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Copyright 1993 by Bernard Palicki. All Rights Reserved. The second of four illustrations, Figure A2-2 Analog Computer Model of the Balance Equation and the National Household is provided to describe the analog computer nature of the circular flow of money within the United States as a national household.
Two of four illustrations, Figure A2-1 and Figure A2-2 are functional flow diagrams to describe and emphasize both the natural and circular nature of the flow of money, from the 'power source' that is the Total National Money Supply (TNMS), under the care of the central banking system of the national household, through both the government and private sectors of any national household. (It is the U.S. National Household under the Federal Reserve Banking Act of 1913, used for illustration purposes.) Within the reality of U.S. Federal Government Banking and Finance, this web site is an offering of a new presentation of 'WHAT IS', and how 'WHAT IS', CAME TO BE'. The newness is simply emphasizing and illustrating the universal presence of the 'Balance Equation from Accounting Principles' - THAT IS, the fact that the 'Balance Equation' applies to the wage earning worker, the same as it applies to all functions of government and all business structures (companies, corporations, partnerships, proprietor-ships, you name it.) The other part of the "newness" offered by this site is revelation that behavior of the distribution of income across all three elements of the Balance Equation (Assets, Liabilities and Capital) is a PROCESS. That PROCESS for distribution of 'income' is exactly the same as the PROCESS behavior of the electronic analog computer in response to inputs. Behavior of the individual human is influenced or effected exactly the same as the electronic analog computer. To wit - it responds only to the input it receives, and produces an output that corresponds to, or is a reflection of, the input. Every individual who has ever lived, lives now, or will ever be born, has his own individual Balance Equation. Behavior of the individual human is like behavior of the individual electron - it shall always seek the path of least resistance. (LET'S NOT GET LOST IN THIS ANALOGY. The electro-mechanical analog computer is a man-made invention, to the image and likeness of man - just as man is a creation of God, to the image and likeness of God, wherein both man and his inventions are subject to the same natural laws from the Iron Hand of God. The Natural Laws are too rigorous, too orderly, too systematic, and too exacting, to be accidents.) Parts of this illustration for focus is PROCESS and PROCEDURE for Expansion of 'Total National Money Supply', using U.S. Treasury Certificates for sale in the Open Market for Money. While this device, process and procedure, provides for an essential 'elasticity' of national money supply, the constitutional power and authority to do so has been abused - whether intentional or not. 'Inflation of money' has a classic definition. The classic definition of Inflation is: "Too much money chasing too few goods and products". It's 'classic' because it's a valid and constant (never changing) fact of life. The critical question here is, "Why does inflation exist?" or, "What is the cause of inflation?". The very simple answer, or cause of inflation, is: "Creating, or adding, new money into circulation, at some rate that exceeds the natural growth rate of the 'Total National Population Headcount". The human race cannot produce more than it can consume: if and when it ever does, the excess becomes waste that is flushed into the sewer. The more important question (asked by others previously and long ago) is: Can the human race produce enough to keep pace to satisfy its needs for survival? An earlier pervert of what 'economics' (management of the national household) is all about, 'Thomas Robert Malthus' (1766-1834), asked the same question and said, 'no'. Since men will never cease to marry and have children, he saw an outcome where population would grow beyond means that earth could support. This caused 'economics' to be called the 'dismal science'. Whatever - Views like those expressed by 'Malthus' have fed and continue to feed support of global socialist control of the sources and means of production. These means include family planning, birth control and abortions, and all the laws emanating from International U. S. Foreign Policy Agreements, in the 1960's and 1970's, to control or regulate environment. These International Foreign Policy Environment Agreements are incorporated into the GATT and NAFTA Trade Zone Agreements - instruments of the 'New World Order'. Whatever - New Money, added to existing money in circulation, can only enter circulation through DEBT. Therefore, adding new money faster than population grows is, in effect, an invisible increase of LIABILITIES, by virtue of the fact that the purchasing power of currency for the wage-earning worker is decreased faster than the wage-earning worker earns money to pay for this invisible DEBT, not of his own making - for the sole purpose of supporting the market for money - buying and selling currency, or buying and selling 'debt'. Inflation then is the fundamental cause of the 'rat race', the treadmill of all places of employment - in or out of the 'paper' structures of 'government' or 'business' structures. No amount of inflation is tolerable or acceptable, because any amount of inflation distorts, for government, business or the individual, the exchange value of currency as a unit of measure (the length of the yardstick) for a balanced trade or exchange of goods, products or services. Stated reasons by Private Federal Reserve Banking Authority for increasing interest rates to counter-act inflation is a fallacy (or just plain 'phoney'). Where 'taxation' is the only source of income for 'government', the 'interest rate' (cost of borrowed money) is the only source and means to control income for banks and all other financial lending institutions. The real reason the Fed has Constitutional Power to increase 'interest rates' is to counter-act the cheapening of the purchasing power of the currency that is cheapend by inflation. Here, and again, both businesses and the wage-earning worker are hit with an increase in DEBT, not of their own making. To suggest that anyone can live or maintain without 'credit' is to suggest that Earth doesn't have to spin on its axis for stability of its orbit around the Sun. To suggest that everyone should start a business from his home is a complete absurdity - a throw-back to 'cottage industries' of the dark ages. The set of 'Corrective Actions' offered by this web site does not change the process, nor does it change the structure of government and banking, or use of the compound interest rate formula for computation of the 'accelereted increase in the cost of debt'. The set of Corrective Actions, proposed and recommended at this website, provides for Amendment to the Federal Reserve Act of 1913, (where voting elections cannot touch it). Such an Amendment to the Federal Reserve Act of 1913 would contain the currently unlimited power of 'government banking and finance' to perturbate, exacerbate, or otherwise interfere with and prevent - through inflation, and the high and changing cost of borrowed money - stability and balance of the 'trade process'. Fair or balanced exchange of goods, products and services through the 'trade process' is a requirement that is natural and inherent to survival and composition of the human race - for 'civilization'; 'civilization' cannot exist without social, economic and political order. Advance/Return Options:
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