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Copyright 1993 by Bernard Palicki. All Rights Reserved. Figure A2-1 is a flow diagram depicting the fundamental structure and circular flow of money within the United States as a national household.
Figure A2-1 is the first of four illustrations - an attempt to illustrate how the fundamental structure of any national household compares, on a one-to-one basis, to and with the fundamental structure of the electronic circuit. [Within the engineering discipline, flow diagrams like these are known as 'functional flow diagrams'.] The electronic circuit is divided into two parts:
When electron energy flows in the electronic circuit, total electron energy of the power supply is distributed within the power supply and across all of the series and parallel loads of the power supply. In this illustration, 'series' load paths run left to right, and vice versa, between the four major 'parallel' loads described here. Electron energy flows in one direction only, from 'negative' to 'positive'; through origin at the power supply, and consumed (in the form of heat) only through the 'resistive' loads of the power supply. Electron energy not consumed by 'resistance' is stored in 'capacitors'(electrostatic energy) and 'coils' (electromagnetic energy) in its path from the power supply to its return to the power supply. Each electron has its own magnetic field, just like the planet Earth has a magnetic field. The magnetic field energy of each electron is transferred to the next electron, so the effect within any electronic circuit is perceived as a flow of electrons, from the output (or negative) end of the power supply, through all of the loads, to the input (or positive) end of the power supply, to complete a continuous circuit. In its singular path of direction through the loads, from the negative end to the positive end of the power supply, that flow of electron energy (like human energy) will always take the path of least resistance. [Electrons are 'negative' in charge. 'Negative' means an excess of electrons. 'Positive' means a deficiency of electrons. Electrons orbit the nucleus of atoms just like planets that orbit 'stars'; and 'stars', like the nucleus of atoms, are called 'suns'. Each star in the night sky represents a 'solar system'. Our planet Earth is only one of nine planets in orbit around our 'sun' that is only one of these 'stars'. We are a part of only one solar system. There are countless billions of solar systems in the universe.] The total magnitude of energy from the power supply, as it flows through the loads of the power supply, is distributed across the power supply and the loads of the power supply, in only two measurable forms - consumption, and storage in opposite directions. (This aspect is described more fully in Appendix 3, The Balance Equation in Vector Form'.) Figure A2-1. illustrates that the structure of the national economy of the United States (U.S.) consists of four parallel elements of structure. These four parallel elements of the structure of the U.S. household are fundamental. They are exactly like the power supply and the load structure elements of the electronic circuit, as follows: Structural Element I - Total National Money Supply Total national money supply equates to the power supply of the electronic circuit. Total national money supply consists of total currency in circulation, plus the total of all demand deposits and savings or time deposits, plus the total of all certificates of deposit. New or additional money cannot enter the circulatory system in any way other than in the form of national debt. The national debt is incurred by profligate 'spending' by the members of the U.S. Congress. (prompting this observer to view elected representatives to the U.S. Congress as 'pimps in a house of prostitution'. Additional (and mostly unnecessary) financial obligations of the U.S. as a national household, decreed by members of the U.S. Congress, are transferred to the 'Open Market Committee' of the Federal Reserve Banking System. Subsequently, the 'Open Market Committee' of the Federal Reserve Banking System sells U.S. Treasury Certificates to member banks, or to any buyer who can afford them. 'Yield' from the purchase of the U.S. Treasury Certificates is the 'profit' to the buyer. That 'profit' is guaranteed by the unlimited power of the U.S. Congress to tax. [This is the real meaning of the expression, "Full faith and credit of the United States."] Total national money supply is an un-populated structural element. It exists in the form of the central banking system. In turn, the central banking system exists in the form of the federal, state and local banks, savings and loan associations and credit unions that are authorized to exist in accordance with public law (as expressed on paper). The people who direct, operate or are otherwise employed by the banking system, who cause and enable it to function, are contained in the total national population headcount. Total national population headcount is structural element IV of the national economic/household structure (the only populated element of this architecture of any national household). Structural Element II - Total Government Total government, like the banking system, is an un-populated structural element. Total government exists in the form of the federal, state and local governments authorized to exist by the U.S. Constitution, and the public law that derives from the U.S. Constitution (the supreme or governing piece of paper). In the electronic circuit, the power supply has a regulator. The regulator is part of the power supply. The power supply regulator functions to prevent perturbation of, and to support, continuous and un-interrupted circular flow of electron energy. Government, in the person of the U.S. Congress at the federal level of government, is (by the original U.S. Constitution) the regulator of the total national money supply. [The Federal Reserve Banking Act of 1913 took that regulatory power away from the Congress, and gave it to a private Board of Directors of the Federal Reserve Banking system, better known as the Federal Reserve Board, or 'The Fed'. 'The Fed' answers to no one except to the market for buying and selling money and debt.] State and local governments are simply extensions of federal, or supreme, government. State and local governments also have the power and authority to impose taxes.(But States do not have power to coin units of currency, or money.) When States were made recipients of federal tax dollars, to support funding of public service needs (like roads and sewers and the public education system), State governments were made inherent parts of the total mechanism of Federal laws that regulate and control circulation and distribution of money from the money supply. Units of money/currency are like units of electron energy. Structurally, the power supply regulator is an important built-in function of the power supply within the electronic circuit. Structurally the same, the regulator of the total money supply (formerly the U.S. Congress) is a built-in function for control of the money supply within the economic/national household circuit. The primary function of the money supply regulator is to assure that the circular flow of units of money (transfer of deposits and payments), representative of individual human energy, like units of electron energy, is continuous and uninterrupted. The power supply regulator is a built-in load of the power supply. The exact same relationship exists between total government and the total national money supply. Total government, through its Constitutional power to create money, to control the time-cost of money, and to impose taxes, is a regulator of the total money supply. However, Total Government is also a user of the money supply, therefore, it is also a load on the money supply. As shown in Figure A2-1, Total Government is a built-in load of the Total National Money Supply. Total Government and Total National Money Supply are inseparable. Together, they constitute the power of the source of energy (units of money) that enables the labor exchange process of the market place to function (labor in exchange for product, or product in exchange for labor, using units of currency as a medium and a measure of the worth of the exchange). Like money supply and the banking system, the structural element of total government is unpopulated. Money supply, government and the banking system are unpopulated. They are made to exist only on paper that authorizes their existence by public law that is expressed on paper. Supreme government of the United States is authorized to exist only in the form of paper that is the Constitution of the United States. All elected and appointed officals and all employees of total government - Federal, State and Local - are included (or contained) in the total national population headcount. Structural Element III - Total Business, Industry and Agriculture This element of structure contains the total of all the foreign and domestically owned businesses of industry and agriculture. Like government, the total of all foreign and privately owned and operated domestic businesses of industry and agriculture equates to one of the parallel loads of the power supply. Like total government, the total of all private businesses of industry and agriculture are unpopulated. They are authorized to exist only under public law expressed on paper. Businesses 'structures' of industry and agriculture exist only on paper under law, for the critical purpose of distinguishing, or for discriminating between personal or individual responsibilities and liabilities of the private individual in courts of law, from the corporate responsibilities and liabilities of agricultural or industrial business structures that are represented by authorizing paper. [It is a fundamental theorem of this work, that the 'federal tax code' treat the individual the same as it treats the structure of a 'company' or 'corporation'. Without the individual, the company or corporation structure is just a useless piece of paper.] Structural Element IV - Total National Population The fourth element of structure of any national economic system consists of the total national population headcount. Existence of this fourth and only populated element of structure is the only reason for the existence of the other three un-populated elements of structure that exist only by virtue of paper that says they exist. Like the total load of government, and the total load of industry and agriculture, the total national population headcount equates to one of the parallel loads of the power supply. Total national population headcount contains the total spectrum of all of the citizens of the national economic/household structure - from the newborn to the eldest - from the employed to the unemployed - from the richest to the poorest, including the homeless. It is from this reservoir of the total national population headcount, that the instruments and facilities of the other three un-populated structural load elements of any national economic (prefer household) structure are required, enabled and caused to exist and to function. Sole purpose for the existence of structural elements I and II is to support a continuous and uninterrupted flow of the labor exchange process through barter or trade that provides the goods products and services of the market place - to support survival, and to support improvements of the circumstances and conditions of human survival. The sole purpose of Structural element III is to provide the facilities and mechanisms to produce the total national output of goods, products and services that are exchanged in the market place. Structural element IV is the total national reservoir of human labor - the only source of the goods, products and services required for the human population to survive, and to improve the circumstances and conditions of survival. That total national reservoir of human life is the nation's wealth. Advance/Return Options:
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