Hi Bradford,



Fascinating discussion.



The economy of any nation is a properly functioning machine. It is accurate, it is precise, and results are always predictable.



Whether people are benefiting from all of the various inputs and outputs of a national economy, is quite another thing altogether.



Regardless of result, the machine is working perfectly. Each input has an effect, and each output has an effect.



Therefore running an economy is exactly like riding a unicycle on a high-wire, while holding a counterbalancing rod.



Too much emphasis on the left (Stimulus/deficit financing), and off we go, tumbling down to the net, while too much leaning to the right (Austerity) results in a similar fate.



And of course, we must make constant forward progress (growth) relative to the unicycle riders on other, parallel, high-wires.



Rather than attribute the present state of affairs to those constantly changing variables, let's just say that we are where we are due to a massively complicated series of movements, each is an input resulting in an output.



No matter what else, the machine gets a 100% score on efficiency. It did exactly what we 'told' it to do. Every time.



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As a fan of reverse-engineering which has brought us much success, whether we are reverse-engineering things that we see in nature -- from the birds we learned to fly, from the fish we learned how to navigate on and under the water, and from a tree we learned about efficient structures. Or whether we are reverse-engineering another engineering teams' work (particularly during the Cold War, this was a big business) reverse-engineering can teach us much.



Therefore, it interests me to reverse-engineer an economy. After all, why shouldn't we begin at the last and most remote point of the economy, as seen from the view of the government or the market.



In fact this is already being done by the UN with its Happiness Index and by the SPI (index) from the point of view of quality of life measures, productivity is another measure but narrower in scope, while money velocity is the quiet elephant in the room.



There are many more ways to measure the results of our inputs and outputs, in ways we haven't yet begun to consider.



By beginning our research at the consumer or user end of things, we are looking at actual results of our many inputs and outputs on our perfect machine. And in so doing, adjust our inputs and outputs to achieve the desired end results.



In cases where we are using consumer data in the case of individuals and user data in the case of industry, it becomes one order of magnitude simpler to make upstream changes to the perfect machine to get us to our goals.



Not that this statement is everything, it's just one input in an economy with an equal but opposite output, but it is a telling statement on the complete fall of a competing economic system; "As long as they pretend to pay us, we will pretend to work." -- an oft-repeated quote by Soviet workers.



Which is why Soviet productivity was low, a factor that was partially responsible for the collapse of that economic system. Again, theirs also was also a perfect machine. Just that the inputs were wrong, resulting in a negative output.



If we don't stop giving half of our money (including stimulus money, after a cursory blip through the economy) to the 1% who use it to make other 1%'ers richer, creating a defacto separate economy for the 1%, paid for by trillions in stimulus dollars, then we will have our own negative output similar in scale to the Soviet example that I used above.



A system where half of the money (wealth) is effectively removed from the mainstream economy by the 1% and the 99% are forced to survive on the other half of the money supply and total wealth, is an unbalanced equation. Which will lead our perfect machine to produce a negative result for up to 99% of the people. We see early signs of that now, and if anything, things seem to be getting worse on that account.



And nobody is doing anything about it.



I always look forward to reading your essays here at ProSyn, Bradford.



As always, best regards, JBS











