THE NATURE
OF
WEALTH
Narrative by Fred Lundgren
Charts & graphs by Jerome Friemel
Introduction 
Learning A New language
In terms of economics, The Nature Of Wealth speaks a new language; the language of a "balanced" economy that embraces the laws of physics, motion and energy. The Nature Of Wealth reveals the physics within an economic system. It explains how economics and physics naturally combine to throttle and brake a private enterprise system. It explains how these two disciplines combine to yield mathematical formulas for internal economic balance and sustained prosperity. It offers proof so strong as to critique itself. It will, in totality, conduct a strip search of past economic policies and lay bare their fallacies while paving the way to sustained peace and prosperity.It may be difficult for government officials to understand, or to admit they understand the need for a balanced economy.. Acceptance may be impossible for career economists who spend their lives parroting their inane craft in the exclusionary jargon of the trade. Both groups ignore 100 years of records which prove economics obeys, without exception, accepted laws of physics, thermodynamics, and entropy. We refer to both groups as blind guides. For most people, the study of economics has about the same appeal as filing annual income tax forms with no hope of a refund. It's tedious, boring, and confusing. but the mystery disappears with a clear understanding of money. Most people suffer from a profound ignorance of money and can't answer simple questions regarding the genesis of money.
Defining Money
Here is our definition. Money is the paper or coin used to measure the biological and mechanical energy spent in the process of creating, exchanging, and consuming goods and services in an organized economy. Therefore, this measure must increase as more and more biological and mechanical energy or "work" is added to products or services as they pass through the various stages of the economy until the product or service is finally sold at retail and consumed. Upon purchase or consumption, some of the "money" is stored, but most is used for the next cycle of production. The "money" must correctly measure the biological and mechanical energy or "work" that is added to products or services as they pass through the various stages of the economy because the "money" actually represents the energy spent to produce a product or service. Thus, money must flow through the economy in sufficient amounts and without interruptions so an organized society can grow and prosper. This is the key to a balanced, prosperous and inclusive economy and the primary message of this book.In a country filled with raw materials and willing labor, most economic interruptions, such as recessions, result from interruptions in the flow of money. These interruptions occur when the "natural" value of products and services are so distorted as to give a false reflection of their value in terms of money. This can happen at any stage of the production cycle but it is most harmful at the raw materials stage where price levels begin. Eventually the problem produces wide spread imbalances across the economy. These imbalances alter the natural "ratios" (or percentages of the total) that must be maintained between each of the six basic segments of our nations economy. These segments accumulate as National Income. The accurate ratio of each segment to National Income will be examined fully in later chapters. Blind Guides
The need to maintain internal economic balance between the basic segments of our nations economy is not taught in our school system. The "CLEP" test, which is the College Level Examination Program. reflects this fundamental error. We offer one of their sample questions as evidence. "Which of the following is a possible cause of stagflation, which is simultaneous high unemployment and high inflation"? (1) Increase in labor productivity(2) Increase in raw materials prices(3) The rapid growth and development of the computer industry (4) A low growth rate of the money supply According to the blind guides who wrote the College level exam, the correct answer is # (2) "increase in raw material prices". However, the correct answer should be "none of the above" but it was not listed as a possible answer. You may review their sample test by clicking on the blue link. The need for "balance" is ignored by colleges and universities while they blindly feed failed economic theories and belief systems to each new generation with cafeteria line efficiency. These students become the teachers and career economists who excrete this indegestable doctrine on scores of national policies. Together, their efforts exacerbate internal economic imbalances and preclude sustainable economic expansion. It falls just short of treason.The ignorance reflected in the CLEP exam could not survive without the malleable minds of blind guides who have allowed themselves to be miseducated because they lack the native common sense and creative intellect to understand, much less teach economics. Each new generation teaches by parroting the half truths and flawed concepts of previous blind guides. The CLEP exam is a clear example of economic ignorance and possibly rank stupidity. Sadly, the professors who prepared the exam have failed their own course. The Nature Of Wealth rejects the CLEP exam, which concludes that cheaper raw materials are always better, and by extension, free is best. The CLEP exam even fails the most simple test of connecting the growth rate of the money supply to stagflation. A stagnated economy can always be temporarily stimulated by increasing the money supply. The Federal Reserve increases the money supply by lowering interest rates which causes more borrowing. Likewise, it reduces the money supply by increasing interest rates. Although reducing interest rates will temporarily grow the economy by causing more borrowing, it only makes matters worse when all the notes come due within an imbalanced economy. In this age of information, "The Nature Of Wealth" is essential reading for blind guides who seek cleansing from the intellectual stain of their miseducation and for those who stand willing to accept a clear, math based definition of money and macro economics. It is absurd to allow blind guides to stand guard over structural poverty and structural affluence by teaching economic policies that perpetuate poverty in the midst of plenty. These blind guides promote policies that cause the potential of the masses to be defined and limited by the Draconian monetary policies of a powerful minority. They have yielded to other policies that guarantee slave wages and poverty to millions. They have ignored the cause or effect of policies that produce a mirage of opportunity for millions; policies that inhibit personal liberty because they eliminate the possibility of financial independence for all but a select few. Blind guides should open their eyes to restore their credibility as guides, because, in this age of information, citizens of all nations are learning the truth from other sources. These criticisms are directed toward blind guides at several levels; including classroom school teachers who ignore the subject, while claiming to teach the basics of the American system; to college professors who lamely teach the history of failed economic theory while avoiding concepts or perspectives that offend wealthy alumni; to think tanks that publish biased reports in favor of the money that funds them. Most importantly these criticisms are directed at governmental systems that ignore the immorality of class biased laws that exacerbate inequity while giving license to individual and corporate greed. Last, but not least, these criticisms are directed at spiritual leaders who either ignore or rationalize the suffering caused by economic injustice.
The Victims
The economy has a natural method of price recovery after prices within one or more segments are maintained at artificially low levels over a long period of time. However, this natural system is never allowed to function. American history is filled with examples of economic distortions perpetuated by bad government policy.
The first victims are almost always wage earners and producers of raw materials. When prices for oil and farm crops decrease, most economists are blissful because these artificially low prices temporarily hide real economic imbalances. Over time, domestic public policy has evolved to subsidize farming in a futile effort to replace a fair price at the market. American international policies embrace foreign religious dictators who empower and enrich themselves with oil money while teaching terrorism against America. Regardless, when any raw material recovers its natural price level, economists scream INFLATION! Again, it falls just short of treason. The other obvious victims are wage earners who suffer cuts and layoffs during recessions. Wall Street is always quick to reward Corporations for holding down wages to increase the bottom line while ignoring the way wage cuts impact the purchasing power of labor and increase surplus product inventories. Regardless of circumstances, any increase in raw material and labor cost is incorrectly viewed by economists as a problem to be solved rather than the systems' attempt to regain internal balance. The Nature Of Wealth shines a spotlight on the only road to inclusive prosperity. It takes the genie out of the bottle by offering a technical manual on balanced economic growth without excessive debt. It places alternative monetary policies into the public consciousness, policies that can drive an incentive based capitalist system at full speed. These policies, once implemented, can become as natural and easy to maintain as adherence to the laws of physics that govern our daily lives. Adoption requires little more than adherence to nature's economic laws. Adherence to these laws is the key to sustained prosperity and require policies so pure and so natural that they can become the logical, dominant force in economics wherever tested. Prosperity is Logical
In terms of natural resources, the United States is by far the richest country in the world. It contains everything needed to furnish every citizen with a good living. Yet, the USA has cycles of recessions and depressions. It is obvious these recessions and depressions are not caused by nature, but by the limitations Americans knowingly or inadvertently place upon themselves. Today, our private enterprise system is unnecessarily flawed because it produces unnecessary debt, unemployment, and poverty. Again, the reason is a lack of internal economic balance.We can all agree that a nation filled with natural resources should afford every able-bodied person with a rewarding task. We can further agree that a rich nation should offer every child a loving home and a modern and motivated school system. Certainly farmers, ranchers, miners, timber companies, and commercial fisheries should make good profits. Likewise, mills, factories, and retailers should be operating at capacity. Recycling and renewable energy should be the rule, not the exception. If God were to ask, "What is the problem with my children? Why do you limit your prosperity? Why the poverty, the drugs, the violence? Why the self-destructive behavior? What is desired that I have not provided?" Most of us would be obliged to answer, "Nothing." Today, individual potential is limited by the flaws of outdated economic structures and educational systems, not by a lack of natural resources, (Acts of God), or by the lack of desire to be educated, (the age old method for blaming the powerless). Instead, the limitations, lost potentials and sufferings of most peoples are caused by an ignorance of nature's economic laws and the lack of will to apply these laws to political and economic systems around the world. The Federal Reserve System. The control and direction of American monetary policy is at the root of Americas' economic and social problems, mainly because monetary policy is, by design, self serving. Thus, it fails to recognize the need to change and evolve. Monetary policy is governed by the Federal Reserve System, a system of monetary control that stands apart from Government. The "Fed" is quick to criticize the Governments' fiscal policy but slow to take responsibility for it's own mistakes in monetary policy. The Fed instinctively resists change while attempting to change the Governments' fiscal and social policy. (Click on Fed Gazette button for example). It ignores the need to improve human rights and it refuses concessions that might reduce it's grip on monetary policy. It boldly resists the very Government that gave it life. It has been largely independent of oversight since it was created by Government in 1913. It is a unique edifice to a past era when unlimited power in the hands of a privileged minority was acceptable.
At the risk of disappointing conspiracy theorists, this should be expected from any large center of power. We see Fed actions as a natural struggle to maintain power, as natural as the ebb and flow of tides. Struggles over the control of money lay open the very core of human nature; nothing more; nothing less. The Nature Of Wealth will demonstrate how a majority of the Feds duties can be modernized by replacing the collective opinion of its Board Of Governors with a few dozen responsibly programmed computers and why this change is necessary if widespread prosperity is to be achieved. In the long run, the Feds refusal to change and evolve will insure its obsolescence because without change, the government that gave it life will eventually be forced to take authority over its outdated doctrine. Until then, the private enterprise system will remain subject to its whims. History is instructive. The original US Constitution is the prime example of a flawed concept that only survived by evolving. The US Constitution, much like the private enterprise system it fostered, was never intended to be used like a finished consumer product. If that were the case, slavery would be legal and women couldn't vote. Instead, the founders designed the framework for a representative democracy that could gradually correct limitations and imperfections. The same view must be taken of the economy. "The Nature Of Wealth" offers superior alternatives to the Fed, and many other systemic flaws in the system. In their totality, these alternatives will allow the Private Enterprise System to "add up" by embracing and rewarding more people, so the 200+ year old "great experiment" in democracy may evolve to its next logical level of inclusion without sacrificing individual freedom and the right to succeed or fail.
