You Create Money

A Producer Rewarded Economic System

5.0 Production Rewarding

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Rev March 5, 2019

This is the fourth set of axioms in the Axioms of Economics.  This set will include two sections of Axioms.  The first section includes the Axioms covering ProductionRewarding.  The second section includes the Axioms covering Money Supply and Money.

Rewarding Production has been found to lead to prosperity.  In Societies and Nations where production is rewarded, those Nations and Societies thrive very well.  In Societies and Nations, where non-producers and counter-producers are rewarded we find recessions, depressions, wars and hard economic times.  The level of prosperity for Societies and Nations rewarding non-production and counter-production is low and declining.  The only solution that will solve a Society or Nation declining economically is to fully reward the Producers of the commodities, trades, goods and services.  They must be rewarded in full for the money, value, energy, wealth, capital and power they have created.

Production Rewarding:

  1. As production rewarding increases, money value increases.

Money value increases because increasing production rewarding gives Producers incentive to increase production rates.  This increase in production on the Open Market causes demand for products to decrease, decreasing the value of the products.  This allows for each money unit the power to purchase more production per money unit.

  1. As production rewarding decreases, money value decreases.

Money value decreases because decreasing production rewarding lowers Producer incentives. Lower Producer incentive decreases production rates.  This decrease in production on the Open Market causes demand for products to increase.  Increased demand increases the value of the products.  This increase in product value causes an increase in money units necessary to purchase the product.  The money now has less value because it takes more money units to purchase the same product volume.

  1. As the rewarding of non- production and/or counter-production decreases, money value increases.
  2. As the rewarding of non-production and/or counter-production increases, money value decreases.
  3. Reward production and only production, never reward non-production or counter-production.
  4. Reward the Producers and they will reward you with abundant production.
  5. Reward non-producers and non-production will increase while production decreases.
  6. Reward counter-producers and counter-production will increase abundantly while production decreases.
  7. Rewarding Producers enhances the prosperity of the individual, family, society, mankind and the environment.
  8. Rewarding non-production or counter-production directs the individual, family, society, nation and mankind toward slavery.
  9. Any individual making money in any other way than through the production of commodities, trades, goods and services is a rewarded non-producer or a rewarded counter-producer.
  10. A society that is rewarding non-production and/or counter-production is on the road to slavery.
  11. Any society that is on the road to slavery is rewarding non-producers and/or counter-producers.
  12. By rewarding non-producers and/or counter-producers you are helping yourself toward slavery along with the non-producers and/or counter-producers.
  13. Increased production rewarding decreases crime and war.
  14. Increased non-production and/or counter-production rewarding increases crime and war.
  15. War when used as the first solution or any solution other than the last solution to a problem is a system of rewarding counter-production.  War is a destructive activity.

Money Supply and Money Axioms:

The money supply provides money symbols used for the medium of exchange.  When a constant money supply is maintained we have a standardized economic system.  The money supply gives us physical universe money unit objects.  These money unit objects are where value, energy, wealth, capital and power are transferred and stored.  The value, energy wealth, capital and power are transferred into and stored in money units during the process of marketing commodities, trades, goods and services on the Open Market.

This section includes the formula for applying a Constant Money Supply to Banking.

It has been found; when constant money supplies are maintained, very stable economic systems are created by Producers.

  1. When a constant money supply is maintained, we maintain a constant unit of measure in money units for monitoring the value of production.
  2. Money, in money units, is a means of measuring value of products on the Open Market.
  3. A constant money supply applied to banking;

A.  Hold the number of monetary units constant in the money supply.

B.  Decide what ratio, money on hand to money loaned out, is most stable when loaning out money. Then hold this ratio constant.  This will set up banking so it will never fail.

C.  Banks don’t loan out money beyond the established stable ratio of “money on hand to money loaned out.”

D.  Creating money, “out of thin air,” is the act of transferring value from the money currently in circulation and placing the value into the newly created money without an exchange for it on the Open Market.  This is an act of counter-production.  This is an act of taking other peoples’ money (value, energy, wealth, capital and power) and using it with no production in exchange for it.

E.  Creating money, “out of thin air,” is very destructive to societies and nations.

          This formula maintains a constant money supply.

  1. The value of money is inversely related to the size of the money supply.
  2. Creating money, “out of thin air,” to increase the money supply decreases the value of all monetary units in proportion to the number of money units created “out of thin air.”
  3. Creating money “out of thin air” to expand the money supply is a form of counterfeiting and rewards non-production and/or counter-production.
  4. An open or floating monetary system, where the money supply is not held constant, has few winners and many losers.
  5. Expanding the money supply is not an ethical act.
  6. When the money supply is expanded, the individuals first to receive the newly created money reap huge profits.

These individuals reap huge profits by transferring value, energy, wealth, capital and power from the money currently in circulation.  This value, energy, wealth, capital and power are transferred into the newly created money.  They are taking money, value, energy, wealth, capital and power without placing commodities, trades, goods and services on the Open Market in exchange for it.   The other individuals in the society lose money value, energy, wealth, capital and power which are transferred to the individuals who first received the newly created money.

  1. Expanding the money supply leads to inflation.

Money loses value when the money supply is expanded.  It requires more money units to purchase the same commodities, trade, goods and services.

  1. Shrinking or contracting the money supply increases the value of money units in the monetary system.
  2. Production doesn’t depend on the monetary system for prosperity.  The monetary system depends on production for the value that is inherent in money.
  3. Production is senior to money.  Production gives money its value, energy and power.
  4. Production is senior to capital.  Production gives capital its value, energy and power.
  5. Production is senior to wealth.  Production gives wealth its value, energy and power.
  6. Production creates the power an individual, family, society and Nation possesses.
  7. Money lends efficiency to production.

It is more efficient to transfer the value of one’s production into money units.  One can then transport the money units to another location and use them there to purchase needed and wanted products.  Before the concept of money was developed and put into practice, production was carried from location to location with the purpose of trading it for needed and wanted products.  This is the barter system.  It is very inefficient. 

  1. Money is always junior to production and production is always senior to money.
  2. In order to get money out of the money supply, an individual must always exchange production for it on the Open Market.
Producer Rewarded Open Market Economics
The Science of Economics
By RP Obrigewitsch
Revised March 5, 2019

 

 

 

 

 

 

5. Creating Money

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Revised November 14, 2013

It is important to note: The Producers who create the products create the exchange value and production value the money unit symbol represents.  The exchange value and production value is transferred into money units during the process of Marketing.  Since Producers have created the exchange value and production value they now own the money units.  They have created the value inherent in the money units received when marketing the commodity, trade, good or service.  You could say they “created the money.”  This money was created at the precise time the commodity, trade, good or service was created.  The Producer exchanges the commodity, trade, good or service on the Open Market, transferring product value to the symbol called money.  In essence the Producers are creating money when they are creating commodities, trades, goods and services and exchanging them on the Open Market

We can say; “The Producer producing one thousand (1000) dozen eggs per day is creating two thousand (2000) money units of exchange value per day.  The Producer producing ten (10) coats per day is creating two thousand (2000) money units of exchange value per day.  The Producer producing five hundred (500) gallons of milk per day is creating two thousand (2000) money units of exchange value per day.  The Producers producing five (5) computers per day are creating five thousand (5000) money units of exchange value per day.  The Producers producing one (1) car per day are creating thirty thousand (30,000) money units of exchange value per day.”  The exchange value of every commodity, trade, good or service produced by any of the Producers, in the realm of mankind, can be expressed in terms of money unit value when marketed on a Market. Only when commodities, trades, goods and services are marketed on the Open Market, open to all on equal terms, is the true and correct money unit value achieved.

It can be seen: All money is created by Producers (Workers and Laborers) who create commodities, trades, goods and services.  These products have exchange value.   The money symbol represents this exchange value.  Money with an absence of production does not exist.  It would have no exchange value.

Money is a material object.  In order for money to exist with value, energy and power it must have production taking place.  This value, energy and power is transferred to the money from the production.  The transfer takes place during the exchange of products for money on the Open Market.

As the Producers produce daily, they produce the exchange value and product value which backs money and gives money its energy and power.  Money is created through and backed by production.  With the absence of production, money has no power, energy or exchange value.  Money has no backing.  The production level of a society as a whole backs the value which is inherent in the money units and the money supply.  The production level of a society gives the money its value.  The money value in a society fluctuates with the production level of that society.

When production enterprises are moved from one Country to another Country, money power and value are lost to the Country moving the production enterprises out.  The country receiving the production enterprises gains money power and value.  This is what has been happening for the past 30 to 40 years in the United States.  Production enterprises have been moved to foreign countries.  These foreign counties have been gaining money power and value.  The United States has been loosing money value and power.

The power, energy and wealth of a Nation is directly tied to its production level, money value and money power.  The Nation moving production enterprises to foreign countries is literally transferring National and International Political Power to the foreign countries.  The United States has been transferring its’ Power to foreign counties.  The United States has been loosing Power and the countries where the production enterprises have been transferred have been gaining Power.

When the production level of a society is high, and the Producers are being rewarded for their production and the money supply is held constant, the money value of the society is high.  When the money supply is expanded money value is lowered.  When production level is high and non-producers and counter-producers are taking money with no exchange for it the money value declines.  When production levels are low the money value is low.  Any non-producer/counter-producer, out-exchange, activities lead to lower money value and lower production levels.

The act of creating money, value, energy, wealth, capital and power is done by the Producers who are also Workers and Laborers.  All money is created through and by some form of work and labor.  All wealth is created through and by some form of work and labor.  All capital is created through and by some form of work and labor.  There are no exceptions.  Labor gives a Nation its’ wealth.  Adam Smith discusses this in his Wealth of Nations book, published in the late 1700s.

There are three basic forms of Work and labor.  Work and Labor is achieved through; (1.) predominantly physical action, (2.) through a combination of physical action and mental action (3.) and/or through predominantly mental action.  These are all forms of work and labor.

Management also creates money, value, energy, wealth, capital and power.  Management uses a form of work and labor to create money, value, energy, wealth,  capital and power.  Management for the most part uses the mental action form of work and labor.  Management, despite its hate and attacks on producing workers and laborers, uses a form of work and labor to create money, value, energy, wealth, capital and power.  The money management receives in pay represents the value, energy, wealth, capital and power management created during production.  If management receives money, value, energy, wealth, capital and power without using any of the three activities of work and labor it is out-exchange.  Management is stealing money, value, energy, wealth, capital and power from the producing workers, laborers and the producing managers.

There should never be an antagonistic relationship between the producing laborers and the producing managers.  Both groups use some form of work and labor to produce commodities, trades, goods and services.  They exchange the commodities, trades, goods and services on the Open Market for money, value, energy, wealth, capital and power.  The solution is to pay all producing laborers, labor and management, the correct amount of money each one has created through the actions or activities of production.  All producing laborers are both management and labor working together in concert to fulfill their purposes of prosperity.

There are counter-producers who pass themselves off as managers and as laborers.  They need to be removed from producing enterprises.  Counter-producers cause much damage if allowed to exist in a producing organization.  They will destroy prosperity for themselves along with the prosperity for all producers, manager laborers and labor laborers, in a production Organization.  I have seen this in actual practice.  It is not an uncommon phenomenon.  Producing managers and producing laborers tend to have pity on these counter-producers or have fear of them and allow them to exist in the organization.  Then they can’t figure out why the organization continues to fail.

When an organization is failing look around and you will find counter-producers and non-producers sucking the energy out of the organization.  You will find counter-producers thrusting forth destructive actions that stop, impede or destroy the organization.  Don’t have pity on them. Simply remove them from the premises.  Don’t fear them for they are cowards and will turn tail and leave the area when they are exposed and when the  correct force and action is turned on them.

The counter-producer managers have for many years looked down on Labor.  They have made the word labor into a bad word.  They have kicked producing laborers around.  They have pushed producing laborers toward slavery and at times have enslaved the producing laborers.

Counter-producers in management have used this antagonistic attack on labor as an aid to take money, value, energy, wealth, capital and power from labor without production exchanged for it.  This attack is made in order to push the creators of the money, value, energy, wealth, capital and power down toward slavery and steal the money, value, energy, wealth, capital and power the producing labors have created.  There are those in management who would attack labor as a way to discredit laborers.  They are attacking and discrediting labor so labor won’t place a claim on the money, value, energy, wealth, capital and power the producing laborers have created.

Creating money, always, no exceptions, requires some form of prosperity directed action or activity.  The activity is either predominantly physical, predominantly mental or a combination of the two.  If one is receiving money without some form of prosperity directed action or activity that results in an exchangeable commodity, trade,  good or service that person is out-exchange.  That person is stealing money, value, energy, wealth,  capital and power.   It is being stolen from the producing laborers and producing managers who use prosperity directed actions and activities resulting in production.  All money, value, energy, wealth, capital and power is created through and by producing laborers and producing managers.  All production requires some form of work and  labor, be it work and labor from the conventional Laborer or work and labor from the conventional Manager.

Producer Rewarded Open Market Economics
The Science of Economics
By: RP Obrigewitsch
July 13, 2012

 

1.7 Capital Destroying Economics

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Revised November 17, 2013

In the previous article we started to deal with the Capital Destroying Class of Capitalism.  We discussed the fact, earlier, that there are two classifications of Capitalism.  There is the prosperity creating classification and there is the prosperity destroying classification.  The prosperity creating classification is Capital Producing Economics.  Producer Rewarded Open Market Economics is a Capital Producing Economics System.   Capital Producing Capitalism is a Capital Producing Economics System.

The prosperity destroying classification is Capital Destroying Economics.  Capital Destroying Capitalism is in the Capital Destroying Economic System.  Communism and Fascism are also in the Capital Destroying Economic System.

Capital as used in economics means; the amount of money or property that a company or a person uses in carrying on a business.  Capital also means; national or individual wealth as produced by industry and available for reinvestment in the production of goods.

Destroy or destroying means:   1. to break to pieces; make useless; spoil; ruin:  2. to put and end to; do away with.  Destroy means: to make useless by breaking to pieces, taking apart, killing, or in any other of many ways. 

When non-producers and counter-producers take money without an exchange for it they cause the value, energy, wealth and power in money to be less.  Money loses purchasing power when non-producers and counter-producers take it without an exchange, of an equal production value, for the money.  Rewarding non-producers and counter-producers causes money to have less value and energy per money unit; they spoil and ruin the value and energy in money.  When Banks expand the money supply, they cause money to have less value and energy per money unit.  They spoil and ruin the value and energy money possesses.

The Capital Destroying Economic system is predominantly being used, today, on planet earth.  This system of Economics causes wild fluctuations between prosperity, recessions and depressions in the field of Economics.  Much confusion is caused when attempting to produce prosperity using Capital Destroying Economics.  It is a covertly destructive and chaotic system of economics.  Anytime prosperity is achieved, the Capital Destroying Economic system eventually goes into a self-destruct mode and collapses the economic prosperity.

This economic collapse is brought about by allowing non-producers and counter-producers into the Marketing system.  It is caused by allowing non-producers and counter-producers into the Money Supply.   This economic collapse is caused by believing we should allow rich and powerful people to take money without an exchange or not enough exchange for it.  An economic collapse is also brought about by believing we need people in the emotional states of chronic anger, hostility and covert hostility running our Companies, Corporations and Political Systems.  On the Planet today, people of the emotional states of chronic anger, hostility and covert hostility are mistaken for sane and able people.  After all, they appear to “know,” with such “force and/or smoothness!”   They appear to know what they are doing and they appear to be “right!”

People in the emotional states of chronic anger, hostility and covert hostility are destructive.  They, because of their negative emotional state, are non-producers and counter-producers.  Their product is the destruction of the companies they work for and the countries they run politically.  They are destroyers of Capital!  They hire and promote people of their own emotional state; chronic anger, hostility and covert hostility.  The companies, corporations and nations that do prosper, prosper despite the counter-efforts of the leaders in the emotional states of chronic anger, hostility and covert hostility.

They prosper because they have a few Super Producers working in key positions in the Organizations.  These Super Producers make production happen despite anything.  They are very able individuals; they don’t let the destructive leaders destroy the Organization.  They produce and produce and find ways to get around the counter-efforts of the destructive non-producing and counter-producing leaders.  Usually they get promoted to a certain level and don’t get promoted any farther even though they carry the Organization on their backs.  The destructive non-producers and counter-producers leading the Organizations; believe it is leading by anger and hostility that is causing the success of the Organization.  When the Super Producers leave the Organization, the Organization collapses. The destructive non-producing and counter-producing leaders can’t understand what caused the collapse.  They are usually clueless because they live off the back of the Super Producer.  They are unaware the Super Producer was the key to the organizations success.  The destructive non-producers and counter-producers have their attention on destructive activities.  They don’t notice constructive activities in progress.

You can spot the chronically angry, hostile and covertly hostile person (leader or worker) by observing how they communicate and by what they do in their activities.  They communicate in general terms.  They are very often out sequence and non-sequitur in their discussions.  They can be very literal in their interpretation of a piece of communication.  They can be found involved in excessive alcohol and drug use.  They can be found to be involved in unusual sex practices, such as with prostitutes and with many partners.  The Producer and Super Producer will overlook and compensate for the faults of the chronically destructive leader and worker.  Meanwhile the company, corporation or nation suffers and follows an economic decline as money, value, energy, wealth, capital and power is destroyed.  The destructive leaders destroy prosperity.

In many Organizations on Planet Earth; when you find the Organization prosperous, you will find a few Super Producers holding it up despite all the counter-efforts of the destructive leaders and workers in the Organization.  In many Organizations on Planet Earth you will find a Super Producing Leader maintaining a high prosperity level despite the counter-efforts of some destructive non-producing and counter-producing workers inside the Organization.

Steve Jobs is an example of a Super Producing Leader.  The Board of Directors of Apple fired him.  The company almost died.  He came back and brought it back to prosperity.  When you find an Organization being led by Super Producers, the Organization is usually doing very well.  The trick is to get all positions in an Organization filled with Producers or Super Producers.

Over many, many years, Capital Destroying Economics has brought about much suffering and hardship for many people, organizations, families, societies and Nations.  Capital Destroying Economics in its basic form rewards non-production and counter-produces.  It provides for the concentration of wealth along with the power derived from wealth to be placed into the hands of a small group of non-producers and counter-producers.  These non-producers and counter-producers have not created products that can be exchanged on the Open Market for the wealth.

Capital Destroying Economics provides for the transference of wealth, created by the Producers and Super Producers in an Organization.  The wealth is transferred from the Producers and Super Producers into the hands of the chronically destructive leaders of an Organization.  Wealth is also transferred from the Producers and Super Producers into the hands of all other non-producers and counter-producers existing in an Organization.

The concentration of Capital into the hands of a few non-producers and counter-producers has given them tremendous power.  They have used this power to take over the political system. With these political systems, Communism, Fascism, Right Wingism and even Left Wingism, they establish laws that create a legal structure they use to funnel much of the Capital created by Producers into their hands.

Production is the action of doing and converting energy into a product.  Marketing is the action of exchanging products for products among Producers. This is basic Marketing; exchanging products for products.  Barter is exchanging products for products.  In more advanced Marketing, Products are exchanged for money units. When products are exchanged for money units, money units are being used as a medium to transport value from the product.  We take this one step further; we say money is also a symbol in which the energy generated to create products is transported to the money unit during Marketing.

The energy used to create the products continues to flow in a society as long as products are “always” exchanged for money units.  More and more energy is being created and added to the Open Market.  As this energy level grows we see money velocity increase.  This increase in money velocity means money is changing hands more rapidly in the society.  This energy can be felt when a society achieves prosperity.  The individuals and the society are much more alive and vibrant.  Non-producing and counter-producing Capital destroyers don’t like this high energy level.  Producers love this high energy level, they revel in it!

When money is taken from the Market with no exchange in production, energy is being removed from the Market.  When this energy is removed from the Market it gets destroyed disappears or vanishes.  The money units, that are the symbols for this energy, lose value.  This is where money (Capital) gets destroyed.  Money velocity slows.  Money value and the amount of energy in each money unit decreases.  A recession starts, if ever so slightly.  With the out-exchange increasing, more and more money value or money energy (Capital) gets destroyed.  Money loses value and energy causing money velocity to slow.  Money value and energy, as Capital, is being destroyed.  All other forms of Capital start to lose value.  What we are describing here is a state of Capital Destruction.

Banks expanding the money supply, speculators who exchange nothing for the huge sums of money they take are huge destroyers of Capital.  Excessive military spending and wars are huge destroyers of Capital.  Any out-exchange activity is a destroyer of Capital.  Monopolies are destroyers of Capital.  Many of the most ardent advocators of Capitalism practice Capital Destroying Economics.  They are engaged, in a big way, in the destruction of Capital.

You ask, “Why is Capital Destroying Economics so destructive?”   Capital Destroying Economics destroys prosperity, it eats up wealth and Capital, it consumes prosperity until a society literally dies and if it doesn’t totally die out it causes tremendous hardship and suffering.

Examples of Capital Destroying Economics at work can be found around the world and throughout history.  Almost all wars are the result of Capital Destroying Economics at work.  The depressed conditions of Third World Nations are traced to practices of Capital Destroying Economics.  The current Great Recession of 2008 is the result of Capital Destroying Economics being practiced.  Communism is a Capital Destroying Economic System developed as a solution to past practices of Capital Destroying Economics.  Communism came into existence as an answer to Capital Destroying Capitalism.  Desperate people under the rule of the Capital Destroying class of Capitalism agreed to accept Communism.  They had two choices, death or Communism.  They chose Communism which wasn’t any better than Capital Destroying Capitalism.  They are still mired in a Capital Destroying Economic system.  Communism is a Capital Destroying Economic System.  They went from one Capital Destroying Economic System into another Capital Destroying Economic System.

Now that we have seen the consequences of Capital Destroying Economics we can see why we need to insist on working toward a pure Capital Producing Economic System.  It is self evident that Capital Destroying Economics slows money velocity and destroys Capital.  It also is self evident that Capital Producing Economics, Producer Rewarded Open Market Economics, increases money velocity, increases the value and energy in Capital and money and leads to abundant prosperity.

Producer Rewarded Open Market Economics
The Science of Economics
By: RP Obrigewitsch
March 13, 2012