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"Fortheloveofmoneyistherootofallevil" (1Timothy6:10)

Rocket Scientists GuideTM to Money and the Economy

Accumulation and Debt


By

D R . M ICHAEL S HARP
www.michaelsharp.org michael@avatarpublication.com
Cover and Illustration

L AURA V AN T INE
lvt@mindspring.com

Lightning Path Press

Published by Lighting Path Press St Albert, Alberta. Canada www.lightningpathpress.com

2009 by Michael Sharp. All rights reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means, electronic, mechanical, photocopying, recording, or otherwise without written permission Distributed by Ingram

Library of Congress Cataloging-in-Publication Data Sharp, Michael, 1963The rocket scientist's guide to money and the economy : accumulation and debt / by Michael Sharp. p. cm. ISBN 978-1-897455-11-1 (alk. paper) 1. Money. 2. Saving and investment. 3. Debt. I. Title. HG221.S537 2009 332.4--dc22

Contents
Life,TheUniverseandEverything.......................................................................................................................6 TheNatureofMoney..........................................................................................................................................7 TheEconomy...................................................................................................................................................8 TheSourceofMoney ....................................................................................................................................10 . TheValueofMoney......................................................................................................................................11 ProblemswithMoney.......................................................................................................................................12 General..........................................................................................................................................................12 Accumulation.................................................................................................................................................12 TheFall ..........................................................................................................................................................14 . Power.............................................................................................................................................................14 APrivateParty...............................................................................................................................................16 TheTruth?.....................................................................................................................................................18 SocialClass.....................................................................................................................................................20 TheReport.....................................................................................................................................................21 Intelligentsia..................................................................................................................................................22 Indoctrination................................................................................................................................................24 Education.......................................................................................................................................................26 Taxation.........................................................................................................................................................27 Progress.............................................................................................................................................................29 ProductDifferentiation .................................................................................................................................30 . Distortion.......................................................................................................................................................31 MetalandRock..............................................................................................................................................33 Crisis ..................................................................................................................................................................35 . Debt...............................................................................................................................................................39 Index......................................................................................................................................................................46 Endnotes................................................................................................................................................................47

THEROCKETSCIENTISTSGUIDETOMONEY ANDTHEECONOMY:ACCUMULATIONANDDEBT
LIFE,THEUNIVERSEANDEVERYTHING
Money,money,money,money. Moneymakestheworldgoround. Whatstheproblemwithmoney? Well,moneyistherootofallevil,orsowearetold. Itisthebaneofourexistence. Itisthesourceofourdespair. Itsbad,andthatsthebottomline. Money,money,money. Asaspiritualwriter,itsatoughtopictobroach.IliketomaketheclaimthatImaworldteacher,iyousee.I teachaboutSpirit,God,andconsciousnessandImaketheclaimthatwhatIteachisthetruth(andthatswith acapitalT).Itsnotthatfarout.Justabouteverywriterorteacheroutthere,exceptmaybethewishywashy postmodernists,willmakesomeclaimtotruth.Nobigdeal.Butforsomereason,assoonasIsayImaworld teacher,assoonasIstarttoteachaboutGodandSpirit,peoplestarttosaythingslikeOh,youreaspiritual teacherandyouteachaboutGodandSpirit.Well,shouldntyoumakeyourstuffavailableforfree?Afterall, youcantchargeforsomethingasbasicasspiritualtruthright? Thequestionalwaysbothersmeandsetsupabitofaconflict. Iagreewiththesentiment. TheinformationthatIprovideshouldbeaccessibletoeveryonewhowantsit. But,shoulditbefree? Personally,Idontthinkso. Havingspentthousandsandthousandsofhourswriting,itseemskindofdisrespectfulandinsensitivetoask someonesomethinglikethat.Youdontgouptothebakerofyourdailybreadandsay,handyourstuffover BubcauseImentitled,doya? Ofcoursenot!

Todothatwouldnotonlydishonouranddisrespecttheirlabour,butitwouldbeinsensitivetothefactthatin thiswesternworldyoucannotdoanythingwithoutmoney,youcanteveneat.Imean,Iliveinanicehouse, butIcantgrowfoodonitbecauseIcouldntaffordayardbigenoughtogrowfood.Andwhatsworse,Icant evenbarteriimyservices.HowamIgoingtobartermyEnglishwritingsandbooksforbananasgrownbyaLatin Americanworker,orclothessewninaChinesefactory? Youseetheproblem. IfIdontmakemoneyfromtheworkIdo(whichistowriteusefulspiritualbooks),myfamilyandIdonteat.In thisdayandage,weallneedmoneytosurvive. Still,likeIsaid,Idoagreewiththebasicsentiment. Thebottomlineis,everybodythatwantstobuymybooksshouldhavethemoneytheyneedtodoso. But,theproblemisnotthattheinformationisnotfree,andtheproblemisnotmoneyitself. Infactitisexactlytheopposite. Theproblemisnothavingmoney. The problem is that despite the fact that we (and by we I mean the people of this earth) have amazing technologyandamazingproductivepotential,noteverybodyonthisearthcanaffordthemodestfeeIcharge formyeBooksandconsideringhowlittleImaskingformyeBooks(basicallyacouplebucksapiece),thatsa crimeanditsacrimethatgoeswaybeyondthedesiretohavespiritualinformationavailablefree.Imean,its notjustbookswecantafford.Alotofpeopleonthisearthdontevenhavethemoneytheyneedtobuyfood anddecentshelterandbecauseofthat,alotofchildrenonthisearthgohungryandstarve,andthatsmost definitelyacrime.iii Soyousee,theproblemisnotmoneyperse.Theproblemisnothavingmoneyandtherightquestionis,Why dosomanypeoplelackthecashtheyneedtobuythethingsthattheyneedonthisearth?

THENATUREOFMONEY
Well,thelackofcashinthepocketsofthepeopleisnotforreasonsthatyoumightthink.However,inorderto understandwhysomanypeopledonthavethemoneytheyneed,wefirsthavetounderstandthenatureof money. Andwhatsthenatureofmoney? Well,thatseasy. Letusstartbysayingthatmoneyisnotthepaperitsprintedon. 7

Moneyisnotgold,itsnotsilver,itsnotplatinum,anditsnotthoseshinylittlerocksthatpeopleputontheir fingersandattachtotheirearlobestomakeothersgoallooh!andaah!andstufflikethat. Moneyisnotaconcretethingatall.Infact,whenyouthinkaboutit,moneyissimplyanidea,anditsanidea that,despitewhatsomepeoplemightwantyoutothink,isnotthathardtounderstand. Itssimplereally. Whenyouboilitrightdowntoessence,moneyrepresentstime. Time is money they say and thats totally true, though there is a bit more to it than that. Money does representtime,butnotalltypesoftime.Moneyhasaveryspecificreferenceandthatisworktime.iv Moneyrepresentsworktime. Itsobvious,right? Youworkanhouryougetpaidforanhour. Ifyoustandaroundanddonothing,moneydoesntfallfromthesky. Moneyisworktime. Butofcourse,eventhatsnotwhollyspecified.Whileitstruethatmoneydoesrepresentworktime,itsalso truethatmoneydoesntjustrepresentworktime.Moneyrepresentsaveryspecifictypeoflabour.Thefactis, I dont get paid money for working in my back yard. I only get paid money when Im doing something for somebodyelse.WhenIdosomethingorbuildsomethingorprovideaservicethatsomebodyelsefindsuseful, thenIgetmoneyinexchange.AlthoughImightfantasizeaboutit,youarenotgoingtogivemeasinglepenny forworkinginmygardengrowingflowersformykitchentable.However,Imightbeabletoconvinceyouto givemeafewpenniesforaflowerIvegrownforyourkitchentable. Ifyoupaintthewallsofmyhouse,Illgiveyou40dollarsforeveryhouryouwork. Youseehowthatworks? Money,money,money. Thedefinitionofmoneyisthis: Moneyrepresentstimespentworkingforsomeoneelse.Andifwedefinetimespentworkingforsomeone elseaslabourtime,thenwecansay: Money=LabourTime

THEECONOMY

Now,whilethewholemoney=labourtimethingmightnotbethatobvioustoyouatthispoint,butitwillbe inamoment.Togetabetterideaofwhatmoneyisallabout;allwehavetodoistakealookatmoneyinan economy.v Andwhatisaneconomy? Well, an economy is basically the formal exchange of money and, since money = labour, an economy is basicallytheformalexchangeoflabour(i.e.timespentworkingforsomeoneelsewiththeexpectationoffair exchange). Simple. Whenever two or more people get together and do something for each other in exchange for something (usuallymoney),youhaveaneconomy. Nowofcourse,therearedifferenttypesofeconomiesandnotalleconomiesneedmoneytofunction.Inour modernworldtheofficialeconomy,vithatistheeconomythatisrecorded,monitored,andfiercelypolicedby thoseinpower,doesusemoney.However,beneaththatofficialeconomythereareothereconomies.Thereis theundergroundeconomy,forexample.Theundergroundeconomyisalsoamonetizedeconomy,butits notrecordedandtaxedliketheofficialeconomy.Alongsidetheundergroundmarketeconomythereisalsothe informal economy.vii When I traded a complete set of my books to a young man who helped to clean the windowsinmyhouse,therewasanexchangeoflabour,butitwasntmonetized.Itwasbarter.Thepointhere thoughisnottogointodetailaboutthedifferenttypesofeconomiesbuttosimplypointoutthataneconomy basicallyinvolvestheexchangeoflabourpower.Whetherthatlabourisrepresentedbymoneyorbarter,oris recordedornot,isirrelevant.Thepointis,aneconomyinvolvestheexchangeoflabour. Wecanseethisquiteclearlyifwesimplifythingsandlookataneconomyof,say,onethousandpeople.Inthis simple economy of one thousand people, everybody does something useful for somebody else. One person playsguitar,anothersings,anotherbuildshouses,onerunsafarm,anotherisintocomputers,anotherbakes bread,anotherprocessesanimals,andsoon.Theyallhaveaskill(orskills),theyallhavethingstheylovetodo, andtheyallgetupeverydayandapplythoseskillsintheirdailylife.Inoursmalleconomyofonethousand people,eachindividualhassomespecializedtalentsandabilitiesandtheybringthesetalentsandabilitiesto theircommunity,andthatsgreatbecausenoteverybodyisthesame.Noteverybodylikestobuildthings,not everybodylikestositalldayandwrite,noteverybodylikesanimals,andsoon.Butthatsokbecauseinan economy,wecanallexchangewitheachotherforthingsthatwecantotherwisedoourselves. Andhowdowedothat? Howdoweexchangeourlabour? Well,asIsaidabove,wecandothatwithbarterorwecandothatwithmoney.Barter(i.e.Ibuildyouahouse, yougivemealifetimesupplyofhamburgers)isfineasfarasitgoes,butitsquitelimitedbecausebarteris neitherefficientnorflexible.Maybethelocalcarpenterisavegetarianandifso,howisthemeatpackergoing

togetahousebuiltwhentheonlythinghehastoexchangeisasubstancethatcausesthecarpentertoretch uncontrollably(i.e.deadmeat)? Youseetheproblem. Entermoney. Money,money,money. Moneyisanimprovementoverasystemofbarterbecauseitabstractslabour.Whentheeconomyisbasedat leastpartlyonmoney(i.e.partlymonetized),thenyouroptionsforexchangeareexpanded.Moneybasically createsamorefluidandefficientsystemoflabourexchange.Insteadofpayingthecarpenterindeadmeat, themeatpackernowpaysincashwhichthecarpentercanthenusetobuywholesomeveggies.Itsawinwin situation. The meat packer benefits because now he can exchange with the carpenter even though he has nothingofinteresttobarter.Thecarpenteralsobenefits.Forhim,moneyisbettersincehecantakethatand buywhateverhewants.Hecanbuyfood,hecanbuyanewcar,atool,orwhatever.Inthissensemoneycan be seen as an economic lubricant or like blood in the body. As a measure of labour power, it simply makes economicexchangemoreefficientandfluid. Moneygiveslifetothesocialfabric. So,thereyouhaveit. Moneyissimplyabstractedlabour. Moneyallowsustoexchangelabourpowerwitheachotherinanefficientandfluidway. Putthisway,moneyhardlyseemsliketherootofallevilassomanypeopleliketothink.

THESOURCEOFMONEY
So,ifmoneyislabour,andiftheeconomyisnothingmorethanawaytoexchangelabour,thenwheredoes moneycomefrom? Well,itdoesntappearoutofthinair;butitsalsonotthathardtounderstand.Moneycomesintobeingina twostepprocess.First,somebodymakesit.Ifitspapermoney,weputpaperthroughapresswithspecialinks and so on. If its metal money, we stamp it with a logo and some numbers. Then we agree on a value and, importanttonote,whateveryoureusingformoney,whetheritbeitgoldorleadorstone,itdoesntmatter. Allthatsimportantisthatthepeoplewhoareinvolvedagreethatthispieceofpaperorthatlumpofmetal representsacertainamountoflabourtime,i.e.thatithasacertainvalue,andthatsallthereistoit.Onceyou agreethatyouaregoingtoabstractlabourandpouritintosomekindofsymbol,allyouneedisasymbolto attachitto,andgeneralagreementaboutthevalueofthesymbol,andthereyouhaveit. Itsallaquestionofconcordance. 10

IfIhandyouapieceofbluepaperandtellyouitsworthonethousandlabourunits(assumingonelabourunit isonehouroflabour)andyouagree,thenwereinbusiness.

THEVALUEOFMONEY
I suppose the question that arises now is, how do we determine the value of money? That is, how do we determinehowmuchlabourpowerisrepresentedbyourinstrumentsofexchange?Wellobviously,whatever itisweareusingasaninstrumenttoconveyvalue,thevalueisntintrinsictotheinstrument.Thatis,apieceof paperisntautomatically worthonethousandlabourunits.That muchisglaringlyobviouswhenit comesto something like paper money. A small piece of offwhite paper, printed in a huge mill, with automated machinery,ateconomiesofscale,isprobablyworthsomethingintheorder of.001cents.Thesame canbe saidofotherinstrumentsofexchange,likethegold,silver,anddiamondsthathavebeenmadetoholdvalue overthecenturies.Nomatterwhatanybodytellsyou,goldhasnointrinsicvalue.Ithasasmalllabourvalue,viii whichisthe totalamountoflabourthatwentintoextractingit,butitsworthlessoverandabovethat.Itis onlywhenweagreethatgold,paper,shinywhiterocks,orwhateverareworthsomethingmorethatthese thingstakeonamonetaryvalueoverandabovethevalueofthelabourthatwentintoprocessingthem. And how do we agree that something has a value over and above its labour value? Well, lets leave that questionforlaterandinsteadfocusonthesimplevalueofmoneyquestion. So,howdoweaddvaluetomoney? Well, although there are people who would have you believe such, its not black magic and its not rocket science.Asnotedabove,theactuallabourvalueofmoneyisderivedsimplyfromtheamountoflabourthat we(andbyweImeanthoseinvolvedintheexchange)agreeitrepresents. Andhowdowedeterminethevalueofmoney? Well, its not random, let me tell you that. The value of money is basically determined in relation to the amountoflabourbeingexchangedinaneconomy.Iknowitmightsoundcomplicated,butitsnot. Itworkslikethis. Say,forexample,youhaveasmalleconomyofonehundredpeopleandyouwanttomonetize(i.e.addmoney in a way that displaces barter as a primary form of exchange) that economy. How much money will you introduce?Well,youwanttointroduceexactlyasmuchmoneyaswillrepresentthetotallabouroutputofthe onehundredpeopleintheeconomy.Forexample,ifyoumeasureeachhouroflabourasoneunitoflabour (onedollar/unit=onehouroflabour),andifmostpeopleworkfourhoursaday,sevendaysaweek,thenin ordertofullymonetizeourlittleeconomywewouldhavetointroduceaboutonethousandfourhundredand sixty(i.e.4x365=1,460)unitsofmoneyperpersonperyeartorepresentanentireyearsworthofthelabour of your small society. For our small economy of one hundred people, that would amount to about one hundredandfortysixthousandunits(1,450x100=145,000)ofmoneycirculatingintheeconomy.

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As for individual pieces of money, their value is determined in relation to the total value of money in the economy.Assumingyourestartingfreshandwithnohistoryofinflation,howmuchanindividualpieceof money is worth would depend on what fraction of the total it represented. You could, if you wanted to, circulate the required one hundred and forty five thousand units of money in our small economy using 145 thousanddollarbills;inthatcase,eachbillwouldbeworthonethousandlabourunits.Or,youcouldbreakit upandcirculateitas145,000onedollarbills;inthatcaseeachbillwouldbeworthadollar.Oryoucoulddoa combination,inwhichcaseyoudhavetostampthebillssopeoplewouldknowthevalueofeach.Regardless, thevalueoftheindividualbillsisonlymeaningfulinrelationtothetotallabouroutputinaneconomy.Inother words,inordertodeterminethevalueofmoneyinaneconomy,youhavetolookattheamountoflabourin economyasawhole,andthendividetheamountofmoneyintothat.

PROBLEMSWITHMONEY GENERAL
As noted above, there are a lot of benefits to a monetized economy; however, there are also potential problems.Forexample,incomplexeconomiesitcanbehardtodeterminetheexactlabourvalueofsomething and therefore hard to determine exactly how much to pay for a single item. For example, its easy to know how much a loaf of bread costs. Say, for the sake of argument, that a baker with a small oven bakes nine loavesofbreadinthreehoursincludingcleanup.Inthatcase,andassumingonehouroflabourisequivalent tooneunitofmoney,eachloafofbreadwillbeworthabout.33unitsofmoney(itworksouttoaboutthree loavesanhouroflabour)pluswhatevertheflourandyeastandbutterandheatcost.However,itsnotsoeasy to determine how much labour goes into a computer chip. There is design, engineering, manufacture, distribution, sales, and so on. To be totally fair to everyone involved, all the labour that goes into the manufactureofachipmustbefactoredintotheactualcostofthechip.ThatsacomplexequationthatIwould thinkcanonlybeestimated. In addition to the problem of estimating the amount of money to be paid for items, there may also be a problemwithselfregulation.Maybepeoplewillnotworktherequiredhoursforthemoneygiventothemto representtheirlabourpower.Maybepeoplewillgettenthousandlabourunitsofmoneyforayearoflabour, butonlyworkfivethousandhours.Thismightbeespeciallytrueofyoungadultswhomaybemoreinterested inpartyingandboinkingthanworking andcontributingtosociety.Theproblemhoweverislikely minorand relativelyinsignificantinanemotionallyandspirituallymaturesocietyandcouldprobablybesolvedsimplyby revisingoursocializationprocessandemphasizingthetruemeaningofmoney(i.e.asacontainerforlabour), theneedformutualcontributiontothecommongood,gratitudeforwhatothersdoforyou,etc. Notrocketscience.

ACCUMULATION

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Nowassimpleastheproblemsofdeterminingthepriceofcommoditiesandmotivatingpeopletocontribute mightbe,thereisabiggerproblemwithmoneythatisnotsoeasytodealwithandthatcauseshugeproblems anddistortionsinthegeneralfabricoflifeinourlittleglobalcommunity,andthatisaccumulation. Andwhatisaccumulation? Well, accumulation basically refers to the practice of accumulating labour power. In concrete terms it is the practiceoftakingsomebodyslabourand,forexample,puttingitontheshelfinyourhouse. Nothingwrongwiththat,right? Wealldoit,right? WhenIwenttoSouthAfricawithmyfamily,weboughtalotofhandicraftsfromtheartisansdownthere.We exchangedourmoneyfortheirlabour(i.e.thehandicraftthattheyhadcreated),andthenweputtheirlabour onthewallsofourhouse.Althoughtheartefactsinourbookshelflooklikeartisticobjects,reallywhatweve doneisaccumulatelabour. Itisnicetosurroundyourselfwithfineworksofartandhandicrafts. Thereisnothingwrongwiththat,aslongastheexchangewasfair. Of course, some things are easier to accumulate than others and, by the same token, some things are impossibletoaccumulate.Mywifecantaccumulatethemassagesshegets,forexample,andmyhousecan onlycontainsomanyelephantcarvingsandtribalmasksbeforeitstartstolookclutteredandmessy,orIhave tobuyshelvesandstorage.Itcanbedone,butitsdifficultandthisdifficultyofaccumulatinglabourgenerally makesaccumulationanonissueinsocietiesbasedonbarter.ixYouworkforwhatyouneed,accumulateafew thingstomakeyourlifemorepleasant,anditdoesntgomuchfartherthanthat.Inabartersociety,thereisa builtin limitation. Theres really no point in accumulating bread, or hammers, or computers, or handicrafts beyondacertainpoint. Ah,butinamonetizedeconomy,itisadifferentstory.Inamonetizedeconomy,thereisnosuchbuiltinlimit to accumulation. In fact, in a monetized economy, you canaccumulateasmuchlabourpowerasyouwant.You can print a thousanddollar bill, a million dollar bill, a billiondollarbill,itjustdoesntmatter.Sincethevalueof money (i.e. the amount of labour it represents) in a monetized economy is symbolic and based on a simple act of agreement rather than a reciprocal exchange of goods, you can accumulate as much labour (i.e. money) as you want. As long as somebody believes you that a thousand dollar bill is worth so many units of labour, youresettogo.

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Butwhywouldyouwanttodosomethingassillyasthat?

THEFALL
Well,inordertounderstandwhyyoudwanttoaccumulatemoney,youhavetounderstandsomethingabout thenatureandpossibilitiesinherentinaccumulatedlabourpowerandthebestwaytounderstandthatiswith alittlestory. Letusimaginethatoneday,sometimeafterthemonetizationofoursmalleconomy,somebodygetstheidea tochargejustalittlebitmorefortheirlabourthanisstrictlyfair.Forexample,insteadofcharging.33labour unitsforaloafofbread(theactuallabourcostofthebread),thebaker(letscallhimJoe)nowstartstocharge .66units(twicetherealcost),or.99units(threetimestherealcost),orwhatever.Joesurmisesthatitsnot much really, and it doesnt seem like its going to hurt anything, or anyone, so whats the harm with accumulatingalittleextralabour? Whatstheproblemwithtakingalittleprofitforoneself?heaskshimself. Wellasitturnsout,itisabigproblem. In fact, it is a worldending problemx; however, that is not immediately apparent when the machine is just startingup.Ittakesawhiletoshowup,soletsskipaheadandtakealookatJoeayearlatertoseewhats happenedwithhisplantoaccumulate. Itsnotdifficulttoimagine. Afterayear ofcharging morethanthetruelabourvalueofhis breadJoewillhaveaccumulatedabunchof extralabour. Howmuch? Well,ifhechargesthreetimestheactuallabourcostforhisbread,attheendoftheyearheisgoingtohave accumulated twice as much labour as he actually put into his business. If a typical person expends one thousandfivehundredunitsayearthenJoe,havingchargedeverybodytriplethecostofthebreadwilbein theblackbysomethreethousandlabourunits,insteadofhavingabalanceclosetozeroattheendoftheyear asheshould. Wow! Thatsverycoolforthebakeranditsevencoolerwhenyourealizewhathecandowithallthataccumulated labour.

POWER
Andonceagain,itisnotrocketscience. Takeagoodlookatthatdollarbillinyourwallet. 14

Rememberthenatureofmoney. Moneyisacontainerforlabourandwhenitsaccumulated,moneyhastheabilitytocommand(i.e.buy)other peopleslabour. Pauseandthinkaboutitforamoment,becausethisextramoneygivesourbakermananincredibleamountof real,palpable,andmeasurablepower.Really,thepossibilitiesareendlessforournewlywealthybakerman. With the extra three thousand units of labour he can do whatever he wants. He can take an extended vacation,hecanhaveabiggerhousemadeforhimself,hecanevenemployahousecleanertocleanhishome, oranassistanttodohisbakingforhimsohenolongerhastowork! Now,howcoolisthat?! And,sincethemoneyinhispocketrepresentsabstractlabourtime,aslongashecanfindsomeonewillingto workforthecash,Joecandowhateverhewants.xi Moreimportantly,hecandomorethananybodyelsearoundhim. Henowhaspowerthatothersdonothave. Itsbrilliant,thinksJoewhenhepausesatyearendaccountingtoconsiderthebenefitsandethicsofitall. He looks up from his books, he looks around at the world, and he realizes, he is now a bit different from everybodyelsearoundhim.Becausehethoughttochargealittleextraforhisbread,attheendofayearhe nowhaspowerandcapabilitythatnooneelsehas. Butisthatwrong,heaskshimself. Nobodyseemstohavegottenhurtand,asfarashecansee,nothingseemstohavechangedinthewider society. Sowhatstheharm,hedecides. Really, he says to himself, the only problem that I have now is how to use this extra labour power. Joe thinksaboutitandaftersomeconsiderationhedecidestospendtheextralabourunitshehasaccumulatedon abeautifulmansion,twicethesizeofalltheotherhousesaroundhim,onthetopofalocalhill,overlookinghis littlecommunity.Ofcourse,itsnotsomethinghecouldhavedoneayearearlier.Beforehestartedhislittle accumulation experiment, he wouldnt have had the money to pay for the extra materials, labour time, or extraeffortrequiredtohaulthematerialsupthehill. Butnowhecan! Now Joes got the cash and so now he builds a beautiful house on the top of the hilland that is when his communitystartstonotice. Thatiswhenthequestionsstart. HeyMr.bakerman,whatthehecksgoingon?askhisfriends. 15

Andhowdidyoumanagetobuildthatbighouse? Andthatstopshiminhistracks. Nowhesgotachoice. Whatshegoingtodo? Ishegoingtocomecleanandrevealthe(real)secrettohissuccessorishegoingtohidethetruthsothathe cankeepaccumulatinglabour?Hethinksaboutcomingcleanbuttobehonestwithhimself,hedoesntlikethe implications. He figures if he comes clean, the jig is up and his free ride is over. After all, nobody in his communityisgoingtostandbyandlethimoverchargeforhisbread.Notonlythat,buthesuspectsthathis communitywillbealittlepissedathim.Heck,theymayevendemandrestitutionandthatwouldsuck,thinks Joethebaker.Payingbackthreethousandunitsoflabourwouldmeanhedhavetoworktripletimeoverthe nextyear. Still,hethinks,despitetheirquestionsnoharmhascomefromit. Everythingisstillworkinganddespitesomeminorgrumbling,everybodyisstillhappy. SowhatifIvegotabiggerhousethaneverybodyelse?heasks. Whereistheharminthat?

APRIVATEPARTY
So,whatdoesJoedo? Well,hecantdonothing. Everybodyinhiscommunityisaskingquestionsandhehastorespondtothem.However,insteadofissuinga public announcement like he should, instead of talking to everybody at once and revealing the secret to his success,insteadofdoingtherightthing,hetellshiscommunityhedrathertalktoonlyafewpeopleatfirst. Itscomplicatedandhardtoexplain,hesaystohisfellowcommunitymembers,so,ifyoudontmind,itwill beeasierifItalktoafewpeopleatfirstandafterthattheycanreporttoyou. Andofcourse,nobodyseesaproblemwiththis. MembersofthecommunitythinkthatifJoesaysitiscomplicatedandheneedssomespacetoexplain,then thatisOK. Everybodytrustseveryoneelseinthissocietyandsonobodyraisesanyconcerns. Andso,thatswhatJoedoes.

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Onenightheinvitesafewcarefullychosenpeople overforaveryspecialdinnerparty.Heinvitesthe carpenter(whomhepaidextratobuildhishouse) and a few of his closest friends over for a sumptuousandluxuriousdinnerandhesparesno expense. He takes a few thousand of those accumulated labourunits andhehiresanarmyto throw a party like no party that has ever been thrownbefore.Itsimpressiveandmagnificentand whenitsover,Joeandhisfriendssitdowntothe finest cognac. There is idle chitchat while Joe patientlywaitsforthewarmglowfromthecognac tospreadthroughthebodyandmindofeachofhis guestsandthen,afterasuitableperiodhaspassed,hestandsupandoffersatoast. Mydearfriends,heexclaims.itisanhonourandaprivilegetosharetheseblessingswithyoutonight. Ithasbeenawonderfulmeal,impeccablecompany,andIamhappierthanIhaveeverbeeninmylife,he says. Everybodynodsinenthusiasticagreement. Butnowweshouldgetdowntobusiness,heexclaimsseriously. Mydearfriends,hesays,ifIcouldtellyouhowyoucouldhaveamansionlikemine,andmakeeverynighta nightlikethis,wouldyoubeinterested? Hisfriendsgetexcited. Ofcourse,theysay,thatiswhywearehere,tofindouthowyoudidthis. Yes,Joesaysnodding,andIwilltellyou. Butyouknow,thisonlyworksifyoukeepitasecret! Atthisstatementapalpableshockgoesthroughtheroom. Thereisabuzzofdiscussionandpuzzledlooks.Thepeoplesittingintheroomhaveneverbeenaskedtokeep asecretbefore,sotheyarejustifiablyalittlewaryaboutit.TheystarttoraisequestionsandconcernsbutJoe raises his hand, smiles, pours more cognac into their glasses, and assures them there is nothing to worry about. Nobodygetsharmed,hesays. Everybodywins!heexclaimsashenodshisheadenthusiastically. 17

AndIcanproveit,hesays. Butittookmeayeartofigureitoutandsoitsgoingtotakeyouayearaswell,hesays. Youwillhavetotryitforayear,andthenyouwillunderstand. Caneveryonedothat?heasks. He keeps the glasses full as his close friends discuss the issue. They raise some objections, really relatively minor,whichJoecounters,andbytheendofitnoneofthemcanseewhattheharmwouldbe. Thebakerisright,theysay. Nobadthingsseemtohavecomefromthis,andwhowouldntwanttohavepartieslikethisallthetime. So,theyshakehands,toastthemselves,congratulatethemselves,andsitdowntoplan. Theyagree. Theywontsayanythingandtheylltryitforayear. Afterall,everybodytrustsJoe. Heistheirfriendandhehasassuredthemitisawinwinsituation.

THETRUTH?
Theonlyproblemisthepeopleatthebottomofthehillareexpectingareport. Itwasthereasonfortheparty,andsotheyhavetodosomething. Butwhat? Whatarewegoingtotellalltheotherswhowerenotinvited!?Joeasks. Everybodyagrees,itsaproblemthattheycannotignore.So,theyconsiderthisproblemforquitesometime untilfinallythecarpenterjumpsupandsaysexcitedly,Iknow,Iknow,Iknow!!! Welltellthemthetruth!hesays. Therearepuzzledlooks. Wellsayweneedtostudytheproblem!hesays. Wellsayweneedtowaitayear,dosomeresearch,andhaveacloserlook. Anditstrue,isntit?hesays,Thatisexactlywhatwearedoing!

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Andofcourseeveryoneagrees,itisexactlywhattheyaredoingandsotheyjotdownsomenotes,picktheir best public speaker, set a date, and call the community together to reveal the results of their private discussion. Itsverythrillingforthecommunityatthebottomofthehill. Everybodyexpectsthetruthtoberevealed. Everybody expects to learn the great secret to Joes wealth and so all the people and all their children congregateinthetownsquareexcitedbywhatisabouttobeannounced. Thespeakerclimbsthepodium... Helooksoutoverthegatheredcrowdandsmiles. Peopleofourcommunity,intonesthespeaker,Joehasstumbleduponthesecrettogreatprosperity. Thebakerhasfoundawaytomakemoney. Thecrowdhushesandallfacesturntothespeakeratonce. Unfortunately,saysthespeaker,itiscomplicatedandnotwellunderstood. Wehavebeenstudyingitandwebelieveitisacombinationoftherelativefluctuationofcommodityindexes, plustheincreaseinconstantpricingofgoodsandservicesonthemarketexchange,overandabovethecostof theinputsasopposedtotheoutputs,intonesthespeakerinamonotonevoice. Thecrowdlooksconfused. Itistheresultofthedeindexingofcommoditypricinginrelationtothecostofinputsandlabour,hesaysin anefforttoexplain. Thecrowdlooksbaffled. Thespeakersolemnlynodshishead. Yes,hesays,itiscomplicated. But,hesaysthumpinghischest,weshallfigureitout. WehavestartedaninstitutethatwewillcallTheInstituteofFiduciaryInvestigation,orjustTheInstitutefor shortheproclaims,andforthegoodofthecommunity,weshalllabourdayandnightuntilwediscoverthe inneressenceofthiscomplicatedprocessandwhenweunderstand,weshallsharewithyousothatwewillall benefitfromthiswonderfulnewwayofmakingmoney. Weshallreporttoyouinexactlyoneyear,hesaysquickly,raisinghishandstoavoidtheemergingquestions, andturnstostepdownfromthepodium. 19

Nowofcourse,thereisabitofconfusion. Everybodywasexpectingananswertothequestionhowwasthebakerabletocreateamansion,butthey didnt get that. All they got was a promise of future revelations. Still, what the speaker had said seemed reasonableenough.Afterlisteningtothespeakertrytoexplainthings,itcertainlydidsoundlikeacomplicated process,sowhynot? Everybodyinthecommunitytrustedeachotherandsothepeopleatthebottomofthehillhadnoreasonto distrustorquestionwhatthespeakerhadsaid.Theyacceptedtheexplanationingoodfaithandtheyallwent homequietlytowaitforthereport.Inthemeantime,theboyswhohadbeenatJoesspecialpartygradually start,atthebehestofthebakerman,toraisetheirprices.

SOCIALCLASS
Andofcourse,assoonastheboysfromthetopofthehillstarttoraisetheirprices,theinevitablehappens. Afteronlyayearofsubtleaccumulation,alltheboysfromtheoriginalpartyhavebuiltfancyhousesontopof thehillrightalongsidetheirbakerfriend. Itsgreat,theytellthemselvesatoneoftheirnowweeklyspecialmeetings. Andwhatsevenbetter,theysay,Joewasright. Despitethefactthatwehaveallmovedupthehillandarenowlivinginbetterhouses,eatingfinefood,and drinking fine wine, the economy is still working properly and nothing untoward seems to have happened, theytellthemselves. Unlessofcourseyouincludethefactthatsocietynowseemstobedividedintotwodistinctgroupsofpeople withdifferentinterestsanddifferentlifestyles. Thedividinglinesareobvious. Therearethefamiliesatthetopofthehillwiththeirbighousesandtheirlavishparties,andthentherearethe familiesatthebottom. Butthathardlyseemssignificant,atleasttothepeopleatthetopofthehill. Whatsthebigdealanyway,theysaytothemselves. Everybodysstillhappytheytellthemselves. Butreally,howwouldtheyknow?Bytheendofthesecondyearthepeopleatthetopofthehilldontsocialize toomuchwiththepeopleatthebottomofthehillanymore.Theyhavetheirownprivatemeetingsandtheir ownprivatefunctionsandthetwogroupsjustdontseemtofittogetherwellanymore. Itsmostlyaquestionofincomeandcomfort.

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Thepeopleatthebottomofthehillsimplycantkeepupwiththelavishextravaganceofthepeopleatthetop ofthehill.Comparedtotheirformerfriendsatthetopofthehill,theyarepoorandtheyfeeluncomfortable beingaroundtheextravagance. And,iftruthbetold,theyarenotaltogetherhappyaboutthat. Indeed,ifthetruthbetold,theyarestartingtogetalittlegrumpy. Allthosefancyhousesandextravagantpartiesareaconstantremindertothemthattheydidntgetananswer totheirquestionaboutthebakershouse.Alltheygotwasapromiseand,inthemidstofthatpromise,allthey areseeingisfurthersocialdifferentiation. Andthatsnotright,saythepeopleatthebottomofthehill. Andyouknow,theyarentshyaboutshowingtheirdispleasure,oraskingdifficultquestionswheneverthey meetupwithoneofthefamiliesfromthetopofthehill. Whathappenedatthatfirstparty,theysayandhowcomeyouareuptherewiththebakernow? Whats going on!? they say as their voices get louder and louder. And it goes without saying that this discontentanddispleasuremakesthepeopleatthetopofthehillalittleuncomfortable. ThankgoodnessforTheInstitutethough. Everybodyagrees! Thereportisalmostdue. Surelytherewillbesomesatisfactioninthat.

THEREPORT
Sadlyhowever,whenthereportisfinallyreleased,thereisnosatisfactiontobefound.Thebasicproblemis, nobody seems to be able to understand it. The report is so full of jargon and terminology, horseshit and gobbledygook that it is a thousand times more confusing than the original speech was. It is positively obfuscatoryandbythetenthpage,anybodyreadingithasbecomevirtuallyunconsciousoutofsheerboredom and confusion. This means, I suppose, that those who wrote the report could breathe a sigh of relief, since theywouldnothavetoansweranydifficultquestionsfromthepeople.Howcanyouformulatequestionson materialthatisinscrutable? However,itisnotallgobbledygook.Insertedatthebeginningofthereportisaonepageexecutivesummary, andthewritingthereisasclearasabellonChristmasdaycallingustoawakentotheChristinside. Theproblemismultifaceted,saysthesummary. Thesituationsarecomplex. 21

Thevariablesareindeterminate. Morestudywillbeneeded,concludestheexecutivesummary.

INTELLIGENTSIA
Now of course, if you are one of those people at the bottom of the hill reading the report and hoping for satisfaction,youwouldlikelyfindithardtohideyourdisappointment,confusion,andanger.Afterallacouple ofyearshavepassedandtheonlythingthatseemstobehappeningisthatthepeopleatthetopofthehillare gettingricher,moreextravagant,andmorelavishallthetime. Frankly,itsalittlehardtostomach. Still,mostpeopleatthebottomofthehillsimplybitethebulletandgobacktowork.Afterall,theytrustthe peopleatTheInstitutewhentheysaytheyareworkingontheproblem.Whatelsewouldtheybedoing? Still,afewofthepeopleatthebottomofthehilldontgocalmlybacktowork. Afewareunhappyaboutthewholethingandtheyfrown,grumble,complain,andaskquestionslikewhats going on? and why is it taking so long? and if they dont know whats going on, why are so many new mansionsbeingbuilt?Andofcourseallthesequestions,andallthatanger,makethefamiliesatthetopofthe hillalittlenervous. Itwasclearlystatedinthereport,saythenervousfamiliesthatmorestudyisneeded. Sowhyaretheygettingallagitated?theyaskindignantly. Whycanttheywaitlikeeveryoneelse? Forthepeopleatthetopofthehill,theagitatorsareadefiniteproblemandsomethingclearlyhastobedone. Theycantjustlettheagitatorskeepagitating. Thatwouldbeamistake. Thepeopleatthetopofthehillcanseethatastheagitatorsagitate,othersarebecomingagitatedaswell. Theagitationisgrowingandifleftunchecked Well Who knows where that might lead and so the boys call a special meeting of their Boys club to discuss the problem. As usual, after a butler serves a dinner of fine wine and food, the chairman (i.e. Joe) stands and says Mosthonourableanddignifiedgentlemenoftheinnermostcircleofilluminatedbackscratchers,wehavea problem. 22

Asyouknow,thereportdidnotprovidesatisfactionorclarity,saysJoe. Theproblemismultifaceted,hesaysechoingtheconclusionsofthereport. Thesituationsarecomplex. Thevariablesindeterminate. Obviously,hesays,morestudyisneededbutunfortunately,somepeoplefromthebottomofthehilldo notseemtounderstandthat. Butwhatcanwedo?Joeasks. UntilTheInstitutereachesapointofclarity,therearenoanswersandtherecanbenosatisfaction. Still,saysJoe,thepeopleatthebottomofthehillarehavingahardtimeunderstandingandacceptingthis. Theyareagitatingforimmediateanswers,andtheirdiscontentgrowseveryday,hesays. Andwhoknowswherethatmightleadhisvoicetrailsoff. ButIhaveaproposal,quipsthebaker. Ihaveapossiblesolution,hesaysnoddinghishead. Thoseagitatorshesayspausingforeffect. Theoneswhoarentsatisfiedwiththereport...hecontinues.. Theonesgettingeverybodyelseagitated Ibelieve,saysJoe,thattheyaresimplyalittlesmarterthaneveryoneelse. Henodsandsmiles. Andyouknow,saysJoe,ashiseyesscanthefacesofthegathereddignitaries,wecouldusepeoplelikethat tohelpoutatTheInstitute! We could use their brain power and hopefully, with a little direction, they can help bring clarity, he says smiling. Andofcourse,everyoneagrees. Itisabrilliantidea. The agitators want answers, so why not coopt them and put them into a position where it is their responsibilitytoprovidethem. Itwillsatisfytheagitators,saysJoe,anditwillremovetheirinfluencefromthebottomofthehill. 23

Theonlyproblemis,saysthebaker,howtogetthemtoTheInstitute? Whywouldtheyaddtheirvoicetosomethingtheyalreadyseeasproblematic? ButJoehasananswerforthat. Welldowhatwealwaysdo,hesays,welljusttellthemthetruth. Welltellthemthatweneedtheirhelp. Welltellthemthatwehaventbeenabletobringclarity. Welltellthemwerejustabunchofdimwittedbusinesspeopleandweneedtheirintellectualprowessto savetheday. Howcantheysaynotothat?asksJoe. Andjusttosweetenthedeal,hesays,wellgivethemasmallbonus. Wellpaythemalittlemorethanthepeopleatthebottom. Givethematasteofwhatitslike,saidJoe. Nottoomuchthough. Wedontwantthemasneighboursatthetopofthehill,hesaid. Itstoocrowdedasitis. Butthereslotsofspaceinthemiddle,hesayscheerfully,sowellhelpthemgetsetupthere. Itsanoffertheywontbeabletorefuse,concludesJoenoddinghishead. Andsothelettersgoout,thebonusesareoffered,andtheagitatorsandtheirfamiliespackuptheirbagsand begintheshorttrekuptoemploymentatTheInstitute,andlifeatthemiddleofthehill.

INDOCTRINATION
Now, when the new intelligentsia arrive at The Institute there is, of course, a magnificent ceremony of welcome. There is fine wine, there is gourmet food, and there is a charismatic keynote speaker, hired to addressthenewcomersandsetthetonefortheworktheywouldcarryout.Wheneverybodyhasfilledtheir bellieswithfinewineandfood,thespeakerclimbsthepodiumandsaystotheassembledguests HonouredguestsThankyouforcoming. Thankyouforacceptingourinvitation. Thankyouforagreeingtohelpus. 24

Fortwoyearswehavestruggledsaysthespeaker. Fortwoyearswehavelabouredintothenight,shesays. Wehavecollecteddata Wehavepouredovercharts Wehaveanalysedpatterns Butstillwelackclarity.shesaidshakingherhead. Butnowwearehopeful.shesayssmilingbroadlyandraisingherhandstowardstheaudience. Nowyouarehereandnowweareconfident. Withyourhelp,wewillbringclarity. Withyourfineminds,andyourdeepmotivationfortruth,wewillsucceedshedeclares. But first, says the speaker, there must be a period of study. Acoupleofyearsatthemost,shesaysraisingherhandsto fend off the questions that start to percolate through the assembledguests. Itisnecessary,nodsthespeaker. We have laboured for two years, she says, and in that timewehavemademuchprogress. We have developed new ideas and discovered new concepts and these ideas and concepts inform our studies andhelpuscommunicateourfindings. But, she says, there are many new concepts and it is a complicated language and therefore you, our honoured guests,mustlearntospeakthatlanguage. Nosenseinreinventingthewheel,shesmilesandshrugs. Andofcourse,thehonouredguestsagree. Whywouldtheynot? Afterall,theymightbealittleunhappywiththeperformanceofTheInstitute,butthatiswhattheyarehere for.Theyareheretohelp.Beyondthat,theytrustthegoodfaithoftheircolleaguesandagreethatitwillbe 25

mostefficientiftheybuildonwhathasgonebefore.Therefore,theywillenteraperiodofstudyandlearnthe languageandtheconceptsusedatTheInstitute.So,withthedecisionmadetheyfinishtheirmeal,drinktheir wine, and shuffle off to bed in order that they will be bright and fresh for their first day of study in the morning.

EDUCATION
Whentheywakeupthenextday,theystudy. Andthedayafterthat,theystudy. Andthedayafterthat,theystudy. AndfortwoyearstheystudyandinthattimetheylearnhowtothinkandtalkjustlikeTheInstitutefounders. AndwhenthefoundersofTheInstitutearesatisfiedthattheagitatorswillthinkandtalkjustlikethem,they setthemtowork. Andthenewprofessionalslabourintothenight. Theycollectdata Theyporeovercharts... Theyanalysepatterns butattheendofeachdaytheystilllackclarity. Somethingisalwaysmissing. Somethingjustdoesntfit. Still,theyworkdiligentlywithintheconceptualframeworkprovidedbyTheInstitute,andeveryonceinawhile theyissueareport.And,sincethenewcomershavelearnedtothinkandtalklikethefoundersofTheInstitute, the report always says basically the same thing. Amidst all the specialized jargon, technical concepts, and economichoaxuspokeusthatseemtogetmorecomplicatedeveryyear,andwhichnobodyatthebottom ofthehillcaneverunderstand,thereportalwayssays... Itiscomplicated,andmorestudyisneeded. Andofcourse,everytimethepeopleatthebottomofthehillhearthat,theyareverydisappointed. ButthatisOK. Thepeopleatthebottomofthehillknowthatthebestmindstheyhavetoofferareworkingontheproblem and they believe that if anybody can do it, they can do it. So, for the most part, they bury their disappointment, trust their comrades, and go back to work while the people at the top of the hill continue theiraccumulationexperiment. 26

Andofcourse,itisntallwineandrosesforthepeopleatthetopofthehill. Eachyear,wheneverTheInstitutereportisreleased,therearealwaysafewpeopleatthebottomthatcannot hidetheirdisappointment. But that was OK too because each year the people at the top of the hill scout the people at the bottom, identifying the agitators, and inviting them to work at The Institute. It is a perfect system and it works brilliantlyuntilonedayTheInstitutegrowstoobigandthefinancialstrainonthepeopleatthetopofthehill becomestoomuchandonthatday,Joecallsaspecialmeeting.

TAXATION
Most illustrious and honoured brothers, he says, I call you here today because of a problem that is emerging. Upuntilnowwehave,asabenefittothepeople Andoutofkindnessofourhearts fundedTheInstitute. Ithasallbeenoutofourownpockets,hesayswithvoicerising. Andthathasworked,hesays. ButnowTheInstituteisgrowinganditscostsareincreasingandwecannolongeraffordthiskindnessonour own,hesays. Ofcourse,hesays,laughing,gettingridofTheInstituteorscalingbackoperationsisnotanoption. NotonlydoesTheInstituteprovideuswithinvaluableyearlyreports,hesays,butitprovidesagreatplace toputpeoplewhoarenthappylivingatthebottom. Still,saysJoe,somethingmustbedonetorelieveusofthecostwhileensuringTheInstitutecontinuesto function,saysthebaker. Helooksaroundattheanxiousfaces. However,hesays,donotworry. IbelieveIhaveasolution. Weshallgetthepeopleatthebottomofthehilltopayforithesayssmilingbroadly. Afterall,hesays,TheInstituteservesthemandnotus. We, he says spreading his arms to encompass the wealth that surrounds them all, do not need The Institute. 27

Andasalways,smilesthebaker,welljusttellthemthetruth. Andofcourse,uponhearinghisexplanation,everyoneagreesandsotheyhirethebestpublicspeakermoney canbuyandcallanassemblyofthepeopleatthebottomofthehill. Thespeakerclimbsthepodiumandspeaks... Thesearetimesofgreatpotential,heintones. Thesearetimesofgreatpromise. Look,saysthespeakerashepointstothemansionsattopofthehill,atwhatispossiblewithindustryand fortitude. Look,hesayspointingtoTheInstitute,attheworkthatwearedoingtobringthatpotentialtoyou. Heraiseshishandstotheaudienceasifpushingsomeoneaway. Butthereisnoneedtothankus,thespeakersays. Wedothisnotforgratitudeorprestigebutbecauseyouareourbrothersandsisters. But,hesays,wecannolongerdoitalone. EachyearTheInstitutehasgrownandeachyearthecostbecomesmoreunbearableforus. Weneedyourhelp,hesaysreachingouthispalmstothepeople. Itwontbemuch,heshakeshishead. Justafewpenniesaweek. Youllbarelyfeelitandifyouwant,saysthespeaker,youcanalwaysmakeitupbyworkingalittleextra eachweek. Andofcourse,everybodyatthebottomofthehillagrees. Whywouldtheynot? Theytrustthepeopleatthetopofthehill. TheytrustthepeopleatTheInstitute. Theyhaveeyes. Theycanseewhatisgoingon. ThepeopleatthetopofthehillarepayingforTheInstituteoutoftheirownpocketsandthepeopleatThe Instituteareworkinghardtobringclarity,prosperity,andprogresstoallpeople. 28

Thepeopleatthebottomofthehillagree,thepeopleatthetopofthehillshouldnotbemadetoshoulderthe burdenthemselves. Itisonlyfairthattheycontribute. Andifitmeansworkingafewextrahoursaweek,saythepeopleatthebottomofthehill,thensurelythis isasmallpricetopayforthebenefitsthatwilleventuallyaccrue. Andsotheyagree,andwiththatthepeopleatthetopofthehillcreateamanagingbody,whichtheycalla government,andthisgovernmentischargedwithtaxingthepeopleatthebottomofthehillinordertofund thenowpublicinstitute. Andthepeopleatthetopofthehillrejoice,fortheyunderstandthatnowthatthefundingofTheInstituteis linkedtothelabourofthemasses,TheInstitutecannowgrowwithoutbounds. Whichisexactlywhatitdoes. EveryyearTheInstitutereleasesanewreport. Everyyeartherearenewagitators. EveryyearTheInstituteexpands. Atfirstitiseconomics,adisciplinedesignedtohelpunderstandtheeconomy. Thenitisengineering,adisciplinedesignedtoincreaseproductionexpertise. Thenitisphilosophy,adisciplinedesignedtohelpunderstandwhytheworldisdividedbetweenthoseatthe top,andthoseatthebottom. Thenitishistory,adisciplinedesignedtotellthestoryfromtheperspectiveofthoseatthetopofthehill. Thenitisreligion,adisciplinedesignedtoprovidejustification. Then it is psychology, to control the workers and keep them docile and pretty soon The Institute is everywhere, which is great because with The Institute operating to manage discontent and provide obscure explanations,everythingisworkingfantastically.And,witheverythingworkingsowell,theboysatthetopof thehillnowhavetimetodealwithotherissuesbesidessystemmaintenanceandso,finally,theyturntheirfull attentiontothethingtheylovethemost.

PROGRESS
Accumulation! Onedayatameeting,afteraparticularlylavishdinner,Joethebakerstandsandspeaks. DidntItellyou?hesaysraisinghisglassforatoast. 29

DidntIsay? Nobodyhasbeenharmed,hesmileswithgreatsatisfaction. Infact,Joesays,quitetheoppositehasoccurred. Lookaroundyouatthechangeswehavebrought! Wethepeopleatthetopofthehillhavecreatedabetterworld!heexclaimsdramatically. Ourhomesarethepinnacleofarchitecturalinnovation,hesays. Ourgardensarethesummitofcreativityandbeauty. AndTheInstitute,hesays,isourcrowningglory. CongratulationstoallofusJoesaysraisinghisglassandtoastingtheroom. Congratulations!hecries. Wethepeoplehavebroughtprogresstothisworld. Hepausesforamomentandthenbeginstospeakslowly. But,saysJoe,wecandomore. Withenoughresources,wecanimproveeverything. Withenoughresources,wecanleadthisworldtoutopia. Wecouldbringanewworldorderthatwouldbringprogressandincreaseourwealthandprosperityamillion fold,hesays. Andallweneedisthemoneytodoit,heconcludes.

PRODUCTDIFFERENTIATION
AndIknowhowwecandoit,Joesays. Iknowhowwecanfundutopia. All we have to do is increase the rate of extraction, and I have found a way to do that, says the baker triumphantly. Insteadofmakingonlyonekindofbread,hesays,insteadofmakingonlythefinestbreadthatIamcapable ofmaking,Icanmakeacheaperbreadwithcheaperingredientsandlesscareandattention,andIcansellthat tothepeopleatthebottomofthehill. IfIdothis,hesays,IwillsavemoneyoningredientsandlabourandthereforeIwillaccumulatemore. 30

Helooksaroundtheroomattheattentive,smilingfaces. Theresmore,hecontinues. IcanalsomakespecialbreadwiththefinestingredientsandthemostcareandattentionandIcansellthat specialbreadtothepeoplehigherupthehillforapremium,saysJoe. Insteadofthreetimesthecost,Icouldsellitforfive. Andyes,hesaysanticipatingtheirquestions,theywillbuyitwhenItellthemitisspecial. Butofcourse,saysthebaker,thereisaslightproblem. Whenthepeopleatthebottomofthehillcomeintotheshopandfindtheycanonlyaffordthecheapbread, theywillprobablygrumbleandcomplain,saysthebaker. Andofcourse,saysthebaker,weknowwherethatleads. But,saysJoesmiling,Ihavelearned,thatinordertocurtailtheirgrumbling,Isimplyneedtotellthemthe truth. WhentheycomplainIwilltellthem,thisisthepricethatyouhavetopayforprogressandthatwillquieten themdownbecausenobodycanargueagainstprogress. Andofcourse,saysthebaker,Illtellthemitisallintheirhandsanyway. Iftheyworkalittleharder Iftheypinchtheirpennies Iftheysavetheirmoney Thentheytoowillbeabletoaffordthespecialbread. Thebakerlooksaroundtheroomsmiling. Inthenameofprogress?heasksraisinghisglass. Inthenameofprogress!cryhisbrothersastheytoastthebakerandquafftheirwine.

DISTORTION
Andso,inthenameofprogress,thepeopleatthetopofthehillbegintolookforwaystoincreasetheirrateof accumulation.Andtheydontstopwithproductdifferentiation.Afterall,thegoalisprogressandthemore efficienttheycanmakeaccumulation,themoreprogressthereis.So,eachweektheymeetwithoneanother andsharetheirideasformoreefficientaccumulation.Oneweektheycomeupwithplannedobsolescenceand product lifecycle. Instead of designing products to last, those who can get away with it design products to break, or go out of fashion after a suitable period of time. In this way they ensure that consumers, as the 31

peopleatthebottomofthehillhavecometobeknown,aretiedconstantlyintoproductpurchase.Ofcourse, plannedobsolescenceandproductlifecyclemeansthepeopleatthebottomofthehillhavetoworkharder andlongerinordertofundTheInstitute,buythespecialbread,replacewornoutproducts,andaffordeach years new fashions. And it also means an expanding strain on the resources of Mother Earth as shoddy consumergoodsandbrokenproductssaturatethelandfillsanddevourresources.ButthesethingssaysJoe, aresmallpricestopayforprogress,andsotheycontinue. Oneweektheycomeupwithanideatolowerlabourcostsbypayingpeopleatthebottomofthehilllessfor the work they do. Of course, this isnt a very popular idea amongst the people at the bottom of the hill becauseitrequiresthem,theirspouses,andsometimeseventheirchildrentoworkharderandlongerjustto getby.However,thepeopleatthetopofthehillarepersistentandinthenameofprogresstheyfindways to force the issue. They deskill labour, tie the workers to assembly lines, keep demand for key professions lowerbyrestrictingaccesstoeducation,andevenusechildlabourincountrieswheretheycangetawaywith it.Andofcourse,thepeopleatthetoprecognizetheunpleasantnatureofthesethings,butthereisalwaysa pricetobepaidforprogress,theytellthemselves,andsotheycontinue. Oneweek,thepeopleatthetopnoticethatalotofpeopleatthebottomofthehillarestillusingtheinformal economy to exchange labour by barter. They think about this and conclude that this is a bad thing because when people barter it is impossible to accumulate labour, and when they cant accumulate, there is no progress. So, the people at the top of the hill decide that bartering should be reduced and eventually eliminated.Ofcourse,thepeopleatthebottomresist.Intheireyesbarterhasalwaysbeenalegitimateform oftradeandtogiveitupwouldputthematafurtherdisadvantage.Butthepeopleatthetopofthehillare persistentand,inthenameofprogress,eventuallyfindawaytoreducebarter.WiththehelpofTheInstitute, theycommissionareportthatsaysthatactivityoutsideofthemaineconomyisdetrimentaltotheprogressof thenation.Theytheninstructthegovernmenttobegincountingallformsofeconomicactivity.Finally,they reorganizeproduction.Insteadofhavingsmall,locallyselfsufficienteconomieswhereinformalexchangeand barteriseasyandnatural,theyforceaseparationofproductionandmakewholecountriesspecializeinsingle productlines.Theygrowbananasinonecountry,buildcarsinanother,getgrainfromathird,andsoon.Itis brilliant. In a globally dispersed marketplace where you get your food from farmers who live thousands of milesaway,barterbecomesimpossible,andlifebecomesprecarious. Andso,inthenameofprogress,onitgoes.Eachweek,theboysfromthetopofthehill,meettodiscusshow tobringprogresstotheworld,andeveryonceinawhilesomeonecomesupwithanewandbetterwayto makeprogress.Andthroughallthis,thepeopleatthebottomofthehillworkharderandharderjusttryingto keepup.Butthat,saythepeopleatthetopofthehill,isthepricewepayforprogress.Butthen,oneday, aproblembeginstoemerge,andtheproblemismoney.Asitturnsout,alltheeffortthattheboysatthetop ofthehillareputtingintodevelopingefficientwaystocreateprogressiscreatinganuncomfortablyrapidflow ofcash. Theproblemis,itiscollectinginfilthyandmouldypiles.

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Itisridiculous,nottomentionugly,dirty,andunsanitaryandinitiallytheboysatthetopofthehilldontknow whattodo.So,theycallaspecialmeetingtodiscusstheproblemand,tomakealongstoryshort,theyfinda bettercontainerfortheirmoney.

METALANDROCK
Itisthestonemasonwhofiguresitout. One day, at one of their special, private meetings, the stonemason sheepishly raises his hand and says to the assembled brothers, I think I might have a solution to our problemwithmoney. Hecallsthemintoacircle. Hebeckonsthemtolookashereachesintohispockettopull outabeautifulgoldringwithahugeshinyrockinit. Heshowsitaroundtheroomashebeginstoexplain,About sixmonthsagomycashflowwassuchthatInolongerhadto workforaliving(pausewhilethemembersoftheclubraise their glasses and congratulate his hard work and good fortune). ButIwasbored,hesays,andIneededsomethingtofillmytime. So, being a stonemason by trade, I started to play with rocks and metals and I discovered that these shiny rockscouldbecutintothesebeautifulsparklydiamondshapes. And,saysthestonemason,IdiscoveredthatIcouldtakethissoftmetalandbenditandshapeit. And,saysthestonemasonasheraisesthediamondringintriumph,IdiscoveredthatIcouldcombinethe two. Everybodyadmirestherockinhisfingers. Itsnotmuchwork,hesays,butitdoestakeasteadyhand. Andlookhowprettyitis,hesays. Andisntthismuchbetterthanapileofmoney?heasks. Andofcourseeveryoneagrees. Itismuchprettierthanapileofmoney. Buthowdoesthissolvetheproblemofmoney?somebodyasks. 33

Well,saysthestonemasonwithasmile,itslikethis Wecanstoreasmuchaccumulatedlabourintooneoftheselittlemetalwrappedrocksaswewant! Remember,thevalueofpapermoneyismerelyaquestionofagreementandsowecanstoretens,hundreds, eventhousandsoflabourunitsintoindividualbills. Thereisnolimit!hesays. Andsoitiswiththisprettyring! Allwehavetodoisagreeonavalue...thestonemasonsvoicetrailsoff. Asthestonemasonfinishestalking,thereissilence. Browsarefurrowedandfrownsappearonsomeofthefaces. Abuzzofdiscussionarisesandafterafewminutes,smilesbegintoemerge. Somebodywhispers,itisbrilliant. Buttherearequestions.

Whatwillwedowiththemoneythatwestore?asksone. Andhowwillweagreeonaprice?asksanother. Thestonemasonsmilesandraiseshishands. Ihaveanticipatedthesequestionsandconsideredasolution,hesayswithsatisfaction. Asforwhattodowithallthecash,wecanbuildacentralstorehouseorbankandwecanstorethemoney there. Asfordeterminingthevalueofourgoldanddiamonds,hesays,wecanappointourmosttrustedbrothers toacouncilandtheycandeterminetheprice. Thiscouncil,thiscartelifyouwish,willtellus,acaratofweightisequaltoonemillionlabourunits.andwe willagreeandaslongasweagree,hesayswithasmile,wereinbusiness. Thebrothersconsiderthisforamomentandtheyallhavetoadmit,itsoundsprettygood.Infact,theycannot seeanydownsideandsotheydecidetodoit.Theycreateabank,theycreateapreciousstonesandmetals cartel,andthestonemasongetstoworkcreatingbeautifulandextravagantwaystostoreaccumulatedlabour. Problemsolvedand,backtobusiness! Thepeopleatthetopofthehillcontinuetheirdriveforaccumulation,distortionspileup,andthepeopleat thebottomofthehillworkharderandharderjusttogetby.Itseemslikeaperfectarrangementanditworks beautifully,accordingtothepeopleatthetopofthehill,untiloneday,outoftheblue,thereisacrisis. 34

CRISIS
Andwhenthatcrisishits,itisadoozy! Allofasudden,forthefirsttimeever,peopleatthebottomofhillareoutofwork,andnotinthefancypants leisured way of those at the top of the hill, but in a plain ol cant buy enough to eat, lose the house and homesortofway. Whenthishappens,itisatotalsurprise. Onedaytheeconomyisworking,thenextdayitisnt. Onedaypeopleareexchanginggoodsandservices,thenextdaytheyarent. AndIwontlietoyouhere,asthiscrisishitsitishugeandugly. Peoplesuffer. Childrenstarve. Peopledieandsadly,nobodyatthebottomofthehillunderstandswhyitishappeningtothem. Butthepeopleatthetopofthehill,theyunderstand.Theycanseetheproblemasclearlyasthediamondson theirfingers.Overthecourseoftheirlittleexperiment,thepeopleatthetopofthehillhaveaccumulatedso much money that they have literally siphoned off all the lifeblood (i.e. cash) from the economy and unemploymentistheobviousresult.(duh!). Ifnobodyhasmoneytobuythethingstheyneedbecauseallthemoneyhasbeensuckedoutoftheeconomy bythepeopleatthetopofthehill,andifoverspecialisationhasmadebarterimpossible,howarepeoplegoing tobeabletoselltheirgoodsandservices? Theansweris,theycannot. Thebottomlineis,ifyoukeepextractingmoneyoutofaneconomyyouaregraduallytakingawaypeoples abilitytoexchangetheirlabour. Ifyoudothatforlongenough oraggressivelyenough andifyoudontputbackwhatyouvetakenout Thenmassunemployment,recession,andeventuallyeconomicdepressionsetsin. Itislogical.

35

It is inevitable and because the ability to barter has been taken away from their economy, potentially catastrophic. Millions, even billions, could starve and there is simply nothing, short of ending the little accumulationexperiment,andgivingitallback,thatanybodycandotostopit. Dontbelieveme? Letstryalittlethoughtexperiment. Imagineforamomentasmalleconomyoftenpeople. Now, imagine that each of these ten people has one hundred dollars and that they use those one hundred dollarstoexchangetheirlabourwith. Nowimagine,thatoneday,oneofthem,letscallhimFred,startstoextractmoneyoutoftheeconomyalittle bitatatime. Maybehedoesitbytaxation. Maybehedoesitbyprofit. Maybehejustmusclespeopleintoit. How the extraction happens doesnt matter because the end result is always the same. Sooner or later, dependingonhowaggressivelythemoneyisextracted,peoplewillnolongerbeabletoexchangetheirlabour becausenobodywillhaveanymoneylefttouseforexchange. Allotherthingsbeingequal,(i.e.ifFreddoesnothingtoputthemoneybackintotheeconomy)atsomepoint Fredisgoingtohaveall themoney,andeverybodyelseisgoingtobeunemployed(i.e.unabletoexchange theirlabour),unlesstheyareluckyenoughtoworkforFred. AndwhatdoesFreddoatthatpoint? HowdoesFredsolvetheeconomiccrisis? Wellreally,theonlythingFredcandoatthatpointisgivethemoneyback. The pure and undiluted truth is, if Fred wants to avoid all the nasty human suffering that attends unemploymentandrecessioninaneconomythathessuckeddryofitsverylifeblood,heputsallthemoney thatheextractedbackintocirculationsothatpeoplehavetheresourcestheyneedtoexchangetheirlabour. Itistherightthingtodo. Nothingelsewillsolvetheproblem. Nowofcourse,hedoesnthavetodothis. Ifhewants,hecanconvincehimselfthatthemoneybelongstohim,orthathehasworkedhardforit,orthat hedeservesitbecauseheissuperior,orclear,orwhatever.However,ifFreddecidestokeepthemoneyand 36

maintainhisprivilege,thenthebestthinghecandoisprovidebandaidsolutions.Ultimately,unlesshestarts to do the right thing, unless he stops sucking the lifeblood out of the economy, nothing he does is going to preventgeneralsystemicfailureanddeath. Andifhedoesntmakethatchange? Ifhedecidesnottodotherightthing? Well,letslookatsomeoftheoptionsourfriendFredhasthen,shallwe? OneoptionthatFredhasistodonothing.Afterall,Fredhaslotsofmoneyandcanbuywhateverheneedsto survive.Notonlythat,butafterawhilepeoplewillbesodesperatethattheywillworkforpeanuts(thereby extendingFredsbuyingpower)justtohaveenoughtofeedtheirfamilies.Butreally,thatapproachcanonly betakensofar.Slowdeathbystarvationdoesntgooverwellwithlargegroupsofheavilyarmedpeople. JustasktheFrenchAristocracy. Ifhekeepsallthemoneyforhimselftothepointwheretheonlythingthatslefttoeatiscake,thepeopleare going to eventually be so hard up, and their families in such distress, that they will build a guillotine in his honour. Chopchop! Andofcourse,thatsamistakehewontmaketwice. So,whatdoeshedo? Well,ifyoucanimaginethatyoureFred,andyouwanttoavoidlosingyourheadoverthewholething,youd havetoputsomemoneyback. Atacertainpointitcantbeavoided. Ofcourse,givingitbackhastobedonecautiously. Imean,youcantjustgiveitback. Youcantjustgouptothepeopleinyoureconomyandsayhereitis,startagain.Ifyoudidthat,peoplewould immediatelystarttowonderwhytheyweregivingittoyouinthefirstplace,andmaybelearntorefusetogo alongwithyourextractionactivities,therebyputtinganendtoyourprivilege,butavoidingthechroniccycleof sufferingcausedbyyourgreediness. Hmmm.... Therefore, if Fred wants to maintain his little secret, he has to find a sneaky way to put the money hes stolenbackintotheeconomy,withoutitlookinglikehesgivingitback.Thankfully,theresafewwayshecan do that that wont tip off the population as to the nature of the beast. One is war, the other is money lending.Welllookatlendingfirst. 37

Nowonegreatwaytoputmoneybackintotheeconomy,therebyreducingunemployment,withoutgivingthe realsecretaway,istolendit. Ifyoulendit,whilesayingthisismineandyouhavetopayitback,thentheillusionthatthemoneyisyours ismaintained,andyoustillgettoinsertamuchneededtransfusionintothesystem.Butitisnotapermanent solution,especiallywhenyourereallygreedyaboutitandchargeinterestontop. Consider: Afterextractingallthemoneyfromtheeconomy,andputtingtheeconomyintocardiacarrest,Fredgoesupto allthepeopleinhiscountryandsaysheyeverybody,Icanhelp.Illlendeachofyouahundreddollarssoyou can get your businesses going again (general cheers and applause) as long as you pay me back with interest,hesays. Illgiveyouahundredbucks,andyoullpaymebackonehundredandten. [puzzledlooks]. Butwhyinterest?thepeopleask. Well,saysFred,IfigurethatsinceImlettingyouusemymoney,Immakingahugesacrificebecausewhile youareusingmymoneytoputyourselvesbacktowork,Iwontbeabletoenjoyitmyself. Soitsonlyfair,hesays,thatIgetsomethinginreturn. Andso,becausetheyhavenootherchoice,thepeopleagree. Anditdoesseemtomakesense. Anditdoesseemtowork. Fredlendsouthismoney,bloodisbackintheveinsof theeconomy,andeverybodyisbacktoworkagain. Unfortunately however, the new found circulatory healthdoesntlastverylongatall. In fact, economic ruin happens once again, in about halfasmuchtimeasitdidbefore. Theproblem? Fredhasgothisfangsintotheeconomicbloodstream intwowaysnow. On the one hand he is still engaged in his regular extractive activities, thereby slowly draining the fluid 38

outofthebody,whileontheotherhandhesgettingloanANDinterestpaymentsaswell. You can see the problem, and the predictable outcome. Fred is now extracting money from the economy twiceasfastasbeforesonow,collapseoccursinhalfthetime,butwithonecriticaldifference.EvenafterFred has extracted all the money from the economy, the balance sheet is not zero! That is, even when all the moneyisbackinFredshands,becauseFredlentmoneyatinterest,thepeoplestillowehimmoney.

DEBT
Fredhasdiscoveredtheperversityofdebt,anditsaproblem. Itisaproblemfortheotherninepeoplewhoarefaced,forthefirsttimeever,withthegrindingabsurdityof debtanditisaproblemforFredbecauseatthispoint,andeventhoughtheeconomyiscollapsingandpeople are suffering, Fred has become very reluctant to lend out more of his money to save the people who are suffering. Why? Well,hesnotstupid. Hesalreadycomeupshortonhislastloan,andhecanseethateverybodyisnowbroke,soitwouldbekindof dumbtostartlendingmoneytopeoplewhocantpayitback.YoucouldsayFredhaslostconfidenceinthe peoplesabilitytopayhimback;hehaslostconfidenceintheeconomy. Itisabitofaquandary. EventhoughFreddoesntwanttolendanymoremoneybecauseheknowsforcertainhellnevergetit(and theinterest)back.Heknowshesgottodosomethingotherwisethepeoplewillgethungry,desperate,and maybeevenviolent.Andthatwouldruinhisbreakfast. Sowhatdoeshedo?Well,whentheeconomyisincrisisandFredhaslostconfidence,therearebasicallytwo thingshecando.Hecaneitherignoretheproblemandletthepeoplesuffer,orhecanjumpstarttheeconomy byputtingmoneybackintoit. Inordertoseethismoreclearly,letusexpandthisthoughtexperimentabitsothatweimagineFredtobein controlofanational,orevenglobal,economy. If he ignores the problem, hes going to need to use force and indoctrination to keep the people down otherwisetheylldowhatstarvingpeopledoeverywhere.Theywillriseupandtakewhattheyneedtosurvive. Of course, hes not going to call it force and indoctrination. That would just leave people bitter and unwilling to work. Instead, hell probably call it keeping the peace, security, education, and cinematic entertainment.Andofcourse,hellgivethemallsortsofreasonswhytheyhavetoputupwithit.Maybehell blowuponeofhisownbuildings,orputadozenpolicedramasontelevisionconvincingthemoftheneedfor security.Ormaybehellscarethemwithtalesofhorrorinthenight.Howeverhedoesit,theoutcomewillbe

39

the same. When the people start looking at him with hungry eyes, all the surveillance, police, armies and technologyhesgatheredunderhiscontrolcanbeeasilyusedtosuppresstheanxiousandagitatedpopulation. Andthisapproachwillwork,toapoint. However,asthoseFrenchmenwithguillotinesdemonstrated,Fredcancallouslydisregardthesufferingofthe masses for only so long before it all ends in tragedy.xii So, no matter how much he might want to keep everything for himself, at some point hes going to be forced to initiate a transfusion, and possibly a defibrillation,ofthedonor. Andhowdoeshedothat? Well,sinceFredwontevenconsidertherightthingandjustgivethemoneyback,andsinceFredistheonly onewithmoneytolend,FredbasicallyhastorestoreFredsconfidenceinthepeoplesabilitytopayFredback, sothatFredwillfeelcomfortableenoughwithhisreturnoninvestmentforhimtolendagain. AndhowisFredgoingtorestorehisownconfidenceand,ergo,hiswillingnesstolend? Well, there are number of tried and tested things that Fred can do to help restore his confidence in the economy, thereby giving himself the freedom to lend again. One of the things he can do is reset the economy.Hedoesthis,simplybylettingtheeconomycollapse,andthenrepossessingallthethingsthatare his. Fred reasons it out like this. When people borrowed money from him, they went ahead and bought somethings(housesforshelter,carstogettowork,foodfortheirfamilies,etc.)thattheyneededtosurvive andthrive.Sincetheydidntpayhimallhismoneyback,Fredreasonsthatallthethingstheyboughtwithhis money now belong to him. So, he takes whats his and clears the debt this way. Getting his money back, through the repossession of goods bought with his money, basically restores Freds willingness to lend. Its uglythough,especiallywhenchildrenareinvolved,sinceitleavesthepeopleinthehorriblepositionofhaving tostartalloverfromthebottomagainbutcestlavie,right? Now, the second thing Fred can do to stave off economic collapse is to print money and let it enter the economy.Printingmoremoneyisagreatwaytostaveoffeconomiccollapsebecauseitbasicallymakesthe essential(inaneconomysubjecttoconstantaccumulationoflabour)processoftransfusion(i.e.puttingback thatwhichhasbeendrainedaway)apermanentthing.Ofcourse,justasFredisnotgoingtogiveawayhisown money,whenhestartstheprintingpresseshesnotgoingtojustgiveawaythefreshminteither.xiiiJustgiving the money away would lead to inflation and the steady devaluation of his money.xiv So to avoid that, he chargesinterestonthenewmoneyaswell. Howmuchinterest? Well,letsjustsayitisnotanexactscience. Itisabitofaguessinggame,really. If interest rates are too low, this leads to lost opportunityxv and (more importantly) inflation. On the other hand, if interest rates aretoo high, extraction and loan payments cripple the economy too quickly. So,Fred 40

triestocreateabalancepointkeepingbothinflation(causedbytheentranceofnewmoneyintotheeconomy) andunemployment(causedbylackofmoney)toreasonablelevels. Anddoesitwork? Well,sortof. Connectingtheeconomicbodyuptoapermanent,interestbearingcashintravenous(IV) xvidoesstaveoffthe inevitable economic collapse caused by the extractive and lending activities of Fred, but only for a time. Eventuallydebtbuildsup,Fredlosesconfidence,andthemoneyflowstops.Inasmalleconomy,theprocessis totally obvious. However in a huge economy, it is less obvious. In a huge economy typically what would happenisdebtwouldpileupinoneortwoareasoftheeconomy,acorrectionwouldcome(i.e.debtwould pileuptothepointwherepeoplecouldntpaybackthemoney),Fredwouldpanic,theeconomicintravenous (IV)wouldbeshutoff,businessesinthatsectorwouldcollapse,peoplewouldbethrownoutofwork,andso on. At that point Fred would reset that sector of the economy by repossessing assets until he was comfortable tolendagainatwhich pointhedlend againuntil debtbuiltup somewhere elseandthewhole thingwouldhappenagain. Andisthisabadthing? Wellifyouareoneoftheonesthatloseeverythingasaresultofthereset,thenyesitisabadthingandit doesnt take much imagination to figure out why. You lose your house, your children go hungry, your self esteem takes a hit, your family falls apart, and life becomes a grind house of pain and stress. On the other hand,Fredbenefits.Fromhisperspective,recession(i.e.theresetcausedbyFredsextractiveactivity)brings a necessary financial correction that allows him to recoup his investment, return himself to confidence, and raisethevalueofhismoneywhichhasprobablytakenahitasaresultofinflation.ItisallgoodforFredwho probablythinksthatiftheworstthinghehastodealwithiscyclicalrecessions,xviiheshappy.Unfortunately, cyclicalrecessionisnottheworstthingthatFredhastodealwith.Whileheiscelebratinghisgoodfortune, recessive crises happen with more and more frequency, grow deeper and deeper, and become harder and hardertogetoutof. Theproblem,asalways,isdebt. Thethingyouhavetorememberis,Fredisalwayslendingmoneyatinterestandextractingmoneyatprofit so no matter what Fred does to put money back into the economy, whether its a bail out or a stimulus package or a tax break or whatever, debt (i.e. the owing of your labour power to someone else) always accumulates.ItstartslikealittlecanceroustumourthatFredcanmanagewithabandaidortwo,butitgrows andgrowsandgrowsandunlessFredoutlawsinterestandgivesthemoneyback,thereisreallynothingFred candotostopthecatastrophiccollapseofhiseconomicsystem.Eventually,mayberightnow,maybeinthree orfouryears,apointisgoingtocomewhendebtissobadandsopervasivethatnothingthatFredcandowill restore Freds confidence in the economy and when that point comes the dominoes will fall and the entire economywillgointofullscalecardiacarrest.

41

Andthefunnythingis,Fredknowsthis.Becauseofhisprivilegedvantagepoint,hecanseeitcomingbetter than anybody and he knows that when it happens, people are going to experience incredible hardship, unemployment, long term deprivation, starvation, and slow, grinding death, which perhaps explains Freds affinityformilitarytechnology,security,armedforces,RFID,andthingslikethat.Ofcourse,hesnotgoingto usethatstuffifhedoesnthaveto.Fredsnotabadguyafterall.Butitdoesmakehimsleepbetterknowing itsthereifheneedsit. So,whenthetimecomesandtheeconomygoesintocompletecardiacarrest,whatisFredgoingtodo? Well,asalways,Fredhasachoice. Ontheonehand,Fredcanwakeupandseethetwistednatureofthesystemhesbeenlivingwith,giveback themoney,outlawaccumulationandinterest,andallowthecountrytolivehappilyeverafter.Ifhedoesthis, then we can all sing for hes a jolly good fellow and go dance in the streets because if Fred makes that choice, it will mean a permanent end to poverty and suffering and the global emergence of shambhala and utopia. Ontheotherhand,Fredcouldcontinueintheoldwaysandtrytohangontohismoney.Ifhedoesthat,things willjustgetworse.AsIalreadysaid,itwillbelikeadominochain.Whenitfinallycomes,thecollapsewillbe rapid and dramatic and there will be nothing Fred can do to stop it. It will start in a single sector of the consumereconomywithanormalrecession.However,becausetherestoftheeconomyissomiredindebt, therecessionwillnotstayconfinedtoasinglesector.Evenalittledropoffinsaleswilltriggerbankruptcyand default in other sectors,panicking Fred into shutting off the IV, and when that happens, the whole chain of dominoeswillfallrattlingdownwithdisastrousconsequencesforthemajorityofpeopleinFredseconomy.It will be so bad that no amount of surveillance and indoctrination will calm the agitated masses and at that point Fred is, once again, only going to have two choices. Hell either have to come clean and do the right thing,orhellhavetogotowar. Whywar? Well, as people like Fred discovered a long time ago, war is a great way to channel aggression and pull an economyoutofeconomicdepression.NotonlydoeswarallowFredtoinjectmucho$$$intotheeconomyina waythatdoesntgivehisprecioussecretaway,butitalsoallowshimtochanneltheaggressionoftheyoung, able bodied, and potentially dangerous men. He calls somebody evil and then sends all the able bodied youngmenoutofthecountrytofighttheevil. Simple! Andofcourse,werenottalkingaboutalittlewarhere. Atthepointoftotaleconomiccollapse,Fredisgoingtoneedarealwar,aglobalwar,withgadjillionsofdollars in military spending leading to bajillions of dollars in economic offshoots into the economy to solve the problemandthatmeans,ofcourse,thatalotofinnocentpeoplearegoingtodie.Ofcourse,Fredneedsan enemytofight.Butthatseasy.Aftercenturiesofindoctrination,theworldissodividedupbyreligion,byskin 42

colour, by nation, by gender, by culture, and by region that starting a global war is as simple as dropping a singlenuclearbomb. So,whatareyougoingtodo? Well,Ipersonallydontrecommendyousitaroundanddonothing. Even if the next world war does manage to solve our global economic crisis by remonetizing the global economy, were rapidly reaching a planetary environmental wall. If we dont fix the numerous ecological, psychological,political,andsocialdistortionsthatarecausedbythelunaticfringeleadingthislunaticeconomic systemwelivein,humanitywontsurvivetodoitagain.Andbesidesthat,werenotfightingwithsticksand stones anymore. With the type of technology that can be deployed to kill with these days, and the global interconnectednessthatthreatenstounifytheplanet,billionscoulddiebeforeFredregainshisconfidence. Ialsodontrecommendguillotinesandviolence.Thatneverreallyworkedanywaybecause,aswehaveseen,if you kill one Fred, a new Fred comes along to take his place. And besides, the old saying is true: violence begetsviolence.Youcantrepairabrokenworldbyusingrepressivestrategies. Ialsodontrecommendyoustandaroundwaitingforabigalienshiptotakeyouawayintothesky,oryour Sirianbrotherstocomefixtheproblemsonthisearth.IknowsomepeopleouttherearedoingthatbutIm tellingyounow,thataintgonnahappen.Trustmeonthisone.IfthealienhighcommanderoftheAnnunaki fleet was speaking to you right now, hed be saying exactly what Im saying to you which is, this is your problemandyouhavetofixitbeforewecanhelpyou.Sogettoit. Finally,Idonotrecommendyoustandaroundwaitingforthesaviourtocomeandsaveyourbutteither.I havenodoubtatallthatifthesaviourwasstandinginfrontofyouandspeakingtoyourightnow,hedbe telling you exactly what I am telling you which is, you are a powerful cocreator and brilliant spark of the divinecreatorGod,andyouhavethepowerwithinyoutochangethisworld.Allyouhavetodoiswakeup, takeyourpowerback,andlearnhowtouseit. Isupposethough,intheend,itsyourchoice. You can make up some excuse and sit around waiting for Fred to do the right thing, or you can realize that after so much indoctrination, war, fighting, division, depression, and suffering you have got to take matters intoyourownhands.Ifyourchoiceisnumberone,thenthebestyoucandoishopethatwhatIvetoldyou today is not true. However, if you want to do number two, I recommend you visit me at http://www.michaelsharp.org/whereIcanhelpyougetstartedontheawakeningandempowermentpartof thesolution.Keepanopenmindthough.Remember,ImaspiritualauthorsoanysolutionsIhavetoofferfor thismesswecallplanetearthwillbespiritualsolutions.Ifyouthinkyourereadyforthat,thenbyallmeans, dropbyforavisitandletsseewhatthereistosee.

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OnreachingJerusalem,Jesusenteredthetempleareaandbegandrivingoutthosewhowerebuying and selling there. He overturned the tables of the money changers and the benches of those selling doves,andwouldnotallowanyonetocarrymerchandisethroughthetemplecourts.Andashetaught them,hesaid,"Isitnotwritten:Myhousewillbecalledahouseofprayerforallnations?Butyouhave madeitadenofrobbers."Thechiefpriestsandtheteachersofthelawheardthisandbeganlooking forawaytokillhim,fortheyfearedhim,becausethewholecrowdwasamazedathisteaching.Mark 11:1518. 44

Pleasefeelfreetopostthisdocumentonyourwebsiteorblogasaservicetoyourreaders. Alinktohttp://www.michaelsharp.orgwouldbeappreciated,butisnotnecessary. Pleasedonoteditthedocumentorremovenotices. Ifyoureadthiseconomictreatiseonlineasafreeebook, andwouldliketoprovideafairexchangefortheeconomicenlightenmentithasprovidedyou, considerasmallmonetarydonationof$2ormore.Usethefollowinglink. https://www.paypal.com/cgibin/webscr?cmd=_sxclick&hosted_button_id=4122696 Yourwillingnesstocontributetothecreationofanewworldeconomy, whereexchangeisavoluntaryresponsibility,isappreciated.

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INDEX
accumulation,4,13,15,20,26,31,34,36,40,42, 47 Accumulation,3,6,12,29 agitators,22,23,24,26,27,29 barter,7,9,10,11,13,32,35,36,47 consumers,31 debt,4,39,40,41,42 economiccollapse,40,41,42 economiccrisis,36,43 economy,4,9,10,11,12,13,14,20,29,32,35,36, 37,38,39,40,41,42,43,47 FrenchAristocracy,37 guillotines,40,43 informaleconomy,9 labour,7,8,9,10,11,12,13,14,15,16,17,19,26, 29,30,32,34,35,36,40,41 labourvalue,11 monetized,9,10,12,13,47 officialeconomy,9 power,9,10,11,12,13,14,15,23,37,41,43,47 profit,14,36,41 realsecret,38 rocketscience,11,12,14 stonemason,33,34 TheInstitute,19,21,22,23,24,25,26,27,28,29, 30,32 undergroundeconomy,9 war,37,42,43


46

ENDNOTES

FormebeingaworldteachersimplymeansIwriteabouttopicsrelevanttothespiritualawakeningandempowerment

ofeveryone,inanaccessibleandgroundedway,withnohierarchy,andnoimplicitorexplicitexclusions.
ii

Seehttp://www.thespiritwiki.com/index.php/Barter ItisablasphemyintheeyesofGodifyoulike.

iii

iv

http://www.thespiritwiki.com/index.php/Labour_Time

http://www.thespiritwiki.com/index.php/Economy http://www.thespiritwiki.com/index.php/Official_Economy http://www.thespiritwiki.com/index.php/Informal_Economy http://www.thespiritwiki.com/index.php/Labour_Value

vi

vii

viii

ix

Thisisnotquitetrueofcourse,buttheproblemsassociatedwithaccumulationarenotaspronouncedineconomiesthat

arenotmonetized,orthatarenotmonetizedtotheextentthatthecurrentglobaleconomyismonetized.Infactinbarter basedeconomies,accumulationtendstobediscouraged.SeeforexamplethenativepracticeofPotlatchwerethegoalis togiveawayasmanythingsasyoucan.http://en.wikipedia.org/wiki/Potlatch


x

ByworldendingIliterallymeanworldending.Thedynamicthatissetupbytheinitiationofaccumulationleads,if

leftuncheckedandinplace,totheinevitableendofhumancivilization.Thepressureontheenvironment,theangerand desperationthatitcausesleads,inthelongrun,tothecollapseofhumancivilization.Thesemightseemlikestrongwords now,butitwillbecomequiteobvioustoyouthataccumulationdoesleadtotheendofthehumanworldonceyouread throughtotheendofthislittlepamphlet.


xi

Interestinglyenough,powerdoesntnecessarilyenterintomonetaryrelationships.Assumingequalityofconditions(i.e.I

haveallthemoneyIneedandyouhaveallthemoneyyouneed),powercannotentertheequationbecauseifyouaskme todosomethingIdonotwanttodo,IdonthavetodoitbecauseIhaveenoughmoney.However,ifforsomereasonI needyourmoney,ifIamunemployed,ifIambroke,ifmybankaccountisdrainedbyinterest,ifIneedtofeedandprotect mykids,orkeeparoofovermyhead,andyoucontrolthemoney,thenyouhavethepower.Ifyouaskmetodosomething then,becauseIneedthemoneyyouhave,IwilloftendothingsIwouldnoteventhinkofdoingifIdidntneedthemoney. You may want to think about prostitution and pornography in these terms, as well as other less than appealing occupations.Eventhinkaboutthejobyouaredoingnow.Doyoulovewhatwouldyoudo?Ifnot,whydoyoudoit?Andif you had enough money to do what you wanted to do, what would you do instead? Its an awesome question to ask becauseitgivesyouanindicationofwhatlifewouldbelikeinaproperlymonetizedeconomy.Ifaneconomyisproperly monetized(i.e.ifmoneyhasntbeengreedilyextractedtothepointwherethereisnotenoughmoneytogoaround),alot ofjobsthatpeoplecurrentlydowouldnolongerexistbecausewewouldntbeforcedtodothem.Thisissomethingto keepinmindaswewendourwaythroughthisshorteconomictreatise.
xii

SeemyBlackBookduetobereleasedontheWWWDec25,2012.

47


xiii

Unless maybe hes trying to bail outhis buddies, who are also feeling thepinch from default on debtcaused by a

drainedeconomy.
xiv

HowdoesinflationdevalueFredsmoney?Well,imagineourlittleeconomyoftenpeople,eachwithahundreddollars.

AfterFredhasmanagedtoextractallthemoneyoutofthehandsofhisninebuddies,helendsitbacktothematinterest. The problem is, because Fred is extracting money in two ways (regular profit generating activities, plus the loan and interestpayments)thistimethemoneyisdrainedfaster.Toavoidhavingtoresettheeconomysofast,Freddecidesto printextradollarsandlendthatintotheeconomyaswell.Theproblemis,withtheextraprintedmoney,nowthereistwo times the amount in the economy than there once was and that leads to instant inflation and a devaluation of Freds money. How? Well,thisgoesallthewaybacktothebeginningwhenwetalkedaboutthenatureofmoneyasanabstractrepresentation oflabour.RememberwhatIsaid?Isaidthataproperlymonetizedeconomywillhaveoneunitofmoneyforeachunit(i.e. hour)oflabour.Imaginethattheaveragenumberofhoursworkedperdayinahealthysocietyisfour.Youaretherefore allottedfourunitsofmoneyadaytoexchangeforlabour(foratotalof4x365=1,460unitsperyearperperson).Inthis case,ifsomebodyworksanhourforyou,youwouldgivethemfairexchangeof1unit(e.g.onedollar)fortheirlabour. Nowimaginethatallofasuddentheeconomyhastwicetheamountofmoneyincirculationasithadbefore.Insteadof 1,460unitsperpersonperyear,thereisnow2,920units.Whatwillhappen? Well, there will be a short period of disequilibrium and inflation caused by the extra cash, but the natural process of inflationwillgraduallyreturntheeconomytoapointofequilibrium. Huh? Itslikethis. Imagine that all of a sudden, as the result of some sort of fiscal magic, you are suddenly making twice the amount of moneyperyearasyouwerebefore.Whatareyougoingtodowiththatextramoney? Well,atfirsteverybodyisgoingtogoonaspendingspree.Thatis,peoplearegoingtoBUYthelabourofotherstwiceas oftenastheydidbefore.Asaresult,everybodywhoworksisgoingtobesuperbusy.Theeconomywillheatup.Withtwice asmanyunitstospend,youllgotoyourlocalpotterandbuytwiceasmanypots.Thisincreaseddemandforpotterywill keepthelocalpotterverybusy,toobusyinfactbecausehewontbeabletokeepupwiththedemand(unlesshesacrifices hisowntimeandhisfamilys).So,whatshedo?Well,hesahealthyladwithaburgeoningfamilyandhedoesntwantto spendallhistimemakingpotsfortotalstrangers,nordoeshewanttoputhischildrentowork.Soinsteadheraiseshis pricesperpottotwiceasmuchasbefore. Theresult? Inflation!

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AndthatisgreatforeverybodyexceptFredbecauseassoonaspeopledoubletheirprices(toreflectthepresenceofextra cash), as soon as inflation balances out the blood flow, business drops off and everything returns to normal with no damage done to anybodyexcept Fred. Unfortunately, Fred has a problem. You see, because of his profit and interest extraction activities, Fred has all the money he needs so he cant really cant justify taking any more money (unless of coursehecanconvincepeopleoftheneedforabailoutbutthatisanotherstory).Therefore,whenheprintsandlends money(atinterest)intotheeconomy,hedoesnttakeanyofthatmoney.Itdoesntsoundlikeaproblemupfront,but considerthis.Thereareninepeopleintheeconomyandeverybodyhas100dollars(givingthemtheabilitytobuy100pots each,forexample).Fredprintsmoneyandlendseverybodyanextraonehundreddollarsandthengoesawayonholiday. Hecomesbackinayearandinflationhasbroughttheeconomytoequilibrium(i.e.thepotterhasdoubledhisprices)but nowFredsonehundreddollarsonlybuyshalfasmuchasbefore! PoorFred,inflationhasdevaluedhiscashandmadehimpoorerasaresult. Ofcourse,itsalittlemorecomplexthanthisbuttheideaisbasicallythesame.Whileinflationisactuallygood(andifnot good,atleastnotbad)foreveryoneelse,itsbadforFred,whosegrossaccumulatedwealthisslowlywhittledawayashe lendsnewmintintotheeconomy.Obviously,Fredisgoingtohavetowanttokeepatightcontroloninflationandhelldo thatby,asweseeinthemaintext,usinginterestratestocontroltheintravenousflow.
xv

AccordingtoFred,itsalwaysbettertolendmoneybecausethemoremoneyyouconfidentlylend,themoreinterestyou

cancollect.
xvi

Perhapsthroughaprivatelyownedcentralbankwiththeauthoritytoprintmoney. Arecessionmaybedefinedasasmallscaleeconomiccollapsethatarisesduetotheunavailabilityofcurrency,usually

xvii

causedbyarestrictionofcreditbroughtaboutbythecatastrophicbuildupofdebtandcollapseofinvestorconfidence.


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ABOUTMICHAELSHARP
IamasociologistandmysticandIvewrittenseveralbooksontopicsrangingfromcosmologyandtheology,to chakra activation, ascension, and awakening of the physical unit. I have created the SpiritWiki (http://www.thespiritwiki.com)asarepositoryofmyownspiritual,psychological,andsociologicalthought. Before writing this book, I didnt have a clue about economics. I took an Economics 100 course as the first class, in the first year, of my failed engineering degree. I dropped that class after only one hour of lecture (couldntstandit)andwassubsequentlyRTDed(i.e.,requiredtodiscontinue)forfailingallmyothercourses. Learningfrommymistake,Iregisteredinuniversityasecondtimeandstayedasfarawayfromtheeconomics andengineeringdepartmentsasIcouldmanage.IsubsequentlywentontofinishaPhDinSociology. VisitmeontheWWWathttp://www.michaelsharp.org/

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