary franchise were restored to its proper place “government” would come to be regarded firstly as an enabling institution for the marshalling of human potential, and secondly as the agency charged with monetizing that potential.

The nature and dynamics of the governing process from bottom to top would be transformed to an extent that cannot be adequately described here.  Suffice it to say that government would at last have the potential of becoming a truly effective body at the national level; rightly exercising by proxy the sovereign power of the people for purposes of enabling their true potential.  Integral to this, it would be widely realized that bona fide life-economic activity is the font of money, not a “cost”.  It is the very basis of revenue for financing its own activity.  This would be a revolution in consciousness (in a crucial sense the effective culmination of the American Revolution).  We would witness a vast transformation from the chronic spectacle of partisan ideological bickering over a budgetary process in which it is assumed, preposterously, that lack of money demarcates the limits of what can be done, while actual life potential, awaiting only equitable monetization, languishes inactivated because it cannot “afford” itself.

Having redeemed the money power through personal initiative, expressed politically through true monetary reform, the task remains of forming associations of sovereign entities in the global realm which will expedite the conditions within which the potential awakened can function on a symbiotic and mutually supportive basis.  This naturally leads to the formation of an arrangement after the nature of the Life-Economic Associative Matrix.

Non-Invasive Character of the LEAM:

We have created a financial order that is bound up with the most incredible plethora of gimmicks, all in pursuit of an economic ideal that seeks self-leveling principles of structural soundness and economic justice.  This ideal cannot be attained, of course, because the basic transaction by which money comes into existence is in itself irreparably flawed, and cannot serve as a foundation for a just and equitable order.  But still we try.  We have created a massive financial edifice constructed of patches upon patches, which include:

  •  The massively invasive “progressive income tax code” (and the incredible tax avoidance industry that has grown up around it)
  •  Ubiquitous programs of redistribution (“wars on poverty” in their many guises)
  •  The extension of sub-prime credit to those who could otherwise not get financing for their own home (and the measures to salvage the financial and personal wreckage they leave in their wake)
  •  Ostensible foreign aid programs (which morph into banker support systems at the expense of the ostensible aid recipients)
  •  Manipulation of exchange rates (as in the attempt of the Chinese to peg their currency at a fixed ratio the dollar)
  •  Reactions against manipulation of exchange rates (as in the attempt to get the Chinese to roll back their fixed ratio, as if that were going to address the intractable reasons that made them feel impelled to be so insistent on this wise in the first place)
  •  Fantasies about if-only-we-returned-to-the-hard-money-of-the-gold-standard (forgetting the ruin such a regime has historically brought in its wake)
  • Tariffs imposed in ways that are not appropriate in their place and time (which do little more than exacerbate the churning)
  • Ever tightening financial security edicts (which transmogrify into smothering bureaucratic mechanisms and the Big-Brother organs of a “homeland security state”)

This listing of well-meaning measures (and unintended consequences) could go on virtually ad infinitum.  They are all essentially churnings of the financial system that fail to address the very impossibility of achieving their goals in a monetary order founded upon private gain at the expense “the other” on the micro level, “debt”-based money creation on the macro, and international exploitation on the meta.  This can all be reduced to one word; i.e. “USURY” (as in “use-you-ery”, or the dismal science of using you for financial gain).  This would all begin to resolve itself quite naturally and without undue stress (which is not to say there would not be a concerted effort required to make it work) in a monetary order based upon the sound principles inculcated in brother/sisterhood, true public money, and the LEAM.

The universal upshot of all these misguided palliative schemes is that they are experienced in one’s own life as being intrusive, increasingly to the point of abject tyranny.  All rely, in one way or another, on a system of detailed reporting, capricious judgment, and micromanaging by agents of a system that has run amok.  This is tempered by the humanity of the people that work within the system, but even they are losing the freedom to act upon their impulses as fellow human beings as their mandates become ever more tightened and mechanized.  We are moving into a phone-tree universe where even the possibility reaching a person or physically locating a party to deal with is becoming an anachronism out of the past.  Just dealing with the tax system is more that most people can reasonably cope with.  The rest is simply becoming out of control, and our personal, national and world-community lives are being swallowed up by the trend.

In the world of the LEAM the problems that all these agencies of the beast are purportedly created to address would begin to resolve themselves back as closely as possible to the level of direct and transparent relationships between people (even if they are necessarily geographically separated in an given instance).  It reaps the benefits of numerical calculations that are precise and meaningful to the n’th degree, but do not control anyone.  More remarkable still is that there is an almost total freedom from personal intrusion required to make the system work.  There are no forms to fill out on a personal level that are inherent to the system.  The numbers entered into the LEAM are simple tabulations of “cash-on-hand” in bank vaults at regular intervals.

None of this to say that bureaucracy, forms or personal reporting would be a thing of the past.  After all, we do yet live in an imperfect world.  Such requirements would, however, be naturally scaled back to a level that was humanly meaningful and doable.  In my own mind I carry an image of a world where such measures can in the fullness of time be done away with altogether.  This is admittedly idealistic (many would no doubt say unrealistically so), but the matter does not have to be resolved at once.  I certainly would not make any dogmatic assertions of what ultimately might or ought to be.  The days work before us now is to rectify the economic order according to the providential evolution of humankind in its earthly sphere of existence at this time.  With the Economic Life thus redeemed, we can safely trust the genius of our progeny to take it from there.

The Question of the United Nations & World Government:

A question naturally arises as to the nature of any institution or institutions which would be associated with the LEAM.  More specifically, do we need a “world government”, and what would become of the present United Nations?  How would world agreements and standards be enforced, and is “enforced” even an appropriate term for a free associative order?  What would become of “free trade”?  How would the operations of whatever mechanism that was adopted be financed?  Would there need to be a world tax?  These are pressing questions which arouse impassioned debate even now.

We should first discover why the UN is apparently so dysfunctional in its current configuration.  The root of the answer I believe is that it is laboring under an impossible condition.  That is, it is the representative body of a world of nations which cannot complete their own domestic market cycles.  Its members are obliged, therefore, to exploit their neighbors to make up the shortfall by whatever subterfuge available.  To compound the problem, these nations are virtually without a clue as to the true nature of their predicament, and so act out their power plays within the most incredible ignorance and denial.  It is a wonder that this organization hangs together at all.  The fact that it does persist, however imperfectly, is telling testimony of the determination of the world’s people to try to work things out if only a way could be found.  If the world economic order could be established on the basis of a true LEAM, then I believe that the way would be open to possibilities for associative initiatives and cooperation on a global level that are almost beyond imagining at present.  In fact, they would evolve quite naturally and of their own accord, if only we could awaken the world to a more altruistic spirit, and excise the structural impediment insinuated into monetary systems by the influence of usury.

For purposes of this discussion let us dub this new world organization of whatever form the “Associative Nations” (AN).  The name is aptly descriptive, and avoids the baggage that the moniker United Nations (UN) has come to be saddled with.

The question then arises as to whether the AN would constitute a “world government”.  It would not be a “government” in the sense that that it would be a ruling body.  It could rather be described as an enabling body.  It might in fact be composed of a number of institutions, themselves working together on a cooperative basis.  Such bodies might evolve out of current NGO’s.  The functions they would perform would include administering a Global Trade Registry to record the movement of currencies across borders, and plugging these numbers into the LEAM.  There would presumably be a plenary body of ambassadors from each nation, or otherwise defined political grouping, where the basis for the resolution of issues would be consensus wherever possible, instead of the balance-of-power gamesmanship or the truth-by-legal-combat of a “world court”.  Much conflict could be avoided because, with the underlying gamesmanship caused by structural indebtedness obviated, optimal outcomes could be realized in actuality.  My guess is that this would work out better than we imagine from our present perspective simply because the supporting economic process would be transparently viable, and not of a nature that forces the “losers” (everyone ultimately) into “debt” in a downward-spiraling financial competition.

Other functions could include the setting of standards for measurements, the pooling of talent and expertise to address common problems, the enabling of global communications, diseases control and eradication, and other measures clearly in the interests of the global commonweal.  It might even be reasonable to constitute such things as space exploration on this basis.

The question inevitably would arise as to the advisability and form of a military force to intervene in hot spots, or to protect the world as a whole against an aggressor.  Given the fundamental changes undergirding the world social order as described above, coercive mechanisms might be a great deal less required than we imagine at present, if required at all.  Terrorism would likely be greatly reduced or nonexistent, given that its causes would be profoundly ameliorated.  If a threat did pop up, it is not armies that would be effective in countering it anyway, but rather the good will of the world’s people (as our experience in Iraq should have taught us by now).  Beyond that, if some megalomaniac did emerge (not very likely) and entice enough people to follow, that is not something that would happen overnight.  Any strategic threat takes time and resources to develop.  Presumably, intelligent people would see it coming, and it could be handled on an ad hoc basis.  The main preparation that would be required in advance would be a consensus on the outline of how such a contingency might be handled.  Any standing “military force” would be more on the order of a public protector.  It should not be a strategic force with offensive capabilities, as the very existence of such a thing would pose its own worst threat.  At the max, any uniformed service should be modeled more on the order of the US Coast Guard or National Guard in their public assistance and disaster relief modes. 

The existence of an associative world body in the context of a viable economic order would be an unprecedented arrangement in human affairs, so there is a bit of speculation in anyone’s opinion as to how it would work out.  I would venture that within a properly constituted context, human endeavor would need a lost less “governing” in the coercive sense than we now imagine.  We might in fact discover that cooperative activity is very much more in humankind’s nature than we have assumed.  Its tendency for such may have been subsumed all along under the corrosive influence and bogus imperatives of an order founded on a corrupt principle.  Wouldn’t that be a marvelous discovery?

My argument here is in part simplistic.  The larger reality is that we have lived, moved and had our beings within the imperatives of spiritual development all along.  I am not imagining that our history in the earth sphere has been a sort of grand tragic mistake, or that there is anyone in particular to blame.  We can presume that anything that has gone before has had its own reason for being.  That does not mean we cannot study the past.  It does mean that we can stop living in fear of its shadow.  We would in a sense be at last free from it, and able to cast the light of our native intelligence into its litany to distill the many lessons it has to offer

Seen from a higher perspective, if a truly associative global order were to come into existence, that presumes that the requisite personal and social leaps have already taken place.  It will not have come from the micro as opposed to the macro domains, or visa-versa, but from a sort of bootstrapping action between the two.  From there the possibilities become expansive beyond imagination.  This is not as impossibly utopian as one might think.  The entire transformation is only a turning of the spirit away.  From there, words like “government”, “political” and “monetary system” would lose their deleterious meanings, and be redeemed as resources of the language; as they are intended to be.  There would only remain to do what needs to be done by people in the truth of the moment with what is at hand through social/political instrumentalities of, by and for the people.

The question soon arises as to how such a world organization could be financed.  Would it mean having to have a world taxing structure?  I would answer that a world tax would be anti-ethical to a freely associative structure.  A more appropriate solution would be for the AN to emit its own currency.  It would be issued through spending to purchase goods and services required by the association to do its business, and be recovered from circulation through the invoicing for services to macro and micro economic entities that used its good offices.  Remission could be paid in any currency because the normalizing monetary adjustments would be made through the LEAM.  This should work out relatively easily because the ability to pay for services without going into debt in the aggregate would be mathematically assured by virtue of the self-normalizing principle upon which the world monetary matrix was set up.  Nations and other entities would be more that willing to pay because of the compelling benefits of having a harmonizing world system that functioned through a single nexus.  Gone would be the divisive political battles over paying “dues”.

This AN-issued money should not be confused with the notion of issuing a single global currency.  It would be merely one sovereign currency among others which finds its equitable relationship to the whole through the LEAM.  Economically speaking this is very much in keeping with the presumed independent and impartial nature of the services the AN would render.  I would recommend, however, that it be designated the reference currency for all others.  In other words, this is the one that would be assigned an “LEF” of “1”.  The relative value of all others would be expressed in relationship to it.  This would be more equitable than designating some “dominant currency”, like say the US dollar, as the baseline of reference; or an awkward scheme to rotate the honor between currencies.  It would provide a convenient frame of reference whereby the value of each currency on the macro level, as well as each price on the micro, would be expressed in terms understandable with respect to the life-economic of the world as a whole.  What could be more straightforward than that?

As a caveat I would add that what has been said above should not be construed to mean that macro-economic national currencies are any final answer to the monetary-reform question.  They assume the primacy in the above discussion by default because of how the world economic order is organized at present.  A check of one’s wallet or bank account would readily show that the accounting chits are virtually all of national issue.  This transition scenario is meant to address the redemption of the present order as a point of departure for an open-ended future.  It is about, not the end of economic history, but rather a new beginning.  From there anything is possible.

I would also hasten to add that this also does not preclude forms that resemble national currencies.  The point here is that whatever steps are taken they should leave the future unpresumed and unshackled.  We may have our respective views about where this is all going or ought to go, but it behooves us to avoid the hubris of ruling out any possibilities from here.  It is enough for now to rectify what we have in hand, learn from our experience in getting to this juncture, and leave the economic order poised for a new evolution into the future.  In the long run, it is up to our progeny to determine how that will go.  To contemplate anything less would not be in keeping with the ideal of freedom we espouse.

I would also note that when I speak of the macro-dimension of monetary affairs, this is not meant to be limited to the nation-state.  The macro is in truth an aspect of the sovereignty that exists at all levels and for all groupings of society.  To illustrate the point, the income of the breadwinner(s) of a family is the macro-dimension of the family’s economy, and the pattern of expenses, priorities and discretionary spending thereof constitutes the economic picture that it monetizes.  This family enterprise, in turn, is a micro-fixture of the macro-pay-structure of the company within which that income is derived.  This company is a micro-player in the state economy which is macro within its jurisdiction, but micro in relation to the national economy.

Naturally we could slice up the overall economic cake along many possible profiles.  For example, there are at present nascent local currency schemes, such as Ithaca Hours.  Generally, these represent true forms of money, providing they issue currency based on an enhanced margin of real economic activity which would not otherwise take place (much vaunted “frequent flyer miles”, in contrast, are sales gambits that are already factored into the price of a ticket).  What is more, they are macro-currencies with respect to the economic enterprise conducted under their aegis.  They are also, at the same time, micro-currencies with respect to dollars.  Ultimately, the micro/macro hierarchy is a fractal relationship.

The macro-dimension is a sovereign expression of any element of the social order that is able and chooses to expedite its good work by issuing a currency.  The micro-dimension, then, consists of the body of players that use that currency.  It should be understood that this cascading of monetary expression can exist along many lines of devolution.  What is more, each “line” will inevitably be interpenetrative of every other one.  This is not a blocking problem, however, because everything will be normalized in the LEAM.  The practical subjective factor about which a decision must be made is to set the criteria for drawing the line of demarcation that would determine which currencies are significant enough to be included in the LEAM.

One implication for the future in this analysis it that the composition of the LEAM is open to modification subject to real economic change in the future.  While the currencies currently in circulation tend to coincide with areas defined on the political map as nation states, that could begin to become less congruent depending on the evolving mix of participants.  Non-state money issued by small groups, or even individuals, could be plugged into the LEAM upon reaching whatever threshold criteria.  LEAM’s might even be nested in LEAM’s, with the currency designated as the one assigned an LEF of “1” as the variable normalized in the higher order.  The evolution of possible forms of the LEAM is something that can be left open into the future.  Ultimately this process could prove to be the effective vehicle for the evolution of a whole new world.  I would not lay any rigid expectations of what that may look like from here, but the fact that it is open-ended and conceivable should be the good fruit of a viable transition scenario that it is our mission to accomplish now.

The China Problem:

Both the U.S. and China are caught up in the same usury-based world monetary system.  The nation, relatively speaking, that bears the most responsibility for that state of affairs is the U.S.  This arrangement was sealed at Bretton Woods, and in actuality has only grown more entrenched and pervasive since then.  It would seem logical, then, that it is up to this nation to make the first move to remedy the situation.  To bring a sound and just monetary order into this world is, in my view, a providential task that has been bestowed upon this nation since before the American Revolution; at least since 1690 when the Colonial government of Massachusetts became the first in the Western world to issue a paper currency directly as an emission of the sovereign enterprise of the People.  The steps necessary to fulfill that providence are, as best I can discern them, outlined in the above treatise, the Iraq War open letter, and others of my writings.  I invite others to join in with this dialogue.

Like for the U.S., the Chinese cannot complete their own domestic market cycle.  Of Hobson’s three options as outlined above, they too must look to a “favorable balance of trade” (an oxymoron if one thinks about it) to cope with their situation.  This is bound to be true regardless of whether their leadership is ruthlessly totalitarian or benignly democratic.  This is not to say that there is no distinction between the two.  We must recognize, however, that the first law of economics is necessity.  Whoever is in charge is obliged to pay heed to it.

It is also true that China is a huge and venerable society that is undergoing wrenching changes.  In real physical and human terms, its problems are mind-boggling.  There is, without a doubt, transpiring in their cultural/political/economic order a life-&-death struggle between forces of the dark and the light.  The severe conditions and delusions under which it labors can only be exacerbated by the obligation of having to emerge within the toxic economic environment of a global monetary order that is based on “debt”.  I can image that this effectively forces souls striving from a more beneficent spirit into the clutches of the more sinister influences.  The arena of monetary redemption is where we as a nation can help most.  Indeed, it may be our providential task to do so.

China’s needs to import virtually all its oil and many other raw materials.  They have a massive population, but are losing the agricultural basis for feeding them.  Ruination of the air, land and water by pollution, depletion and mal-development is pervasive.  Sheer crowding is taxing their living space.  Is it any wonder that they feel compelled to gather in U.S. dollars, the “paper gold” which backs practically all international trade, to cope with their own inherently weak position?

Chinese confidence in the bonds they purchase which underwrite U.S. debt is no doubt becoming untenable.  Still, for reasons that are complex, they (like much of the rest of the world) feel it in their interest to continue buying them.  This self-interest may be morphing into a worried desperation, as they try to protect the soundness of their own monetary position.  There is much talk about switching to the Euro, Yen or other reserve currency (even the Renminbi), but no one knows how to make the leap without triggering a world financial catastrophe.  That said, the day is fast approaching when their hands may be forced.  What that would look like is anybody’s guess, but the fallout from such an eventuality is surely something we would not want to contemplate.  The tragic upshot is that such a gesture might be futile in the long run anyway.  Any currency that the world could make the switch to currently suffers from the same usury-based structural deficit.  It would only be a matter of time before it too was as bound up with “debt” as the dollar is at present.

The China Solution:

But there is a solution.  If the dollar were no longer a “debt”-based currency, the global monetary order would be transformed.  This is a sweeping statement to be sure, but I believe that it can be shown to be justified.   Among other things, the complex and paradoxical problems associated with the Chinese hoarding of bonds backing the dollar would begin to rectify themselves virtually of their own accord (“But follow the principle, and the knot unties itself”).  The first step to accomplish this would be to establish the dollar as a public currency emitted interest-free out of the U.S. Treasury.  There is no legal barrier to doing this, as Lincoln’s “Greenback Act”, augmented by the Agricultural Adjustment Act of 1933, is still in effect.
Monetization of the actual economy could be implemented via two streams.  One would be for money to be loaned into circulation (much in the manner that it is done now), but not at interest.  Its level would be self-regulating via the loan-approval-and-payback process.  The proceeds would go primarily for purposes that benefit the commonweal, like, say, public infrastructure.  The other monetization stream would be direct government spending.  Its level would be regulated through taxation and retirement of any excess buildup in the monetary pool.

As for the bonds “backing” the dollar, most of these are now held by foreigners, increasingly the Chinese.  The announcement that the U.S. was going off the “debt-money” system would signal that the bonds already extant are the last.  The pervading worry that they are the air in a “debt” bubble that is destined to one day burst would be instantly rendered moot.  Indeed, these bonds would suddenly become secure interest-beating instruments of limited issue.  Those possessing them would naturally hold them to term, and that would work out just fine because it would set up an orderly process whereby they could be redeemed over time for United States Notes (“Greenbacks”), instead of Federal Reserve Notes (“debt”-based currency, for which there would be issued more bonds).  The debt-spiral would be effectively halted in its tracks without trauma or default.  These outstanding bonds would suddenly become what are essentially coupons against the future productive capacity of the U.S.  The upshot is that the only thing the Chinese government and top financial interests can do is to cash them and spend the dollar proceeds as they reach maturity.

From the perspective of the Chinese, these bonds are essentially transformed from being debt-bearing instruments which the country is obliged to hoard to underwrite their own buying power in the international marketplace, into a reserve that it is free to cash in and spend as they reach maturity.  For years, the value of what the Chinese worker has been creating with his or her own hands has been siphoned off into these foreign bond holdings.  Now it can be redeemed in the U.S. marketplace as genuinely-earned, but long-deferred, purchasing power.  This would inculcate a profound element of justice that is due the Chinese people.  Concomitantly, it also constitutes a currency stream which could help to rebuild the American manufacturing capacity lost to China in the first place.  The initial influx of money would tend not to be inflationary since it would stimulate a commensurate level of economic activity.  In the long run, any buildup of currency that did turn out to be excess to market requirements could be taxed out of circulation and retired.

As final note I would offer a thought about the question of technology transfer to China that could be used to threaten this nation militarily.  The United States has been since the end of the Cold War the number-one arms exporter in the world, and much of this materiel has been used against us, either as threats, or in actual combat (who armed the Iranians under the Shah, Saddam in Iraq and the Taliban in Afghanistan?).  Clearly, it does not make the world safer for the U.S. to fill the planet, supposedly teeming with terrorists, with weapons we cannot control.  The stealthy transfer of technology to the Chinese can only compound our security problems.  The question has to be asked, what is so compelling about this sort of enterprise that a nation can’t resist it, whatever the security implications?

The vain ambitions of university professors and venality of government officials may indeed be a factor, but I think that the problem is more fundamental than that.  Why does this country compete in the international arms market at all?  I have often heard expressed an underlying resignation to the idea that our country “needs the jobs”, but in my view, that is a euphemism for it “needs the foreign exchange credits”.  That rationale would not exist if our economy did not constantly experience a felt need to halt the slide into “debt” in the balance-of-trade game, which “need”, not incidentally, is an extension of the inability to close our domestic market cycle, which at root arises from the “interest” attached our money in the private bank “loan” transaction by which it is created.  Clearly, there is a chain of cause-and-effect at work here that is driving the military transfer phenomenon in a senseless direction.  I don’t know if monetary rectification would entirely halt the race for market-share in this lethal “trade”, but clearly it would remove a lot of fuel from the fire (my best guess is that for a totality of reasons, such commerce of death would end).

A New Future for China and the U.S.:

As a world humankind needs a new future.  The ones we can imagine now seem to be shadowed by dark clouds that no one knows how to dispel.  The American mindset is haunted by a fear that arises from the very specter of a nation the size of China attempting to emerge into the modern world.  “Oh my God, what if all those Chinese want to live in big houses, drive cars and live the “good life” just like we do?  The earth is buckling under the weight of our own consumption now.  How does this not turn into a life-or-death, superpower-against-superpower, struggle to survive in a time of post-peak oil, global-warming and disease pandemics (e.g. Chinese bird flu)?  Perhaps we can sign a treaty whereby they will agree to limit themselves and not be a threat to our lifestyle”.  These arguments are not subliminal.  I hear them voiced in the media, and not only on talk radio.  Clearly we and the Chinese need a more adequate vision for the future.  The question arises, then, “On what basis could it be hoped for?”  In a practical sense, this must begin by examining the mode by which money is created, issued and controlled.

A key factor in the in the private-bank-loan process is that for a loan to be approved, someone must put up “collateral”; i.e. tangible property or economic activity to “secure” the loan.  We have also seen how a society which is tethered to a “debt”-money system is obliged to go deeper into debt on a continuing basis.  This is another way of saying that it must find a way to put up more collateral all the time.  The way this works out is that the size of the economy in material terms must basically double once per generation (24 years at a 3% growth rate).  One is obliged to consider how long we could hope for the economic activity of the planet to be materially supportable if it is forced to re-double every twenty-four years, against a continually diminishing resource base to boot.  It should be noted that this imperative is dictated by the mathematical “need” to service the compounding “debt” against the money supply; apart from actual human needs.

The “bottom line” is that in the end the ‘debt”-based monetary system tends to drive the evolution of life in a materially snowballing direction.  It is mainly the quantification of the material that is the basis for collateral.  It is true that that has become modified to an extent in that value in the material world has become interpenetrated to an ever greater extent by intelligence patterning.  This is the reason, for example, my father used to crunch out the math for his business laboriously on a ten-pound metal adding machine, but now it is possible to hold in the palm of one’s hand a devise in which is inculcated immense computational intelligence that can be programmed to handle every aspect of one’s bookwork comprehensively and at lightening speed.  Clearly, we have become vastly more productive.  Why, then, was it common for those in my father’s day to work one job, buy a house, raise a family (five kids in my father’s case), allow the mom to stay at home, and still have a good life; while in this vastly more “productive” era it takes two incomes and no kids to subsist in an apartment?

The answer for this, of course, is complex, but I would suggest that at the root of the conundrum is the usurious nature of money, and the “interest” cost that is at once driving life in the direction of endless material expansion, and ultimate financial un-affordability.  Amongst the people I know, this dilemma seems to be the besetting preoccupation of virtually everyone’s life, and its effects are visibly decimating the earth around.  To have any prospect for a viable future, this riddle of having materially to double and redouble just to meet cash-flow, and then not being able to afford it (vast productivity gains notwithstanding), must be answered even within the economic life of America.  How much more imperative then, must it be to come to grips with this uber-ultimate catch-22 in a world burgeoning with billions of emergent people in China and elsewhere?

Life does indeed still hold the potential for expansive growth, but its multi-dimensional reality cannot be realized until it is freed from the slavish ersatz-necessity to forever compound its material-exploitation base quantitatively to satisfy the demand for collateral to secure bank loans which cannot ultimately be paid.
There is, as I write this, news in the media that raises a question as to whether our world is now in actually approaching the point where the physical/human realities of the economy can no longer keep up with the mathematical fantasy of endlessly compounding monetary “interest”.  How, then, can the present cancerous financial model be the basis for a world that has to move into the future, while accommodating the needs and aspirations of a billion-plus Chinese (plus billions of others)?  Clearly, we need another vision, and a new way forward.

The practical first step is to return the money-creation process to the public domain.  The salutary effects of this measure would be manifold, not the least of which is that what we do economically would no longer be driven by “debt”.  Instead, the money supply could be increased or decreased according to whatever was available and required at any given time.  Activity that was heretofore deemed “uneconomic” because it was not suitable as collateral for “debt” could now be performed.  For example, gleaning the landscape for recyclables, cleaning up the air and water, reclaiming the land in a healthy way, alternative energy, appropriate scale of enterprise, keeping a parent home to raise children, authentic lifelong education, holistic health care, good food, and whole new rhythms and patterns of life would now become not only “affordable”, but logical.  Such an economy would not be forced to mindlessly “grow” irregardless of all other factors.  Rather, it could expand, contract and transform itself according to actual needs, without trauma or default.

To be sure, this is a big vision, and there is not room to develop it here.  What I do suggest, however, is that such a monetary rectification could be the basis for a shared new frontier for an emerging global civilization.  It would open a way to supplant competition, obsessive material excess and mutual ruin, with cooperation, multi-dimensional growth and mutual enrichment.