You Create Money

A Producer Rewarded Economic System

Transforming Businesses in the Modern Age

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2.1 Banks Don’t Create Money

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Revised November 2, 2013

Many people believe money is created by banks!  This is false.  Banks don’t create money.  The banking industry would like you to believe this for their benefit.  If they can get you to believe this false idea, they can steal your money value, energy, wealth, capital and power.  Money has two parts; the symbol and what the symbol represents.  The money symbol represents value, energy, wealth, capital and power.  This is the value, energy, wealth, capital and power you create working and laboring when producing commodities, trades, goods and services. 

Banks currently expand the money supply.   Governments  create the money symbol.  That is all they create.  The Producers create what the symbol represents, the value, energy, wealth, capital and power.  Producers create all of what the money symbol represents.  Again, banks don’t create money.  Money has two parts.  Governments create the first part, the symbol.  Without the Producers the symbol would have no value, energy or power.  It wouldn’t represent wealth or capital because there would be none.  

The Producers create the value, energy, wealth, capital and power which is inherent in the money you possess.  In most cases the Super Producer and the Producer create more money value, energy, wealth, capital and power than they receive in pay.  In most cases they are underpaid for the commodities, trades, goods, and services they produce.  The rewarded non-producer and counter-producer receives more money value, energy, wealth, capital and power than they produce.

The first and primary service the Bank provides is to safeguard the money, value, energy, wealth, capital and power you produce.  This is their first and by far their most important product!  The Banking service came into existence when people used gold as a medium of exchange.  Gold is heavy, difficult to secure, handle and transport.  In order to handle these problems, Banking was set up to hold and secure the gold in vaults and other secure means.   These vaults and other secure means made it very difficult for anyone to steal the gold.  In exchange for securing the money the Bank would issue a paper note.  This paper note defined how much gold the note could be redeemed for.  It could be taken to the bank and exchanged back to the bank for the amount of gold that was stated on the note.

This paper note evolved over time to be used instead of gold during the process of purchasing commodities, trades, goods and services.  You could purchase food, horses, buggies, clothing; most anything with these paper notes.  Each paper note became a symbol for a specified amount of gold the Bank held in their vaults.  The gold held by the bank backed up or secured the note.  You could go to the Bank and exchange paper notes and in return receive a specified amount of  gold.  In exchange for securing the gold, the Bank would charge a small fee.  Here the banks were creating money value by providing a very much in-demand service.

From there the banks evolved into loaning out part of the money they held in their vaults.  They loaned out this money in exchange for interest.  Here again, they were creating money value in exchange for providing a service.  The service was providing loans to people who needed more money. Sun Cash offers payday loans and cash advances. These people paid interest in exchange for the use of the money they were borrowing. Click this link for more information on loans and interest rates. This is fine as long as the bank doesn’t loan out too much of the money it holds in its vaults.  As long as there is enough money held in the bank vaults, to cover the day to day transactions of the banks customers and depositors, the economic system flourishes.  When banks loan out too much of the money held in their vaults and the depositors’ sense there is a shortage of money in the bank, they will panic and make a run on the bank.  This loaning out too much money will cause an economic problem, a perceived “shortage of money” problem.

When I talk about money value, I am talking about the value you produce in the creation of commodities, trades, goods and services.  Value is what you create when you create commodities, trades, goods and services.  You could also look at it as energy because you really generate energy and put it into the commodities, trades, goods and services you create on a daily basis.  Money can be in the form of gold, paper, shells, silver, and cloth anything the people agree to be the symbol to represent the value, energy, wealth, capital and power they create.  It must be set up to be at a constant supply and be in absolute amounts measured in units.  Gold worked very well because it was impossible to create more of it.  It was close to a constant supply.  There was near a constant supply of gold.   It is divided into units.  The units in the United States are in ounces.   Gold was and is difficult to find new sources for mining.  Gold was fairly constant in terms of a money supply, and was measured in units of weight.

Every now and then there would be a major new gold discovery.  This new discovery of gold would cause problems, such as inflation, in the economic system.  A new supply of gold would be introduced into the economic system.  This would cause money value, energy, wealth, capital and power inherent in the existing money units of gold to be transferred to the newly mined gold as it became money units.  The peoples’ gold value would decrease, decreasing the purchasing power of each gold money unit.  This is the same principle that happens today when the paper money supply is expanded, the value of each existing money unit decreases as the value is transferred to the newly printed money.   This gives the apparency of commodities, trades, goods and services getting more expensive when in fact the money unit is losing value and purchasing less.  This is the source of inflation.

Yes, you could argue gold, when not used as a medium of exchange, does have value.  However if you removed it from being the medium of exchange for commodities, trades, goods and services, it could have a far different value.  What could you really use gold for if it was not the agreed upon medium of exchange?  You can’t eat it; it can’t shelter you and can’t transport you. It wouldn’t have much more use than for jewelry, or industrial uses.  Take platinum for example; it has the value it has, for its industrial purposes.  If it were substituted for gold as the medium of exchange its value would change and people would lose interest in gold. If people are looking for mens rings, they can get them from here.

Gold holds a very interesting position in the minds of people.  Today people still view gold as the master medium of exchange.  They place attention on gold as the savior medium of exchange.  They look towards gold as the default medium of exchange when the economic system recedes toward depressions.  Today, even with our paper monetary system, gold is continued to be viewed as the basic medium of exchange.  Gold is valued as a stable medium of exchange because it gives a constant money supply.  More gold can’t be printed or created in order to expand the money supply.  I believe a paper money supply system or any other form of money supply could be set up to function as a constant money supply system.  A constant money supply system gives an economic system and its Producers stability and confidence.  See The Constant Money Supply at http://personalist.wpengine.com.

Today when the Banking industry causes a shortage of money by loaning out too much of what it has in its vaults, it expands the money supply, learn more at https://www.debtconsolidation.com/debt-settlement/.   This is fraud.  By expanding the money supply the bank is stealing money value or energy from the money already in circulation and this value or energy flows to the newly expanded money.   The same can happen with gold when more new gold is introduced into the society.  Value is transferred from the existing gold units to the new gold units.  This happened in Spain. After Spain brought the gold from the New World and introduced it into Spain’s society the society suffered an economic collapse.

BANKS DO NOT CREATE MONEY!  They expand the money supply.  They do not create the value the symbol represents.  The value is created everyday by the Producers of commodities, trades, goods and services which must be marketed on the Open Market open to all on equal terms.  The banks do not create the energy, wealth, capital and power the money symbol represents either.  Banks expand the money supply.  The Government prints and coins the symbols.  The banks would like you to believe they are creating money including the moneys’ value, energy, wealth, capital and power out of thin air.  With you believing they are creating the money symbol along with the value, energy, wealth, capital and power the symbol represents; they can literally steal the value, energy, wealth, capital and power right out of the money you have in your possession. 

When Banks expand the supply of money,  money is not created!  They increase the supply of money symbols.  They use these new money symbols to steal value, energy, wealth, capital and power from the owners of the existing money that is in circulation.  Only the money symbol is created.  When Banks increase the supply of money symbols; money value, energy, wealth, capital and power is transferred from the money currently in circulation to the newly printed money symbols.

It is very important to know, Banks do not create money!  They may expand the money supply, but that reduces the value, energy, wealth, capital and power in each money unit you possess.  This transfers money value, energy, wealth, capital and power from the money currently in circulation into the new money units, reducing the value of all money in circulation.  This means, whenever the money supply is expanded, people lose money value, energy, wealth, capital and power.  It is transferred to the bank expanding the money supply.  You could also say money is stolen by the bank.  Or, you could say banks steal money whenever they expand the money supply.

Banks have as their prime service; to secure the money, value, energy, wealth, capital and power you create during your production.  This is their primary duty.   Their secondary duty is to provide money in loans.   Their secondary duty is to provide loans from the money on deposit in their vaults.  Banks must provide these loans without loaning out more money than the bank’s depositors need in their everyday financial operations.  Money is energy and it flows.  It is the duty of the Bank to maintain an optimum level of money (energy) velocity in the society.  This means the Bank must not loan out its depositors deposits to the point where the flow of money (energy) in the society slows or is stopped.  There must be enough money on deposit in the banks vaults for the bank’s customers to function on a daily basis.  When banks perform their primary and secondary duties well the whole society they serve will prosper.  This type of bank is a very valuable asset for the Producers.

Banks expand the money supply in the mistaken belief they are creating more money.  The act of expanding the money supply sucks the energy out of the society.  Expanding the money supply reduces the value in all money units.  Expanding the money supply transfers wealth, capital and power from the individuals in the society into the hands of the bankers who expanded the money supply.  They are taking money, value, energy, wealth, capital and power without an exchange in commodities, trades, goods and services for it.  They will suck the energy, wealth, capital and power out of the society until a society will almost die.  They can be parasitic on a society.  Bankers allowed to expand the money supply are very destructive to themselves and their society!

Value which gives money its power can only and only be created through the production of commodities, trades, goods and services.  The commodities, trades, goods, and services must be exchanged for money on the Open Market, open to all on equal terms.  See The Open Market Construct at http://personalist.wpengine.com.

The money supply must be held constant.  When the money supply is expanded, money value is stolen from those who currently possess the money and given to those who receive the newly printed money units.

Only Producers of commodities, trades, goods and services can create money and the Producers must be paid all the money in exchange for the value they create in their production.  Producers must not take more money than they have created in the production of commodities, trades, goods and services or they will also be sucking energy out of the society.

Banking can and should be a tremendous asset to a society.  They can help the Producers create an explosive prosperity!  They can help create an explosive prosperity by securing the money value and by maintaining the optimum money velocity in a society.  They can maintain the optimum money velocity by not loaning out too much or too little money held in their vaults.  They can secure the money value by maintaining a constant money supply.

Producer Rewarded Open Market Economics
The Science of Economics
By Raymond P. Obrigewitsch
April 24, 2011

2.2 Capitalism Without Rules

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Revised November 3, 2013

The purpose of this article is to show that all existence and prosperity in this Universe results from finding and applying very specific rules.   Capitalism without rules is very destructive to the prosperity of a society and nation.  Specific workable rules must be applied to provide prosperity for all production activities and for the existence of all living and non-living entities.  

When you look at this Universe you will find nothing exists and persists unless it applies and follows very specific rules or laws.   This includes all life organisms, all physical universe bodies and all activities.  

The planet earth follows very specific rules everyday.   If it didn’t it would crash into the sun or spin into outer space.  When you drive a motor vehicle you follow the rules of the road and the Laws of Physics involved in operating a motor vehicle.  You know the outcome if you don’t follow these rules.  Look around you, everything that’s existing, persisting and prospering is successfully following very specific rules. Automobile engines follow very specific rules of Physics.  Very specific rules demanded by the society are applied when engines are designed and created.  Computers follow very specific rules.  Living organisms follow very specific rules in order to prosper and exist.   Successful business activities apply very specific rules. 

When you examine entities or activities which are not prospering well, you will find they are not following or applying exactly the rules that apply in creating prosperity in their activity.  In many cases the misapplication of rules or laws ranges from not exactly applying them, to not applying them at all.  These activities and entities are on their way towards failure.

Non-producers and counter-producers think they can violate this basic law of the Universe without consequences.  They operate a destructive form of Capitalism, capitalism without rules, and call it Capitalism, without applying any rules. 

We are now suffering through a rough economic time because the non-producers and counter-producers are attempting to operate an Economic System without any rules.  This is not freedom. There is no freedom when the correct rules are not being applied.  There also is no freedom when incorrect rules are being applied.  Freedom is gained only by correctly applying the exact rules which make a particular activity or entity prosper at an optimum level.  

Producer Rewarded Open Market Economics has the Basic Natural Laws or Rules which give Economic Systems prosperity.  They give Economic Systems prosperity at the optimum level.

It is currently popular to believe freedom is living in the absence of rules.  This living in the absence of rules is on the road to destruction; the non-producers and counter-producers will take over the economic system and destroy the society. 

Here are examples of what would happen if no rules were applied.   What would happen to the games of Baseball, Basketball, Golf or Football if no rules were used to define and officiate in these games?   They would cease to exist!  What would happen in the game of Music if no rules were used to define the production of sound so we would have pleasing sound aesthetics?  Music would become a dead subject! You would have what is classified as noise.   The same holds true in Economics!  The society will go toward destruction via recessions, depressions and war. 

In 2009, we were in a Great Recession because the rules of economics were not applied.  We were lead to believe it would be prosperous to run an economic system without applying any rules as to how it should be operated.  They ran on the rule, “no rules are necessary in operating an economic system.”  This is a criminal way of operating.  Criminals believe no rules are necessary!  They believe we should all be left to do as we see fit!  When an economic system is operated with no rules the criminals can do as they see fit!  

The criminal non-producers and counter-producers took over and crashed the Stock Market, crashed the Real Estate industry and crashed the whole economic system world wide.  They transferred trillions in money units from the huge population of Producers, world wide and placed it into the hands of a very small group of rich non-producers and counter-producers.  They redistributed wealth on a very, very large scale from the Producers to the non-producers and counter-producers!  They bottled up huge, huge amounts of money units, severely slowing the Money Velocity, causing a deep recession. 

Money, created by the Producers, is the energy that flows through an organization, society, nation and mankind.  It is the life blood of the individual, family, organization, society, mankind and environments.   Like blood in the body, when money velocity is slowed the Individual, Family, Organization, Society, Nation, Mankind and Environments recede towards depressions.  Likewise the body will suffer when the blood flow velocity slows.

Ideally, in the case of Economics, the Government or another appointed body of Citizens would officiate in the Game of Economics.   They would apply the exact rules of economics, correctly, to govern the economic system.  Only then would we have a very high prosperous Economic System where everyone could prosper when they followed the Rules or the Natural Laws of Economics. 

There is one true economic system and that is the system where the Producers create the wealth and receive reward in exchange for the wealth they create.   If there is any prosperity in any economic system, from the systems that follow the rules exactly to the most depressed economic systems, it is being created by the Producers.   Even in the most depressed systems there are some Producers present creating the little money, value, energy, wealth, capital and power that exists.  The Producers are creating the little prosperity that is present.  If there are no Producers present or there is no production present that society or group is dead.

The true purpose of Government is to officiate in the prosperity of a Society, a Nation and all of Mankind by ensuring the exact rules of economics and politics are followed.  This requires honest men and women. It also requires men and women who aren’t short-sighted and propelled by greed.  Men and women who can see truth and don’t dwell in lies are required.  Men and women who are driven by the purpose of working and laboring for the prosperity of all Mankind are required.  In doing this they can insure an optimum prosperity level for themselves, families, organizations, society, nation, mankind and environments.  They must use the exact economic rules and insist they are enforced for the benefit of the prosperity of the greatest numbers of citizens.  This, by the way, is Democracy, “Do what produces the most prosperity for the greatest number of people.”

Producer Rewarded Open Market Economics
The Science of Economics
By Raymond P. Obrigewitsch
July 11, 2009
Revised November 3, 2013

1.3 Who are the Producers?

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Revised November 5, 2013

Who are the Producers?  The purpose of this article is to define who the Producers of money, value, energy, wealth, capital and power are.  The purpose also is to help distinguish the Producers from the non-producers and counter-producers.

A Producer is a person:

1.       Who generates his or her own energy

2.      Who takes this energy and converts it into commodities, trades, goods and services.

3.      In order for these commodities, trades, goods or services to qualify as a product they must be needed and wanted.

4.      These commodities, trades, goods and services must be marketed on the Open Market.  The Open Market is a market that is open to all Producers on equal terms.

 After placing the commodities, trades, goods and services on the Open Market the Producers receive an    exchange in money units for them.  The amount of money they receive is based on the value of the  commodities, trades, goods and services.  All commodities, trades, goods and services compete with all other commodities, trades, goods and services on the Open Market while establishing value.

    5.      The commodities, trades, goods and services must enhance or should not destroy the prosperity of the individual, organization, family, society, nation, mankind and environments.

The person who fulfills all of the above requirements is a Producer.  The Producer is the creator of money, value, energy, wealth, capital and power.  He is a converter of self-generated energy into money units through the production of commodities, trades, goods and services.

The Producer, in essence, has generated energy and converted it into money through the production of commodities, trades, goods and services.  The Producer markets these products on the Open Market.  He places this money into his pocket and exchanges it for more commodities, trades, goods and services, on the Open Market.

Money has the concept of a symbol that represents energy.  This is because the Producers convert self-generated energy into products.   Money flows like energy throughout the organizations, societies and nations of mankind.  Increased money flows or increased Money velocity increases the prosperity of an individual, family, organization, society, nation, country, mankind and environments.  Decreased money flows or decreased money velocity decreases the prosperity for the individual, family, organization, society, country, mankind and environments.  Rewarding non-production and counter-production decreases money velocity.  Rewarding non-production and counter-production takes money (energy) out of a society without putting production in, in exchange for the money.  This is a parasitic activity.  The act of taking money out, without exchanging for it, is really taking energy out without putting an equal amount of energy back in, in the form of commodities, trades, goods and services. 

To balance things out we will now look at who the non-producers and counter-producers are.

Non-producers and counter-producers are people:

1.      Who don’t generate their own energy.

2.      Or, they are people who generate their own energy and convert it into non-production and counter-production activities.  Taking reward (money) for non-production or counter-production is harmful to the prosperity of all individuals, families, organizations, societies, nations, mankind and environments.

3.      Or, they are people who create activities that are not needed and wanted by citizens in the society.  We can’t call these created activities commodities, trades, goods and services because they don’t fit the requirements of what a product is.

 4.      Or, they don’t market their created activities on the Open Market; open to all on equal terms.  Examples of marketing activities that are not Open Market activities are monopolistic practices.  Subsidization by a governmental entity or by a private entity is another non-Open Market activity.

 5.      Or, they create an activity that is destructive to the prosperity of the individual, family, organization, society, nation, mankind and environments.

This article should help define the difference between Producers, non-producers and counter-producers.  It can be seen how important it is to make sure the Producers of the money, value, energy, wealth, capital and power get all of what they have produced.   Any time money is given to those who have not produced it, the money velocity slows.  The prosperity thrust is dampened.  The whole society suffers and looses prosperity.   The non-producers and counter-producers will use whatever money they can get, with an out exchange for it, to invest in more activities that will reward more non-production and counter-production.  

The rewarded rich non-producers and counter-producers have a tremendous negative impact on the economics of a society.   They can pull a society down very rapidly.  This is what happened to start the Great Depression of the 1930s and the Great Recession of 2008.  You can see the result of rewarding rich non-producers and counter-producers in third world Nations.  It results in perpetual economic depressions.  You can see the results of rewarding rich non-producers, and counter-producers in Right Wing (Fascist) countries as well as in Communist governed countries, they are also mired in perpetual economic depressions.

However, when Producer Rewarded Open Market Economics is applied, prosperity can be explosive.   The economic condition can be turned around extremely rapidly to a very positive condition.  As can be seen throughout History, rewarding Producers pulls countries and societies out of economic depressions.  Rewarding Producers is the only way to have prosperity and to pull Nations and Societies out of recessions, depressions and wars.

Producers are the main beams, support structure and the back bone of a Society and Nation.  The prosperity of a Society and Nation rests upon the backs of the Producers.  Whatever prosperity large or small, exists in a Society or a Nation, is being created or generated by the Producers in that Society or Nation!

 

Producer Rewarded Open Market Economics
The Science of Economics
By Raymond Obrigewitsch
March 23, 2011

 

 

 

1. What is money?

By 2 Comments

Revised November 5, 2013

We start with the question.  What is money?  Many people don’t know what money is.  They find themselves with a lot of interest and attention placed on money.  Money has a way of drawing and holding people’s attention.  Down through the age’s money has had a way with attracting the attention and interest of individuals.  Many people have fought and died because of the attraction of money.  On this site, I will address the question.  What is Money?  I will demonstrate what money is and how it is created.

Money has two parts.  The first part is the symbol.   The second part is the value this symbol represents.

The symbol is made from paper with highly ornate designs inked into it so as to make it very difficult to counterfeit.   In these modern times money should also have a serial number inked into it.   Money is also made from stamped metal in the shape of disc variations.  

In the past many other solid material forms were used as a symbol to represent value.   Some examples are gold, shells, beads or any other hard to find or duplicate objects.

The second part of money is value.   The value comes from the production of commodities, trades, goods and the services exchanged on the Open Market (open to all on equal terms.)

In short, money is a symbol that represents the value created during the production of commodities, trades, goods and services.   You create money value every day if you create commodities, trades, goods and services that are exchanged on the Open Market.

Instead of you exchanging your production for someone else’s production, you exchange your production for money units and then you take the money units and exchange them for another person’s production.   This is where the term, “Money is a medium of exchange,” comes from.

Even in your family life, your children can create production. Their production comes in the form of their school work, their hygiene duties, their household chores, and in the production of the social behavior you value as a parent. The Children’s ISA is a great investment fund for children. You could set up a fun game with them by exchanging money for each of their products on a weekly, daily or monthly basis.   In this way you are teaching them what money is and how to create more of it.   When they are out in life they will have a very solid concept of what money is and how to create it and thus have a prosperous life.

Producer Rewarded Open Market Economics
The Science of Economics
By: R P. Obrigewitsch
September 29, 2008

1.1 What is a Product?

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The following is the definition of:  What is a Product?

A commodity, trade, good or a service is a Product when it:

  1. is marketed on The Open Market (open to all on equal terms,)
  2. is needed and wanted and
  3. does not harm the economic well being and prosperity of the individual, family, organizations,  society, nation, mankind and  environments.   Or it can be stated by saying, “a good or a service is a Product if it assists in the economic well being and prosperity of the individual, family, organizations, society, nation, mankind and environments.”
Producer Rewarded Open Market Economics
The Science of Economics
By: R P Obrigewitsch
February, 27, 2011

1.2 The Four Basic Laws of Economics

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Revised November 5, 2013

There are The Four Basic Laws of Economics.   When these laws are applied correctly in a society the society achieves explosive prosperity.   Conversely when these four laws are violated that society will spiral down into recessions, depressions and wars.

The following are The Four Basic laws of Economics.

 1.      All money value is created through and backed by the production of commodities, trades, goods and services.

 2.      The individuals who create the production own all the money that is exchanged for the products.  Another way to state this second law is, “reward the Producers of the commodities, trades, goods and services and only the Producers.”

 3.      All production must be marketed on an Open Market (open to all on equal terms, absolutely no exceptions.)

 4.      The money supply must be held constant with no exceptions.  A constant money supply standardizes the Economic System.

These four basic laws standardize the Economic System.  They standardize the Economic System like the Standard Meter standardizes the metric system.   

These are the four basic laws of economics.   When I studied the History of Economics I found when these basic laws were applied, in a Society, the Society achieved roaring prosperity and when they were misapplied the Society found itself in a recession, depression and wars. 

The first law cannot be violated because production always creates money value, if production is taking place.   It is always operating, man cannot change this law.  Without production money will have no value. 

The second law can be violated and is violated to a very large degree when we find a society and nation going into recessions, depressions and war.  When a society and nation finds itself moving into recessions, depressions and war, the second law is being misapplied.  When the second law is maintained we find a society and nation achieving roaring prosperity.

The third law also can be violated.  It is violated by not having a Market open to all Producers on equal terms.  It is also violated by allowing non-producers and counter-producers to participate in the Market.  When this law is violated we find non-producers and counter-producers in the Market on unequal terms.  They are taking money out of the Market without the correct amount of self-produced goods and services placed on the Market for the money they receive.  They are in effect taking money away from the Producers who create goods and services and don’t receive the correct amount of money for their production.  The Producers don’t receive the correct amount of money because the non-producers and counter-producers are taking more money than their production is worth.  Violating the third law leads to the violation of the second law.  It leads to the Producers not being fully rewarded for the production of goods and services they create.

The forth law can be violated.  At present time on this planet it does get violated to an extreme.  When a money supply is expanded it is not held constant.  Expanding the money supply is very destructive to individuals, families, organizations, societies, nations, mankind and environments. 

When a money supply is expanded, money value is stolen from the money in circulation.  The money in circulation loses value to the newly created money.  Money value is transferred to the newly created money from the current money.  This is another way the non-producers and counter-producers take money without an exchange of commodities, trades, goods and services for it on the Open Market.

In The Four Basic Laws of Economics we have four basic laws.  When these laws are applied we have great prosperity.  Three of these laws can be violated.  This first law cannot be violated.  The violation of the remaining three laws harms the Producers and rewards non-production and counter-production.  Maintaining the four laws rewards production and Producers.

Producer Rewarded Open Market Economics
The Science of Economics
By: R P Obrigewitsch
Feb. 27, 2011