There are two tools for doing this, the forward calculation and the backward calculation.
Backward Calculation
The change in GDP to dollar quantity ratio is reflected by the inflation rate. Therefore if you want to know how much the GDP has grown, just look at how much prices have changed. This cannot be fudged because anyone can go out and see out much things cost.
If prices fell 10%, and the number of dollars is the same, then the economy must have become 10% more efficient, or 10% more valuable. The GDP grew 10%.
Assume there are a million dollars in the economy and you’re calculating the inflation rate by the retail price of apples, that is your CPI basket of goods consists of a single apple. Assume you want price stability of apples to be $1/apple.
Suppose you build a road which increases the efficiency of the economy and lowers the price of apples to $.90/apple or a 10% reduction. You know that there are a million dollars in the economy which means you can now print up 10% times one million dollars and spend those dollars into the economy to return the price of apples to $1.
So you print up $100k to maintain the roads. You can continually print up money and spend it into the economy as long as the price of apples is below $1/apple. That is, it makes sense to spend money maintaining economic efficiencies.
Forward Calculation
The backward calculation is a safe bet, it shows you how much you can spend into the economy and the worst you’ll do is to simply return the price of apples to at most $1/apple.
However, that assumes that the $100k you spent did nothing to improve the economy, that is, $1 spent in resulted in $0 of increase of value in the economy.
Businesses never operate like that, when they spend $1, they need a return on investment. For instance they spend $1 and get $1.10 back.
Suppose building a bridge across a certain river will greatly reduce shipping costs for apples and that spending $200k building it, will reduce the price of apples by 30%. If you have a million apple economy that’s $300k savings a year in shipping costs, so it makes sense to build that bridge, even though the backward calculation doesn’t say you have money to build it.
You build the road, possibly experience temporary inflation, but then the price of apples will fall back under $1.
Because the forward calculation may result in temporary inflation, there would need to be political checks to keep it from becoming a chronic issue. For instance, if the price of apples is over $1 for three years in a row then the current Congress is not eligible for re-election.
Negative Taxes
Keep in mind that if you spend the money you created in the backwards calculation correctly and get a greater than 100% return on investment, then you may never need to use the forward calculation. That is, if the backwards calculation tells you to spend $100k, you then spend it and create $110k in value in the economy, then you can do that year after year, forever and never have to tax.
You’ll be able to have negative taxes and pay the citizens with the money left over. This will create an incentive for people to do things that make the economy more efficient even though they aren’t getting paid directly for it. It would be a type of economy where people could go into private business for themselves, or they could charge nothing for their services and just collect the negative tax and live on that.
I am not sure how a non-fractional reserve system would work? How are the banks going to make a profit? since they don’t produce anything for GDP technically. If they are private wouldn’t they still be siphoning off money out of the system? The way I see it banking should be a non profit activity of the state. Any interest would go to off set taxes. Or better yet have a Gov Bank that handles non commercial laons and small business and the private handle the large commercial like the Glass/Stegale Act
You just tax banks on profits they made on fractional reserve loans. The banks can siphon all they like, but then the govt just siphons it back into the public fund, so the banks do not have more economic power than the govt.
Excise Tax wouldn’t that cause inflation? I mean the government always wants more money so they tax the businesses then the business raises the price on goods. Plus some companies would lobby to be exempt.
I’m kind of ambivalent about excise taxes. If the govt does things correctly it won’t need excise taxes. They are ok as a last resort for things like cigarettes and alcohol, or things which are possibly more harmful than good.
I like the idea of taxing imports to be the same price as local items! People say this will start a trade war but that is only a worry for globalists. But oil is the problem again. If we depend on imported oil other countries who don’t like our tariffs will pressure the oil countries to raise their price on oil for USA…. If we were not imported oil dependent, it would work perfectly . I think. But it is worth a try! It couldn’t be worse than it already is!
There are plenty of alternatives to oil. It’s just a matter of price. People would rather bomb and murder in order to steal oil from other countries rather than developing alternatives. We’re spending a billion a day on wars for oil, that same money could go to subsidizing ethanol or any number of alternatives. It’s just that Americans like to feel important with their aircraft carriers and nuclear submarines that we don’t do that.
Forcing the US off oil completely would be one of the best things for it, right up there with returning to a debt-free currency and eliminating direct domestic tax.
This clip, taken from C-Span, from a House session dating back to March 2001, shows Ron Paul stating there is nothing to fear from a global currency…. as long as it’s backed by gold, of course. Listen at 0.32 (more in your face numerology), where Paul states there being nothing to fear from a “single, worldwide currency.” He then goes on to praise the wonders of globalism, which he also claims is nothing to fear.
Is the establishment running scared of Ron Paul, or is that what “they” would like you to think? Is it so absurd to think they could be promoting Ron Paul while simultaneously “ignoring” and “attacking” him, thus giving him a sort of legitimacy in the eyes of a targeted vector in the never-ending dialectic scheme?
What if abolishing the Fed has been in the plans all along, only to be replaced with something ever bigger and more nefarious?
What if Ron Paul is somehow being used to promote a counter-opposition that actually plays into the hands of the controllers and their diabolical plan of creating the world currency — and government — Ron Paul apparently supports?
Ron Paul makes a number of cardinal errors in this video, such as thinking that gold money is not fiat. (As soon as you make gold, or anything else, good for the payment of taxes it’s fiat, as Bill Still has pointed out.) He also attacks economic protectionism which was what the country was built on: tariffs.
Why is it OK for the US to protect itself with military force, but not economics?
In this dark firmament, however, one bright star shines. The sole state to actually gain jobs is an unlikely candidate for the distinction: North Dakota. North Dakota is also one of only two states expected to meet their budgets in 2010. (The other is Montana.) North Dakota is a sparsely populated state of less than 700,000 people, largely located in cold and isolated farming communities. Yet, since 2000, the state’s GNP has grown 56 percent, personal income has grown 43 percent and wages have grown 34 percent. The state not only has no funding problems, but this year it has a budget surplus of $1.3 billion, the largest it has ever had.
Why is North Dakota doing so well, when other states are suffering the ravages of a deepening credit crisis? Its secret may be that it has its own credit machine. North Dakota is the only state in the Union to own its own bank. The Bank of North Dakota (BND) was established by the state legislature in 1919, specifically to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men. The bank’s stated mission is to deliver sound financial services that promote agriculture, commerce and industry in North Dakota.
The Advantages of Owning Your Own Bank
So, how does owning a bank solve the state’s funding problems? Isn’t the state still limited to the money it has? The answer is no. Chartered banks are allowed to do something nobody else can do: They can create credit on their books simply with accounting entries, using the magic of “fractional reserve” lending. As the Federal Reserve Bank of Dallas explains on its web site:
“Banks actually create money when they lend it. Here’s how it works: Most of a bank’s loans are made to its own customers and are deposited in their checking accounts. Because the loan becomes a new deposit, just like a paycheck does, the bank … holds a small percentage of that new amount in reserve and again lends the remainder to someone else, repeating the money-creation process many times.”
Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her earlier books focused on the pharmaceutical cartel that gets its power from “the money trust.” Her eleven books include Forbidden Medicine, Nature’s Pharmacy (co-authored with Dr. Lynne Walker), and The Key to Ultimate Health: Non-toxic Dentistry (co-authored with Dr. Richard Hansen). Her websites are www.webofdebt.com and www.ellenbrown.com. Ellen Brown is a frequent contributor to Global Research.Global Research Articles by Ellen Brown
Recently, the state of Virginia has added its voice to the growing war between states and Washington when state Delegate Robert G. Marshall introduced a bill to permit the Commonwealth to investigate the mechanics and legal hurdles that must be overcome in enacting a switch from the dollar to a Virginian currency.
Many of the states are exploring such an option under the radar. The mainstream media for the most part is turning a collective blind eye towards the process and under-reporting the major news story.
The reason behind the move by a growing number of states towards exploring the ways and means of issuing their own legal money is the fact that many fear a coming implosion in the value of U.S. currencyboth internationally and domestically.
Virginia’s House Joint Resolution 557 is one more tip-toeing step states are taking. To date, 10 other states have considered similar bills.
From the resolution: “Establishing a joint subcommittee to study whether the Commonwealth should adopt a currency to serve as an alternative to the currency distributed by the Federal Reserve System in the event of a major breakdown of the Federal Reserve System.”
Marshall and other state senators and representatives across the Union are very serious about dumping the dangerously weakened U.S. currency. They believe they have an obligation to the sovereignty of their states, their way of life and the prosperity of the citizens of their states.
Federal Reserve Chairman Ben Bernanke on Friday ruled out a central bank bailout of state and local governments strapped with big municipal debt burdens, saying the Fed had limited legal authority to help and little will to use that authority.
“We have no expectation or intention to get involved in state and local finance,” Mr. Bernanke said in testimony before the Senate Budget Committee. The states, he said later, “should not expect loans from the Fed.”
This has to be one of the most glaring examples of how Fed Corp is a private bank with authority over Congress. That fact that Congress supposedly has input on who is put on the Fed Corp chairs clearly has no influence over the fact that the banks can do absolutely anything they want and that it does not serve the Federal government in any useful way.
It also strongly suggests that Fed corp is actively sabotaging the government since it doesn’t mind printing up bails of money to pay for worthless quantitative easing loans which will probably never be repaid. However it won’t open the purse strings for state governments meaning it’s hoping that the state governments fail.
Why Does It Matter If Federal Reserve Is Private Or A Government Agency?
It’s important that Federal Reserve Corp is private because by law the boards of private corporations must make all decisions toward whatever is most profitable for that company.
So in any case where fed corp has the choice to do what Congress wants versus screwing Congress and making a buck it will always choose to make a buck for its shadowy shareholders.
In other words, given the choice to use it influence to send the US into moronic, unwinnable wars versus using its influence to keep the peace, Fed Corp will pit the US into idiotic wars because wars are profitable to banks.
It’s a retarded system that can only end badly, and is ending badly.
One of the most powerful ways to spread awareness for the power and benefits of monetary reform is through the use of simple phrases that sum up the basic ideas without people needing to read an entire book on it. In order for a phrase to be effective, it needs to be:
True
Short
Phrased so that the opposition is not turned off by it
Bonuses: Rhymes, uses alliteration, paints a visual picture
I was thinking about this quote from Bill Still in his response to Ed Griffin:
It doesn’t matter what backs the money, all that matters is who controls the quantity.
That’s a good phrase since it’s a true statement and it’s fairly short. However I think that pro-gold monetarists will have a hard time accepting it because the phrasing includes the words “who controls” which brings up the connotation of a dictatorship. This means that even though the statement is 100% logically correct, they will likely reject it because of their emotional biases.
So I thought about ways to describe that same concept without the word “control”. One possibility:
“The only way to have zero inflation and deflation is when the quantity of money is equal to total value of the economy.”
That’s a bit too long. However it may be a good start because it paints a picture of joining the two quantities together and that even a child should be able to see that the value of a dollar would always be the same is there were always the same number of dollars are the value of the economy.
So how to shorten it? Well, people tend to worry more about inflation than deflation, so maybe you can make the phrase more powerful by simplifying that out.
Additionally the phrase “constant value money” could be used as shorthand for money that’s pegged to the value of the economy. The phrases can be shortened to:
“Constant value money means no new money without new value in the economy.”
“From constant value money comes zero inflation.”
“Zero inflation with constant value dollars.”
The phrase “constant value dollars” is a little awkward. So what about using “debt-free money” instead?
I’ve found that people have a hard time understanding what “debt-free money” is because they can’t understand that our money is created from debt without a long explanation of Fed Corp’s trickery, and so they don’t understand what the difference is that we’re proposing to make.
Also, “debt-free money” doesn’t necessarily imply that there would be exactly the same number of dollars as value in the economy. For instance you could have debt-free greenbacks but then print up too many of them.
So maybe phrases like this would work:
“No new dollars without new economic value”
“No money created without value earned”
“A dollar earned is a dollar created.”
“A dollar earned is a dollar created. Never more, never less.”
Phrase on fractional reserve banking counterfeit and the unfair inflation tax: “A dollar created without a dollar earned is theft by counterfeit.”
Phrase on manufactured depressions: “A dollar earned without a dollar created is theft by fraud.”
Are there other phrases that spring to your mind that you boil the concept of monetary reform down to the simple essentials so that anyone can understand it?
…what most people don’t realize is that even the Fed itself is shifting away from the dollar. Everyone knows that China and Japan hold massive foreign reserves (the dollar). But the US Federal Reserve does this too (we own euros, yen, etc.). And for some reason the amount of foreign reserve assets (non-dollar assets) on the Fed’s balance sheet skyrocketed by 50% to $133 billion at the end of August.
Now, $133 billion in foreign reserves is nothing compared to China and Japan’s ~$3 trillion. But a 50% increase in one week is an astounding rate of change.
The culprit?
A 500% increase in SDRs: the “global” currency issued by the IMF. The blog ZeroHedge caught this story first and pointed out that SDRs are the IMF’s means of maintaining a “super reserve” currency for the world. SDRs are defined as: a basket of currencies, today consisting of the euro, Japanese yen, pound sterling, and U.S. dollar.
Now, one has to wonder why the US Federal Reserve decided to suddenly buy $40 billion worth of SDRs overnight. The answer is that the IMF decided to massively increase the amount of SDRs outstanding from SDR 21 billion to SDR 204 billion in late August.
It’s only going to get worse unless we somehow get debt free currency controlled by the people.
Price stability promotes economic growth. The money supply growth should be locked to GDP growth so inflation is zero and people can count on the money being rock solid so they can go ahead with business ventures without worrying about the currency pulling the rug from their feet.
The main scam is that the banks know when they’re going to create booms and busts before anyone else because they know when they’re going to raise or lower interest rates. That means they know when to buy low and sell high before any one else.
With Quantitative Easing though it’s become a matter of outright thievery where the banks pay themselves with Fed-created money in exchange for garbage assets like toxic mortgages and so forth.
