More like a vomit. A real-life, real-time, demonstration of what this web site is trying to tell you.

The 'Natural Law Thesis' of this web site offers you a new look at the Balance Equation, the bed-rock foundation of all accounting principles. The 'Balance Equation' reads, ASSETS = LIABILITIES + CAPITAL, where CAPITAL is the algebraic difference between ASSETS and LIABILITIES.

The Asian stock market drop was initiated, precipitated, or caused, initially, by a devaluation of the exchange rate of the currency/currencies used by Thailand, Malaysia and Indonesia.

As reported by Associated Press reporter, Martin Crutsinger, (Huntsville Times, Tuesday, October 14, 1997 - before the huge hiccup), "Malaysian Prime Minister Mahatir Mohammed last month threatened to clamp controls on foreign currency trading and blamed his country's troubles on currency speculators such as George Soros. (ABC's 'Nightline' broadcast on November 5, '97 focused on this billionaire who has more money than many nations in the world).

This analysis says that that de-valuation of the affected Asian nation's currency was caused by selling huge amounts of that currency in the free and open market for buying and selling currency. (Was it Soros? Who the hell knows.) Whatever, the sell of huge amounts of that affected currency drove down the exchange value of that currency, subject to the natural law of demand and supply.

Understand: 'Currency' is an amount that resides under the ASSETS term of the BALANCE EQUATION. Devaluation of that currency is a 'de facto' reduction of the 'book value' of the ASSETS of the affected nations, and the portfolios of every business structure in the world that had/has or does business using that currency.

Given the algebraic fact of the BALANCE EQUATION, reduction in the book value of currency spells reduction in the book value of ASSETS. Reduction in the book vale of ASSETS spells an automatic increase in LIABILITIES by an offsetting amount.

Affected business structures, in effort to offset this uncalled-for and forced increase in their LIABILITIES amount, had no choice but to sell whatever stock they held to do so. That sell-off caused the chain-reaction reduction of stock market prices on a global scale - because of the inextricable inter-dependence of the exchange values of all national currencies.

If adopted by all nations on Earth, the 'Corrective Actions' proposed by this web site would prevent re-currance of such major perturbations - rather - install a self-regulating fixed stability in the exchange values of the currencies of all national sovereignties; an approach preferred over division of Earth into five or more international trading blocs.

Understand the following problem conditions of the central banks of the world:

1. the daily differences of the exchange rates of the currencies of all national sovereignties is caused by the different inflation rates of the respective national sovereignties that exist on Earth.

2. the bookeeping task of tracking the daily differences of the exchange rates of the many different currencies that now exist has to be horrendously onerous and expensive.

In recognition of these expensive bank problem conditions, strong argument can be made to reduce the total number of different currencies by divison of Earth into five, six, seven or eight different trading blocs, and thereby reduce the total number of global or international currencies to a corresponding number.

The problem with division of Earth into separate but huge international trading blocs is the problem of loss of national sovereignty in the exchange. In the case of the United States, the Office of President is reduced to that of Governor of a Province, Governors of States are reduced to that of county commissioners, and County Commissioners reduced to voting ward bosses. This is where we, in the United States, find ourselves today.

That solution still does not address a deliberate inflation of money policy that decreases the purchase or exchange power faster than the wager earner or business structure can earn it through buying and selling product in the market place - rather, it only feeds the causes of maintenance and expansion of poverty on a global scale.

Return to Home Page