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Ove Aigner Haukenes October 28, 2007
Abstract The way things work today, especially in an uncontrolled, unconditionally free market as in the U.S., it results in the fact that a business has to expand to exist. It does not have the opportunity to balance its production in a way that keeps it alive, but not growing. This is how economy works on microscale in the U.S. which reﬂects how the whole country works economically on macroscale, and thus why the eﬀect is more explicit in the U.S. than other countries. In eﬀect, this means that as long as the U.S. is expanding it will continue to have economical growth, but if it starts to stagnate or to have a negative growth it will result in an economic crisis.
The dependence between need for expansion and BNP
I use the country’s BNP as a measurement for change in production, and deduce the eﬀects from that. As long as there is a demand for products, the production will be on a rise, and businesses will grow since people want the products. This will result in that the BNP of the country will rise, and since there always will be a bigger demand than production, the dollar will also rise, because it will be needed inside the country. Every dollar that exists will reﬂect more value relative to other currency since their country doesn’t have a need to sell out (other then the things that are set up as international businesses). But the catastrophic eﬀect here is that more and more people will have more and more money. There will be a bigger amount of money sum sumarum (even though the wealth will be very centralized) in the country. It will end up with an unrealistic amount of money present compared to production, and therefore the dollar will be less worth, unless it is spent! If it is spent it will not be a static value that will diminish the value of the dollar, but it will be an investment that will lead to an increase in the growth of the BNP, and the wealth of the country. And hence cause a rise in the Dollar. Of course, that is a very short term solution for how to solve the problem.
the U.S. budget
Lets look at the U.S. budget: an immense amount of money is being spent on military budgets. It is a demand that is being fulﬁlled, and always demanding more. This has been the case since WWII, and that has been the basis for growth through the whole period of the Cold War. Since 1989, suddenly there has been an enormous cut in where to use money because of the end of the weapon race. Consequently there will suddenly be an enormous amount of money present in the states that there is no use for! And hence, no value. Money is like anything else... if nobody needs it there’s no value in it. It is just an abstraction from food. If everybody has food, you cannot trade a sack of wheat for an axe. You will have to do something else, or have exceptionally good food. But again, somebody has so want it. In the end that will cause that the dollar looses value, thereby leaving people with less money. But production will still be high, a lot of things will be produced that nobody can buy, which will cause them to sell cheap and so diminish the BNP of the country. This again will make the dollar even weaker (inﬂation increases), people have even less value for their money, demand will sink even more and BNP will sink again. Because of international trade there will be necessary to print up more money since the need for all the basic necessities produced in other countries still need the same value as before to continue, and the Dollar is weakened, even though this will weaken the dollar even further. There will be a self-enhancing eﬀect that eventually will make the economy collapse unless there is something to turn the tendency around. The interesting thing here is: Where is the point of growth of BNP relative to the size of BNP which leads towards a situation where it is physically impossible to spend all the money inside ones own country? There is a limit for how fast it is possible to spend money on defensive military activity. Sooner or later there will be a point where a country has to expand itself to make room for new demands and further trade to satisfy its BNP, and, last but not least: a war will be an extremely eﬀective way to create an instant demand, and hence a rapid change in a situation. There is no better way to create work for people, have demands up, have a rising production, and be sure that everything that is produced actually is destroyed so that further production is secured. One CAN never satisfy the market, because it is destructive. For every square meter of bombed infrastructure there will be a market for big companies to expand their business, and thus surviving and expanding 1 . As an example: the rights for building up the infrastructure and phone systems in Iraq were sold to diﬀerent companies before they bombed. Its not even being done discretely! 2 The problem is that in a static system, as the earth actually is; an internally variable system of a static amount of energy in which you cannot have a real proﬁt within the system self. Stockpiled energy, and also stockpiled money, has to be invested in its own system for it not to decrease the value it represents.
1 This is intersting with the knowledge that most of the top politicians in th ve US have been or are key persons in big corporations: Dick Cheney: Former CEO for HalliBurton, a war supply company which has quadrippeled its value and size since 2001, Bill Clinton, former Wall Street Banker, The Bush family: Have several big oilcompanies, and close business to f.x. the Bin Laden family etc. etc. 2 Another interesting, but less relevant in this context, fact, is that people in the Senate that had ownership in the companies that got the deals had almost $500 mill. in personal gain from the deals
If a country has a lot of energy, it will be cheap. If it has little, it will be expencive. If it sells out half of its energy in the summer, it will have less in the winter when it’s realy needed, and everyone is willing to pay more for it, and the electic companies will make a huge proﬁt from doing this energy-scam om the people, until they start to react to the theft.
Is there an alternative to the present model?
If you want a business to survive without the need to expand, then the manager has to choose not to uppen his salary more than for the things he actually needs. But since it seems to be the essence of Man, to relief ones own existential fears through collecting excess stock of things needed for survival, and since it is the necessity for scientiﬁc progress to have spare time, and hence a society with spare energy, or analogous, money, it is inevitable to acknowledge the need for a sensible way to redistribute excess stock of (in this case) money for its currency not to lose value, and for the economy to remain stable. But still, thanks to the ideal and the eﬀort for having free competition (which in essence means that everything is allowed), another company doing the same thing as your business does, would reinvest all its money in itself, grow faster and bigger then you and soon buy bigger quantas of things, sell them cheaper and eliminate you from the marked. So the world-government, mainly through the WTO (World Trade Organization) makes sure nobody will be able to do business in a harmonic way, but sets the scene for the biggest companies to become bigger, and the smaller to go bankrupt. My idea is to create a formula based on BNP, growth in BNP and the potential (or the limits for) a country to spend its own wealth. By making this you can create a border, (a line in the graph) where, as long as things happen under this ratio of growth/value, there will be no problem. But every nation should be obliged, i.e. by UN, to spend every amount created over that limit on some international project, like bridges, the building of ISS, space exploration, projects for helping other lands to get out of poverty, and so on. Thereby there would be possible to create a constructive way of spending money that theoretically doesn’t do anything else then decreasing the value of its currency, and thus keeping economy stable. I think a lot about space exploration in this, because the problem is that in the end, if every country has a stable economy, and war is absent (although a defence will be present), the same problem will occur again in time, since our model of growth is exponentially (a certain percantage pr. year - this is NOT a straight line, but an exponetial graph which soon will demand an inﬁnite increase in production to match inﬂation, which, through the past 1500 years have been the single reason for the biggest empires to fall). There has to be a vent to let out the pressure, but still, people have to have value for their money. Through projects in space people can get to own things, and expand their businesses into space and space exploration to inﬁnity. There will be no limit (the theoretical limit is the amount of energy that is possible to extract from earth. Free energy from vacuum brings up some interesting results rearding that). Thereby one can have growth without having to lead destructive wars to release the economic pressure inside the system that creates the money. These are the ﬁrst outlines for the idea of a formula that can predict when a country will end up in the situation where war is a necessity for it to exist, 3
and hence a possibility to avoid it. The most troubling result of this equation is that the only superpower in the world right now has an economic model which cannot aﬀord not to be at war...
Peace is not an option