Compendium: How the Central Bank sets the Exchange Rates under the Work-Standard

In the entries “How the Economy creates Arbeit” and “How Arbeit is converted into Geld,” all of the important steps on the basic processes of the Work-Standard were laid out. Granted, they were discussed in the context of a single transaction by one Vocation within a larger State-Owned Enterprise. Both entries demonstrated how a single Vocation received an influx of Life-Energy to yield the Arbeit that was contributed to the Life-Energy Reserve of the Central Bank. From there, the Central Bank converted the Arbeit into Geld.  It is realistic to expect the national economy under the Work-Standard to adhere to the Life-Energization Reciprocity (LER) process of Life-Energy into Arbeit and Arbeit into Geld.  

Additionally, it was also established in those entries that the Value of the Currency is affected by the Quality of Arbeit (QW) in accordance with the Attrition/Inaction and Mechanization Rates.  That in turn determines the Quality of Geld (QM), which is the amount of Geld that can be yielded by converting them from Arbeit. The Geld can then be used by the State for practically everything the nation-state needs and wants, from the macrocosmic to the microcosmic. The great question that must be asked now is how does the Central Bank decide Qualities of Arbeit and Geld within Exchange Rates. What was elaborated in the two preceding entries is still applicable to the nation-state relying on the Work-Standard. The real test, as it remains to be seen, is how it operates beyond national borders.

Can the Work-Standard coexist internationally alongside Liberal Capitalist Floating Exchange Rates, where Kapital is affected by the Incentives of Supply and Demand? Is it possible to envisage how the Work-Standard operates between two nation-states with Currencies pegged to the Work-Standard itself? What would be the metrics that govern their transactions within Exchange Rates as part of an existing “Real Trade Agreement” (RTA)?

To ascertain the significance of those questions, it becomes necessary to deduce what how best to group the various variables mentioned in the two aforementioned entries. Work-Intensity (WI), Work-Productivity (WP), Force Multipliers (FMs), Attrition/Inaction and Mechanization Rates are all variables that affect the Quality of Arbeit, Total Economic Potential (TEP), and Real Total Economic Potential (RTEP). However, all of these variables only affect economic activities that originate from and are a part of the national economy alone. Any and all foreign trade with other nation-states, including those on the Work-Standard, will always be calculated as part of the TEP and, upon factoring the Attrition/Inaction Rate, RTEP.

Two new variables are needed here to distinguish between Arbeit from national economic activities and those from foreign ones within trade. The variables will be referred to as “Economic Socialization” (X) and “Economic Foreignization” (O). All of the premises that factor into the RTEP of the nation-state as its “X” apply for the variables behind the “O” of another nation-state, particularly those under the Work-Standard; Liberal Capitalist nation-states are also factored as part of the “O” variable within their own category only.

It may seem somehow counterintuitive at first, but the motivation behind labeling those two important variables as simply ‘X’ and ‘O’ has its basis. Two of those are the need to find the “Total Economic Socialization Rate” (TXR) and the “Net Economic Foreignization Rate” (NOR). The TXR records the surpluses in Arbeit and Geld that the nation-state earns from international trade. The NOR gauges the deficits in Arbeit and Geld though international trade, including how much Schuld was gained from trade imbalances. Together with TEP and the Attrition/Inaction Rate, TXR also affects the RTEP and in turn the Quality of Arbeit overall.

As a general procedure, when the Central Bank needs to figure out how the RTEP affects international trade, it will factor the TXR and NOR. When it wants to know whether the nation-state is running trade deficits, it will deduct the NOR from the TXR and RTEP. The NOR represents all of the outgoing Schuld, Arbeit and Geld that the nation-state is not receiving from its economic and financial activities through trade with other nation-states. The Quality of Arbeit for both sides of the trade agreement will be the variable that affects the Exchange Rate. This too is another area where the Work-Standard deviates from the Liberal Capitalist conceptions.  

The Central Bank can narrow the baskets down to the criterion of the other Currencies being pegged to the Work-Standard or still operating on Liberal Capitalist conceptions of finance. Thus, what has been written about the significance of the Quality of Arbeit is also applicable to the Quality of Geld as well. The greater the Quality of Arbeit is for the nation-state with the Work-Standard, the more likely their Currency is going to appreciate against any given basket of other Currencies. That can be correlated to a lower Quality of Geld where small amounts of Arbeit is capable of creating large amounts of Geld. Conversely, a lower Quality of Arbeit has that same Currency depreciating against any given basket, which can be correlated to having a higher Quality of Geld. The basics behind calculating the Exchange Rate and how much will be left over through conversions between two Currencies remain unchanged. This enables the Central Bank to set an official Exchange Rate and make any adjustments as needed.

Imagine for a moment that the Central Bank needs to find more precise amounts for determining how much the Currency depreciates or appreciates. There may be circumstances where the Central Bank is forced to keep detailed records of how much Liberal Capitalist Currencies as Kapital fluctuates in Price across a specified period of Zeit. There may be other conditions where the Central Bank would like to know more about certain Force Multipliers within its own nation-state in comparison to those found in others. It is also possible that the Central Bank is interested in determining specifically how much Arbeit is converted into Geld (and, if possible, Geld being converted into Kapital through international trade). In the case of the latter, that arises from the State establishing “National-Socialized Enterprises” (NSEs) as part of its trade agreements.

Several variables exist for the Central Bank to discern all of the above through the Qualities of Arbeit and Geld.     

For the Quality of Arbeit, there is the Meaningful Work Rating (MWR), the For My People Index (FMPI) and the Civil Service Performance Index (CSPI). The MWR determines the rate at which foreigners are willing to allow their Arbeit be converted into Geld by the Central Bank. FMPI refers to the Geld that they intend to send back to their own nation-state, while the CSPI is the amount of Geld that they will need for their Duties under the terms of a trade agreement. In the latter two categories, they determine how much Geld is capable of improving the Quality of Arbeit by lowering the Quality of Geld.

And for the Quality of Geld, there is the Cost-of-Dying Rating (CDR), the World Improvers Index (WII) and the Ease of Terrorizing Others Index (ETOI). As the Work-Standard version of “Cost-of-Living,” the CDR denotes the amount of Geld that the Totality will need from the Central Bank before Death. The WII refers to the amount of Arbeit that the Totality has devoted to foreign trade and investment. And the ETOI determines how much Arbeit is devoted to serving foreign tourists and investors; a high rating is indicative of the nation-state relying on tourism and foreign investment as sources of Geld. In short, all of these indices increase the Quality of Geld by lowering the Quality of Arbeit.

For both sets of indices, the Central Bank will be coordinating its activities with the Kontore and Commissariats of Wages and Prices. A few additional variables exclusive to this particular codetermination becomes applicable once the State accepts the terms of a Real Trade Agreement. Rather than FDIs (Foreign Direct Investments), the State is enabled by the Work-Standard to allow for the existence of SFIs (State Foreignization Investments). SFIs refer to the influx and outflux of Arbeit and Geld or Kapital and Schuld across the nation-state’s borders through its National-Socialized Enterprises. They are applicable for each NSE and can be factored alongside the indices for Qualities of Arbeit and Geld to find the Total Economic Socialization and Net Economic Foreignization Rates. With all of these variables coming full circle back to TXR and NOR respectively, the Central Bank is now able to calculate how much Arbeit and Geld was gained or lost from foreign trade and how that in turn affects the Value of the Currency within Exchange Rates.     

[Note: If everything discussed here seems difficult to follow, and provided it was organized coherently, then the ongoing readings of Der Arbeiter are applicable here. The Work-Standard demands a distinct mindset in understanding and conducting everyday economics and finance. As I pointed out early out in those entries, the Work-Standard requires a deeper understanding that involves perceiving the Totality as being far greater than just the sum of their parts.]  



Categories: Compendium, Philosophy, Politics, Technology

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  1. Compendium: Total Financial Potential Formula (Pt. II of II) – The Fourth Estate

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