Phantastic money

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Alice, meet Dr. Dodgson
The money multiplier is a fundamental
in Economics 101 and never again reviewed for its underlying reverberance throughout
subsequent economics course work
The money multiplier is surficial
in Alice’s garden and as well understood as how Blue Whales the largest animal ever on Earth
thrive in the depths of the equatorial Indian Ocean on cold
surface in the sub-polar seas. The five
1.25-cent dollar2
even more when real estate assets are sought, such as at the peak of 2008 when
British banks are reported to have indulged, against which the aggressive practices of t
American banking industry is mere schoolyard taunts reporting 2.5
We can illuminate
much
double entry accounting that dominates
represented in balance sheets. Each point on that line has a
corresponding abscissa
liabilities side or column and the other
say that is as much as the ba
underlying business process, it gives a
possible overview
1
In my extensive remaining inventory of senior economics and MBA texts there is no further reference to the money multiplier
but lots of debate on how fiat reserve bank money causes inflat
investment banking practices creating inflation of
instruments create ledger amounts just by extremely risky lending. T
the primary cause of financial illiquidity and credit collapse
value through their enterprise, creating new
banking and the real wealth by innovation labour and capital productivity real firm enterprise creates in the real economy.
2
the reserves may sit untouched. Prior to 2008,
money’ "Where does money come from?↑
http://www.opendemocracy.net/ourkingdom/oliver
3
As confirmed by John Mack CEO of JP Morgan in interview with Charlie Rose
People will look askance if one was to say, “Money is just wishful thinking, just as every banker
knows is the case.” At very least
advised them, especially my banker. The money multiplier effect is profound seen for how it
works, the banks know this “how
works. The multiplier fantastically produces fictional money us
accounts, the creation of real money by firms and the trading connections.
So much depends on belonging in their comfortable flat land view. Flatness in that world though
apparent is a conjecture, not a full or proper accoun
cipher of projection in a flat land of accounting for the phantom that money is, is not Cartesian,
but round. We project that ‘money’ into a Cartesian cipher but must understand that real
economic world in which money arises, which economics has fought long and hopefully to
ignore, is far more complex a realm that is not the least bit flat. “Alice, meet Dr. Dodgson.”
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Alice, meet Dr. Dodgson! Phantastic Money.
fundamental effect, a very powerful and useful effect
subsequent economics course work1
. However it is that one effect, banking vitally depends on
The money multiplier is surficial consequence of a financial ecology as deep as any rabbit
thrive in the depths of the equatorial Indian Ocean on cold-water krill, normally seen nearer the
The five-cent dollar is a fact of the markets. Banking prefers the
British banks are reported to have indulged, against which the aggressive practices of t
American banking industry is mere schoolyard taunts reporting 2.5-cent dollars3
We can illuminate, by a very basic graphing of a 45
much of importance about the monkish St Gallen Swiss creation of
double entry accounting that dominates our world view of finance
corresponding abscissa, x or y, that is logged as an entry
liabilities side or column and the other, y, on the assets side. We can
say that is as much as the balance sheet actually tells u
underlying business process, it gives a needful limited and concise as
possible overview. The reality remains in an entire gas
but lots of debate on how fiat reserve bank money causes inflation. This deceit lays through all economics debate
tion of ‘money’ is never suggested. Fundamentally aggressively margined financial
instruments create ledger amounts just by extremely risky lending. Transference of their risk through insurance on mortgages was
liquidity and credit collapse. Firms are still struggling to defray that inflation by making new
new added value money in the economy. Central banking just plays overtop
the reserves may sit untouched. Prior to 2008, ‘the banks had £1.25 in central bank money for every £100 of customers’
" by Josh Ryan-Collins, Tony Greenham and Richard Werner
http://www.opendemocracy.net/ourkingdom/oliver-huitson/uneconomics-guide-to-money-creation
ed by John Mack CEO of JP Morgan in interview with Charlie Rose January 2009
At very least I can report they do look askance at me whenever I
, especially my banker. The money multiplier effect is profound seen for how it
works, the banks know this “how-it-works” very well, but it is badly understood as to why it
works. The multiplier fantastically produces fictional money used to “invoke” onto ledgers and
accounts, the creation of real money by firms and the trading connections.
apparent is a conjecture, not a full or proper account of the reality. Money in their sense is just a
hich money arises, which economics has fought long and hopefully to
Phantastic Money.
briefly reviewed
banking vitally depends on.
al ecology as deep as any rabbit-hole
water krill, normally seen nearer the
cent dollar is a fact of the markets. Banking prefers the
British banks are reported to have indulged, against which the aggressive practices of the
.
, by a very basic graphing of a 45O
sloped line,
Swiss creation of
our world view of finance
as an entry x on the
on the assets side. We can
tells us about the
limited and concise as
The reality remains in an entire gas-cloud of
economics debate. Commercial
Fundamentally aggressively margined financial
ransference of their risk through insurance on mortgages was
irms are still struggling to defray that inflation by making new
l banking just plays overtop commercial
central bank money for every £100 of customers’
whenever I have so
, especially my banker. The money multiplier effect is profound seen for how it
works” very well, but it is badly understood as to why it
ed to “invoke” onto ledgers and
t of the reality. Money in their sense is just a
hich money arises, which economics has fought long and hopefully to

“
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possible intersections from profit to loss for either participant.
The complexities of the business process are reduced to those simple modelled ciphers. We
“know” however intuitively such projection is just short form of adequate representation. So
much short but as acceptable as Dr. E. H. Gombrich’s “Hobby Horse” suffices in most gleeful
instances to represent an intensely useful and joyful galloping pony for us, whether as child
receiving or grand-parent giving. Economic models are no more exotic but too often just are mis-
representations abbreviations from account the fullness of issues at play.
It is our sentient habit to project things from one realm outside our keen into our understanding
or comprehension, whether by allegory and parables, double-entry bookkeeping of receipts and
waybills, or, differential calculus, topology and set theory as the case warrants. So, let us now
confront our imagining and see that graphed line as the closed edge of a book. Now we will open
that volume to see how those ciphers aligned on that graphed Cartesian line emerge there from a
very evolved realm of business processes. Those ciphers are a reduction to abscissa projected
onto that line. Those processes often comprise more than four parameters that evolve and invoke
mapping their strange geometries on which their modes of activity are charted as they voyage.
The business process is a realm that can include more than the geometry of flat pages but also
convoluted and involuted geometries of spheres, saddles and topologies of higher orders that
describe the terrain and realities of economic lives in which we can all engage from time to time
and most times are actively engaged in conducting. That we do so engage is very real, most often
habitual whether right or left handed, upright or devious, but how we do it is not so much
conscious as it is subconscious or supraconscious, and certainly never linear. Dr Atrill
demonstrated fundamental relations of firms to their balance sheets are far more convoluted.
That economics suffices mostly on the ciphers of the dotted implied inclined line of our simple
graph is highly delimited representation. Highly parsed from the realities of business processes

“
that in combination or concert make or break the economy is a given, that they are removed from
that real context. The parsing is unfortunately too far removed with the consequences we have in
modern economics discourse as the result. Nations cannot properly form and institute laws that
regulate because the economic models being used and debated are too high strung out of context
with the range of realities and not sufficiently robust to address the generalities let alone the
specifics of business and banking processes. The whole has become an unfortunate shadow war,
with the victims quite real however, while what has become a branding war of essentially
parallel and barely divergent views conducts this economic carnage as merely collateral damage.
Whether they profess or not belief in big government both sides participate in its regular conduct
for the benefit of its respective constituency. The only divergence they have is over who benefits
in isolation from the other, when both are in the same realm, exploiting one over the other.
Theirs is the zero-sum of profit and loss, demand and supply. Those that profess otherwise
naively believing the cash is the whole of it calling for metal currency are equally unaware of the
deeper processes giving birth to those cash accounts. Commodity money will inflate their
holding at everyone else expense just as J.P. Morgan and others profiteered in scooping vast
holdings at discount when runs on banks occurred without reserve systems.
Their advantage sought is that their gilt coin will be inflated as the economic process deflates for
want of float money in credit, their seizing greater control of capital means of economic
production. They also will do serious damage to (liberal democratic plutocrat or state capitalist)
basis on which business processes emerge from which difficult recovery is merely possible.
These all attempt to regulate business, if or when at all, from the cash result. That is monkey
business and they are observant at the wrong end of it, and know not better, but will suffice for
their own benefit.
Business processes will engage as human discourse for better or worse regardless of the political
context. The difference will be in the accounting whether the state, plutocrats or citizens broadly
will benefit from the use of the common purse that is the result.
What all are missing money is invoked by the process to greater and lesser volumes as their need
for money arises to account for the process in ledgers and balance sheets, as the ciphers
responding to its credit float needs held in the banking system. Without the float emerging from
business process the money arising as specie/coin has no worth other than as commodity in itself
for barter. Clearly ink on paper has less barter value than metal coins in and of its intrinsic self
when we have reduced the business process to barter that can otherwise create greater float value
and volume rather when at full engaged-in process which debt instruments and contracts
represent. Fiat money as these contracts allow in any form creates the opportunity for interest
free credit floats that are the keystone for wealth creation by business processes, not least for
banks. Commodity money merely lies in deposits with interest burden.
What they are referencing to and dealing in as money is only specie/coin as representation for the
value and price determined from demand for supply. That is also as far as all economics
generally has delved, the flotsam that is floated, never the current that creates and carries it. The

“
intersection of downward sloping demand and upward sloping supply curves are inferred to
explain all in a precise point, when nothing close is the factual reality. That intersection is a
blurry cloud of gas from which both profit and loss can emerge with resonant effect on any or all
participants. As medium, coin is accounted for representation of, but not as message for the story
of its being there. That story is ignored as if a trifling, “There is nothing behind that curtain,”
they will maintain but that is farthest from truth. That it confounds them is more to the point.
What is looney about our usage of the term 'money' is belief it has intrinsic value. Nothing
further from truth can be imagined. The value being traded, the real money being traded is
elsewhere in contracts of business process. The whole concept people (mostly self-
proclaimed libertarians (in-hiding from their real identities as would-be sociopathic buccaneers,
plutocrats and monopolists)) carry in a commodity money is more primitive than cowrie shells
and wampum. Banks create our specie money at will, at their will to supply demand for its use.
The Mint and Central Bank discount window as "lender of last resort" to the banking industries
is the least part of the process and is in existence as from their founding to engage banking in the
financing of political policy. Central banking is just a straw man tableau for this disingenuous
rant for gold standard commodity money in their wish to play J.P. Morgan.
Fundamentally money is a promise, just wishful thinking. It projects your "I promise to pay the
bearer on demand the sum of ..." on a third party in future establishing a social contractual
relationship of credit and debt between two agents that a third we rely will settle. That third party
can however near freely create the specie money and carry-on issuing to both creditor and debtor
as long as we primary participants retain confidence in those promises to pay. Real money is at
the two ends of transaction with this phantom as intermediary. It is a powerful phantom that is
invoked at will in the economy to project real "money" worth from one place and time to another
Like Alice falling down the rabbit hole you say with a titter, you can be certain that is the actual
case. Banks are licensed by law to conduct their taxation of business process that is economics
by what is counterfeit fraud when conducted by others.
The Swede, Johan Palmstruch who in 1656 near perfected the first sustainable form of this
banking was first sentenced to hang and then was pardoned as the Swedish Crown realized the
significance of his creation and took over his bank, and remains the earliest central bank still in
operation. Charles I ‘appropriation’ of the gold held in the mint lead to later experience of
London Goldsmiths safe keeping gone awry due to temptation later known as moral hazard.
“No deposit had been made and the gold was not there. The receipts were fictitious – they
were pure credit and had nothing to do with gold. But no one could tell the difference
between a real deposit receipt and a fictitious one.”
Many attempts at reserve banking were made from Florence, Venice and Genoa at the beginning
of the second millennium first surviving record attempt at issuing script demand notes to secure
payment obligations, and Dutch in 1609 that have not survived due to their ethical dilemmas
becoming exposed. The earliest Berenberg’s commercial bank built on Baltic trade to the Hansa
free-state Hamburg in 1590 remains in operation, as does the Lombard grain trade based

“
Banca Monte dei Paschi di Siena SPA (MPS) Italy, of 1472 the oldest surviving bank in the
world. Getting around Vix Pervenit restriction on usury did not stop the Medicis using the
invention of insurance (see contractum trinius) on repayment making banking very profitable.
The Canadian dollar "Loonie" is apt start to discussion of what a dollar is and how they strangely
come to relevance. We make them because we need them. The fact that no economist has
determined how money is made is a baseline of abysmal science. Stamped metals or printed
paper are tokens we use as currency, specie money. What these represent and where that which is
represented arises confounds adequate description, in economics most significantly there is no
near agreement, they do not know. What you cannot describe you cannot manage.
The recent book Where does Money Come From ? A guide to the UK monetary and banking
system, repeats old understandings with new data but goes no further than this truism.
Each and every time a bank makes a loan, new bank credit is created – new deposits –
brand new money. (Graham Towers, 1939, former Governor of the Central Bank of Canada)
The most interesting commentary that appears is a misunderstanding of ‘credit rationing’, that
today’s problems emerge as largely a shortfall of credit liquidity, of supply. That is the least
likely prospect. Banks issue credit loans as often as they can as it multiplies their return and
further competing for profit. That remains unexplored in its discussion.
The real limit comes when prospective borrowers fear their ability to repay. How true that is,
is barely appreciated. That is because they see their prospective cash flow curtailed coming from
the business or business plan in which they have an interest, pouring their efforts as entrepreneur,
financier, shareholder, owner, supplier, employee or client, seeing those become less than they
hoped for. Simply put, it is these trading connections that are the source of float in any business
process adding real value, creating real wealth and with that initiating the flow of ‘real’specie.
The banks need that demand to issue their receipts that are no more than fictitious multiples of
(possibly even fictitious) deposits, but as long as the flow of business process continues in its
confidence there is nothing to bring down confidence in the banks' ability to settle the accounts
(most often from 'healthy' cash flow it can find or create receipts for elsewhere). Their tokens are
there to mark the transactions expanding value at each milestone of the business process. That
alone is the nature of specie money. Real money lies in the creations of business processes we
arrive at every day in our bleary or clear eyed efforts "to make some money" whether by creation
of idea for opportunity, innovation, initial owner investment, productivity, employee
investment, supplier investment, client investment, shareholding investment, bond holder
investment, and working capital liquidity provided by commercial banks. The confluence of
which confidence creates the added value, real money, that was not there before and specie
money is needed only to account for that in ledgers and balance sheets. Almost all of that
GAAPP has no means of describing or of measuring and cannot manage accounts for, so it is
referred to mostly as "goodwill" which is ultimately bought in some form whether by darts or
power-points at 10 paces or other means of agreement.

“
Dr Atrill’s fundamental achievement was the tabulation of the elements of ratios that can be
found to exist in one business also can be found to exist in others. Further what seemed to link
that pattern was a relationship built-up in a business process and found in the balance sheet as the
relationship of owner/shareholder equity; to, bondholder equity; and to, working capital. The
geometry of that pattern was found to also provide other projections that were proven to be very
useful, like N*/share and Risk Price
The real question is what lead to Ottmar Issing's outburst at 2011 INET conference. The
baseline research was not done throughout the past century of burgeoning chairs for economists,
as macroeconomics swept central banks to create credit for national politics. The limit on credit
is our ability to demand for it through business processes creating value others acknowledge.
The float qualities of money are confusing to even the best practicing economists in the real
world of exchange and commodities, like the storied, George Soros, revealed in his Alchemy4
(which title may be an intended slash in reference to Sir Isaac Newton as Chancellor of the Mint
iron willed establishment of the gold standard - the root cause of most bubbles going badly (by
taking credit and liquidity out of the markets into a commodity)) telling of his reflexivity theory
partially reverberates.
"Money values do not simply mirror the state of affairs in the world; valuation is a positive act
that makes an impact on the course of events. Monetary and real phenomena are connected in a
reflexive fashion; that is, they influence each other mutually. The reflexive relationship manifests
itself most clearly in the use and abuse of credit. ... The connection between credit and economic
activity is anything but constant - for instance, credit for building a new factory has quite a
different effect from credit for a leveraged buyout. This makes it difficult to quantify the
connection between credit and economic activity. Yet its a mistake to ignore it. The monetarist
school has done so, with disastrous consequences."
Now Comes the Whopper Banking Fish Story
However the entire banking industry spawned and has thrived on their observances of interest
free money to be had from being in the stream of the transactions between trading connections.
How that flow is generated has always been obscured of its understanding, explanations are
always in terms of the effects and not causes. Such explanations are the whole of prevalent
economics whether one is of Freshies or Salties persuasion or among the neo-conservatives.
The interval between accepting and proving deposits is the one type of float banking will
grudgingly admit to and will retain regardless how efficient and instantaneous the regime of
computers will make the registry of transferred amounts appear. Banks will resist and have made
unlawful when anyone else indulges in the flotation “kiting” of instruments in which they are
4
George Soros, The Alchemy of Finance, page 17-18 commenting on international debt crisis of 1982-5. It is interesting to note
that George Soros, also an accolyte of Lionel Robbins regime of studies, as were Coase and Atrill before him, seemed to
understand some of the relationships involved, but could not quite express it not having quite got his mind's finger on it. Soros in
fact sponsored the INET function at which Ottmar Issing proposed “a Nobel for anyone who provides a proper theoretical treatment that
combines credit and money, financial quantities and financial prices.”

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specialists. This form of kiting the credit and debit floats is the core of what banks do to obtain
interest-free money as they receive and are then able to hire-out for payables.
That amounts to a volume of some 16 hours of transactions worth in the world economy that is
not acknowledged officially deposited as that interval moves around the planet every day. That is
interest-free flow for that interval, an amount with minor fluctuation in level as it is in constant
renewal, and this is ‘float’ in a classic sense. Once these amounts are entered as according debit
or credit, they then are held for clearing confirmation, a further interval where the debit float
continues as a banking “liability” until it is turned into a credit float or banking “asset” by their
lending it out. Early-Renaissance bankers, usurers as they were then known, quickly found they
could loan-out their client letter of credit demand deposits at the rate of six sevenths with small
risk, as the last seventh was their functioning daily reserve. With time that 14% reserve amount
has been persistently shaved, and at times too often, very aggressively shaved, because of the
money multiplier incentive underlying their desire to shave the reserve to as small as possible.
The reserve amount is of substantial effect on credit and liquidity of the financial system. The
level of reserve is critical to the amount of credit the banks can offer and collect their earnings
from, the core “product” of their business enterprise.
Usually the money multiplier effect is explained using one tenths as the reserve ratio and for
simplicity assume all loans are made to the accounts of other client accounts in the same bank,
which is what the bank prefers. If you hold one tenth in reserve as a bank you then loan out 90 to
another client, holding then a tenth, you loan out 81 to a third client, holding another tenth you
then loan out 72.9 to a fourth client account, holding another tenth in reserve you then loan out
65.61 to the fifth client account, and so on until you have lent out near exactly 1,000, or ten times
the 100 deposit amount. Of course each of those loans at say 5% creates revenue of 50 dollars on
the hundred deposit. So actually near 50% is the real rate the bank can potentially earn by their
lending out of your 100 dollar deposit. When the banks push it as they did in the phase of
deregulation of reserves and mingling of reserve and shadow banking, the moral hazard becomes
very tempting. Many banks to be really competitive started to reserve less and less, by 2008
some US banks reported as little as 2.5% reserve, a 40 multiple, which enables the creation of
credit for 4,000 from “money multiplying” your 100 dollar deposit yielding at 5% earned on all
those credit instruments some 2,000 dollars of bank potential earnings in interest floating on the
back of your 100 dollar deposit.
Not only are [banks] allowed to create money and allocate purchasing power, but
someone else guarantees to pay their liabilities for them if they are unable to. That
someone else is you, the taxpayer, via the government.5
That is how credit liquidity is achieved by the banking system to enable capitalization of
business enterprises, a good thing for us all, enabling us the creation of our jobs and means of
personal wealth. The reserve ratio and the amount of money in circulation are very important.
The reserve ratio is regulated to ensure a measure of stability for the system to absorb the shock
5
"Where does money come from?↑
" by Josh Ryan-Collins, Tony Greenham and Richard Werner, p.69.

“
of a loan default rippling through, until someone must take a loss from their projected interest
stream of earnings.
If there is not enough business enterprise for banks to lend working capital too, then banks create
other forms or financial products in which to make these loans to maximize their earnings
potential, like consumer debt, or zero down “zombie” mortgages and such with higher likely
default ratios and poorer collateral.
The fees they charge and deduct for ‘handling’ from the loan amount placed into your account is
just another way in which they retain interest free money from that credit float amount. Like the
Les Miserables innkeeper Thénardier “trim a little here and there just a trice, but devil make sure
you do it twice.”
The fundamental take away here is that without float there is no banking business. Note also that
that float is created on a paper promise being exchanged. There is no lugging around of coinage
metals involved in this float money. All gold standard monetarists do not understand this, either.
Credit creation as money creation obscures that deposits and lending out of them is not at a “near”
identity of 1:1 most people actually assume that it is, mislead by statement like this:
Given the near identity of deposits and bank lending, Money and Credit are often used
almost inseparably, even interchangeably… (Bank of England, 2008)
The commercial banking sector not subject to reserves constitutes some 97.4% of “money” in
circulation (noted by economists as the M4 money supply) is by their creation of loan
instruments and financial products therefrom derived used as deposits. That is to say a 2.6%
reserve of cash which yields 38.46 times multiple of every dollar deposited by commercial
investment bank investors is created in loans. Now imagine what the level new fiat money was
created in 2008 in Britain when their reserves were at 1.25% of deposits yielding 80 times
multiplier, twice that of New York banks reported6
at that time of Lehman Brothers collapse.
Where reserve levels are unregulated the ability of banks to create loan contracts is ever nearer
infinite and only mediated by the risk of increasing default causing shock to the system of one
bank not accepting another’s loan instruments as commodities in exchange for settling of debt.
Each and every time a bank makes a loan, new bank credit is created – new deposits –
brand new money. (Graham Towers, 1939, former Governor of the Central Bank of Canada)
The willingness of banks to create and supply loans for a stream of interest is limited largely by
demand for loans, where at some point ultimately “people are reluctant to borrow because they
fear their own ability to repay risking what they have created.” The elasticity of reserves banks
will willingly engage seems hardly any limit. The problem only is real and present when the cash
flow is interrupted as one bank will not accept the instruments written by another. That hesitancy
precipitated the debacle of 2008 that the real economy is still labouring to recover those losses.
6
See John Mack CEO Morgan Stanley, interviewed by Charlie Rose January 2009

“
…rather than the Bank of England determining how much credit banks can issue, we could argue
that it is the banks which determine how much central bank reserves and cash the Bank of
England must lend to them7
. (ibid, p.22)
Not only are [banks] allowed to create money and allocate purchasing power, but someone else
guarantees to pay their liabilities for them if they are unable to. That someone else is you, the
taxpayer, via the government.8
(ibid, p.69)
The most interesting commentary that appears is a misunderstanding, of some sort of ‘credit
rationing’, that most feel triggered today’s problems, that credit liquidity emerges as largely a
shortfall of supply, lack of credit liquidity as it is referred to. That is the least likely prospect.
Banks issue credit loans as often as they can as it multiplies their return opportunities for cash
flow and profit. This is what they intend when they complain of not being able to compete
internationally for making loans and obtain debt instruments.
The real limit comes when prospective borrowers fear their own ability to repay. How true that
is, is barely appreciated. There is more psychology behaviour and emotion than equation at play.
The borrowers fear because they see their prospective cash flow curtailed coming from the
business in which they have an interest, pouring their efforts as entrepreneur, financier,
shareholder, owner, supplier, employee or client, seeing those become less than they hoped for.
Simply put trading connections are the source of float in any business process adding real value,
creating real wealth and with that initiating the flow of real money through credit and debt
instruments. The business process is the creator of float among the trading connections. That
float is the worth of and creation of money it needs to conclude and register transactions and
contracts in all their respective ledgers. The tokens are there to mark the transactions expanding
value at each milestone, adding value and creating the need for money debt instruments provide.
The real question is what led to Ottmar Issing's outburst at last year's INET conference. The
baseline research was not done throughout the past century of burgeoning chairs for economists,
as macroeconomics swept central banks to create credit for national politics.
Phantastic Money
Our social ability for creating wealth is the expression of our mutual willingness to engage with
others in business processes. This is an essential fact that needs to be understood and instead has
been marginalized in mainstreams of economic thought. It is one that economics largely has
passed-over in silence much as Wittgenstein recommends for want of its understanding, “we can
only speak of that which we know” paraphrases the effect without delving into cause.
It is such mutually advantageous cooperation that empowers us to dominant species. Pack
wolves, lioness pride or Orca pod all use the same to their dominant advantage. Our ability for
7
"Where does money come from?↑
" by Josh Ryan-Collins, Tony Greenham and Richard Werner, pg 22.
8
Ibid pg 69

“
engaging in cooperation enables persistence hunting to obtain our success as much as it
empowers the creation of our Martian mobility for exploration. It is this “cause” of cooperative
effort that results in the social production that is money. By never investigating this key factor of
economic life, but reflecting on the effects economics remains very limited. It is entirely within
the structures of cooperation that business is built and conducted by any firm (or person or
fictitious person) among the trading connections with whom and for this business liaison is
formed and resolves. Each day we leave our homes to go and “make some money” convinced of
that effect from our efforts working with others, but rarely appreciating how deeply the
implications of that statement actually are.
The aggregation of this activity is the national economy, GDP measured in dollars of specie
money. The measure in specie money is of an effect, not of cause. Like measuring the antelope
deaths might not be effective determination of future health, number or vigour of lions. We know
there is further ‘value’ in the firm but by these conventions we are ill equipped to its measure, so
will “throw a number on the wall” and see if it will “stick” in negotiation of this goodwill
quantity.
We create specie money in order to oblige the requirements of these processes. Specie money
comes after, is the result needed by the trading connections
process. Specie money is driven by the process’s needs. we
are willing to engage due to mutual benefits we believe will
emerge from our participating in this discourse of our
cooperation with others and their cooperation with yet more
“others.” We accordingly unite our mutual efforts in
facilitating this exchange as an entity of trading connections
who collectively ‘will’ the business process into existence
and sustain it. This willingness to engage and sustain
cooperation in trade as in persistence hunting is the essential key to our species success. For
specie money to facilitate the transactions outside the process of collaborating trading
connections we have invented forms such as cowrie shells, wampum, and coinages. The most
effective means has proven in printed script, starting in some form in Europe and China at two
extremes of the trading worldscape of the first millennium.
What invokes this heated discourse among trading connections is always the communication of
an idea. It is an idea that draws this commitment to participation from which the process engages
develops, unfolds, succeeds, and expands to its allowed space and may then be mature in its
sustained continuation or decline to demise in accordance with the limitations of the idea.
The process is differentiated in each case in some likely unique way but always has fundamental
similarities that emerge in its conduct. One such is the money it expresses in its accounts and
balance sheets. These expressions have a consistent pattern. Most economists have passed over
in silence allowing the monies operation of the process remain as phantoms between the lines of
ciphers and figures that are a projection of the monies trading as needed and invoked by need
among the trading connections for their participation.

“
The Objective Economics9
discerned, nominated and developed10
by Dr. Atrill in the 70’s is
prescient11
and unique in his effort to visualize and make ready as tools for the tracing of worth
developed within the structure of firms, their trading connections and their business processes.
Without question the sum of firms’ activity is the national economy as understood assumption in
all economics from the Physiocrats forward. How that sum originates its force was Atrill’s focus
instead of the surficial subjective economics that flowed from Keynes to Friedman reliance on
the sloped line from which macroeconomics takes its cue for summing the firm into its economic
model. Atrill’s work of the late 70’s in gaining his research access to the ledgers and balance
sheets of the TSX 100 allowed for his tabulation of float that existed in the transactions with
their trading connections among these same firms. This was detailed work not unlike the
foundation work of Tycho Brahe in logging star and planetary movement positions on extensive
tables that later enabled Kepler to overturn the geocentric and confirm the former heresy solar
centred planetary motion in a time when Savonarola was burned at the stake for his ‘science’.
Dr. Atrill, stirred by the conflicts of the Austrians and Chicago with Keynes attended by Lord
Lionel Robbins at the LSE, to look deeply behind the ledger, and the balance sheet parallelisms,
where all of something is brought to nought. He understood so much could not be reduced in
classic science methodology to such meagre classification. Imbalance is what stirs all into life in
the open systems that are all life is. Indeed as we begin to discern the Big Bang may only be a
mid-point in the sonata of the spheres12
stirred by less than 1% of the energy we can see as mass,
so far, the rest has been latent from view, background noise we want to filter-out for its distortion
of what are willing to trust. Atrill looked into the works and foundations of Quantum
Electromagnetic Dynamism thinking and suspected there was indeed more one could discern
behind the page, as the popular press scream over seriality13
was populous press at its best. The
real world is much stranger when one looks beneath its surficialities.
The disturbances of ideas on calm waters indeed do make storms. Business at core is little more
than the resolution of ideas whose results have consequences we will in practice measure. Atrill
it turns out rightly guessed money is the emergent from the process, in contradistinction to
shareholders’ interest in established convention. Mozart’s sonatas emerged from his ideas in a
process of creation analogously for which coin had to be minted to pay settling accounts written
then into ledgers, his and patrons. The worth existed prior due to process in creation assembling
the notes into form from which it emerged. Such is a more apt description than Adam Smith
ventured in Wealth though it seems to me he understood its case in Moral Sentiments long prior
9
V. H. Atrill, “How the Whole Becomes the Sum of its Parts,” monograph, Toronto, 1976
http://openlibrary.org/books/OL23783929M/How_the_whole_becomes_the_sum_of_its_parts
10
V. H. Atrill, How All Economies Work: Principles and Applications of Objective Economics, Dimensionless Science
Publications, Calgary, 1979
11
M. H. Buechner in 2011 seems to have co-opted Objective Economics for “branding” purposes to his enthusiasm for Ayn Rand
myth (and in his presumed ignorance the use of Atrill’s term nominating his own field of economics) to a merely parallel
expression Buechner exposes in his own derivative subjective economics that just substantiate his bias of dialectic demand-
supply price setting and out of his oversight and misguidance.
12
Lawrence Krauss, A Universe from Nothing , 2012
13
John Donne, The Serial Universe, 1934

“
just as the Physiocrats had struggled to see beneath the surface. Popular success too often tides
over the constructs on the beach. The Invisible Hand was a convenient allegory, not example.
Atrill attempted to release that boundary and examine the “How” beneath the ledgers. He risked
a great deal of condemnation by the powerful many that stood to lose their bets. Many were
deeply unkind describing his efforts labelling his work as “nuisance if not downright dangerous.”
He proved himself right in their practical terms as those many lost their bets piled into business
bubbles, like Dome Petroleum, Atrill would reveal as insolvent, from their balance sheets alone,
years before their “pop” could be seen.
Dr. Atrill knew he risked the censure of most of his peers committed as they were for their
convenient understanding to a body of ideas that made them substantial incomes in banks and
governments managing economies in a way Keynes feared and Hayek had condemned. We live
with the result and suffer the consequences as banking has shoved its impractical imprudences to
the public purse that governments endorse through ill-advised policy as consent. The obligation
of government has become the financing of bankrupts by policy as much as it finances policy
ideas without process to develop money within their pursuit. The entire worth of any economy
emerges like a phantom from those processes which require specie money be prepared to account
for them in ledgers and balance sheets, “phantastic money” that is manufactured into existence
by business process before coin is mined and milled or paper promises to pay are printed.
Phantastic money is what Dr Atrill had discerned. The evidence of its creation or manufacture
was found within the structure of, his prochton and antichton, entity and counter-entity, to the
confusion of so many. With reverberant insights from Tobin and Coase and further refinements
we can define as the workings of the firm and worth of the trading connections and map them.
The process has a discernible shape of terrain and modality in which it moves to process business
ideas into consequences that as one objective requires specie money to settle account of their
motions into ledgers and balance sheets, as the trading connections evoke and agree on
ultimately. The credit floats and debit floats and their respective volumes are developed by the
trading connections to engage by mutual definition and benefits through their willingness to
participate with the firm. The accomplishment of worth happens long before as, phantastic
money, that we through our Modal Geometry, are able now to document with reasonable and
robust degree as a projection into the balance sheets from ciphers it generates there. The rules of
that projection were first intimated in Dr. Atrill’s work. Our success builds on his.
That perspective is profoundly and fundamentally different from the surficial and subjective
economics studied and learned and passed as shibboleth into law and tenure then passed by
convention into Generally Accepted Accounting Practices and Procedures (GAAP). The
common points between these views are ‘credit float’ and ‘debit float’ as banks know well.
Those are the very foundation of their business process they defend through law (knowing alone,
empirically from traditioned experience, they exist with useful consequences) and from which
they are able to manufacture liquidity, from the interest-free money presented as if manna due to
processing of deposits and making payables from them. The money multiplier effect is
laboriously reviewed, observed and never further resolved in subjective economics.

“
The credit floats and debit floats are exponential drivers of that multiplier that needs and
generates a prudent model for banking reserves, with or without a central chain of reserves
banks, which if abandoned has deleterious consequences such as we are currently passing
through. Private banks as investment houses succeeded where 14% of deposits was traditionally
held as deposit reserve against a “run” in difficult times of gossip or tragic events in shipping.
We delude ourselves in policy that accepts a Pareto relationship allows the 40% of the deposit
insured reserves banking system can and will successfully govern the 60% of our system that
moves as the shadow banking system of private equity investment banking operations. Linking
both practises through the discount counter of the reserve bank was and remains a folly of policy.
Given that opportunity, the private banking instruments can and will create a run on the reserves
such as we are wading through systemic wide short liquidity following 2008. Such bubble is the
source of inflation as it is a purely inflationary financial process from which no economic net
worth emerges in productivity. It generates singularly and alone, as commonly said, paper profits
and losses, the real economy must then as a tax absorb to access specie money for ledgers and
balance sheets accounting. Government entitlement programmes of corporate welfare or social
supports which exceed the capacity of the real economy also generate this inflation in like form.
Bankrupt private banking and government policies both are habituated to creating inflation,
behind the curtains, both function as a tax form on the real economy creating inflation.
As Dick Cheney observed, “Deficits do not matter, Reagan proved that.” Currently, corporate
welfare policy is as much a liability on the real economy by definition and not an asset as
political newspeak records and exceeds social entitlements 2 to 1.
Ships need to dislodge their barnacles to make better progress.
Our reasons for having any equity in our portfolios are clear, concise and consistent. The equities
we hold are “likeables” tending to gain 67% of the time. We do not make stock prices but can
reasonably respond to stock price tendencies, by our knowing the price of risk, the downside, and
buying and holding accordingly. That is new fundamentals from theory we have put into policy
obtaining 29% IRR average. Know What You Have. Have What You Know
Our view is risk averse. Of course we require a fee for doing that. Mail us for our help.
Hans Goetze,
Architypes Inc and StockTakers Limited
Head Office
76 Midridge Close SE
Calgary, AB
T2X 1G1
7 Balsam Avenue
Toronto, ON
M4E 3B3
351 Chemin Boulanger
Sutton, PQ
J0E 2K0
450 538-1270

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