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"Fortheloveofmoneyistherootofallevil"
(1Timothy6:10)
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Rocket Sc i ent i sts Gu ideT M
to Money and the Economy
Accumulation and Debt
By
DR.MICHAELSHARP
www.michaelsharp.org
blog.michaelsharp.org
Cover and Illustration
LAURAVAN [email protected]
Lightning Path Press
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Published by Lighting Path Press
St Albert, Alberta. Canada
www.lightningpathpress.com
2009 by Michael Sharp.
All rights reserved.
No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means, electronic, mechanical,
photocopying, recording, or otherwise without written permission
Distributed by Ingram
Library of Congress Cataloging-in-Publication Data
Sharp, Michael, 1963-
The rocket scientist's guide to money and the economy : accumulation and debt / by Michael Sharp.
p. cm.
ISBN 978-1-897455-11-1 (alk. paper)
1. Money. 2. Saving and investment. 3. Debt. I. Title.
HG221.S537 2009
332.4--dc22
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Contents
Life,TheUniverseandEverything....................................................................................................................... 6
TheNatureofMoney.......................................................................................................................................... 7
TheEconomy................................................................................................................................................... 8
TheSourceofMoney..................................................................................................................................... 10
TheValueofMoney...................................................................................................................................... 11
ProblemswithMoney....................................................................................................................................... 12
General.......................................................................................................................................................... 12
Accumulation................................................................................................................................................. 12
TheFall........................................................................................................................................................... 14
Power............................................................................................................................................................. 14
APrivateParty............................................................................................................................................... 16
TheTruth?..................................................................................................................................................... 18
SocialClass..................................................................................................................................................... 20
TheReport
.....................................................................................................................................................
21
Intelligentsia.................................................................................................................................................. 22
Indoctrination................................................................................................................................................ 24
Education....................................................................................................................................................... 26
Taxation......................................................................................................................................................... 27
Progress............................................................................................................................................................. 29
ProductDifferentiation.................................................................................................................................. 30
Distortion....................................................................................................................................................... 31
MetalandRock.............................................................................................................................................. 33
Crisis...................................................................................................................................................................
35
Debt............................................................................................................................................................... 39
Index...................................................................................................................................................................... 46
Endnotes................................................................................................................................................................ 47
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THEROCKETSCIENTISTSGUIDETOMONEY
ANDTHEECONOMY:ACCUMULATIONANDDEBT
LIFE,THEUNIVERSEAND EVERYTHING
Money,money,money,money.
Moneymakestheworldgoround.
Whatstheproblemwithmoney?
Well,moneyistherootofallevil,orsowearetold.
Itisthebaneofourexistence.
Itis
the
source
of
our
despair.
Itsbad,andthatsthebottomline.
Money,money,money.
Asaspiritualwriter,itsatoughtopictobroach.IliketomaketheclaimthatImaworldteacher,iyousee.I
teachaboutSpirit,God,andconsciousnessandImaketheclaimthatwhatIteachisthetruth(andthatswith
acapitalT).Itsnotthatfarout.Justabouteverywriterorteacheroutthere,exceptmaybethewishywashy
postmodernists,willmakesomeclaimtotruth.Nobigdeal.Butforsomereason,assoonasIsayImaworld
teacher,assoonasIstarttoteachaboutGodandSpirit,peoplestarttosaythingslikeOh,youreaspiritual
teacherandyouteachaboutGodandSpirit.Well,shouldntyoumakeyourstuffavailableforfree?Afterall,
youcantchargeforsomethingasbasicasspiritualtruthright?
Thequestionalwaysbothersmeandsetsupabitofaconflict.
Iagreewiththesentiment.
TheinformationthatIprovideshouldbeaccessibletoeveryonewhowantsit.
But,shoulditbefree?
Personally,Idontthinkso.
Havingspentthousandsandthousandsofhourswriting, itseemskindofdisrespectfuland insensitivetoask
someonesomethinglikethat.Youdontgouptothebakerofyourdailybreadandsay,handyourstuffover
BubcauseImentitled,doya?
Ofcoursenot!
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Todothatwouldnotonlydishonouranddisrespecttheirlabour,butitwouldbeinsensitivetothefactthatin
thiswesternworldyoucannotdoanythingwithoutmoney,youcanteveneat. Imean,Iliveinanicehouse,
butIcantgrowfoodonitbecauseIcouldntaffordayardbigenoughtogrowfood.Andwhatsworse,Icant
evenbarteriimyservices.HowamIgoingtobartermyEnglishwritingsandbooksforbananasgrownbyaLatin
Americanworker,orclothessewninaChinesefactory?
Yousee
the
problem.
IfIdontmakemoneyfromtheworkIdo(whichistowriteusefulspiritualbooks),myfamilyandIdonteat.In
thisdayandage,weallneedmoneytosurvive.
Still,likeIsaid,Idoagreewiththebasicsentiment.
Thebottomlineis,everybodythatwantstobuymybooksshouldhavethemoneytheyneedtodoso.
But,theproblemisnotthattheinformationisnotfree,andtheproblemisnotmoneyitself.
In
fact
it
is
exactly
the
opposite.
Theproblemisnothavingmoney.Theproblem is thatdespite the fact thatwe (andby we Imean thepeopleof thisearth)have amazing
technologyandamazingproductivepotential,noteverybodyonthisearthcanaffordthemodestfeeIcharge
formyeBooksandconsideringhowlittleImaskingformyeBooks(basicallyacouplebucksapiece),thatsa
crimeanditsacrimethatgoeswaybeyondthedesiretohavespiritualinformationavailablefree.Imean,its
notjustbookswecantafford. Alotofpeopleonthisearthdontevenhavethemoneytheyneedtobuyfood
anddecentshelterandbecauseofthat,alotofchildrenonthisearthgohungryandstarve,andthatsmost
definitelyacrime.
iii
Soyousee,theproblemisnotmoneyperse.Theproblemisnothavingmoneyandtherightquestionis,Whydosomanypeoplelackthecashtheyneedtobuythethingsthattheyneedonthisearth?
THENATUREOFMONEY
Well,
the
lack
of
cash
in
the
pockets
of
the
people
is
not
for
reasons
that
you
might
think.
However,
in
order
to
understandwhysomanypeopledonthavethemoneytheyneed,wefirsthavetounderstandthenatureof
money.
Andwhatsthenatureofmoney?
Well,thatseasy.
Letusstartbysayingthatmoneyisnotthepaperitsprintedon.
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Moneyisnotgold,itsnotsilver,itsnotplatinum,anditsnotthoseshinylittlerocksthatpeopleputontheir
fingersandattachtotheirearlobestomakeothersgoallooh!andaah!andstufflikethat.
Moneyisnotaconcretethingatall. Infact,whenyouthinkaboutit,moneyissimplyanidea,anditsanidea
that,despitewhatsomepeoplemightwantyoutothink,isnotthathardtounderstand.
Itssimplereally.
Whenyouboilitrightdowntoessence,moneyrepresentstime.Time ismoney they say and thats totally true, though there is a bit more to it than that. Money does
representtime,butnotalltypesoftime. Moneyhasaveryspecificreferenceandthatisworktime.iv
Moneyrepresentsworktime.
Itsobvious,right?
Youworkanhouryougetpaidforanhour.
Ifyoustandaroundanddonothing,moneydoesntfallfromthesky.
Moneyisworktime.
Butofcourse,eventhatsnotwhollyspecified.Whileitstruethatmoneydoesrepresentworktime,itsalso
truethatmoneydoesntjustrepresentworktime.Moneyrepresentsaveryspecifictypeoflabour.Thefactis,
Idont getpaidmoney forworking inmyback yard. Ionly getpaidmoneywhen Imdoing something for
somebodyelse.WhenIdosomethingorbuildsomethingorprovideaservicethatsomebodyelsefindsuseful,thenIgetmoneyinexchange.AlthoughImightfantasizeaboutit,youarenotgoingtogivemeasinglepenny
forworking
in
my
garden
growing
flowers
for
my
kitchen
table.
However,
Imight
be
able
to
convince
you
to
givemeafewpenniesforaflowerIvegrownforyourkitchentable.
Ifyoupaintthewallsofmyhouse,Illgiveyou40dollarsforeveryhouryouwork.
Youseehowthatworks?
Money,money,money.
Thedefinitionofmoneyisthis:
Moneyrepresents
time
spent
working
for
someone
else.
And
ifwe
define
time
spent
working
for
someone
elseaslabourtime,thenwecansay:Money=LabourTime
THEECONOMY
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Now,whilethewholemoney=labourtimethingmightnotbethatobvioustoyouatthispoint,butitwillbe
inamoment.Togetabetterideaofwhatmoneyisallabout;allwehavetodoistakealookatmoneyinan
economy.v
Andwhatisaneconomy?
Well, an economy is basically the formal exchange of money and, since money = labour, an economy is
basicallytheformalexchangeoflabour(i.e.timespentworkingforsomeoneelsewiththeexpectationoffair
exchange).
Simple.
Whenever two ormore people get together and do something for each other in exchange for something
(usuallymoney),youhaveaneconomy.
Nowofcourse,therearedifferenttypesofeconomiesandnotalleconomiesneedmoneytofunction.Inour
modernworldtheofficialeconomy,vithatistheeconomythatisrecorded,monitored,andfiercelypolicedbythose
in
power,
does
use
money.
However,
beneath
that
official
economy
there
are
other
economies.
There
is
theundergroundeconomy, forexample.Theundergroundeconomy isalsoamonetizedeconomy,but its
notrecordedandtaxedliketheofficialeconomy.Alongsidetheundergroundmarketeconomythereisalsothe
informal economy.viiWhen I traded a complete setofmybooks to a youngmanwhohelped to clean thewindowsinmyhouse,therewasanexchangeoflabour,butitwasntmonetized.Itwasbarter.Thepointhere
thoughisnottogointodetailaboutthedifferenttypesofeconomiesbuttosimplypointoutthataneconomy
basicallyinvolvestheexchangeoflabourpower.Whetherthatlabourisrepresentedbymoneyorbarter,oris
recordedornot,isirrelevant.Thepointis,aneconomyinvolvestheexchangeoflabour.
We
can
see
this
quite
clearly
if
we
simplify
things
and
look
at
an
economy
of,
say,
one
thousand
people.
In
this
simpleeconomyofone thousandpeople,everybodydoessomethinguseful forsomebodyelse.Oneperson
playsguitar,anothersings,anotherbuildshouses,onerunsafarm,anotherisintocomputers,anotherbakes
bread,anotherprocessesanimals,andsoon.Theyallhaveaskill(orskills),theyallhavethingstheylovetodo,
andtheyallgetupeverydayandapplythoseskills intheirdaily life. Inoursmalleconomyofonethousand
people,each individualhassomespecializedtalentsandabilitiesandtheybringthesetalentsandabilitiesto
theircommunity,andthatsgreatbecausenoteverybodyisthesame.Noteverybodylikestobuildthings,not
everybody likestositalldayandwrite,noteverybody likesanimals,andsoon. Butthatsokbecause inan
economy,wecanallexchangewitheachotherforthingsthatwecantotherwisedoourselves.
Andhow
do
we
do
that?
Howdoweexchangeourlabour?
Well,asIsaidabove,wecandothatwithbarterorwecandothatwithmoney.Barter(i.e.Ibuildyouahouse,
yougivemea lifetimesupplyofhamburgers) is fineasfaras itgoes,but itsquite limitedbecausebarter is
neitherefficientnorflexible.Maybethelocalcarpenterisavegetarianandifso,howisthemeatpackergoing
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togetahousebuiltwhentheonlythinghehastoexchangeisasubstancethatcausesthecarpentertoretch
uncontrollably(i.e.deadmeat)?
Youseetheproblem.
Entermoney.
Money,money,
money.
Moneyisanimprovementoverasystemofbarterbecauseitabstractslabour.Whentheeconomyisbasedatleastpartlyonmoney(i.e.partlymonetized),thenyouroptionsforexchangeareexpanded.Moneybasically
createsamore fluidandefficientsystemof labourexchange. Insteadofpayingthecarpenter indeadmeat,
themeatpackernowpaysincashwhichthecarpentercanthenusetobuywholesomeveggies.Itsawinwin
situation.Themeatpackerbenefitsbecausenowhe canexchangewith the carpentereven thoughhehas
nothingofinteresttobarter.Thecarpenteralsobenefits.Forhim,moneyisbettersincehecantakethatand
buywhateverhewants.Hecanbuyfood,hecanbuyanewcar,atool,orwhatever.Inthissensemoneycan
beseenasaneconomic lubricantor likeblood in thebody.Asameasureof labourpower, itsimplymakes
economicexchangemoreefficientandfluid.
Moneygiveslifetothesocialfabric.
So,thereyouhaveit.
Moneyissimplyabstractedlabour.
Moneyallowsustoexchangelabourpowerwitheachotherinanefficientandfluidway.
Putthisway,moneyhardlyseemsliketherootofallevilassomanypeopleliketothink.
THESOURCEOFMONEY
So, ifmoney is labour,and iftheeconomy isnothingmorethanawaytoexchange labour,thenwheredoes
moneycomefrom?
Well,itdoesntappearoutofthinair;butitsalsonotthathardtounderstand. Moneycomesintobeingina
twostepprocess.First,somebodymakesit.Ifitspapermoney,weputpaperthroughapresswithspecialinksand
so
on.
If
its
metal
money,
we
stamp
it
with
alogo
and
some
numbers.
Thenweagreeonavalueand,
importanttonote,whateveryoureusingformoney,whetheritbeitgoldorleadorstone,itdoesntmatter.
Allthats important isthatthepeoplewhoare involvedagreethatthispieceofpaperorthat lumpofmetal
representsacertainamountoflabourtime,i.e.thatithasacertainvalue,andthatsallthereistoit.Onceyou
agreethatyouaregoingtoabstract labourandpour it intosomekindofsymbol,allyouneed isasymbolto
attachitto,andgeneralagreementaboutthevalueofthesymbol,andthereyouhaveit.
Itsallaquestionofconcordance.
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IfIhandyouapieceofbluepaperandtellyouitsworthonethousandlabourunits(assumingonelabourunit
isonehouroflabour)andyouagree,thenwereinbusiness.
THEVALUEOFMONEY
I suppose thequestion thatarisesnow is,howdowedetermine the valueofmoney?That is,howdowe
determinehow
much
labour
power
is
represented
by
our
instruments
of
exchange?
Well
obviously,
whatever
itisweareusingasaninstrumenttoconveyvalue,thevalueisntintrinsictotheinstrument.Thatis,apieceof
paper isntautomaticallyworthonethousand labourunits.Thatmuch isglaringlyobviouswhen itcomesto
something like paper money. A small piece of offwhite paper, printed in a huge mill, with automated
machinery,ateconomiesofscale, isprobablyworthsomething intheorderof .001cents.Thesamecanbe
saidofotherinstrumentsofexchange,likethegold,silver,anddiamondsthatmaybemadetoholdvalueoverthe centuries.Nomatterwhatanybody tells you, goldhasno intrinsicvalue. Ithasa small labourvalue,viii
which isthe totalamountof labourthatwent intoextracting it,but itsworthlessoverandabovethat. It is
onlywhen weagree thatgold,paper, shinywhite rocks,orwhateverareworth somethingmore, then
thesethings
take
on
amonetaryvalueoverandabovethevalueofthelabourthatwentintoprocessingthem.
Andhowdoweagree that somethinghasavalueoverandabove its labourvalue?Well, lets leave that
questionforlaterandinsteadfocusonthesimplevalueofmoneyquestion.
So,howdoweaddvaluetomoney?
Well,although therearepeoplewhowouldhave youbelieve such, itsnotblackmagicand itsnot rocket
science. Asnotedabove,theactuallabourvalueofmoneyisderivedsimplyfromtheamountoflabourthat
we(andbyweImeanthoseinvolvedintheexchange)agreeitrepresents.
Andhow
do
we
determine
the
value
of
money?
Well, its not random, letme tell you that. The value ofmoney is basically determined in relation to the
amountoflabourbeingexchangedinaneconomy.Iknowitmightsoundcomplicated,butitsnot.
Itworkslikethis.
Say,forexample,youhaveasmalleconomyofonehundredpeopleandyouwanttomonetize(i.e.addmoney
in away that displaces barter as a primary form of exchange) that economy.Howmuchmoneywill you
introduce?Well,youwanttointroduceexactlyasmuchmoneyaswillrepresentthetotallabouroutputofthe
onehundred
people
in
the
economy.
For
example,
if
you
measure
each
hour
of
labour
as
one
unit
of
labour
(onedollar/unit=onehouroflabour),andifmostpeopleworkfourhoursaday,sevendaysaweek,then in
ordertofullymonetizeourlittleeconomyyouwouldhavetointroduceaboutonethousandfourhundredand
sixty(i.e.4x365=1,460)unitsofmoneyperpersonperyeartorepresentanentireyearsworthofthelabour
of your small society. For our small economy of one hundred people, that would amount to about one
hundredandfortysixthousandunits(1,450x100=145,000)ofmoneycirculatingintheeconomy.
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As for individualpiecesofmoney, their value isdetermined in relation to the total valueofmoney in the
economy.Assumingyourestartingfreshandwithnohistoryofinflation,howmuchan individualpieceof
money isworthwould depend onwhat fraction of the total it represented. You could, if youwanted to,
circulate the requiredonehundredand forty five thousandunitsofmoney inoursmalleconomyusing145
thousanddollarbills;inthatcase,eachbillwouldbeworthonethousandlabourunits.Or,youcouldbreakit
upandcirculateitas145,000onedollarbills;inthatcaseeachbillwouldbeworthadollar. Oryoucoulddoa
combination,in
which
case
youd
have
to
stamp
the
bills
so
people
would
know
the
value
of
each.
Regardless,
thevalueoftheindividualbillsisonlymeaningfulinrelationtothetotallabouroutputinaneconomy.Inotherwords,inordertodeterminethevalueofmoneyinaneconomy,youhavetolookattheamountoflabourin
economyasawhole,andthendividetheamountofmoneyintothat.
PROBLEMSWITHMONEY
GENERAL
Asnoted
above,
there
are
alot
of
benefits
to
amonetized
economy;
however,
there
are
also
potential
problems.Forexample,incomplexeconomiesitcanbehardtodeterminetheexactlabourvalueofsomething
and thereforehard todetermineexactlyhowmuch topay forasingle item.Forexample, itseasy toknow
howmucha loafofbread costs.Say, for the sakeofargument, thatabakerwitha smallovenbakesnine
loavesofbreadinthreehoursincludingcleanup.Inthatcase,andassumingonehouroflabourisequivalent
tooneunitofmoney,eachloafofbreadwillbeworthabout.33unitsofmoney(itworksouttoaboutthree
loavesanhouroflabour)pluswhatevertheflourandyeastandbutterandheatcost.However,itsnotsoeasy
to determine how much labour goes into a computer chip. There is design, engineering, manufacture,
distribution, sales, and so on. To be totally fair to everyone involved, all the labour that goes into the
manufactureof
achip
must
be
factored
into
the
actual
cost
of
the
chip.
Thats
acomplex
equation
that
Iwould
thinkcanonlybeestimated.
In addition to theproblemof estimating the amountofmoney tobepaid for items, theremay alsobe a
problemwithselfregulation.Maybepeoplewillnotworktherequiredhoursforthemoneygiventothemto
representtheirlabourpower.Maybepeoplewillgettenthousandlabourunitsofmoneyforayearoflabour,
butonlyworkfivethousandhours.Thismightbeespeciallytrueofyoungadultswhomaybemoreinterested
inpartyingandboinkingthanworkingandcontributingtosociety.Theproblemhowever is likelyminorand
relativelyinsignificantinanemotionallyandspirituallymaturesocietyandcouldprobablybesolvedsimplyby
revisingoursocializationprocessandemphasizingthetruemeaningofmoney(i.e.asacontainerforlabour),
theneedformutualcontributiontothecommongood,gratitudeforwhatothersdoforyou,etc.
Notrocketscience.
ACCUMULATION
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Nowassimpleastheproblemsofdeterminingthepriceofcommoditiesandmotivatingpeopletocontribute
mightbe,thereisabiggerproblemwithmoneythatisnotsoeasytodealwithandthatcauseshugeproblems
anddistortionsinthegeneralfabricoflifeinourlittleglobalcommunity,andthatisaccumulation.
Andwhatisaccumulation?
Well,accumulationbasicallyreferstothepracticeofaccumulating labourpower. Inconcreteterms it isthe
practiceoftakingsomebodyslabourand,forexample,puttingitontheshelfinyourhouse.
Nothingwrongwiththat,right?
Wealldoit,right?
WhenIwenttoSouthAfricawithmyfamily,weboughtalotofhandicraftsfromtheartisansdownthere. We
exchangedourmoneyfortheirlabour(i.e.thehandicraftthattheyhadcreated),andthenweputtheirlabour
onthewallsofourhouse. Althoughtheartefactsinourbookshelflooklikeartisticobjects,reallywhatweve
doneisaccumulatelabour.
Itisnicetosurroundyourselfwithfineworksofartandhandicrafts.
Thereisnothingwrongwiththat,aslongastheexchangewasfair.
Of course, some things are easier to accumulate than others and, by the same token, some things are
impossibletoaccumulate.Mywifecantaccumulatethemassagesshegets, forexample,andmyhousecan
onlycontainsomanyelephantcarvingsandtribalmasksbeforeitstartstolookclutteredandmessy,orIhave
tobuyshelvesandstorage. Itcanbedone,butitsdifficultandthisdifficultyofaccumulatinglabourgenerally
makesaccumulationanonissueinsocietiesbasedonbarter.ixYouworkforwhatyouneed,accumulateafew
thingsto
make
your
life
more
pleasant,
and
it
doesnt
go
much
farther
than
that.
In
abarter
society,
there
is
a
builtin limitation.Theres reallynopoint inaccumulatingbread,orhammers,or computers,orhandicrafts
beyondacertainpoint.
Ah,butinamonetizedeconomy,itisadifferentstory.Inamonetizedeconomy,thereisnosuchbuiltinlimit
toaccumulation. In fact, inamonetizedeconomy,you
canaccumulateasmuch labourpowerasyouwant.You
can print a thousanddollar bill, a million dollar bill, a
billiondollarbill,itjustdoesntmatter.Sincethevalueof
money (i.e. the amount of labour it represents) in a
monetizedeconomy is symbolic andbasedon a simple
act of agreement rather than a reciprocal exchange of
goods,youcanaccumulateasmuch labour (i.e.money)
as youwant.As long as somebody believes you that a
thousand dollar bill is worth so many units of labour,
youresettogo.
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Butwhywouldyouwanttodosomethingassillyasthat?
THEFALL
Well,inordertounderstandwhyyoudwanttoaccumulatemoney,youhavetounderstandsomethingabout
thenatureandpossibilitiesinherentinaccumulatedlabourpowerandthebestwaytounderstandthatiswith
alittle
story.
Letusimaginethatoneday,sometimeafterthemonetizationofoursmalleconomy,somebodygetstheidea
tochargejustalittlebitmorefortheirlabourthanisstrictlyfair.Forexample,insteadofcharging.33labour
unitsforaloafofbread(theactuallabourcostofthebread),thebaker(letscallhimJoe)nowstartstocharge
.66units(twicetherealcost),or.99units(threetimestherealcost),orwhatever.Joesurmisesthat itsnot
much really, and it doesnt seem like its going to hurt anything, or anyone, so whats the harm with
accumulatingalittleextralabour?
Whatstheproblemwithtakingalittleprofitforoneself?heaskshimself.
Wellasitturnsout,itisabigproblem.
In fact, it isa worldendingproblemx;however, that isnot immediatelyapparentwhen themachine isjust
startingup. Ittakesawhiletoshowup,so letsskipaheadandtakea lookatJoeayear latertoseewhats
happenedwithhisplantoaccumulate.
Itsnotdifficulttoimagine.
Afterayearofchargingmorethanthetrue labourvalueofhisbreadJoewillhaveaccumulatedabunchof
extralabour.
Howmuch?
Well,ifhechargesthreetimestheactuallabourcostforhisbread,attheendoftheyearheisgoingtohave
accumulated twice as much labour as he actually put into his business. If a typical person expends one
thousandfivehundredunitsayearthenJoe,havingchargedeverybodytriplethecostofthebreadwilbe in
theblackbysomethreethousandlabourunits,insteadofhavingabalanceclosetozeroattheendoftheyear
asheshould.
Wow!
Thatsverycoolforthebakeranditsevencoolerwhenyourealizewhathecandowithallthataccumulatedlabour.
POWER
Andonceagain,itisnotrocketscience.
Takeagoodlookatthatdollarbillinyourwallet.
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Rememberthenatureofmoney.
Moneyisacontainerforlabourandwhenitsaccumulated,moneyhastheabilitytocommand(i.e.buy)other
peopleslabour.
Pauseandthinkaboutitforamoment,becausethisextramoneygivesourbakermananincredibleamountof
real,palpable,andmeasurablepower. Really,thepossibilitiesareendlessforournewlywealthybakerman.
With the extra three thousand units of labour he can do whatever he wants. He can take an extended
vacation,hecanhaveabiggerhousemadeforhimself,hecanevenemployahousecleanertocleanhishome,
oranassistanttodohisbakingforhimsohenolongerhastowork!
Now,howcoolisthat?!
And,sincethemoneyinhispocketrepresentsabstractlabourtime,aslongashecanfindsomeonewillingto
workforthecash,Joecandowhateverhewants.xi
Moreimportantly,hecandomorethananybodyelsearoundhim.
Henowhaspowerthatothersdonothave.Itsbrilliant,thinksJoewhenhepausesatyearendaccountingtoconsiderthebenefitsandethicsof itall.
He looksup fromhisbooks,he looksaroundat theworld,andhe realizes,he isnowabitdifferent from
everybodyelsearoundhim. Becausehethoughttochargealittleextraforhisbread,attheendofayearhe
nowhaspowerandcapabilitythatnooneelsehas.
Butisthatwrong,heaskshimself.
Nobodyseemstohavegottenhurtand,asfarashecansee,nothingseemstohavechanged inthewider
society.
Sowhatstheharm,hedecides.
Really,hesays tohimself,theonlyproblem that Ihavenow ishow touse thisextra labourpower. Joe
thinksaboutitandaftersomeconsiderationhedecidestospendtheextralabourunitshehasaccumulatedon
abeautifulmansion,twicethesizeofalltheotherhousesaroundhim,onthetopofalocalhill,overlookinghis
littlecommunity.Ofcourse, itsnotsomethinghecouldhavedoneayearearlier.Beforehestartedhis little
accumulationexperiment,hewouldnthavehad themoney topay for theextramaterials, labour time,or
extraeffortrequiredtohaulthematerialsupthehill.
Butnowhecan!
Now Joesgot thecashandsonowhebuildsabeautifulhouseon the topof thehilland that iswhenhis
communitystartstonotice.
Thatiswhenthequestionsstart.
HeyMr.bakerman,whatthehecksgoingon?askhisfriends.
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Andhowdidyoumanagetobuildthatbighouse?
Andthatstopshiminhistracks.
Nowhesgotachoice.
Whatshegoingtodo?
Ishegoingtocomecleanandrevealthe(real)secrettohissuccessorishegoingtohidethetruthsothathe
cankeepaccumulatinglabour?Hethinksaboutcomingcleanbuttobehonestwithhimself,hedoesntlikethe
implications.He figures if he comes clean, thejig is up and his free ride is over. After all, nobody in his
community isgoingtostandbyand lethimoverchargeforhisbread.Notonlythat,buthesuspectsthathis
communitywillbealittlepissedathim.Heck,theymayevendemandrestitutionandthatwouldsuck,thinks
Joethebaker.Payingbackthreethousandunitsoflabourwouldmeanhedhavetoworktripletimeoverthe
nextyear.
Still,hethinks,despitetheirquestionsnoharmhascomefromit.
Everythingisstillworkinganddespitesomeminorgrumbling,everybodyisstillhappy.
SowhatifIvegotabiggerhousethaneverybodyelse?heasks.
Whereistheharminthat?
APRIVATEPARTY
So,whatdoesJoedo?
Well,he
cant
do
nothing.
Everybodyinhiscommunityisaskingquestionsandhehastorespondtothem.However,insteadofissuinga
publicannouncement likeheshould, insteadof talking toeverybodyatonceand revealing thesecret tohissuccess,insteadofdoingtherightthing,hetellshiscommunityhedrathertalktoonlyafewpeopleatfirst.
Itscomplicatedandhardtoexplain,hesaystohisfellowcommunitymembers,so,ifyoudontmind,itwill
beeasierifItalktoafewpeopleatfirstandafterthattheycanreporttoyou.
Andofcourse,nobodyseesaproblemwiththis.
Membersofthecommunitythinkthat ifJoesays it iscomplicatedandheneedssomespacetoexplain,then
thatisOK.
Everybodytrustseveryoneelseinthissocietyandsonobodyraisesanyconcerns.
Andso,thatswhatJoedoes.
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Onenighthe invitesafewcarefullychosenpeople
overforaveryspecialdinnerparty.He invitesthe
carpenter(whomhepaidextratobuildhishouse)
and a few of his closest friends over for a
sumptuousand luxuriousdinnerandhesparesno
expense. He takes a few thousand of those
accumulatedlabour
units
and
he
hires
an
army
to
throw a party like no party that has ever been
thrownbefore.Itsimpressiveandmagnificentand
when itsover,Joeandhisfriendssitdowntothe
finest cognac. There is idle chitchat while Joe
patientlywaitsforthewarmglowfromthecognac
tospreadthroughthebodyandmindofeachofhis
guestsandthen,afterasuitableperiodhaspassed,hestandsupandoffersatoast.
Mydear
friends,
he
exclaims.
it
is
an
honour
and
aprivilege
to
share
these
blessings
with
you
tonight.
Ithasbeenawonderfulmeal, impeccablecompany,and Iamhappierthan Ihaveeverbeen inmy life,he
says.
Everybodynodsinenthusiasticagreement.
Butnowweshouldgetdowntobusiness,heexclaimsseriously.
Mydearfriends,hesays,ifIcouldtellyouhowyoucouldhaveamansionlikemine,andmakeeverynighta
nightlikethis,wouldyoubeinterested?
Hisfriendsgetexcited.
Ofcourse,theysay,thatiswhywearehere,tofindouthowyoudidthis.
Yes,Joesaysnodding,andIwilltellyou.
Butyouknow,thisonlyworksifyoukeepitasecret!
Atthisstatementapalpableshockgoesthroughtheroom.
Thereisabuzzofdiscussionandpuzzledlooks.Thepeoplesittingintheroomhaveneverbeenaskedtokeep
asecretbefore,sotheyarejustifiablyalittlewaryaboutit.TheystarttoraisequestionsandconcernsbutJoe
raises his hand, smiles, poursmore cognac into their glasses, and assures them there is nothing toworry
about.
Nobodygetsharmed,hesays.
Everybodywins!heexclaimsashenodshisheadenthusiastically.
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AndIcanproveit,hesays.
Butittookmeayeartofigureitoutandsoitsgoingtotakeyouayearaswell,hesays.
Youwillhavetotryitforayear,andthenyouwillunderstand.
Caneveryonedothat?heasks.
Hekeeps the glasses fullashis close friendsdiscuss the issue.They raise someobjections, really relatively
minor,whichJoecounters,andbytheendofitnoneofthemcanseewhattheharmwouldbe.
Thebakerisright,theysay.
Nobadthingsseemtohavecomefromthis,andwhowouldntwanttohavepartieslikethisallthetime.
So,theyshakehands,toastthemselves,congratulatethemselves,andsitdowntoplan.
Theyagree.
Theywontsayanythingandtheylltryitforayear.
Afterall,everybodytrustsJoe.
Heistheirfriendandhehasassuredthemitisawinwinsituation.
THETRUTH?
Theonlyproblemisthepeopleatthebottomofthehillareexpectingareport.
Itwas
the
reason
for
the
party,
and
so
they
have
to
do
something.
Butwhat?
Whatarewegoingtotellalltheotherswhowerenotinvited!?Joeasks.
Everybodyagrees,itsaproblemthattheycannotignore.So,theyconsiderthisproblemforquitesometime
untilfinallythecarpenterjumpsupandsaysexcitedly,Iknow,Iknow,Iknow!!!
Welltellthemthetruth!hesays.
Thereare
puzzled
looks.
Wellsayweneedtostudytheproblem!hesays.
Wellsayweneedtowaitayear,dosomeresearch,andhaveacloserlook.
Anditstrue,isntit?hesays,Thatisexactlywhatwearedoing!
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Andofcourseeveryoneagrees, it isexactlywhattheyaredoingandsotheyjotdownsomenotes,picktheir
best public speaker, set a date, and call the community together to reveal the results of their private
discussion.
Itsverythrillingforthecommunityatthebottomofthehill.
Everybodyexpectsthetruthtoberevealed.
Everybody expects to learn the great secret to Joes wealth and so all the people and all their children
congregateinthetownsquareexcitedbywhatisabouttobeannounced.
Thespeakerclimbsthepodium...
Helooksoutoverthegatheredcrowdandsmiles.
Peopleofourcommunity,intonesthespeaker,Joehasstumbleduponthesecrettogreatprosperity.
Thebakerhasfoundawaytomakemoney.
Thecrowdhushesandallfacesturntothespeakeratonce.
Unfortunately,saysthespeaker,itiscomplicatedandnotwellunderstood.
Wehavebeenstudyingitandwebelieveitisacombinationoftherelativefluctuationofcommodityindexes,
plustheincreaseinconstantpricingofgoodsandservicesonthemarketexchange,overandabovethecostof
theinputsasopposedtotheoutputs,intonesthespeakerinamonotonevoice.
Thecrowdlooksconfused.
Itis
the
result
of
the
de
indexing
of
commodity
pricing
in
relation
to
the
cost
of
inputs
and
labour,
he
says
in
anefforttoexplain.
Thecrowdlooksbaffled.
Thespeakersolemnlynodshishead.
Yes,hesays,itiscomplicated.
But,hesaysthumpinghischest,weshallfigureitout.
Wehave
started
an
institute
that
we
will
call
The
Institute
of
Fiduciary
Investigation,
or
just
The
Institute
for
shortheproclaims,andforthegoodofthecommunity,weshalllabourdayandnightuntilwediscoverthe
inneressenceofthiscomplicatedprocessandwhenweunderstand,weshallsharewithyousothatwewillall
benefitfromthiswonderfulnewwayofmakingmoney.
Weshallreporttoyouinexactlyoneyear,hesaysquickly,raisinghishandstoavoidtheemergingquestions,
andturnstostepdownfromthepodium.
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Nowofcourse,thereisabitofconfusion.
Everybodywasexpectingananswertothequestionhowwasthebakerabletocreateamansion,butthey
didnt get that. All they gotwas a promise of future revelations. Still,what the speaker had said seemed
reasonableenough.Afterlisteningtothespeakertrytoexplainthings,itcertainlydidsoundlikeacomplicated
process,sowhynot?
Everybodyinthecommunitytrustedeachotherandsothepeopleatthebottomofthehillhadnoreasonto
distrustorquestionwhatthespeakerhadsaid.Theyacceptedtheexplanationingoodfaithandtheyallwent
homequietlytowaitforthereport.Inthemeantime,theboyswhohadbeenatJoesspecialpartygradually
start,atthebehestofthebakerman,toraisetheirprices.
SOCIALCLASS
Andofcourse,assoonastheboysfromthetopofthehillstarttoraisetheirprices,the inevitablehappens.
Afteronlyayearofsubtleaccumulation,alltheboysfromtheoriginalpartyhavebuiltfancyhousesontopof
thehill
right
alongside
their
baker
friend.
Itsgreat,theytellthemselvesatoneoftheirnowweeklyspecialmeetings.
Andwhatsevenbetter,theysay,Joewasright.
Despitethefactthatwehaveallmovedupthehillandarenowlivinginbetterhouses,eatingfinefood,and
drinking finewine, theeconomy is stillworkingproperlyandnothinguntoward seems tohavehappened,
theytellthemselves.
Unlessofcourseyouincludethefactthatsocietynowseemstobedividedintotwodistinctgroupsofpeople
withdifferentinterestsanddifferentlifestyles.
Thedividinglinesareobvious.
Therearethefamiliesatthetopofthehillwiththeirbighousesandtheirlavishparties,andthentherearethe
familiesatthebottom.
Butthathardlyseemssignificant,atleasttothepeopleatthetopofthehill.
Whatsthebigdealanyway,theysaytothemselves.
Everybodysstill
happy
they
tell
themselves.
Butreally,howwouldtheyknow?Bytheendofthesecondyearthepeopleatthetopofthehilldontsocialize
toomuchwiththepeopleatthebottomofthehillanymore.Theyhavetheirownprivatemeetingsandtheir
ownprivatefunctionsandthetwogroupsjustdontseemtofittogetherwellanymore.
Itsmostlyaquestionofincomeandcomfort.
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Thepeopleatthebottomofthehillsimplycantkeepupwiththelavishextravaganceofthepeopleatthetop
ofthehill. Comparedtotheirformerfriendsatthetopofthehill,theyarepoorandtheyfeeluncomfortable
beingaroundtheextravagance.
And,iftruthbetold,theyarenotaltogetherhappyaboutthat.
Indeed,ifthetruthbetold,theyarestartingtogetalittlegrumpy.
Allthosefancyhousesandextravagantpartiesareaconstantremindertothemthattheydidntgetananswer
totheirquestionaboutthebakershouse.Alltheygotwasapromiseand,inthemidstofthatpromise,allthey
areseeingisfurthersocialdifferentiation.
Andthatsnotright,saythepeopleatthebottomofthehill.
Andyouknow,theyarentshyaboutshowingtheirdispleasure,oraskingdifficultquestionswheneverthey
meetupwithoneofthefamiliesfromthetopofthehill.
What
happened
at
that
first
party,
they
say
and
how
come
you
are
up
there
with
the
baker
now?
Whats going on!? they say as their voices get louder and louder. And it goes without saying that this
discontentanddispleasuremakesthepeopleatthetopofthehillalittleuncomfortable.
ThankgoodnessforTheInstitutethough.
Everybodyagrees!
Thereportisalmostdue.
Surelytherewillbesomesatisfactioninthat.
THEREPORT
Sadlyhowever,whenthereport isfinallyreleased,there isnosatisfactiontobefound.Thebasicproblem is,
nobody seems to be able to understand it. The report is so full ofjargon and terminology, horseshit and
gobbledygook that it is a thousand times more confusing than the original speech was. It is positively
obfuscatoryandbythetenthpage,anybodyreadingithasbecomevirtuallyunconsciousoutofsheerboredom
andconfusion.Thismeans, I suppose, that thosewhowrote the reportcouldbreatheasighof relief,since
theywouldnothavetoansweranydifficultquestionsfromthepeople.Howcanyouformulatequestionson
materialthat
is
inscrutable?
However,itisnotallgobbledygook.Insertedatthebeginningofthereportisaonepageexecutivesummary,andthewritingthereisasclearasabellonChristmasdaycallingustoawakentotheChristinside.
Theproblemismultifaceted,saysthesummary.
Thesituationsarecomplex.
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Thevariablesareindeterminate.
Morestudywillbeneeded,concludestheexecutivesummary.
INTELLIGENTSIA
Nowof course, ifyouareoneof thosepeopleat thebottomof thehill reading the reportandhoping for
satisfaction,youwouldlikelyfindithardtohideyourdisappointment,confusion,andanger. Afterallacouple
ofyearshavepassedandtheonlythingthatseemstobehappeningisthatthepeopleatthetopofthehillare
gettingricher,moreextravagant,andmorelavishallthetime.
Frankly,itsalittlehardtostomach.
Still,mostpeopleatthebottomofthehillsimplybitethebulletandgobacktowork.Afterall,theytrustthe
peopleatTheInstitutewhentheysaytheyareworkingontheproblem.Whatelsewouldtheybedoing?
Still,afewofthepeopleatthebottomofthehilldontgocalmlybacktowork.
Afewareunhappyaboutthewholethingandtheyfrown,grumble,complain,andaskquestionslikewhats
goingon?andwhy is it taking so long?andif theydontknowwhatsgoingon,whyare somanynew
mansionsbeingbuilt?Andofcourseallthesequestions,andallthatanger,makethefamiliesatthetopofthe
hillalittlenervous.
Itwasclearlystatedinthereport,saythenervousfamiliesthatmorestudyisneeded.
Sowhyaretheygettingallagitated?theyaskindignantly.
Whycanttheywaitlikeeveryoneelse?
Forthepeopleatthetopofthehill,theagitatorsareadefiniteproblemandsomethingclearlyhastobedone.
Theycantjustlettheagitatorskeepagitating.
Thatwouldbeamistake.
Thepeopleatthetopofthehillcanseethatastheagitatorsagitate,othersarebecomingagitatedaswell.
Theagitationisgrowingandifleftunchecked
Well
Whoknowswhere thatmight leadand so theboyscalla specialmeetingof theirBoysclub todiscuss the
problem. Asusual,afterabutler servesadinnerof finewineand food, thechairman (i.e. Joe) standsand
says
Mosthonourableanddignifiedgentlemenoftheinnermostcircleofilluminatedbackscratchers,wehavea
problem.
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Asyouknow,thereportdidnotprovidesatisfactionorclarity,saysJoe.
Theproblemismultifaceted,hesaysechoingtheconclusionsofthereport.
Thesituationsarecomplex.
Thevariablesindeterminate.
Obviously,hesays,morestudy isneededbutunfortunately,somepeople fromthebottomofthehilldo
notseemtounderstandthat.
Butwhatcanwedo?Joeasks.
UntilTheInstitutereachesapointofclarity,therearenoanswersandtherecanbenosatisfaction.
Still,saysJoe,thepeopleatthebottomofthehillarehavingahardtimeunderstandingandacceptingthis.
Theyareagitatingforimmediateanswers,andtheirdiscontentgrowseveryday,hesays.
Andwhoknowswherethatmightleadhisvoicetrailsoff.
ButIhaveaproposal,quipsthebaker.
Ihaveapossiblesolution,hesaysnoddinghishead.
Thoseagitatorshesayspausingforeffect.
Theoneswhoarentsatisfiedwiththereport...hecontinues..
Theonesgettingeverybodyelseagitated
Ibelieve,saysJoe,thattheyaresimplyalittlesmarterthaneveryoneelse.
Henodsandsmiles.
Andyouknow,saysJoe,ashiseyesscanthefacesofthegathereddignitaries,wecouldusepeoplelikethat
tohelpoutatTheInstitute!
Wecoulduse theirbrainpowerandhopefully,witha littledirection, they canhelpbring clarity,he says
smiling.
Andof
course,
everyone
agrees.
Itisabrilliantidea.
The agitators want answers, so why not coopt them and put them into a position where it is their
responsibilitytoprovidethem.
Itwillsatisfytheagitators,saysJoe,anditwillremovetheirinfluencefromthebottomofthehill.
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Theonlyproblemis,saysthebaker,howtogetthemtoTheInstitute?
Whywouldtheyaddtheirvoicetosomethingtheyalreadyseeasproblematic?
ButJoehasananswerforthat.
Welldowhatwealwaysdo,hesays,welljusttellthemthetruth.
Welltellthemthatweneedtheirhelp.
Welltellthemthatwehaventbeenabletobringclarity.
Welltellthemwerejustabunchofdimwittedbusinesspeopleandweneedtheir intellectualprowessto
savetheday.
Howcantheysaynotothat?asksJoe.
Andjusttosweetenthedeal,hesays,wellgivethemasmallbonus.
Wellpaythemalittlemorethanthepeopleatthebottom.
Givethematasteofwhatitslike,saidJoe.
Nottoomuchthough.
Wedontwantthemasneighboursatthetopofthehill,hesaid.
Itstoocrowdedasitis.
Butthereslotsofspaceinthemiddle,hesayscheerfully,sowellhelpthemgetsetupthere.
Itsanoffertheywontbeabletorefuse,concludesJoenoddinghishead.
Andsothelettersgoout,thebonusesareoffered,andtheagitatorsandtheirfamiliespackuptheirbagsand
begintheshorttrekuptoemploymentatTheInstitute,andlifeatthemiddleofthehill.
INDOCTRINATION
Now, when the new intelligentsia arrive at The Institute there is, of course, a magnificent ceremony of
welcome. There is finewine, there is gourmet food, and there is a charismatic keynote speaker, hired to
addressthe
newcomers
and
set
the
tone
for
the
work
they
would
carry
out.
When
everybody
has
filled
their
bellieswithfinewineandfood,thespeakerclimbsthepodiumandsaystotheassembledguests
HonouredguestsThankyouforcoming.
Thankyouforacceptingourinvitation.
Thankyouforagreeingtohelpus.
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Fortwoyearswehavestruggledsaysthespeaker.
Fortwoyearswehavelabouredintothenight,shesays.
Wehavecollecteddata
Wehavepouredovercharts
Wehaveanalysedpatterns
Butstillwelackclarity.shesaidshakingherhead.
Butnowwearehopeful.shesayssmilingbroadlyandraisingherhandstowardstheaudience.
Nowyouarehereandnowweareconfident.
Withyourhelp,wewillbringclarity.
Withyourfineminds,andyourdeepmotivationfortruth,wewillsucceedshedeclares.
But first, says the speaker, there must be a period of
study.
Acoupleofyearsatthemost,shesaysraisingherhandsto
fend off the questions that start to percolate through the
assembledguests.
Itisnecessary,nodsthespeaker.
Wehave
laboured
for
two
years,
she
says,
and
in
that
timewehavemademuchprogress.
We have developed new ideas and discovered new
concepts and these ideas and concepts inform our studies
andhelpuscommunicateourfindings.
But, she says, there aremany new concepts and it is a
complicated language and therefore you, our honoured
guests,mustlearntospeakthatlanguage.
Nosenseinreinventingthewheel,shesmilesandshrugs.
Andofcourse,thehonouredguestsagree.
Whywouldtheynot?
Afterall,theymightbealittleunhappywiththeperformanceofTheInstitute,butthatiswhattheyarehere
for.Theyareheretohelp.Beyondthat,theytrustthegoodfaithoftheircolleaguesandagreethat itwillbe
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mostefficientiftheybuildonwhathasgonebefore.Therefore,theywillenteraperiodofstudyandlearnthe
languageandtheconceptsusedatTheInstitute.So,withthedecisionmadetheyfinishtheirmeal,drinktheir
wine, and shuffle off to bed in order that theywill be bright and fresh for their first day of study in the
morning.
EDUCATION
Whentheywakeupthenextday,theystudy.
Andthedayafterthat,theystudy.
Andthedayafterthat,theystudy.
AndfortwoyearstheystudyandinthattimetheylearnhowtothinkandtalkjustlikeTheInstitutefounders.
AndwhenthefoundersofTheInstitutearesatisfiedthattheagitatorswillthinkandtalkjust likethem,they
setthemtowork.
Andthe
new
professionals
labour
into
the
night.
Theycollectdata
Theypourovercharts...
Theyanalysepatterns
butattheendofeachdaytheystilllackclarity.
Somethingisalwaysmissing.
Somethingjustdoesntfit.
Still,theyworkdiligentlywithintheconceptualframeworkprovidedbyTheInstitute,andeveryonceinawhile
theyissueareport.And,sincethenewcomershavelearnedtothinkandtalklikethefoundersofTheInstitute,
the report always says basically the same thing. Amidst all the specializedjargon, technical concepts, and
economichoaxuspokeusthatseemtogetmorecomplicatedeveryyear,andwhichnobodyatthebottom
ofthehillcaneverunderstand,thereportalwayssays...
Itiscomplicated,andmorestudyisneeded.
Andofcourse,everytimethepeopleatthebottomofthehillhearthat,theyareverydisappointed.
ButthatisOK.
Thepeopleatthebottomofthehillknowthatthebestmindstheyhavetoofferareworkingontheproblem
and they believe that if anybody can do it, they can do it. So, for the most part, they bury their
disappointment, trust theircomrades,andgoback toworkwhile thepeopleat the topof thehillcontinue
theiraccumulationexperiment.
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Andofcourse,itisntallwineandrosesforthepeopleatthetopofthehill.
Eachyear,wheneverTheInstitutereportisreleased,therearealwaysafewpeopleatthebottomthatcannot
hidetheirdisappointment.
But thatwasOK toobecauseeach year thepeople at the topof thehill scout thepeopleat thebottom,
identifying the agitators, and inviting them to work at The Institute. It is a perfect system and it works
brilliantlyuntilonedayTheInstitutegrowstoobigandthefinancialstrainonthepeopleatthetopofthehill
becomestoomuchandonthatday,Joecallsaspecialmeeting.
TAXATION
Most illustrious and honoured brothers, he says, I call you here today because of a problem that is
emerging.
Upuntilnowwehave,asabenefittothepeople
Andout
of
kindness
of
our
hearts
fundedTheInstitute.
Ithasallbeenoutofourownpockets,hesayswithvoicerising.
Andthathasworked,hesays.
ButnowTheInstituteisgrowinganditscostsareincreasingandwecannolongeraffordthiskindnessonour
own,hesays.
Ofcourse,
he
says,
laughing,
getting
rid
of
The
Institute
or
scaling
back
operations
is
not
an
option.
NotonlydoesTheInstituteprovideuswithinvaluableyearlyreports,hesays,butitprovidesagreatplace
toputpeoplewhoarenthappylivingatthebottom.
Still,saysJoe,somethingmustbedonetorelieveusofthecostwhileensuringThe Institutecontinuesto
function,saysthebaker.
Helooksaroundattheanxiousfaces.
However,hesays,donotworry.
IbelieveIhaveasolution.
Weshallgetthepeopleatthebottomofthehilltopayforithesayssmilingbroadly.
Afterall,hesays,TheInstituteservesthemandnotus.
We, he says spreading his arms to encompass the wealth that surrounds them all, do not need The
Institute.
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Andasalways,smilesthebaker,welljusttellthemthetruth.
Andofcourse,uponhearinghisexplanation,everyoneagreesandsotheyhirethebestpublicspeakermoney
canbuyandcallanassemblyofthepeopleatthebottomofthehill.
Thespeakerclimbsthepodiumandspeaks...
Theseare
times
of
great
potential,
he
intones.
Thesearetimesofgreatpromise.
Look,saysthespeakerashepointstothemansionsattopofthehill,atwhatispossiblewithindustryand
fortitude.
Look,hesayspointingtoTheInstitute,attheworkthatwearedoingtobringthatpotentialtoyou.
Heraiseshishandstotheaudienceasifpushingsomeoneaway.
Butthere
is
no
need
to
thank
us,
the
speaker
says.
Wedothisnotforgratitudeorprestigebutbecauseyouareourbrothersandsisters.
But,hesays,wecannolongerdoitalone.
Eachyeartheinstitutehasgrownandeachyearthecostbecomesmoreunbearableforus.
Weneedyourhelp,hesaysreachingouthispalmstothepeople.
Itwontbemuch,heshakeshishead.
Justafewpenniesaweek.
Youllbarelyfeel itand ifyouwant,saysthespeaker,youcanalwaysmake itupbyworkinga littleextra
eachweek.
Andofcourse,everybodyatthebottomofthehillagrees.
Whywouldtheynot?
Theytrustthepeopleatthetopofthehill.
Theytrust
the
people
at
The
Institute.
Theyhaveeyes.
Theycanseewhatisgoingon.
ThepeopleatthetopofthehillarepayingforTheInstituteoutoftheirownpocketsandthepeopleatThe
Instituteareworkinghardtobringclarity,prosperity,andprogresstoallpeople.
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Thepeopleatthebottomofthehillagree,thepeopleatthetopofthehillshouldnotbemadetoshoulderthe
burdenthemselves.
Itisonlyfairthattheycontribute.
Andifitmeansworkingafewextrahoursaweek,saythepeopleatthebottomofthehill,thensurelythis
isasmallpricetopayforthebenefitsthatwilleventuallyaccrue.
Andsotheyagree,andwiththatthepeopleatthetopofthehillcreateamanagingbody,whichtheycalla
government,andthisgovernmentischargedwithtaxingthepeopleatthebottomofthehillinordertofund
thenowpublicinstitute.Andthepeopleatthetopofthehillrejoice,fortheyunderstandthatnowthatthefundingofTheInstituteis
linkedtothelabourofthemasses,TheInstitutecannowgrowwithoutbounds.
Whichisexactlywhatitdoes.
Every
year
The
Institute
releases
a
new
report.
Everyyeartherearenewagitators.
EveryyearTheInstituteexpands.
Atfirstitiseconomics,adisciplinedesignedtohelpunderstandtheeconomy.
Thenitisengineering,adisciplinedesignedtoincreaseproductionexpertise.
Thenitisphilosophy,adisciplinedesignedtohelpunderstandwhytheworldisdividedbetweenthoseatthe
top,andthoseatthebottom.
Thenitishistory,adisciplinedesignedtotellthestoryfromtheperspectiveofthoseatthetopofthehill.
Thenitisreligion,adisciplinedesignedtoprovidejustification.
Then it is psychology, to control the workers and keep them docile and pretty soon The Institute is
everywhere,which isgreatbecausewithThe Instituteoperating tomanagediscontentandprovideobscure
explanations,everythingisworkingfantastically.And,witheverythingworkingsowell,theboysatthetopof
thehillnowhavetimetodealwithotherissuesbesidessystemmaintenanceandso,finally,theyturntheirfull
attentiontothethingtheylovethemost.
PROGRESS
Accumulation!
Onedayatameeting,afteraparticularlylavishdinner,Joethebakerstandsandspeaks.
DidntItellyou?hesaysraisinghisglassforatoast.
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DidntIsay?
Nobodyhasbeenharmed,hesmileswithgreatsatisfaction.
Infact,Joesays,quitetheoppositehasoccurred.
Lookaroundyouatthechangeswehavebrought!
Wethepeopleatthetopofthehillhavecreatedabetterworld!heexclaimsdramatically.
Ourhomesarethepinnacleofarchitecturalinnovation,hesays.
Ourgardensarethesummitofcreativityandbeauty.
AndTheInstitute,hesays,isourcrowningglory.
CongratulationstoallofusJoesaysraisinghisglassandtoastingtheroom.
Congratulations!hecries.
Wethepeoplehavebroughtprogresstothisworld.
Hepausesforamomentandthenbeginstospeakslowly.
But,saysJoe,wecandomore.
Withenoughresources,wecanimproveeverything.
Withenoughresources,wecanleadthisworldtoutopia.
Wecould
bring
anew
world
order
that
would
bring
progress
and
increase
our
wealth
and
prosperity
amillion
fold,hesays.
Andallweneedisthemoneytodoit,heconcludes.
PRODUCTDIFFERENTIATION
AndIknowhowwecandoit,Joesays.
Iknowhowwecanfundutopia.
Allwehave todo is increase the rateof extraction, and Ihave found away todo that, says thebaker
triumphantly.
Insteadofmakingonlyonekindofbread,hesays,insteadofmakingonlythefinestbreadthatIamcapable
ofmaking,Icanmakeacheaperbreadwithcheaperingredientsandlesscareandattention,andIcansellthat
tothepeopleatthebottomofthehill.
IfIdothis,hesays,IwillsavemoneyoningredientsandlabourandthereforeIwillaccumulatemore.
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Helooksaroundtheroomattheattentive,smilingfaces.
Theresmore,hecontinues.
IcanalsomakespecialbreadwiththefinestingredientsandthemostcareandattentionandIcansellthat
specialbreadtothepeoplehigherupthehillforapremium,saysJoe.
Insteadof
three
times
the
cost,
Icould
sell
it
for
five.
Andyes,hesaysanticipatingtheirquestions,theywillbuyitwhenItellthemitisspecial.
Butofcourse,saysthebaker,thereisaslightproblem.
Whenthepeopleatthebottomofthehillcomeintotheshopandfindtheycanonlyaffordthecheapbread,
theywillprobablygrumbleandcomplain,saysthebaker.
Andofcourse,saysthebaker,weknowwherethatleads.
But,says
Joe
smiling,
I
have
learned,
that
in
order
to
curtail
their
grumbling,
Isimply
need
to
tell
them
the
truth.
WhentheycomplainIwilltellthem,thisisthepricethatyouhavetopayforprogressandthatwillquieten
themdownbecausenobodycanargueagainstprogress.
Andofcourse,saysthebaker,Illtellthemitisallintheirhandsanyway.
Iftheyworkalittleharder
Iftheypinchtheirpennies
Iftheysavetheirmoney
Thentheytoowillbeabletoaffordthespecialbread.
Thebakerlooksaroundtheroomsmiling.
Inthenameofprogress?heasksraisinghisglass.
Inthenameofprogress!cryhisbrothersastheytoastthebakerandquafftheirwine.
DISTORTION
Andso,inthenameofprogress,thepeopleatthetopofthehillbegintolookforwaystoincreasetheirrateof
accumulation.Andtheydontstopwithproductdifferentiation. Afterall,thegoalisprogressandthemore
efficienttheycanmakeaccumulation,themoreprogressthereis.So,eachweektheymeetwithoneanother
andsharetheirideasformoreefficientaccumulation.Oneweektheycomeupwithplannedobsolescenceandproduct lifecycle. Insteadofdesigningproducts to last, thosewho can getawaywith itdesignproducts tobreak,orgooutof fashionaftera suitableperiodof time. In thisway theyensure that consumers,as the
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peopleatthebottomofthehillhavecometobeknown,aretiedconstantlyintoproductpurchase.Ofcourse,
plannedobsolescenceandproduct lifecyclemeansthepeopleatthebottomofthehillhavetoworkharder
and longer inordertofundThe Institute,buythespecialbread,replacewornoutproducts,andaffordeach
years new fashions. And it alsomeans an expanding strain on the resources of Mother Earth as shoddy
consumergoodsandbrokenproductssaturatethelandfillsanddevourresources.ButthesethingssaysJoe,
aresmallpricestopayforprogress,andsotheycontinue.
Oneweektheycomeupwithanideatolowerlabourcostsbypayingpeopleatthebottomofthehilllessforthework they do.Of course, this isnt a very popular idea amongst the people at the bottom of the hill
becauseitrequiresthem,theirspouses,andsometimeseventheirchildrentoworkharderandlongerjustto
getby.However,thepeopleatthetopofthehillarepersistentandinthenameofprogresstheyfindways
to force the issue.Theydeskill labour, tie theworkers toassembly lines, keepdemand for keyprofessions
lowerbyrestrictingaccesstoeducation,andevenusechildlabourincountrieswheretheycangetawaywith
it.Andofcourse,thepeopleatthetoprecognizetheunpleasantnatureofthesethings,butthereisalwaysa
pricetobepaidforprogress,theytellthemselves,andsotheycontinue.
Oneweek,thepeopleatthetopnoticethatalotofpeopleatthebottomofthehillarestillusingtheinformal
economy toexchange labourbybarter.They thinkabout thisandconcludethat this isabad thingbecause
when people barter it is impossible to accumulate labour, and when they cant accumulate, there is no
progress. So, the people at the top of the hill decide that bartering should be reduced and eventually
eliminated.Ofcourse,thepeopleatthebottomresist.Intheireyesbarterhasalwaysbeenalegitimateform
oftradeandtogiveitupwouldputthematafurtherdisadvantage. Butthepeopleatthetopofthehillare
persistentand,inthenameofprogress,eventuallyfindawaytoreducebarter.WiththehelpofTheInstitute,
theycommissionareportthatsaysthatactivityoutsideofthemaineconomyisdetrimentaltotheprogressof
thenation. Theythen instructthegovernmenttobegincountingallformsofeconomicactivity.Finally,they
reorganizeproduction.
Instead
of
having
small,
locally
self
sufficient
economies
where
informal
exchange
and
barteriseasyandnatural,theyforceaseparationofproductionandmakewholecountriesspecializeinsingle
productlines.Theygrowbananasinonecountry,buildcarsinanother,getgrainfromathird,andsoon.Itis
brilliant. Ina globallydispersedmarketplacewhere yougetyour food from farmerswho live thousandsof
milesaway,barterbecomesimpossible,andlifebecomesprecarious.
Andso,inthenameofprogress,onitgoes.Eachweek,theboysfromthetopofthehill,meettodiscusshow
tobringprogresstotheworld,andeveryonce inawhilesomeonecomesupwithanewandbetterwayto
makeprogress.Andthroughallthis,thepeopleatthebottomofthehillworkharderandharderjusttryingto
keep
up.
But
that,
say
the
people
at
the
top
of
the
hill,
is
the
price
we
pay
for
progress.
But
then,
one
day,
aproblembeginstoemerge,andtheproblemismoney. Asitturnsout,alltheeffortthattheboysatthetop
ofthehillareputtingintodevelopingefficientwaystocreateprogressiscreatinganuncomfortablyrapidflow
ofcash.
Theproblemis,itiscollectinginfilthyandmouldypiles.
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Itisridiculous,nottomentionugly,dirty,andunsanitaryandinitiallytheboysatthetopofthehilldontknow
whattodo.So,theycallaspecialmeetingtodiscusstheproblemand,tomakealongstoryshort,theyfinda
bettercontainerfortheirmoney.
METALANDROCK
Itis
the
stonemason
who
figures
it
out.
One day, at one of their special, private meetings, the
stonemason sheepishly raises his hand and says to the
assembled brothers, I think Imighthave a solution toour
problemwithmoney.
Hecallsthemintoacircle.
Hebeckonsthemtolookashereachesintohispockettopull
out
a
beautiful
gold
ring
with
a
huge
shiny
rock
in
it.
Heshowsitaroundtheroomashebeginstoexplain,About
sixmonthsagomycashflowwassuchthatInolongerhadto
workforaliving(pausewhilethemembersoftheclubraise
their glasses and congratulate his hard work and good
fortune).
ButIwasbored,hesays,andIneededsomethingtofillmytime.
So,beingastonemasonbytrade, Istartedtoplaywithrocksandmetalsand Idiscoveredthat theseshiny
rockscouldbecutintothesebeautifulsparklydiamondshapes.
And,saysthestonemason,IdiscoveredthatIcouldtakethissoftmetalandbenditandshapeit.
And,saysthestonemasonasheraisesthediamondring intriumph,IdiscoveredthatIcouldcombinethe
two.
Everybodyadmirestherockinhisfingers.
Itsnotmuchwork,hesays,butitdoestakeasteadyhand.
Andlook
how
pretty
it
is,
he
says.
Andisntthismuchbetterthanapileofmoney?heasks.
Andofcourseeveryoneagrees.
Itismuchprettierthanapileofmoney.
Buthowdoesthissolvetheproblemofmoney?somebodyasks.
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Well,saysthestonemasonwithasmile,itslikethis
Wecanstoreasmuchaccumulatedlabourintooneoftheselittlemetalwrappedrocksaswewant!
Remember,thevalueofpapermoneyismerelyaquestionofagreementandsowecanstoretens,hundreds,
eventhousandsoflabourunitsintoindividualbills.
Thereis
no
limit!
he
says.
Andsoitiswiththisprettyring!
Allwehavetodoisagreeonavalue...thestonemasonsvoicetrailsoff.
Asthestonemasonfinishestalking,thereissilence.
Browsarefurrowedandfrownsappearonsomeofthefaces.
Abuzzofdiscussionarisesandafterafewminutes,smilesbegintoemerge.
Somebodywhispers,itisbrilliant.
Buttherearequestions.
Whatwillwedowiththemoneythatwestore?asksone.
Andhowwillweagreeonaprice?asksanother.
Thestonemasonsmilesandraiseshishands.
Ihaveanticipatedthesequestionsandconsideredasolution,hesayswithsatisfaction.
Asforwhattodowithallthecash,wecanbuildacentralstorehouseorbankandwecanstorethemoney
there.
Asfordeterminingthevalueofourgoldanddiamonds,hesays,wecanappointourmosttrustedbrothers
toacouncilandtheycandeterminetheprice.Thiscouncil,thiscartelifyouwish,willtellus,acaratofweightisequaltoonemillionlabourunits.andwe
willagreeandaslongasweagree,hesayswithasmile,wereinbusiness.
The
brothers
consider
this
for
a
moment
and
they
all
have
to
admit,
it
sounds
pretty
good.
In
fact,
they
can
not
seeanydownsideandsotheydecidetodo it.Theycreateabank,theycreateapreciousstonesandmetals
cartel,andthestonemasongetstoworkcreatingbeautifulandextravagantwaystostoreaccumulatedlabour.
Problemsolvedand,backtobusiness!
Thepeopleatthetopofthehillcontinuetheirdriveforaccumulation,distortionspileup,andthepeopleat
thebottomofthehillworkharderandharderjusttogetby.Itseemslikeaperfectarrangementanditworks
beautifully,accordingtothepeopleatthetopofthehill,untiloneday,outoftheblue,thereisacrisis.
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CRISIS
Andwhenthatcrisishits,itisadoozy!
Allofasudden,forthefirsttimeever,peopleatthebottomofhillareoutofwork,andnotinthefancypants
leisuredwayof thoseat the topof thehill,but inaplainolcantbuyenough toeat, lose thehouseand
homesort
of
way.
Whenthishappens,itisatotalsurprise.
Onedaytheeconomyisworking,thenextdayitisnt.
Onedaypeopleareexchanginggoodsandservices,thenextdaytheyarent.
AndIwontlietoyouhere,asthiscrisishitsitishugeandugly.
Peoplesuffer.
Childrenstarve.
Peopledieandsadly,nobodyatthebottomofthehillunderstandswhyitishappeningtothem.
Butthepeopleatthetopofthehill,theyunderstand.Theycanseetheproblemasclearlyasthediamondson
theirfingers.Overthecourseoftheirlittleexperiment,thepeopleatthetopofthehillhaveaccumulatedso
much money that they have literally siphoned off all the lifeblood (i.e. cash) from the economy and
unemploymentistheobviousresult.(duh!).
Ifnobodyhasmoneytobuythethingstheyneedbecauseallthemoneyhasbeensuckedoutoftheeconomy
bythe
people
at
the
top
of
the
hill,
and
if
overspecialisation
has
made
barter
impossible,
how
are
people
going
tobeabletoselltheirgoodsandservices?
Theansweris,theycannot.
Thebottom line is, ifyoukeepextractingmoneyoutofaneconomyyouaregraduallytakingawaypeoples
abilitytoexchangetheirlabour.
Ifyoudothatforlongenough
oraggressivelyenough
andifyoudontputbackwhatyouvetakenout
Thenmassunemployment,recession,andeventuallyeconomicdepressionsetsin.
Itislogical.
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It is inevitable and because the ability to barter has been taken away from their economy, potentially
catastrophic. Millions, even billions, could starve and there is simply nothing, short of ending the little
accumulationexperiment,andgivingitallback,thatanybodycandotostopit.
Dontbelieveme?
Letstryalittlethoughtexperiment.
Imagineforamomentasmalleconomyoftenpeople.
Now, imagine thateachof these tenpeoplehasonehundreddollarsand that theyuse thoseonehundred
dollarstoexchangetheirlabourwith.
Nowimagine,thatoneday,oneofthem,letscallhimFred,startstoextractmoneyoutoftheeconomyalittle
bitatatime.
Maybehedoesitbytaxation.
Maybehedoesitbyprofit.
Maybehejustmusclespeopleintoit.
How the extraction happens doesntmatter because the end result is always the same. Sooner or later,
dependingonhowaggressivelythemoneyisextracted,peoplewillnolongerbeabletoexchangetheirlabour
becausenobodywillhaveanymoneylefttouseforexchange.
Allotherthingsbeingequal,(i.e.ifFreddoesnothingtoputthemoneybackintotheeconomy)atsomepoint
Fred isgoing tohaveallthemoney,andeverybodyelse isgoingtobeunemployed (i.e.unabletoexchangetheir
labour),
unless
they
are
lucky
enough
to
work
for
Fred.
AndwhatdoesFreddoatthatpoint?
HowdoesFredsolvetheeconomiccrisis?
Wellreally,theonlythingFredcandoatthatpointisgivethemoneyback.
The pure and undiluted truth is, if Fred wants to avoid all the nasty human suffering that attends
unemploymentandrecessioninaneconomythathessuckeddryof itsvery lifeblood,heputsallthemoney
thatheextractedbackintocirculationsothatpeoplehavetheresourcestheyneedtoexchangetheirlabour.
Itistherightthingtodo.
Nothingelsewillsolvetheproblem.
Nowofcourse,hedoesnthavetodothis.
Ifhewants,hecanconvincehimselfthatthemoneybelongstohim,orthathehasworkedhardforit,orthat
hedeservesitbecauseheissuperior,orclear,orwhatever.However,ifFreddecidestokeepthemoneyand
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maintainhisprivilege,thenthebestthinghecandoisprovidebandaidsolutions.Ultimately,unlesshestarts
todothe right thing,unlesshestopssucking the lifebloodoutoftheeconomy,nothinghedoes isgoing to
preventgeneralsystemicfailureanddeath.
Andifhedoesntmakethatchange?
Ifhedecidesnottodotherightthing?
Well,letslookatsomeoftheoptionsourfriendFredhasthen,shallwe?
OneoptionthatFredhasistodonothing.Afterall,Fredhaslotsofmoneyandcanbuywhateverheneedsto
survive.Notonlythat,butafterawhilepeoplewillbesodesperatethattheywillworkforpeanuts(thereby
extendingFredsbuyingpower)justtohaveenoughtofeedtheirfamilies.Butreally,thatapproachcanonly
betakensofar.Slowdeathbystarvationdoesntgooverwellwithlargegroupsofheavilyarmedpeople.
JustasktheFrenchAristocracy.
If
he
keeps
all
the
money
for
himself
to
the
point
where
the
only
thing
thats
left
to
eat
is
cake,
the
people
are
going toeventuallybe sohardup,and their families in suchdistress, that theywillbuildaguillotine inhis
honour.
Chopchop!
Andofcourse,thatsamistakehewontmaketwice.
So,whatdoeshedo?
Well,ifyoucanimaginethatyoureFred,andyouwanttoavoidlosingyourheadoverthewholething,youd
haveto
put
some
money
back.
Atacertainpointitcantbeavoided.
Ofcourse,givingitbackhastobedonecautiously.
Imean,youcantjustgiveitback.
Youcantjustgouptothepeopleinyoureconomyandsayhereitis,startagain.Ifyoudidthat,peoplewould
immediatelystarttowonderwhytheyweregivingittoyouinthefirstplace,andmaybelearntorefusetogo
alongwithyourextractionactivities,therebyputtinganendtoyourprivilege,butavoidingthechroniccycleof
sufferingcaused
by
your
greediness.
Hmmm....
Therefore, ifFredwants tomaintainhis little secret,hehas to finda sneakyway toput themoneyhes
stolenbackintotheeconomy,withoutitlookinglikehesgivingitback.Thankfully,theresafewwayshecan
do that thatwont tipoff thepopulation as to thenatureof thebeast.One iswar, theother ismoney
lending.Welllookatlendingfirst.
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Nowonegreatwaytoputmoneybackintotheeconomy,therebyreducingunemployment,withoutgivingthe
realsecretaway,istolendit.
Ifyoulendit,whilesayingthisismineandyouhavetopayitback,thentheillusionthatthemoneyisyours
ismaintained,andyoustillgettoinsertamuchneededtransfusionintothesystem.Butitisnotapermanent
solution,especiallywhenyourereallygreedyaboutitandchargeinterestontop.
Consider:
Afterextractingallthemoneyfromtheeconomy,andputtingtheeconomyintocardiacarrest,Fredgoesupto
allthepeopleinhiscountryandsaysheyeverybody,Icanhelp.Illlendeachofyouahundreddollarssoyou
can get your businesses going again (general cheers and applause) as long as you pay me back with
interest,hesays.
Illgiveyouahundredbucks,andyoullpaymebackonehundredandten.
[puzzledlooks].
Butwhyinterest?thepeopleask.
Well,saysFred,IfigurethatsinceImlettingyouusemymoney,Immakingahugesacrificebecausewhile
youareusingmymoneytoputyourselvesbacktowork,Iwontbeabletoenjoyitmyself.
Soitsonlyfair,hesays,thatIgetsomethinginreturn.
Andso,becausetheyhavenootherchoice,thepeopleagree.
Anditdoesseemtomakesense.
Anditdoesseemtowork.
Fredlendsouthismoney,bloodisbackintheveinsof
theeconomy,andeverybodyisbacktoworkagain.
Unfortunately however, the new found circulatory
healthdoesntlastverylongatall.
In fact, economic ruin happens once again, in about
halfasmuchtimeasitdidbefore.
Theproblem?
Fredhasgothis fangs intotheeconomicbloodstream
intwowaysnow.
On the one hand he is still engaged in his regular
extractive activities, thereby slowly draining the fluid
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outofthebody,whileontheotherhandhesgettingloanANDinterestpaymentsaswell.
You can see theproblem,and thepredictableoutcome. Fred isnowextractingmoney from theeconomy
twiceasfastasbeforesonow,collapseoccursinhalfthetime,butwithonecriticaldifference.EvenafterFred
hasextractedall themoney from theeconomy, thebalance sheet isnot zero! That is,evenwhenall the
moneyisbackinFredshands,becauseFredlentmoneyatinterest,thepeoplestillowehimmoney.
DEBT
Fredhasdiscoveredtheperversityofdebt,anditsaproblem.
Itisaproblemfortheotherninepeoplewhoarefaced,forthefirsttimeever,withthegrindingabsurdityof
debtanditisaproblemforFredbecauseatthispoint,andeventhoughtheeconomyiscollapsingandpeopleare suffering, Fredhasbecome very reluctant to lendoutmoreofhismoney to save thepeoplewho aresuffering.
Why?
Well,hesnotstupid.
Hesalreadycomeupshortonhislastloan,andhecanseethateverybodyisnowbroke,soitwouldbekindof
dumbtostartlendingmoneytopeoplewhocantpayitback.YoucouldsayFredhaslostconfidenceinthe
peoplesabilitytopayhimback;hehaslostconfidenceintheeconomy.
Itisabitofaquandary.
EventhoughFreddoesntwantto lendanymoremoneybecauseheknowsforcertainhellnevergetit(and
theinterest)
back.
He
knows
hes
got
to
do
something
otherwise
the
people
will
get
hungry,
desperate,
and
maybeevenviolent.Andthatwouldruinhisbreakfast.
Sowhatdoeshedo?Well,whentheeconomyisincrisisandFredhaslostconfidence,therearebasicallytwo
thingshecando.Hecaneitherignoretheproblemandletthepeoplesuffer,orhecanjumpstarttheeconomy
byputtingmoneybackintoit.
Inordertoseethismoreclearly,letusexpandthisthoughtexperimentabitsothatweimagineFredtobein
controlofanational,orevenglobal,economy.
If he ignores the problem, hes going to need to use force and indoctrination to keep the people down
otherwisetheylldowhatstarvingpeopledoeverywhere.Theywillriseupandtakewhattheyneedtosurvive.
Of course, hes not going to call it force and indoctrination. That wouldjust leave people bitter and
unwilling to work. Instead, hell probably call it keeping the peace, security, education, and cinematicentertainment.Andofcourse,hellgivethemallsortsofreasonswhytheyhavetoputupwithit.Maybehellblowuponeofhisownbuildings,orputadozenpolicedramasontelevisionconvincingthemoftheneedfor
security.Ormaybehellscarethemwithtalesofhorrorinthenight.Howeverhedoesit,theoutcomewillbe
-
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the same.When thepeople start looking athimwithhungry eyes, all the surveillance, police, armies and
technologyhesgatheredunderhiscontrolcanbeeasilyusedtosuppresstheanxiousandagitatedpopulation.
Andthisapproachwillwork,toapoint.
However,asthoseFrenchmenwithguillotinesdemonstrated,Fredcancallouslydisregardthesufferingofthe
masses for only so long before it all ends in tragedy.xii So, no matter how much he might want to keep
everything for himself, at some point hes going to be forced to initiate a transfusion, and possibly a
defibrillation,ofthedonor.
Andhowdoeshedothat?
Well,sinceFredwontevenconsidertherightthingandjustgivethemoneyback,andsinceFred istheonly
onewithmoneytolend,FredbasicallyhastorestoreFredsconfidenceinthepeoplesabilitytopayFredback,
sothatFredwillfeelcomfortableenoughwithhisreturnoninvestmentforhimtolendagain.
AndhowisFredgoingtorestorehisownconfidenceand,ergo,hiswillingnesstolend?
Well, there are number of tried and tested things that Fred can do to help restore his confidence in the
economy, thereby giving himself the freedom to lend again. One of the things he can do is reset the
economy.Hedoesthis,simplybylettingtheeconomycollapse,andthenrepossessingallthethingsthatare
his. Fred reasons itout like this.Whenpeopleborrowedmoney fromhim, theywentaheadandbought
somethings(housesforshelter,carstogettowork,foodfortheirfamilies,etc.)thattheyneededtosurvive
andthrive.Sincetheydidntpayhimallhismoneyback,Fredreasonsthatallthethingstheyboughtwithhis
moneynowbelong tohim.So,he takeswhatshisandclears thedebt thisway.Gettinghismoneyback,
through the repossessionofgoodsboughtwithhismoney,basically restoresFredswillingness to lend. Its
ugly
though,
especially
when
children
are
involved,
since
it
leaves
the
people
in
the
horrible
position
of
having
tostartalloverfromthebottomagainbutcestlavie,right?
Now, the second thing Fred can do to stave off economic collapse is to printmoney and let it enter the
economy.Printingmoremoney isagreatwaytostaveoffeconomiccollapsebecause itbasicallymakesthe
essential(inaneconomysubjecttoconstantaccumulationoflabour)processoftransfusion(i.e.puttingback
thatwhichhasbeendrainedaway)apermanentthing.Ofcourse,justasFredisnotgoingtogiveawayhisown
money,whenhestartstheprintingpresseshesnotgoingtojustgiveawaythefreshminteither.xiiiJustgiving
themoney awaywould lead to inflation and the steadydevaluation of hismoney.xiv So to avoid that, hechargesinterestonthenewmoneyaswell.
Howmuchinterest?
Well,letsjustsayitisnotanexactscience.
Itisabitofaguessinggame,really.
If interest ratesare too low, this leads to lostopportunityxvand (more importantly) inflation.On theother
hand, if interestratesaretoohigh,extractionand loanpaymentscripple theeconomy tooquickly.So,Fred
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triestocreateabalancepointkeepingbothinflation(causedbytheentranceofnewmoneyintotheeconomy)
andunemployment(causedbylackofmoney)toreasonablelevels.
Anddoesitwork?
Well,sortof.
Connectingthe
economic
body
up
to
apermanent,
interest
bearing
cash
intravenous
(IV)
xvidoes
stave
off
the
inevitable economic collapse caused by the extractive and lending activities of Fred, but only for a time.
Eventuallydebtbuildsup,Fredlosesconfidence,andthemoneyflowstops.Inasmalleconomy,theprocessis
totally obvious. However in a huge economy, it is less obvious. In a huge economy typically what would
happenisdebtwouldpileupinoneortwoareasoftheeconomy,acorrectionwouldcome(i.e.debtwould
pileuptothepointwherepeoplecouldntpaybackthemoney),Fredwouldpanic,theeconomicintravenous
(IV)wouldbeshutoff,businessesinthatsectorwouldcollapse,peoplewouldbethrownoutofwork,andso
on. At that point Fred would reset that sector of the economy by repossessing assets until he was
comfortableto lendagainatwhichpointhed lendagainuntildebtbuiltupsomewhereelseandthewhole
thingwould
happen
again.
Andisthisabadthing?
Wellifyouareoneoftheonesthatloseeverythingasaresultofthereset,thenyesitisabadthingandit
doesnt takemuch imagination to figureoutwhy. You lose yourhouse, your children gohungry, your self
esteem takesahit,your family fallsapart,and lifebecomesagrindhouseofpainand stress.On theother
hand,Fredbenefits.Fromhisperspective,recession(i.e.theresetcausedbyFredsextractiveactivity)brings
anecessary financialcorrection thatallowshimtorecouphis investment,returnhimself toconfidence,and
raisethevalueofhismoneywhichhasprobablytakenahitasaresultofinflation.ItisallgoodforFredwho
probablythinks
that
if
the
worst
thing
he
has
to
deal
with
is
cyclical
recessions,xvii
hes
happy.
Unfortunately,
cyclicalrecession isnottheworstthingthatFredhastodealwith.Whilehe iscelebratinghisgoodfortune,
recessive crisishappenwithmore andmore frequency, growdeeper anddeeper,andbecomeharder and
hardertogetoutof.
Theproblem,asalways,isdebt.
Thethingyouhavetorememberis,Fredisalwayslendingmoneyatinterestandextractingmoneyatprofit
sonomatterwhat Fred does to putmoney back into the economy,whether its a bailoutor a stimulus
package or a tax break orwhatever, debt (i.e. the owing of your labour power to someone else) always
accumulates.It
starts
like
alittle
cancerous
tumour
that
Fred
can
manage
with
aband
aid
or
two,
but
it
grows
andgrowsandgrowsandunlessFredoutlawsinterestandgivesthemoneyback,thereisreallynothingFred
candotostopthecatastrophiccollapseofhiseconomicsystem.Eventually,mayberightnow,maybeinthree
orfouryears,apointisgoingtocomewhendebtissobadandsopervasivethatnothingthatFredcandowill
restoreFredsconfidence in theeconomyandwhen thatpointcomes thedominoeswill falland theentire
economywillgointofullscalecardiacarrest.
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Andthefunnything is,Fredknowsthis.Becauseofhisprivilegedvantagepoint,hecansee itcomingbetter
than anybody and he knows that when it happens, people are going to experience incredible hardship,
unemployment, long termdeprivation, starvation, and slow, grindingdeath,whichperhaps explains Freds
affinityformilitarytechnology,security,armedforces,RFID,andthingslikethat.Ofcourse,hesnotgoingto
usethatstuffifhedoesnthaveto.Fredsnotabadguyafterall.Butitdoesmakehimsleepbetterknowing
itsthereifheneedsit.
So,whenthetimecomesandtheeconomygoesintocompletecardiacarrest,whatisFredgoingtodo?
Well,asalways,Fredhasachoice.
Ontheonehand,Fredcanwakeupandseethetwistednatureofthesystemhesbeenlivingwith,giveback
themoney,outlawaccumulationandinterest,andallowthecountrytolivehappilyeverafter.Ifhedoesthis,
thenwe canall sing forhesajolly good fellowand godance in the streetsbecause if Fredmakes that
choice, itwillmeanapermanentend topovertyandsufferingand theglobalemergenceofshambhalaand
utopia.
Ontheotherhand,Fredcouldcontinueintheoldwaysandtrytohangontohismoney. Ifhedoesthat,things
willjustgetworse. AsIalreadysaid,itwillbelikeadominochain.Whenitfinallycomes,thecollapsewillbe
rapid and dramatic and therewill be nothing Fred can do to stop it. Itwill start in a single sectorof the
consumereconomywithanormalrecession.However,becausetherestoftheeconomyissomiredindebt,
therecessionwillnotstayconfinedtoasinglesector.Evenalittledropoffinsaleswilltriggerbankruptcyand
default inothersectors,panickingFred intoshuttingoff the IV,andwhenthathappens,thewholechainof
dominoeswillfallr