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Monday, August 1, 2011

Economic Collapse 2020: A Failed Theory

WARNING: these comments may have certain theological ideas that are provided  only for the purposes of "clinical analysis"and readers may freely include theological beliefs of their choice in the analysis without disturbing the conclusions

Where's the INVISIBLE HAND now?

Economic Collapse 2020: A Failed Theory? 

A General Theory of Reality, Science, Economics and Money

Comments Swiss Bankers/ Economists, July 31, 2011

Thank you again for your comments and questions. Please let me take some time to respond to the others later Let me remark about the thrust of what I am trying to achieve. First no matter how complex the reasoning or analysis the final conclusions reached must be easy for all to understand and practical to apply. This clarity is critical.

There were a number of issues that brought me to where I am today. First it was apparent that the macro economic model had failed in 2008, meaning that all thinking up to then may be seriously flawed in someway. If the past theories were right; the world should never have reached the brink it had then.

Second a major part of the problem relates to the printing of currency both by the state and agents of the state such as banks, investment houses and corporations. The latter could also create surrogate currencies such as stocks, derivatives, bonds etc that could be converted to the state's currency through the "banking process”. These powers were in place for numerous entities to create infinite amounts of currency based on future events and resources. That is logically impossible as it assumes we can forever create goods and services from a finite source (earth) to provide everyday value for the currencies created by these entities.

Third, in looking to identify where the best future opportunity for investments might be, it was clear that the importance of the expected life of oil reserves was paramount to every element of economic activity. And the future investment possibilities too. Thus the exhaustion of oil reserves meant all economic activities, as we know them, could possibly cease. Worse, the best guesses as to the life of reserves were running anywhere from 15 to 45 years. How then could we be printing all these currencies and surrogates when the whole system would shut down in a very real sense in a few short decades?

In other words, the idea that currency was acting as a device to symbolize that a store of value would be in existence at some future point was likely a fraud. An economic system highly dependent on oil and energy to generate its economic stores of value would soon in all likelihood no longer exist. Yet many nations and their agents continued and continue to create more and more currency based on the almost magical belief that "we could learn to create another planet earth" at some point in the future. That's collective insanity

In the last analysis, this meant that the actual printing of money needed to be logically tied to the finite resources of the planet. The printing of money needs to be better controlled in a world where that relationship exists. Think for a moment about what will logically happen when we create more and more money and people; yet there is less and less everyday utility available to meet basic needs. Prices must rise sharply and social unrest will be widespread as currency (or gold too) no longer converts to the store of value needed for everyday use. Why? Because there is none...and so, the final days of money should be extremely unpleasant.

Did we really think that money would last forever? What was the "scientific logic" behind such a belief? In reality...none. Most, I believe will be shocked to discover, that for money to be eternally operative we must conquer the laws of thermodynamics. Not likely; so to extend human survival, we must decelerate both the use of resources and population growth. (In turn this extends the useful life of money too) Then build a macro-economic model and its related currencies around realities of the physical sciences of our planet. A new theory of economics and money is thus required to better tie economic goals and activities to the planet's "likely physical constraints"

In order to begin building the new economic model we would first need a practical theory of reality and a conceptual framework that could be applied to all fields of knowledge. It is amazing that, so far, no one has documented or theorized such a framework. Instead we see reality generally being defined within individual fields of study or by religious doctrine that is in opposition to the clinical or existential method. It appears that out of real necessity that logic brings us to the need to define such a framework.

The elements of this framework derive from the pillars of common sense. There are first concrete constructs, that are defined to exist by our five primary senses and cognitive functions.(dollar bill, water, electricity mathematics).There existence is confirmed by object device or observation Then second, there are abstracts that cannot be defined to exist through our primary senses and cognitive functions (Invisible Hand, Fairy Tales, Santa Claus, Supreme Beings). These matters are largely created in the mind and cannot be objectively confirmed to exist by any devices or object means external to the mind. They are imagined.

Both constructs come in two forms; they are either visible OR invisible. Invisible concrete constructs are elements such as air, gravity, magnetic force, oil reserves etc. Visible concretes are readily apparent and too numerous to mention. Visible abstracts come in the forms of art, music, symbols and money among others. Imagined or invisible abstracts no doubt progress well beyond the last eternity. There is no doubt too, that a body of work exists on this framework that may lead to exotic metaphysical discourses, however a rudimentary view should suffice for this discussion.

As shown in the diagram (see article) many objects or ideas overlap and are found to have the characteristics of more than one construct creating confusion. Human nature it seems when faced with an invisible construct that requires everyday utility; "creates a visible concrete construct(s) to symbolize its existence". The human species ironically did this for both Supreme Beings and money. Much could be discussed here.

Thus the human mind operating with elementary cognitive functions converts these symbols of the abstract construct into a "real concrete construct". The elementary mind cannot distinguish between what is by nature an abstract or concrete construct. In its mind the abstract constructs are as real as Santa Claus is to children or as the Invisible Hand is to Economists. Money also takes on the realty of its existence through its everyday use. However without human cognition the symbol in its simplest form is paper, metal or a number on a page. That's reality.

Much more will be discussed about money in later remarks, as it one of the most complex objects we use. Moreover it strongly blends many of the characteristics of concrete and abstract constructs. It is a "virtual concrete construct” of sorts because everyday we convert it into other usable constructs or utilities. So it is easy to confuse its classification.
Sorry, these comments are longer than expected, such are a few lines. My thesis works on the view that the foundation of the current economic thesis was built at a time when the world seemed to have unlimited resources, in the 1700s.Thus it was started and based around Adam Smith's book, "The Wealth of Nations"

Today we know in reality that the premise of unlimited resources is false. The new economic model should therefore entail this reality and focus on theories and concepts recognizing the physical constraints as to "The Wealth of Planets" This overall line of reasoning ties to the "Austrian School of Economics," but with more integration with the natural sciences added.

Hopefully this helps to bring together the central thrust and gives the puzzle pieces more connection. Folks let me know if you have further questions, or where you think further clarity is needed.

Thank you for your time,

First Financial Insights Inc
T A McNeil 
Toronto, ON  


Recommended Readings

The Wealth of Planets
Quantum Realonomics
Invisible Genocide; Fallacy of Growth
Existential Economics

Where did it go?

A long time ago; I can still remember, how the music made me smile... So its bye bye Miss American Pie