ABSTRACT

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We describe the law of conservation (LOC) from physics. Then we show how money is used to violate the LOC. Because of this violation we have poverty around the world. We have debt, deficit, unemployment, and war. Therefore all our economic and social problems are manmade.

Where do we get the money? The money is originated by the central bank (CB). Only this bank can print money. It can print as much as it wants; whenever it wants, and give it to anybody it wants. It does not cost anything for the CB to print money. The CB prints money out of thin air. Thus money is free for the CB. We call it free money.

This bank controls economy by controlling the supply and distribution of free money. By controlling the economy the CB controls the government. If economy fails, people fail, and the government fails. The government of your country does not have any control over this CB. The CB is not accountable to anybody. It is a private bank, and therefore CB is the most powerful dictator. In USA the Federal Reserve Bank (the Fed) is the CB.

Since money is free, we really have money-less economy (MLE) now in our world. However, the money is not free for all the people of the world, it is free only for the CB. We show how we can run the same economy without this money. Thus the idea of the MLE was originated by the capitalism and the CB.

In MLE we get all our products and services free. Therefore we also work free.  The details of the MLE can be found below and in the FAQ. We want your help (a) to find the flaws in the MLE and (b) to show how we can fix it. At the end you will surely agree that the MLE is a meaningful and desirable economy.

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A SHORT HISTORY OF MLE

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During the last hundred years many forms of moneyless economy (MLE) have been proposed. However, no government has ever tried to implement any such systems. Some small communities all over the world have implemented and still practicing such systems in some form (Shiwa, 2007).

In 1919 two influential socialists, Otto Neurath and Otto Bauer, had each published books advocating a moneyless economy (Steele, 2002). In the early years of Soviet power there was serious discussion amongst the party elite about instituting a moneyless economy (Nelson, 2001). Nobel Laureate (1974) in economics, Friedrich Hayek, discussed about possibility of moneyless economy while searching for alternative to mainstream modern economics (Horwitz, 2004). A moneyless world with neither a common medium of exchange nor a common unit of account is discussed in the book by Cowen and Kroszner (Malte, 2008). Nobel Laureate Milton Friedman has suggested replacing the central bank (Friedman, 2006).

The present environment is ready to be replaced by the MLE, which is exactly in tune with the laws of nature, and also gives whatever we want.

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References:

Friedman, M. (2013), “Abolish the Fed”, https://www.youtube.com/watch?v=m6fkdagNrjI  January 9, 2013.

Horwitz, S. (2004), “Friedrich Hayek:  Austrian Economist”, J. of the history of economic thought, spring.

Malte, K. (2008), “Money: A market microstructure approach”, MPRA paper No. 18416.

Nelson, A. (2001), “The poverty of money: Marxian insights for ecological economist”, Ecological economics, 36, pp. 499-511.

Shiwa, S. (2007), “More than 300 million people are benefiting from moneyless markets”, Tides of India, Bombay, India, Monday, January 29.

Steele, D.R. (2002), “Posing the problem: The impossibility of economic calculation under socialism”, ec.pdf, www.libertarianalliance.org.uk

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THE LAWS OF CONSERVATION (LOC)

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This law says that the mass and energy cannot be created or destroyed. They can only be transformed from one form to another form. This is a law of nature and physics.

It can be shown that many laws of physics are either same as the LOC or can be derived from the LOC. Thus the nature has only one kind of law, the LOC. In particular, it can be shown that Newton’s second and third laws are LOC. The second law of thermodynamics is a LOC. The conservation of momentum can be derived from the LOC. Even the derivative theory of calculus is a LOC. Thus the entire theory of differential equation is based on the LOC. Since all systems can be represented by differential equations, then all systems naturally obeys the LOC. In this paragraph we have ignored the relativistic effects.

Economy is a system also. Thus it must obey the LOC. It does not have to follow all the laws of nature and physics, but it must follow the basic law, the LOC. If we can ensure that, then everything will be normal and natural.

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VIOLATING THE LOC

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The GDP (gross domestic product) of any country during any year is the total amount of all products. This includes all cars, boats, houses, airplanes, missiles etc. Assume that this GDP is equivalent to a pot of gold. Similarly, assume that the total money of that country in that year is equivalent to a bag of dollar bills.

This bag of dollar bills has an one to one relationship with that pot of gold. They are tied together. None of them can grow independently, according to the LOC (law of conservation). Manipulation of the bag of dollar bills will violate the LOC.

Now, the CB (central bank) can print another bag of free money without any restrictions. These two bags of dollar bills will be then equivalent to that one pot of gold. Thus the price of gold has doubled now, creating inflation. The printing of extra bag of money violated the LOC; the money has grown, but the gold did not.

The CB can also give this free money to anyone it likes, without any restrictions. If this money goes equally to all the people in your country, this will not cause any problem. However, if the CB gives it only to the top one percent of the population, then we have a severe problem. The top one percent acquired the fifty percent share of the gold.  The process violated the LOC; it transferred your gold using free money. The gold that you had vanished from the pot.

Just like CB can print free money and give it to anyone it wants, it can similarly stop giving you the money also by making you unemployed. Thus reducing your share of gold to zero, violating the LOC. Your home will be foreclosed, and another rich person will confiscate it.

Observe that, profiting and interest charging violate the LOC in the same way.

Thus printing free money and allocating it to a specific group helps to create poverty by violating the LOC. Note that the remaining 99% of the population has suffered for many reasons (a) the price of gold has increased (b) their purchasing power has reduced (c) the available share of gold has reduced. The resource has become scarce, artificially.

In MLE we eliminate the root cause, the problem the free money creates. We can then run the same economy without violating the LOC.

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TRANSFER OF WEALTH

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Printing free money and then giving it to a special group is designed to transfer wealth from large majority to a smaller minority. The capitalism headed by the CB (central bank) is using this technique to make some people richer and some poorer. It is a violation of the LOC (law of conservation). Observe that giving higher salary to anyone has the same effect. It increases the share of the pot of gold. It creates inflation.

The profiting and interest charging are also the same method of transferring wealth. Thus profiting is cheating or stealing of your wallet. It violates the LOC. At one time both profiting and interest charging were illegal and immoral in both Christian and Muslim religions. But now it has become glamorous in capitalism. More you profit better is your company.

Creating recessions by the CB is another large scale wealth transfer method.  By controlling free money the CB can choke the corporations and create unemployment. This will cause loss of homes by foreclosure. The property cannot be destroyed according to the LOC. It will be eventually purchased by some rich person, causing transfer of wealth. Thus large scale unemployment is organized to transfer of wealth en masse.

The CB is purposely violating the LOC and causing inflation. Keynes, a father of economic theories, says –

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some. … The process engages all the hidden forces of economic law on the side of destruction and it does it in a manner which not one man in a million is able to diagnose”.

It is the CB that creates the inflation, not the government. CB uses the government to do the CB’s work; CB is the dictator. The government does not have any control over CB.

There is no profiting in MLE, no violation of LOC, and yet we will have everything we want. Obeying the nature will create the abundance, peace, and happiness.

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NO WIN-WIN SITUATION

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If I dump a truck load of sand on my drive way, and if you search carefully, you will find that I have dug many small holes in the sandy beaches around the world. This is the LOC (law of conservation). I get, only when someone else loses. Mass and energy cannot be created or destroyed; they can only be transformed or transferred.

You can see now that there cannot be any win-win situation. In every win-win situation, a careful analysis will always reveal a third party who will be the loser. Wining means profiting; profiting means cheating and violating the LOC.

If I have something, that I do not need it, and someone else needs it, then why not just give it away. Similarly, if a store has something that I need, I just go and get it. There is no need to exchange or barter with something else. After all the money that we are using is free for the CB (central bank).

All the products we are using are made of resources from nature. Nature is free for everybody. Nature cannot and should not be allowed to confiscate. Thus all products are, in reality, free. Anyone who needs them should be able to get them free. So the concept of MLE already exists in principle.

There is no need to create and maintain an artificial win-win situation.

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