[GJM] #16 William Krehm On The Inner Structure Of TOP (The Optimum Policy)

[Wesley S. Burt]

Dear friends and enemies of the USA,

Once again I am in debt to John Hermann of 
Economic Reform Australia Information Network 
for a timely article by William Krehm on what 
C. S. Lewis' senior Devil, SCREWTAPE, was 
talking about in 1943 when he said:

        "It is funny how mortals always picture us 
        as putting things into their minds: in reality 
        our best work is done by keeping things out." 

A brief excerpt below from Mr. Krehm's article 
confirms that SCREWTAPE's best work has 
been keeping the competitive pricing policy 
of our corporations out of the public mind.  
The whole article will be sent to all who are 
not persuaded, by the excerpt, that Wes Burt's 
attached figures are exactly what has been 
omitted from our economic lessons during 
the whole 20th century.

~~~~~~~~~~~~ A brief excerpt ~~~~~~~~~~~~~
Date: Wednesday, 22 November, 2006
Subject: The Cover-ups of Economic Theory
Author: William Krehm
Source: COMER Journal (Economic Reform), November 2006 issue
Country of origin: Canada

The following article, which first appeared in Economic Reform of
December, 2000, will be included in the second volume of "Meltdown", to
be published early in 2007.

The Cover-ups of Economic Theory
by William Krehm

We will get nowhere in understanding and managing our ever more complex
economy unless we come to terms with the flaws in our theory. From its
origins it was partly an attempt at a science, partly an essay in
advocacy. Periodically it was taken over by dynamic new interests engaged
in conquering space for their new agenda. To accomplish that, they had to
examine the claims of the establishment that blocked their way. That was
certainly the case with writers on economics in the 18th and 19th
centuries. A limited democracy where the disenfranchised were still
illiterate allowed economists ample room for their philosophizing. It
could be compared to the free gossip parents indulge in when their young
ones have been put to bed, though here the situation was that society’s
lesser members had still not awakened.

~~~~~ Snip all but the above and last two paragraphs ~~~~~

The Crimes of Non-disclosure

Non-disclosure has dominated the US political scene during much of the
presidency of Bill Clinton. And certainly overshadowed just about every
other issue in the Bush-Gore presidential race. In the one instance it
had to do with the outgoing president’s back-stair romances, and with
Bush’s cover-up of a drunken driving fine 24 years earlier. But surely
the silence about the entire corpus of free market theory resting on the
purest fictional assumptions should take priority in our concerns for
buried crucial facts. Surely suppressing all awareness of that in our
universities and government is more flawed morally than whatever the
President may have done with the young lady of his passing fancy, or
George W. Bush’s silence about his drunk driving conviction.

Should a building contractor pour the concrete for the footings for a
structure an inch less thick than specifications, he would be risking
serious legal trouble. But what has been suppressed in the case of the
free-market dogma is that well-endorsed simplifications like “leave it
all to the market,” and “balance the budget every year,” and “pay off the
debt” send our policy-makers shopping for major disaster. And when
eventually it strikes, society is left helpless without an economic
theory that can stand up under the most elementary examination.

####
~~~~~~~~~~~~ End A brief excerpt ~~~~~~~~~~~

There is a powerful reason why we do not have 
an "economic theory that can stand up under the 
most elementary examination."  Our WHIPs (our 
wealthy, healthy, intelligent, and powerful folks) 
live in mortal fear of any innovation that tends 
to level the economic playing field.  Being 
without a shared valid conceptual model of 
the inner structure of an industrial economy, 
with which they might fairly evaluate their best 
interests, they obstruct and obfuscate every 
effort to extend the financial rules of our 
private sector corporations to our public 
sector local governments.  The only systemic 
defect of omission in the US economy is 
our failure to capitalize the expense of 
human development as completely as we 
capitalize the expense of capital development.

The monetary history shown in Fig2-3e.gif 
locates the "Great Transformation" of the 
US in the 1890s, from an economy of property 
owning farmers and small business men, to 
an economy of propertyless employees who 
are wholly dependent on the "Justice" of the 
labor market.  But that monetary history does 
not show what creates the 5% unemployment 
and the 2.3 to 4.0%/year inflationary trend 
which continues to date.  

The macro model (Figure 4) shown in Fig4-8.gif 
illustrates the steady state flow of money (M1c) 
in the three flow paths: 
A, Gross Domestic Product flow to the 
consuming public ($/year)(according to 
C. H. Douglas), 
B, business to business transactions at 1.5 times 
GDP ($/year) ( according to Wassily Leontief), 
C, the speculative (financial) transactions which 
are an order of magnitude, or more, larger than 
the GDP (according to all monetary reformers).  

Notice that every national economy has 
its own central banking system to adjust 
its M1 money supply and is connected 
to the larger global economy by two links 
(money-in and money-out).  Since neither 
corporations nor people consume money, 
the banking system need only accommodate 
real growth in production, people, and 
current account deficits to keep the CPI 
(consumer price index) steady at its natural 
inflation rate (See Fig2-3e.gif for NIR 
since 1789).  

The same stability question and system 
configuration presented itself in our 
interconnected power grids, and was 
resolved in the 1930s and automated in 
the 1950s by engineering students of 
Paul A. Samuelson, while our most 
famous economists studied the business 
cycle and neglected the steady decline 
in the value of the Dollar through the 
20th century.

But again, this macro model of the national 
economy does not show what creates the 
inflationary trend which continues to date, nor 
how to reverse that trend without forcing the 
economy into a second great depression.  

It is in the micro model (Figure 8) where the 
root causes of the expanding gap between rich 
and poor may be clearly seen.  Tax evasion 
by the wealthy we understand.  RHIP (rank 
has its privileges).  The $6,500/year expense 
of 1-12 years of education was capitalized 
early in the 19th century, and appears on 
the left hand side of Figure 8. The $5,000/year 
expense for 0-17 years of subsistence has 
not yet been capitalized in the US, and is 
shown on the right hand side of Figure 8 as 
a deduction from household discretionary 
income.  The two items of expense are 
similar in size to the US defense budget.

Why should we capitalize the expense of 
1-12 grades of education while expensing 
to the household budget the cost of 
subsistence for under age dependents? 
Who believes that parenting families should 
be financially crippled as their children are born?

Once again my sincere thanks to whoever 
restored my connection to Yahoogroups 
lists; FixGov, Simpolicies-General, and ERANet 
after a five day separation at the hands of 
some technically competent and politically 
correct defender of the status quo.  My web 
search for William Krehm's e-mail address, in 
vain, reminded me that politically correct 
web sites (on the Global Monetocracy System 
[GMS] payroll) out number by ten to one the 
politically incorrect web sites (searching for TOP).

Kind regards,

Wes Burt
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

               TOP and TWP are cognoscible on
                Dr. W. Curtiss Priest's web site at:
       <http://www.epie.org/cyber-soc/default.htm>
                 TOP is GOOD --- TWP is EVIL




 
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