The Mathematically Perfected Economy
A comment to my last post suggested that I visit www.perfecteconomy.com, People for Mathematically Perfected Economy. So I did. It is a very interesting topic and I agree with the premise that the Federal Reserve is not completely constitutional and that our monetary system has some flaws. But the system that is suggests doesn't seem to me to be any more sustainable than or current system. I'm not an economics major or anything, but I did minor in mathematics, so I do know a thing or two about numbers.
In section 4 of the site, WHAT IS MATHEMATICALLY PERFECTED ECONOMY?, the rules of the system are outlined. The key to it is the elimination of interest. Interest is simply the profit that a lending institution receives from it debtors. They then give an example of the system for purchasing a house.
For example, we might purchase a $100,000 home with a hundred-year lifespan — the price of which includes a one time credit worthiness certification fee of $50, and transaction processing fees of $0.25 per month for 100 years, or $300.
In mathematically perfected economy, the $100,000 is loaned into circulation, and the $99,650 cost of the home is paid to the producers of the home, who therefore receive immediately for their doings. Out of the $100,000 debt, the certification and processing fees are paid to the entities performing these services, as the services are rendered.
To maintain a related circulation equal to the current value of this production, we pay for this home at the rate of $1,000 per year, or $83.33 per month — which is the rate at which we consume it. Everyone pays for exactly what they get from the system, and no more. There is no inflation or deflation. The value of money is not corrupted. A constant relationship between the circulation and remaining value of financed assets is maintained. There is no multiplication of debt by interest. There is no depression or recession. The system is perpetually sustainable. We can prosper perpetually to our full capabilities, without obstruction or impediment. Moreover, we have far more to spend, to support far greater prosperity.
Now it seems to me that sure the processor gets his processing fee and the builder gets his money, the owner gets his house, but what does the lender get for parting with his money for A HUNDRED YEARS?!?
This system is not sustainable, no lender would loan money without the promise of a profit.
I also disagree that it is the Fed that causes this whole interest/inflation problem in the first place. Private banks have been lending money for centuries. These loans come from the money that we as depositors place with the institutions. We didn't make the loan the bank did. If I have $1,000 in the bank and the bank then loans that money to my neighbor he now has $1,000. Now there is $2,000. I still have my $1,000 and now he has $1,000. When he pays off the loan, plus interest, that new $1,000 is effectively wiped out and the bank gets a profit. The bank isn't going to loan money just for fun; they need a profit, so they charge interest. In any event even if my neighbor wanted a $1,000 from me I'd charge him for the use of it(depends on the neighbor).
The whole even trade system doesn't work. I have money today, he needs money today, I loan it, I no longer have use of it, I must charge for the use of it. After all I could use it if I didn't loan it out.
Perhaps I'm missing the point or something, I don't know. I didn't read the entire thing it is quite lengthy and confusing (in my opinion unnecessarily almost purposefully), but I do suggest that you look it over and post your comments. Thanks to phi50 for giving me something to write about.
posted by Easy E @ 4:46 PM
13 comments
13 Comments:
Thanks for the try, phi50.
I have responded to this blog at my blog. I *do* cordially invite you to debate your assertions.
Regards,
mike montagne - founder, PEOPLE For Mathematically Perfected Economy
Please see the blog at:
LINK
under the title:
COMMENTARY: RESPONSE To ‘The Money Tree’: BLOG on Mathematically Perfected Economy™
The OP is essentially correct.
The promise of $83 a month for the next hundred years isn't going to convince anybody to foot the bill for the construction of a house. The contractors, after all, expect to get paid up front.
Montagne's website is quite disorganized, but I have taken the time to sort out his four basic premises:
1) People trade things that are of equal value. If they trade things that are not equal in value, then one of them is being cheated.
2) Borrowers are trading more money in the future for less money now. It follows from premise #1 that they are being cheated.
3) Any monetary system subject to interest ultimately terminates itself under insoluble debt. It follows from premise #2 that, because the charging of interest is not currently prohibited, the world economy is destined to collapse.
4) There is class conflict between laborers and usurers as they battle over the unearned gain (surplus value) that is the proletariats’ due. By an argument similar to dialectical materialism, as the world economy collapses (see premise #3), the implementation of Mathematically Perfected Economy™ is inevitable.
Mr. Montagne denies that he is a socialist though I view his theory as being akin to Marxism and find fault with all four of his premises.
See my paper:
http://www.axiomaticeconomics.com/montagne.php
Victor of course resorts to the lowest possible tactics in attempting to gain recognition for his preposterous, non-selling and useless, trivial work, "Axiomatic Economics." In his mere 3 preposterous "axioms," he claims for instance that the value of money *must change* by a preposterous formula which of course justifies nothing.
And of course, by the same "principles" by which he claims I am a "Marxist," he would also have to call Thomas Jefferson one, for Jefferson too stood against Aguilar's and Hamilton's thinly veiled system of exploitation -- a system under which "bankers" merely insert themselves into commerce between debtor and true creditor, claiming the promise of the debtor must be issued on the paper of the "banker," and thus forcing us to maintain a vital circulation by perpetually re-borrowing principal and interest paid out of the general circulation, as subsequent sums of debt -- perpetually increased so much as periodic interest.
The consequence of Mr. Aquiliar's preposterous "axiom" therefore is cyclical failure of the system, for the preposterous notion that our promises to pay are no good unless they are issued on the paper of entities which *can only* make them no good.
Nice try, Aguilar. Remember, I have five knuckles to answer to if you ever have the gonads to call me a communist or Marxist to my face. You're an idiot, Victor; and obviously an enemy of freedom.
PS. As for the contractor requiring and being denied payment "up front," Victor exposes himself as having done the poorest "study," if any at all, because of course the contractor is paid immediately under mathematically perfected economy as they are under usury -- with the note of the debtor.
The only difference in fact between Aguilar's proposition and his asserted Marxism is unassented private ownership of the means of production (and virtually all other wealth), for the benefit of usurpers, rather than the "Marxist"/"socialist" government.
So the only difference between Aguilar and Marx is Aguilar wants to be part owner of the transgression.
Right On, Mike!
Wish Iceland will take the MPE on board and be the first of many (all) countries to follow suit.
They may be so successful, whence they may stop their fury of having to pay excessive interest on a “per capita” basis (€ 13.000 per inhabitant @ Euribor, or Libor plus 2.75 % p.a.) to the UK/Holland and Denmark for the failure of a limited liability banking company (another fault in the system: bankers fail, individuals may pay for their rescue and then again for their outstanding debt, directly or through their government! (Presently they make interest PLUS 400% profit on mortgages here in Holland. – Ouch, who created this “worst financial crisis since 1929”?).
Maybe the Islanders will be so happy that they will “turn off” that darned volcano and stop bellowing ashes all over us here in Holland.
The beginning of knowledge is the discovery of something we do not understand. Once you understand (MPE) supporting anything else is economic suicide!! The solution to your fate is Mathematically Perfected Economy, ....but will you listen?
http://endtheecb.ning.com/video/mathematically-perfected
MPE is a system to be applied by government in the case of long term ownership or infrastructure creation to eliminate the financially crippling and inflation causing interest. this will stabilize the economy and the govt can pay back the loan to the central bank through future tax revenues.
[Post 2/3]
In order to really get our brains around these issues then, we must first understand (a) that banks are not even true creditors; they merely intervene upon our natural issuance of promissory obligations to pretend to be creditors by no more than publishing the evidence of our promissory obligations (purported "money"); the real creditor/creditors gives/give up property for the promissory obligation; we therefore *absolutely do not* "borrow money from banks"; on the contrary, we wrongly believe in fact that we can only "borrow" evidence *of our very own promissory obligations* from purported banks. Nothing could be further from the truth; nothing is further from a veritable concept of true free enterprise (particularly considering the fact that the ramification of this erroneous belief is terminal dispossession and failure); and *therefore* the only solution to all this is to restore the right of individuals to issue their promissory obligations, free of extrinsic manipulation, adulteration, exploitation, and even inevitable denial of even the very opportunity to make good upon them, by eliminating banking (purposed exploitation by denial of this right) from the equation.
In order to eradicate exploitation (and particularly to eradicate terminal exploitation), that governance, or the vital establishment of joint, just government therefore, is *necessarily* only to certify credit-worthiness, to maintain the accounts of the people (as would a bank in mere accounting systems), and to issue the promissory obligations of the people ("promissory notes" therefore) in a standardized form (which necessarily might be no more than *electronic*).
Thus mathematically perfected economy™ is no more than the monetary equivalent of barter, with the additional advantages of a universal medium of exchange, and a virtually costless capacity to *justly* finance all the prosperity we are capable of, by certified, enforced (and the only enforceable) promissory obligations, which indeed it is the right of every individual to engage in.
Of course too then, there is no question then "who we would borrow 'money' from if it were not subject to interest, because we do not *even* borrow money from banks: we merely, wrongly allow "banks" to intervene upon our issuance of promissory obligations (no erroneous "need" to borrow even exists!!!), to merely pretend we can only "borrow" evidence *of our own promissory obligations* from purported banks.
2. With all this well understood then, it is just not quite right then to say that these principles are "applied by government in the case of long term ownership or infrastructure creation":
The same principles are vital to sustaining short term ownership and consumption of production as well. (A fine point, I understand, but a vital one, because [as I have often demonstrated] nothing less than an *effective* circulation, capable even of simultaneously sustaining trade of *all* production at once is sufficient to represent a fact of just reward and unencumbered, just trade.
[Post 3/3]
3. We must further understand the fine nuances of the assertion, "to eliminate the financially crippling and inflation causing interest." It is often asserted (wrongly, without qualification, and without even the right math) today, that *circulatory inflation* is the cause of price inflation. In fact, where issuance of promissory obligations is merely collateralized (as is purported to be the case), it is mathematically impossible *even to suffer* circulatory inflation.
No one but no one but no one *establishes* a fact of circulatory inflation furthermore, merely decrying how much "money" is being poured into circulation ― for the only veritable, comprehensive math is to account too for what we are paying *out* of the circulation in the way of servicing the perpetually escalating sum of artificial indebtedness engendered by the present obfuscation of the currency.
What we need to understan therefore, is that there is not systemic cause of *price inflation* in purported *circulatory inflation*: on the contrary (as my work proved over 40 years ago), the only systemic cause of price inflation is the very perpetual multiplication of artificial indebtedness *which instead is attributable to interest*!
This ever unjustifiable imposition of *interest* therefore is the cause of price inflation; and therefore the only *correct*, veritable thin which can be meant by "inflation-causing interest" is *price inflation* (as distinct from unproven and implausible *circulatory inflation*).
4. But therefore it is entirely wrong to say, "and the govt can pay back the loan to the central bank through future tax revenues."
Why?
NO: In restoring the right of individuals to issue their promissory obligations, free of extrinsic manipulation, adulteration, exploitation, and even inevitable denial of the very opportunity to make good on them (at the present brink of inevitable, terminal failure), *each of us* instead are inherently obliged to pay off our promissory obligation(s), retiring principal at the rate of consumption of the related property.
Thus too, joint governance, in providing agreed infrastructures at agreed (publicly affirmed) costs, is to be paid for by the public, likewise at the rate of consumption or depreciation of the related property, by of course, those who consume of that infrastructure. Effectively then, joint governance just determines what we need... always imposing the cost on the consumer who has agreed to that need, and whom, under mathematically perfected economy™ is obliged to pay no more than an equivalent measure of their own production, for whatever they consume of the joint, affirmed designs "of government" (the people).
On the private level on the other hand, all we are doing too is paying for what is *our* production (the production of the people) with no more than an equal measure of our own production ― a right (and only true case of actual free enterprise and markets), which of course, is denied to us by mere publishers of the evidence of our promissory obligations, whose first crime against us is that they launder all the principal ever so created into their unjustifiable possession; and whose second crime against us is that in imposing interest on the principal (which is not truly even owed them [but instead is to be retired from circulation as it is paid) when in fact the publisher has no more than absorbed the mere, negligible costs of publication, thus they impose terminal failure and dispossession upon the subject, unwitting populace, by no more than a purpose obfuscation of our right to issue our own promissory obligations.
mike montagne (original 1968 author, MPE)
perfecteconomy.com
[Post 4/4 - CONCLUSIONS]
Thus we see how wrong the author of this thread is when they asserted, "But the system that is suggests doesn't seem to me to be any more sustainable than or current system."
On the contrary, the 1:1:1 relationship sustained *only* by mathematically perfected economy™ therefore is *the only* sustaining proposition of monetary solution (MPE™ therefore is likewise the only monetary solution); and (as recognizing how MPE™ is a matter of no more than second-grade, elementary math) therefore, even the most mediocre mathematician therefore can and will readily recognize (just for instance) that there is no more than one actual solution for inflation and deflation, because (if inflation and deflation are defined respectively as increases or decreases in circulation per represented wealth) *only* maintaining a circulation (free of maldisposition, and...) which is *always, always, always* equal to the remaining value of represented wealth, *solves* inflation and deflation. Likewise, nothing but eradication of interest solves our third categoric fault, or inherent, irreversible, and therefore terminal multiplication of artificial/falsified indebtedness by interest. And thirdly, only the inseparable integration of the solutions of our first and third categoric faults therefore solves our second categoric fault... which is systemic manipulation of the cos or value of money or property.
Too then, in regard to the author's (common) error of assuming, "Interest is simply the profit that a lending institution receives from it debtors..." we likewise understand from my (original) explanation of the obfuscation of the currency (or promissory obligation), that in fact the purported "lending institutions" are lending *nothing*: on the contrary, they're merely publishing evidence *of our issuance of promissory obligations*, to which the banks are not even an intrinsic party! Much less to the purported banks establish *actual* facts of debt (OR LENDING!!!) when in fact they give up no commensurable property whatever in the issuance (and obfuscation) of *our* "money."
We DO NOT "borrow money" from the banking system at all: on the contrary, the purported banking system merely pretends to be a creditor, when in fact the only actual creditors TOO are we who accept these promissory obligations for the property we give up in exchange for them.
These facts of course are not mere nuances of semantics: they are the unraveling of a purposed obfuscation of the currency, the fatal flaw of the means of which, in turn, is inherently terminal.
The blog author further states nonetheless, "I'm not an economics major or anything, but I did minor in mathematics, so I do know a thing or two about numbers."
Great. Then you understand that there is no such thing as "an economist" who advocates the ever unjustifiable imposition of interest; and therefore I would expect, that after careful evaluation, you will join us in advocating mathematically perfected economy™ ― as in fact, *the only* veritable monetary solution (and the only way to avoid the present, terminal failure).
(Incidentally, in regard to all the plagiarists out there, this original analyses and development of one fact of solution is copyright and/or trademarked by yours truly, mike montagne. ALL RIGHTS ARE RESERVED.)
What happened to my first post?
[Post 1/3]
Just for the record...
Anonymous wrote, "MPE is a system to be applied by government in the case of long term ownership or infrastructure creation to eliminate the financially crippling and inflation causing interest. This will stabilize the economy and the govt can pay back the loan to the central bank through future tax revenues."
While this seems a worthy effort to summarize/paraphrase mathematically perfected economy™, it's important to recognize the proposition as it is, and so it is incumbent upon myself to rectify even the least nuances. So please forgive my attention to what may seem to be tedium.
1. First of all, we should be clear that the concept of "government" here (in accord with the only veritable concept of truly free enterprise and markets), is joint, consensual governance in authority only to exercise the few principles which preserve the integrity of promissory obligations (and thus "money") by:
a) eradicating interest (as a.1) "the banks" are not true creditors; as a.2) no lawful consideration is given up by "the banks" in the creation of "money"; a.3) as "the banking system" merely publishes evidence of our promissory obligations to each other; and a.4) as "interest" is terminal, in that their obfuscation of the currency comprises an implicit obligation to maintain a vital circulation by perpetually borrowing interest and principal (paid out of the general circulation) back into the general circulation ― which thus inherently and irreversibly increases the sum of falsified, artificial debt to the banking system in proportion to the circulation, until we succumb to terminal failure under untennable sums of artificial debt);
b) and by imposing an obligatory schedule of payment equal to the rate of consumption or depreciation of the related property ― which in turn of course (even eradicating any need for regulation) always, always, always, b.1) automatically maintains a perpetual 1:1:1 relationship between b.1.a) remaining circulation, b.1.b) remaining value of represented wealth (which in conjunction with our first precept [a], too maintains a circulation which at all times is fully disposable to that representation), and b.1.c) remaining obligation to pay *just that much* *for* (!) the represented property. Nothing else and nothing less then *can* maintain the perpetual value of currency, or, in other words, *perpetually* immutable tokens of value.
It is *only* by this *necessary* eradication of interest and obligatory schedule of payment (retiring principal at the rate of consumption or depreciation of the related property) then that we solve: 1.1) inflation, deflation, and maldisposition (dedication of ever more of a circulation to servicing artificial debt, versus sustaining industry); 1.2) systemic manipulation of the cost or value of money or property (which are caused by any combination of our first [1.1] and third [1.3] categoric faults); and 1.3) inherent, irreversible, and therefore terminal multiplication of artificial indebtedness by interest.
Mike constantly states that he has proven that debt will rise to unsustainable levels if interest is charged on debts. Yet in all the millions of pages on his website, I could never find this proof.
It is easy enough to reason that if interest is paid to a bank then that is money removed from the economy without a corresponding reduction in debt.
There are three possibilities from this point:
The bank could just sit on the interest it collects (or squirrel it overseas) in which case the money supply will diminish until there isn't enough of it to service the debt which doesn't change.
The bank could re-lend the interest into the economy. This would restore the money supply but increase the total amount of debt (mike only considers this possibility).
The bank could spend the interest back into the economy (eg by paying interest on demand deposit accounts or paying dividends to its shareholders). This would also restore the money supply but not change the level of debt. Therefore the system would be sustainable for ever.
If sustainability is mike's main concern, he would probably have more success arguing that banks should be prohibited from sitting on or re-lending interest than arguing for a radical change to a system that provides more questions than answers.
I am responding to the original post. Re this statement "Now it seems to me that sure the processor gets his processing fee and the builder gets his money, the owner gets his house, but what does the lender get for parting with his money for A HUNDRED YEARS?!?" You are missing the point in your question. The proposal of MPE restores money to its actual function which is as a promissory obligation which represents the labour and/or assets of the person who gives up property in exchange for it (money). There is no 'lender' in this system because a Common Monetary Infrastructure is, on instructions of each person/entity, creating the money on their behalf. It is the people who create the money and who retain the obligation. There is no intervention on this direct money creation by banks. There is no lender and there is no interest. Why would there be. All there is is an obligation on the part of the person who created the money to cancel it from circulation as the asset/item/service depreciates over time. This would encourage products to have a longer and longer lifespan which would be great for the environment. It would also mean that all industry which proposed a useful service/production could create the necessary funds to function so long as they adhered to the same requirement to pay the correct amount out of their accounts (cancel it) in the measure that the item they bought with the said money depreciates. So all MPE does is to define money as it really is. it is merely a promissory obligation and no entity or person should be trading this money to make more money. The inherent value of money must always relate to the labour and assets which went into creating it and the amount of money circulating should always relate to the remaining assets in existence. Gold or any other measure is obsolete - what reason would we have for digging up metal from the ground and then claiming that that is the measure of money? Merely to leave the control in the hands of those who find and mine the gold I daresay! MPE defines who is the REAL CREDITOR in any transaction. Is it a bank?? NO! It is the person who gives up property in exchange for a promissory obligation (money).
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