Chapter Thirteen
Putting It All Together
Thus far, the mathematical and physical systems that produce new wealth and new debt have been isolated. Now, these systems will be analyzed and dissected in a series of tables called "Consolidated Exchange Statements for Trade in the United States." These tables and charts prove that from 1910 through 1930, one dollar of debt expansion could generate an average of about $8.50 of National Income, but since the mid-1970's, this "debt multiplier" has dropped to approximately $3.70 of National Income for every dollar of new debt. Trend lines show this rate can fall to $1.90 at any time. Therefore, excessive borrowing reduces the efficiency of debt expansion and causes the economy to become more imbalanced.
These Consolidated Exchange Statements prove that America CANNOT monetize debt in perpetuity. Instead, wealth must be monetized by creating debt free dollars that represent tangible value.
These tables and charts prove that dollars must be earned into circulation that don't add debt and interest to the system or produce costs that exist beyond the consumption or decay of the tangible value they represent.
These tables and charts prove that when a product is consumed, there can logically be no debt remaining in the economy attempting to represent the consumed product, or pure debt expansion, inflation or blue sky debt remains. Therefore, producing a profit before the point of consumption is mandatory, and extinguishing all cost at the point of consumption is mandatory. This becomes impossible when the economic energy needed to repay debt (the product itself) was consumed too cheaply.
In physics or economics, the law of entropy rules. No one can eat the same piece of cake twice! No one should pay for the same piece of cake twice when it can only be eaten once.
Nicholas Georgeseu Roegen, author of "Entropy Law and the Economic Process" said it best:
The fact that a natural law is involved in every aspect of man's behavior is so common that we would not expect the study of the influence of the entropy law on man's economic actions to present any unusual complications.
The upcoming Consolidated Exchange Statements relate primarily to the trade turns and the related labor ratios, and use math to consolidate the energy driven forces that dictate economic actions. These tables also establish the reverse multiplier of debt, or the "debt turn."
These tables illustrate the historical and predictable mathematical relationships that exist between raw materials value, debt expansion, and National Income. These tables prove how the energy of the earth is used to produce National Income, and how the monetary equivalent of this energy can assist the production of wealth, or the dislocation of wealth, and the accumulation of debt.
ESTABLISHING EARNED NATIONAL INCOME
Table 97 demonstrates the concept of "Earned National Income." This concept was established by Carl H. Wilken approximately 50 years ago. The concept is straightforward. First, the Parity Trade Turn is established as the ratio of Parity National Income to parity raw materials income. The actual level of raw materials income for each year is then multiplied by that rate of turnover. Table 97 displays the arithmetic. In 1993, actual raw materials income was 334.7 Billion Dollars. That total is multiplied by 7.28, which is the 1993 Parity Trade Turn, for a total Earned National Income of 2,436.2 Billion Dollars. That's about 2-1/2 Trillion Dollars, or less 1/2 of actual National Income which in 1993 was 5.1 Trillion Dollars.
Table 97 can be summarized as follows:
Column "A" is actual National Income for the year.
Column "B" expresses Raw Materials Income (RMI) in actual dollars or the value of Raw Materials actually earned by producers at the first point of sale. For many years this value has been too low and is automatically subsidized by debt expansion to maintain the flow of commerce.
Column "C" is the "Parity Trade Turn" or the natural average rollover rate of dollars in the American economy consistent with state of the arts technology from the first point of sale to retail consumption.
Column "F" is the dollar amount of National Income that originated with Raw Materials Income. This column demonstrates the ability of raw materials to produce National Income by the multiplier effect. It describes the percentage of the total economic generator that originated with raw materials income. The percentages in this column are calculated by multiplying Column B by Column C.
Column "G" is the product of Column F but expressed as a percentage. It describes the percentage of National Income that was earned into circulation.
ESTABLISHING THE DEBT TURN
The debt turn is the ratio between annual public and private (gross) debt expansion and the portion of National Income resulting from that debt expansion. Or, the debt turn is the ratio between gross debt expansion, and the difference between actual and earned National Income. Here is the arithmetic for 1993:
Actual National Income................5140.3 Billion Dollars
Earned National Income................2436.2 Billion Dollars
National Income from Debt..............2704.1 Billion Dollars
Divided by Gross Debt Expansion of...699.5 Billion Dollars
Equals: The Debt Ratio......................3.86 (1-to-3.86)
Table 98 can be summarized as follows:
Column "A" is the actual National Income published by the National Wealth division of the Bureau of Economic Analysis.
Column "B" is the amount of National Income that resulted from the rollover of raw materials income. This "Earned National Income" is the same number as Column F of Table 97.
Column "C" is the amount of National Income that resulted from debt expansion. It is calculated by subtracting Earned National Income from Actual National Income. Because raw materials were underpriced, debt expansion was used to "fill in" the National Income generator gap or to replace the lost earnings. When the National Income generator is replaced by debt, it temporarily offsets most, but not all losses in National Income. This prevents depressions such as the "great depression" of the 1930's, but like any debt, it must eventually be paid, either by the debtor or creditor.
Column "D" is the same amount as Column C but expressed as the percentage of National Income that was earned into circulation.
Column "E" Is the annual change in Public & Private Debt expressed in Billions of Dollars. (debt expansion)
Column "F" is the ratio of annual debt expansion to the annual shortage of National Income. It is the ratio of Column E to Column C. It can be described as the "debt turn", or the way debt multiplies. It is the mathematical expression of the way debt comes into existence and rolls over backward to create National Income. This column reflects a decreasing "bang for the borrowed buck" that began to develop during the early 70's and reached an all time low during 1984-85.
Column "G" is the straight line, or the mathematical normal trend line of Column F.
Column "H" is actual raw material income taken from Table 65.
Column "I" is the "Parity Trade Turn and the ratio of actual raw materials income to Earned National Income. It should be recognized that this ratio is exactly the same as the ratio called the "Parity Trade Turn," Column C on Table 88. Thus a mathematical loop is complete.
Graph 11.1
Graph 11.1 illustrates the straight line "Debt Turn." It is the computerized trend of Column F on Table 98. It shows the growing loss of efficiency over time as continuous debt injections accumulate in the economy. It demonstrates the declining efficiency of debt as a means of stimulating growth.
Graph 11.2
Graph 11.2 illustrates the "Parity Trade Turn." It is a Graph of column C on Table 88. It illustrates a continuous gain of overall efficiency as technology is advanced by the intelligent use of natural resources.
In terms of energy utilization, the "debt turn" has the opposite effect. The "debt turn" is a high entropy line, while the "parity trade turn" is a low entropy line.
THE CORRECTABLE FLAW
In preceding chapters, simple math has been used to identify the structural problems in the American economy. Likewise, math has been used to explain how prices and incomes can be restored through the application of Raw Materials Economics.
The negative economic impact of underpricing high volume raw materials such as agriculture and petroleum products have been explained. The positive impact of price restoration has also been demonstrated. Fair and equitable methods to price products and services have been isolated. Various examples of how these optimal or natural prices will systematically promote prosperity in the labor force have been discussed.
All this data produces a central message. Private enterprise functioned during the 20th century because most raw materials under-payments were replaced with debt. This caused economic convulsions at every stage of the production cycle. These convulsions occurred because America expanded debt beyond the amount that can be repaid. The Graphs and Tables have proven the amount of under-payment manifests as total public and private debt expansion. In other words, Americans were forced to borrow credit into circulation when earning debt free money into circulation was more efficient.
The mismanagement of money and credit has caused the American economy to repeatedly stumble to its knees and then jump up and lurch forward during each decade. This produces less and less "bang for the borrowed buck" as un-repayable debt debases the dollar. This syndrome is also expressed by the growing volume of public and private debt expansion necessary to subsidize the American economy so products and services can be distributed.
Over the decades, the national government has tried to control production and consumption with an assortment of management tools including domestic tax incentives, subsidies, loans, export enhancements, import incentives, and favored nation status agreements. The leadership of both the executive and legislative branches of government have mistakenly thought such measures would optimize distribution. However, none of these controls are effective because they don't lessen the need to borrow. Borrowing to consume creates a permanent debit which is a negative counterbalance against future consumption. This is a correctable flaw in the American private enterprise system. The source of this flaw is monetary and not fiscal because the American government allows short term changes in the availability of credit to modulate the volume and velocity of production and distribution.
In the long run, this management system has demanded enormous amounts of annual debt injections which lower the profitability of non-financial business and cause more dollars to be inhibited by continuous interest payments. This debt based economic system prevents optimal product distribution to all but the very wealthy.
Today, most Americans are submerged in debt and interest, and suffer from the collective inability to consume their own production. This results in a pent-up demand for products in a country overflowing with surplus production and surplus labor.
Viewed from the perspective of Raw Materials Economics, most Americans suffer a lack of purchasing power that the annual economic cycle should automatically generate by production times a optimal price.
ECONOMIC SOLUTIONS ARE POSSIBLE
The only permanent alternative to America's all debt system is to monetize wealth to a level sufficient to automatically create an adequate flow of money from the beginning of the production cycle (the raw materials input sectors) to the end of the production cycle (consumption). This will lessen the need to borrow at each stage of the production cycle. This must occur consistent with the monetary and fiscal reforms suggested in early chapters, so earned money can recycle without becoming permanent debt.
Applying the treatment of Raw Materials Economics must be carefully planned and orchestrated. First, the existing inventories of finished goods must be slowly reduced so the increased flow of goods and services that result from fair pricing will not generate hyper-inflation. Also, as more debt free money comes into circulation, installment credit must be made more difficult to obtain. This change demands that reserve requirements of banks be raised as the need to borrow decreases, in order to prevent the banks from relending too much earned income.
This cure does not require a "tight money policy" with high interest rates. It demands a higher level of down payments on installment purchases. This will affect everything from consumer loans to credit cards. It causes credit limits on credit cards to be reduced, not increased, as more unencumbered cash is circulated. This will be very difficult to administer in a society that's "drunk" on credit. This tightening of credit demands a counterbalance of increased earned income.
This restoration of accurate values must include the regulation of short term interest at, or below, the level of inflation. It may require the re-implementation of a national usury law.
These initiatives must be approached at a glacier's pace to be politically feasible. If these measures are pursued over the next several decades, the economy will gradually improve and become more profitable. Eventually, the amount of debt free currency in circulation will surpass the value of finished goods already in supply; thereby accelerating a more profitable flow of consumer goods through the economic pipeline. This will move a greater percentage of new dollars from the right side of the T-chart to the left side of the T-chart while growing the economy. This can be accomplished without causing disruptions to commerce or creating un-necessary inflation if "tools" are used that produce more earned income and less debt.
Most importantly, prosperity can only be maintained if a parity level of National Income is restored to America. This will separate the economy from its bond to debt and interest growth. As a prerequisite to this restoration, raw materials prices must be gradually re-indexed to a parity with finished retail goods and services. The formula for this restoration is available today. It requires that raw materials prices at the first point of sale be moved to relative equilibrium with the prices raw materials producers pay for their inputs. This re-indexing will eventually restore the profits of private enterprise displayed on the left side of the T-chart to a parity with wages and interest costs displayed on the right side of the T-chart. The velocity of this restoration must never surpass one percent per year increase in the percentage of National Income attributable to the profits of private enterprise, or resistance from special interest groups will abort the process.
Re-indexing must be extended to the minimum wage law so labor can buy its own production without government assistance. A par economy can be sustained if the minimum wage is set at a level equal to the par value of a bushel of wheat at the first point of sale. This requirement establishes a balance between labor and production. It makes a 360 degree circle around the economy in terms of an index. In January of 1993, the par value of a bushel of wheat was $10.79 - so, the minimum wage of one hour of labor at par was also $10.79.
Next, the Treasury Department must issue currency in the form of non-interest bearing (United States Notes) in precise amounts to gradually increase the volume and profitability of the production and consumption of domestic goods and essential services. This will cause price levels to re-adjust at all stages of the production cycle without clogging up the economic pipeline. These United States Notes can be metered into the economy at various stages of the production cycle or spent into circulation through a Department of Transportation Infrastructure Fund, that will provide money for road and bridge projects to all 50 states based upon population, unemployment rates, per capita income and various other appropriate standards.
This national currency (United States Notes) should be used to pay foreign holders of US public debt to eliminate the constant offshore interest drain.
The Federal Reserve System must also raise the reserve requirements of depository banks as new debt free money is spent into circulation. As a consequence, local lenders must raise the level of down payments required on installment purchases. Reserve requirements and down payments must be increased, or the economy will over inflate due to the increased purchasing power that will result from excessive fractional lending. Raising reserve requirement & raising down payment levels must replace any Federal Reserve actions to increase interest rates. If inflation becomes a problem during the transition phase, the inflation causing sectors of the economy should be sufficiently taxed to redeem their excess profits from circulation.
During this process, the Federal Reserve System must make interest free loans available to commercial banks at the "Fed Window" up to a mathematically definable cap that regional conditions dictate. Commercial banks should earn 4% interest by loaning this credit in their local trade area. Local banks that borrow from the Fed Window must re-loan this credit only to the private sector in their local trade area, and not purchase government debt.
Federal government transfer payments must be widely dispersed to the public in an amount equal to the interest paid TO the private banks by private sector borrowers. As an example, if total loans in a county or city generated 100 Million Dollars annually for the banks, then government transfer payments via U.S. Notes should total 100 Million Dollars, and reserve requirements in those banks should be raised the following year by 100 Million Dollars.
This replaces bank debt money with national currency. It constantly replaces the money removed from circulation as interest which guarantees that principal and interest can be repaid when due. It slowly forces interest as a percentage of National Income to decrease. Without this procedure, the monetary system will force interest driven inflation on itself as it expands the money supply to pay the interest.
The amount of money required for each segment of the American economy during each year of this restoration is mathematically definable.
These proposals remove the confusion from the monetary system by pre-calculating the amount of National Income necessary to insure adequate employment and distribution of goods and services.
These reforms can't restore prosperity unless the federal government establishes a trade policy of countervailing tariffs on raw materials and manufactured goods equal to the difference between the intrinsic value of products produced in America and those products purchased from societies with lower living standards. The impact of such tariffs will be to maintain domestic profits for private enterprise and wages, create upward pressure on profits of private enterprise and wages within our trading partners and reduce the necessity for debt both domestically and overseas. Instead of creating downward pressure on American profits, wages and standard of living, this approach will increase domestic growth while helping to enhance local development and reciprocal trade throughout the World. These threshold tariffs must cover agriculture, forestry, commercial fishing, aquiculture, oil & gas, industrial minerals, as well as manufactured goods made from these materials.
This trade policy removes incentives that direct America toward services industries. These trade reforms will produce equity of exchange and incentives that allow more Americans to produce goods at a profit in America. Today, too many goods are being imported to America at a loss. Changing trade policies to favor America will cause the Industrial Production Index to rise faster than the Consumer Price Index. It will close the gap between actual National Income and Parity National Income without producing un-necessary inflation. This will protect the American standard of living. It demands that international trade agreements be re-negotiated, including NAFTA and GATT.
These changes will meet strong resistance from people and companies who earn profits from interest or from underpriced domestic and foreign labor. These forces will offer average citizens much more tranquilizing debt before they capitulate. Debt is an excellent sedative that knows no bounds. It can neutralize its strongest opponent. The corporate and financial power structure of major industrialized countries will cause debt to flow through American households like the Mississippi flood waters of 1993 before they will yield to these changes.
BOIL THE TOAD SLOWLY
The story of the boiling toad establishes the proper analogy, with regard to eroding the power base of the people in control of monetary and fiscal policies. If a live toad is placed in a metal container filled with room temperature water, the toad will be agitated but will tolerate the incident. If it's dropped into boiling water, it will jump out of the container the instant it feels the heat. However, if the toad is placed in room temperature water over a cook stove on medium heat, the toad will not notice the increasing temperature until it's too late. The toad will literally float around in the pot until it boils to death, oblivious to its fate. This is the approach that must be taken with regards to monetary and fiscal reforms.
The rewards for successful reforms are boundless for future generations. However, such fundamental changes will require several decades to complete. Otherwise, resistance from the toads that guard the status quo of debt expansion will be too great.
When these monetary and fiscal reforms are complete, they will yield rewards to all citizens because, as the value of the labor and all other cost factors in tangible materials at the first point of sale reach equilibrium with the value of labor and all other cost factors in finished goods and services, full employment and consumption will occur. This will create perpetual reciprocal markets and abundant amounts of lawful debt free money to escort the production, distribution and consumption of goods and services through the economy. Then, banks will lend only "floor plan" money (production credit) from savings deposits, and maintain a 100% reserve of demand deposits. Banks will no longer be allowed to purchase short term government debt to the exclusion of local borrowers because the government will operate with a surplus of funds.
Concurrent with the changes outlined, the government must issue a predetermined amount of national currency into circulation each year and tax away the excess profits from each segment of the economy sufficient to modulate the process and balance the federal budget.
This is the outline for a par economy that's based on the intrinsic value of metabolic and kinetic energy. This intrinsic value of goods and services is based upon actual production and distribution cost factors that reflect the cost of domestic labor and the value of business organizations at every stage of production. This change restores the constitutional obligation and authority of government to regulate the value of money so growth and prosperity can be maintained.
This is not a simple process. It will require the approval of most standing committees in Congress, the re-negotiation of most trade agreements, and a gradual downsizing or elimination of most bureaucracies that were born out of the need for entitlements.
These reforms will increase per capita earned National Income, so they will reduce the need for many entitlements. Eventually, most governing bureaucracies will be reduced in size. This process must be monitored by a new generation of Americans who understand the fundamentals of Raw Materials Economics.
The consumer demand patterns released by these changes can explode the economy if the government doesn't tax surplus money out of circulation.
The federal government must maintain a budget surplus that's pre-determined within the context of monetary policies as well and fiscal policies.
Consider the people energy of an economy where 100% of the output of one sector is rewarded with an equal amount of consumption by other sectors of the economy. When physical production generates profits, consumption, and earned income rather than compound interest, debt expansion, and under-consumption, a rebirth of enthusiasm will replace current cynicism. As a result, honest and productive people will work harder, and many will ignore their physical limitations. Since business will be earning parity profits, the labor cost penalty of time and one-half wage rates over 40 hours per week, and double time on Sundays and holidays may not be sufficient to modulate the process. Having one's labor properly rewarded is an alien concept to most young low wage earners of the present day.
According to Frederick Soddy, author of Wealth, Virtual Wealth and Debt, "To awaken and release all this pent up human spirit and energy can be equated to the energy released from the artificial transmutation (splitting) of the atom." Soddy concluded that such a high level of energy could never again be controlled by high interest rates, debt expansion, or labor costs. Instead, new laws will be needed to control the human expenditure of energy. In the past, when government penalized business for overworking labor in the form of "time and one-half" over 40 hours per week and "double time" on Sundays, it tempered the aggressiveness of the business establishment. Under a private enterprise system governed by the principles of Raw Materials Economics, workers must also be penalized in the form of higher taxes, shorter work weeks, and longer unpaid vacations.
"CHOICES"
Graph 11.3 offers three possible futures in terms of the ratios previously considered. The top line of the Graph offers the efficiency and vitality of an earned income par economy (the Parity Trade Turn). The middle line offers a status quo economy that can be maintained only if America continues to disregard the need for full employment, balanced budgets, and peoples prosperity. This trade turn is the current debt subsidized trade turn. The bottom line on the Graph reflects the lost efficiency and depressions that can overcome America at any time (the pure debt turn).
Table 102 offers the specific timeline for a cure and the required levels of National Income needed each year to bring full prosperity to America by the year 2020. The Table describes the amount of income that must be allocated to each segment of the economy each year so proper ratios of cost to profit can be re-established. This restoration of value will permit a National Income comprised of two parts cost, to one part income to re-develop by the year 2020. This will result in a new par economy comprised of 2.9% net farm income, 12.1% small business income, 3.4% rental income and 14.8% corporate profits before taxes that comprise the 1/3 of National Income called the profits of private enterprise.
Table 103 displays the labor ratio that will produce full employment as America returns to structural balance.
Please study the table carefully. It should be apparent that no real revisions to the division of labor are necessary to return America to full employment. Instead, full employment will be restored if the new people entering the workforce have the option to work in basic industries. This will gradually increase the number of workers in raw materials production from the 1993 level of 4.2 million to 13.3 million workers by the year 2020. This increase restores an internal labor balance to the economy. This internal labor balance is a product of the income re-division and the profit restoration displayed on Table 102.
Table 102 illustrates that economic solutions are possible, and Table 103 illustrates that economic solutions will result in full employment regardless of the technological state of the arts.
The American private enterprise system has always suffered from an institutional inability to maintain a fair and honest domestic value for tangible production, a problem that begins with the underpricing of raw materials. This text has illustrated how parity priced raw materials can balance price levels across all sectors of the economy. This sets the stage for the equitable exchange of value at each stage of production and distribution, which is necessary to generate earned income and prevent continuous debt expansion. This is the only solution to the problems within the private enterprise system.
An equitable exchange of goods and services is a difficult concept for many citizens to accept, because this equation demands that the price of raw materials be kept in balance with the retail prices of goods and services. In practical terms, it requires that the disorganized economic forces engaged in raw materials production must be shielded from exploitation by the organized economic forces that believe cheaper is always better.
This text has demonstrated in a variety of ways that Raw Materials Economics holds the only key to a price creating system that maintains a natural floor under the energy value of products and services consistent with the state of the arts. This text has demonstrated that an equitable exchange of products and services is the cornerstone of economic growth, and cannot be ignored out of existence.
This text has demonstrated that the principles of Raw Materials Economics automatically yield the correct amount of exchange media (money) to represent the accurate value of tangible products and services as they flow through the production cycle to retail consumption. This correct amount of exchange media is produced naturally when 100% of needed production flows through channels of commerce at 100% of intrinsic value.
This accurate volume and value of raw materials flow is based upon population and technology. It establishes the pool of funds available to pay labor and maintain the diversified ownership of private property. It controls the prices and volumes of all retail consumer items. As a result, the value of raw materials determine the profits and savings produced across the economic cycle, and the standard of living for the society.
CONSIDER AGRICULTURE
Various plans have been brought forth over the years by advocates of Raw Materials Economics to index the values of raw materials to the value of finished goods. In the past, these concepts have been formulated into laws that addressed agriculture production but omitted the production and price of other primary raw materials, such as oil and industrial minerals. The economic record of the United States demonstrates that some of these plans became successful laws. Some of the older methods for indexing prices are included in a law proposed by NORM entitled The National Economic Stability Act.
NORM originally proposed the National Economic Stability Act in 1971. This legislation was designed to establish and maintain a parity value for basic storable commodities harvested from 75 to 80% of Americas tillable land. This law would also place a realistic floor under the values of semi-storable commodities such as meat and dairy products as they enter trade channels.
NORM examined the price history of raw materials through the 20th century and decided to build a proposal around the aforementioned basic commodities. They found that when primary metabolic energy flows through the production cycle at full value, the index level of perishable products and other raw materials will naturally follow; automatically creating the foundation for prosperity. This remains accurate today, because storable commodities generate the largest single block of retail sales in the national economy. However as stated earlier, such a restoration of value without careful measures to allow the economy to re-adjust will doom any meaningful effort to failure.
In 1947, the Raw Materials National Council proposed a program for agriculture that was developed by Carl H. Wilken, J. Carson Adkerson, Charles B. Ray and Dr. John Lee Coulter, along with the National Association of Commissioners, Secretaries and Directors of Agriculture. The program is described in Prosperity Unlimited, a book published by Carl Wilken who made the following statement regarding the proposal:
This type of legislation will cure any depression in 6 to 12 months and will prevent depressions in the future. As citizens, it's our duty to make a science out of economics instead of a tool for exploiters. Two times two makes four, thus an increase in our production must translate into a higher standard of living for all Americans engaged in production, processing, distributing and retailing.
Wilken's exaggeration was probably motivated by a naive enthusiasm for the real solution but the statement continues to ring true today, even though the 6 or 12 month cure period is unrealistic.
A solid plan for rural America will build a solid foundation under the United States economy. However, a plan to cover the value of all raw materials must be included, and most importantly, the program must have provisions for a very gradual restoration of raw materials value at the first point of sale so the economy won't suffer an inflationary explosion during the transition.
The present policy of under pricing raw materials, and operating the economy with fractional borrowing and debt expansion has been in place for a long time. Obviously, a transition period much longer than 6 to 12 months will be necessary to allow Americans to adapt to a new earned income pricing system.
If the economy restores intrinsic values too quickly, it will be necessary to enact wage and price controls, excessive import duties, and selective excess profit taxes to prevent exploitation by predatory business interests.
CONSIDER OIL & GAS
Currently, the United States imports approximately one half of all oil consumed. During the preparation of the raw materials worksheet it was discovered that when the price of oil reached parity levels, the per capita consumption of oil decreased. This has benefits in terms of conservation, environmental protection AND economics. The logical way to bring crude oil to a parity price level is with a threshold tariff that gradually increases until a parity price is attained. This should occur concurrently with the development of incentives that enhance the production and consumption of alternative energy sources.
CONSIDER FORESTRY
The timber industry is in an extremely vulnerable position with regard to old growth forests. This is a problem that can't be easily cured, but it's not too late to alter the course. It seems appropriate to convert idle farm land to timber production where feasible. Millions of acres of productive land were taken out of crop production during the 1980's for temporary retirement in the Conservation Reserve Program (CRP). Today, this land is under contract to the USDA for non-use. The government has paid farmers to retire millions of acres that are considered "highly erodible" by the USDA and environmental groups. This land has a grass cover and is an excellent host for young seedlings of various marketable trees. CRP "tree" contracts could be created for 40 years, and tree plantings could occur immediately in areas of adequate rainfall. This will be a wonderful legacy to leave our children and grand children. In this way, we can save more old growth forests and the timber industry can purchase and use planted forests as they mature.
CONSIDER FISHERIES
Americans import about 50% of all fish consumed. This is unnecessary. The technology for aquiculture has not been prioritized in America, because fish can be imported. Eventually, population pressure will drain the oceans of usable food unless policies are established that move commercial fishing into aquiculture. Before the oceans are emptied, the USDA could sponsor aquiculture projects to encourage entrepreneurs and commercial fishing companies to begin fish farming. Due to the advent of genetic manipulation, many fish species that heretofore were considered out of bounds for confinement tanks and fresh water can be adapted to commercial fish farming.
CONSIDER RECYCLING
Recycling is coming into its own. Almost 100 million tons of recyclables are kept out of landfills each year. Here are some of the totals recycled annually:
·49 million tons of scrap iron and steel, that's enough to build 6,700 Eiffel Towers.
·31 million tons of scrap paper and cardboard, enough to make 100 billion pizza boxes.
·2.8 million tons of aluminum, enough to provide aluminum siding for 8 million homes.
·1.5 million tons of copper, enough to surface 350 trillion new pennies,
·3 million tons of glass beverage containers, enough to make 6 billion one-quart juice bottles.
·0.8 million tons of stainless steel, enough to make 10 billion spoons.
However, America's landfills are still overflowing with additional resources that should be recycled. As a consequence of environmental restrictions placed upon business during each session of Congress, a new and necessary Clean Up America campaign has been promoted in many cities, but, many of these efforts are economic disasters. It appears that government should subsidize any commercial business engaged in new recycling efforts. This subsidy must be equal to the difference between the perceived market value of the materials recaptured and the original parity price for a like amount of raw material at the first point of sale.
NATURE DOESN'T LIE
In 1937 the leadership of the Raw Materials National Council organized their first convention around the concept of a "par economy." This convention was held in Sioux City, Iowa, and was named the "First Congress of Industry and Raw Materials." It brought miners, oil producers, farmers, manufacturers, lumbermen, and consumers under one roof for the purpose of developing a strategy to lift America out of the great depression. Since the first Sioux City Convention, the concept of Raw Materials Economics has developed into a scientifically testable truth.
This truth has exposed the flaws in national policies that continuously break the bond between economics and physics by substituting debt for earned income.
Sadly, the interest earned from debt is now accepted as a reasonable source of profits for future expansion and this flawed logic has become the cooled and hardened lava surrounding the physical economy.
The truth of Raw Materials Economics is the truth of nature and of humanity's ability to adjust to its demands and limitations.
Raw Materials Economics studies the flow of energy in nature by following the dollar value of metabolic and kinetic energy from origination to final consumption; showing humanity how to match economic theory to the true Nature Of Wealth.
Nature doesn't lie. It always bears a record of the positive and negative forces that debit its bounty. In a larger sense, the American nation is writing its record on nature everyday. Unfortunately, most of the scribes elected to write this record don't understand The Nature Of Wealth, which is simply the language of the land.
