Why The Financial Crisis Has Nothing To Do With Money
Philippine LaRouche Society (PLS)
Why The Financial Crisis Has Nothing To Do With Money
October 28 2008 (LPAC)--The economic crisis is at forefront of everybody's mind. Yet, when inquiring into the nature of the problem, one is bombarded from all sides by news about the activities of financial markets. This is actually a form of brainwashing. By repeatedly associating the real concept of economy, with the gambling fiction known as a financial market, anybody who is not educated in real physical science can quickly become confused. This simple fact may yield a clue as to why thousands of Harvard Economics graduates are completely incapable of furnishing any sane solution to this worsening mess.
A recent poll by the Associated Press claims that 53% of Americans believe the economy will be better, and the stock market will rise, within three months. We're skeptical that so many Americans still believe this, but this ubiquitous correlation of economy and financial markets reveal an abysmal ignorance of economics, and a mystical belief in the markets.
The reason for such widespread incompetence in economics lies in the lack of understanding of real science. In his "Trade Without Currencies," Lyndon LaRouche stated clearly that there is no knowable relation between economic value and financial value.
He states: "The fact of the matter is, that, contrary to the Laputa-like superstitions which certain academic mystics spread to their credulous students at Harvard and Chicago Universities and elsewhere, all prices and related set values in day-to-day economic practice, are never closer to reality, than serving as reasonable approximations; the mythical "right price" exists only in the minds of deluded persons. Contrary to utilitarians such as Jeremy Bentham, there is no asymptotic price-value upon which commodities must tend to converge in a state of "free fall." There are no random numbers in real economic processes, but only the customary charlatans who teach a dogma of random numbers."
To Know or Not to Know
To grasp the principle of the matter, let us discover what the human mind can and cannot know. Draw a circle and its diameter (the radius, of course, being half the diameter). With a compass, place the pivot point on any point of the circumference and swing out the radius until it touches another point on the circumference. Rotate again upon this new point, and continue all the way around the circle, and you will have drawn a hexagon whose side is equal to the radius of the circle. We can know this simple enough.
We will now produce a 12 sided dodecagon by doubling the number of sides of our hexagon, and then find out what we know about the side of this polygon. Divide the hexagon side AH in half at O, and extend a line from the center of the circle, C, to the circumference at L. From L, extend a line to H. This new line LH is the length of the 12 sided polygon, called the dodecagon. But what is that length? Think about it. Do you know? It's not as readily obvious as the hexagon side. At this point, one who knows the algebraic formula can mash it into their calculator, and completely evade the activity of figuring something out for yourself. But let us be more philosophical, and see exactly what we do know about this line length.
Let us make the Radius CL = 2. Then, the Hexagon side AH = 2 as well, and so half the side OH = 1. Using the Pythagorean theorem, we can obtain the length of OC by comparing the squares made from the sides of the triangles. 22 – 12 = OC2. So, OC2 = 3, then OC = √3. What is this number, really? It is called an irrational number, because it, like most things, is unknowable by itself. However, we see that it is the side of a square of 3. This is easy to comprehend, but the square root is not so easy. You could try plugging √3 into a calculator, but it could only provide an approximation. It would very, very close, but the calculator does not know what it is really doing. The human mind understands the square root by knowing its relation to its square.
Onward! The remainder of this line LO is found by subtracting this newly found OC by the radius CL. So, LO = 2 – √3. Here we have two types of number. This is called an apotome. Even though this is farther from direct knowability, it is still knowable. Therefore, we can find the length of the side of our dodecagon, LH, using the same means as we did to find OC.
LH2 = OH2 + LO2. i.e. AB2 = 12 + (2-√3)2. Take some time to refresh on your algebra, and you will find that LH2 = 8 – 4√3. And so, we have discovered the length of the side our dodecagon, LH = √(8-4√3). But, what do we find in this length? The square root of the square root of 3? What a strange number. How can we think about understanding this? It is only possible by tracing the steps from the diameter to the radius, through the squares, through the apotome, and through the squares of the apotome. Such that we are 5 degrees of knowability away from our diameter.
But this approach is far too algebraic. Our mind can get a better understanding of what these lengths mean when we examine the areas. By examining the triangle produced by the side and the star of the dodecagon HP, we find that the rectangle produced by LH and HP is ¼ the square of the diameter. Also, we see that squares of these sides, LH and HP, equal the square of the diameter! This animation should make it much clearer for further investigation.
The Curved and the Straight
With an example of how the human mind can know through comparative relation, ask yourself: what is the relation between the circle and the radius. It is readily apparent that one cannot simply make a polygon with so many lines that it becomes a circle. Even a 700 billion sided polygon can only approximate a circle, although it may be look imperceptibly close. We must employ a different method to investigate this because we are dealing with different species (or qualities) of physical space.
With a circle's radius = 1, the length of the circumference has a never ending decimal (pi, or 3.141592...) We never find the exact value in terms of the radius' value. However, given a further look, using terms of a circle, by folding it the circle in half (i.e. folding is circular rotational action) you obtain a straight line in the form of the diameter. Resist the university brainwashing! Don't think about numbers. Put the calculator away! It is only in terms of the physical process that allows man's mind to know, or to know what he cannot know, about the relation between a circle and its diameter. Think of the physical action that took place. If you are having trouble, I highly recommend getting a piece of paper, constructing a circle and doing the experiment. (It's fun!)
Transcendental and the Contracted
The transcendental nature of circular action in physical reality becomes self-evident when investigated at any length. Every machine uses some form of circular action, such as your car, or a power saw. For fun, try to imagine constructing a saw that does not use any spinning motions. Even a handsaw requires the rotational action of your shoulder and elbow.
In geometry, one only has to take a circle, and fold it in half to obtain a straight line, in this case, the diameter. But given any straight line, we would not be able to construct any curved line, nor a circle. So, between a curved and straight line, there is a relation, not of proportion, but of qualitative hierarchy. The circle is transcendental (of a higher ordering) to its contracted line. Now, let us really look at what we've been doing.
Any student of philosophy at one time must have come across a paradox, that an intangible idea has tangible effects in the material. What's this relation? Ah! Our circle and line are really not important, at all. These are only objects. Go up a level, and they are actually one single idea expressed in multiple mathematical concepts.
Physical Economic Processes and their Contracts.
The most essential physical action occurring in this economic lesson is the "circular" action of the human mind attempting to resolve inconsistencies in nature and discover universal physical principles. The communication of these discoveries is best expressed in physical production of infrastructure, industry and agriculture. This results in a change in the behavior of society to increase the physical productive output of that society as a whole. This is economy. (Also called a physical economy for clarification) But, the productive output of this process is not the process itself. For example, a nuclear power plant and its processes are a consequence of scientists, engineers, machinists, construction workers, etc. putting their mind to action. Therefore a power plant holds value only as a product of human creativity, and has no value in and of itself.
We must see the relation of economy (transcendental) and financial values (contracted) in this way. They are called contracts for this reason. Real Economy may NEVER be produced from money. Only a physical economy can create the conditions for a stable system of banking and finances. So how can the bailouts possibly work? What is there to bailout? How many bailouts ever produced a developed human mind? How many bull-markets did it take to put a man on the moon? How many investment firms have established a sovereign nation-state republic? The best, and easiest way to understand how a real economy works, is to follow the example of the New Deal policy of Franklin Roosevelt. By focusing on the physical production of the economy, instead of worrying about the impertinent Dow Jones Industrial Average, Roosevelt was able to promote an increase of discoveries by creative human minds. This saved the nation not just from economic ruin, but also from the British and Wall Street sponsored Nazi party.
Threats today are congruent. Therefore, nations must convene a new Bretton Woods conference to establish a fixed-exchange rate monetary system and partake in treaty agreements for long-term credit towards infrastructure, industrial and agricultural development in a crash science-driven manner typified by the Apollo space program.
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