John F: Original comment, 5/30/2011
Thomas: Reply:  6/01/2011
John F: Rebuttal to Reply, and Thomas, rebuttal to Rebuttal:

Dear Thomas,

Regarding the quote:

Quick comment on the above quote, in the interest of clarifying terms and exposing the popular dissemination of lies through the use of true statements. I am very much enjoying how you are doing this, by the way, in your article.

I like how you have frankly abbreviated the possibility list:

tax revenue streams,
borrowing, or
printing

One improvement I offer here, and that is to eliminate "printing", and that on two counts. The US Government (Treasury) is not doing the printing, and the dollars are not coming from actual printing.

"Printing" falsely brings up the visions that our family tangibly experienced when we went through the D.C. printing facility on 14th St. The visitors center reminded us that these were not dollars and not legal to use as money until the Federal Reserve issued them through their member banks. Further study informed me that the paper bills are never dollars at all, but member banks 'owe' dollars to the Fed in exchange for receiving these scrip tokens which they can use as their own reserves in their FED-Regional account, or issue to the public as claim tickets to transfer what one bank owes them to another bank owing them instead.

So it is true that the US agency "prints", but it is not printing dollars or money. What you and virtually the entire financial community really means by the verb, 'print' -- is that so much (especially now) of what the US Government borrows is made available by the "saying" of the Federal Reserve that there are more dollars. We could trace it this way when the US Treasury borrows dollars in exchange for a T-Bill:

Treasury trades T-Bill (promise to repay dollars) for dollars from a Primary Dealer.
Primary Dealer trades T-Bill to FED Central for dollars that FED Central says are now in the Primary Dealer's bank account by some kind of EFT (Electronic Funds Transfer) or paper certificate.

Final result is the US Government owes the FED dollars. It will repay these dollars in the future by fresh borrowing of more dollars, unless it is able to obtain them by taxes.

When it repays those dollars in the future, they go back to whence they came. Where did they come from? Where do they go?

Our language describing all this is complicated by the reality that no one can explain or define what the dollar is. Also, our minds think that when the bank says it 'owes' us (as in the quantity showing on our account balance) that means it could or will pay us something in the future -- this being the old essential meaning of credit and debt. The difficulty being that this has not be true since June 24, 1968. I suspect that God's "Grace Period", of ~40 years, on allowing this human repudiation of His exclusive ability to create out of nothing –without serious consequences, ran out shortly after that anniversary in 2008. That September, the worldwide banking system began to meltdown and the mostly-hidden efforts to extend its legitimacy and ability to keep promises.  If you really understood the mechanics and consequences of their actions, it would be the stuff of which nightmares are made.

Since 1968 no US Banking dollar has existed except in the form of some integer/decimal quantity that a bank, somewhere in the world, says it owes the account holder. But there is nothing that a bank can pay, as in “deliver to the account holder”. All it can do is honor an agreement for a former account-holder to have the bank start owing some integer-decimal quantity to a different account-holder at that or some other bank.

They can owe, but cannot pay.

So that leaves us with borrow or tax. The world is having to face the reality that we cannot tax more. Higher taxes will decrease the production that can be taxed – thus reducing collected revenues. Besides, people feel taxes more than borrowing. It is not so easily evident that borrowing hurts, so borrowing it will be.

Then comes the difficulty that the bidders to loan money to the US Federal government are leaving the room, leaving Bernanke (as the figurehead spokesman of the Fed) by himself to say he is creating them as needed. If the FED stops saying there is more dollars, interest rates will go up, but that will cause problems more immediate and painful than the public is sensible. Whereas the consequences to increases in dollars is not so immediately felt or mentally understood.

So borrowing it will be. Not taxes. Not "Printing".

But I would be delighted to be proved wrong.

Printing would be much better, because if anyone can actually print wealth so cheaply, that, indeed, would be a great salvation of our economy. Taxing is even better, because if people actually had to pay for all their government spends for services, they would be more willing to diminish the welfare and warfare programs. The total cost of government programs, with all their non-economic, social side-effects, may then also be seen.

John F.

From Thomas Abshier, ND
To: John F.
6/1/2011

Dear John,

Your erudite description/essay on the creation of money was excellent!  You have described well the process and mechanics of “printing” money and putting it into circulation.  The process of injecting new-money into the system is opaque, and almost impossible to intuitively grasp the actual significance of introducing money into the economy, interest rate changes, credit and debit transfers, and other policies that alter present and future value of money.

As a result, the monetary system, the system of storing value by symbol, is open to manipulation for personal or group benefit by the schemes of those who would use appearance to further a cause without detection or attribution of motive.

Yes you are correct, the word “printing” was meant as a metaphor rather than as an accurate/literal representation of the process of “creating” money.  Even though this metaphor is not strictly accurate, I chose to continue to use this word.  It portrays in pejorative light the current process of using debt and quantitative easing to meet the expenditure requirements of the Medicare/Social-Security transfer payments.  I believe the word “printing” accurately represents the current policy of injecting money into circulation without first associating it with the credible commitment to produce new-value.  It is this concept that I wish to examine in detail in this current essay, and attempt to establish a new paradigm by which the common man can intuitively grasp the reality behind the symbol of money.  And in turn, exert political force on the policy makers to a responsible, reality-based, introduction of new-money into the economy.

In your essay, you implicitly confront the question, “what is money?”  The fact that a mind as great as Ayn Rand’s would ask the question in the quote below, illustrates how far removed the concept of money has moved from its foundational and functional reality.

In your essay about how money was put into circulation, you made an interesting comment about the Fed “creating” money, noting that true (ex nihilo) creation is an act that can only be executed by God.  You then stated that there may be punishment in store for those who usurp God’s role of creator.  

Men can create to a limited degree, as we were created in His image.  We are gods, but not God.  As men, we clearly have a domain of authority that includes creation, but it is bounded by limits.  Learning the edges between the domain of God and man’s authority is a lesson we must all learn in our process of maturing the soul to attain the mind of Christ.  Thus, rather than condemning man for engaging in creation, we must distinguish whether a particular act of creation crosses the line where God alone has authority.  This question refers to the scriptural admonition against magic and witchcraft.  The spiritual controls that move the subtle and earthy elements can be appropriated without divine authorization, but only for a time.  The consequence of the violation of boundary and domain of spiritual authority is sure, and the balance of power in the heavenlies will be restored.  In other words, those who cross the lines of spiritual authority will be pushed back, eventually.

God alone can create with persistence by His word alone, but man has vestiges of this power.  Man, through pride, can become blinded to the truth of his limited power.  In general, men are given the power to create what the mind and heart conceive through faith and works.  The power to create by word alone should be limited to speaking blessing to the good, and commands to the wind and waves to still.  We have the power of prayer, and can petition the Almighty for justice and mercy.  Sometimes our prayers are answered with sovereign miracles, and other times we are given the command and/or authorization to act.  The possibilities of response are too great to declare carte blanche that a particular activity of man is within or outside of man’s authority.  The specifics of each circumstance must be carefully analyzed with the eyes of the mind and heart before judging the righteousness of a particular act of creation.

When men create by intention only, in general we engage in faith without works, and without the miraculous enlivening of those words, such faith is dead.  There is a time and place for speaking in faith, for declaring things that are not as though they are.  To a point, men can create miraculous manifestation by the word.  But without divine authorization, such creations will tumble.

We sanctify our power to move the unseen realm by speaking according to His will.  We do have some spiritual power, but we can move heaven and earth only a small amount by our will.  And, if we attempt to build castles in the air without His blessing, the forces of Hell will mount to tear it down.  The fall may be slow, but that fall is certain.

When men print money without first associating it with work, production, and created value, there is a natural consequence.  Economies that engage in the foolishness of printing without production will dilute and debase the value of their currencies.  By printing money, government has authorized consumption of value, without connecting the new-money with a commitment to produce new-value.

Certainly neither the Fed, mint, bank, king, or country can “print” the actual value/utility of the products that we receive in exchange for dollars/scrip.  Nevertheless, even though there is no inherent value in the scrip, we see a universal willingness, to accept money in exchange for valuable goods and services.  This is a strong testimony to the power of money to move the soul.  Money carries the spirit of value recognized by the human psyche as equivalent to real goods and services.  

There is a spiritual (soul) aspect to money, just as there is a soul aspect to all things created by men’s hands, nature, and God.  (But, the soul force associated with the work’s of men’s hands is weak in comparison to the power of the True God.  We see in scripture the futility of worshipping false gods, puny earth spirits, and idols carved from wood and stone.)

But, we need not go to a spiritual/soul level examination to discern the error of printing money and calling it valuable.  Clearly money has no value if there is no real value for which it can be redeemed.  Thus, the concrete connection between the quantity of goods produced and available for consumption, and the money supply, is an adequate first order explanation of the relationship between real value and money.

Nevertheless, the power of money over men’s hearts bears examination.  Clearly, there is a subconscious equivalence between money and goods.  The strong emotional affinity, fear of, and desire for money that men have evidences that money may be associated with a life force, spirit, soul, or archetype.  Scripture declares that, “The love of money is the root of all sorts of evil.”  The love of money could be called worship or idolatry, and God clearly warns of the consequences of elevating any other god above Him.

But, why is idolatry so toxic?  Why has God forbidden it so strongly?  Certainly God wants our loyalty, hearts, and companionship, and we could attribute the entire disastrous consequences of idolatry to God’s jealous and punitive intervention in the affairs of men.  But, in addition to withdrawing blessing, and releasing the demonic hordes to act on idolatrous men, we can see the very real and concrete effects of depending on a false reality to deliver real results.

Men who worship money expect it to do what only God can.  Men love money because they believe it can give them happiness, peace, and fulfillment.  But, money cannot deliver any of these things, it is only a token of value, and even the earthly value it represents does not satisfy the heart with a lasting joy.  Thus, worshipping the false god of money produces pain and disappointment; a result we would expect of every idolatry.  

Again we ask, where does money acquire its value?  We know that the act of printing, coining, or entering a digital ledger entry is not the source of value.  The transferring of money from Fed to Branch, or issuing paper in demand for withdrawal does not give money its value.  Thus, the question remains, “How does money acquire its equivalence with real value?”  When does money become money?  Or as Ayn Rand said, “What is the root of money?”  

Creation of Money:

To those living within a money-mediated economy, money is universally recognized as representing value.  Money is fungible, easily exchangeable for other symbolic or tangible forms of value.  The societal contract recognizes that holding/owning the dollar/scrip “representation of contract” gives one the right to exchange the scrip/dollar for actual value, or other forms of “promise-to-deliver” value.  

Some of the history of money is documented, and other aspects of it are speculative.  Nevertheless, we can be sure that men have long made contracts to give goods and services in the future for consumption now.  We see how the promissory note (the IOU,  the promise to pay given to another) could be used as a representation of value.  The note itself could be given in exchange for other goods and services needed by the holder of the note.  Of course, such a system of commitment to repay with actual goods and services would be cumbersome because of the specificity of the type of redemption.  Nevertheless, it illustrates how a paper representing contract is imbued with meaning.  It has its roots in the reliability of presenting the contract to render goods and services.  

As an additional substantiation to the validity of the concept of paper money having acquired value due to its associated underlying contract, consider the history of using paper money in relationship to stored gold.  Supposedly, many years ago, when gold was used as legal tender, persons wanting to save and store large amounts of gold deposited it in a bank, and scrip was given to the depositor as a claim to represent the stored gold.  The depositor could use this Gold Certificate of Deposit to trade with, since it had the same ownership right as the gold itself.  Thus, the banker was in effect printing money by the issue of a the Gold CD, which corresponded to the right to redeem the physical gold.  These Gold CD’s were thus the prototype of the government issued gold notes that were generally circulated as a measure of value in commerce.  Supposedly, loaning more than the value of gold held in deposit by the bankers began the practice of Fractional Reserve Banking.  The FRB concept worked because the banker seldom had a large call for redemption.  This allowed the banker to loan out the physical gold at interest, while keeping only a small portion of it in storage.

The final step in the abstraction of money is the creation of fiat money, which is scrip with no stored value, such as precious metal, held in reserve as an alternate possibility of redemption.  Fiat money is largely decried by the conservative community, but I contend there is no absolute need to have gold as a alternate redemptive option to give fiat currency real value.  

A gold standard is only needed to prevent a criminal government from printing counterfeit money.  Printing money, without correspondent work or promise to work, and then redeeming it for real value in the society, allows the bearer to consume based upon the societal trust established for the money.  (Since all digital money looks the same, its fraudulent status cannot be detected by physical examination.)  When there is no contract to produce value underlying an increased supply of fiat (paper or digital) money, the government or person who engaged in such action has consumed without producing.

But, once a dollar/scrip is created by contract to produce value, the process of trading value for that dollar/scrip can continue indefinitely without its value changing.  This is how a society can secure the value of its money, and “make it as good as gold.”  Thus, when a dollar is placed into circulation, it must have gone through the “ceremony of commitment to produce value”.  Printed money is given value, and authorized for exchange and redemption for value, by associating it with a contract to produce new value.

There should be no issuance of new scrip/dollars into the money supply without the correspondent and preceding commitment by a responsible party to produce new value.  The power to represent value, and be traded as value-for-value, which the dollar represents, is at its initiation, a contract to produce value.  And, since the contract does not expire if another person holds the contract, the scrip/dollar representing that contract can be transferred or exchanged with any other person.

Consumption after having been paid to produce value is the reward for production.  In effect, every act of work (producing either goods or services) is an act of new creation.  Thus, men are authorized the use of money as a reward for their creation, and the money they use authorizes them to consume the goods and services which are new creations of others.  A gift is the transfer of authorization to consume to another who has not earned the right to consume by his own effort in producing new creations.

The initial contract for production of goods and services establishes the value of newly issued dollars.  Spending that dollar/scrip is the redemption of the contract.  Continued exchange of those dollars reflects the fact there is a societal economic-cohort of those who have entered into a group agreement regarding the number of scrip/dollars that correspond to the production and redemption value.  The dollar/scrip was given value by the initial contract to produce value, but once that dollar is in circulation the market engages in continual negotiation as to the consensus/agreement of the value of dollars/scrip in relationship to tangible value.

The “printing” of more dollars and redeeming them for real value, without an attendant commitment to produce value, is the equivalent of theft.  Such printing without an attendant contract-commitment to produce value is the production of false/counterfeit money.  There is no production, no commitment to produce value behind such money.  IT has value only because of the social-economic commitment behind other dollars.  The similarity of appearance to scrip issued in return for legitimate contract deceives the storekeeper.  He exchanges real value for a contract without value.

Thus, “counterfeit money” is those dollars/scrip that have have not been given the intangible initiation of “commitment to serve”.  Until a dollar/scrip has been through the initiation contract of being associated with a commitment to produce new value, the society has simply “printed” the “right” to consume the value another has produced without having committed to a correspondent production.  Serving without being served is not fair, and violates the command to “love your neighbor as thyself”, and “do unto others as you would have them do unto you.”

The equation is fairly simple on a macro scale: money supply must correspond in some appropriate ratio to the quantity of goods and services available to consume.  Both of these quantities are finite, and they must be approximately equal according to some ratio or algorithmic relationship.  

Massive injections of counterfeit money into any of the institutions of credit (e.g. QE1, QE2 – loaning counterfeit dollars to banks, which they cannot loan, so that their minimum required deposits are maintained) will necessarily skew the perception of the dollar’s value.  Creation of any quantity of counterfeit money will have a depreciating effect on the actual value of the dollar.  If the Keynesian manipulation of the money supply is sufficiently egregious, the fuzzy band of acceptable relationship between total consumable value and money supply could lose its linear relationship and initiate a hyperinflationary spiral.

If the above analysis of the “spirit of money”, and the true nature of its creation, are accurate, then we can use this principle to revive the economy.  The problem with a slow economy (stagnation, recession, or depression) is a lack of trust that there will be a correspondent production and consumption.  In a recession, consumption drops, but only because commitment to new production has waned.  As a result, employment, and compensation for employment wanes.  Economy is built upon a circle of trust and expectation that work will result in credit to consume.  But, when any link in the chain of faith and expectation is broken, the economic cycle (the cycle of production to consumption, and consumption to production) is interrupted.  Money mediates this cycle, and any disturbance in the availability or value of money changes the vigor of the economic cycle.

There is no desire in the consuming public to limit consumption.  Consumption has no upper limit.  Thus, a recession or depression will never occur because people lost their desire for new, better, and more.  The drop in consumption is only due to a fall in the availability of credit/cash/dollars.  

There is no end to the desire of humanity for a better, more comfortable and prosperous life.  Desire and hunger are the driving forces behind an expanding economy.  When recession occurs, the desire for consumption (which is always high) has disconnected with the productive capacity (which has not changed).  The challenge of restoring an economy in recession/depression is to restore the consumers’ ability to consume, as well as their confidence and hence willingness to consume.  

The best way to restore consumer confidence is to pay him for production, and thus authorize him to consume.  Typically when a nation comes out of recession, the productive capacity of industry increases.  When more goods and services are produced, the consumer (who is the worker, who becomes consumer by virtue of his work) can consume.   

Of course, the economic equation is more complex than just the amount of dollars available compared to the goods available for consumption.  The consumer must have a sense of faith that the flow of goods for consumption, the demand for consumption, and the income to consume them will be steady.  

When uncertainty erupts, the consumer hoards dollars, putting them into savings instead of consumption.  This reduces consumption, and industry (corporations, small business...) will therefore lower its production, which lowers pay, which lowers consumption.  This downward spiraling positive feedback loop stops only when industry returns to production, and employment rises, and consumption returns.   

Ideally, the productive sector is more efficient after the contraction, which would enable lower prices.  If dollars were saved due to cutting back inefficiencies during the recession, then capital may be available to authorize new productive expansion.  Thus, the combination of lower prices, and new productive capacity would justify new hiring, wages, and consumption.  This would be the normal recovery mechanism, and outside of the proposed new money injection.

Again, a cornerstone of the idea of how to restore the economy is the injection of new money into the economy to support new productive capacity.  And, an integral aspect of this process of properly introducing new money is having an agent of accountability to which the borrower (the producer of new productive capacity) will be responsible.  

Typically the bank would be the point of responsibility to perform.  The bank will function as judge in vetting the contractee (the creator of value).  The bank has provided value by this service, and has the right to be paid for their initial and ongoing work, which should come from interest and fees of various sorts.  

New money should only be introduced into the economy with the commitment to produce new value, whether goods or services.  Restated: New money should not be issued for consumption of goods and services.  Such loans, e.g. for cars, houses, and office buildings, etcetera, should be financed out of the savings already deposited with the bank.

The amount of money placed into circulation by new contract is only limited by the willingness of the public to delay consumption until those obligating themselves to produce value, the contractors, actually complete their production and the dollars can be exchanged for the goods and services produced.  

Thus the need for savings.  Once the chain of contract, production, consumption has been completed, the money is now real and has tangible correspondent value.  Up until the dollars were connected with consumable value, they possess only potential consumptive utility, but without the possible reality of actual consumption.  

The issue of whether men have assumed God’s role as creator by printing money is thus answered.  Men cannot simply publish value from idea to reality without engaging in the process of work.  For men to create value without work is to imitate the power of the divine mind to declare into existence by the Word.  Men do not have that power.  To act as though this is true is the equivalent of declaring oneself a god.  Those who engage in printing money, and then consuming in proportion to its apparent value, have pretended that their word is the equivalent of the object they imagine, and it is not.  Rather, their supposed “act of creation” is false, and actually theft.

The economy can be brought back to vibrancy, with the unleashing of the individual (banks) to make contract and hold accountability for new production.  But, this would require a sea change.  A single bank acting as a rogue institution issuing new money to the world without the entirety of the system colluding would be disastrous.  If their contractors were to produce, but the general world did not have the means to purchase, then the production would be in disparity with consumptive power.  Thus, even though there may be a desire to consume, the productive effort would fail to initiate a recovery.  The entire economy must be elevated incrementally in its ability to serve and consume.  As more receive dollars/scrip for service, more consumption will be authorized, and thus more production can be supported by consumption.  There is a time lag between production and consumption, and the next round of expansion of production.  The environment of consumption and production must be assessed to determine the appropriate rate of new money authorization.

Thus, this would require both a macro and micro management of the banking system.  The current digital entry of credit system using Federal Reserve, etcetera could be employed as it is.  An important change must be made regarding the declaration of bank bankruptcy.  Currently, banks are declared bankrupt when they fall below a certain amount of solvency (deposit to reserve) ratio.  This must be changed to a more organic analysis.  Is the bank loaning money inappropriately into a local/regional environment that cannot support the level of new productive capacity they are authorizing.  

The rules defining bankruptcy must change.  The new paradigm should compare the level of commitment to production vs commitment to consumption and ability to meet repayment?  If the loans for production are high, and the rate of consumption in the environment is likewise high, then there should be adequate justification for declaring a bank solvent.  The ratio of deposits to loans is irrelevant in such a scenario.  It is only a matter of time before the contracts for production produce actual production and correspondent consumption.  The production-consumption cycle must turn before the production allows consumption and repayment of the loan.  The cycle of production-consumption will eventually complete.  The key is the proper judgment of the consumptive environment an the authorization for new production that will create an actual generation of consumption.

The government and market must cooperate in generating regulations that guide banks in their authorization of new money to initiate new production.  They will involve some relationship between the current and the potential new consumption environment. It will also involve the evaluation of the banking environment locally, regionally, and nationally.  Mathematical models could be developed that would simulate and serve as the guidelines for regulation.  Or, in free market terms, create the framework for association and cooperation in the banking community to increase total production, equitable distribution, and its concomitant prosperity.  

Initiating money in correspondence to contracts to create new value is truly a free market concept.  It could unleash the productive capacity of those who wish to work in an otherwise stagnant economy.

But, in addition to having capital available for business to borrow and use to create useful goods and services, there must be a correspondent social-political environment that allows for business to be profitable.  Lest government kill the incentive of profit, and thus diminish the most powerful motivation for production, invention, and expansion, government should enact only policies of regulation that prevent behaviors which are criminal or destructive.  (Of course this is a slippery slope, with small authority to regulate morphing into huge governmental power usurpations.)  In general, government should allow all moral pathways and movements of industry that allow men to engage in the most efficient means of production and maximization of profits.  

In addition to the constraints of regulation, the burden of taxes is another weight that can progressively slow the engine of production.  As men feel that their effort produces little extra personal benefit, they lose the drive to expand production.  Taxes have this effect at some level.  We all recognize the benefit provided by government in maintaining a secure environment in which to live and engage in commerce.  

But, government can, and has, become the consumer of resources to provide goods and services that they believe society should want.  Government justifies its forceful extraction of taxes with the argument that their purchases/programs make society better, safer, more just, equal, tolerant.  The goals on the surface appear Heaven-like, One-Worldish, and Aquarian.  

The Statist speaks of utopian dreams and argues the beauty and value of attaining these ideals is sufficiently noble to justify the expense or sacrifice of any minority groups (the rich, poor, old, infirm, retarded, deformed, genetically/racially inferior, and/or wrong-thinking) for the greater good of the whole.  To mobilize action, he uses liberally the rhetoric of class warfare, hatred, and envy to incite the masses/mob (see “Demonic” by Ann Coulter) to support imposing his dream on those who resist.  The Statist speaks with a religious fervor, and uses the media as a monolithic megaphone to embed the propaganda of a utopian vision.

The utopian verbiage may be a carefully contrived sham to a cover the power-hunger of a Hitler.  Or, the seductive story of Valhalla on earth may reflect a man’s sincere desire to bring world harmony and peace.  We cannot see men’s souls, nor with certainty judge their conscious motivation.  But, the reason and intent behind the imposition of utopia on society has no mitigating effect on the ultimate horror of such humanocentric solutions.  Whether conscious, subconscious, or a fool deluded by Satanic seduction, the effect is the same.  Men will suffer as the masses throng to worship this idol, this god of man-imposed perfection.  Men cannot bring Heaven on Earth without partnering, and submitting to the rule, guidance, and Way of the True God.

When men impose their solutions on the earth, giving no consideration of divine guidance and order, we give Satan the de facto reign in governing the motive, method, and outcome of our works.  Humility recognizes God’s superiority and place in our lives.  A personal, felt, and known relationship with God allows the Holy Spirit to guide the heart, mind, and circumstances in choosing actions that will each day make the world better.  Imposing utopian solutions and order upon men from a central governing authority reeks of the rigid, controlling regime characteristic of Satanic force.  Only God’s Way can organize men and society in a way that actually statisfies the need for liberty, fairness, beauty, meaning, and the myriad of competing factors that add texture and richness to the tapestry of life.  

We see that nature grows one cell at a time, with layers, organs, and substance forming under local control with a subtle layer of central coordination.  Such is the proper role of central government in its various orders of size.  Ultimately the cell, the individual, is the foundation of the healthy society.  The organism maintains its health by properly directing its relationship with other organisms and the environment.  The largest amount of organizational and structural work is done by the cell and the local coordinating control to form tissue and proper organ function.  

Regarding the purchase made by the central planner with our taxes, the masses who have been forced to contribute to enable government expenditures may not be motivated to continue maximum effort by the “purchases” made by government.  The analogy is of a man working hard so his neighbor can decide what to buy for him.  There will likely be a mismatch between the desires of the worker, and the taste and judgment of the neighbor who makes the purchases.

Thus, rather than assuming the central planners have the best and wisest plan for what will restore America’s economy, we would do well to take the hands of government off the soul of the people and groups (business and corporation) and let them all use their own creative inspirations to produce goods and services, and thus expand the supply of consumables, and thus expand the credit that was rightfully in circulation that corresponds to that pool of consumable resources.

The method which we have pursued as a nation has long tended toward centralization of power and a controlled economy.  But, this was not the intent or pattern of government-economy given to us by the Founders.  We have used exaggeration, diminishment, and distortion to twist the original intent and Constitutional Charter to justify the centralization of power.  The primary tool of this morphing and mapping of original intent would probably be the expansion of the Commerce Clause to justify the intervention of central government in literally every aspect of life that has risen to the point of concern of the central planners.  

The disaster of the Great Depression of the 1930’s has been well examined in the following link:

We see that the big government, central-planning-based economic policies of Hoover and FDR are in essence the same as those being pursued by Obama, and will likely produce the same disastrous results.

It appears that government attracts men motivated to control from the center.  Such men may be driven by a lust for power and money, or a misguided faith in the wisdom and efficacy of government in directing the efforts and actions of the masses.  Regardless, excessive central control de-motivates men to engage in enterprise and initiative.  The solution to a flagging economy is return of business decisions to the individual to meet the needs of economy as each sees fit.

The primary caveat to allowing an economy to operate totally without imposed regulation centers around issues of national security and cooperation of the independent States.  A moral/Godly society self-regulates on nearly all issues of individual and group behavior.  Thus, the need for regulation, enforcement, and central planning/direction diminishes to the minimum needed for coordination of the group will.  The vast majority of issues regarding commerce and individual behavior are best imposed upon the people by themselves at a more local level.  The Founders intent with regard to central control is reflected in the 9th and 10th Amendments, and was later reinforced by the 11th.

The policies of Calvin Coolidge ushered in a boom from the recession following WWI.

Thus we would create support for a return to prosperity with a policy of new money supply being made available to those who contract to create new industrial or service capacity.  It would be the job of the central and local banking system to serve as a point of accountability and rationally support the injection of new money by evaluating the macro and micro business environment to confirm the success of the proposed capital venture.  In general, the banking system should accommodate the initiative, motivation, and willingness of the entrepreneur to risk.  The counterpoint being, that expenditures that do not produce interest, consumption, and/or satisfy a need, should not be authorized.  The entire economy is dependent upon a rational use of resources to produce that which is needed and desired.  In the case of the IPO, the economy is choosing to invest in new productive capacity instead of consume production.  Thus, the human and resource capacity is being directed toward expansion when consumption is delayed by saving.  The payoff to the investor is the possibility of reward – dividends, interests, appreciation of shares.  Thus, investment rewards those who delay consumption, giving them a percentage of the gain in productivity in return for the delay.

The regulatory environment should support the desire and effort of business to prosper.  In general, government regulation and taxation should retreat to the pre-New Deal era intervention in the lives of people and business, and return the power of self-regulation to the States and Counties.

T.