An innovative way of understanding the inflation and deflation of currency is to regard a nation as a corporation with the currency being the nation's stock certificate. Drawing a parallel between a corporation's stocks and a nation's currency can convey how certain political activities cheapen currency. For the U.S. production system, the dollar is the stock certificate. As with any certificate, the dollar's real value is its product value, namely, what amount of production time you can get in goods or services. The product value of the dollar is tied to the production level of America, which is not determined by productive policy-making, not mere political guarantees.

Like the stock certificate of a corporate structure, currency is worth no more than the production health of a country. This health is synonymous with the productivity per capita, not per worker, as indicated in the following comparison. The stock of which corporation is worth more: Company A in which the ten employees work at half the rate of the record-setting worker in Company B which also has nine non-working employees? Said another way, ten half dollars is worth more than a silver dollar and nine pennies.

Applying this to the American Economic System Of Production, the pursuit of increased efficiency per worker should not come at the expense of efficiency, production, and consumption per capita. Logically, it shouldn't. However, many corporations are presently acquiring and streamlining other corporations with a surface symbolic gain of efficiency per worker. Yet, in many cases, the total American economy suffers. Production and efficiency per capita decrease with the concomitant reduction of production and employment due to acquisition and streamlining, e.g., steel and railroad cars.

While there are many stocks certificates in America, politicians, economists and citizens don't appreciate the functional nature of the dollars as THE American stock certificate. Carrying the comparison further, the President is the Chief Executive Officer (CEO); Congress is the Board of Directors; and the citizens are the basic stockholders.

When understood as the national stock certificate, one can draw comparisons between dollar and stock manipulations. Stock manipulations are outlawed by Congress through the Security and Exchange Commission (SEC), but the politicians have not outlawed similar dollar manipulation by themselves. Legally, corporate stockholders have a say in whether the symbols of their production system shall be expanded, but the average American citizen has little say in the expansion of dollars.

The printing of money by the Federal Reserve System--the Fed--is analogous to a corporation issuing common stock to indicate ownership of a company's assets--its products and production. Similarly, dollars indicate ownership of any product in America for which one can exchange the dollars. As the de facto national stock, don't dollars indicate ownership of products or production? The printing of Treasury bills (T-bills) and Savings Bonds by the Treasury Department is an effective issuing of "preferred" stock.

Logically, counterproductive practices deemed illegal with private stocks should also be illegal with the national stock. Expansion and contraction of both stocks and dollars should be held strictly in accord with the rationale behind SEC regulations. Neither should be counterproductively increased in number so as to decrease the value of the previously issued scribbled-on paper products. Examples of existing, destructive manipulation of the dollar with corporate comparisons are easy to find. In late Spring 1982, the attention of Iowans, the eyes of Wall Street and the scrutiny of the SEC were centered on the multimillion-dollar stock manipulations of a banker's son.

Private corporations initiate stock-splits whereby existing stock-holders receive additional shares of stocks in proportion to their existing amount of corporate ownership. After a split, each stock-holder should have the same percentage of ownership as before; the reduced value of each stock is compensated for by having ownership of a greater number of stocks.

Why would corporate officers illicitly expand a stock issue? If a private system of production is inefficient and unable to generate enough revenue to cover costs, the production need not close down if the chief operating officer and Directors resort to manipulation of the stocks. The elected officials could quietly print and distribute some unauthorized stocks so as to use the money to prop up the bottom line, their performance, and their jobs.

This illegal action, however, is a short-term solution that steals production ownership from the existing stockholders. This short-term solution intensifies the long-term decline, for the production inefficiencies are further ignored. With time, if the stock supply is quietly doubled in this counterproductive manner, the original stock represents only half as much production ownership. Probably, the actual value of the stock is less as the elected officials waste time counterfeiting stock when they could have been engineering a more efficient production system. This clandestine expansion of the stock supply could be through either common or preferred stocks.

Destructive Equity Financing: E. F. Hustle

Thanks to the necronomists, the counterproductive expansion of outstanding shares does not have to be done clandestinely. Cash to cover operating costs can be obtained by diluting the value of stock in a very legal mode that gradually bankrupts a company and steals from the oldest stockholders. The necronomists call legal watering of a stock equity financing; a better phrase is the "E.F. Hustle".

When a company is incorporated, it usually does not sell all the stock authorized to capitalize production. Or, the stockholders authorize an expansion in the number of stocks. Some of the stock is held in reserve for later production expansion, and, when so used, it is an example of equity financing. The E.F. Hustle uses the same process but props up an ailing business with an infusion of needed cash. The company that has to resort to equity financing to cover costs becomes an economic junkie, dependent upon infusions of external currency to maintain its level of activity. The same is true of countries that run trade deficits financed by printing money, e.g., the U.S.

Examples of destructive rather than productive equity financing are occurring in not only goods manufacturing but services: "Conversion of the mutual S&Ls to stock companies is creating a lot of new publicly held institutions, infusing them with badly needed cash ...." If the operations of these firms were profitable, would they be going public? None are non-profit charities engaged in giving more than they receive. As with Chrysler, most are on their way to skid row in need of covert or overt subsidies.

Chrysler is not alone among the automakers that are hardship cases, for a stock transaction by General Motors shows how equity financing can be used not for expanding production, but for generating dollar influx during periods of financial losses. Thus, in 1982, GM cancelled some outstanding bank loans by giving the banks a block of stock.

Federal E. F. Hustles

Parallels exist between the debasement of corporate stocks and the budget deficits debasing the value of currency. With budget deficits to finance unproductive governmental operations, the elected public officials in the Executive and Legislative Branches water down the national stock certificate in order to prop up a sagging economy. The dilution occurs governmentally through the Fed issuing the common stock with its money presses and through the Treasury Department issuing the preferred stock with its bond presses.

When the politicians hustle the Treasury bills by allowing floating interest on them, they are cheapening the existing dollars. That the modern politicians have to counterproductively expand the money supply and dilute the product worth of the dollar is testament to their corruption: their own little watergates.

Argued in the chapter labeled "Legalized Inflation: Legisflation" is how most inflation results from politicians pushing special interest laws. Legisflation increases the wealth of the special someone without increased productivity on the part of the special ones: Inflation! These uncountable little watergates are draining the productive strength out of the American production system from the producers, for a system of production cannot have inflationary returns without having inflationary losses.

The legisflative watergates--innumerable, unending and unrepealed--water down the national stock, laying low the once almighty dollar.

For a long time, the domestic legisflation has created a class of domestic inflationary losers. The domestic inflationary sufferers have been able to maintain some standard of survival by virtue of being international inflationary winners. Through trade deficits and the exportation of inflation, the American politicians are able to blunt the true effects of counterproductive domestic programs ... at a long-term cost, of course. (See "Monetary Colonialism" in NOBI Cure)

As of the early 1980s, the increasingly anemic American economy is being propped up by the exportation of inflation and trade deficits: monetary colonialism. Through monetary colonialism, America has been able to buy cheaply from abroad using the inflationary expansion of the money supply through the Fed and the Treasury: international watering down. Unfortunately, time is running out. rem -monetary colonialism

One might think that foreign leaders would put the kibosh on the continual American draining of their production--goods and services--in exchange for increasingly worthless currency. Most of them won't decry U.S. monetary colonialism. Modern politicians almost everywhere have become immune to compromising their nations for their particular special or personal interests. However, this professional courtesy will be increasingly harder to offer. America will not be able to acquire goods and services from abroad for a simple economic reason: Recessed and depressed industries (foreign or domestic) cannot give. In 1980, Europe entered a recession that raises more alarm each week.

A number of conclusions can be drawn based on how the politicians will continue to corruptly and/or incompetently use the printing presses of the Treasury Department to abort any attempt by the Fed to control the money supply. There is no coherent anti-inflationary policy. Inflation is really out of control.

Furthermore, the monetary economists could not stop inflation, even if they did not have the competition of T-bills in expanding the money supply. They do not recognize the monetary implications of the special interest presses.

Do the "necronomists" recognize that inflation is foremost from a reduction of production, foremost from shortages of products relative to the undiminished demand? No! False distinctions and real disasters must be recognized before a money supply can be productively regulated. Only a productively regulated money supply can avoid the evils of either inflation or deflation. How is a money supply productively regulated? By democratic tuning, of course.

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