Failure Analysis of 20th Century Economics

Grand Deceptions of Democracy, Free Trade and Globalization of Trade

Copyright 1983-2000 by Bernard Palicki, All Rights Reserved


From classic observation by Aristotle more than two thousand years ago, wealth and freedom are the grounds on which the wealthy and the poor claim power in the state.

Democrats (the 'socialists') have always claimed power to rule on grounds of pursuit of the interests of the poor and needy. Republicans (the abusers and perverts of 'capitalism'), have always claimed power to rule on grounds of pursuit of wealth.

Current domestic rivalry and antagonism that exists between 'Republicans' and 'Democrats' is a repetition of the rivalry and antagonism that existed between them during the 1930's. It's exactly the same rivalry that existed between the 'bolsheviks' ('bolshevik' means majority) and 'mensheviks' ('menshevik' means minority) in the Russian parliament in 1917. (Only thirteen years before I was born.)

No political party, by any name in the history of mankind, has ever ruled in the interests of the common good of all. What's new, in this repetition of the classic power struggle between these two major political parties, is that both claim power to rule using the same unholy sign of the cross - 'democracy', 'free trade' and a 'global economy'.

Under international trade agreements of global proportions, leadership of both political parties support division of the world into separate world trade zones by the year 2020, at the expense of national sovereignties, including national sovereignty of the United States.

In matters of domestic policy and law, their separate visions of ways and means to eliminate the gap between rich and poor are opposed - making them political enemies. In matters of international policy and law, they are totally united in their support of a 'global economy' in the name of 'democracy' and 'free trade' - making them political allies.

It no longer makes any material difference to the working individual, or the family, who gets elected to Congress or to the office of President, as long as both major political parties are allies for reasons of international policy and law under the invisible constitution of government that exists in the form of the Federal Reserve Act of 1913, as further amended by the Bretton-Woods Agreement Act of 1945, and the NAFTA international trade agreement during the closing years of the George Bush, Sr. Administration.


Claiming power to rule on grounds of 'democracy' and 'free trade' in a 'global economy' is a grand deception - a grand confidence game. Such terms are as deceptive as they are appealing.

1. The world has been a 'global economy' since the passengers of Noah's Ark disembarked after the Great Flood and scattered to form new nations and principalities.

2. By original definition, from classic observation by Aristotle more than two thousand years ago, 'democracy' is a perversion of constitutional government.

3. From the reality of experience, nothing is free - everything and everyone bears the burden of a price.

There is increasing skepticism, suspicion and fear of the arrogant and brute-force means government is using to contain drug traffic, crime and violence. There is great speculation why the increase in drug use, crime and violence occurred in the first place.

Mis-guided public law is embedded at extremely low levels of detail in the body and content of the Federal Reserve Act of 1913, creating the existing framework of government, politics and economics.

Because that framework exists at extremely low levels of detail, changes to that framework are totally immune from the results of voting elections.

This thesis asserts that the existing framework for government through politics (compromises) and economics (fragmented theories for mis-management) is at the root of causes for drug abuse, crime, domestic violence, poverty and misery.

Given the existing framework is the cause of our great domestic problems, just hiring a new group to make laws within that existing framework does not offer solution to our national domestic problems. The framework that allows for inflation, layers of taxation and high and changing cost of money must be changed

1. to eliminate inflation

2. to simplify and balance distribution of the tax burden and

3. to eliminate the high and variable (changing) cost of borrowed money.

Increasing speed of communications via computer and satellite (the Internet, for example) will not decrease the consistently increasing gap between the wealthy few and the burdgeoning population of poor. The telephone, auto and airplane increased speed of movement and communications by replacing the horse and the mule and didn't do it; what makes anyone think or believe that an even greater speed of movement and communications via satellite and computer will do it?

Greater speed of movement and communications via satellite and computer doesn't even begin to touch the perverse marriage that exists between government and the private banking system - the marriage that enables and provides for inflation, unbalanced distribution of the tax burden and the high and changing cost of borrowed money.

Many are beginning to think about and look for a third political party to provide solution to real and perceived problems with 'government'. But there is no clear or incisive third political party agenda on the horizon. To the extent that there is an increasing interest in 'independents' and a third political party, it is clear that such an interest derives from dissatisfaction and disgust with Republicans and Democrats alike, with all professional politicians, and with corruption within the entire political party system.


If 'constitution' and 'government' are one and the same, and if government means management, then 'constitution of government' and 'management' are one and the same.

If 'economics' means 'ways and means of household management', then 'constitution of government', and 'government and economics' are one and the same. Herein lies the first clue to identification and causes of our national domestic problems. Those problems derive from national household mis-management theories that cater to the self-interests of a government, banking and finance coalition, at the expense of and applied to govern or manage the working population of the United States.

So what if those who try to work for a living can't keep up and get stepped on, left out and caged in the process - they're just numbers. The masses are easier to control if they are kept in poverty and debt than if they are financially independent and stable.

By current definition of economist, the first economist in the recorded history of man didn't exist until little more than two hundred years ago. He believed that a natural order governed man's activities - that our only problem was to determine the natural order, then conform to it.

Technical appendices to the essays offer new and original understanding of the natural structure of the natural order, and imposition of the 'balance equation' from accounting principles on the natural structure of the natural order. This new and original understanding is the foundation for the 'corrective action' required to bring federal government banking and finance under control.

Four required corrective actions, like the four legs required for stability of a table or a chair, reduces government, banking and finance to their proper roles as servants, not masters, of the individual and the family in the market place - the only real game in town that has ever existed in human experience since the creation of man.

Science and technology succeeds because it's life and its success depends on the constants that exist in nature and standard units of measure. The circumference of a circle for example, independent of its size, is always 3.1416... times the diameter.

Civilization (simply, social order - or any system for living in some organized way) needs a new beginning, by establishing a stable currency - a unit of money that is a constant as a standard unit of measure of the cost of human labor.

Money is a unit of measure of the cost of human energy in the expenditure of energy in work that provides the material essentials and conveniences of life. Thus, money is a unit of measure of the cost and worth of human life - what the output or product from effort or work is worth in the market place - where the outputs or products are exchanged using money as a unit of measure for balanced trade or exchange.

A stable currency as a unit of measure of labor is the essential foundation to social order and prosperity of the working man - an essential constant that does not change dimension with time, population growth or population densities.

Four corrective actions are required to eliminate artificial and destructive variables that are at the root of causes of our social problems, and to improve the human condition. These are as repeated here as follows:

1. Zero inflation. This is accomplished by controlling growth rate of total national money supply to the growth rate of the total national population headcount.

2. Fix the cost of borrowed money or cost of credit at 5% annual percentage rate.

3. Fix the total cost of total government (federal, state and local) to an amount that is 50% of the total national money supply. Apportion 25% of the 50% to support the total cost of federal government (executive, legislative and judicial branches). Apportion the remaining 25% of that 50% to the several states based on state population percent of total national population. The states then apportion their shares to counties based on county population percent of total state population.

4. Abolish all government grants, subsidies and loan guarantees; abolish all taxes on everything except gross incomes with no deductibles except cost of borrowed money to purchase private property, not distinguishing between companies, corporations, partnerships, individuals or families.


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