Secret and Lies of the Bailout

[Magda Hassan]

Mortgage doesn't mean death gamble for nothing. Here is an article by John Turmel, he is actually an engineer and looks at economics though those eyes. He is also active in anti-usury economics. Hope this helps clarify things for you Lauren.

HOW "MORT-GAGE" INTEREST CREATES A DEATH-GAMBLEcsurvive the mort-gage death-gamble.
P < principle, I < Interest, i < Interest Rate, t < Time
[TABLE="width: 89%"]
[TR]
[TD="width: 37%"]Production Costs (Principal)[/TD]
[TD="width: 17%"]100[/TD]
[TD="width: 8%"]P[/TD]
[TD="width: 15%"]1[/TD]
[TD="width: 27%"][/TD]
[/TR]
[TR]
[TD="width: 37%"]Production Prices (Debt)[/TD]
[TD="width: 17%"]100+I[/TD]
[TD="width: 8%"]P+I [/TD]
[TD="width: 15%"]exp(it)[/TD]
[TD="width: 27%"][/TD]
[/TR]
[TR]
[TD="width: 37%"]Purchasable Value (Survivors)[/TD]
[TD="width: 17%"]100/(100+I)[/TD]
[TD="width: 8%"]P/(P+I)[/TD]
[TD="width: 15%"]1/exp(it)[/TD]
[TD="width: 27%"][/TD]
[/TR]
[TR]
[TD="width: 37%"]Unpurchasable Value (Non-survivors)[/TD]
[TD="width: 17%"]I/(100+I)[/TD]
[TD="width: 8%"]I/(P+I)[/TD]
[TD="width: 15%"]1-1/exp(it)[/TD]
[TD="width: 27%"][/TD]
[/TR]
[TR]
[TD="width: 37%"]For Unemployment = 0, let: [/TD]
[TD="width: 17%"]I=0[/TD]
[TD="width: 8%"]I=0[/TD]
[TD="width: 15%"]i=0, t=0[/TD]
[TD="width: 27%"][/TD]
[/TR]
[/TABLE]
The odds of survival are always set by the interest rate(i).
P/(P+I) survive, I/(P+I) do not.
INFLATION
The equation for the minimum inflation (J) we must suffer is the
same as the equation for unemployment (U) because the fraction of the
people foreclosed on is the fraction of collateral confiscated. Though we
are led to believe that inflation is caused by an increase in the money
chasing the goods (Shift A), actually, it is caused by a decrease in the
collateral backing up the money (Shift B) due to foreclosures. Though
both inflations shifts feel the same, the graph shows inflation is not the
inverse function of interest, it is the direct function exposing the Big Lie
that interest fights inflation. (Fig. 4)

Most people who have not studied economics, if asked whether
interest fights or causes inflation, are quick to agree that a
merchant must pass on increased interest costs in his prices and
therefore it is evident that increased interest costs will result in
increased prices. How they then accept politicians who tell them
interest fights inflation is a measure of double-think too.
DIFFERENTIAL EQUATIONS
Where "B" is the original bank balance, "i" is the rate of
interest and "t" is time, the differential equation for your bank
account is:
dB/dt = iB
The "d" stands for "delta" or "change."
So "dB" is the delta change in the Balance.
So "dt" is the delta change in the time.
So the rate of change of your bank balance over time equals your
balance times the interest rate: iB. We can now examine the problem,
not over one cycle with algebra, but over time with exponential
functions. The solution to the differential equation dB/dt=ib is
exp(it). Exp(it) means that your balance will exponentially double and
double in time as a function of the interest rate. It is a crooked
non-linear function.

Consider that if two men are in a car accident and one owes the
other $1. Fig. 5 shows that if there is no interest, the debt stays
friendly and sociable like the two straight lines for one owing $1 and
the other being owed $1. The two straight lines from at +$1 and -$1
represent the growth of their debt and credit. Zero growth. If there
is interest, the balances start to grow with time and double in time
T, then again in time T and again and again into the exponential curve
exp(it).
LAPLACE TRANSFORMATIONS
Laplace Transformations are a branch of mathematics which allows
engineers to manipulate complex system differential equations
algebraically. Like magic, we transform tough real world functions
from real numbers into a function of the Laplace variable "s" in the
imaginary number dimension. There we do our computations algebraically
and then reverse transform from the imaginary number dimension to the
real world solution. Nothing in my engineering studies has ever awed
me as being more powerful than Laplace Transforms and what can be done
with them.
TAYLOR SERIES
We want to get the Laplace transform of a bank account which
makes an original Balance B grow as B*exp(it). We expand the bank
account function exp(it) into it's Taylor Series:
exp(it) = 1 + it + (1/2!)*(it)^2 + (1/3!)*(it)^3 + ...
LAURENT SERIES
Taking the Laplace Transform of each component of the Taylor
Series produces the Laurent Series of the banking system:
LT{exp(it)} = LT{1 + it + (1/2!)*(it)^2 + (1/3!)*(it)^3 + ...}
LAURENT SERIES = 1/s + i/(s^2) + i^2/(s^3) + i^3/(s^4) + ...
= (1/s)*(1 + i/s + (i^2)/(s^2) + (i^3)/(s^3) + ...)
= (1/s)*(1/(1-i/s))
= 1/(s-i) = USURY BANK ACCOUNT LAPLACE TRANSFORM
The moment the debt passes through the (1/(s-i)) usury filter in
banking system, it starts to grow.
The differential equation for inflation (J) whose solution is (1-
exp(-it)) can be described as:
dJ^2/dt^2 + (i)*dJ/dt = 0 or j'' + (i)j' = 0
The Laplace Transformation of the inflation (J) is: 1 / ( s^2 + is )
CONTROL SYSTEMS
With the Laplace transform, it is also possible to draw the
electrical blueprint of a bank account in the usury banking system:

Fig. 6 is the control system blueprint of a usury bank account
which shows that added to any input is the feedback of the interest
rate times the previous balance which can be positive or negative.
This net amount is added to the previous balance to produce the new
balance. This positive feedback makes the system unstable and the root
of bad vibrations.
Your $100 volt pulse is the input to the first addition node.
Added to it is the positive feedback interest voltage from the last
balance which, to start, was 10% of zero volts. The new net $100 volt
pulse enters the second addition node where it also is added to the
old balance, still zero volts, to push the new balance up to $100
volts.
Next year, with no new pulse at the input, added to this zero
voltage is 10% interest, a pulse of 10 volts. The 10 volt pulse goes
into the second addition node where it is added to the old balance,
100, to push the new balance to 110.
After 2 years, you'll have 11 more for a balance of 121.
After 3 years, you'll have 12 more for a balance of 133.
After 4 years, you'll have 13 more for a balance of 146.
After 5 years, you'll have 14 more for a balance of 160.
After 6 years, you'll have 16 more for a balance of 176.
After 7 years, you'll have 18 more for a balance of 194.
After 7.2 years, you'll have 6 more for a balance of 200.
The same growth will apply to an input of -100 volts.
This demonstrates quite well what's called the "rule of 72."
Divide the number "72" by the percent interest, in this case 10%,
and that's approximately the number of years it will take to double,
in this case 7.2 years, and double, and double, etc. That's what's
called an exponential function.
At 5%, it should take about 14.4 years to double.
At 10%, it should take about 7.2 years to double, as shown.
At 24%, it should take about 3 years to double.
Cycle after cycle with no new inputs, you have the exponential
growth exp(it) which grows as the above series. It acts just like
bringing a microphone up to a speaker. The sound from the speaker is
picked up by the microphone and fed back to make the sound out of the
speaker louder which is picked up and fed back to make it louder until
you blow your speaker. Having an unstable positive feedback loop built
into a system makes that system unstable.
Negative feedback loops where the feedback from the previous
balance is subtracted are very useful in stabilizing systems away from
error but positive feedback always makes the error grow. A physical
example of negative, positive and no feedback follows:
If you have a bowl and you put a ball in it and then give the
ball a little shove, it will travel up one side, gravity will bring it
down and it will rock back and forth until it settles back to the
middle. That's how engineers use negative feedback to bring back
things which have been pushed out of normal operation back to normal.
If you turn the bowl upside down and put the ball at the top, one
small push and the gravity will make the ball fall faster and faster.
That's unstable. If you put the ball on a platform and give it a push,
without friction, it will just continue in rolling steady state. Both
zero and negative feedback are acceptable while positive feedback is
always unacceptably unstable.
Engineers say that systems are stable if the pole of the system
is in the left-hand plane or on the origin but unstable if the pole is
in the right-hand plane.
Knowing that the Laplace Transform of the system is 1/(s-i), the
denominator is zero when s=+i and therefore, the pole is on the right-
hand side of the origin, hence unstable.
Eliminating the bad vibrations is as simple as making the
interest feedback loop in the bank's computer programs zero and using
only the simple interior circuit known as an "integrator." Currency
systems presently using these simple "integrator" accounts are now
known internationally as Greendollar systems of the Local Employment
Trading System (LETS).
We know that the LETSystem is an interest-free system and so we
cut the positive feedback loop to get 1/(s-0). Fig. 7 shows that to
make the interest positive feedback zero, we simply break the circuit:

Fig. 8 is the interior circuit still left in operation which is the true
electrical control system of the LETS 1/s bank account. This
is the mathematical circuitry behind all interest-free systems and how
Greendollars work: Instead of an output which is exponential, crooked,
we have an output which is linear, straight. Your $100 volt pulse is the
input to the addition node. Added to it is old balance, starting at zero, to
push the new balance up to $100 volts.
Next year, with no new pulse at the input, and with interest
voltage to add, the balance stays at $100 volts. If another deposit
comes in, it's added to the old balance to create a new balance. A
negative coming in will reduce the old balance. But the system is
always in balance. Positives equal negatives.
So now we see how Greendollar credit at a LETS bank works. Fig. 9
shows that when you use Greendollar credit, the amount you have taken
out which is represented by the top circuit and the amount you owe
which is represented by the bottom circuit stay the same:

We can also see how a loan at a normal usury bank works. Fig. 10
shows that while the amount of cash in your wallet is shown by the
upper circuit, the debt for that $100 shown in the lower circuit
starts to double and double over time and all the while, all you have
is original $100 in your possession:

This analysis shows that unemployment and inflation must go to
zero if the banks' computers, which are now permitted to charge both
interest and service charges, are restricted to only the service
charge and the interest charge abolished.
Note that the exponential derivation shows that there are two
solutions to the mort-gage (death-gamble). The software solution is
interest rate(i) = 0 by restricting the banks computers to a pure
service charge and abolishing the interest charge. The hardware
solution is time(t) = 0 by installing an instantaneous electronic
cashless marketplace.
GAME MODEL: SERVICE CHARGE VS. INTEREST
In his book `The Theory of Games and Economic Behavior', John Von
Neumann, one of this century's top mathematicians, stated that
"important questions in economics arise in a more elementary fashion
in the theory of games." In the business war for markets, the economy
decides who sells their goods and who fails to. Models used by
economists are flawed by guesses and approximations about what the
economy will choose. The only way to perfectly model the economy is to
use fair chance to pick the winners and losers.
TO PLAY MORT-GAGE:
The necessary game equipment to play "mort-gage" is:
1) 3 types of tokens to represent food, shelter, and energy (the
tokens can be knives, forks, spoons)
2) a fair chance mechanism like a coin, cards, dice, etc.;
3) matches, beans, chips or tokens to represent currency.
Here is how I demonstrated the difference at a dinner party
between the interest on a business loan and the service charge on a
Greendollar LETSystem business. The hostess provided a bag of raw
beans which I used as my model dollars. I used knives as tokens for
food, forks as tokens for clothing and spoons as tokens for services
which I put into a bowl representing the market economy in the center
of the table.
INTEREST-USURY MARKETING METHOD:
In the Interest Game, all borrow 10 but have to inflate their
prices to recuperate the 11 they owe the bank.
Step 1): I had all 10 guests at the table pledge their watch as
collateral for a $10 Beandollar loan. At 10% interest, they each owed
me 11 Beandollars at the end of the loan period.
Step 2) I had all 10 guests spend their $10 Beandollars into the
market bowl in exchange for a product token.
Step 3): Once all 10 guests now had a product token for sale, I
used fair chance to determine who would successfully market their
product. Starting first with pairs of players with similar product
tokens for sale, I flipped a coin to determine which the economy chose
to buy from. Then winner delivered the product token to the market
bowl and collected $11 Beandollars. After the first round, half the
players had successfully marketed their product and half had not yet
sold. Finally, taking diverse pairs, I continued tossing the coin to
decide who the economy chose to purchase from, the winner delivering
goods and taking price out of the market.
Step 4) Since everyone put in 10 and the winners all took out 11,
eventually, the market bowl ran out of Beandollars with one guest
still having products unsold. I foreclosed and seized the loser's
product token and watch.
Step 5) I explained to the winners how their $100 Beandollars had
inflated because there were now only 9 watches.

NO-INTEREST LETS MARKETING METHOD:
In the No-interest Service Charge Game, all guests borrowed 11
and owed 11. The 11th Beandollar borrowed was to pay the bank
employees a service charge.
Step 1): I had all 10 guests at the table pledge their watch as
collateral for an $11 Beandollar loan.
Step 2) I had all 10 guests spend the same $10 Beandollars to
purchase their production token from the market bowl and then spend
their last Beandollar into the market to pay for the services of the
bank employees who facilitated the transactions.
Step 3): I again used the coin to model the decisions of the fair
market and noted that at the end of the game, all the production was
sold.
Step 4): I noted that no one lost their watch even though the
bankers still got paid.
Step 5): I noted that at the end of the LETS service charge game,
there were enough watches for the Beandollars to retain their original
value, unlike in the Interest Game. I noted that everybody had sold
all their product tokens because the 11th unit of money had entered
the market bowl through the bank employees' service charges.
The very subtle difference between systems is that in the
Interest Game, the bank demands payment of money it did not create
while in the LETS Service Charge Game, the bank demands payment of
money it did create. With exactly enough markets to match the prices

of goods produced, there can be no foreclosures.