|Posted by dr.ron45 on October 8, 2012 at 12:45 AM|
Professor Yamaguchi of the Doshisha Business School in Kyoto, Japan, became fascinated with the Federal Reserve System about 10 years ago upon reading two historical books, (1) The Creature from Jekyll Island - A Second Look at the Federal Reserve by Edward G. Griffin, and (2) The Lost Science of Money: The Mythology of Money - the Story of Power by Stephen Zarlenga. He had studied the System Dynamics mode of modeling dynamic systems at MIT where Jay Forrester had shown how such models could be developed and used with great benefit for Industrial Systems commonly encountered particularly in manufacturing industry. He learned the Vensim software for developing and analysing dynamic models with simulation and optimization procedures, and embarked on a project to show how Vensim modeling could be used to great advantage for the understanding of macroeconomic models for alternate economic systems. This develdopment is described in his draft book (see Yamaguchi links page) that is freely available for download and study. He became acquainted with Stephen Zarlenga and prepared three important papers analyzing the American Monetary Act proposal for restructuring the monetary system (most recently known as H.R. 2990). The first (in 2010) dealt with the Liquidation of Government Debt; the second (in 2011) dealt with the Workings of a Public Money System; and the third (in 2012) dealt with the Monetary and Financial Stability under A Public Money System. Roughly speaking, his bottom line is that Public Money Systems CAN be run without inflation, and they perform better than debt-money systems in almost any respect that you can think of. They will support higher levels of employment and real output, they can achieve and maintain a zero national debt indefinitely, and do so with much smaller "business cycle" swings than the boom-and-bust debt money systems. More information is provided on the Yamaguchi links page.
We hope to next look at the dynamics of the transition from a debt-based money system to a public money system by interposing an intermediate stage in which there is a hybrid system in which public (debt-free) money is issued in parallel with bank (debt-based) money. Since government money can be issued without any change to the federal reserve system (other than its subordination to a new Monetary Authority), the legislation for this purpose (such as the Greenback Renewal Act linked on the home page) can be much simpler and less controversial. The research objective is now to show that a hybrid system can be managed in a stable fashion to bring deficits, unemployment, and national debt down at the same time without producing inflation. Development of specific strategies with specific timetables that can be codified into public law is all part of the research that we are engaged in at this time. I will attempt to confirm Professor Yamaguchi's results by running similar models in the MATALB/SIMULINK environment provided by MathWorks, Inc. We should be able to enhance both our models by comparing results and trying to understand any output differences. We should have positive results by next July when the System Dynamics Society holds its next meeting.
Categories: Yamaguchi Research