Reciprocal System #546 "The Road to Permanent Prosperity" ch12-Money Inflation A [Thomas Newsome]

Transcript

all right everyone hello and welcome to my channel uh this channel is for educational purposes and we look at Great theories of everything ancient and modern and uh try to um flesh them out and figure out how to use them in the best way to uh work on your paradigm shift your Awakening to 5D Consciousness and or your formation of a holistic worldview today is our 546th video that we've done on the reciprocal system of theory from dwey Bernard Larson and Mr Larson lived in the 20th century died in 1990 and uh he put out a lot of books on physics and chemistry and astronomy but he's also got a book on metaphysics uh which has sections on philosophy Rel religion and psychology biology some of his associates have written books uh written articles or books on meteorology geology uh conspiracy theories and um LaRon also has two books on economics uh and we are looking at one of those books today called the road to permanent Prosperity uh we just are getting ready to wrap up chapter 11 on production and then move into chapter 12 uh now uh Larson is uh not the first but uh the first successful um scientist to put forward a theory cosmologist put forward a theory excuse me of a universe made out of motion people like Thomas Hobs and Renee dayart had attempted that way back in the day but uh Larson made it work I think because he was able to Define um motion as the relationship between space and time Larson's first postulate says that the universe is composed entirely of one component motion existing in three dimensions in discrete units and with two reciprocal aspects space and time you can see that in speed I was running at 10 m hour 10 miles of space in one hour of time space over time but Larson spreads that out and applies it to all our um basic um scientific quantities they are all fractions with space or time as the numerator and time or space as the denominator but time or space can both have multiple uh exponents so you can have you know time to the second power or third power or even fourth fifth or sixth power and um LaRon uh then came up with his two fundamental apostates and then he uh derived a theoretical Universe from those and uh then compared his theoretical Universe the universe that would exist if his postulates were correct and compared that with his with the uh empirical universe of the modern scientists uh that they have compiled in their scientific tables and such like um he did that especially in his works on chemistry and astronomy and uh for his economic work he um uses the same principles and goes back to First principles um so uh he opposes uh the approach the sociological approach to economics um which which is you know that you're attempting to um propagate your particular philosophical Viewpoint whether it is uh equality or Justice or feeding the poor or stamping out uh crony capitalism or something like that um Larson says that first you have to deal with the actual facts the economic mechanism and the economic system uh and he likened it to building a bridge or a house that you have to comply with the laws uh of physics first and then you can worry about the policy decisions later so we've got to we've got to break down econ economics to its scientific components he does that to start a lot through Robinson cruso economics you know uh economics isolated to a one person on a deserted island and then gradually moves into more complicated situations first by introducing barter then introducing money and then introducing um employees who are not involved in um you know both stages of the uh economic equation which are production and consumption so in uh physics you have you know time and space uh in economics you have production and consumption and the products of uh uh the goods are uh the products of production but goods are also what are consumed uh they are when they are produced they're what he calls purchasing power and when they are consumed they're called Goods okay and uh you know he then introduces several principles which he says are um and equations which are uh exact scientifically exact and um leads to many conclusions that you probably wouldn't have guessed um that things like supply and demand are irrelevant um you know things like you can't uh the money supply is also irrelevant to um you know the functioning of an economy and um makes a number of different uh prescriptions uh later on in the book about what to do about the economic system okay we're going to take over here at the end of chapter 11 uh just the last couple pages and then move into chapter 12 um so if you want to get a a more detailed description of the reciprocal system in general uh go back and watch one of my first uh 474 videos on this subject if you would like to get to the back to the beginning of this book and start from there go back about 3 or 4 weeks in the archives and um we'll move move through um starting with uh you know uh chapter one The Road to permanent Prosperity okay as long as such a balance exists a general increase in wages or in business taxes will have no adverse effect on business enterprises market prices will rise enough to absorb the increase in money purchasing power the increase will pass on to the producers who will then be back in the same relative position as before the cost increases the price increase is inevitable and inescapable it will take place regardless of what business enterprises want to do about it even if they try to hold it back the reverse is also true as experience during depressions has demonstrated The Producers cannot keep the market from adjusting itself to a falling purchasing power flow if they keep their prices up in defiance of a falling Market Trend they cannot sell their goods if they hold their prices down in defiance of a rising market Trend they merely raise the prices of other Goods for the general average of prices is fixed by the relation of the money entering the markets to the goods production volume efficient operation of the economic system to attain the results that we want is not the complicated and difficult task that we have been led to believe it is difficult for those who want to reform the system to conform with their own ideas but if we address ourselves to the specific task of eliminating the cycle of booms and depressions and leave the reforms to the reformers there are no serious obstacles in our path later in this volume it will be demonstrated that there are many practical methods of accomplishing the stabilization of the money reservoirs that is the primary requisite for permanent Prosperity these measures do not involve alteration of our economic in institutions or reconstruction of our people they merily provide the means whereby intell ENT control can be applied to the system that is now in operation okay that's the end of chapter 11 on production chapter 12 is called money inflation now uh you know what larsson's outlining there is his road to permanent Prosperity it all has to do with the money with the reservoirs uh the banks uh places for storage and um boom and bus are related to withdrawals or deposits into those reservoirs and so in the rest of this book he comes up with various ideas for um stimulating or regulating or balancing the um flow of uh money from to or from the reservoirs and that is what keeps the economy on an even Keel and those things can be done unobtrusively and um you know uh he explains uh those basic things to the rest of this book okay chapter 12 money inflation quote the unsolved problems of the affluent societ society says galbreth are one the process of consumer demand creation and its financing and two inflation the solution to the first of these problems he tells us is or uh quote or at least one part of it is to have a reasonably satisfactory substitute for production as a source of income end quote here is an idea that certainly deserves some kind of a medal as a prime example of economic absurdity absurdity real income all economists admit can be measured only in Goods that is money or money substitutes constitute income only to the extent that they can be exchanged for goods what Galbraith is telling us then is that the answer to our problem is to devise some way of getting Goods without producing them some kind of magic but he does not stand alone he has plenty of distinguished company the Happy Hunting Ground of the something for nothing Enthusiast the individual who refuses to recognize conservation laws has always been the field of Economics here there is an unbroken line of succcess succession from the John laws of one era to the Francis Townsen of another and it is hard to find an economic fallacy of any description that cannot command the support of at least one of two economists of the front rank thus we find the thoroughly discredited quote automatically depreciating money or quote self-liquidating script endorsed by both KES and Irving fiser the social credit program approved by Joan Robinson and the performance of useless work as a means of enriching the community advocated by both beverage and canes and more recently by mdll Mrs Robinson's comment on the proposed social dividend is particularly revealing quote to Conventional Minds she says this scheme seems altogether too fantastic to be taken seriously but all the same it recommends itself to common sense if there is unemployment on the one hand and unsatisfied needs on the other why should not the two be brought together by the simple device of providing the needy with purchasing power to consume the products of of the unemployed end quote here is a typical example of the logic of the present day soci socially oriented economic reasoning the objective of this proposal is unquestionably praiseworthy hence let us forth with proceed to adopt it without further Ado the first question that the scientists ask asks in such a situation is can it be done is there a simple device by mean by means of which we can supply the needy with purchasing power gets no consideration from the economists who has his eyes on the com commendable objective to him it is the kind of a problem that is solved merely by persuading the community to arrive at a decision to take action he does not bother to follow the dividend back to its source to determine where the purchasing power is coming from so far as he is concerned it just materializes out of thin air as shumer explains quote it is always a question not of transforming purchasing power which already exists in someone's possession but of the creation of new purchasing power out of nothing end quote it is particularly strange that the economists who recognizes so clearly that the only true measure of wages is the amount of goods that they will buy and has coined the expressive term real wages to designate this quantity should be unable to see that the same principle applies to all entities regard uh all entities that are measured in terms of money regardless of whether it happens to be in the form of money wage payments money obtained from some other source or some substitute for money a quantity of money purchasing power is simply a claim against the goods produced and it stands to reason that the more such claims that are issued against the same quantity of production the less each one is worth in terms of real purchasing power the suppliers of Labor and Capital Services receive as payment claims against the total production of the community equal to the total value of the production if any additional claims of any kind are issued by providing purchasing power in some other way as advocated by galb KES Robinson mdll Etc the effect is simply to decrease the value of the original claim all that is accomplished by such measures is to divert goods from those who would normally receive them as payments for their productive activities into the hands of other individuals who have contributed nothing toward production this is not necessarily an argument against such a diversion there is much to be said in favor of sub subsidizing those who are involuntarily unemployed those who are physically handicapped Etc at the expense of those who are regularly receiving payments for productive services but such subsidies should be recognized for what they are and should be handled accordingly not presented in the guise of measures to Aid the economy in general all such diversions of purchasing power from one group to another are transactions at the same economic location as stated in principle 4 such transactions have no effect on production in general or Marketing in general they do not enrich the community they merely help some groups at the expense of others the synthetic purchasing power which well-meaning but Visionary individuals propose to distribute so freely in the form of social dividends or other handouts to those who have done nothing to earn them specifically condemns quote the Puritan principle that Leisure should be less amply rewarded than work uh could be obtained uh by taxation but this is not popular among the supporters of the measures as it then becomes too painfully obvious that these programs merely rob Peter to pay Paul what the socio economic Economist tries to do is to devise the economic equivalent of a per perpetual motion machine a scheme which will create something purchasing power in this case out of nothing but the basic laws of Economics are no more subject to evasion than the corresponding laws of physics purchasing power cannot be created except by production all that the something for nothing schemes ever produce is more money and this merely dilutes the value of the existing money it does not add anything to real purchasing power a failure to distinguish between money and purchasing power is one of the great weaknesses in modern economic theory this lack of differentiation not only opens the door to a weird assortment of something for nothing schemes of the type just discussed us but even more significantly it prevents The Economist from seeing the solid and stable relationships that uh that do exist in the economic field those that constitute the basis for the theoretical developments in this work for example it is this confusion between money and purchasing power that is responsible for Samuel 's previously quoted statement that there is no economic law to prevent the creation of purchasing power he can see that money can be created out of nothing and that this money can be used as purchasing power hence he concludes that purchasing power has been created what he fails to recognize is that the total amount of purchasing power the ability to buy Goods that was previously in existence have has not been altered by the addition of more money this money is circulating purchasing power to be sure but as money it is measured in dollars or their equivalent as purchasing power it is measured in terms of ability to buy Goods in terms of dollars the circulating stream has been increased but in terms of purchasing power it remains unchanged the issuance of more more money has not created purchasing power it is merely a device whereby purchasing power can be diverted from those who now possess it to others who will presumably use it in a manner meeting the approval of those who control the diversion if the government issues more currency it is able to buy Goods therewith but the ability of the recipients of normal income wages Etc to buy Goods is decreased proportionately this fact is generally recognized in the case of severe currency inflation as it has been demonstrated over and over again in actual practice but it should be realized that this is a general principle which applies to all money inflation including um that resulting from banking transactions new credit new credit money issued by the Banks has buying power only to the extent that the buying power of current income from other sources is decreased the new currency increases money purchasing power but it does not alter the real purchasing power ability to buy Goods the buying power of the new money is a obtained only by reducing the buying power of the money received as compensation by the workers and the owners of capital which is principal 15 but I think we skipped a couple principles there but uh so hopefully he'll go back to that any program that puts purchasing power into the hands of individuals other than those who Supply the means whereby it was produced takes this purchasing power away from other individuals usually the general public if the diversion is not accomplished directly by taxation it is accomplished just as surely by inflation the net result of the futile attempts to solve galbus problem number one is therefore to push us into the jaws of his problem number two inflation is the creation uh I'm sorry inflation is the reaction of the economic mechanism to man's attempts to get something for nothing is the way in which the economic system enforces payment when the members of the human race try to avoid paying the costs of their actions efforts to find a substitute for production as a source of income our attempts to get something for nothing and if such schemes are put into operation the result is inflation efforts to increase purchasing power by subsidizing special groups are attempts to get something for nothing and they lead to inflation efforts to avoid high taxes by printing money with which to meet governmental expenses are attempts to get something for nothing and they cause inflation efforts to improve the status of the working population by raising the level of money wages or reducing the hours of work without cutting wages are likewise attempts to get something for nothing and they cause inflation efforts to obain Prosperity by cutting taxes while government expenditures are maintained or even increased are attempts to get something for nothing and these two cause inflation something for nothing is prohibited by a law that we cannot evade and no matter how ingenious the attempt at evasion may be the end result is always inflation which means that the general public has to pay the bill General inability or unwillingness to recognize the real meaning of inflation is the caus of Mo cause of most of the confusion which now Reigns in this area of economic thought a confusion which led the authors of a 1963 survey of inflation Theory to describe their work in these words quote our survey is accordingly more of a guide through chaos than a history of revealed Doctrine or a systematic critique of a few rival positions end quote in this atmosphere of chaos that now surrounds the subject of ver uh the various investigators are not even able to agree as to just what they are talking about when they speak of inflation the authors of the survey just mentioned make this comment quote indeed disagreement over the definition of the term is symptomatic of the confusion in inflation Theory our first concern therefore will be to define the concepts with which we will be dealing We Begin by defining inflation in general inflation is an increase increase in the General market price level this defines inflation in terms of its effect which is the primary concern of the victim the consumer who has to pay the higher price for purposes of analysis we are interested in the relation between the causes of inflation and that effect from the points brought out in the discussion in chapters 10 and 11 it is clear that the effects of a price level increase originating in the production Market are quite different from those of an increase originating in the Goods Market and will therefore we will therefore want to distinguish between the two the most common cause of price increases in the production Market is an increase in wage rates but several other factors such as increased business taxes or lagging productivity that increase the cost of production have the same effect we will therefore use the term cost inflation for this kind of an increase in the price level cost inflation is an increase in the general price level originating in the production Market no fully satisfactory term is available for the price level increase originating in the Goods Market but since its cause is a net withdrawal from the money res reservoirs which increase the flow of money purchasing power in the circulating stream we may call it a money inflation money inflation is an increase in the General market price level due to an addition to the money flow in the circulating stream from the money stored in the reservoirs the terms demand inflation or demand induced inflation are quite commonly used in present day economic literature with the same general significance that has been given to money inflation in the foregoing definition but since we find it necessary to take some exceptions uh to The Economist conception of the relation between demand and inflation it has seemed advisable to use a different term another terminology that is used to some extent refers to sellers inflation and and buyers inflation which correspond roughly to cost inflation and money inflation respectively although inflation is ordinarily regarded as an increase in Goods prices it would be equally correct to consider it a decrease in the value of money what is actually what it actually does is to change the relative uh change the relation between the two and the question as to which one is altered is merely a matter of which we take as our reference point the usual practice is to call it a price change because money is utilized as a standard of value for economic purposes and we therefore tend to regard money as the fixed element and price as the variable element in Market transactions however if the conditions are such that the buying power of the local currency can be compared with that of gold or some currency enjoying more General acceptance we then recognize variations in the relative buying power as compared to that of these more stable forms of money as being evidence of changes in the value of the local currency rather than price changes minor changes of this kind are accepted as no more than fluctuations in the currency exchange rate but a significant drop in value is known as currency inflation since this kind of a value collapse almost always results from financing government expenditures by printing currency rather than by taxation technically it is simply a severe money inflation okay that uh is about all the time we have for today and uh we will resume chapter 12 on money inflation when we start tomorrow uh hopefully I bit my tongue and uh uh my tongue is swollen and certain words just trigger it and it it kind of hurts but it also uh affects my pronunciation um so hopefully my swelling will be down by tomorrow and I'll be able to talk normally again uh but uh thanks for tuning in today and