Preview of “Monetary Expansion/Contraction”

The following is the completed copy of the other new Entry exclusive to The Work-Standard (2nd Ed.). It continues the ideas discussed previously in two-part Entries known as “Theories of Value” and “Theories of Money.” Included is an excerpt of the revised passages in “Theories of Money (Pt. II of II),” which describes how the “Work Theory of Money (WTM)” defines the technical specifications of the Life-Energy Reserve. The Life-Energy Reserve is an overarching topic in Section Two because of its strategic importance in Section Three. Sections Four and Five, meanwhile, builds upon everything discussed in Sections Two and Three by discussing about the Council State and its fiscal and monetary policies as part of the Financial Regime.

Following the Reciprocal Theory of Value (RTV) and the Work Theory of Money (WTM) to their logical conclusions, several important observations can now be drawn regarding the specifications of the Life-Energization Reciprocity (LER) Process. The implications of everything related from the past four Entries in the SMP Compendium indicate the need for mathematical equations and formulas to demonstrate the strategic, operational and tactical capabilities of the LER Process. To begin, note the peculiar, flowery language being described in the previous Entry:

“The Synchronization of Arbeit and Geld sets the precedent for QW determining the Value of Actual Arbeit and QM affecting the Price of Actual Geld. The overall performance and well-being of everyone in their Vocations, Professions, Enterprises, Industries and Economic Sectors affect the Quality of Arbeit in relation to the Quality of Geld. The inflows of Actual Arbeit inside the Life-Energy Reserve are decisive in the discernible ‘Schwerpunkt (Focal Point)’ of a ‘Work-World’ overseeing conversions to Actual Geld. The QW of one Vocation is added to the Socialist Nation’s ‘Final Quality of Arbeit (FQW),” allowing its FQW to be combined with ‘Economic Socialization (ES)’ and ‘Solidarity Rate (SR)’ to yield a ‘Final Quality of Geld (FQM).’

Through FQW and FQM, the Socialist Nation’s acquires its ‘Total Economic Potential (TEP)’ and ‘Total Financial Potential (TFP)’ respectively. The Attrition/Inaction Rate transmutes the Socialist Nation’s TEP into ‘Real Total Economic Potential (RTEP)’ and TFP into ‘Real Total Financial Potential (RTFP).’ Both RTEP and RTFP eventually form the Socialist Nation’s ‘Total Productive Potential (TPP)’ as the controlling factor in the Central Bank’s ability to expand or contract the overall ‘Requisitionary Productive Forces (RPF).’”

Even though all of these terms will be elaborated in greater detail over the course of the SMP Compendium, the most relevant ones for the purposes of this Entry are the Schwerpunkt, Work-World, and Requisitionary Productive Forces (RPF). These three terms were introduced as part of The Work-Standard (2nd Ed.) to refer to specific factors and topics which were already present in the original First Edition, but never given precise technical designations or enough comprehensive information on their strategic importance for the Financial Regime’s Central Bank and the State Commissariats of Wages and Prices.

The Total Productive Potential (TPP), as established earlier, refers to the sum total of RTEP (Real Total Economic Potential) and RTFP (Real Total Financial Potential) from all of the known economic and financial activities in the Socialist Nation. The final TPP value determines the overall Monetary Base of the Life-Energy Reserve, informing the Financial Regime on how many currency units could be put into circulation by the Central Bank as Legal Tender. This particular variable, the Requisitionary Productive Forces (RPF), is the formal technical designation for the Central Bank’s control over the extent of Monetary Expansion/Contraction.

Under normal conditions, when the Central Bank pursues Monetary Expansion, the RPF value rises against the TPP value. Conversely, when the Central Bank carries out Monetary Contraction, the RPF value falls relative to the TPP value. If the RPF value surpasses the TPP value, any excess units will be counted toward the Socialist Nation’s Sovereign Schuld. As long as the RPF value stays at or below the TPP value, any further expansions of the Monetary Base will not lead to the creation of Sovereign Schuld. What may seem like a hindrance to the Totality and State can be confronted in a multitude of ways for the Totality and State. Below are three lesser-known methods where the Central Bank will be able to expand or contract the RPF value. Each of the following demonstrates the Work-Standard’s flexibility in providing an impressive arsenal of creative strategies to raise the RPF value without accumulating any Sovereign Schuld.

The Schwerpunkt and the Work-World

The Life-Energy Reserve offers a number of special accommodations and features that enhance the LER Process by operating on parameters different from comparable rivals like the Gold Standard’s “Gold Reserve” or the “Blockchains” of most Cryptocurrencies. Aside from its primary role of facilitating the conversions of Arbeit-into-Geld and Geld-into-Arbeit, the Life-Energy Reserve is capable of enabling the establishment of a “Work-World.” In the legal jurisprudence of the Socialist Nation, the Work-World governs the Dominion of all known economic and financial activities compatible with the LER Process, distinguished by their capabilities of contributing Arbeit and generating Geld for the Life-Energy Reserve. The Work-World also covers a broad range of other non-economic and non-financial activities that can be reconfigured for the LER Process, allowing the affected organizations, facilities and personnel to contribute Arbeit and generate Geld. One obvious example involves the State retrofitting specific “Public Goods” like education and healthcare, allowing every school and hospital to afford its own upkeep and maintenance costs, and providing the Totality with newfound sources of economic growth. Something similar is also applicable to transportation, electrical power, infrastructure, water and waste treatment, and other basic necessities by dint of the basic fact that the State will always need somebody to contribute Arbeit as part of those Professions.    

Another set of implications related to the Work-World involve helping the Socialist Nation find and eliminate Kapital from all facets of everyday life. Liberal Capitalist concepts such as Privatization, Marketization, Deindustrialization, Social Safety Net, Universal Basic Income (UBI), Pensions and Insurance, Rents and Mortgages will all be rendered obsolete. It is also feasible to envisage other concepts like the Progressive Taxation, Securities, Private Property and Common Property being abolished outright in favor of their proper Socialistic alternatives, all of which will become the topics of interest among the relevant Entries in the SMP Compendium.

There are plenty of lucrative opportunities in the Work-World for the Totality and State to further augment the capabilities of the Work-Standard by developing newer forms of Arbeit and Geld, allowing other aspects of everyday life to become applicable to the Work-World’s sphere of influence at the behest of the Life-Energy Reserve. That will allow the Socialist Nation to eliminate the Work-Standard’s ideological rivals like the Post-Bretton Woods Debt-Standard, Gold Standard, Cryptocurrencies, Modern Monetary Theory (MMT), Quantitative Easing, Monetarism, Freigeld, Time-based Currencies, NFTs (Non-Fungible Tokens) and all the rest by rendering them obsolete. Even the Financial Market and the Fractional-Reserve Banking System will have no chances of surviving anywhere in the Socialist Nation. Truly, a whole different way of life is well within reach of being brought into existence by the Totality and their State.

Guiding the Work-World and the Productive Forces of the Totality and the State is the Schwerpunkt at the heart of the LER Process. The Schwerpunkt gives the entire Socialist Nation, as part of the Vocational Civil Service (VCS), the conceptual and theoretical framework to determine the Values and Prices of raw materials, goods and services based on their strategic importance to the Totality. The growing multiplicity of choices, decisions, tasks and assignments so characteristic of this 21st century–this “New 20th Century,” will no longer be the daunting chore anymore that it was under Liberal Capitalism. Additionally, the Schwerpunkt enables the Socialist Nation to eliminate the concept of Commodity altogether with the introduction of its Socialistic alternative, the “Equipmentality.” Operating on the same metaphysics as the LER Process, the Equipmentality offers provides the Socialist Nation with newfound Intents to “Repurpose” anything to fulfill secondary or tertiary purposes based on their “Reference” and “Relevance.”  

Inflow/Outflow Convertibility Rates

Should it ever become necessary, the Life-Energy Reserve is flexible enough to allow the Central Bank, the State Commissariats and State Banks, Central Planners as well as subordinate Inspectors, Accountants and Economic Planners to oversee alterations to Inflow/Outflow Convertibility Rates for Arbeit-into-Geld or Geld-into-Arbeit. This enables the Financial Regime to change the Value of Arbeit and Price of Geld in response to emerging national priorities, to prioritize certain goods and services, to help the Socialist Nation adjust to wartime conditions, natural disasters, pandemics and other contingencies with economic and financial implications. These changes can be applied to individual Professions, Enterprises, Industries and Economic Sectors or they be made applicable to the entire Socialist Nation.   

In essence, it is possible to imagine the Value of Arbeit among certain Professions, Enterprises, Industries and Economic Sectors to be falling and their Price of Geld rising due to the excessive production of certain goods and services. At the same time, others could see their Value of Arbeit rising and their Price of Geld falling as a result of what is happening elsewhere in the Socialist Nation. These alterations will then proceed to affect the Final Quality of Arbeit (FQW) and Final Quality of Geld (FQM). The Economic Planners, Accountants and Inspectors relay those changes to the State Commissariats, the Central Planners and the Central Bank by depositing financial ledgers at specified State Banks tasked and transferring them to the Life-Energy Reserve.

A suitable example of where this will become beneficial for the Socialist Nation involves the problem of “Overtourism” as the decisive factor behind making the Coronavirus Pandemic an inevitable crisis prior to 2020. If one does not remember how the Pandemic became a worldwide phenomenon, let it be known that the Tourism, Hospitality and Airline Industries of the Western world had cheapened the experience of traveling abroad. The years preceding the Coronavirus Pandemic was marked by alienated local populations, environmental damage, and disturbances to the local scenery and social order among the affected town and cities. With this important historical precedent in mind, a functioning Council Democracy will allow the Totality to raise the problem of Overtourism as not just being a socioeconomic or environmental issue alone; it is also a political and cultural issue of significance for future generations as an educational matter.

This is not to suggest that the Socialist Nation ought to be compelled to close its borders, refuse the opportunity of negotiating Real Trade Agreements (RTAs) or avoid cultivating cultural understanding with other countries. The Totality is supposed be given a public forum by their central government, where they will be able to voice their concerns about the massive influx of tourists to their own communities for instance. It is even important for the Totality to help the Council State decide on the extent to which their Socialist Nation should be dependent on certain Industries as sources of Arbeit and Geld within the Work-World. Should the Totality fail to take the initiative, the Council State will then remain as the final authority to decide on matters such as Overtourism. Had other countries listened to their own peoples, the Coronavirus Pandemic could have been avoided or have its severity reduced at the very least.

Currency Devaluation/Revaluation

There may be moments where the Price of Geld is ‘underpriced’ or ‘overpriced’. Put another way, the Price may not reflect the true Value of Arbeit. A similar problem may occur when the Quality of Arbeit becomes distorted by allowing it to be ‘undervalued’ or ‘overvalued’ on the Price of Geld. While this is capable of happening from sudden fluctuations in the Attrition/Inaction Rate, the distortions may even occur from rapid, massive and sustained changes to how much Arbeit is being contributed to the Life-Energy Reserve. Wars, natural disasters, pandemics, political instability, and other similar crises are capable of causing them.

Since the Work-Standard has its pegged Sociable Currency 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 declaring that the Price of Geld will be increased against another Currency or a Basket of Currencies. The Intent here is to secure cheaper Exports and expensive Imports within the Exchange Rates. This causes the financial firepower of Foreign Currencies to strength, requiring greater amounts of Geld to purchase them. Since the Work-Standard entails a Financial Regime to be operating on a Fixed Exchange Rate, this can all be done officially.

The same is true for the polar opposite of Devaluation, “Revaluation.” Unlike Appreciation, Revaluation also does not occur from an increase in the Inaction Rate. The Fixed Exchange Rate enables the Financial Regime to lower the Price of Geld against another Currency or a Basket of Currencies. The financial firepower of Foreign Currencies weakens against the Sociable Currency and less Geld will be needed to purchase the same amount of Foreign Currency. The Intent of this decision entails expensive Exports and cheaper Imports.

Striking a proper balance between Devaluation and Revaluation is crucial in international trade. They are integral to ascertaining the “Balance of Trades and Payments” that govern the Real Trade Agreements (RTAs) of the Socialist Nation under the Work-Standard. As soon it becomes necessary to Devalue or Revalue the Sociable Currency, refrain from letting the Central Bank make massive alterations to the Price of Geld against any or all of the known Currencies in circulation. Any Devaluation or Revaluation is bound to cause the Financial Regimes issuing those Foreign Currencies to retaliate by Devaluing or Revaluing their own Foreign Currencies against the Sociable Currency of the Socialist Nation. The result bears an uncanny resemblance to a financially-driven arms race called a “Currency War,” its implications beyond the immediate purview of this Entry and the rest of Section Two.

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