the physics within
an economic system
Updated March 16, 2016
"With the production of wealth essentially a finished science, it insults our intelligence to regard it as, like the weather, beyond the wit of mortals to control".....
Frederick Soddy;
Wealth, Virtual Wealth and Debt

Frederick Soddy
We've all heard it said, "If you want to know the truth, just follow the money."  This book follows money through the economy in terms of it's energy equivalent from the beginning of each economic cycle when raw material production inputs are purchased, to the consumption of finished products and services.  The book explains how we can predetermine winners and losers in this process, based upon how our society prices each product and service at each stage of the production cycle.

The Nature Of Wealth views modern economics in terms of energy flow in all its forms. The book explains how to accurately calculate the parity value of all goods and services in terms of the energy required to produce each product or service. The book explains how the expenditure of human and mechanical energy in all its forms gives a retail product or service its intrensic value in terms of money.  This relationship will be explained so clearly that you will depart these pages with a new and better understanding of our capitalist economy.

The Nature Of Wealth proposes national economic policies that have the ability to restore internal economic balance to the private enterprise system by viewing the economy in the way just described; policies that operate within laws of physics and at harmony with nature; policies that promise lasting prosperity for families while balancing governmental budgets at all levels for future generations.    
To do so, we must  call upon the combined disciplines of physics and economics because the correct application of both sciences is necessary to mark this narrow but certain restorative path. This is a path to a peaceful and harmonious future where personal potential becomes the only definition of personal limitation, a future where intellect, incentive, and energy can be combined to maximize individual gain, a future where every able bodied individual can joyfully and fully contribute to society.

America's path to sound economics was abandoned decades ago, but the historical  records exist which outline when and how we veered from our once prosperous path.

A capitalist system can be very rewarding when certain rules of conduct are applied. Without these rules, capitalism becomes as heartless and insensitive as sending a blind person into a mine field.  Without the informed application of specific monetary and fiscal policies, capitalism ceases to produce positive results for a majority of its citizens.

To retrace capitalism's proven path, our book employs dozens of historical tables and charts that demonstrate how a prosperous economic climate can either be fostered, frustrated or defeated.  These charts, tables and graphs will clearly isolate and define the source of all wealth, the origin of all profits, the true nature of money, and the fallacy of systemic debt expansion.  This information paves the way toward a balanced, prosperous and fully inclusive economic model; a model more accurate than any prepared by any corporation, university, or government agency because it conforms to the laws of physics (nature), rather than failed economic theory.  

Study this book to discover the hidden keys to national prosperity, which heretofore have been obscured by fully informed self-interests and popular dogma. 
Study this book to understand that the hopelessness of millions is the product of flawed public policy and how poverty, crime and illiteracy can be eliminated.

Study this book and you will conclude that a nation's economy follows natural laws, that when understood,  demystify economics and money.

Study this book and you will conclude that inclusive, sustained prosperity can only be achieved through the implementation of policies that have been proven over generations to be mathematically defensible because they are the only policies that allow the American Private Enterprise System to add up!
                      Learning A New Language

The Nature Of Wealth speaks the language of a balanced economy, one governed by the laws of physics, motion and energy. 

The Nature Of Wealth reveals the physics within an economic system.  We explain how economics and physics naturally combine to either throttle or brake a private enterprise system.   We explain how these two disciplines can combine to yield mathematical formulas that result in internal economic balance and sustained prosperity. The proof we offer is so strong that it critiques itself.  We conduct a strip search of past economic policies and lay bare their fallacies, while clearly defining the route to sustained prosperity and growth.

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, however, the mystery disappears with a clear understanding of money. Most people don't understand the true nature of money because they have been brainwashed by a ruthless financial oligarchy. 

Elected government officials, bureaucrats and career economists parrot the exclusionary jargon of their trade, but never really discuss a balanced economy because most don't have an elementary understanding of the concept. They parrot the party line and pander to big business while pretending to empathize with the masses. They spend their lives serving the powerful and why wouldn't they?  That's how their bills are paid and that's all they have ever been taught.   They have been spoon-fed macro economic bullshit from birth.   These groups can transfer their nonsense from generation to long as they are selectively oblivious to more than 150 years of records which prove economics simply obeys laws of physics, thermodynamics and entropy and it does so without exception.  We refer to these groups as blind guides.

Blind Guides
The need to maintain internal economic balance between the basic segments of our nation's 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 CLEP 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. We reject the CLEP exam, which concludes that cheaper raw materials are always better, and by extension, free is best.  You may review their sample test by clicking on the blue link. Blind guides should open their eyes if they are ever to restore their credibility, because in this age of information, citizens of all nations are learning the truth from other sources.  Physician, heal thyself.

A stagnated economy can always be temporarily stimulated by increasing the money supply.  The Federal Reserve and bank regulators can increase the money supply by lowering interest rates which causes more borrowing.  The Fed can unilaterally increase the money supply by loaning funds to banks at 0% interest.  Likewise, the Fed and government regulators can reduce the money supply by arbitrarily increasing interest rates and requiring higher down payments and credit scores for mortgages.  Although reducing interest rates will temporarily grow the economy by causing more borrowing, it only makes matters worse when all the notes come due.
Capitalism's basic requirement for internal economic "balance" is ignored by colleges and universities while they blindly feed failed economic theories and flawed belief systems to each new generation of students with cafeteria line efficiency.  These students become the next generation of teachers, politicians, career bureaucrats and economists who implant this irrational doctrine into scores of national policies.  Together, their efforts exacerbate internal economic distortions that preclude sustainable expansion. The whole thing falls just short of treason.

The ignorance reflected in the CLEP exam could not survive across generations without new malleable minds who will allow themselves to be misguided, simply because they lack the native common sense and creative intellect to understand, much less teach, economics.  Each new generation of blind guides teaches by parroting the half truths and flawed concepts of previous blind guides.  The CLEP exam is a clear example of economic ignorance rising to rank and frightening stupidity.  Sadly, the economics professors who prepared the exam have failed their own course.
In this age of information, "The Nature Of Wealth" is essential reading for blind guides who seek cleansing from the intellectual stain of their misperceptions and for those who stand willing to accept a clear, math based definition of money and macroeconomics. 

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.  The masses  have yielded to policies that guarantee slave wages and poverty to millions.  These blind guides have selectively ignored the cause and effect of their policies which produce a mirage of opportunity for millions and inhibit personal liberty and the possibility of financial independence for all but a select few.  These criticisms are directed toward blind guides at every level; from classroom school teachers who claim to teach the basics of the American system; to college professors who lamely teach the history of failed economic theory while avoiding concepts and 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 willfully 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 injustices.   
Defining Money
Here is our definition.   Money represents the intellectual, biological and mechanical energy spent in the process of creating, exchanging, and consuming goods and services in an organized economy.  However, money should not be confused with bank issued credit which is created or destroyed at a banker's desk. Real money can only be increased at the rate that biological, mechanical and intellectual energy is added to the economy in  the form of goods or services that pass through the various stages of production. 

    If the economic system is balanced across the six major segments of national income, all domestically produced products and services can be sold at retail and consumed without perpetuating debt. 

    If the correct amount of money is in circulation, the capitalist system works wonders by producing a monetary profit upon the purchase or consumption of the annual aggregate of goods and services, such that some of the "money" may be stored, (five percent of national income), while the money remaining after payment of labor and taxes becomes available to be used to purchase inputs for  the next annual cycle of production.
"Money" must correctly measure the intellectual, biological and mechanical energy or "work" that is added to products or services as they pass through the various stages of the economy from their first introduction into the economy as biological, mechanical, and/or intellectual raw material energy to the eventual consumption of goods and services.  The "money" in circulation must approximate the energy spent to produce a product or service.  When too much credit is issued against this raw material framework, the money is debased.  When too little money and credit is available, the economy gets smaller. In turn, millions of workers are unemployed as businesses fail.

    Thus, we can conclude that money must flow through the economy in sufficient amounts and without interruptions so an organized society can grow and prosper. The alternative of bust to boom and back to bust leaves every citizen submerged in a sea of non-repayable debt. This is fully explained and proven in the forthcoming pages.  This book carries the key to a balanced, prosperous and inclusive economy.  If you understand this book, you will understand money, credit, and the nature of wealth.

    We have established, that in a country filled with raw materials and willing labor, most economic interruptions, such as recessions, result from interruptions in the flow of money; (the boom and bust cycles).

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 time and at any stage of the production cycle if the economy is out of balance but, it is most harmful at the raw materials stage where price levels begin. 

Eventually, the problem of wide spread monetary imbalances across the economy will alter the natural "ratios" (or percentages of the total money) that must be maintained within each of the six basic segments of our nations economy.  These six segments accumulate as National Income. and they carry the potential of adding great wealth or great debt to the economy, depending upon their capacity to regenerate reciprocal markets. The accurate ratio of each segment to National Income will be examined fully in later chapters.
The Victims
     The economy has a natural method of price recovery after prices within one or more segments of the economy are maintained at artificially low levels over a long period of time. However, this natural system of reciprocal markets is never allowed to function properly. American history is filled with examples of economic distortions perpetuated by greedy multi-national conglomerates and lobby-driven government policy makers.

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.  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 new and superior alternatives to an economy managed by the Federal Reserve System, and alternatives to other  systemic flaws that for a century have been the accepted monetary policy of the United States.

    A new truth will unfold in the pages that follow. Acceptance and adherence to this truth will enable the Private Enterprise System to literally "add  up".  When our economy adds up, it will consistently embrace innovation, applaud entrepreneurship and reward all Americans who participate in this "great experiment."

  An economy guided by an informed people's government will naturally employ policies that embrace the true nature of wealth and evolve to a maximum level of inclusion without sacrificing our individual freedoms or our right and opportunity to succeed or fail.

Narrative by Fred Lundgren
Charts & graphs by Jerome Friemel

Money has an energy equivalent.  We assign a dollar value to each form of energy based upon its source. Energy can be measured in many ways.
Fuels are measured in "British Thermal Units"
Engines in Horsepower
Electric motors in watts.
Humans burn calories

Raw materials are things we grow and mine.  They includes all sources of  food, clothing and shelter. 65% of all raw materials exist as crops and livestock. 35% of all raw materials exist as oil, coal, natural gas, timber and quarry materials. 
Inputs needed to produce  raw materials include labor, land, machines, fuel, parts etc. When the finished products are sold at the end of their economic cycle on the retail  market, the cost of these inputs plus a reasonable profit should be reflected in the price.