Those of you may have probably read these two entries in the SMP Compendium that Arbeit is given a value denominated in a placeholder currency. This is understandable but there are a few questions which I have been thinking about is mathematically running conversions between Arbeit and Geld. Since I am currently pondering over them while I work on the next upcoming today, I thought I should share them with everyone who reads The Fourth Estate regularly, since many of you are into topics related to finance and accounting.
How would accountants and financial analysts perceive the process of converting Arbeit into Geld mathematically? Would they interpret Arbeit and Geld as being two separate tangible things or would they view the Geld as being pegged to the Arbeit? Or would they still continue to interpret the Geld as being something more akin to either a Commodity Currency, a Representative Currency, or a Fiat Currency?
These questions will become increasingly relevant as I continue to outline the mathematical basis behind the Work-Standard, including the formatting of its equations and formulas. I am convinced that I should demonstrate where my thoughts are coming when I conceptualized the Work-Standard’s conversion of Arbeit into Geld by the Central Bank within a relevant SMP Compendium entry.
To begin, imagine for a moment that the Quality of Arbeit of an entire nation-state had an average of 2,124 GDM. The nation-state’s Total Financial Potential is 2,500,000,000 GDM. Assume that the Attrition Rate was at 0%.
The equation that I envisage to figure out the Quality of Geld in this context would be as follows:
Total Financial Potential / Quality of Arbeit = Quality of Geld
2,500,000,000 GDM / 2,124 GDM = 1,117,024.482 GDM
This would imply that, from all of the Arbeit generated by all of the Vocations within the Vocational Civil Service Economy, the Central Bank was able to set the Quality of Arbeit at “2,124 GDM.” If so, then the Quality of Geld would have to be a lot higher than the amount listed as the Quality of Arbeit. In this case, the Quality of Geld is listed as “1,117,024.482 GDM,” given the Quality of Arbeit, Attrition Rate, and the Total Financial Potential.
A new equation to find the Real Total Financial Potential can even be provided based on the above information. Of course, this is assuming we do not know what the Real Total Economic Potential (RTEP) and the Total Economic Potential (TEP). It would be written as:
(Total Financial Potential / Quality of Geld) * Attrition Rate = Real Total Financial Potential
If my conclusions here are anywhere close to being the most accurate and plausible, then my arguments about the Quality of Arbeit having figures far lower than the much larger ones for the Quality of Geld are correct. This implies that a lot of Geld can be created by the Central Bank from the Arbeit of a single Vocation. Have enough Vocations to generate the Arbeit needed to ensure the TFP could reach 2.5 billion GDMs without overworking them (that raises Attrition) and my conclusions from earlier this month begin to receive a proper mathematical basis.
Of course, I will not know until I decide to go forth and determine for myself.