Monetary Economics

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Monetary Economics and the effects on our society.

Submitted: February 06, 2011

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Submitted: February 06, 2011



Monetary Economics

Mechanisms & Consequences


Defining our terms:


The term “Economics” is generally defined as ‘the social science that studies the production, distribution, and consumption of goods and services’.

As of the early 21st century the prevailing mechanism of virtually all economies worldwide is some form of “Monetary System”. A Monetary System uses an intermediary exchange medium, known as ‘money’, as the means for facilitating employment, production, distribution, and the consumption of goods and services. The use of this medium of monetary exchange, as a basis for an economic system, could be termed: “Monetary Economics”.

While virtually no nation on the planet currently uses anything else but Monetary Economic Theory in its country’s operations, certain variations are indeed present. Generally speaking, these variations have to do with the degree by which the system is controlled by the government of a country.

The current ‘sliding scale’, moving from more regulation to less regulation, typically starts with “Communism” (maximum state control), passes through Socialism (partial state control), and ends at Capitalism (little to no state control).

These variations of economic application could be termed

“Social Systems”.

The prevailing Social System of the world today is Capitalism. Capitalism, which is often placed under the umbrella of another theoretical concept known as the “Free Market”, is defined as:

“an economic system by which the means of production are owned by private persons, operated for profit, and where investments, distribution, income, production and pricing of goods and services are predominantly determined through the operation of a ‘free market’.”

A “Free market” is essentially an unregulated trading orientation where “the prices of goods and services are arranged completely by the mutual consent of sellers and buyers; hence, the market forces of supply and demand determine prices and allocate available supplies, without government intervention”.

The notion of “Free market” has many interpretations and schools of thought. For example, one of the more extreme, yet currently active ideologies is the “Austrian School”, which condones the notion of “laissez-faire” which basically means having literally no state intervention on economic issues at all. In this perspective, “welfare” and other state sponsored ‘social’ programs would be considered inappropriate.

Now, general terminology aside, a very relevant attribute of Monetary Economics is the “Theory of Value”. The level of a product or service’s ‘value’ is derived essentially from two factors:

1)The scarcity (availability) of the materials used.

2)The amount of human labor required to produce a product/service.

For instance:

Imagine the amount of time and effort it would take to create a simple shirt before the advent of electricity and advanced industrial technology. The overall process might be to:

prepare the soil – plant the cotton seed – oversee the growth period -- pick the cotton -- tease out the seed --- spin the cotton into thread -- weave it into the cloth -- and shape the cloth into shirt form.

Given the above scenario, simply from a human labor standpoint, the value of that shirt would be relatively high and likely sold for a price respective of the extensive labor. The cotton seed (component material) value would be negligible as it is produced as a byproduct of the prior harvest, making its scarcity value very low. Therefore, the real value of this shirt comes from the labor involved.

Now, hypothetically speaking, what if this production process required no human labor at all, while the cotton seed/water/sunlight/soil maintained its natural abundance? What would the value of that shirt be then?

Obviously, it really wouldn’t have a value at all.

As of the start of the 21st century, Industrial Machines have taken the role of planting and harvesting agricultural products to the effect where one lone farmer can now work 1000+ acres of land on his/her own. The advent of textile equipment, such as the Cotton Gin dramatically reduced human effort, while with the modern use of industrial computerization, we are seeing a constant gravitation to the near full automation of the Agricultural and Textile Industries, among many others.

The point is that the position of “Economic Value”, as a seemingly static economic notion, is now being overhauled by this technological influence (increasing ease of production/material abundance), which could, theoretically, eliminate the notion of ‘value’ entirely.

When human labor is reduced/displaced by technology and automation, the assumed ‘value’, which is to equate that ‘labor’ to ‘price’, drops respectively. The ‘value’ of the output would then move to the creation/maintenance of the machinery, which now serves as the role of laborers. Consequently, the more efficient, durable and sustainable these worker machines are, the further the ‘Value’ of the production drops.

The realization is that the pattern of machine automation, coupled with modern innovations that are finding substitutions for “scarce” resources, could lead us into a position where no good or service would require a “value” or price tag. It simply wouldn’t make any theoretical sense.

For most, this is a very difficult thing to consider, due to what we are used to experiencing in our everyday lives. Regardless of your opinion, the fact is, the pattern of constant technological improvement coupled with automated machinery can theoretically create an economic environment where the abundance of materials and production mediums are so high and efficient, most humans will have little need to ‘purchase’ anything, let alone ‘work for a living’, in the traditional sense. More specifically, even if machines slowly displaced only a large minority of people, expanding unemployment, the ramifications would be systemic, and the entire economic system would grow more and more unstable and inoperable.

That point aside for now, let’s examine some empirical mechanisms that Monetary Economics, specifically in the context of Capitalism, requires in order to maintain the integrity of the system.


Mechanism One

The Need for Cyclical Consumption


The roles of people in a monetary system are basically broken into three distinctions:

The Employee, The Consumer, The Employer (or Owner/Producer)

The Employee performs tasks for the Employer in exchange for a “Wage” or monetary payment, while the employer sells a good or service to the Consumer for a “Profit”- another classification of monetary payment.

In turn, both the Employer and Employee function as Consumers, for the monetary payments (“wages” and “profits”) they obtain are used to purchase goods and services relevant to their survival. The act of purchasing goods and services, which is the role of the Consumer, is what allows the Employer to make its “Profit”, while also enabling the payment of the Employee’s “Wage”.

In other words, it is the requirement of perpetual ‘Consumption’ that keeps the Employer in business and maintains the Employee’s job.

Now, it is important to understand that this payment consumption cycle (or ‘cyclical consumption’) cannot stop, or the entire economic structure would collapse, for money would not come to the Employer, the Employer would not be able to afford to pay his Employee, and both the Employer and Employee would not be able to perpetuate the cycle by being a Consumer.


#1 - Nothing physically produced can ever maintain an operational lifespan longer than what can be endured in order to maintain economic integrity through ‘cyclical consumption’.

In other words, every ‘good’ produced must breakdown in a respective amount of time in order to continue financial circulation to support the players (consumer/employee/employer) in the game.

This characteristic could be defined as: “Planned Obsolescence”.

Planned Obsolescence can generally take two positions:

<span><span>a) Intentional: Deliberate withholding of efficiency so the product in question breaks down.</span></span>

b) Consequential: Profit based shortcuts taken in production, usually in the form of cheap materials/poor design, in an effort to save money and create repeat customers. This translates into an inferior product immediately.

i.e. = The use of plastics for electronic enclosures is cheaper for the company and the consumer, but the durability of this material is poor in comparison to say, titanium metal, which is much more expensive.

#2- The introduction of new products and services must be constant to offset any increased efficiency of the prior generations of production, regardless of functional utility, generating endless waste.

In other words, waste is a deliberate byproduct of industry’s need to keep ‘cyclical consumption’ going. This means that the replaced/obsolete product is expelled, often to landfills, polluting the environment. The constant multiplicity accelerates the pollution. ‘The Need for Cyclical Consumption’, which could be considered the ‘engine’ that powers the entire

economic system, is inherently dangerous and corrupt, for the nature of the necessity does not allow for environmentally sustainable practices to be maximized. The constant re-creation of inferior products wastes available resources and pollutes the environment.

To express this from a different angle, imagine the economic ramifications of production methods that strategically maximized the efficiency and sustainability of every creation, using the best-known materials and techniques available at that time. Imagine a car that was so well designed, it didn’t need

maintenance for 100 years. Imagine a house that was built from fireproof materials where all appliances, electrical operations, plumbing and the like were made from the most impermeable,

highest integrity resources available on earth. In such a saner world, where we actually created things to last , inherently minimizing pollution/waste due to the lack of multiplicity and maximization of efficiency, a monetary system would be impossible , for ‘consumption cyclically’ would slow tremendously, forever weakening so called “economic growth”.


Mechanism Two

The Abundance of Scarcity


In Monetary Economics, the notion of “Supply and Demand” is a well-known construct, simply denoting that ‘the more there is of something, the less it is worth in respect to itself’’. For example, drinking water was historically a very abundant resource, which didn’t typically require payment for its consumption in a commercial sense. However, as pollution of the water table and city water systems have developed, filtered drinking water is now being commercially sold, often at a higher

price than oil per gallon. In other words, it is profitable for resources to be scarce. If a company can convince the public that their product is “rare”, the more they can charge for that product. This provides a strong motivation to keep their items scarce. On yet another level, it should be pointed out that the central banks of nearly all countries also create scarcity within the money supply itself in order to keep pressure on the market system. Bernard Lietaer, designer of the EU currency system points out:

Greed and Competition are not the result of immutable human temperament…greed and fear of scarcity are in fact

being continuously created and amplified as a direct result of the kind of money we are using…We can produce more

than enough food to feed everybody…but there is clearly not enough money to pay for it all. The scarcity is in our national currencies. In fact, the job of the central banks is to create and maintain that currency scarcity. The direct consequence is that we have to fight with each other in order to survive.”

Lietaer, Bernard “Beyond Greed and Scarcity”.

Yes Magazine 1997


The ramifications of this abundance of scarcity are nothing but detrimental. If profit can be made as a result of scarcity generated by environmental pollution, then this creates a sick reinforcement of indifference to environmental concern. If companies know they can make more money by having

their resources or products remain scarce, how can a world of abundance ever occur? It can’t, for the corporation will be motivated to create the scarcity if need be. In turn, the scarcity created in the money supply itself by the central banks compounds the motivation for us to compete with each other, generating an ethic-less, primitive tribalism with everyone out for themselves, producing human stress, conflict and illness.


Mechanism Three

The Priority of Profit


A monetary system’s foremost motivating principle is Profit

, or the acquisition of money through the exploitation of others. All players in the game must, in order to survive, seek out a strategy to acquire income. A “wage” earner seeks out the best possible pay he can get for his services, while the Employer (owner/producer) seeks to constantly reduce costs in order to maximize profit. This is the dominant “mentality” in a Monetary System and those who are in positions of great wealth (material

“success”) are often the most ruthless. While many people who favor the profit system will talk endlessly about their “ethical” standards in regard to their practices, history has shown that the

priority of profit is actually a sickness which is not only poisoning our personal/social well-being and standards of living, but also the environment on which we rely for virtually everything we need as a species.

However, before we begin with the negative consequences resulting from this ‘mentality’, let us consider what many think to be the good side of this profit priority – “Incentive”.

As the theory goes, the need for profit provides a person/organization with motivation to work on new ideas/products that would sell in the market place. In other words, the assumption is that if people were not motivated by their need to survive through profit, little social progress would be achieved.

First of all, the most powerful contributions to society did not come from corporations seeking profit. Nikola Tesla did not establish alternating current electric power because he was out to make a buck. Louis Pasteur, Charles Darwin, the Wright Brothers, Albert Einstein and Isaac Newton did not make

their massive contributions to society because of material self-interest. While it is true that useful inventions and methods do come from the motivation for personal gain, the intent behind those creations typically have nothing to do with human or social concerns, for detached self-interest and survival are really the true motivations.

Profit interest almost always comes before human concern, and a simple glance at the cancer causing preservatives in our foods, the planned obsolescence of nearly everything manufactured, along with a health care industry that charges $300 for a single antibiotic pill, will indicate that ‘Profit Based Incentive’ is actually detrimental, for the true incentive is not to contribute to society in a meaningful way, but merely to exact wealth from it in any way possible. Profit is actually a false incentive. Problems in our monetary based society will only have a resolution if profit can be made from solving those problems.


The psychological/sociological ramifications resulting from the priority of profit are of grave proportions when it comes to the conduct of human beings. In fact, an entire structure of imposed

control has been created in order to deal with the never-ending problems associated with the need for survival by way of gain/profit/income - The Legal System. While non-monetary related crimes, often born from ego, jealousy, emotional deprivation and other psychological issues are currently a

problem, the frequency of non-monetary related crimes are nothing in comparison to the crimes committed that are motivated by the acquisition of money and property. In fact, if we define “Crime” as ‘Corruption’ and define “Corruption” as “Moral Perversion; Dishonesty”, then an entirely new perspective comes into play, for, if you look closely enough, you will see that nearly every act of strategic monetary gain is corrupt by its very construct…it is just accepted as ‘normal’ by the conditioned culture to whatever degree is deemed tolerable by consensus.

For example, when you go to the grocery store and buy a box of cereal, 9/10 times the amount of cereal occupies only 60% of the space within the box. This ‘advertising strategy’ as the producing company would call it, is actually just a blatant, wasteful lie. The advertising agencies, with all of their tactics of social manipulation, are likely one of the most corrupt institutions on the planet. Sadly, we have been conditioned to call it ‘promotion’ or ‘strategy’ instead.

Now, to put the spectrum of monetary derived corruption into a workable perspective, we will divide this aberrant behavior into 3 classifications:

General Crime – Corporate Crime – Government Crime.


General crime , as derived from the pursuit of money, ranges from petty theft to illegal sales to fraud to violent robbery. This byproduct of the monetary system is often not given the thought needed to understand its source, for many tend to dismiss these “criminals” as some kind of social anomaly, rather than relating their basis to the need to survive. The inherent stress and other side effects associated with deprivation are also overlooked.

The ‘Merva-Fowles’ study, done at the University of Utah in the 1990s, found powerful connections between unemployment and crime. They based their research on 30 major metropolitan areas with a total population of over 80 million.

Their findings found that a 1% rise in unemployment resulted in:

a 6.7% increase in Homicides; a 3.4 % increase in violent crimes; a 2.4 % increase in property crime.

During the period from 1990 to 1992, this translated into:

1459 additional Homicides;

62,607 additional violent crimes;

223,500 additional property crimes.

If you were to take a well-to-do, ethical, ‘stand-up’ person, strip them of their wealth and resources and drop them into a poor city with nothing but the shirt on their back, there is a very high

probability that this person will begin to lie, cheat and steal in order to survive.

It is no surprise that the poorest neighborhoods in the United States maintain the highest crime rates. A person born into a deprived environment, with little resources, poor education and few opportunities for work will do what they need to do in order to live. The point here is that economic depravity (scarcity), not so called genetic “criminal tendencies”, creates this kind of aberrant behavior.

Corporate Crime, which is almost always exclusively profit related, takes many forms: Planned Obsolescence; Market Manipulation; Outsourcing; Price Fixing; Monopolistic Collusion; Labor Exploitation and Governmental Collusion are just a few to note. From Enron’s deliberate shutting

down of California’s Power Plants to boost its Energy stocks, to the Bayer Corporation’s knowing distribution of HIV tainted drugs, it should be clear to most people that corporate crime is constant and often times more insidious than “General Crime”, for the repercussions tend to affect very large groups of people.

The “Corporate Criminal’s” need to secure a business’s profitability is no different in basis than the “General Criminal’s” need to survive. While the latter typically commits crimes to live, the former commits crimes to further secure their positions of power, lifestyle and wealth. It is based on fear.

The notion of “Greed”, which manifests from a perpetual insecurity derived from the fear of losing what one has, serves as the motivating factor for most corporate crimes. It is like a gambling addiction. The more you get, the more you want. This neurosis is perpetuated/reinforced by the social stratification that the monetary system creates, for there is a never-ending progression of “luxuries” available as one’s purchasing power increases (i.e.: mansions, yachts, limos, diamonds, land, etc).

The power of government is highly modified by the prevailing values this “ruling class” perpetuates through society, via the mass media and traditional jingoism. In other words, if we look back at the horrors of Hitler, many often forget that many of the German people also maintained the anti- Semitic value system, propagated by the regime through pamphlets and broadcasts. The same can be

said for the US Invasion of Iraq, which was fueled initially by public support, simply because of the hate and fear of so called “Islamic terrorists”, generated by the attacks of September 11th 2001. That being said, let’s put aside our traditionalized values of loyalty and “patriotism” and take an objective look at what government within a Monetary System actually is and represents.

First of all, all members of government must be paid a wage and all projects they devise must have funding. This money apparently comes from “Taxes” imposed on the public, or loans from banks or other governments. Taxes are generated through ‘commerce’ or ‘income from commerce’, while loans must be paid back with money manifested in some way either through more commerce, more loans, or more taxes, theoretically.

The central role of government is the invention of regulatory legislation to handle the functioning of society. Idealistically, the broad interests of the public would be the first priority of government. Unfortunately, as history has shown, this is not, and has rarely been, the case. Rather, government as we know it is actually a ‘parent’ corporation to all the other corporations working within the country’s economy. This, of course, makes sense for the value of any nation is really determined by the state of its economy. This means the government has a ‘”Vested Interest” in the economic state of its nation, most specifically an interest in those within its own class - the rich upper class.

“Vested interest” or a person or group having something to gain or lose by a governmental decision is a two way street. A politician can gain monetary ‘contributions’ from a company he favors in his rulings, while the company thus gains from the rulings made in favor of itself. Lobbying and Contributions in America constitute Billions of dollars a year and this money is given entirely under the pretense of putting the donating parties “agenda in action”.

While the examples of government and corporate collusion are vast, ranging from the passing of untested pharmaceuticals by the FDA, to the oil lobby’s success in reverting the California Zero Emissions Law which forced the clean running ‘electric’ cars into reclusion, the greatest monetarily derived crime of government is its use of War for the benefit of it corporate/financial constituents.

In the words of Two-Time Congressional Medal of Honor Recipient, Major General Smedley D. Butler:

War is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives. A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small "inside" group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes…

In the World War [I] a mere handful garnered the profits of the conflict. At least 21,000 new millionaires and billionaires were made in the United States during the World War… The Sixty-Fifth Congress, reporting on corporate earnings and government revenues. Considering the profits of 122 meat packers, 153 cotton manufacturers, 299 garment makers, 49 steel plants, and 340 coal producers during the war. Profits under 25 per cent were exceptional. For instance, the coal companies made between 100 per cent and 7,856 per cent on their capital stock during the war. The Chicago packers doubled and tripled their earnings. And let us not forget the bankers who financed the Great War. If anyone had the cream of the profits, it was the bankers. Being partnerships, rather than incorporated organizations, they do not have to report to stockholders. And

their profits were as secret as they were immense. How the bankers made their millions and their billions I do not know, because those little secrets never become public – even before a Senate investigatory body.”

Butler, Smedley D., War is a Racket , Feral House, 1935, Chapter 1


World War II, The Korean War, Vietnam and now Iraq and Afghanistan are no different. Accelerated industrial creation, military contracts, reconstruction contracts, energy/resource

acquisition (theft), high interest austerity driven World Bank and private bank loans for post war economies, and even drug trafficking by the CIA9, are just a few of the highly profitable mediums. The motivation for war is three fold.

  1. Industrial Profit, maximized for the elite

  2. Resource Acquisition (theft)

  3. Geopolitical Alignment to increase the ease of further industrial profit and resource theft.


This is one of the greatest sicknesses caused by the need for wealth and power. Government, with its team of brainwashed assassins on hand, is involved in the ultimate form of self-preservation, and as long as all the resources of the world remain ‘hoarded’ for the interest of a few, this pattern of War will never end.

Now, the above classifications of “corruption” are only a generalized grouping. Vast nuances of human behavior in everyday life are also very much poisoned by this mechanism for profit; dishonesty, ranging from the ‘art of negotiation’ where two business people compete with each other for their own self-interest, with an inherent disregard for the other, to the disharmony built into the employer-employee relationship, where one wants to maximize labor to reduce hourly wages paid,

while the other seeks to maximize time spent in order to gain more income.

The bottom line is that The Priority of Profit sets up an ‘us against them’ duality mentality, for, within the monetary system, there has to be a buyer-seller; a worker-employer; a client-owner; a have have not. Given this reality, each party is forced to enable conditions that are most profitable for them, therefore strategic edges are always sought and thus a constant battle is always raging. We are constantly at war with each other in order to live. This battle creates little over time in the way of sustainable human progress, and the sick, polluted, distorted world you see around you is the result.


Mechanism Four

The Distortion of Values


Our Beliefs and Values are shaped by culture.

While there is a genetic basis to certain human attributes and behaviors, the knowledge we have and the way we think about and act upon that knowledge is fundamentally an environmental phenomenon.

With that in mind, the monetary system requires a form of communication to inform the public of what a company has made available for sale. This form of communication is termed ‘advertising’. The characteristic of advertising is ‘promotion’ and promotion is a manner of communication, which, generally speaking, creates a bias in favor of the product in question. In other words, advertising’s job is to entice…or in more direct terms – manipulate the consumer into purchasing a product. This

manipulation takes many forms, but one of the most effective is the manipulation and/or exploitation of the viewing audience’s “values” - what he or she finds important.

However, before we go any further, it needs to be pointed out that the mass consumption patterns currently seen in the United States and elsewhere were not always the case. America originally was founded, to some degree, on a kind of Protestant work ethic, where thrift and savings were dominant values. However, by the early 20th century, a concerted effort by the business community set out to distort these notions and mold a new army of impulsive, perpetually dissatisfied, status conscious

consumers. Advertising agencies switched their arguments from utilitarian ones to those gauged for emotional appeal and status. Consequently, today the average American consumes twice as much as he or she did since the end of WWII.

Now, one of the most powerful forms of ‘value manipulation’ comes from re-associating a person’s identity to a particular ideal. Patriotism and Religion are classical examples of this, for through indoctrination at an early age, a person is often conditioned to feel a close personal connection to a country or religion, hence conditioning that person to want to support the doctrines, unconditionally.

Another example of this is the concept of “fashion”. Fashion takes many forms, from the clothes people wear to even the ideologies they perpetuate. To illustrate how successful the commercial industry has become in manipulating the values of human beings for their own gain, many people today can be seen walking around wearing certain commercial articles, merely for the purpose of expressing a company’s brand, contriving some kind of apparent social status or “stylistic expression” from them. Signature “Tommy Hilfiger” shirts, trade marked “Prada Bags” and flashy Rolex watches are examples of products where the utility or function of an item has lost total relevance, with

importance now derived by what the item “represents”.

Sadly, what these people often do not realize is that they are nothing more than walking advertisements for the respective company, plain and simple. The “status” or “expression” really exists entirely in the conditioned ‘value projections’ of that person, and if enough people become manipulated in the same way, a “trend” emerges, which further reinforces the delusion by way of collective identification. These trends can become so powerful, that those who do not adhere to the fad, might be deemed “outcasts” and be ostracized.

Now, ‘Vanity’ aside, we must also examine the distorted values created in the form of mentalities and worldviews. This constant need of self-interest often spreads like a cancer into other psychological areas, creating and reinforcing such neurosis as “Greed”, “Jealousy” and “Ego”.

Greed is likely the driving force of the monetary system’s perpetuation, beyond just survival. Due to the inherent stratification of goods and services (and hence standards of living) available to those with more and more purchasing power, the human being is groomed to perpetually want “more” material wealth, for the “more” seems to go to infinity. The result is a culture which doesn’t have a concept of balance, or a sense of what is actually important, or “enough”. Advertising compounds this by its constant depictions of “the possibilities”, often making people question their own self worth because they do not “have the best things in life”, etc.

Jealousy appears to begin cultivation at a very early age, perhaps when the school teacher would praise the student who would make high marks, and scold the student who didn’t, making that

student feel envious of the person who made the high grade. Regardless of its origin, a classic tactic

of advertising is to exploit this neurosis by using the media to depict a person with something that you do not have, making you feel as though you need to have it in order to be “equal”. This is very similar to greed, with the exception being that people grow to despise others for what they have, creating social tension and often conflict.

Ego is often defined as ‘a feeling of superiority to others’. This distortion takes essentially two forms:

1) General superiority based on wealth class / or position in the social hierarchy

2) Arrogance regarding one’s creative contribution, demanding prestige, acknowledgment or other “rewards”.

The latter, for many, almost seems “natural”, for people today love to “take credit” for their ideas and inventions. This has a strong reinforcement in the monetary system, for when it comes to making a “profit”, one is literally being “rewarded” and “acknowledged” for their personal inventions and actions. This further compounds the propensity for a person to demand credit for what they do, even if it has nothing to do with money.

It should be pointed out that no human really “invents” or creates anything on his or her own. Every idea and creation that has emerged has been done so based on the contributions of prior generations’ work, environmental influences and/or peer feedback. As Isaac Newton once said:

If I have seen further, it is only by standing on the shoulders of Giants”.

Newton, Isaac, Letter to Robert Hooke February 5th 1675


His point was that he built his research, and hence discoveries, upon the work of many other great scientists who lived before him. His credit therefore is not only his, it goes to the whole body of scientific discovery that he had learned and worked with. This form of Ego has no position when a person understands that ALL inventions and creations are actually collaborations developed serially, one way or another.

Now, as for the former distinction of Ego noted above (“General superiority based…”) this is a class oriented disposition which, on one level, is a psychological means to make one feel better for having more than another human. A wealthy person walking down the street finds it much easier to dismiss a homeless person, by saying “he is just a lazy bum”, as opposed to recognizing him as a victim of culture. On another level, blind elitism, in the form of a kind of ‘class based racism’ leads people to dismiss those with less purchasing power as simply being “inferior” or “undeserving”, for the social stature, education and lifestyle afforded by this elite, is vastly out of reach for those without similar purchasing power, therefore creating gross differences in culture.

In the end, our values are based on what works and helps us create easier, better lives. If we live in a system that rewards competition, unenlightened self-interest, corruption, vanity and arrogance, then these are the values that will constantly be perpetuated in society. While many people give lip service

to ‘honesty, caring for others and humility’, it is easy to see why these qualities do not prevail, for the system of survival in society today does not support or reinforce them.


Mechanism Five

Fiscal Manipulation


Currency used today is called “fiat”, which means its value comes essentially from government decree. In other words, there is nothing “backing up” the value of the currency other than perhaps the sweat of laborers who exchange their services for the currency. Many years ago, most currencies were on a ‘gold standard’ which provided a pseudo-empirical basis for the value of a currency note, but this was still entirely arbitrary, for the source of value was simply shifted to this raw material called “Gold”, which also has no intrinsic value in and of itself. The ‘value’ of any material is relative to its scarcity (supply) and demand, and these attributes are always in flux and hence unstable.

This so-called “supply and demand” equation also applies directly to Monetary Value . Value within the fiat system is derived from how much money is in circulation within an economy. Just as with any natural resource, the more money that is in circulation, the less each unit of fiat currency is worth. When less money is in circulation, it makes each unit worth more, respectively. This phenomenon is called “Inflation” and “Deflation’’, generally speaking. Very simply, if new money is

pumped into an economy, without regard for the current demand for goods and services, the prices in the economy will eventually rise as the value of the currency becomes worth proportionally less.

This is an “Inflationary Effect”. However, if the new money is quickly put to use in the creation of new goods and services, while there exists a demand to purchase those products, it can be introduced into the economy without a substantial inflationary effect. For example, if there is a demand in the market for new homes, and the government injects 1 billion dollars of new money into the economy, and all that money is put to use for creating these new homes, which are then bought, the inflationary effect is minimal.

The increase in the supply of money available in an economy is called Monetary Expansion , while a decrease in the supply of money is called Monetary Contraction . When both of these forces are in play, you tend to get a cyclical trend, called the “Expansion and Contraction Cycle”, also known as the “Business Cycle” or the “Boom and Bust Cycle”(more on this below). Generally speaking, the Expansion period is usually associated with so called “Economic Growth”, for more money is being put to use and often more jobs are created. Conversely, the Contraction period is often called a Recession or Depression, for money is drying up and hence there is less money to put to use, so jobs are lost and companies fail.

The concept of “Economic growth” is typically defined as: “the increase in the amount of the goods and services produced by an economy over time”. The GDP (‘gross domestic product’) measurement system, which basically compares the ‘income’ and ‘output’ of an economy in a certain time period, is commonly used to gauge this so called “Economic Growth”.

Now, before we go any further, let it be noted that the whole idea of Economic Growth, as it is traditionally interpreted, is nonsense with respect to true human development. There is no such thing as true economic growth in and of itself, for the underlying mechanism is based almost entirely on the amount of liquidity (money) in the system. In other words, if I counterfeit 100 million US dollars and give it to you to start a business (you don’t know it’s counterfeit) and you buy and fix up an old

building, hire a team of employees and start to produce a product that the public buys, this would be considered an ‘expansion’ of the economy. You have invested in real estate – increased the

employment rate – and created new products that others buy, therefore exciting the circulation of currency (the ‘consumption cycle’).

Now, what if it was found out that all that money you had was counterfeit, and the whole operation was shut down? This would be a ‘contraction’ of the economy, for the money thus vanishes; your employees would be laid off, the building foreclosed upon, and the production halted. Given the above scenario, one should ask: What was the real growth? If the increase (expansion) in

the supply of money can result in the creation of jobs and production, while the decrease (contraction) results in the loss of jobs and production, what exactly was the point?

To understand this more clearly, we need to look at how money is created and regulated by the government and/or its central bank. For this example, we will use the United States and its central bank- The Federal Reserve.


As noted above, the ‘expansion and contraction cycle’ is a cyclical pattern, which has to do with the infusion and relinquishing of money in the system. This pattern is largely controlled and manipulated by the Central bank (Federal Reserve) by way of Interest Rates . An Interest Rate is a fee charged to a borrower for the use of an amount of money. This fee is based on a percentage of the amount borrowed.

Since all money in the US economy and nearly every other economy in the world is created out of debt through loans, the speed by which money comes into existence depends on how much a person is willing to pay in interest to acquire that loan. The Commercial Banks base their interest rates on values set by the Central bank.

For example, in America the “Prime Rate” is the lowest interest rate charged by banks to their most creditworthy customers. This rate is based on what is called the “Federal Funds Rate” which is

dictated by the Federal Reserve.

 The important point here is to understand that the Federal Reserve has the power to influence the interest rates of all banks. This translates into the power to control the amount of money being borrowed, and hence the amount in circulation .

<span><span>When the Fed lowers its interest rates, so do the commercial banks and credit (borrowing) becomes less </span></span>

expensive. When the Fed raises its interest rates, credit becomes more expensive.

In a low interest environment more people are likely to borrow money, put it to use, and create so called “economic growth”(Expansion). In a high interest environment, less can afford to borrow money, less is put to use and economic growth slows or reverses (Contraction).

This is all the so-called “Business Cycle” is, and the Federal Reserve, through its use of interest rate manipulation, can “throttle” the expansion and contraction of money at will, to a certain degree.

Why does the Fed need to control this?

To understand this, you need remember that all money is created out of debt (loans), and the increase in the supply of money can lead to Inflation.

If the money supply was allowed to constantly increase (expand), it is simply a matter of time before the market becomes saturated with excess liquidity stifling the resulting economic growth. This will then lead to Inflation, depreciating the value of the currency, raising prices. Likewise, outstanding

debt is directly proportional to the money supply, so the more an economy ‘expands’, the greater the debt that is created. This sets up an inevitable systematic crisis for the money needed to pay the interest charged on the loans does not exist in the economy outright. Therefore, there is always more outstanding debt than money in existence. Once the debt grows larger than a person/company can afford, defaults begin (often in a systematic way), loans slow and/or stop and the money supply begins to contract. This particular scenario of debt overpowering and nullifying expansion could be termed “financial failure”, very simply.

Now, before we go any further, we need to talk about Debt more specifically. It needs to be clearly understood that debt itself is also a very active tool for social control, but not in ways most would consider. In a Monetary System, the whole structure is based on human participation. The structure is always hierarchical, so those at the top of the pyramid always benefit more than the majority at the bottom. Therefore keeping people motivated to be employed and fearful of losing their jobs and thus subservient, is a positive circumstance for those at the top. A person, who “needs” a job, is more likely to take a lower wage, and less likely to cause problems.

One of the most reliable ways to get people to work and maintain subordination is to put them into debt . A person in a lot of debt is going to be much more submissive to the system, than a person who has no debt. This mechanism of “Debt Slavery” is little talked about, for most simply do not even think about it. Every dollar in existence theoretically has to be paid back to the banking system and in order to pay that money back, it must be “earned” by the indebted parties, usually through the form of “wage” or “profit”, hence requiring human service/servitude.

This issue is compounded by the reality that there is always more outstanding debt than money in existence (due to the interest charged), making the public’s attempt to “break even” within the system futile. There will always be more debt to pay back, ensuring the slavery of the masses.


Industry and Labor


Again, as expressed previously, statistics have shown that human beings are increasingly being replaced by automated machines in the workforce, causing unemployment and hence a reduction in

the purchasing power of its citizenry. Over time, as this phenomenon progresses, a tipping point will

occur when the lack of consumer purchasing power will destroy the monetary based economy, for it won’t matter how cost effective the production companies are… people will simply not have any money to buy the items with , thus ending the mechanism of ‘cyclical consumption’.

Those who are aware of this, often attempt to create solutions within the monetary system, usually suggesting some form of ‘hyper-welfare socialist state”, where the rich elite own the factories, a virtually non-existent middle class (perhaps 5% of the world’s population) works to oversee the machine operations, while the rest of the world is given money to use, in the form of hand outs from the government. This type of idea is nothing but horrifying and absurd. It would lead to dictatorship,

extreme liberty restrictions and great public anger, for the stratification of class is still there, giving those at the top access to more resources than the billions at the bottom.

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