To Understanding of Macroeconomу of State and World

2.3. What is what in credit-and-finance system. Credit-and-finance system as the means of production and distribution management.

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2.3. What is what in credit-and-finance system. Credit-and-finance system as the means of production and distribution management.

Not only does the public economic science ‘for clerks’ lack managerially significant notions to do with the real production and consumption (i.e. demographically defined and degradation-parasite spectrum), but it also lacks a number of managerially significant notions that describe the credit-and-finance system itself and its links with the exchange of commodities as such. Actually, that is just what makes the economic theories ‘for clerks’ inconsistent and, therefore, inapplicable to solving the macrolevel economic problems to receive the predetermined, ‘pre-ordered’, promised and guaranteed results.

The basic notion that makes the economic theories for masters to be consistent in metrological terms is the ‘price-list invariant’.

The ‘price-list invariant’ has always been defined in such a way, that in a barter trade system, where the goods are exchanged using a two-stage scheme «G1SYMBOL 222 \f "Symbol" \s 10ЮMSYMBOL 222 \f "Symbol" \s 10ЮG2», there is such a commodity belonging to the money commodity group that possesses the following features:

· firstly, it is a sovereign participant of the natural exchange of goods in the barter trade process because it has some additional valuable features apart from the fact that it constantly acts as commodity money in two-stage schemes «G1SYMBOL 222 \f "Symbol" \s 10ЮMSYMBOL 222 \f "Symbol" \s 10ЮG2»;

· secondly, the market prices of other goods for every single commodity-exchange deal are given in an equivalent amount of that commodity by common consent (as a result, the price of a standard unit of the invariant commodity calculated in the invariant amount is always equal to 1, which is behind the term ‘price-list invariant’. In other words, we always exchange an invariant to an invariant pro ratia1/1.)

· In the days of ancient barter trade, according to the laws enacted by Hammurapi, the King of Babylon, the society considered the payments in grain and gold to be equal, there fore, they established them as the two equal price-list invariants. Later, in the crowd-and-‘elite’ society, the ruling elite on the basis of its degradation-parasite needs deprived grain from the right to function as a price-list invariant, and the civilization used the gold invariant for a long time.

In economic studies and calculations we can use any commodity type as the price-list invariant, including the commodities that do not belong to the established money group.

Economics does not need the notion ‘price-list invariant’ only in case if researchers do not know how to select it in a way that will let them use the invariant for solving the macrolevel management problems. They do not now about it because they serve the ‘elite’ wants and needs, which belong to the degradation-parasite spectrum.

Gold as an invariant was used as the stuff for means of payment production - coins and standard bullion. Due to that fact, the whole йpoque of circulation of gold and other precious monetary metals as means of payment (up to the beginning of the XXth century) represented the йpoque of natural barter using the scheme «G1SYMBOL 222 \f "Symbol" \s 10ЮMSYMBOL 222 \f "Symbol" \s 10ЮG2».

The only difference between that йpoque and the йpoque of traditional barter trade was the fact that ‘packing’ of the invariant into a shape of standard coin was transferred from the marketplace stalls to the Board of Treasury. However, that difference is not bigger than the one between buying tomatoes by weight from the stall at the market or buying nicely pre-packed tomatoes from the supermarket.

The difference between means of payment and the price-list invariant is that whereas the mean of payment, being the measure of prices fro all commodities (like the price-list invariant), can possess no other commonly recognizable values except playing the intermediate part of commodity money in a two-step scheme of exchange «G1SYMBOL 222 \f "Symbol" \s 10ЮMSYMBOL 222 \f "Symbol" \s 10ЮG2», or be used in a single-stage scheme «GSYMBOL 222 \f "Symbol" \s 10ЮMSYMBOL 222 \f "Symbol" \s 10Ю», when it plays a role of means of accumulation of nominal paying capacity.

Any means of payment that does not have any value outside the sphere of money circulation, accompanying and supporting the exchange of commodities for production and consumer purposes and accepted in certain transactions, may be rejected in other transactions. However, despite the means of payment may have no other value except being the means of payment or means of accumulation of nominal paying capacity, it can still be recognized having such qualities by the majority of population for a long time.

Economic theories ‘for clerks’ thoughtlessly inherited the notional system from the йpoque of circulation of ‘precious-metal’ coins and the gold standard. The functions of price-list invariant and those of means of payment are considered as if they were just different functions of the same money.

As the previous price-list invariant (gold) and means of payment (figures on bills and bones, and clearing - in the accounts, which represent the nominal paying capacity) were separated and stopped being the same kind of money, the economics for ‘clerks’ has lost its metrological consistency. As a result, we lost a possibility of calculating the financial indicators of production-and-consumption systems, whose spectrum ofproduction and consumption is given on the basis of quantity.

If we do not have a possibility of single-value estimates of figures that have to do with various dates and regions, we are unable to analyze, forecast, plan or manage the economy at micro- or macrolevel. Consequently, the only motive of economics as a whole is a profit-motive; economists try to sell themselves at the top price. All the calculations and recommendations are useless (if not harmful), nobody is interested in them, except a narrow circle of people from the squeezes [4] of economists.

Being the measure of prices of other goods, the price-list invariant, however, in a general case does not act as a price level basis for the rest of the prices, including rates of exchange (the relative prices of foreign money). That is why all the suggestions aimed at the revival of the gold standard come from the grave misapprehension of the fact that the possibilities of distribution are stipulated by its production.

‘An attempt to ‘galvanize’ the dead body of gold standard or even restore the circulation of gold are useless in the йpoque of economic well-being. In Spain, from 1492 to 1600, in the times of perfectly working circulation of gold, the prices for goods tripled annually. It happened because the production spectrum of other products per head remained approximately the same, whereas the amount of gold, including the gold in monetary circulation, loomed drastically due to the gold flow from America, whose robbery had just started.

That historic fact shows how the price of the gold invariant dropped in comparison with the other implicit invariant (grain), which the society did not recognize in that role; however, grain still defined the price levels and all the other relative prices. That takes us to the notion of the ‘price-list foundation.

The price-list foundation is a small group of goods, each of which has the following feature: a short-term perceivable price growth for such goods cause a perceivable growth in production cost figures of the most of other goods. The reasons of the production cost increase of other goods is the direct or indirect consumption of the products from that small group for production of other goods (all or most of them).

Of course, the production cost growth is accompanied by the market price growth. Herein, the price relations between various pairs of goods and the cost-effectiveness of particular sectors undergo changes, because the prices are not only determined by production costs, but also by distribution of always limited effectual demand all over the goods and services supply spectrum.

From what we said above follows that to make economic calculations, long-term economic analysis and forecasts and long-term plans of social and economic development comparable, we have to select a price-list invariant which belongs to its base for the time span in question.

Ordinary people, politicians and economists should remember a well-known definition from the school course of physics:

“Useful work performed by a system” = “efficiency coefficient” ? “power consumption of the system”

However, we may be interested in ‘useful work’ performed by a system, which is not seen in a sense of ‘mechanical work’ (which is a physical term). In that case, ‘useful work’ and ‘useful effect’ satisfy the same equation, but their dimensions will be different from physical dimensions of mechanical work and energy in physics. In that case the efficiency quotient will not be dimensionless.

[efficiency] = [the unit of measurement of a useful effect] / [the name of the unit of measurement of incoming energy].

Like anything else, the production system of a society obeys the general physical law of energy conservation, a partial form of which is the efficiency coefficient equation.

The useful effect of the production system of a society is represented in a natural form as an end-consumption product manufacturing spectrum.

Abstracting from the span of time needed for the growth of production capacities in each sector, and taking into consideration the whole lot of consumption of intermediate products for manufacturing purposes (because it is impossible to do without them when producing end products with the use of modern technologies), we will see that the industrial output level for each item throughout the production spectrum is limited by efficiency coefficient of technological processes [5] in the corresponding sector and by the amount of incoming energy.

Correspondingly,

The production spectrum as a whole has an upper limit. It is limited by:

· the values of sector efficiencies of technologies (the dimension of technological efficiency is [unit of measurement of the output mount] / [kW/hr];

· the amount of incoming energy for the whole system;

· energy distribution by sectors.

The above means that when we move from physical indicators of a production-and-consumption system to their monetary expression, we can see that the primary base of the price-list is its energy base. In other words, energy prices determine all the other price levels, whenthe established needs of the society undergo slow changes in comparison to the production dynamics.

The words in italics mean that human needs are primary to pricing, whereas the labour theory of pricing (value) in its historically established form is metrologically inconsistent.

The reason of inconsistency of the labour theory of value, which the public economics has not been able to get rid of, is the fact that all the people seen as workers taking part in diversified production are mutually incommensurable. The progress of professional management sectors, processing of various data, including professional research and design work, led to the state when severity rate (man-hours) as the unit of measurement, or the units of rating of work load needed to gain useful effects, have lost their managerial value not only when we compare different sectors but even within individual sectors.

They used to be managerially valuable until manual labour of great numbers of people was the main basis of economic well-being, and, in the first place, of the ruling ‘elite’, which despised professional gainful activities, considered itself to be ‘free’ and embezzled the fruits of labour and the incomes of the employees enslaved by them.

People can be compared to each other only as the consumers in accordance with the demographically defined needs spectrum. That is why the ‘hour rate’ has the managerial value because it defines the paying capacity of the population, and in turn, its purchasing power as well as most of the consumption spectrum. However that indicator is useless when it comes to evaluation of the output performance.

Another indicator that has the managerial value is the ratio of electricity rate to hour rate in different sectors and regions in comparison with the demographically defined consumption spectrum [6].

The energy base of the price-list has permanently been present all through the span of the history of civilization; however it consists of a changeable composition of power sources, whose component weights are also prone to changes. All the history of the modern global civilization can be separated into two йpoques:

till the middle of XIXth century; it was the period when production was mainly based on the prevailing biogenetic power, which source is photosynthesis in plants (which means that the natural flora and crop production efficiency are the roots of well-being).

since the beginning of XX century - the йpoque of production based on the prevalence of technogenic power.

There was a transitional period that lasted for several decades, during which a transition from biogenic to technogenic power sources was made, when we could witness a superposition of both.

It follows from what was said above that the society of the Hammurapi period did not make a mistake choosing grain as a price-list invariant. At that time grain was the main source of biogenic, power both for people and draft-cattle. It was easily available for consumption grain amount that determined the upper limit that could not be exceeded by the contemporary production capacities with respect to the engineering capabilities of the time.

Modern professional economic science and ordinary people make a grave mistake having chosen an American dollar - a currency of one of many countries - as a pseudo-invariant, despite the fact that none of the modern monetary units belong to primary (energy-based) price-list foundation; what is more, it is not a sovereign participant of production-and-consumption exchange of commodities, but only follows and supports it.

Since the second half of the XXth century, the best choice for the price-list invariant of technologically developed countries has been kWh of energy consumption, because:

· the overwhelming majority of businesses are electric power consumers;

· electric power tariffs are a part of energy base of a price-list.

Herein, financial and economic analysis and the forecasts gains the metrological consistency and comparability for long-lasting time intervals in case all the calculated and real prices, costs and other financial indicators are measured in kWh.

But even if we have accepted the electric power invariant, we should remember that in other sectors beyond agriculture the number of workers is limited by the ability of agricultural infrastructure to feed its personnel (otherwise the coverage of the deficiency of own products has to be guaranteed by means of imports). Therefore, the dynamics of the ration of the number of people dealing in agriculture to the number of people dealing in other industries ought to be targeted at the efficiency growth in agriculture, first and foremost at crop production and natural flora (photosynthesis is the core of everything).

Nowadays and for the foreseen future, the best choice for the invariant seems to be kWh, but not ‘a ton of fuel equivalent’, for ‘a ton of fuel equivalent’ represents an abstract notion created as a result of vain attempts to find the proper foundation for comparability of economic reports and business analysis without rejecting the hangover of public economic science ‘for clerks’.

‘A ton of fuel equivalent’ may have a limited right-to-life when used in analysis of the energy complex sector; however it is not applicable for long-term economic analysis, forecasting or planning, because the way it is linked with real energy carriers transforms together with the changes in technological foundation of production, predominantly in energy industries. Unlike that unit, kWh of consumption remains the same and does not depend on the particulars of primary energy source spectrum lying in the foundation, or how the spectrum responds to the consequences of technological progress.

Having selected an unchangeable kWh of power consumption as a price-list invariant, belonging to its energy base, we can deal with long-term planning of production in accord with the demographically dependent needs spectrum by means of simulation and optimisation of distribution options in the continuity of production cycles of energy consumption among the specialized sectors, which produce goods and services.

We should remember that the plan is to determine the minimum production levels in the sectors, below which the output should not fall. It is not supposed to chose record targets, the attempts of achieving which will lead the diversified production to an inevitable fall, for in such a case it will not be provided with the necessary amounts of power and raw materials.

The above approach implies that a stability margin is, institutionally and purposively, put in the plan, which lets some resources to remain in a free state to be used for compensation of possible errors and emergency situations (natural disasters, catastrophes, etc). In that case, the technological progress as a whole is the growth of ergonomic features and durability (where it makes sense) of the output; the increase of efficiency coefficients in sectors, the higher efficiency of household and other types of appliances, as well as the outgrowth (in comparison to the plan) of the power availability per sector. They all make a plan to be stable. As a result, real life cannot be worse than it was planned if the state supports intersectorial and interregional solvency proportions by means of tax-and subvention policy to implement the plan of the social and economic development of the country, by controlling the profitability threshold of businesses in accordance with the plan, and by responding to the real changes of market prices.

The main methodological fault of the planning system of the former USSR and of Soviet economic school caused by ill-will of Soviet ‘elite’, especially ‘scientific elite’, was that the Soviet Gosplan:

· did not refuse from metrologically insolvent Marxist political economy, based on categories that could not be measured, so it could not be linked with practical accounting tasks;

· tried to assimilate to the conditions of the USSR managerially-illiterate economic theories and models of the western science for ‘clerks’;

· did not come ON TIME (having a great practical experience at hand), off its own bat, to the same conclusions that we are making here.

Since the ‘elites’ want to target the macroeconomics of the society to a knowingly unpredictable degradation-parasite needs spectrum, not only is the system of demographically-defined long-term planning necessary, but it is also a direct obstacle to implementation an ill-will policy. That thesis, which is true for the modern global economy of the humankind, explains the moral background and the character of the reforms in the USSR and in Russia from 1985 till 1999.

In a multi-industry system of production and consumption, the prices for goods from the base of the price-list, are among the factors which determine, directly or indirectly, the profitability threshold, that is the profitability values corresponding to minimum prices; if the prices drop lower than such values, the production and modern renewal of productive forces becomes detrimental. The price-list bases play that role whether the invariant is obvious, or unidentified.

Issuing and acceptance of paper money, so called, ‘credit money’, led to separation into the obvious price-list invariant (at that time it was gold) and the main payment facilities - the carrier of nominal solvency value, mutually recognized by the participants of the exchange of goods (paper slips). The appearance of a means of payment which does not have any value outside the credit-and-finance system led to a drastic change in pricing comparing with the йpoque of barter trade (which had lasted until the gold circulation age).

Because of the separation into the obvious invariant and means of payment, the purchasing power and nominal paying capacity turned into different economic indicators, which could change independently. This is how they are different:

· nominal paying capacity is represented directly by the amount of means of payment;

· purchasing power is represented only in the consumption spectrum, in some kind of ‘consumer goods basket’ which can be purchased for a particular sum of the means of payment when there is an established nominal price-list.

Nominal paying capacity is a measure of purchasing power and economic wealth only for a certain price-list and a certain consumption spectrum (‘consumer goods basket’). It has no managerial value per se.

Respectively, the masters are those who, directly or indirectly, manage (turning that activity to their own advantage) the purchasing power of a monetary unit and the distribution of nominal paying capacity among the participants of production-and consumption exchange of goods. It is accompanied by the re-distribution of the purchasing power that, in turn, represents an indirect macrolevelmanagement by means of production-and consumption exchange of goods.

The above means that all the tasks of macroeconomic management cannot be solved by the statehood, if there is a global, supranational usury corporation behind the purchasing power of a currency, and if the active generations within the society do not realize the mechanism of management behind those processes, so they are do not know how to create an alternative to be used to protect their own statehood and its economic policy. They are the slaves of the tycoons pulling the strings, and they pay off the costs of their slavery [7] themselves, however, the tycoons always became the hostages of their own parasitism.

Monetary unit purchasing power management is the management of the dependence that has one-to-one correspondence with the price-list invariant.

In the days of gold standard the law concerning the exchange of paper and other kinds of money for gold provided the uniqueness of that dependence. However, if we introduce the direct elecric power invariant, the tariffs on electric power consumption will not be an energy counterpart of the ‘gold standard’. It is due to the fact that the character of credit money exchange for gold at a fixed rate (which was the main point of the ‘golden standard’) is different from the character of electric power consumption for production or consumer exchange of goods in a society.

The exchange volume of credit money was not determined by the needs of production or consumer exchange of goods (gold coins and credit money coped with goods exchange equally well). It was determined by social nervousness and psychological instability, which led to an intense exchange of the bills for gold, when purchasing power of the means of payment really dropped, or the wealthy social layers expected it to drop soon. In such cases they sought for ‘accumulators’ where they would be able to keep the purchasing power of their money till the better times come, so they disposed of extra nominal paying capacity by investing the money into gold, real estate (land), antiques, works of art etc. If the resulting demand for gold soared, it was impossible to keep the ‘gold standard’ at the previously established level of gold backing of ‘slips’, and such impossibility emerged as a result of existing disturbances in paper money circulation and the connection between the parameters of paper money circulation with the exchange of goods as such.

Thus, the need of devaluation in terms of the transition to a new value of the ‘gold standard’ in case the energy dependent price-list invariant was indirect, was the consequence, not the first evidence, of the disturbance of theenergy standard backing of a monetary unit. It was that kind of disturbances of biogenous energy backing standard in the XIV century’s Spain that led to triple growth in gold equivalent (i.e. gold went three times as much more expensive).

Electric power consumption is not a reaction of the society to some disturbances in the exchange of goods of in paper money circulation. It is a component of production or consumer exchange of goods as such. The society does not have auctions for electric power consumption: there are electricity meters, and the tariffs are set in advance. Moreover, the capacities of power stations and the systems of power supply redistribution through the regions as well as different tariffs (reduced and increased tariffs, which may depend on time of the day and aggregate electric power consumption for a particular term) have been satisfying the needs of the customers (including ‘peak’ ones) for the past decades in a reliable way as soon as they have been connected to the main electricity supply grid. Emergency interruptions of power supply of production facilities, inhabited localities or regions due to overloads have been extremely rare [8]. Thereof, the electricity consumption tariffs are basically connected with the money circulation parameters the same way the other nominal prices are.

Accordingly, the monetary unit backing standard, whether it is a precious metal coin or a nominal means of payment, in metrological terms, has to connect (one to one) the production spectrum in energy units and the aggregate nominal paying capacity of the society that defines the nominal price scale.

The production spectrum in energy units represents the amount of electric power produced for a year [9]. The consumption of goods produced by all the sectors in financial terms is given by such statistical indicators as the aggregate number of purchases and sales, their distribution by the seasons of the year, by specialized markets, by regions as well as the their costs. The aggregate cost of the deals is the annual volume of trade in nominal values, i.e. the turnover volume, or the turnover volume of means of payment.

If, firstly, there are no short-term (for an annual scale) structural redistribution of production and consumption needs due to natural disasters, severe technogenous catastrophes, wars, silly economic reforms, etc., and, secondly, the system of production and consumption performs steadily, then the structure of the annual exchange of goods for the past several years will change smoothly, i.e. with no sharp hikes or drops.

This is a balancing mode of autoregulation of the production-and-consumption system of the society. The taskof a macroeconomic management is to maintain that balance. That is the normal mode of macroeconomic performance.

For normal modes, the value of the niminal volume of trade - the volume of means of payment turnover, is mainly dependent on, among other factors, by the value of an APPARENT instantaneous aggregate nominal paying capacity of the society, because an aggregate seller will squeeze out of a buyer that really needs a particular item of goods everything that he is able to pay. That value exceeds the factual apparent instantaneous aggregate nominal paying capacity of the society (the underlined words are terms), equal to the amount of means of payment in circulation. The apparent instantaneous aggregate nominal paying capacity of the society is given by a sum of two components: S+K.

· S - stands for the aggregate sum of nominals of means of payment that the would-be buyers possess (factual nominal paying capacity);

· K - stands for the credits lent (including repeated lending), ignoring the debt rate of the society as a whole to the usurers.

The apparent instantaneous aggregate nominal paying capacity exceeds the sum of nominal values of the means of payment Sin circulation, for bank depositors calculate their payment capacities considering the sums on their bank accounts that have already served as sources of lending, and considering which the borrowers evaluate their apparent payment capacities.

It is the value of (S+K) that at any time withstands all the mass of commodities on sale and represents the maximum nominal evaluation of its cost.

In the trade turnover of the x\society, it distributes this way or another between the deals that accompany production and consumption exchange of goods, and the deals on various speculative markets (stocks, antiques, currency, bonds etc.), which mostly satisfy parasite disposition of some part of the population to derive their incomes from incomes in antiphase with the fluctuations of prices for speculative goods.

The of means of payment satisfies the equation:

«energy backing standard» =

= (S+K ) / «potential of energy» (1)

It follows from (1), that

S+K =«energy backing standard» Ч

Ч «potential of energy» (2)

The energy backing standard is the proportionality factor, whose role in the system of macroeconomic management is to control the correspondence of values of instantaneous aggregate nominal paying capacity and real (or possible - in case of planning tasks) elecric power production volume, representing (in energy terms) real (or possible) production spectrum.

The energy backing function in the macroeconomic management system corresponds an assumption that the statistical data to do with the deals, which define the nominal value of means of payment circulation changes slowly from year to year, so such changes must be factored out and contracted. For ‘potential of energy’ we may use either the annual electric power output, or the aggregate power of the power-stations. For macroeconomic systems that are not all-sufficient in power generation, ‘potential of energy’ will stand for the volume of electric power imports.

Credit-and-finance system can steadily follow the exchange of goods in the society (and, in particular, in production sector), if S+K, -and energy backing of means of payment respectively, were changing over the time span we are interested in; they grew or drop quite slowly or oscillate within a narrow value band.

Most financial, production and consumer troubles to do with the processes at the macrolevel of economy of a society are the consequences of direct and indirect manipulations with the apparent instantaneous aggregate nominal paying capacity(S+K ) due to ill-will or ignorance. That leads to changes in energy-backing standard of means of payment on a scale of production-consumption system as a whole and on a scale of its functionally specialized components. From historical point of view, ignorance really acts as just a tool of the back-door ill-will: evil is done by fools and ignoramuses who are either explicitly corrupt or suffering from a superiority complex.

The troubles emerge in the following way. A change in (S+K ), that is an increment SYMBOL 68 \f "Symbol" \s 10 D (S+K ), represents a particular volume of issued means of payment (or, vice versa, the demonetization volume), or a change in the volume of money lent. The impact on the credit-and-finance system can be described as pulse and address by which we mean that the emission or credit pulse produces an instant change in the nominal paying capacity of some (not all) would-be buyers or some particular groups.

Having made an instant change in the energy-based standard of means of payment, the pulse SYMBOL 68 \f "Symbol" \s 10 D (S+K ) generates a wave of changes in nominal paying capacity, which spreads throughout the trading network in the direction, opposite to the direction of exchange of goods, as the nominal paying capacity of the pulse is getting involved into currency circulation. The wave of changes in nominal paying capacity movement through the money circulation channels, in turn, produces some changes in nominal prices for the corresponding product line groups, pressed by hikes and drops in nominal effectual demand for them.

Supposing the initial pulse SYMBOL 68 \f "Symbol" \s 10 D (S+K ) was targeted at the production sector, the wave of changes in nominal paying capacity, by means of salaries and incomes of entrepreneurs, will pours out of the production sector onto consumer-items market, so a process of redistribution of nominal effectual demand by the end-product groups. It produces changes in market conditions, which spread all over the sectors, and some time later we can see secondary changes in the intersectoral proportions of profitability and manufacturing indicators used in natural accounting (the initial change makes the wave move through the industrial sector if the initial pulse was inward).

The pulse SYMBOL 68 \f "Symbol" \s 10 D (S+K ) produces irreversible transformations of nominal prices, which makes this case different for seasonal fluctuations of paying capacities of different groups of would-be buyers, and of price fluctuations.

When the pulse SYMBOL 68 \f "Symbol" \s 10 D (S+K ) ‘spreads’ over a long time span, the wave of changes in prices becomes invisible against the background of heterogeneous price fluctuations; but anyway, there is a slow general change in price scale, which leads to changes in purchasing power of a monetary unit no every single market.

Herein, the changes in purchasing power of people’s incomes and spendings have the top priority for macroeconomics and politics: “A signature of an official” ? the growth in means of payment volume outgoing the growth rate of production energy backing ? a loss of purchasing power of incomes and a possible decay of microeconomics into a number of production-wise insolvent pieces of the economics ? a loss of work motivationand a possible economic crisis” That algorithm was launched in 1991 by Ye. T. Gaydar and it was supported by all the governments until the end of 1999 [10].

Obviously, all that those people were taught at school and universities was economics for ‘clerks’. Well, everybody was taught, but they were the ‘best students’. We wonder what have the members of the Economic Department of the former Academy of Science (now Russian Academy of Science) and the less celebrated scientists, been thinking of in for several decades?

When the wave SYMBOL 68 \f "Symbol" \s 10 D (S+K ) goes through the production sector, not only does it change the nominal profitability of the businesses, but it also changes the purchasing capacity of their nominal current assets. If the changes in financial indicators of businesses (or sectors) generated by the wave SYMBOL 68 \f "Symbol" \s 10 D (S+K ) exceed some limits (which are different for different sectors), then the purchasing power of current assets of one group of businesses (sectors) will become excessive in comparison with their production facilities (when the natural output is calculated) and technologically and economically possible pace of reconstruction and capacity growth, whereas the purchasing power of current assets of the other group of businesses (sectors) will become insufficient.

All the sectors are linked by a technology-wise system of ratios of standard mutual supplies volumes for production needs in each sector for the purpose of its further development. So, if there are supercritical sector disproportions between purchasing power of current assets and production facilities in their natural expressions, the credit-and0finance system loses its capability to assemble a number of microeconomics into a single macroeconomics, whose performance is stable.

The immediate cause of that course of events at a microlevel is that some businesses cannot afford to purchase (at drastically changing prices [in comparison with the turnover rate of their capital stock per value]) the items they need for their production, ant the others cannot sell (without making losses, i.e. in order to save the purchasing power of their current assets) their output.

Sectors with long lasting (in comparison with the decay time of the pulse SYMBOL 68 \f "Symbol" \s 10 D (S+K )) production cycles (among which are industrial and residential construction, shipbuilding, agriculture, etyc.), are most sensitive to such kind of macroeconomic impact, due to a slow response to rapid (in comparison with the duration of their production cycles) changes in the market climate, because their current assets are bound in incomplete projects.

The immediate cause of the financial collapse of such ‘slow’ sectors at a microlevel is that their current assets are bound in incomplete projects, in the output that the customers do not need unless it is complete. And the rapid (in comparison with the duration of the production cycles) changes in nominal price-list caused by the wave SYMBOL 68 \f "Symbol" \s 10 D (S+K ) movement, can create a situation when the customer is unable to pay for the job done, or when the purchasing power of their current assets, gained as a result of the sales of their output during previous cycles of the wave SYMBOL 68 \f "Symbol" \s 10 D (S+K ) movement, and a s a result of selling the currently produced output at pre-arranged prices, will not be sufficient to continue and support the further production or for the sector development purposes.

The above description of the wave SYMBOL 68 \f "Symbol" \s 10 D (S+K ) movement can be strictly proven with the use of mathematics by performing the input-output study in a value form.

The only type of businesses that can flourish in such economic environment are the ones with the fast turnover of capital, and in the first pace those which satisfy degradation-parasite needs spectrum. It happens due to the fact that excessive (comparing to demographically defined wants) nominal effectual demand of some groups of population and the demand of morally damaged groups can only take a shape of satisfaction of degradation-parasite needs, in case a fall in the production spectrum takes place.

Redistribution of apparent instantaneous aggregate nominal paying capacity(S+K ) between the ‘real sector’ markets and parasite speculative markets has a similar effect on the production-consumption exchange. The redistribution of the nominal paying capacity entails the changes in monetary unit energy-backing standard in ‘real sector’ and in the sector of mass consumption.

This is one of the reasons why speculative markets have to be exterminated whenever occasion serves, to prevent the very possibility of the following scenario to be implemented: ‘mass psychosis of already inane stock exchange speculators ? the collapse of credit-and-finance system as means of macroeconomic assembling.’

In comparison with the economy destruction mechanism caused by nominal paying capacity changes and redistributing we have just described, the energy-backing standard of means of payment is not only the indicator of possible future troubles in money circulation and in production and consumption exchange of goods, but it is also the best indicator and tool of control at the macrolevel. That makes it different from the previously used ‘gold standard.’

Statehood can pursue different policy regarding energy backing standard. It may increase the value of (S+K ) in direct ratio to the growth rate of the launching of new power station facilities.

It is possible to keep (S+K ) constant or make it grow (the growth should be a bit retarded in comparison with the growth rate of electric power supplies to the production sector.) In that case the purchasing capacity of a monetary unit will grow on each market, which will be observed as a steady price decrease and the welfare growth of all the groups of society (but not only those groups of population whose nominal incomes and savings are excessive in comparison with demographically determined needs.) Herein, the pay policy must prevent the population from receiving incomes that are excessive in comparison with satisfaction of demographically determined needs (anyway, as soon as a family has purchased a place to live and the means of transport, corresponding to the standards of demographic sufficiency, their incomes, which can be used for personal consumption {not for production or charity purposes} should be limited)

That mode of credit-and finance system performance used to be called ‘Stalin’s policy of planned reduction of prices’. And it is the mode that is most preferable for the majority of population, for those who are ready to work honestly in their profession, those who do not want to change place of work seeking for ‘big money’ or for a possibility to stick like a leech to the ever-living source of unearned incomes.

The factor which prevents the transition of the system into the above mode of performance is cost of borrowing.

Loan itself is the means of quick adjustment of nominal effectual demand to the output supply spectrum (at set prices). When the production-consumption exchange of goods is stable, and when credit-and-finance system performance is steady, the fluctuations in K/(S+K) are mainly seasonal and they change insignificantly for a number of annual production cycles [11]. That is why in succession of a number of annual production cycles interest-free crediting itself does not have any effect on pricing and standard of price.

However, if lending includes interest rate, the interest rate causes:

· the outgrowth of nominal prices in comparison with the growth of price-adjusted [12]production spectrum, because the price of the output includes the need to return the loan and the interest.

· the irreversible flow of nominal paying capacity of the society from the society to a corporation of usurers, which, when the usurers are free to operate, generates high monopoly purchasing capacity, which an unideaed society cannot fight back.

The two above factors, generated by interest, lead to the loss of purchasing power of the society as a whole, which slows down and stops the sale of the output (regardless its quality and demand for it) and can make credit-and-finance system loose the ability to assemble numerous microeconomies into a single macroeconomy. In that case a particular amount of unreturned interest-generated debt can emerge in a society; that debt will be distributed among all physical and corporate bodies, including a faction of the least happy usurers.

The amount of unreturnable debt may be discharged only by additional issuing of means of payment. In the first case, when usury is free, interest rates, being the vehicle of irreversible price growth, force the state to lower the energy backed monetary unit standard. Such kind of emission always objected to, However, if we refuse from doing so, we will turn the society and its production-and-consumption system into a financial slave of the corporations, because it has been strangled by designedly unreturnable debts and has to work for free to cover the debts, and its consumption is limited by bloodsucking creditors.

That is exactly what happened in Russia in the course of reforms, so all the reforms, until the end of 199, have been sabotage, war waged on the peoples of the USSR and Russia with the use of 4th priority means, supported by the means of the 3rd priority (spreading nonsense theories concerning the causes and mechanisms of the social and economic crisis that has been lasting for several decades now.)

The above said has been strictly proven mathematically by performing the input-output study in a value form.

The distinction in kind between the ‘tax pressure’ of statehood and usury vampirism is following: as soon as currency circulation had emerged,

· taxes take from manufacturers some of his real output in value form; if that share is not stolen, it is used for reasons of state. If the state expresses the interests of the overwhelming majority of honestly working population, then everything that had been taken from the society as taxes, is returned to the society in the form of diversified state-provided personal social security. In other words, in such a state the ‘pressure of taxation’ oppresses no one, for everything taken off in a form of taxation comes back to the same society in some way.

· usury sucks off the society a set share of the output (in the value form), which has always been higher that a useful effect achieved as the result of the loan. Consequently, the society becomes a slave of a supranational corporation of bloodsuckers - racist usurers.

The fact that mass-media, numerous political blabbers, including the party leaders [13],, blow the fire of hatred to ‘pressure of taxation,’ keeping silent when it comes to usury vampirism, univocally shows to whom they serve and against whom they do so.

If we are going to get rid of the crisis and move to the development of Russia with no crisis, we need an article of the Constitution, which will make put a ban on participation of a Russian party (Russia’s statehood, private or legal entities) in any kind of external and internal deals connected with lending at interest in all possible forms. Those who break the law must be considered traitors to Motherland, and their crime must be seen as a crime against humanity. That declaration must be proclaimed at the UNO.

Interest rate - ‘free’ price of credit, is a component of a price-list base, not being a result of work or free goods. The interest rate is set for the states and regions by wheeler-dealers from a supranational usurer corporation that usurped banking; so interest rate does not express free balance between supply and demand for loans. Until usury (including its banking shapes) is considered by Law as a sector of private enterprise, the state does not have a statutory motive to reason the ban on usury. If a state proclaims its own monopoly right to administer prices of price-list bases, the issue of a ban on lending at interest will be solved in accordance with the Law.

This is neither a ban on banking activities, nor destruction of payment and clearing infrastructure of society. Every bank - state bank, central bank, each commercial bank, - has to stop being a ‘state farm’ of usurers, as it is now; it has to become an investment fund which provides the structural reconstruction of diversified production-and-consumption system of the society and the development of the production capacities of the sectors. Their only incomes, which will be used for replenishment of their loan resources, will come from their share of profits made in the ‘real sector’ of economy as a result of implementation of socially useful projects designed by their ‘brain trusts’. The banks whose ‘brain trusts’ are unable to perform that function do not have a right to exist. So, if some banks will not manage to restructure themselves in order to offer interest-free loans and crash, it will be perfect, because we will have fewer useless mouths to be fed.

In the system of interest-free crediting, the lowering of electric energy tariffs and simultaneous build-up of energy standard, will unbar the pass to lowering non-nominal values on the final product market as the needs of the society will be satisfied all over the demographically determined spectrum of needs and to rooting out the degradation-parasite spectrum of needs.

Taxation and subsidy policy has to maintain the purchasing power in sectors, regions at a ratio which is necessary for stable performance of the market mechanism of distribution of the output, in accordance with the demographically defined plan of social and economic development of the state and the society.