Archive for the ‘Finance’ Category

Full & Equal Rights: providing all a quality life while reducing labor and resource use by half

Sunday, March 22nd, 2009

By J.W. Smith

Dear Dr. Smith, To me the work you are doing represents the highest expression of patriotism and compassion for humanity found on the planet today. After reading your work, one has to totally reset one’s mind. Let me know how I can be of assistance to your efforts to create a sustainable, socially just world for all. Respectfully, Peter Lorenz, Editor, Peter’s Picks.

If you cannot name an essential social service not fully funded under this economic/financial thesis, even as all taxes disappear, and if you notice that there is virtually nowhere the crafty can gain unearned wealth, you have just agreed this is right and both classical and neoclassical economics, with the exception of a very few aspects, are only justifications of a system of theft of what is properly your, my, and every citizen’s wealth.

Summary of my one-hour-presentation at the UN General Assembly Hall

UN General Assembly Hall 03/05/2009, United Nations International Students Conference, UNIS-UN (see slides or view 70 minutes into the webcast).

  • Visualize a fertile valley 10,000 years ago with fruits, nuts and vegetables growing wild along with lush thatch for building shelters. The new settlers have only to pick their food, build their thatch homes, and, once that home is built, relax most the day.
  • A selfish, greedy, cunning cabal form and each lay claim to a part of the best land. They make a pact with toughies that they will share the spoils if they protect their unequal, and unjust, “property rights.” The meek, mild, and law abiding now have to share the food they pick with those “greedy owners,” have to build their houses, and provide any and all other services.
  • The cunning go on to claim their unearned wealth on through history, and those are the property rights laws, as applied to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free, that are still in place today.
  • The primary cause of poverty in the middle of plenty has been uncovered. The Sheriff and the courts are today enforcing the very same unequal rights the cunning laid claim to 10,000 years ago.
  • This exposes most current finance capital as both unearned and not very productive. In the thesis below, note how, even as taxes disappear and honest capitalism is fully retained, those rental values paid to ourselves (a redirection of the flow of money) will fully fund all the social services currently starved for money.

This economic thesis eliminates the unequal economic structure created by those many, many cabals over the centuries:

An Understandable Full and Equal Rights Economy That Takes Only 170 Words

A utopia can actually be this simple:

  • By paying land (resource) rents to ourselves (socially collected), a citizenry is quintuply repaid through those continually circulating social-credits building roads, railroads, water systems, sewer systems, and electric grids (any natural monopoly), as well as funding governments, providing education, health care, and retirement.
  • Infrastructure and populations, not capitalists, establish the use-value of land, of other natural resources while their rental values provide the social credits to fund all essential social services.
  • Restructure to cooperative capitalism as described herein, and taxes disappear as employed working hours and consumed resources drops by half and all enjoy a quality, secure, life.
  • This requires sharing the “productive” remaining jobs and equal pay for equally-productive labor.
  • With socially-owned banks, each region of the world, each nation, each region of a nation, each state, each county, each community, and each entrepreneur has equal rights to their share of both created and saved finance capital (created money and savings). With those rights, entrepreneurs (private industry) will fill every niche within the production-distribution process. Virtually all unearned monopoly values disappear (170 words).

Between 1979 and 1984, in only four short years, under socially-owned banks and socially-collected resource rents, “the number of rural Chinese living in poverty declined from more than 200 million to 70 million” (Jean Dréze and Amartya Sen, Hunger and Public Action, Oxford: Clarendon, 1989, p. 216.). So this thesis of full and equal rights eliminating both poverty and war has already been proven.

With the redirection of the flow of money under this legal structure providing all essential services, with each citizen fully understanding their rights within this new legal structure, and with ombudsmen and ombudswomen refereeing disputes, legislators need meet only occasionally.

All can visualize that honest economy in action providing them a quality life and each will know immediately if some group, or person, is claiming superior rights such  as those cunning did thousands of years ago.

Banks are  social technologies well understood for centuries, there is nothing there to own beyond a little brick, mortar, and furniture.  Bank labor should be well paid but “profits” of socially-owned banks, along with resource rents and normal usage charges, will fund all essential social services.

There are no capitalized (monopoly) values in the above honest economic structure; there are only use values. (Capitalized monopoly values are only Marx’s surplus values claimed and capitalized.)

At this point, I normally ask: “You have never before heard anything I just said did you?” “No I didn’t.” “And you understood every word I said, didn’t you?” “Yes I did.” Could you see the flow of products and services one way and the money flowing the other way within that efficient economy?” “Yes I could.”

This thesis is so simple, logical, and efficient, people can follow those flows of money and commerce in their head after a 10 minute conversation.  Efficient community social credits now build and operate those natural monopolies while private industry efficiently produces and distributes consumer products and provides all other services.

All there is to economics is food, fiber, shelter, recreation, and care when in need. If you understand economics as laid out here, very little within the parameters of classical Western economics applies. If you are mentally within the parameters of classical Western economics, very little within cooperative-capitalism economics applies.

Take note: When you buy land under cooperative capitalism economics, you have all rights except the right to pay rental values (interest on capitalized values) to a bank. You pay that money to yourself (the social fund). As all taxes will disappear, on balance, the rental value you do pay to yourself is slightly less than what was once paid in taxes.

The disappeared capitalized values, the beating heart of monopoly capitalism (theft capitalism), were (currently are) nothing more than unearned monopoly values. This honest economic structure converts those unearned values into your, my, and everybody’s earned use-values.

Both taxes and poverty disappear even as employed working hours drop by half and the pressures on resources and the environment are alleviated roughly to the same degree. That savings is the half of our labor and resources currently wasted within the superstructures operating those monopolies we are told do not exist. (The waste of labor is actually well over 50%.)

With seven billion people on this earth, each are entitled to 1/7billionth of both the rental values of nature’s wealth and the profits of banks. Paying both those monies into the social fund and expending them on infrastructure, education, health care, retirement, and the now very small governments, each citizen is receiving their proper share no matter where they travel within the societies so structured

At first glance it appears each citizen has gained those annual earnings and, once the remaining productive jobs are shared and each equally paid for equally productive work, the lower paid will have gained. However, the big gain is that money is no longer flowing through monopolies to those non-productive monopolizers, and the waste of resources disappears. All that is left is the real economy fully visible to every intelligent citizen as each work only two days a week for that quality life. 

With citizenry voting directly on—and emplacing full and equal rights in—their laws and constitutions; Cooperative Capitalism governments would have so little to do they would only meet occasionally. Being able to visualize the entire restructured efficient economy, the citizenry would be very close to governing themselves.

Everything needed to understand an honest efficient economy is in the above few words. We have tested it many times and, almost without fail, this simple thesis is understood and visualized by all. That just below is only saying the same thing with more supports.

 

 

We appreciate acknowledgment as to where this thesis came from. However,  we encourage any and all to take this school of thought as far as you can. We think it stands alone but appreciate being alerted if it is out there somewhere else.

Since this has the potential of eliminating poverty, war, and taxes, would you please alert all your contacts, newsletters, list serves, media contacts, etc.

When rental values of nature’s wealth is paid to ourselves (society), it is our earned wealth paying all essential social costs which are currently starved for funds.

The current system of theft of your and my wealth by the powerful was established centuries ago; the privatization process. Exclusive title to nature’s wealth is the same system of theft as exclusive title to a slave. Those laws, as applied to nature’s resources and technologies, are aristocracies laws, the very culture we supposedly, but unsuccessfully, evolved from.

We are not talking about labor-created values which are properly exclusively owned. We are talking only about values created by nature which are properly only conditionally owned (this includes the natural processes of nature such as banking). Society should collect those rental values which, along with the profit of socially-owned banks, provide the social credits financing all essential services (those used by all).

Current unequal property rights laws cause most poverty and protecting the massive wealth accumulated under those unequal rights is the cause of most wars.

Unearned and unproductive capitalized monopoly values, which is 95% of all finance capital at the top of today’s bubble, are transposed into pure use-values which remain with you, me, and all other citizens by simply paying the rental values of nature’s wealth, the profits of social technologies (via a drop in consumer prices of 50 to 80%), and the profits of banking, to ourselves.

Fifty percent of our labors and half our resources are wasted within the superstructures operating those monopolies we are told do not exist. This includes conspicuous consumption, the massive military, and their wars protecting this massively inefficient, unjust, and unequal social and economic structure.

Conspicuous consumption totally disappears as soon as all are paid equally for equally productive labor. And the employed workweek drops by half, or more, as the remaining productive jobs are shared.

The elimination of monopolies other than land and banking, discussed below, do not add to the social fund. However, through the cost of consumer products and services dropping 50%, or more, as that inefficient structure is eliminated, that earned wealth remains with us. That savings is mirrored in the 50%, or greater, reduction in employed labor time which must happen so all will have a job to “earn” their living.

We are all concerned with poverty, hunger, inequality, and global warming (or nuclear war) making large parts of this earth uninhabitable. This simple thesis, understandable by all, that has been kept from us for centuries by power and wealth protecting their power and wealth, can be the awakening that destroys their power, restructures the world to efficient economies, and reclaims the stolen wealth which belongs to us all in relatively equal shares.

The ethereal world of high finance (massive sums of unearned money) and inefficient corporations are converted to efficient banks and corporations with all aspects of the economy locally, fully, and easily funded. As financial warfare is a major cause of poverty and underdevelopment, this requires a dual currency system–each economically viable region creating their own currency and a digital world currency (it cannot be counterfeited) protecting the value of those regional currencies as it funds world trade.

Assuming economically viable regions throughout the world establish the honest property rights laws and monetary structures addressed above, most social problems will be completely resolved. Funds are available for education, Universal Health care, retirement, infrastructure (roads, water and sewer systems, electric power), and funding the much smaller governments, all social needs currently starved for funds. As further explained below, poverty and famines disappear and free time for family interactions are doubled or even tripled.

Utilizing this legal structure, the developing world regains title to their resources, turns those finance streams to funding education infrastructure and industry, establish an efficient economy, and they too can eliminate poverty within two generations.

A further explanation of these yet unrealized full and equal rights

While riding a bus to my hotel in New York to my presentation at the UNIS-UN Conference, United Nations General Assembly Hall, a fellow passenger asked me to explain this further. I said, “See these huge skyscrapers we are going by? The value of the land they are on were put there by society through building roads, water systems, electric systems, gas lines, communication lines, etc. Except for some improvement in farm soils, which is far less than the values destroyed by corporate farming, not a dime of that value was put on there by the owners of that land.

Society need only convert those exclusive titles to land to conditional titles paying those rental values to ourselves (society). Then use that money flow to build and maintain the above described infrastructure (roads, water systems, etc.), run governments, pay for health care, education, fund retirements, etc.

Industry and consumers within this efficient economy, primarily local in nature, is funded by socially-owned local banks whose profits add to the social fund. Everything is local and visible and all need for the ethereal world of high finance, fully 95% that currently financing the primary and secondary monopolies and 100% of that in the derivatives-credit default swap markets and other totally non-productive endeavors, disappears.

The massive trillions of dollars extracted from the masses and other nations have to be reclaimed by each economically viable region issuing new currencies to build infrastructure and first industries.  The value of those regional or national currencies are then protected by a newly-created digital world currency (no bills or coins and thus cannot be counterfeited) financing trade between those economically viable regions.

This is the exact opposite of current world monetary policy where currencies of impoverished nations, and occasionally currencies of powerful nations, are consciously and intentionally destroyed so as to steal their wealth. And this is only one aspect of how wealth is stolen through Plunder by Trade. See also The simplicity of eliminating poverty and war will stun you.

A careful analysis of the above 170 word economic thesis demonstrates that far the greater share of today’s finance capital is unearned. Society should have followed theft capitalism’s rules during this financial crash and let those financial institutions go bankrupt instead of bailing them out to the tune of trillions of dollars.  A large share of that unearned wealth would have then been reclaimed through those unearned funds simply disappearing as debts were cancelled.

The simplicity of eliminating the monopoly structure that President Barack Obama and his economic recovery team are avoiding

Exposing monopolies we are told do not exist should alert trained theorists there are substantial shortcomings in what they are taught. Only the first paragraph below is duplicated above:

  • The only labor-created values in banking is a little brick, mortar, and furniture. There is nothing else within that natural “social structure” to own except exclusive title licenses. Therefore, identical to land and other resource rents, the profits produced by that natural monopoly is properly paid into the social fund. Ellen Brown explains it clearly. This video of CommonGoodBank, a caricaturization of Robinson Crusoe, parallels this thesis.
  • Even as their doctors are better paid, England provides better health care to all her citizens for 43% the per capita cost as America where possibly 40 million essentially have no health care under “exclusive titles” to all aspects of medicine and care. Germany provides equal quality health care cheaper through a Taylorist efficiency study eliminating the wasted labor and unearned profits we describe.  (http://www.casttv.com/video/pndmvy/sugar-the-bitter-truth-video and http://www.youtube.com/watch?v=dBnniua6-oM alerts us that the lifespan of Americans would jump 10 years if both transfats and corn syrup were eliminated from our diet through a total reform of the food industry and the Food and Drug Administration. Example, 44,000 died from Vioxx before an FDA employee could take it no longer, blew the whistle, and he said “five other drugs were highly suspect.”) The full story is an ongoing crime scene. Heart attacks dropping 24% and the more severe attacks dropping 62%, over the past decade as transfats are being phased out points the way.
The Bizarre Theft of Dr. Stanislaw Burzynski’s Miracle Cancer Cure By Meryl Ann Butler, http://www.opednews.com/articles/The-Bizarre-Theft-of-Dr-S-by-Meryl-Ann-Butler-110613-684.html,, explains how millions of cancer patients not only need not have died but the costs of all their treatments should have been much less.

  • Pay inventors well, place their inventions (technology, drug patents in the above example) in the public domain, and 85% of the gambling casino’s called stock markets, where those exclusive title (unearned) patent profits are collected, disappear, and the costs of consumer products and services drop 50-to-80%. Staying with the above example, this is all evident when one realizes that prescriptions which cost hundreds, or even thousands, of dollars are produced for $1 to $10.
  • Most insurance beyond life insurance is necessary and should be a social or human right. Establish a centralized office to automatically handle insurances and all those individual insurance offices and their unnecessary labors, wasted resources, and unearned profits, as well as their overcharges, disappear.
  • Where the rental value of land, resources, and banking profits are properly paid into the social fund, the wealth currently extracted from society by patent, medical, insurance, legal monopolies, and others are returned to society through much lower prices for products and services
  • Elimination of all monopolies establishes full and equal economic rights for everybody, automatically eliminates law monopolies, all welfare disappears except for the totally disabled, most courtrooms and prisons would not be needed, etc.
  • On about one-third of a page, the complete monopolization story is again told. I trust trained theorists will notice how easily every citizen is fully cared for when each have full and equal rights. They should quickly realize something, actually almost everything,  is very wrong with current economic theory.
Again: If you cannot name an essential social service not fully funded under this economic thesis, you have just agreed that this is right and both classical and neoclassical economics are nonsense.
Calling extracted money (unearned money) profits right along with honestly earned money totally distorts reality. Calling it extracted/unearned wealth tags those thefts and alerts everybody where to look for the errors within our economy, within our property rights laws as applied to nature’s resources and technologies, and in our philosophies which are little more than justifications for these systems of theft.

The waste within monopolized sectors of the economy ranges from 40% (the private insurance industry) to possibly 80% of the money expended (banking and monopoly patents). Few realize this waste is even there let alone that the cause is unjust and unequal property rights law as applied to nature’s resources and technologies. Theorists are typically fighting just one battle while they should be describing the full range of unjust property rights laws which causes the automatic formation of monopolies we are told do not exist.

The existence of those monopolies proves our current governing economic theories are little more than justifications of systems of theft. As soon as one steps into the world of those from whom that wealth is stolen, and study out how, it makes no sense at all. In each of the links just below, notice that those massive sums are obviously unearned monies.

    The Unearned, Unproductive, and Ever Expanding, Ethereal World of High Finance

    Thank you  William K Black for Quantifying that massive, ever expanding, unearned, and unproductive finance capital:“Forty years ago, our real economy grew better with a financial sector that received one-twentieth as large a percentage of total profits (2%) than does the current financial sector (40%).”

    Michael Hudson came up with close to the same figures. Those statistics tell us that only 5% of current finance capital is actually running the economy and the remaining 95% should be returned to the citizenry from which it was extracted (stolen). If we had honest and efficient property rights laws, as applied to nature’s resources and technologies, that massive wealth would have gone straight to all citizens in roughly equal shares.

    That ethereal world of high finance, all finance capital above that needed to run an efficient economy, is not only totally non-productive, they  extract $7 from the economy for every $1 of wealth they create. Andre Damon explains that, over a period of five years, the income of the wealthiest increased by a multiple of  five while others’ income remained flat. Matt Taibbi describes the outright scams for extracting even more wealth from the rest of us once so much unearned money has been piled up no place can be found to invest it.

    That massive, ever expanding, unearned, and unproductive finance capital, and the poverty of those whose rightful wealth has been appropriated, is specifically due to the inequality of  property rights laws, as applied to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free.

    Nomi Prins explains to us the simplicity and low costs of plain vanilla loans within our banking system and the enormous costs of the totally non-productive wealth extraction process within the ethereal world of high finance that banks have expanded into.

    From a novel and mind bending direction, Matt Bivens explains that same wealth extraction process.

    From a third perception point Sarah Anderson and Sam Pizzigati explain the ongoing theft of our wealth.

    Les Leopold explains how, through control of the totally non-productive ethereal world of high finance, the top 1% gained wealth during this financial collapse while the producers of that wealth became impoverished. David Degraw also explains how the banksters are extracting an ever increasing amount of wealth from middle class Americans and the poor.

    Robert Fisk’s explanation of how the unearned massive accumulations of the wealth, belonging to us all in roughly equal shares, addressed by the authors just above, and now collapsing the entire capitalist system, is spreading across the blogosphere like wildfire.

    William K Black again explains it clearly. Our research tells us that most this finance capital (misnamed profits) is unearned. This unearned wealth is far more than the wealthy can ever spend or find a safe place to invest.  So those sums just get larger and larger and are “invested” in the totally non-productive gambling games, derivatives etc, addressed by the authors just above.

    Matt Taibbi, best of all blogs on the subject, explains how the big boys of the naked short sellers had consumed all the small companies, started consuming each other (Bear Stearns, Lehman Brothers, Merrill Lynch disappeared). He explains the takeover of the Fed, the Treasury, and the government by lackeys of the remaining two (Morgan Stanley, Goldman Sachs) to pour newly created money at themselves to stave off their own collapse. My view is these thieves all know this economy is going down and their massive salaries and bonuses are going into safe havens such as gold so they come out on top when it totally collapses.

    The Mandelman Matters blog explains how a win at the Supreme Court level could slow this wealth theft machine down.

    With a 99% success rate, Mondragon cooperatives are rapidly restructuring world business/production models. If most industries turn to that model as the world economy collapses, then they must share their jobs. If they do not, a new monopoly system will have replaced the current one.

    Aetius Romulous has a similar property rights thesis.

    We need your help in connecting the dots between “unequal property rights laws, as applied to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free” and today’s unproductive, unearned wealth masquerading as earned wealth. Instead, almost all theorists and writers still write as if this stolen wealth was earned wealth and this error denies themselves and their readers seeing how easy it could be for us all to live a quality life while employed less than half today’s normal working hours.

    That this unearned (extracted) capital is unproductive is now, as per the authors just above, written about all over the place. But they and others have not yet made the connection between this massive unearned, unproductive, wealth and “The property rights laws, as applied to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free.” As soon as they do, their already high quality writings will be explaining this theft of our wealth in far more depth.

    Before they can do this, these theorists and authors must realize the theft of our wealth goes far beyond land. The monopolies described above, banking, insurance, pharmaceuticals, medical, and patents (technology), plus the natural monopolies–railroads, electric and water systems, communication systems, etc–collectively and unproductively extract far more money from the economy than do land monopolies.

    This is because there is only a small amount of wasted labor and resources within land monopolization while the waste of labor and resources within the other monopolies addressed just above is well over 50%. It is their elimination which would reduce our necessary working hours by 50 to 60%, even more counting the elimination of conspicuous consumption which we will now discuss.

    As soon as society has equal pay for equally productive labor and they share those productive jobs, conspicuous consumption will disappear. No one will pay $3 million for a daughters wedding, travel the world in their personal airliner, tour the ocean floor for six weeks in their own submarine with picture windows, buy a $100,000 or even a $50,000 automobile, or build a 25,000 square foot or even a 5,000 square foot house, because their income would not cover it. Seven hundred dollar shoes and all those false identities will also disappear. The current elite can expend such money because it is they who are extracting wealth from you and me while producing little or nothing of value, certainly not creating even a small fraction of what they are consuming.

    Not only would one’s income not cover, no one would expend such money and leave themselves short on money for clothes, food, socializing, etc, all far more important than big cars, big houses, and big weddings.

    Conspicuous consumption goes far beyond those false identities. One conspicuous consumer was wearing cowboy jeans he paid $100 for. His friend said, “I paid $15 at the thrift store for a great suit.” “And what do you think of yourself” said the cowboy wannabe. A large share of this nation’s shoes, clothes, where one eats, etc, are priced for conspicuous consumption and most that will disappear as soon as labor is equally paid for equally productive labor.

    The savings of an efficient society with full and equal rights will be massive. With most of their days free to do as they want, their most enjoyable structuring of time will likely be the most productive. Permaculture community gardens will spring up within communities to provide highly nutritious fruits and vegetables for little more than helping the master gardener and personally harvesting the food just before eating it. Carpenters overseeing construction, along with modest labor charges or trading labor by others would build homes, garages, etc. For a very modest price. Seamstresses would sew beautiful and unique clothes at low costs. Currently beautiful-but unsaleable-paintings, wood carvings, pottery, etc would decorate many homes at modest cost or for only the cost of traded labors. Most mechanical repairs would be done within the community and only those which required expensive tools would require downtown shops.

    Community barbecues and dinners with neighbors will replace going out to fine restaurants and be far more enjoyable. Community projects for renewable energy would retrofit homes with solar panels, wind farms, etc. As our research demonstrates, almost all education can be done at home over the Internet (the practice is spreading fast and picking up speed). All school bus drivers, 98% of the teachers and professors, as well as school support staff will be working less than half their current hours as they share the remaining productive jobs.

    Most automobile use is to and from work. Most that expenditure of time, money, and fuel disappears. All this savings means less paid employment, and yet a higher quality life for every citizen of this earth. If the entire world had been developed through sharing technology as per this thesis, there would have been no poverty, few wars, and all the world’s citizens would have had a quality life 50 years ago.

    Counting elimination of wars protecting the current  monopoly structure and the automatic elimination of conspicuous consumption through sharing those remaining productive jobs and equal pay for equally productive labor, resource use lowers enough to protect against global warming even as each citizen of this world has a quality life.

    Dear browser, Please study this thesis carefully and point out to us any social need that is not automatically provided within this full and equal economic rights structure. We think they are all covered.

    We are all in this together. Everyone of you are sincerely looking for those answers. If you recognize how easily a society can be cared for within this full and equal rights structure, I would appreciate your support getting this to the world. Alert your contacts, put an alert on list-serves, alert any media you feel might be interested, and link from your websites.

    Supporting information

  • In Principles of Political Economy (Great Mind Series, Prometheus Books, 2004), John Stuart Mill (1806-73) addresses the early beginnings of today’s monopolies. A study of the 16 pages detailing the subjects within the book page by page turns up many examples. But nowhere does one see nouns branding this process of extraction and accumulation of unearned wealth for what it is, the theft of wealth produced by nature properly belonging to all in roughly equal shares. Nor does one find quantifications of that wasted effort and unearned wealth.
  • Henry George (1839-1897) is the recognized authority on land monopolization but, except for an occasional phrase and a foray into world trade, he did not go beyond land.
  • The language usage of Pierre-Joseph Proudhon (1809-65) and myself, describing this phenomenon are essentially identical.
  • Obviously influenced by Proudhon, throughout the first half the 20th century Thorstein Veblen, Stuart Chase, and Ralph Borsodi quantified some of those wasted labor and resources.
  • A few industry specific researchers quantified wasted labor and resources within insurance, health care,  law, etc during the 2nd half the 20th century. In this 21st century, a few are quantifying the waste in banking and pharmaceuticals.
  • The movie, The Corporation, addresses the privatization problem deeply in the same language we use. Ten minutes laying out this 170 word thesis as addressed on the first page would be a great fit.
  • Nicholas Georgescue-Roegen, Hazel Henderson and others also proved that economics, as currently taught, has, except for creating wars, poverty, and misery, little connection to reality.
  • Hundreds of deep exposure books are being published today, occasionally they and a few economic classics give a nod to Henry George principles, but none address the inequality of property right s law throughout a capitalist economy, as applied to nature’s resources and technologies, which causes inequality, poverty and war. Thus, when theft capitalism comes out of this financial collapse, just as in all previous collapses, unless the world wakes up, the same unequal property rights laws that caused it all will still be in place.

The forthcoming book from which all the above was taken, Cooperative Capitalism: No Poverty No War No taxes, will be out sometime in the summer or fall of 2011.

Related links:

Please help spread the word

Please help us spread this simple thesis for elimination of poverty and hunger across the world. We expect to learn from others as they comment. Please comment yourself.

Put this thesis into your own arguments and develop your skills for quickly reaching people on subjects dear to your heart.

With the exception of insanity, all problems will be at least partially alleviated and the world’s gravest problems are fully taken care of.

We appreciate acknowledgment but we are placing this short thesis in the public domain for all to use. This thesis stands alone. The good minds and broad frames of reference of others can flesh this out into a fully developed school of thought.

Thank you. Respectfully, J.W. Smith and the IED team

Our presentation at the UNIS-UN Conference, United Nations General Assembly Hall

Sunday, March 15th, 2009

On March 5th, 2009, we were given the opportunity to present at the United Nations International Schools conference, at the United Nations General Assembly Hall

The theme for this year’s conference was “The Food Crisis, A Global Challenge” and included a number of prominent speakers. The conference started off with a speech from UN Secretary General Ban Ki-moon, followed by Daniel Gustafson, director of the Liason office for North America Food and Agriculture Organization of the UN.

J.W. Smith was third to speak. The presentation was on eliminating poverty and hunger once and for all. It went quite well with a lot of positive feedback from both student advisers and the students.

You can also view the conference webcast. The presentation by J.W. Smith is third out and goes well beyond the summary below.

Here are the slides presented:

Below is a short summary of the lecture that went with those slides.

Reaching Doubting Contacts and Audiences in 20 Minutes

Picture a fertile valley 10,000 years ago with fruits nuts, and vegetables growing wild along with lush thatch for building shelters. All the wandering settlers who found it have to do is pick their food, build thatch homes, and relax most the day.

But a cunning cabal forms and each lay claim to a part of the land. They make a pact with toughies to share the spoils if they protected their “exclusive title to what nature offers to you, me, and everyone for free.

The primary cause of poverty among plenty

The primary cause of poverty among plenty is “Property rights law, as applied to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free.” Others have to share the food they pick with those “owners” and those protecting their “property,” have to build their houses, and provide them with other services while those cunning go on to claim more unearned wealth throughout history.

Today that same protection of exclusive title to what nature offers for free is accomplished through law. Seventy to 130 years ago, this error in property rights law was being studied and taught right in the university (Professors John Stuart Mill, Alfred Marshall, Thorstein Veblen, & others).

We have never had a “true” democracy

A good place to start your thinking on how this happened is Greece which is claimed to be “the birthplace of our democracy.” There only “land owners” could vote. That monopolization of the voting privilege carried though to the American political structure. Eventually and slowly other “men” were allowed to vote.

Women did not get the right to vote until 1920 and for all practical purposes African Americans did not gain that right until the 1960s.

Due to the massive wealth appropriated from you and me funding lobbyists, which means funding the elections of most legislators, those “rights” are still illusions. It is still effectively “their” government just as it was when those “exclusive titles to nature’s wealth” were first established thousands of years ago and protected by power and legislators of every shade ever since.

The proof is capital claiming all the gains in wealth produced by the ever-increasing efficiencies of technology the past 35 years (30% per decade compounded) plus a part of what once went to labor.

Wages are lower today than they were in 1972 but we do not realize it because the wives went to work to make up for that theft of labor’s proper share and today each family does have a higher standard of living.

But this is the economic story, not the political story and it is enough to know this thesis has a solid foundation in the classics. Please imprint in your mind:

Property rights law, as applied to nature’s resources and technologies, denies you your rightful share of what nature offers to all for free.

Our property rights laws are aristocratic property rights law

Your property rights law, again as applied to nature’s resources and technologies, is nothing more than aristocratic property rights law, exclusive title to nature’s wealth.

We are not talking about personal property which was built by labor and properly exclusively owned. We are talking about the wealth of nature which she offers to us for free.

This is why the powerful are privatizing everything in sight and why costs rise rapidly (frequently doubling) each time they do so.

Efforts are underway to privatize highways, water systems, and other social services. In this “monopolization process,” the descendants of those claimers of the wealth of nature 10,000 years ago, hope to privatize Social Security.

When Bolivia’s water system was privatized (monopolized), costs tripled as services went down. Bolivian citizens revolted, took back their water, prices dropped, services rose, and the legal system legitimized the recovery of everyone’s right to water.

Regaining our full and equal rights through paying resource rents to ourselves

We can each regain our rights to our share of nature’s wealth by paying land rents, meaning all resource rents, to ourselves (meaning socially collected) and using those massive funds to build roads, railroads, water and sewer systems, and electric grids (all natural monopolies). Those funds will also run governments and provide education, health care, and retirement which is the community process.

This is not socialism. This is the rental value of nature’s wealth, which is your and my wealth, funding the community process. We have only reclaimed what nature offered to all for free and we have more wealth yet to reclaim even as we retain the principles of “honest capitalism.”

Money and banking are properly part of the community process

Money and banking are centuries-old technologies—just as much a part of nature’s wealth as land, water and air—and thus are an integral part of the community process. The only tangible (labor created) values within banks are brick, mortar and furniture.

Operating those banks and paying for the use of those few tangible values are covered by ½ of 1% interest on loans.
Base Money is created out of thin air by the socially-owned Federal Reserve. Circulation of that socially-created money is our money supply. Thus they are also forms of wealth produced by nature and a key part of the community process.

Those earnings of nature are also properly paid to ourselves and used to augment the funding of governments, infrastructure, education, healthcare and retirement.

Currently your earned money becomes monopolist’s unearned money which is then loaned back to you. That unearned money, essentially the other side of the ledger of everyone’s unnecessary debts, grows greater and greater.
The huge gains from correcting today’s unequal property rights laws is your share not being appropriated from you in the first place. That is done through paying rent values on nature’s wealth to yourself (the community fund).

Other examples of eliminating the monopolization process

Health care is an integral part of the community process. For example: Britain provides coverage to 100% of her citizenry at 43% the per capita cost of America whose citizenry without health care is approaching 50 million.
Case proven. The superstructure above the monopolized health care industry in America claims massive sums of unearned money.

Another example, insurance: Social Security is retirement insurance operating on ½ of 1% of premiums paid. For every $2,000 you pay in, you get back $1990.

All except life insurance is essential. Yet market insurance requires almost 50% of premiums paid to cover costs and profits. For every $2,000 you pay, you get back only $1000.

Establish a central insurance office where banks or individuals can apply by mail, phone, or computer for home, auto, and business insurance and the costs drop to 6% of premiums paid.

The entire superstructure of monopolized insurance (offices and labor) is replaced by one central office. Again we prove monopolizations of the community process exist.

A third example, patents monopolizing technology: Those profits are collected through the stock market (the monopoly superstructure within that sector of the economy). This is wasted effort extracting wealth from you and me and doubling consumer costs in the process.

Simply pay inventors well, place those patents in the public domain for all to use and 85% of the casinos called stock markets disappear. Monopolies short circuiting the community process do exist.

The efficiency gains of paying inventors a capitalized value for their inventions drop consumer prices 50% or more and those unnecessary stock brokers and staff are available for productive employment.

An honest capitalist structure

This is an honest capitalist structure paying resource rents and banking profits to ourselves and using that money to fund the community process.

Wages cover food, fiber, shelter and recreation which are primarily provided by private enterprise.

Savings within that circulation of money is the multiplier factor building and operating industries which is also private enterprise.

The ethereal word of high finance, the 60% of all finance capital which is unearned wealth amassed through the private collection of rental values to nature’s wealth, simply disappears under honest capitalism.

All taxes disappear as employed working hours drop by half

By paying resource rents and banking profits to ourselves, meaning socially collected, citizens are quintuply repaid through those massive funds building roads, railroads, water and sewer systems, and electric grids (any natural monopoly) as well as funding governments and providing education, health care and retirement which is all part of the community process.

Restructure to that honest capitalist structure and taxes disappear as employed working hours drop by half even as all enjoy a quality, secure, life. This requires sharing the remaining productive jobs and equal pay for equally-productive labor.

Addressing the producers of our wealth, private industry, completes this economic thesis. Each region of the world, each nation, each region of a nation, each state, each county, each community, and each entrepreneur (that includes you) must have equal rights to their share of both created and saved finance capital (created money and savings).
With those full and equal rights within the community process, entrepreneurs will fill every niche within the production-distribution process which entails most economic activity and is properly privately operated.

Visualizing this efficient economy

You can follow those flows of money and commerce in your head and we will verbally do so now: Socially collected resource rents and bank profits run governments, build infrastructure, and pay for education, health care, and retirement which is the community process.

Those wages—plus those of private industry—pay for food, fiber, shelter, and recreation.

Entrepreneurs, providing the greater share of those wages, fill every private industry niche within the economy and funding is available.

There is your fully operational economy. Both the community process and private industry are fully visible.

An economic-property rights law thesis for full and equal rights in 170 words

By paying land (resource) rents to ourselves, meaning socially collected, a citizenry is quintuply repaid though those massive funds building roads, railroads, water and sewer systems, and electric grids (any natural monopoly) as well as fund governments, provide education, health care and retirement.

  • Infrastructure and populations, not capitalists, establish the use-value of land and resources and their rental values fund those same required infrastructures as well as essential social services (the community, social credit, process).
  • Restructure to the just described honest capitalist structure and taxes disappear as your employed working hours drop by half and all enjoy a quality, secure, life.
  • This requires sharing the remaining “productive” jobs and equal pay for equally productive labor.
  • Each region of the world, each nation, each region of a nation, each state, each county, each community, and each entrepreneur must have equal rights to their share of both created and saved finance capital (created money and savings).
  • With those rights, entrepreneurs (private industry), will fill every niche within the production-distribution process.

Thousands of books can be written expanding from this foundation. But, to avoid waste, monopolization, hunger, poverty, and war—which consumes over half our resources, wealth, and labor—an honest social structure must be built upon the principles of this simple, 170 word, economic treatise.

Most social problems are alleviated or completely resolved under this economic structure. Funds are available for Universal Health care, retirement, infrastructure, education, and funding governments, all social needs currently starved for funds. Poverty and famines disappear and free time for family interactions are doubled.

All the stated goals of Capitalism, Socialism, and Comunitarianism are attained and those living standards can be set within the earth’s capacity to provide resources and absorb wastes.

The gains for you and I are many: Both taxes and poverty disappear even as our employed working hours drop by half and the pressures on our resources and the environment are alleviated roughly to the same degree.

How did such an inefficient social structure such as we have today evolve? Throughout the past 800 years and yet today only powerbrokers protecting their monopoly position created these monopolization laws.

In Mercantilism as a Rent-Seeking Society, Robert B. Eklund, R Tollison and about 70 authors they reference on the subject—including Adam Smith and many other classics—address mercantilism, monopolization, privatization and rent seeking (both in world trade and internal trade) as being the same thing. Thank you.

J.W. Smith

We have only opened the door; help us expand this

Most funding problems we face today are covered within those 168 words. This simplicity came together as we prepared the conference presentation.

We have only opened the door. Your comments will further expand our and others’ understanding of this school of thought. The short list of professors 70 to 130 years ago point you towards classics on this thesis.

After explaining this to a listener for roughly 20 minutes, we ask, “You have never heard any of this ever before, have you?” “No I haven’t.” “And you understand everything said, didn’t you?” “Yes I did.”

We have tested this over and over, including it being the primary focus of this presentation at that UNIS-UN conference, and we reach everybody. Please refine this to your views of the world and make your own tests as to how easy it is understood.

Then teach others. Hopefully this will spread exponentially and we will all have done our little bit to eliminate hunger, poverty, and war.

With the exception of insanity, we can’t think of any problem that will not be at least alleviated under this school of thought for full and equal rights for every citizen of this earth and the biggest problems—hunger, poverty, and massive waste of resources—are almost totally eliminated.

We encourage each to put clothes on this 168 word full economic-property rights law thesis and write articles and books. We would like to be cited but it has all been said before so it can be used without fear of plagiarism. Our only contribution is assembling those individual stories and bringing that economic-property rights thesis down to as few words as possible.

Please blog your thoughts on this site. We want to learn from you and surely others do also. If browsers doing so keeps increasing exponentially, this expanded school of thought will be on this site for all to read and this school of thought will become firmly established across the world.

For that purpose, this author keeps everything he writes on this site to be read worldwide. The Plunder by Trade story is now understood around the world and developing countries are refusing to sign those unequal trade contracts.

This unequal property rights thesis is closely tied into the Plunder by Trade thesis. Since it is even more unknown, we feel it is crucial that it too gets out there. Thank you

Related links

Please let others know

Please help us get this simple thesis on elimination of poverty, hunger, and war to the world (newspaper editors, listserves, links from webpages, your contacts, etc.).

With it we reach anybody and everybody in 20 minutes.

Put this thesis into your own arguments and develop your skills for quickly reaching people on subjects dear to your heart.

With the exception of insanity, all problems will be at least partially alleviated and the world’s gravest problems will be eliminated.

Thank you. Respectfully, J.W. Smith and the IED team

Stopping this Financial Crisis in its tracks, Eliminating Poverty, and Providing Full and Equal Rights for All.

Monday, January 19th, 2009

This financial crisis is deepening fast, J.W. Smth.

Cause of poverty within internal economies is rooted in exclusive title to nature’s wealth which she offers to all for free

Below are easily understood examples of the causes of poverty and equally understandable examples of how to restructure and provide a quality life for every citizen of a nation and even the world.

How did such an inefficient economy evolve? Visualize a fertile valley 10,000 years ago with fruits, nuts and vegetables growing wild along with lush thatch for building shelters. The new settlers have only to pick their food, build their thatch homes, and, once that home is built, relax most the day.

A cunning cabal form and each lay claim to a part of the land. They make a pact with toughies that they will share the spoils if they protect their unequal and unjust “property rights.’

The primary cause of poverty among plenty has just been established. The meek, mild, and law abiding now have to share the food they pick with those “owners” and have to build their houses. Those cunning go on to claim their unearned wealth on through history and that is the property rights laws, as applied to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free, that is in place today.

Your property rights laws today, as applied to nature’s resources and technologies, is nothing more than aristocracy’s property rights law, exclusive title to nature’s wealth which she offers to all for free. We are not talking about personal property which was built by labor and is properly exclusively owned. We are talking about the wealth of nature which was not produced by labor. It is wealth that belongs to everybody.

Now it is obvious why the power structure is privatizing everything in sight and why costs rise rapidly (frequently doubling) each time a piece of nature or a part of the infrastructure of the economy, such as a highway or bridge, is privatized. This is happening all over the world and efforts are underway to privatize highways and other social services, even Social Security.

When Bolivia’s water system was privatized, costs tripled as services went down. The citizenry revolted, physically took back their water system, prices dropped, services rose rapidly, and the legal structure had to recognize and legitimize that recovery of society’s basic right to water.

Of course our legal structure did not begin 10,000 years ago, it developed in various stages between now (those unequal laws are still being enacted) and 800 years ago and aristocracy proper developed throughout the previous centuries.

In the above quote from our books, the origin of today’s unearned massive fortunes is laid out. Over the past several hundred years, every gain in wealth-producing technology was monopolized just as the wealth of nature upon and under land was monopolized.

Of course technology is also a part of nature

Wealth-producing technology developed faster and faster and its monopolization, along with the appropriation of ever more massive sums of unearned wealth, kept pace.

From 1972 until the current financial crash, the descendants of those original land monopolizers, today’s power brokers, claimed all the increased wealth of ever-more-efficient technologies plus a part of what once went to labor.

Those gains were 30% per decade compounded. Within those 35 years, unearned wealth increased roughly 130% while the daily income of individual labor declined. This theft was unrealized by labor because their wives went to work to make up the difference.

This theft was accomplished because while economies are going well governments due the bidding of capital and ignore the needs and rights of labor. Only during a crisis such as is currently emerging, when the threat of ballot box revolutions are high, are the rights of labor considered.

How society can restructure to full and equal rights

Below are some quick examples of how society can restructure to full and equal rights for each citizen during this crisis with the powerbrokers under threat of a ballot box revolution.

We will alert you that economies under these full and equal rights will reduce employed labor time and resource consumption by half.

That savings of resources and alleviation of pollution will go a long way towards providing every citizen of this earth a quality life even as the pressure on resources and the environment it reduced.

This is all evident in the above example of how labor was forced to work more hours to care for the non-producers who had laid claim to nature’s resources and technologies denying others their proper share of what nature offered to all for free.

Once those lost rights are regained, current non-producers have to work for their living and the labor and resources once wasted operating the superstructure of those monopolies are now free for truly productive work.

Of course we are told those monopolies do not exist but the above examples of how they formed and how they claim all efficiency gains of technology prove they are the primary factor in all economies today.

Our first example on the simplicity of elimination of monopolization

Whether buying real property or renting we are all paying rent on what nature offers to all for free.

Simply pay those rental values to ourselves instead of monopolists, use those socially-collected funds to run governments, build infrastructure (railroads; roads; water, sewer, gas, electric, and communication systems–all natural monopolies), and provide education, health care, and retirement.

As all taxes disappear, each citizen is quintuply repaid for paying those rental values to themselves.

Our Second Example, monopolization of social technologies

Just as resources and technologies are a part of nature, so are social technologies. Though a tiny tiny bit of mental labor was expended to figure them out and an equally tiny amount of physical labor expended putting social technologies in place, they are essentially there at all times offered for free by nature

Social technologies are not produced by labor thus they are not entitled to be owned or profits privately collected for their use.

Money and banking are social technologies that have been understood for centuries and are ideal examples. The only labor produced values in banking is a little brick and mortar and some furniture.

For a hundred years or more bankrupt private banks have been taken over by governments, nursed to health, and sold back to the private sector.

That alone is proof that socially-owned banks are far more efficient than privately-owned banks. Two hundred years ago, Scotland proved that one percent interest on loans covered the cost of banking.

With cheap computer accounting, the costs of banking are not over 1/2 of 1%. Thus all interest charges above that 1/2 of 1% properly are paid to the citizenry themselves, just as the rental values of nature’s resources, and those funds further support eduction, health care, retirement, etc.

There are a few other monopolies eliminated within our philosophical structure but they will quickly be eliminated once these two primary monopolies are understood and eliminated and the monopolization process thus exposed.

The simplicity of an honest economy that any bright high school student can understand can now be clearly seen

Labor is paid, they buy food, fiber, shelter, and recreation with those earnings and also pay rents on land (resources) and interest on loans.

As addressed above, those rental funds and interest paid cover costs of governments, all social services, even as all taxes disappear.

The ethereal world of high finance was not necessary back when this monopolization process started and it is not necessary today.

Under the simple, but profound, changes in property rights law, as it relates to nature’s resources and technologies, full and equal rights are attained and poverty disappears even as employed working our outside the home drop to two to three days per week.

More information

All that research is available in our primary books, recently updated:

They can be downloaded or read online for free.

You can also purchase hard copies, which will support our efforts and enable us to continue offering our research for free.

Those crucial 170 words describing an honest, efficient, capitalist economy. Does anyone have the ear of President Barack Obama’s Economic Recovery Team?

Please alert your contacts. Place a review on Amazon.com (Economic Democracy: A Grand Strategy for World Peace and Prosperity Money: A Mirror Image of the Economy).

An Open Letter to President Barack Obama’s Economic Recovery Team: Full and Equal Rights and a Quality life for All

Saturday, January 17th, 2009

By J.W. Smith

With the world economy still imploding the U.S. Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke pulled out all stops.

The Federal Funds rate was dropped essentially to zero and they declared their intention to recapitalize financial institutions through buying up their worthless debt, taking an ownership position through buying preferred shares, and giving them access to almost zero interest money. All that and more is promised for the ethereal world of high finance.

Pouring Trillions at the Very People Who Caused the Current Crisis

Thoroughly frightened, these managers of the crash originally part of the same ethereal world of high finance just mentioned, as they saw the economy still worsening, finally decided to also pour a few trillions at the real economy.

The collapsing auto industry is now to be bailed out, commercial paper funding daily operations will be purchased, loans will be made directly to industries that are unable to obtain financing, and—along with other governments—if unsaleable the paper guaranteeing every shipload of commodities or manufactures will be financed, and close to a trillion is planned to be passed out to all taxpayers.

Sound accounting and law put maximum leverage (debt to equity ratio) for banks and other stockholder industries at 12:1. The leverages of 30:1 or even 70:1 worldwide, attained by operating off book (Citibank’s rose to 280:1, before being bailed out), are unwinding. When values drop 50%, those leverage numbers double.

Thus trillions and trillions of both borrowed money (those zero interest treasuries as finance capital flees to safety) and created money are being poured at the world economy to try to inflate values so these now bankrupt banks, industries, homeowners, etc, will be solvent.

In 2008, financial institutions were to bring their off book business back on book and the 12:1 leverage rule was to be re-imposed. But, as most financial institutions and many others would be immediately bankrupt, the imposition of that law has been suspended.

If these efforts provide enough liquidity and confidence to turn those collapsing values back up, the unequal and unjust monopoly system can be saved for a while.

The Undeveloped World May be Gaining Their Freedom

But, except by war, they cannot avoid the reality that the rest of the world will be developing rapidly, they will be turning their resources and labors to producing for their own citizenry, and this will destroy the worldwide monopoly system. (See From Plunder by Raids to Plunder by Trade for the origin of plunder by trade which is only now being effectively challenged as the worldwide populist revolution rapidly gains speed.)

Towards that end, the value of the dollar started dropping fast the day those plans for the creation of trillions more dollars were announced.

The cheapest and quickest route to full and equal rights, elimination of poverty, and restructuring to a quality life for all is the current collapse being total.

Only then, with the former self-satisfied population cold and hungry, will the monopoly structure be rejected and hopefully replaced by an efficient, easily understood, social structure with the citizenry paying socially-owned bank profits and privately owned resource (land) rents to themselves and used to provide single-payer health care, retirement, building and maintaining infrastructure, running governments and all other essential social needs as addressed in the above hotlink.

More than half our economy is a waste of time, money, labor, and resources

Before we can understand the error of pouring those trillions of dollars at the ethereal world of high finance, we must first understand that it is totally non-productive and that social needs can be provided at less than half the costs of this monopoly system.

Labor created real values and monopoly created fictional values

Nature produced all the resources on and under the land and offered it to us all for free. Banking and money are only social technologies understood and used for centuries.

Land has tangible values but they were not created by labor and its wealth was offered to all for free. The only value in banking is a little brick and mortar, and banking and money are nothing more than social technologies in use for centuries, so most those profits too are unearned and thus properly belong to us all.

As each are nature’s wealth offered to all for free, those land (resource) rents and bank profits should be paid to ourselves (socially collected) and those funds providing all social services. This leaves only food, fiber, shelter and recreation, the basics of a quality life, to be paid for out of our earnings.

Quintuple gains by abandoning monopoly values and embracing real values

The shock of such a statement disappears when one realizes they are quintuply repaid by all taxes disappearing; the price of land dropping to zero even as use rights are retained, use values rise, and governments, infrastructure (roads, railroads, postal systems, water and sewer systems, electric and gas systems, and all other natural monopolies) education, health care, and retirements are funded.

Measured in required employed working hours to earn the money, the costs of providing all needs of society, including those basics (food, fiber, shelter, and recreation) drops to half of today’s monopoly costs.

These efficiency gains expose over half of our labors and resources being ground up within the superstructures of these monopolies we are told to not exist. A substantial share of those unnecessary costs go to the military protecting this monopoly structure.

Owning those bankrupt banks

Trillions of dollars have been wasted pouring money at the ethereal world of high finance. This created money should be poured at the productive real economy providing our goods and services, not at an ethereal world of high finance producing nothing and these are the very people who caused this crash.

Of course centuries of perception management (propaganda) have trained us to believe this ethereal world of high finance was crucial to running our economy.

It is not. By the rules of capitalism, by law, by custom, and by virtue of the trillions of dollars already poured at them, society should already own the banks and other financial institutions running our economy.

It is only necessary to declare that reality by Presidential decree or Congressional action. Governments have done this over and over again over the centuries, taken title to those banks, turned them back to the inefficient private sector after having nursed them back to health, where they return to their corrupt ways a generation later, and the boom and bust cycles goes on forever.

If governments can nurse bankrupt banks back to health and private banks crash economies, there is no logical reason for private banks

The very fact that society can nurse those bankrupt banks back to health where they go on to again crash the economy a few decades later once they are again privately owned proves the efficiency and power of a Socially-Owned Banking System and the inefficiency and powerlessness (during a crisis) of privately owned banks.

One monopoly, the banking system, has already been theoretically eliminated and this could be done quickly once we realize that monopoly is there. Those banks are bankrupt and it is only necessary for the government to declare that reality and take them over.

The elimination of the banking monopoly is the key to eliminating all other monopolies and doing that job while keeping the real economy running is where all those trillions of public funds should be going.

The process is not complicated. Already 38 of the 40 most developed counties have eliminated the 2nd of these monopolies we will be addressing through providing single-payer, privately provided, health care.

Other sectors of the economy are also doubly overcharging the consumer

Using Britain as an example, she provides better health care to her citizenry at 43% the cost per person as in America where 46 million essentially have no health care.

In this economic crisis there is an every-increasing cold and hungry citizenry. Simply pass the single-payer health care bill that over 5,000 physicians and thousand of others have petitioned President Barack Obama to do and those health care costs will immediately start dropping towards the 40% of today’s costs that it should be.

The funds to pay those health care costs come right out of the once bankrupt, but now healthy, socially-owned and operated banking system. That is two monopolies eliminated already, those two sectors of the real economy well financed, and all at zero cost to government or the citizenry beyond that already poured behind the once bankrupt banking system.

The unearned monies that once went to monopolist are now financing essential social services, governments, education, health care, retirement, and infrastructure. There are no personally paid health care costs and each one’s medical needs are privately provided by a single-payer health care system funded by the profits of the now socially-owned and operated banking system. See again the above two hotlinks.

At this point, it will be necessary to push aside the belief systems imposed upon us by centuries of perception management (propaganda [see also They Who Write History Control History and thus Control the World]).

Continuing with how President Barack Obama’s economic recovery team could establish an efficient economy

We will assume the alert Obama Presidency explains to the citizenry that Social Security, which is retirement insurance, costs only ½-of-1% of premiums paid (payroll deductions) to operate while the monopoly superstructure overseeing most other insurances cost 50% of premiums paid.

Once the citizenry realize that their insurance premiums would drop by half, they will insist on, and a frightened Congress afraid of a cold and hungry awakened citizenry would pass legislation establishing that efficient insurance structure.

Insurance costs, still privately paid except for that spent for health care addressed above which is paid for by socially-owned banking profits, immediately drop by half.

That is three monopolies eliminated and the replacement of insurance offices and their wasted labor visible in every town and city replaced by a central insurance office that nobody ever sees exposes the superstructure of current insurance monopolies.

With that exposure, the citizenry will now look for, spot, and understand the superstructures of all monopolies.

But they will also realize that, as these inefficient social structures are rationalized, more and more people will be unemployed.

Subsistence payments for the unemployed until they are reemployed

Knowing all this in advance, the alert Obama Presidency simultaneously asks Congress to pass subsistence payments for all unemployed heads of households who have no resources to draw on.

Once that law is passed, a decree is issued for every head of household—husbands, wives, or singles—without a job and without other income or resources to apply to their bank or credit union for a monthly subsistence based on single households receiving 75% that of married couples and an allowance for each dependent.

The loan institutions will put the applicant’s electronic transfer number on that application. That form will include testimony, under oath, that they have no income or resources.

Upon signing, and on the 1st of each month thereafter until receiving their first full paycheck, subsistence funds will be computer-deposited into those accounts.

Heads of family will walk out with funds in that secure bank to cover food, fiber, and shelter for that month and each month thereafter until employed.

Those who would be against a non-bankruptable bank and subsistence funds for those with no equity and no income would be so out of sync with events they will be few and irrelevant.

Though only modest amounts of cash can be withdrawn, all purchases or bills can can be quickly paid through checks, credit cards, or debit cards which are the real money in a modern economy.

With this latest break from unequal property rights laws as applied to nature’s resources and technologies over the past 700-plus years, denying others their rightful share of what nature offers to all for free, all Americans are now fed, clothed, and housed and the worst aspect of the crisis, a cold and hungry citizenry, is under control.

Spending of those subsistence funds will increase demand and quickly stabilize the economy.

Compare this financing of the real economy with created money halting the economic collapse in its tracks with the current failure of trillions poured at the ethereal world of high finance and the house of cards still crumbling.

With money flows across national borders controlled through countries and regions issuing new currencies spendable only within their borders, any shortage of circulating money for subsistence payments’ and continued funding or repairing of economic infrastructure can, up to the level of a balanced money supply, be created debt free and interest free.

Inflation threats due to too much circulating money are easily handled when a currency is spendable only within a nation’s borders.

Inflations are easily prevented

If required reserves of 3% are increased to 6% in step with money creation doubling reserve deposits (base money), the circulation of money will be reduced by half and the money available (to borrow or to spend) remains the same.

A 30% increase in reserve deposits, due to an increase in created money, will require a mandated reserve increase from 3% to possibly 4% to maintain the same money supply.

However, both money and investment confidence will have been destroyed in the economic collapse, creating inertia in velocity of money circulation which will give the appearance and effect of a further destruction of money, and increasing those required reserves (limiting surplus circulating money) will be only after an economy has returned to normal and threatens to inflate.

Meantime, as addressed above, the citizenry are quintuply repaid for paying those resource rents and bank profits to themselves.

The initial distribution of socially-created money and destruction of any surplus through increased mandated reserves, along with careful loaning choices, are tools to point money to the owners, operators, and workers within the real economy.

Bypassing the nonproductive ethereal world of high finance, avoids deflations and inflations and the only crisis would be from natural disasters.

Over half of current finance capital is wasted

Once monopolization is eliminated, only 40% the former level of finance capital will run the American economy efficiently. That unnecessary 60% had been operating the superstructure of those monopolies providing unearned monopoly profits.

Ownership of that capital will now be very broadly diffused, and it will be democratically and equally shared with all transactions visible, touchable, and understandable.

The ethereal world of high finance, which is nothing more than massive sums appropriated through unequal property rights law—denying others their rightful share of what nature offers to all for free—being loaned back to those from which it was appropriated and the still massive surplus with no place to be safely invested placed on the gambling tables of derivatives and hedge funds, will be history.

By this time monopolists will know their secret was out and they will not be investing in monopolies they know will soon no longer exist.

Rights to land is a human right

The citizenry worldwide and those locally will be watching closely the on-going drama and by now will understand the key concept of paying resource rents and bank profits to themselves:

“Human labor did not produce land (resources), nature offers it to all for free, and a rightful share for each can be had through socially-collected resource rents and bank profits returned to all citizens through essential services being fully funded by the wealth once consumed within monopoly superstructures and the unearned profits that once went to monopolists.

Taxes disappearing as those funds (bank profits, created money, and resource [land] rents) are returned to the citizenry through being expended on running governments, building and maintaining economic infrastructure (water and sewer systems, roads, railroads, electricity, communications superhighways, and all other natural monopolies), universal health care, retirement, and, in an emergency, any social need will quickly gain the respect and loyalty of the citizenry.

With the citizenry understanding these quintuple gains, society collecting all resource (land) rents and expending it on social needs will pass by law or referendum.

The mother of all monopolies (land [resources]) will have been eliminated along with its twin (banking monopolies), all would be receiving their share of the wealth produced by nature, and, for the first time in history, an honest capitalist society will have been established.

This funding of the real economy, stopping the financial collapse in its tracks, is many times cheaper than the current pouring of trillions of dollars at the ethereal world of high finance which caused this crisis in the first place.

Dual currency systems crucial for full and equal rights worldwide

In fact this plan costs nothing to society as a whole. Under a DualCurrency system, properly spent created money costs nothing, any surplus money can be drained out after an economy is rebalanced, and a restructured world economy that provides a quality life for all its citizens has to be a real value, owned relatively equally by everybody, many times greater than today’s monopoly values.

As proven by the savings possible under an economy fully restructured to full and equal rights, investment funds from socially-collected resource rents and bank profits replacing unearned appropriated values capitalized into huge blocs of capital are so enormous that money to fund this peaceful society will be in plentiful supply.

Shortage of investment capital is fiction. Currently only 40% of finance capital is operating the real economy. The rest is wasted within the superstructures of the monopoly system, wars, on high living and appropriating unearned wealth.

Revaluing values and debts

While all the above is taking place, accountants experienced in real estate will be assessing the value of all property before and after the financial collapse.

With reassessment ongoing, the alert Obama presidency proceeds to clear up titles to all property and, with the greatest good for the greatest number in mind, restore the financial health of the citizenry and the nation.

The land under all homes, all farms, all mines, and all industries will remain under the name of the current owners (previous owners if property has been foreclosed upon) but they now must pay monthly resource rents to society (which is themselves).

Considering rent payers are quintuply repaid as those funds come right back in the form of all taxes eliminated, operating governments, building infrastructure, education, universal health care, retirement, etc, socially collected resource rents and bank profits is the most efficient and profitable social structure.

As land has no sale value under these restructured property rights, it will incur no purchase costs.

Loans against land must be erased from the records and that against structures built upon it reappraised to current values. If 50% of loan values were backed by the land before the crisis, that 50% loan value is erased and the remaining 50% revalued.

If homes and structures, separate from the land, were half paid for before the collapse, the remaining loan would be discounted to 50% those structure’s current value.

Autos, boats, and other loans would be similarly restructured. Paid-for real-estate would not be affected except that landowners monthly rent paid to society would, when all efficiencies were factored in, be quintuply compensated as addressed above.

Erasing debts

A private bank can write off only a modest amount of loans before they are bankrupt while a socially-owned bank can erase all debt that is necessary.

The process is simple and the rights of all can be protected while stabilization of a severe crisis is not viable under private banking and restructuring an economy is equally impossible. Protecting borrowers would be in direct conflict with current property rights and private banks’ maximization of profits.

With the citizenry understanding the monopoly system they previously were unaware existed, and with property rights of all secure, this is the time to tackle the doubling of consumer costs due to patent monopolies.

Consumer costs, measured in employed labor time, drops by half

Explanations to the now alert citizenry on how consumer prices are at least twice that necessary will make those legal changes imperative. Whether by Congressional action or referendum, those patent laws will change to paying inventors well (a capitalized value and placing patents in the public domain.

When that law is fully in place, 85% of the activity of casinos known as stock markets, the superstructure of the patent monopoly system where those unearned profits are collected, will disappear. Again an unnecessary and wasteful monopoly superstructure stands out in bold relief.

The resources and talented labor previously battling within equity markets over who shall claim the enormous wealth produced by technology will be available for truly productive use.

Reduce employed working hours that 50%

Among the large numbers of unemployed will be people well qualified to calculate the number of productive jobs in a fully rationalized, efficient, economy.

We will assume their calculations will match ours, two to three days work per week for each employable citizen. From that calculation, Congress would pass and a President would sign, or a voter referendum would mandate, a reduction of the work week to that level. A productive job for each is now guaranteed.

Subsistence payments continuing as wages during the first one to two months, or more, of an employment-learning period will readjust the workforce smoothly. Highly skilled jobs, pilots, railroad engineers, etc, will take longer.

A few skills, such as scientists, may take years to rebalance the workforce but that and a stable money supply can be seamlessly accomplished. The workweek will be lowered and subsistence payments withdrawn as fast as labor is trained.

All this can be done much faster, much cheaper, and create a far more efficient economy than pouring those massive sums of created money at the same ethereal world of high finance that created this crisis and all others in history in the first place.

Some people are much more productive than others but not so productive as to justify the current wide disparity in pay. There will be exceptions—an Einstein, an Oprah Winfrey, a president, and a few others—but serious researchers have concluded that most should be paid equally with a differential in pay no greater than two to one is reasonable.

Through raising the wages of the lower paid, this badly needed social adjustment should be put into effect simultaneously with sharing those productive jobs. Both poverty and subsistence payments are now history and all at no net cost to society. Creating money incurs no costs if a society is properly structured.

Cost of products and services would drop roughly the same as hours worked, living standards will average higher than before the collapse, and the economy has no where to go but up.

All wealth is now earned

Within this restructured economy the massive unearned, appropriated, blocks of capital disappear and are replaced by a socially-owned and operated banking structure fully capable of handling the financing needs of regions, states, communities, companies, and entrepreneurial individuals.

Look at this closely: Each citizen pays land and resource rents and banking charges just as they do now. But those funds are paid to ourselves (society) and spent for health care, retirements, education, economic infrastructure, funding entrepreneurial industries, and running governments.

In this efficient economic structure, an equal sharing of now-productive jobs assures those honest earnings will be spent providing quality life styles.

That assured flow of money provides assured markets for the production of industries and business which, in turn, assures that the money will be there to fund them.

The ethereal world of high finance disappears

There is no need for the ethereal world of high finance which created this inefficient economy which loaned the very money taken from true producers back to them so they can pay for the monopolized products and services necessary to live.

This efficient economy operates on roughly 40% the flow of money even as it provides a higher quality of life for every citizen. The 60% of current flows of money that disappears measures the current wasted labor and resources of the monopoly system.

That there was ever a shortage of finance capital within a modern economy producing massive wealth is fiction. This unearned—privately collected—money was only being wasted on conspicuous consumption, war to protect the monopoly system, ground up within the superstructures managing each monopolized sector of the economy, and banked as unearned profits.

Back to the ethereal world of high finance which is currently crumbling:

The shadow banking system (commercial banks, hedge funds, etc.) have leveraged themselves 30:1, 70:1 and more (Citibank’s leverage had risen to 280:1 before being bailed out).

Leveraged buyouts for 40 years forced corporations operating the real economy to leverage below the legal limit of 12:1 However a drop in values of 50% immediately doubles leverage and even a conservative 7:1 leveraged company is now 14:1 and technically bankrupt.

Those high leverages had been made quasi legal by paying lobbyists massive millions of their unearned dollars to get Congress to change the laws.

Those changes permitted moving hedge funds and derivatives off book where a small amount of borrowed (leveraged) capital could earn massive profits.

A leverage of 50:1 on these bets (that is all they were, they were not productive investments in the real economy) would earn 100% on capital with only a 2% average move in the market up or down (those bets were placed both directions).

As these financial institutions knew almost everything that was going on within the financial community and they also had the ability to influence those markets, most of their bets were on the right side and massive unearned profits were made even as nothing was produced.

But when those financial markets collapsed control was lost. Bets were typically on the wrong side, and, most important, those high leverages on both sides of those bets meant that many debts could not be paid.

The ongoing massive collapses of the ethereal world of high finance from all those failures to pay is specifically where most the bailout money is going.

The ethereal world of high finance had, and still has, control of the Treasury-Federal Reserve-government, and they were/are pouring that money at themselves.

As we have shown, the best thing that could happen is the ethereal world collapsing of its own idiocy and silliness and be replaced by an honest monetary and economic structure.

With trillions of dollars thrown at the problem, this inefficient monopoly structured house of cards may be shored up for a while. But there is also the possibility that no amount of money poured at this ethereal world of high finance can stop the collapse.

Reason 1: The economies of nations are slowing across the world which destroys both buying power and wealth and the rate of slowing is increasing.

2: At least $30 trillion of wealth has already been destroyed worldwide and that is many times the dollars than have been created to replace those values.

3: Maximum profits are made by leveraging money, leverage means debt, and those leverages had risen to 30:1 70:1 and higher in the current collapse. Citibank’s leveraged rose to 280:1when they were finally taken over by the Paulson/Bernanke bailout team.

4: Each 50% drop in values doubles those leverage ratios which what caused those quickly rising numbers.

5: Accounting rules and the law stated that maximum leverage of American stock companies was to be 12:1. Those rules were both relaxed by law and by these stock companies moving the hedge fund-derivatives operations off book. Thus the high leverage ratios to begin with.

6: Realizing these evasions of common sense and law through off-book operations was the problem, companies were given until October 1st, 2008 to bring these operations back on the books. Because every corporation running off book companies would be immediately bankrupt, that order was put on a permanent hold.

7: Fifty years ago, corporations were sensible and sound. But again the high profits of leverage was the base of their undoing. Throughout those past 50 years the threat of leveraged buyouts forced virtually every stock company to maximize their debt. If they did not do so, buy out artists would buy up enough stock to gain control, immediately leverage with high debt, sell out, and—since the buyouts were done with borrowed money—increase their monies invested many times over.

8: Those companies are all rapidly losing value and their leverage ratios have doubled, tripled, quadrupled, or even far greater, again witness Citibank’s 280:1 leverage at the time of their bailout.

10: Leveraged profits being the route to massive individual fortunes for those engineering the leveraging and ever higher valued stocks for stockholders, the entire world is now highly leveraged and those ratios are doubling and then redoubling again, and again, as values drop.

11: In step with those collapsing values, shuttered businesses, lost jobs, declining wages, and both shoppers and businesses refusing to spend for fear they will soon need their money just to survive, the world economy is rapidly slowing and losing value faster than money is being created

12: As each created dollar’s (base money’s) normal circulation adds 9-to-10 dollars to the money supply, it appears the several trillion dollars created so far should have replaced the money destroyed.

But the real money supply is the circulation of base (created) money. The money supply is not base money itself, it is the velocity of that money as it circulates.

The speed of that circulation has slowed down as individuals, highly leveraged companies, and extremely highly-leveraged financial institutions save their money for what appears to be even tougher times ahead.

13: Those highly-leveraged financial institutions and now equally highly leveraged, low-stock- value corporations have to hang onto every dollar thrown at them during the current bailout frenzy.

This is what is meant when the evening news tells us that banks are not loaning the bailout money being poured at them. They do not dare loan it out. They need to keep it on their books in a so-far-failing effort to comply with the 12:1 accounting and legal leverage rule when it is enforced.

14: Once a population has lost trust in an economy and its banking system, no amount of created money can make them spend beyond their base survival needs.

The Ascent of Money story is the 600 year history of collapses of bubbles. After watching that, we felt that the money being thrown at the ethereal world of high finance is like throwing a bucket of waste water directly into the wind of a hurricane.

There we learn that the massive leveraging of the entire financial structure through off books accounting was copied directly from Enron’s Kenneth Lay. There was never ever any intention of producing anything. The intention was to totally privatize, monopolize, move the high leverage off books, and pull in massive profits.

To keep this short, I had to gloss over many aspects of this restructuring to an efficient economy. But we have continually hotlinked to that bigger story.

The even more complete story is in the just released 2009 editions of Economic Democracy: A Grand Strategy for World Peace and Prosperity and Money: A Mirror Image of the Economy.

These books were started over five years ago on the assumption that this crash was coming.

More important, as we have addressed herein, they show how to stop this financial and economic crash in its tracks and quickly restructure the world economy to full and equal rights for every world citizen.

The elimination of the 50% of the economy (perhaps half is preparation for, and loss from, those wars) that is wasted labor and resources permits each that quality life while reducing paid employment by half.

The simple cause of this crash, massive increase in leverage as economies and corporations collapse in unison leading to a massive drop in the money supply as circulation of money slows seems not to be addressed because it seems few really understand what money is. So we threw in our understanding of the problem.

Thank you.

J.W. Smith

Those crucial 170 words describing an honest, efficient, capitalist economy. Does anyone have the ear of President Barack Obama’s Economic Recovery Team?

Credit Default Swaps, Derivatives, The Federal Reserve, Henry Paulson, Ben Bernanke, and How the Financial Crash Could Have Been Avoided

Sunday, October 12th, 2008

By J.W. Smith

Steve Kroft in Sixty Minutes did a great job describing what credit default swaps were and how they were bringing down the biggest banking houses in the nation.

As explained in the above video, credit default swaps are nothing but insurance policies given a different name so as to avoid retaining the reserves required by regulations of the insurance industry.

Instead of retaining reserves, these gamblers expected cash flows from premiums to cover losses and paid out their massive earnings in the form of multi-million dollar salaries, bonuses, stock options, and profits.

With the insurer, now called a credit default swap derivatives holder, having nothing set aside to cover major defaults when the housing bubble collapsed, they simply did not have the money to pay those losses.

These derivative companies were held “off the books” so the parent companies (Bear Stearns, Merrill Lynch, Lehman Brothers, Washington Mutual, AIG, etc.) could avoid the accounting rules of marking those credit default swaps to market.

All went well and massive profits were made as the bubble economy inflated. But when the bubble collapsed the losses were so massive that, though at first they tried, the parent companies could not rescue their off-the-books creations.

Though, as explained by Steve Kroft in the above video, they are what triggered the current, 2008-09, financial crash, credit default swaps are only about six percent of all derivatives. There are still over $600 trillion more derivatives out there and it is agreed by all that they are nothing more than bets on which way a company or some aspect of the economy will go.

When this financial collapse first started a year ago (October 2007), there were $530 trillion worth of derivatives, almost 10 times the GDP of the world economy. As the world economy lost $30 trillion in value during this financial crash, total derivatives rose to $700 trillion.

The Federal Reserve/Treasury is now speaking of trading an investment stake in financial institutions in for the money it takes to recapitalize these financial institutions to solvency.

The citizenry is becoming aware of the give-a-way of created money to the very people whose greed created this crisis. September through November money was created at the rate of 300% a year, from $836 billion to $1.479 trillion. Much more money will to be thrown at bankrupt banks and corporations.

If those who have to pay off those bets have no more money behind them then the credit default swaps people and the Fed/Treasury bailout effort fails to crank this house of cards back up, the people will own the entire banking system.

That analysis is based on the Fed/Treasury taking a creditor ownership stake in these companies which supersedes stockholder rights. But with the foxes guarding the henhouse the money thrown at bankrupt corporations could be a cover story to satisfy the masses as the foxes move as much of the taxpayer bailout money to overseas safe havens as they can.

But once ownership of a large percent of the world’s wealth is traceable to those supposed safe havens (currently $23 trillion worth), they are no longer safe. There is no way those $23 trillion, and rising fast, could be earned money and their property rights would simply be extinguished by law.

I am sure these thieves, currently called investors and unaware they are trading under property rights laws which are a system of theft, will prefer that to the normal angry citizenry response, the guillotine or the hangman’s noose.

To understand our failure to realize our property rights laws are a system of theft, we need only analyze how those rights evolved.

We are taught that Western culture evolved out of aristocracy but that is not true. Current Western property rights law, as applied to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free, is only slightly adjusted aristocratic property rights law.

Aristocracy held exclusive title and all others had to pay them for the use of the land which nature had offered to all for free. Thus the extinguishing of the rights of all others was done through the principles of exclusive title as opposed to conditional title.

Society is Quintuply Repaid for Paying Land (Resource) Rents to themselves. Those socially collected funds pay for operating governments (local, regional, and national), builds infrastructure (water and sewer systems, roads, railroads, electric systems, and all other natural monopolies), and, when adding in the current unearned profits of banking which too should properly go to all, there are enough funds to cover health care and retirement.

Recapitalizing banks with public funds will, by those same property rights laws which created this crisis, transfer those bank titles to society.

That is not the disaster we are being told. That is an opportunity to have the costs of government, infrastructure, health care, and retirements paid by the rental value of the fruits of nature and the profits of banks.

For an understanding of the fraud of current property rights law and how those inequalities are responsible for both poverty and war, we need only analyze each monopolized sector of the economy and the massive efficiency gains from the elimination of those monopolies.

Just above we have already addressed exclusive title to land (resources) with society being quintuply repaid by by restructuring to conditional title (society paying rental values of nature’s resources and technologies to themselves).

Land’s tangible values were created by society itself simply by forming, they were not produced by human labor, society should collect those rental values, and return those funds right back to the citizenry by providing essential social services.

As opposed to land, Banking has no tangible values beyond a little brick and mortar, furniture, and computers. Fair return on tangible bank values plus the cost of labor has been proven to be covered by 1% interest on loans a century ago with expensive hand labor. The costs of computerized banking is not over 1/2 of 1% interest on loans.

Thus most the profits of banks are misnamed, they are unearned. Those massive unearned sums of money are properly termed “thefts of social wealth.” We have already pointed out that, just like the rental value of land (resources), those unearned funds should be collected by a socially owned banking system and used to provide essential social services (health care and retirement).

Britain providing better health care to all their citizens at 40% the cost per person as in America which has over 60 million essentially uninsured citizens and inadequate insurance on others exposes 60% of America’s health care as wasted. In that one sentence the monopoly of the our health care system stands exposed and the waste quantified.

The Monopoly within the insurance industry is exposed with equal simplicity. Social Security is only retirement insurance and its operating costs are 1/2 of 1% per year. Except for life insurance, all other insurances (automobile, home, health, business, etc.) are a necessity and thus a social right.

Simply replace marketing rights for essential insurance to a social right, establish the framework where that insurance is available simply by signing up, and costs drop roughly 50%. Those insurance offices every few blocks apart are replaced by one central office such as Social Security utilizes today.

Virtually every technology (industrial, chemical, or electrical) is an aspect of nature waiting to be discovered. Those technologies are monopolized through exclusive patent rights.

The unearned profits of monopolized technology are collected through the stock market. Currently inventors receive very little for their inventions. Most the profits go to monopolists.

Simply pay inventors well, place those technologies in the pubic domain, and 85% of the stock markets as well as the wasted labor and capital those savings represent disappear. Those savings permit the price of consumer products to drop fully 50% and we really think it would be 75%.

Those massive cost savings represent the equally massive savings of labor, capital, and resources as the monopoly superstructures operating those monopolies disappear as well as the massive unearned profits no longer collected.

In the case of land (resources) and banking, those unearned rental values and bank profits collected are returned right back to the citizenry. In the case of all other monopolies, the funds to operate the superstructures of those monopolies (labor, capital, and unearned profits) simply are not appropriated from the citizenry in the first place.

Unearned profits are the least of the waste incurred. By far the greater waste of our monopoly system is the unnecessary labor, capital, and resources necessary to operate the superstructure of those monopolies.

We calculate the total waste to be fully 50% of the current cost of operating the economy and this does not consider the cost of the military which is no longer needed. These past 60 years military might has only been protecting this monopoly system and the wars of the previous 800 years have primarily been over who will control those resources and the wealth producing process which is exactly what those earlier battles were about.

We needed to establish the above foundation before we could explain the real cause of the current worldwide financial crash. The above has already explained how to avoid them.

The rents privately collected on all the land and resources in America, including that which is savings due to property being paid for, is a truly massive sum. That and the fifty percent of the current costs of the health care and insurance industries currently wasted is a lot of money.

As the ethereal world of high finance is currently many times larger than the finance capital necessary to run an efficient economy and operating that superstructure costs huge sums of money, the funds that should never have been appropriated from the citizenry in the first place, and the honest profits available for distribution to them by an efficient socially-owned banking system, is also a huge sum.

The disappearance of the superstructure operating technologies, 85% of the stock markets, also saves massive sums.

Most of those savings are in the form of labor and resources no longer wasted. This permits a reduction in employed labor time of roughly 60%. labor time spent caring for the home and children will see a moderate increase. Self employed labor time will see a large increase and that productive employment will further decrease those in the labor force employed by others.

On top of those labor and resource savings are the finance capital savings. As just stated, this ethereal world of high finance is many times larger than that necessary to run the real economy. That is the real story that the finance industry does not want you to ever know.

Massive unearned wealth was spent lavishly in conspicuous consumption (mansions, wedding costing millions, private airplanes for pleasure, underwater submarines to cruise the oceans, etc,) investments, and still they could not spend all their unearned wealth.

More money than places to invest led to export of capital. This is the foundation for the massive export of capital and enforced privatizations (by the IMF, World Bank, and other infrastructures of world control) all over the world and also within the imperial centers. There simply was not enough safe place to invest these massive sums so safe places to invest were created.

But they still had too money left over that they could neither consume nor invest. And that massive amount of appropriated wealth with not enough places to invest is where the ethereal world of high finance came from.

As capitalist societies came out of their periodic crashes or wars, at first places could be found to invest all their money. But once those safe places to invest were all filled, money with no place to safely invest would start building.

The stock markets can absorb massive sums of unearned money and their values would rise in step with the absorption of that surplus finance capital. All stock values above monopoly values is gambling and all those unnecessary charges are a tax on society by monopolists who are not even aware this is a monopoly structure.

Too much money into stock markets would lead to bubbles and eventual collapse. So little by little other gambling games were inserted into capitalism’s financial structure.

This is where the $700 trillion derivatives market came from. Some point out that possibly 8% to 10% of the derivatives market has a legitimate purpose, primarily insurance. I could accept that except that those credit default swaps were the fake insurances that are bankrupting our financial structure as this massive gambling casino collapses.

The entire $700 trillion derivatives structure, fully 85% of the stock market (as addressed above), a good share of merchant bank business (the shadow banking system), and the monopoly aspect of all banking is nothing less than the ethereal world of high finance. Only a part of it is tied to the real economy. The rest is essentially producing nothing as it sucks massive sums of money out of the economy that belongs to us all in roughly equal shares.

This is what is missing in all financial and economic analysis, these massive sums of unearned finance capital should never have been appropriated in the first place. As laid out above, eliminate these monopoly structures and economic efficiency more than doubles.

If the serfs had won those early struggles and established a sharing society as laid out early in this posting, production would have doubled. That would have produced industrial capital for more people both within that society and other societies.

That sharing culture would have shared as it crossed the oceans instead of enslaving. As they met other people, they would have said, “We will teach you how to read, write, smelt ore, build ships, etc.” Soon the production of those newly literate people would have doubled. In a few years doubled again, and then again.

In short, if Western culture had established a cooperative capitalist society instead of a monopolized economy, there would have been little poverty, few wars, and we would have had a peaceful prosperous fully developed world decades ago.

The simplicity of eliminating poverty and war will stun you. That page is the conclusion of this author’s two primary books (Economic Democracy: A Grand Strategy for World Peace and Prosperity and Money: A Mirror Image of the Economy).

That conclusion alerts us that a financial collapse such as we are currently experience can be stopped in its tracks, all citizens can be quickly provided the income for food, fiber, and shelter, and the world economy quickly rebuilt with no poverty and no wars by simply following the rules of full and equal rights for all through a restructuring of property rights law and eliminating Plunder by Trade (addressed in that hotlink).

We should alert Henry Paulson and Ben Bernannke that their task is really simple if they, and all others, were willing to give up their massive unearned wealth as we restructured to an honest economy. Thank you. J.W. Smith

Those crucial 170 words describing an honest, efficient, capitalist economy. Does anyone have the ear of President Barack Obama’s Economic Recovery Team?

Reviving Main Street-A Bailout we can use

Sunday, October 5th, 2008

By Nick Polimeni

One of the reasons the Paulson bailout was touted necessary, was that Main Street economy (consumer-production, employment) couldn’t work without it. Nevertheless, a wide base of economists have maintained the bailout was not necessary; that even with the bailout there would be problems, as James K. Galbraith puts in his Washington Post article, “A Bailout We Don’t Need: “First, the underlying housing crisis: There are too many houses out there, too many vacant or unsold, too many homeowners underwater. Credit will not start to flow, as some suggest, simply because the crisis is contained. There have to be borrowers, and there has to be collateral. There won’t be enough.” Others worry about the huge increase of the national debt, and yet others fear deficit spending and candidates whether they’ll be able to keep their promises.

As you can see, the lowest common denominator is: There isn’t enough money. What’s wrong with this idea?

What’s wrong with it is the underlying fallacy, wherein we take for granted that

a) The only way to create liquidity is to capitalize things through collateralization of assets in our nation’s real economy, and

b) Only the financial community can generate this liquidity.

Further, it appears that no conventional economist ever bother to go beyond the current system to examine the underlying relationship between the financial community and the consumer-production (real) economy. It’s a marriage made in hell, ready for divorce. When one pours over the thousands and thousands of public postings on the subject they are all based on the same underlying assumption: liquidity can ONLY be generated by the financial community. Even the government has to borrow from them, building an unsustainable national and international debt.

When currency was backed only by gold and silver, or other commodities, the quantity of currency was significantly restricted or subject to the ebbs and flows of the availability of that commodity. Today, however, there is no commodity upon which the value of the currency depends. The currency is backed by the productive capability of the population, and the process of monetizing (creating liquidity based on that productive ability) is not the exclusive right of the financial community, nor if we want to engage their participation, do we need to do it by surrendering all power to determine the use of that liquidity.

While there is no explicit details on how to create liquidity, the US constitution, Article I, Section 8, provides the basis for authority over the economy, with the right to: “To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;” and “to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.” Under that authority, the government can and should, for each economic period (a year, six months, or as reasonable):

1. Assess the available human resources (people who need and want employment).

2. Determine the productive capacity of the nation.

3. Determine if the natural resources or raw material is adequate to support that capacity.

4. Determine the consumption needs of the population.

5. Monetize whatever new amounts are required to fuel this new additional production above the previous year.

These steps can be done to any degree of detail necessary or desirable to ensure adequate monetization. The congress will pass as part of its budget a provision for new liquidity, by ordering the Treasury secretary to enter in its accounting records, under the asset heading of “New Liquidity,” and the equivalent cash increase to the Treasury.

Of course, this is sacrilege by traditional economic theory, and these schools, and their wealthy sponsors will publish hundreds of thousands of pages calling it fiscal irresponsibility, and voodoo accounting, and decree money, and they will produce historical precedents to show this is the beginning of mad hyperinflation.

In the end, this is just a method of monetizing which bypasses borrowing from the super-wealthy, and borrowing from next year’s productive capability of the population. The promissory note or security is given to the population instead. Why? It is obvious that since the currency is backed by the productive capacity of the population, then, the population has to be the primary beneficiary of that production.

The Treasury then will distribute the funds through community banks, which have explicit instruction on the distribution of the new liquidity, based on the five point assessment above. Community banks stocks are owned by its depositors (not unlike ‘credit unions”), and there is a cash ceiling to the amount of stock an individual could own, to eliminate concentrated ownership in the hands of a small group.

This process would totally alter the concept of loans, credit, and taxes. Taxes would be used to equalize wealth, or miscalculations or misestimating on the original assessment; they would withdraw directly for the bank’s liquidity any excess that could become inflationary.

In the article, “An Alternate Economic Paradigm there is a more detail description of managing the system as if it was a “complex navigational system, with locks, gates, and reservoirs,” and the management provide and monitor liquidity to float all boats. With this process, we can rebuild our industrial base, employ everyone who wants to be employed, and have the necessary liquidity to maintain a rational growth rate, with a stable currency.

It is absurd that that the only way to add liquidity to the economic system can only be done through borrowing from the financial community, or failing that, through government borrowing, and astronomically increasing its debt to the super-rich. We run our lives and our country’s economy based on available credit (ability of desire of the financial community to lend); and not on what we need and on supporting our human resources with the necessary liquidity to employ everyone who wants to be employed. We buy oil and coal because it’s “cheaper” than solar and other alternative energies, instead of supporting the alternative sources with sufficient liquidity to make it viable. Where’s the money? Is the financial community the God appointed source of it?

The real reason this method of monetization and liquidity generation is not even brought up or the status quo challenged with this, as an alternative is because it would radically alter the balance of power between the population and the super-wealthy, and this is something they powerful have not allowed for hundreds (maybe thousands) of years, and they will vigorously oppose it today. Two possible reasons conventional economists don’t bring it up is either because they’ve not thought outside the economic box they are trained into in college and MBA programs, or they have a vested interest in the status quo


A Bailout we Don’t Need-New Paradigms

Sunday, October 5th, 2008

By Nick Polimeni

James K. Galbraith’s in his “A Bailout we Don’t need” in the NY Times, makes suggestions that are rational, and would be viable to eliminate the need for the bail out bill. He admits, however, that his solutions are not going to help the economy recover quickly:

“Two vast economic problems will confront the next president immediately. First, the underlying housing crisis: There are too many houses out there, too many vacant or unsold, too many homeowners underwater. Credit will not start to flow, as some suggest, simply because the crisis is contained. There have to be borrowers, and there has to be collateral. There won’t be enough.”

The fact is that we take for granted that the only way to create liquidity is to capitalize things through collateralization of assets in our nation’s real economy, and only the financial community can generate this liquidity. Further, no conventional economist ever got past the current system basic, to examine the underlying relationship between the financial community and the consumer-production (real) economy. It’s a marriage made in hell, and there has to be a divorce. And when you pour over the thousands and thousands of public postings on the subject, you can see the same underlying assumption: liquidity can ONLY be generated by the financial community. Even the government has to borrow from them, building an unsustainable national and international debt.

Considering that the currency is backed by the productive capability of the population, there are many type of organization which would be superior to our financial community to take charge of monetization, including expanding the credit unions (depositors’ owned banking), or cooperatives of people in communities.

It is absurd that that the only way to add liquidity to the economic system can only be done through borrowing from the financial community, and when all the existing assets are already monetized, and “there is no more new money,” further monetization (additional liquidity) can only be done through government borrowing. In fact, the most logical method would be to monetize (create liquidity) that is necessary to supportable the productive capacity increase from year to year.

We run our lives and our economy based on available credit (ability of desire of the financial community to lend); and not on what we need and on supporting our human resources with the necessary liquidity to employ everyone who wants to be employed. We buy oil and coal because it’s “cheaper” than solar and other alternative energies, instead of supporting the alternative sources with sufficient liquidity to make it viable. Where’s the money? Is the financial community the God appointed source of it?

The real reason this is not even brought up or challenged as an alternative is because it would radically alter the balance of power between the population and the super-wealthy, and this is something they powerful have not allowed for hundreds (maybe thousands) of years, and they will vigorously oppose it today.

Two possible reasons conventional economists don’t bring it up is either because they’ve not thought outside the economic box they are trained into in college and MBA programs, or they have a vested interest in the status quo.

This idea has been discussed before, but taken off the table on specious basis, while the underlying reason is the protection of the power wielded by the financial community, servants of the super-wealthy.


Corporate Control of Food, Facing Famine & Starvation, Solving the Current Food Crisis

Sunday, August 10th, 2008

by J.W. Smith

We would like to hear from those who can expand upon these perceptions.

Early corporations burned all the spice trees they could not control so as to maintain the high price of spices.

Modern corporations controlled America’s foreign policy, Destroying the farming industry of poor countries through selling highly-subsidized, thus low-priced, grains to both developed and undeveloped nations.

Under their self-designed monopolization of the world’s food supply, those corporations doubled, tripled, and even quadrupled their grain prices as food supplies grew scarcer.

Under this monopoly structure, specifically designed to suck the wealth out of nations, hundreds of millions now face starvation.

As these people–helpless within the corporate controlled world structure–die, the capitalized value of the appropriated wealth (profits) of the designers and operators of this death trap multiply, in the stock markets, by 10 to 30 times or more.

Their hundreds of millions of appropriated wealth becomes hundreds of billions, those entitled to a secure food supply die, and both catastrophes are due to the Plunder by Trade System and the property rights structure put in place the past 700 plus years, both denying others their proper share.

This was all done under the cover word “privatization” which the power brokers’ perception managers have taught us is is a good thing.

They get away with these outright frauds because advancing technology is so efficient those same powerbrokers and perception managers are able to distribute half the potential gains of technology, bank obscene profits, and the even greater remaining potential gains are not even thought of because the half or so of the potential gains realized is itself very large.

Immense as those unearned profits are, they are only a fraction of the gains in living standards denied the world through the 50% of full potential never realized because technology is monopolized.

How can a nation or region attain security so as to avoid starvation and poverty as faced by 100s of millions today due to intentional destruction of the viability of local farmers and corporate control of world food supplies?

First they must establish local permaculture and avoid corporate control of food supplies. If a nation or a region were serious and organized (for smaller nations this means alliances or federation), they could be self sufficient in food within 20 years even as their soil fertility steadily increases.

Plants providing thread for cloth, such as flax or six foot high hemp, are among the most prolific in the world. So permaculture can be expanded to produce fiber for clothes and exotic threads made from oil or coal will not threaten the environment.

Houses built from rammed earth, brick, or rock with ceramic interiors that will last for centuries is also primarily a local industry.

Within those two local industries, permaculture and housing, are the essentials of a secure society, food, fiber, and shelter. When regional soils are used with attention to protection of nature’s wealth, these necessities of life are not intense consumers of resources.

With no one claiming or receiving unearned wealth, money within this secure social structure represents use values (real values) which are labor values plus rental values of nature’s resources and technologies distributed to all through those rental values funding essential social needs. Taxes disappear and health care, retirement, governments, and more are all funded from those natural flows of money.

We document thoroughly that over half our wealth is ground up within the superstructures of our monopoly system. We then document that an equal amount is wasted in plunders by trade and war. We are now demonstrating that another large share is wasted through the massive sums of unearned wealth being spent on resource intensive endeavors which primarily only structure our time and supports our egos.

All this is built on, and made possible, by our vaunted freedom to travel. As shown above, caring for basic needs is quite easily managed in social restructures that avoids the theft of others’ wealth, the resultant disappearance of the ethereal world of high finance, and the further result of elimination of war

The further waste within the wealthy world which is consuming another large share of the world’s wealth is running uptown for hamburgers, shopping till they drop, having houses full of clothes and shoes that are seldom–or never–worn, kids with closets stuffed with toys they never play with, there are trips overseas, cruises, annual vacations, and on and on. The list of what a modern society is titillated with as they exercise their freedom to travel (conspicuous consumption) is endless and very resource and energy intensive.

At Aptera Electric Typ-1 e – Video Test Drive, you can watch a video of a 300 mile per gallon, three wheeled, two seat, 90mph, Aptera gas-electric hybrid run-a-round, that requires less than 10% the labor and resources to build as today’s average car. Beyond the computer, which is not a necessity, everything in that car was on the shelf, available for purchase, 40 years ago.

On short drives this little run-a-round runs on electricity alone up to 120 miles, is charged each night, and uses no gas. Battery capacity has already been proven (120 miles on one charge), somewhere up to 20 such batteries is surely adequate (golf carts use only six), far more efficient batteries are coming on stream, and the market has priced that electric storage capacity at roughly $2000. So batteries being too expensive is fiction. Simply crank up the newer, highly efficient, batteries, specifically designed for cars, to mass production and the price will be reasonable.

With a lifespan, double that of today’s cars (There is no drive train, the small engine runs only on long trips, and fiberglass bodies are easily repaired) means people throughout the world could have been driving this very cheap, almost pollution free, car the past 40 years.

The efficiencies of a market economy within today’s property rights law, as applied to nature’s resources and technologies, denying others their proper share, are fiction.

The world was sold BMWs, expensive SUVs, pickups and other big cars because companies earned $8,000 apiece on them, only $1,000 on small cars (these statistics on the evening news demonstrating and discussing the Aptera car), and could not have earned over $500 on this little gas electric run-a-round.

Ditto for much of what is sold within the so-called developed world. You can pay $700 for a pair of shoes that cost $3 to produce and ship. Even the cheapest priced shoes, which to me looked much better than that $700 pair, will cost $40 while an efficient economy could distribute them for $15.

Those high prices are due to the monopolization process compounded by promotional, persuasive, titillating advertising and further compounded be a society trained to conspicuous consumption. Not only did our property rights laws as applied to nature’s resources and technologies, denying others their rightful share, evolve out of aristocratic law, so did our system of individual identity.

This exposes the true costs of modern societies, freedom to go anywhere and do anything one wants. Most industries beyond food, fiber, and shelter are built to sustain those freedoms even though the most important needs for a fulfilling life, food, fiber, shelter, family and friends, are near that home.

If all are to share in freedom as understood within the wealthy world, pleasure travels must be rationally spaced. Through equal pay for equally productive labor, a sharing of truly productive jobs (two days per week once the current waste and inefficiencies within the economy are eliminated), and a culture of family, friends, and cheap transportation accomplishes that spacing.

A thirty mile local commute would plug in at night and charge for 30 cents. With about 10% the resources and labor to build and a lifespan of twice today’s cars, both local and regional travel could have been affordable, relatively non polluting, and in place the past 40 years.

Equal pay for equally productive labor and a sharing of productive jobs will have eliminated conspicuous consumption, retained rational consumption, and each person or family would automatically restrict their expenditures to rational travel and pleasures.

Study current freedoms closely. Titillating and extravagant life styles are a major cause of pollution, resource depletion, poverty, and, in a final analysis, to protect that life style, even wars.

This is being carried forward as we speak. Companies consisting of nothing but advertising (they have no factories) are all over the place. Their only purpose is to sell you something at a very high price that has nothing to do with your basic living needs or rational pleasures.

If you had never heard of them, you would never have felt a need for what they had to sell. Those products have common features, you do not need them, they titillate your interest, they feed the ego of you and your peers, and they are enormously expensive.

A friend’s friend bought in-style, wore-out, ragged western jeans for $100. When telling this friend about paying $5 for a nice suit at the goodwill store, the raggedly dressed friend said, “And what do you think of yourself.”

In short, life styles of the middle classes within the wealthy world today is only conspicuous consumption as practiced by aristocracy and the wealthy for centuries. Our conditioning to be aristocrats will be trumped by reality once all are paid equally for equally-productive labor and employed labor time is reduced to the two days per week necessary to provide a quality life.

A Practical Approach for Developing Poor Nations & Regions

Trying to provide an answer to capitalism, socialism, and communism the past 50 years, the Progressive Utilization Theory, Prout, www.prout.org, “integrating economic democracy and spiritual values,” is speaking to full and equal rights for each and every person, very similar to our approach.

Those reading both philosophies may want to add a spiritual approach to this strictly economic approach and perhaps add a full understanding of Henry George philosophy appled across the full economic spectrum and A Socially-Owned Banking System to Prout’s cooperative philosophy.

While waiting for the world to throw off the current beliefs which maintain their poverty, let’s design an emerging-nation development plan utilizing cheap, broadly-available resources that can be accomplished within the current monopoly structure.

Almost all countries have traditional, fireproof, earthen homes hundreds of years old. Most developing nations have large numbers of unemployed labor quite capable of building in the traditional ways and who can build high-quality earthen homes cheaply.

Firing the inside of earth homes creating ceramic walls and floors opens an unlimited potential of beautiful, clean, easily maintained, yet cheap, housing. Some regions traditionally use other building materials such as stone, straw-bale, timber, bamboo, etc.

Local master-craftsmen can train the apprentice home builders, and these newly-trained practitioners can teach others on the job. The teachers would be paid but the workers’ pay would be their training as master home builders.

For example, assuming five workers to a crew on an adobe or rammed earth home, every three or four houses built will result in five more master builders who can return to their home regions, sign up apprentice home builders, and that would continue exponentially and rapidly build quality housing for all that will last for centuries

Other building materials will require differing periods of training to produce master craftsmen, but the principle is the same. (See Hassan Fathy’s book, “Architecture for the Poor,” for an inspiring account of the method that was used to create a total-process system of adobe construction in Egypt.

Having designed and built sustainable housing and major architectural projects in many countries, Phil Hawes philhawes@amaonline.com is an internationally known expert as is Richard Register, ecocitybuilders.org.

Additional industries are necessary to produce doors, windows, plumbing and electrical systems, flooring, roofs, and furniture. These industries will expand in step with the expansion of home building.

Though these homes will be built cheaply, they have full, actually superior, use value. As some projects mature, labor will be paid, while in others the master-builder will train volunteer workers to build more homes for themselves, family, and friends, and are thus paid indirectly, but paid well.

Since real value is being produced utilizing local and regional resources, base money can be created by any nation, or region, up to the value of those homes, businesses and inventory.

That created money and the circulation of that base money is the proper financial source to utilize a nation’s own resources to build infrastructure, industries, businesses, and inventory necessary to service a developing community.

The circulation of that base money will build and operate distribution systems and repair systems and provide wages which becomes the buying power (circulating money, money supply) to purchase the production of those industries.

Simultaneous with building homes, a country or region must develop a prosperous agriculture. Permaculture fruits, nuts, berries, tubers, and vegetables work will with eco-village housing.

Master permaculturists can be trained and returned to their regions to train more just as described above with master builders. Farms, equipment, and the food produced have value and, as it is locally produced and, if circulating money (the money supply) is insufficient, more money (known as base money) can be socially created for that development as well.

All resources should be processed locally into high value-added products both for regional consumption and export. As economic activity and production increases, buying power increases to purchase the new production, and community values rise.

So long as countries or regions are utilizing local resources, money can be created to build industries and infrastructure. Correctly guided, this can even include high tech industries for manufacturing such energy producing equipment as wind generators, small hydro generation units, and photovoltaic cells.

These can convert the naturally occurring, non-fossil fuel forces of wind, waterpower, and sunlight into electrical energy. It is possible to train ambitious local inhabitants to assemble electronic equipment, such as TVs and computers, which can provide a free education via satellite and solar powered WiFi.

However, a developing country or region will soon need technology and industries that, unless the revolution we addressed throughout our books has taken place, are firmly under the control of the imperial centers. It is at this point that regions must federate (ally together) to negotiate with the imperial centers to trade access to resources for access to technology.

To not ally together would result in the locally created wealth being transferred to those imperial centers via unequal pay for equally-productive labor and the many other methods of theft of others wealth.

Local resources will be purchased far below their full value, resulting in the familiar inevitable debt traps for the developing regions sucking up any money that has been created and even taking title to constructed wealth.

The key is cheap, quality, local production of social infrastructure. But the money created must be regionally created and protected against claims by international creditors through an international trading currency (a dual currency trade structure).

Collecting the rental values of nature’s wealth as per Henry George’s property rights (chapters one through five of Money: A Mirror Image of the E economy) prevents capitalized monopoly values, provides development funds, and protects the entire nation from having those values attached to repay debts.

Henry George’s principles of society collecting socially created rental values (You are Quintuply Repaid for Paying Resource Rents (Land Rents) to Yourself (Society)) are essential both for economic efficiency and protection against creditor nations laying claim to a weak nation’s wealth.

The use value is still there but society collecting resource rents and interest on loans prevents those nature-produced values from being capitalized, keeps them out of the hands of creditors, and thus nature’s wealth and socially-produced profits are spent for a nation’s citizens (infrastructure, eduction, health care, retirement, and more).

By all classes being available via satellite or WiFi and studied on home TV, it is possible for the developing world to educate their citizens for 5-15% the cost of conventional brick and mortar schools (Communication Super Highways Educating the World for 5-15% the Cost of Brick and Mortar Schools).

Not only would the youth become well educated, so would many older citizens. wiring those emerging nation’s communication superhighways would give the talented access to jobs and markets in the highly developed world. Apprentice labor working side by side with skilled labor will soon build a skilled labor force as described above on building homes and training permaculturists.

Currency values can only remain stable if a country’s productive capacity is efficient and stable. So a country needs to develop infrastructure cheaply and efficiently and the above building of quality homes, support industries, and communication superhighways cheaply are examples but only a start.

With technology and markets historically monopolized, high technology industrializing is more problematic (this may be changing fast, study our pages and books). The key is maximum production of high-value-added products rather than selling raw resources.

Example: an oil producing nation has the option of refining its oil, producing plastics, etc. The monopolies of wealthy nations are so powerful that such industries will require trading alliances or full federations between weak nations, a step toward the full federation of all nations.

Stevia is 30 times sweeter than sugar, is cheap to produce, cheap to process, and it does not have the health damaging effects of sugar.

William Hayward (haywardwj@execs.com) has containers filled with Stevia plants, processing equipment, and instructions ready to ship anywhere in the world. Africa also has a couple indigenous sweet plants that may replace sugar. The gains to a society both financially and in health care substituting any one of these sweeteners for sugar is huge.

Most important is sharing with other developing nations the various ways to protect their wealth from being claimed by speculators of wealthy nations.

Hopefully these nations can ally together (federate) to build their infrastructures and protect themselves from monopoly capital. As this simple development plan is put together, other areas of utilization of local labor and resources will become visible.

We are a cooperative publishing house dedicated to the elimination of poverty and war that pays ourselves double the normal royalty and will pay higher yet as soon as we can.

We need more cutting edge researchers. If you can broaden our understanding and that of our readers, have a high-quality book within you that you wish to use in class, or just wish to reach the world, please Contact Us. Thank you

J.W. Smith

Fannie Mae and Freddie Mac, a $5.2 Trillion Bankruptcy

Sunday, August 3rd, 2008

By J.W. Smith

When established in the 1930s, Fannie Mae was a government sponsored, non-profit financial institution, designed to provide low-cost home loans to a nation traumatized by the Great Depression.

In 1970, FMae was privatized so as to remove it from the federal budget and Freddie Mac was established the same year. As government sponsored organizations (GSEs), neither paid local or state taxes, they were exempt from Securities and Exchange registration and fees, they were permitted to operate with lower reserves than banks, and they could each borrow up to $2.5 billion directly from the U.S. Treasury at low interest. The faith that they were backed by the government and operated so cheaply gave them access to massive sums of low-interest money looking for both profits and security.

With those advantages mortgages bought directly from lenders provided a large and steady profit stream which was reflected in high and secure stock prices. Even larger immediate profits were made when those loans were packaged into bonds (Mortgage Backed Securities) and sold to investors at a high capitalized value justified by the expected profits on these packaged mortgages and the normal low interest on bonds.

This proved so profitable that banks and other lenders packaged their loans into bonds, sold them on the market for that quick profit (especially the agent rake offs), loaned out those replenished funds, and did this over and over again with riskier and riskier loans as housing prices climbed higher and higher and security requirements were lowered to essentially nonexistence.

When bankruptcies jumped above normal, the value of those Collateralized Debt Obligations (CDOs) collapsed. The market now knew home prices were going to drop, the losses were going to be very large, and those CDOs, SIVs, (Structured Investment Vehicle) or any other name they went by were unsaleable.

Starting with the Bear Stearns collapse in March 2008, The Federal Reserve has pledged to pour several trillion dollars into banks and other financial institutions (including other central banks) to stem their collapse and the financial markets have still not liquified.

Each knows the various ways of being leveraged beyond the rules of prudent banking, know both they and all others were way over leveraged, so they must keep the money handed to them by the government to bring their debt ratios down from 30:1 to 70:1 (Citibank was 280:1 when bailed out) and do not loan to each other. Realizing the new rules will force them to reduce their leverage (meaning reduce those debt to equity ratiios), those trillions are being kept in reserve to pay down their debts and keep them within the parameters of prudent banking as demanded by those new rules. Both accounting rules and the law says a maximum of 12:1.

As homes and other equities continue to lose value (11 million homeowners with negative equity and prices expected to fall at least another 30%), the financial institution’s debt to equity ratios  look worse faster than money can be poured at them. Bankruptcies and walk-aways are rapidly increasing and prime loan walkaways and Alt A bankruptcies, expected to start in 2009, are anticipated to create greater losses than subprime loans.

The soothing words of $25 billion being available to shore up the two FMs and even that may not be needed fooled few people. Two hundred billion has been spent and another $800 billion is budgeted to buy up their toxic debt. And it is still far from sure the two FMs can survive.

Lets do the math. The housing rescue bill just passed, December, 2008, is intended to protect the $5.2 trillion in mortgages of the two FMs which are now guaranteed by the government. The value collapse of the remaining $7 trillion in mortgages is supposedly protected by the trillions poured at the rest of the financial structure, including the shadow banking industry. Thus GMAC and may other shadow banking corporations have officially became banks and eligible for bailout money.

Since most those trillions authorized by Congress is to replenish the coffers of financial institutions and only possibly $800 billion will go to homeowners to stave off their bankruptcies, it would appear two or three million will still lose their homes. And this is before the much larger 2nd wave of foreclosures and bank crises–the keep up with the Jone’s Alt A loans, prime mortgage holders whose income has collapsed, home mortgages up to 50% under water walk-a-ways, and credit card defaults–hits.

This financial crisis was never necessary. On GRIT TV, 7/18/08, Headrick Hertzberg pointed out that Fannie Mae did not have that high overhead when originally established. He said, “What is the purpose of all that overhead, those high profits, the huge salaries, and the annual payoffs to presidents and others?” It is obvious that providing low cost home loans was the proper function of the two FMs and neither should have ever been privatized.

One of the key aspects of our research is that so much unearned wealth is appropriated through Plunder by Raids and property rights law as applied to nature’s resources and technologies that denies others their fair share. Those huge blocs of unearned finance capital within the ethereal world of high finance get larger and larger, they cannot find enough places to safely invest it, and this is why they insist on privatizing, privatizing, privatizing.

Not even massive conspicuous consumption and investment in new privatizations can consume all the massive funds being appropriated from its proper owners. So investors turn to hedge funds and derivatives which produce absolutely nothing. They are only bets which decide who will end up with most of the stolen wealth.

They reach down into the real economy to appropriate more wealth and they grind up (waste) ever more wealth as they gamble between themselves (hedge funds and derivatives, $526 trillion worth, are only bets between each other).

Instead of pouring money at the ethereal world of high finance, it should have been pointed towards those millions threatened with loss of their homes, in short, towards the real economy.

In The simplicity of eliminating poverty and war will stun you we demonstrate a society can stop a financial collapse in its tracks if they point newly created support money at the real economy (those troubled home owners, the unemployed, and the underemployed). In the process it is possible to restructure the economy to double its current efficiency, the ethereal world of high finance disappears, a quality life for each citizen of this world is provided at less than half the current resource consumption, and future financial collapses are eliminated.

Instead of running such a society with full and equal rights for all, the corrupt financiers now controlling the money creation process are pointing most this money at themselves, the ethereal world of high finance which we prove are negative producers reducing economic efficiency by fully 50%.. Thank you

J.W. Smith

We are a cooperative publishing house dedicated to the elimination of poverty and war that pays ourselves double the normal royalty and will pay higher yet as soon as we can.

We need more cutting edge researchers. If you can broaden our understanding and that of our readers, have a high-quality book within you that you wish to use in class, or just wish to reach the world, please Contact Us.