The Micro Model 
>Date: Wed Feb 17 16:15:59 1999
>Subject: [lets] Fig.8, the Micro Model at URL 
>Our money will continue to decline in value through the twenty-first 
>century if the century old systemic defect of omission in American 
>public policy remains in force. There is no natural or physical 
>limit in either our political or our monetary systems which will 
>arrest that inflationary trend.  
     JCT: Reducing the interest charge to zero and replacing it with a 
service charge in order to pay the bank employees, like LETS, will 
arrest that inflationary trend by eliminating the trend itself. 
>Some people would like to see the U.S. reduced to about 100 million 
>Americans living in a third world status. Others are proposing a new 
>global currency to be introduced, from the top down by the Global 
>Resources Bank (GRB) at URL <>, or, from the 
>bottom up by Local Employment Trading Systems (LETS) at URL 
><>, in competition with the 
>U.S. dollar. 
     JCT: Actually, though LETS is growing from bottom up, I'm 
suggesting that the new LETS currency be introduced from the top down. 
All we have to do is get the established banks to offer LETS accounts 
to everyone in the world and it's done. 
>IMHO, each of these reform factions is playing with a short deck. 
>They presume to establish a new world order without correcting the 
>systemic defect of omission in the existing capitalistic world order. 
     JCT: Sorry but the systemic defect in the existing capitalistic 
world order is not of omission, it is a positive feedback loop which 
must be eliminated. Once this evil positive feedback loop is gone, 
then the system will stabilize. 
>If any one of these reform factions were to be successful in fully 
>implementing their financial reforms, their utopian world would 
>still experience the same 2-3%/year inflation, 4%-10% unemployment, 
>trade deficits, and budget deficits which curse today's industrial 
>nations, because the systemic defect of omission in our public 
>policy is not addressed by any of their proposals.  
     JCT: If this were an economics group who do not possess an 
equation for inflation, then there would be no way to argue. But this 
group is supposed to be aware that inflation is not something that we 
can only measure, it is for which we have the equation: I/(P+I). With 
this equation which also happens to be the equation for involuntary 
unemployment, something else economists measure rather than predict, 
we can know that once I=0, then inflation=0 and involuntary 
     Of course, we are basing this on the fact that the problems are 
not of omission but of the instability of a positive feedback loop. 
Getting rid of the instability necessarily leaves a stabilized system 
with no inflation and no involuntary unemployment.
>the Great Depression of the 1930s was ended in the 1940s by World 
>War II, and the stimulus of war production 
     JCT: The Great Depression, due to an artificial shortage of 
money, was ended in the 1940s by an influx of money commanded by World 
War II. The financing that was always available for production of food 
and clothing etc was just simply impeded from entering circulation by 
bankers who were overruled once human endeavor was aimed at 
destruction rather than production. Where was all that money that 
financed all the production once the goal was destruction when men 
wanted to finance production? It was in the same credit source that it 
had always been all along. 
>Date: Wed Feb 17 18:20:23 1999
>From: (Paul Dumais)
> wrote:
>>our public policy is not addressed by any of their proposals.
>Are you saying that these trends indicate that an interest-free 
>currency will not stop inflation? 
>A global interest free currency would halt inflation caused by 
>interest charges. It is capitalism using interest-based currency 
>that is producing your observed ill effects and not capitalism when 
>using interest free currency. The only way to prove this hypothesis 
>is to establish a global interest free currency and see what happens 
>when people are allowed to borrow at 0% interest. I'd appreciate any 
>cause-effect arguments you might have that might further enlighten 
     JCT: I think you've stated the arguments pretty clearly. But 
there is an easier way to empirically prove the point. When you 
consider working models like casino chips, it becomes obvious why sch 
interest-free systems cannot suffer inflation. Each token is backed up 
in the cash by its own piece of collateral. It's as if each chip were 
a receipt for collateral. If properly issued, how could these receipts 
for collateral lose any of their collateral backing? They can't. 
     Also, once the equation for inflation is acknowledged, I/(P+I), 
then acknowledging that I=0 is a solution makes the point too. 
     There are too many inflation-free models in existence for there 
to be any need of a global test. 

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