With the other NSFIs accounted for, we now need to know the values for Offices IV and VI. This will also include us trying to determine the values of the KDM and KBM Accounts as well as the FECs (Foreign Exchange Certificates) that Office IV is authorized to issue by the State. We will also need to distinguish between Geld and Kapital mathematically.
1. NSFIs issued by Offices IV and VI of the Kontor
NSFIs = Office I + Office II + Office III + Office IV + Office V + Office VI
Office I = (FI1 + FI2 – SFx)
Office II = (FWP1 + FWP2 – SFx)
Office III = (EQ1 + EQ2 – SFx)
Office IV = [(FEC1 + FEC2 – SFx) + (KDM – FEC3) + (KBM – FEC4)]
Office V = [(WT1 + WT2 – SFx – SHx) + (WT3 + WT4 – SFx – SHx)]
Office VI = [(PR1 – SFx – SHx) + (PR2 – SFx – SHx) + (PR3 – SFx – SHx) + (PR4 – SFx – SHx)]
FIx = Fiefs
FWPx = Four-Year/Five-Year Work-Plans
EQx = Equipmentalities
FECx = Foreign Exchange Certificates
KDM = Kapital of Dirty Money Account
KBM = Kapital of Blood Money Account
WTx = Work-Tenures
PRx = Priority Requisition for State, VCS Economy, SSE and Military
SFx = Service Fees
SHx = Schuld
Priority Requisition Accounting
Priority Requisition deals with the funding and financing of special projects which lack the prioritization and interest of the State. The State’s scientists and engineers prefer finding investors at Office VI than to convince the State to allocate more Geld from Office VI. Similar arguments can be made for the SSE and the military, since both have certain assignments that may require them to be more discrete with their activities across international borders. Then there are usual issues of fundraising on the part of intellectuals and the religious. All of these factors and more can be accomplished inside Office VI.
The general idea behind Priority Requisition should be simple, given the implications of Office VI. Somebody has a project proposal that they would like to embark on, but they need additional sources of funding beyond what the State normally provides or else the State needs to compartmentalize its own activities in the cases of the SSE or the armed forces. Somebody else invests Geld into their Arbeit on the expectation that there will be results from the endeavor. For the sake simplicity, we will be relying on an Enterprise as opposed to any other variable for the “Totality” in our Command-Obedience Account Bookkeeping formatting. This is because the procedures employed at Office VI are consistently the same, even if the clients involved are not the same ones every single time.
We format our accounting table to show the amount of Geld that the Investor has allocated for investment, the amount of Geld that they must pay as part of the Service Fee, and whatever Schuld that they may owe to the State. Both the Service Fee and the Schuld will go to the Kontor along with their investments. The Kontor has only a fixed amount of Reserve Geld reserved for this transaction, in addition to the Investment, the Service Fee, and the Schuld from the Investor.
On the Command side, the Investor is expecting the value of the Final Quality of Arbeit (FQW) and any incurred Expenses to become greater than the initial investment and Quality of Arbeit. And on the Obedience side, Office VI is also expecting the same thing. Both Investor and Office VI are counting on the Enterprise to ensure that their Expenses do not surpass their FQW when the Arbeit is converted into Geld by the Central Bank to yield the Final Quality of Geld (FQM).
The Expenses will rise along with the FQM. The final value of FQM must be greater than the Reserves held by the Kontor and the Incomes held by the Investor. While the Enterprise receives the actual results of their endeavors, the Investor and Office VI are allowed to split the FQM by up to half. Both Office VI and the Investor must negotiate over how much they will be paying any additional Schuld that may occur from the FQM being worth less than what they were expecting.
Currency Conversion Equations
How Office IV calculates the Currency Conversion equations will depend on whether they are dealing with Geld or Kapital from the KDM and KBM Accounts.
K = G1 * Exchange Rate
G1= K / Exchange Rate
Exchange Rate = K / G1
The Currency Conversion equation between Currencies pegged to the Work-Standard is the same:
G2 = G1 * Exchange Rate
G1 = G2 / Exchange Rate
Exchange Rate = G2 / G1
G1 = Our Currency, pegged to the Work-Standard
G2 = Foreign Currency, pegged to the Work-Standard
K = Foreign Currency, unpegged from the Work-Standard.
The reason for having two different procedures is allow Office IV to account for the possibility of different Currencies becoming pegged to the Work-Standard or even becoming unpegged from the Work-Standard. The former is only possible if the foreign currency in question belongs to another Socialist regime. The latter occurs if that Socialist regime is overthrown and gets replaced by a Liberal Capitalist regime.
If we need to figure out the Absolute Purchasing Power Parity (APPP), Office IV uses these two equations:
Exchange Rate = K / G1
Exchange Rate = G2 / G1
When we want to know how much something is worth in our Currency or another Currency, those equations are:
K = G1 * Exchange Rate
G2 = G1 * Exchange Rate
And if we need to work backwards, those equations are:
G1= K / Exchange Rate
G1 = G2 / Exchange Rate
We rely on the Relative Purchasing Power Parity (RPPP) when we want to determine the rate of Currency Depreciation/Appreciation. RPPP argues that any changes to the Exchange Rate can be traced back to changes in the Inflation/Deflation Rate (if the Financial Regime is Liberal Capitalist) or the Attrition/Inaction Rate (if the Financial Regime is Socialist).
The following includes the General and Simplified Equations for dealing with two Currencies pegged to the Work-Standard and when our Currency interacts with another Currency as Kapital:
FXK = (1+WG1/1+IK) – 1
FXG = (1+WG1/1+WG2) – 1
The Simplified method for calculating the RPPP in both cases are as follows:
FXK = WG1 – IK
FXG = WG1 – WG2
WG1 = Our Nominal Attrition Rate based on Quality of Arbeit
WG2 = Their Nominal Attrition Rate based on Quality of Arbeit
IK = Their Nominal Inflation Rate based on Quantity of Kapital
2. FOREX Reserves, KDM and KBM Accounts
Finding the FOREX Reserves and the KDM and KBM Accounts are simple. We just need to know how much Kapital is in existence at the Central Bank and how much does the Council State has in foreign currencies pegged to the Work-Standard. Any foreign currency pegged to the Work-Standard, as well as the circulation of FECs, will appears under the FOREX Reserve.
FX = FEC1 + FEC2 + FEC3 + FEC4
FEC1 = Domestic FECs pegged to the Work-Standard
FEC2 = Foreign FECs pegged to Work-Standard
FEC3 = Domestic FECs for Currencies from the KDM Account
FEC4 = Foreign FECs for Currencies from the KBM Account
For the KDM and KBM Accounts, all we need to do is to simply recalculate their Values in our own Currency with a given Exchange Rate. Since our Currency is relying on a “Hard Peg” Exchange Rate to the Work-Standard, the Central Bank has the power to decide the Exchange Rates. It is applicable to how much Geld in our Currency should be worth in another Currency. Note that this only applies to Exchange Rates from our Currency to another Currency only. For foreign currencies relying on Floating Exchange Rates, the financial markets decide the Exchange Rate based on the Incentives of Supply and Demand.
There are ways where we can mitigate the effects of the Incentives of Supply and Demand. The Intents of Command and Obedience can allow us to recreate the conditions conducive to an artificial scarcity of our Currency on the international stage. Since very few foreigners will have full access to our own Currency, the less there are in existence by being-with foreigners, the more likely that the Incentives of Supply and Demand will bend in our favor. Such a possibility is feasible because our Currency bases its Value on the Quality of Arbeit, which in turn influences its Price as the Quality of Geld.
For the values of the KDM Account, determine how many Currencies there are inside the KDM Account. Next, calculate their values in our Currency. The value of the KDM Account will always be listed in our Currency under Command-Obedience Account Bookkeeping.
The KBM Account, unlike the KDM Account, is intended for any Kapital that our Central Bank has for the Currencies of Liberal Capitalist regimes, certain LCFIs (Liberal Capitalist Financial Instruments), any Foreign Schuld that the Liberal Capitalists may owe us, Gold and Silver, and Cryptocurrencies. Also included are the possible existences of counterfeited Currencies from Liberal Capitalist regimes; those need to be pulled from circulation and destroyed.
We will start with Gold and Silver, since not only are they Commodities which need to be converted into Equipmentalities under the Work-Standard, it will provide insight on how we recalculate the Value of the KBM Account itself. Everyone should know that Gold and Silver are still being valued in US Dollars because the US Dollar itself retains its status as the World Reserve Currency. Bretton Woods and the Gold Standard are dead, but the same cannot be said for the US Dollar, the IMF and the World Bank. Prices for Gold and Silver skyrocket whenever the financial markets perceive an impending financial or economic crisis. The Liberal Capitalists are essentially speculating that they will need to buy Gold and Silver so that they can profit from the perceived crisis by selling them at higher Prices.
What allows those Prices to skyrocket is the Quantity of Kapital in existence as Gold and Silver under the Incentives of Supply and Demand. Unlike our Quality of Arbeit, where our State Commissariats can reliably set and reset Prices, the Liberal Capitalists’ Quantity of Kapital is always in constant flux. Prices of Gold and Silver are soaring in one moment and crashing in another. Such behavior is only understandable when Quantity of Kapital is paired with a corresponding Quantity of Schuld in existence. In essence, the Liberal Capitalists buy Gold and Silver with a Currency pegged to the Schuld Standard when the Prices of Gold and Silver are lower, which may or may not coincide with them borrowing Kapital from their Fractional-Reserve Banking System while it creates Kapital out of thin air. They then sell the Gold and Silver on a later date when the Prices for Gold and Silver are higher in order to acquire the greatest Quantity of Kapital for the lowest Quantity of Schuld.
Unlike the Gold and Silver found in financial markets as “Commodities,” the Gold and Silver sold by the Kontore as Equipmentalities do in fact operate according to a different set of parameters. Office III needs to know where the Gold and Silver came from, the Purity of the Gold and Silver, and the Quality of Arbeit and Quality of Geld which went into the creation of those base metals. Their Quality of Arbeit will tell us who created the Gold and Silver and under what conditions were they mined. Their Quality of Geld will also tell us the extent to which the Arbeit had gone into the Gold and Silver and under what conditions were they minted.
We will be listing the Prices of Gold and Silver as Equipmentalities based on their national origin. The Prices for Gold and Silver are far more reliable if we know who mined and minted them in the first place based on their Quality of Arbeit and Quality of Geld. If we do not know the identities of who created the Gold and Silver, there is no way for us to know the Quality of Arbeit. And if we do know the Quality of Arbeit, we cannot know the Quality of Geld either. Therefore, Office III will advise the State Commissariats to list them as “Equipmentalities of Liberal Capitalist Origin,” cautioning anyone who purchases them that they are in fact “Prone to Rapid Price Fluctuations” in our own Currency.
At the same time, expect the Value of Liberal Capitalist Currencies to also fluctuate since the vast majority of them are Fiat Currencies relying on an Inflation/Deflation Rate and Interest Rate. A higher Inflation Rate will depreciate the Value of any Foreign Schuld that the Liberal Capitalists owe to our Council State. Similarly, a higher Deflation Rate does the exact opposite: it appreciates the Value of Foreign Schuld. This is because of the fact that the Quantity of Kapital is dependent on the Quantity of Schuld in existence.
Also expect more of the same for the Values of any LCFIs in the KBM Account, which will be restricted to Stocks and Bonds. Stocks will allow our specialty department stores and shops to infiltrate Liberal Capitalist privatized commercial firms in an attempt to capture them through Economic Foreignization. Our Council State, when it has ample reserves of foreign currencies, can launch Financial Warfare operations by investing in the stock market to “corner the market.” Our Council State will also try to purchase government bonds on the condition that the Liberal Capitalists will be paying us back on a later date. And if they do not, our Real Trade Agreement (RTA) has a ‘Collateral Damage Clause’ where the Council State will be forced to assert Command and Obedience on the Liberal Capitalists for their Kapital. ‘There is no such as Free Trade under the Work-Standard if there is no such thing as a Free Lunch under Socialism.’
And in the digital realm, our Currency must contend with the proliferation of Cryptocurrencies like Bitcoin and Ethereum. A Cryptocurrency may pose a challenge to our Central Bank, but they cannot pose a challenge to anyone in a power outage. How does one expect to spend any Cryptocurrency or process the transaction within the Blockchain in situations where there is no electrical power to begin with? Why should any nation have to devote obscene amounts of electrical power just to create new units of any Cryptocurrency, when the Work-Standard can provide the same amount at a fraction of the cost and even with older technologies?
At least with the Work-Standard, our Socialist nation can technically operate it with late 18th, 19th and 20th century mechanical and analog technologies. Conventional Cryptocurrencies are worthless if they are no digital technologies to speak of. The only real downside for the Socialist nation in those conditions is its inability to electrify Arbeit and Geld as part of the LERE (Life-Energization Reciprocal Electrification) process, which requires digital technologies. But even if that means fewer contributions of Arbeit and fewer generations of Geld for the Life-Energy Reserve, the LER (Life-Energization Reciprocity) process alone is still capable of helping the Socialist nation live within its own means of production.