Work-Standard Currency Devaluation/Revaluation (Pt. II of II)

The Work-Standard’s methodology of Currency Devaluation/Revaluation follows its own set of procedures. Familiarity with this consideration is paramount in a world where most nation-states rely on Floating Exchange Rates since the Death of Bretton Woods, which is in turn governed by the Incentives of Supply and Demand. Given the fact that the Work-Standard relies on the Intents of Command and Obedience to facilitate its own conception of Fixed Exchange Rates, any alterations to the Value of Arbeit and Price of Geld can be formalized as part of official governmental policies. Such policies are proposed by the Council State, specifically the Financial Regime, and declared by the Head of State on every conceivable mode of communications throughout the Socialist Nation. The Central Bank and the State Commissariats of Wages and Prices will then proceed to enforce those policies to the best of their abilities.

Everything described fits within the context of two relevant entries in The Work-Standard, namely Part I and Part II of “Devaluation and Revaluation.” They detailed general plans on how Currency Devaluation/Revaluation can be done as part of a Socialist Monetary Policy (SMP) pegged to the Work-Standard. However, what has yet to be documented are the precise instructions on how the Financial Regime is supposed to carry out those changes. The exact methods on how to mathematically calculate the alterations remains elusive, something that I was never able to determine in The Work-Standard due to the question of whether the alterations should affect the RTEP (Real Total Economic Potential) and RTFP (Real Total Financial Potential) values or the TPP (Total Productive Potential) value.

In “Devaluation and Revaluation (Pt. I of II),” I provided the following statements in relation to the trade policies of the Socialist Nation. Note the precise language that I had chosen to describe Currency Devaluation/Revaluation:

“Since the Work-Standard has pegged Currencies relying on a Fixed Exchange Rate, one possible cause during peacetime is a trade imbalance, an important topic among SMP Compendium entries concerning international trade. ‘Devaluation,’ unlike Currency Depreciation, does not stem from a rising Attrition Rate. It instead involves the Central Bank deliberately reducing the Price of Geld by reducing the Value of Arbeit. The Intent is to secure cheaper exports and expensive imports within Exchange Rates. This causes the purchasing power of the Currency to weaken, requiring more amounts of Geld to convert into another Currency.”

“[Moreover,] [t]he opposite of Devaluation is ‘Revaluation.’ Unlike Appreciation, Revaluation does not occur from an increase in the Inaction Rate. It arises when the Central Bank of the Socialist nation-state decides to increase the Price of its Geld by increasing the Value of Arbeit within Exchange Rates. Less Geld will be needed for conversions into another Currency, whereas the other Currency has to spend more for less Geld. The Intent of this decision varies, as it happens less often than with Devaluation.”

The most important keyword phrases within both paragraphs are “reducing the Value of Arbeit” and “increasing the Value of Arbeit.” We can interpret those two phrases to be referring to the TPP value in relation to RTEP and RTFP, instead of referring to the RTEP value or the RTFP value alone, because the TPP value is always going to be the sum of the RTEP and the RTFP. RTEP is derived from the TEP (Total Economic Potential), which in turn is affected by the Quality of Arbeit (QW), whereas RTFP is derived from TFP (Total Financial Potential) and its relationship with Quality of Geld (QM). It is also tenable to argue that any Currency Devaluation/Revaluation must manipulate the TPP value due to the significance of the LER (Life Energization Reciprocity) and LERE (Life Energization Reciprocal Electrification) Processes being accounted for in the equations for RTEP and RTFP. Recall the same equations that I had developed for TEP and RTEP as well as TFP and RTFP from The Work-Standard in relation to the precise manner in which they had been presented in Part I of this particular entry:  

Attrition/Inaction Rate = TEP / TFP
RTEP = TEP / Attrition Rate
RTFP = TEP + TFP / Attrition Rate
TPP = RTEP + RTFP

$24.00 / $48.00 = 0.50%
$24 / 0.50 = $48.00
$24.00 + $48.00 / 0.50 = $144.00
$48.00 + $144.00 = $192.00

Going back to the context of the example which I had provided from Part I, we are talking about 40 youths who were operating 20 lemonade stands as part of a Homeowner Cooperative. Their parents no doubt ran the Homeowner Cooperative, their neighbors and friends the 120 people who purchased 1 cup of lemonade for $0.10. I stated that their RTEP value was “$48.00” and their RTFP value to be “$144.00.” The TPP, itself being the sum of RTEP and RTFP, is “$192.00.”

My conclusion at the time remains not only constant, but also relevant to this half of the entry. Is it possible for us to argue that the RTEP, RTFP and TPP values are somewhat ‘overvalued?’ If so, what would be the best way to go about altering the TPP value without causing any sudden increases in the Attrition Rate (which leads to Currency Depreciation) or the Inaction Rate (which yields Currency Appreciation)?

Fortunately, it did not take long for me to figure out how the RTEP, RTFP, and TPP values were overvalued from hindsight. I found out that slight alterations to the equations for RTEP and RTFP are capable of recreating the effects of Devaluation or Revaluation. For Devaluation, find the products of RTEP and RTFP; for Revaluation, find the quotients of RTEP and RTFP. It should be noted that “finding the products of RTEP and RTFP” involves multiplication, while “finding the quotients of RTEP and RTFP” involves division. The mathematical logic behind Multiplication and Division are different from each other insofar as they are akin to opposites.

Are there any discernible differences in terms of Multiplication and Division? Yes, there are differences as the following sets of equations will attest:          

Attrition/Inaction Rate = TEP / TFP
RTEP = TEP * Attrition Rate
RTFP = TEP + TFP * Attrition Rate
TPP = RTEP + RTFP

$24.00 / $48.00 = 0.50%
$24 * 0.50 = $12.00
$12.00 + $48.00 * 0.50 = $36.00
$12.00 + $36.00 = $48.00

For comparison purposes, I am going to repeat the original set of equations from earlier. Feel free to reevaluate my handiwork. Everything else will be explained afterward:

Attrition/Inaction Rate = TEP / TFP
RTEP = TEP / Attrition Rate
RTFP = TEP + TFP / Attrition Rate
TPP = RTEP + RTFP

$24.00 / $48.00 = 0.50%
$24 / 0.50 = $48.00
$24.00 + $48.00 / 0.50 = $144.00
$48.00 + $144.00 = $192.00

From the standpoint of Socialist Monetary Policy, which TPP values seems less overvalued in the context 40 youths running 20 lemonade stands as part of a Homeowner Cooperative? Is it “$48.00 USN” or is it “$192.00 USN?” Based on what I had written elsewhere in The Work-Standard as well as throughout both Parts of “Devaluation and Revaluation,” a TPP value of $48.00 USN makes far sense than $192.00 USN. The latter comes across to others, particularly foreign nations in a Socialist World Order, as a sign of “Currency Manipulation” or “Exorbitant Privilege” by the Federalist American Union. These United States have always been accused by the European nation-states of engaging in such questionable practices during the Reign of Bretton Woods. Such accusations never subsided in the wake of the Death of Bretton Woods. In fact, they have worsened, as evidenced by the prevalence of “trade wars” and “currency wars” with Post-1945 Japan in the 1980s and more recently with People’s Republic of China in the 2010s. Everything points back to the rising Trade Deficit, the Federal Budgetary Deficit, and the National Debt itself.

Furthermore, it can be inferred that if the TPP value of “$48.00 USN” is the result of Currency Devaluation, the TPP value of “$192.00 USN” was ipso facto the result of Currency Revaluation. As stated earlier, Currency Devaluation/Revaluation under the Work-Standard operates according to its own logic and therefore its own methodological basis. The insistence upon Fixed Exchange Rate is there to fulfill an Explicit Intent that should not restricted to trade policy insofar as it is in final analysis byproduct of the LER and LERE Processes. This in turn allows the Socialist Nation to assert (or in the case of these United States, to reassert) control of its own financial and economic freedom vis-à-vis the Council State and its Financial Regime in particular. And under the Intents of Command and Obedience (as opposed to the Incentives of Supply and Demand), the Council State’s Financial Regime is capable of pursuing the necessary Currency Devaluation/Revaluation as part of SMP.

Therefore, in retrospect, it is now possible for us to make the two conclusions based on the information from both Parts of “Devaluation and Revaluation (Pt. I of II)” in The Work-Standard:

  • To Devalue any Currency pegged to the Work-Standard entails lowering the Value of Actual Arbeit and the Price of Actual Geld. Devaluation requires finding the TPP value as the sum of the product of RTEP and the product of RTFP.
  • To Revalue any Currency pegged to the Work-Standard involves raising the Value of Actual Arbeit in relation to the Price of Actual Geld. Revaluation requires obtaining the TPP value as the sum of the quotient of RTEP and the quotient of RTFP.

Below is a table that documents the two different RTEP and RTFP equations based on the example discussed in Part I. We will be exploring these two sets of equations again in future entries.            



Categories: Compendium, Financial Warfare

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