Cronin Economics

Cronin Economics
This is a letter sent from Kevin Cronin to congress about fixing the dire state of the US economy in 2012.
Dear Congressman …,
<big>Abstract</big>
Early next year congress will be constructing a plan to avoid the fiscal cliff. I am writing not to lecture but to throw out several ideas. They are not perfectly polished ideas but they are derived from Austrian economics and original. I hope they provide a new insight into our economy and our foreign policy. As a citizen of the US I have the highest standards for my congressman but I respect the eventual decisions that they make. As Lincoln said, “We, the People, are the rightful masters of both the Congress and the Courts. Not to overthrow the Constitution, but to overthrow the men who have perverted it.” I can guarantee that after you finish this paper you will be more optimistic about the future than ever before in your whole entire lifetime.
<big>1.Current Economic Model</big>
I’ll start off this paper by quoting Thomas Jefferson, “If you ever let the central bank take control of a nation’s currency first through inflation, then deflation, they will extract the wealth of that nation until one day you wake up homeless on the continent your forefathers conquered.” Every portion of this paper has been fact checked. I believe there are no valid conspiracies or coincidences. Most conspiracies derive from mistakes or misinterpretation of the facts. My theory is that the most powerful individuals in the world just don’t know what they are doing because they are still using flawed economic policies. Why haven’t these economic problems been resolved? Most attempts at correcting a problem in congress are ineffectively patched by using quick shortsighted fixes no matter what the long-term implications of those fixes are. Fear leads to short term mistakes. These mistakes add up and usually lead to long-term despair (i.e. the booms and busts of the Keynesian economic market the past century). The wealth we have in the United States allows us the luxury of easy choices. Maybe this blinds us from the right answers. I’ll follow up that comment by letting you know my motivations. There is a considerable amount unnecessary violence in this world. Violence is a primitive reaction to an inconvenient situation. I hope to eliminate some violence worldwide with this economic theory. If you want to hear an honest opinion, listen to a person who has nothing to gain. Whether it’s true, is based upon their intelligence and source of information. Developing a resolution to the US economic crisis has been a hobby of mine for the past few months while I’ve been in graduate school. I love meteorology and I intend on completing my masters’ degree no matter what reception this proposal receives.
The founding fathers of this nation eerily predicted some of the current predicaments. Is this just a coincidence? Thomas Jefferson was strongly against a central bank and this position reflected in his writings, "The system of banking we have both equally and ever reprobated. I contemplate it as a blot left in all our constitutions, which, if not covered, will end in their destruction. I sincerely believe, with you...that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." Abraham Lincoln mentioned the destructive partisanship we see in congress today, "I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. Corporations have been enthroned, an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people (e.g., by pitting the cooperation-oriented political left against the competition-oriented political right), until the wealth is aggregated in the hands of a few, and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of the war." Currently one percent of the US population holds around 36% of the wealth of our nation.
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• Driven by consumers and fear
• Unstable, inefficient and unsustainable (Boom and Bust)
• Little environmental awareness
• Extreme lag time between economic efficiency and economic effects of that efficiency
The Federal Reserve buys treasury securities as a privately owned company. The US government has little if any influence on the Federal Reserve. Therefore it is not owned by the citizens of the US it is owned by a few. Ironically this is the reason why the American Revolution took place. This is a quote from Benjamin Franklin, "The colonies would gladly have borne the little tax on tea and other matters, had it not been that England took away from the colonies their money, which created great unemployment and dissatisfaction. Within a year, the poor houses were filled. The hungry and homeless walked the streets everywhere. The inability of the colonists to get power to issue their own money permanently out of the hands of George III and the International Bankers was probably the Prime reason for the Revolutionary War." It shamefully mirrors today’s situation.
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The Federal Reserve buys treasury securities, which creates inflation. In order of having a stable monetary system, precious commodities should be backed by 90% of the currency given out by government owned banks (I’ll talk about district banks later). The US dollar’s value, which is not backed by any precious commodity since 1971, has noticeably depreciated in the 20th-21st century. Stocks are another form of currency, evaluating the strength of a company. Therefore what does the devaluation of the dollar tell you? The only reason that the US hasn’t collapsed is the improvements in science and technology. Fortunately economic adversity creates an incentive to research and invent. Increased efficiency in producing a product allows more purchasing power with the dollar. This allows currency to deflate, as a certain product is mass-produced. Competition in a market allows corporations to find ways of lowering costs to make the product therefore allowing the cost of the product to be reduced. The lowing cost of the product is not as quick as the inflation of the dollar. Items that can’t have any type of advancement (i.e. gold and silver) show the inflation of the US currency pretty well through the 20th century. Gold’s and silver's value stay relatively constant because only a small percentage of the total amount is mined every year. Therefore the value goes down a small amount each year (~1%). During an economic downturn the value of precious metals does not go up but the value of the dollar depreciates due to decreased confidence in the US market. Therefore prices of gold are around $1,600 right now because there is really low confidence in the dollar. The US dollar’s worth is dependent on the state of the US, domestically and abroad.
Wars are only possible through the inflation of our currency through the Federal Reserve. It is not uncommon to hear some economists mention that war can in some cases be good for an economy. This is an absolute fallacy. It is an erroneous belief to think that World War II got us out of the Great Depression. The US was recovering prior to the war due to the inundation of war in foreign nations and peacetime in the US. Massive casualties sustained during World War II allowed the wealth to be redistributed. The huge population growth after the war and the confidence that another World War wouldn’t happen for some time is what got us out of the Great Depression. This is evident from figure 9. Economic efficiency ALWAYS decreases during wartime. This simple statement suggests that peace leads to prosperity in a nation. Thus there is an incentive for countries to prevent wars if they want to continue to have a strong economy.
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As stated above, the Federal Reserve creates inflation by decreasing interest rates. The Federal Reserve creates bubbles by keeping interest rates artificially low instead of letting a free market adjust and allow interest rates to ascend. This sends a signal to the market for investors to spend but since they are only spending because interest rates are low they invest in malinvestments. Investors are pulled in to invest in commodities they normally wouldn't due to these low interest rates. Whether these commodities are of any value depends on the integrity of the product. A good example of the problem with artificially low interest rates can be seen with the housing bubble. During the early 2000s investment banks all bet on US real estate market. The democratic senate passed a bill where the government helped people finance a house. This of course was for good intentions but banks took advantage of this bill. They handed out loans to anyone who wanted a house. Even if the new homeowner had absolutely no chance of ever paying back the loan based upon their occupation, age, and amount of income. People on Wall Street bet on the housing market because the Federal Reserve decreased the interest rates inciting people to spend. They primarily bet on the housing market because it was seen as invincible, it had never gone down before in US history. After the housing bubble burst, investment banks blew up because they were circulating too much of these bundled housing loans that were essentially bundled debt. So they went to the US government and told them they messed up and if the government doesn't bail them out they would not be able to cover the deposits made by citizens. Unfortunately taxpayers had to fund their gambling habits through Troubled Asset Relief Program (TARP) in order of preventing an economic catastrophe. We the people can only hope that investment banks learned their lesson.
The Federal Reserve has already lowered interest rates again. If banks do not diversify their investments, (once again single out a commodity) it will be massed produced to a point where there is a massive supply with little demand. College loans are the next malinvestment. There are too many students going to college for inefficient majors. However since some students are STEM majors this will add efficiency to the economy offsetting some of the malinvestments in the arts. Unfortunately, the malinvestments in the arts might prove too costly to the economy. The market will see this too late and the bubble will burst again creating more agony. If interest rates were not touched the market equilibrium would increase interest rates. Investors would save due to higher interest rates. This allows the investor to research and take an educated guess on which commodities will be successful to invest in. It is necessary for the Federal Reserve to buy securities but only if there is a scientific improvement that increases efficiency in a task. As seen in figure 2 efficiency in the US economy has flat lined and figure 3 shows a decrease in economic internal energy.
So what creates a stable economy, or an efficient economy? The answer is simply science and technology because science and technology make tasks or jobs more efficient. When tasks are more efficient, there is more time to complete additional tasks. What this basically means is Science, Technology, Engineering and Mathematics (STEM) are the only entity keeping the US afloat right now. Unfortunately less and less people are getting involved with STEM fields. This would be the sole reason for the collapse of the dollar.
<big>2.Cronin Economic Model</big>
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• Driven by ideas/innovation and confidence
• Stable, efficient, and sustainable
• Symbiotic with environment (social, natural, economical, education, political…)
• Little lag time/friction between economic efficiency and economic effects of that efficiency
Increased efficiency in a task allows the user to spend less time on the task. Hence more time is allocated to the citizen as free time. Free time will be enhanced by artists/entertainers/athletes that display spirit or create books, music, movies and media for that citizen to enjoy. This free time correlates to a happier person. Therefore this person will be more productive and confident in one’s own abilities. Teachers provide the groundwork for artists and STEM majors to be successful. Creativity is born from hardship therefore any type of art is derivative from adversity not education. STEM is directly correlated to education. Education and teaching is important to the US economy for this reason. It’s time to stop providing federal loans for majors that will be unproductive to the US economy. If you ask any artist/entertainer/athlete, I’m sure they will tell you that schooling didn’t influence their work but the adversity in their lives did. Fund the teachers and STEM majors that will help make the economy more efficient. This will make income directly correlated to education. Philosophy provides the moral composition of artists and STEM majors in order of allowing them to be conscience of their output and attitude. The most efficient federal government is one that provides the most liberty but bestows enough security for the property and principles of the people to be protected.
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An important component to a free democratic republic is who prints the currency. Abraham Lincoln mentioned the power of government controlling the currency, "The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government's greatest creative opportunity. By the adoption of these principles...the taxpayers will be saved immense sums of interest ...Money will cease to be master and become the servant of humanity. Democracy will rise superior to the money power." Implementing a free market economy will accomplish this. This would not be a capitalistic society that revolves around limited currency and consumers but an idealistic society that revolves around limitless ideas. This is a quote by Thomas Jefferson about currency; "Information is the currency of democracy." Currency in an idealistic society is equal to the confidence that the government provides the best environment and security for an economy to become as close to a free market economy as possible. It is the confidence that district banks will provide the best environment for research to take place to increase efficiency. This is not an original idea but an idea that has been loss.
Our current system is similar to a government James Madison talked about in this quote, "A popular government, without popular information, or the means of acquiring it, is but a Prologue to a Farce or a Tragedy; or, perhaps both. Knowledge will forever govern ignorance. And a people who mean to be their own Governors, must arm themselves with the power that knowledge gives." Therefore it is the people’s responsibility to take care of them selves in a free market system but government provides services to enhance their liberties not diminish it.
With this economy in place the Federal Reserve would be dissolved into district banks. As a result, governments would control the currency through district banks.
Citizens with high moral standards would be selected through popular vote in their district after intensive training to run these banks. However they would have to commit to 10 years in the army. They will need to do 6 months of boot camp, and then take advanced economic training at a local university within the district. After a popular vote by the district population he or she will be declared the head of a district bank for 5 years. Soldiers give up their security for our freedoms therefore they should have the responsibility to oversee our wealth. They would be interested in creating a more efficient district environment through funding research. Soldiers will decide what to invest people’s retirement in by researching what new science or technology makes a certain task more efficient. They would also not want to let down their friends in the neighborhood they are in (try and match soldiers with their region they grew up in).
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The current national debt would be spread throughout these 435 district banks. Taxes would be cut substantially in order for citizens to pay off their $50,000 worth of debt. Now instead of everyone in the US being $50,000 in debt they will then be in the positive creating confidence in the district economies. This would essentially make people the new commodity (need more people to work). This in the long run is not good due to the likelihood of world overpopulation. Therefore people should be educated not to have more than 2 offspring. This should only be a recommendation and there should never be a law to enforce this. It will be up to the people to make the right choice.
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In order to decide what to invest in, private investment banks or government banks would have to research what type of technology or science that would improve efficiency. What this economic philosophy would do is it would eventually make everyone middle class and only a few would be upper or lower class. Positive actions, peace and work would translate into wealth. Laziness would translate to poverty but there would be much more opportunity to get out of poverty and achieve your dreams. If you make a perfect environment only a person’s actions will determine if that person has good values or morals. The smaller the environment the greater the chance of having a forecast with small errors and a greater chance to survive entropy because there would be less grid points to take into account. Adversity and errors create an incentive to research and invent. Therefore errors would stimulate economic growth in this free market economy.
<big>3.Free Market Economic Derivations</big>
<big>Cronin Economic Laws</big>
First law of Economics:
Economic energy can be created or destroyed.
Second Law of Economics:
Accurate information is always discovered and increasing in a closed system.
Third Law of Economics:
As information and population become constant economic energy rates approach zero.
Variables
E = economic efficiency
GDP = Gross Domestic Product (adjusted for inflation)
R = research/innovation
W = work
e = efficiency (ratio of output to input)
Pc = precious commodities (at recent market price)
M = currency/money
C = efficiency rate
Δt= change in time
R t = Time, resources and energy required to complete a research task
R e = Research efficiency
U = Internal energy of an economic system (measured in Crons)
U r = Economic energy rate (measured in Crons per time step)
Δr= change to promote security(income taxes)
ΔP = change in population
H=Human potential (Infants have greatest human potential)
G = GDP
Δe= Time required to complete task with new method minus time required to complete task with old method
Equations
(1.) R W e Pc M
(2.) (Carnot cycle)
(3.)
(4.)
(5.)
(6.)
(7.)
(8.)*
(9.)*

*Equation derived from a similar thermodynamic equation
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<big>4.Free Market Economic Banking System</big>
As Thomas Jefferson once said, "I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have risen up a moneyed aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs." This bank transition must be peaceful. The Federal Reserve will not give up its power so easily. It will use a lot of fear mongering and might even use violent attacks on its own country in order of retaining its power. Hold steady congress and for once in your term stand up for the people of the US and of the world. We the people shall overcome tyranny and create a free democratic republic. The loss of power of the private banks and the Federal Reserve will be the atonement for all their crimes they committed against the American people. The Federal Reserve Bank must be dissolved to transition into an Idealistic society. There will be only one bank in every district and they will report to the treasury for money to be printed. The only power the treasury has is to print money and balance/check all the district bank’s assets at the current economic price. The district banks must disclose their assets (economic products) that back all the dollars they distribute. Each district bank will control interest rates within their district (private banks can still set their own interest rates). This will influence saving or spending. However the spending in this economy would be on ideas/innovation/research for a solution not products. We will defeat our problems rather than create them. We will use the new power taken from banks in order to better mankind through more efficient processes.
Soldier-civilians oversee each district bank. It will be seen as a great honor and service to run a bank as a soldier. In order of becoming a district banker a civilian under the age of 30 must enlist in the army for 10 years. They will then be sent to boot camp for 6 months. After, the civilian will be put through a rigorous testing phase to instill values and be put into a university near the district bank where they will learn advanced economics. A class of these students will then graduate and the district population will vote one of them into a district banking system. Their wage will be set at $80,000 all 5 years with NO commission on any products they sell. After 5 years they will be put on the front lines if the US is involved in a war. If the district banker is doing a poor job, he or she could be impeached by a popular vote within the district if the popular vote is beyond 70%. The solider-banker will be the only one within the government bank system that could invest in stocks, set up retirement plans and hand out loans. Extremely stable retirement funds through district banks will replace social security but citizens will have the choice of setting them up.
There will still be depository and investment private banks. Government district banks will be fractional reserve banks that must have 90% of each depositor's funds kept in reserve, as cash or other highly liquid assets. Private banks will be fractional reserve banks that will be allowed to have 10% less than the current requirement of banks in 2012 of each depositor’s funds in reserve, as cash or other highly liquid assets. Thus this will give an incentive for private banks to be more aggressive than government banks and create competition. However, the government will not back private banks financially if they go bankrupt. The investments made in a private bank are high-risk, and high reward. This will essentially make betting on research the new type of casino and phase out the immoral casinos still present in the US. If a district bank falls into trouble (economic disaster in their district) the congress member of that district asks the rest of the district banks for help. An economic crisis in a district would send a signal to local universities in the district to investigate the problem through research and invention.
Once this system is in place many programs can be cut. Such as the IRS, sales tax, federal student loans except to teachers and STEM majors, income tax and foreign military bases. District banks will collect taxes within each district. Thus laws must be enforced on a district level with only constitutional laws applying on a federal level. Surpluses go to federal government to fund federal programs. Once our economy recovers and millions of jobs are created from the decrease in taxes, cut entitlement programs such as welfare and food stamps. The Y generation should also be allowed to op out of social security and Obama care. I bet if you took away welfare and food stamps from US citizens but they were given an opportunity to work towards bettering mankind. They would come home happy at the end of the day because they would know they played their part in helping the rest of the world. Neighboring citizens would also respect them for overcoming adversity. This system will influence the next renaissance.
With every new economic system there will be winners and losers. The winners will be we the people, honest politicians (please prove to me that this is not an oxymoron), everyone outside the US, and honest corporations. The losers will be weapons contractors, people who became rich in dishonest ways, people who rely solely on US government handouts (losers in the short run winners in the long run), dishonest politicians, dishonest corporations, terrorists, and warmongers. It should be noted that if taxes are reinstated (i.e. fiscal cliff) it would destroy economic efficiency and thus bring about another recession.
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<big>5.Foreign Policy and Civil Liberties</big>
People who die from suicide bombing should be given a special recognition that states that they sacrificed their security for all the freedoms we share in this great nation today. They are the true heroes in every sense of the word. The people who commit terrorist acts are extremely mentally ill and it would be bewildering to know what they were thinking before they committed such atrocious acts. We must not strike back in honor of our beloved people who have past away. We are above these people who think along the same lines as these terrorists. We believe in peace, liberty and freedom; which only bring us closer to the heavens, while these terrorists are engulfed in hated, and only know hell. At this time the congressmen should meet with all the families that were affected by these horrendous attacks during 9/11. I will never forget the people who died for the freedoms we all share today. Freedoms in a literal sense and a free mind that allows us to communicate better than any other place on Earth.
Freedom and liberty allow a citizen to quickly adapt to an environment. Laws and governance inhibit citizen’s adaptive abilities. However they must be there in order to promote a sense of a security. Freedom works because it is the closest representative to planet Earth’s natural law of chaos. Peace and nonintervention are the best response to any event because it allows the system to reach equilibrium more swiftly than playing an interventionist role. Laws are inefficient on a national level because there are thousands of different city environments. Thomas Jefferson made a keen observation about the American Indians, "I am convinced that those societies (such as the Native American peoples) which live without government enjoy in their general mass an infinitely greater degree of happiness than those who live under the European governments. Among the former, public opinion is in the place of law, & restrains morals as powerfully as laws ever did anywhere. Among the latter, under pretence of governing they have divided their nations into two classes, wolves & sheep. I do not exaggerate."
We must give up our security and repel the Patriot Act and National Defense Authorization Act in order to preserve our ideas of liberty and freedoms. James Madison once said, “The means of defense against foreign danger historically have become the instruments of tyranny at home.” It’s important to note that Thomas Jefferson said, “A person who gives up their security for their freedom deserves neither.” Even though it leaves us open to attack we will at least live in a free and peaceful society. Another quote from Thomas Jefferson puts homeland security in perspective, “I prefer dangerous freedom over peaceful slavery.” It would be naive to think that we can monitor every American in hopes of preserving their life. Without liberty and freedom life is defined as slavery. Life in a free democratic republic is everything you want it to be. Lets not oversee what all the American people are doing (privately owned fusion centers). Please do not be a coward but be free. Cut homeland security and invest in ideas that actually provide security like dual polarized phase array radars. This would increase our national defense, our security and reduce our domestic damage from weather events. The National Weather Service has saved more lives than terrorism will ever take. Yet Homeland Security is expected to receive five times more funding than the whole Department of Commerce. I would personally be embarrassed if I worked for an ineffective and inefficient organization that is keen on completely annihilating the 4th amendment. There is a direct correlation between the funds received and the lives saved for the National Weather Service. There is absolutely no correlation between the funds received and the lives saved for Homeland Security. The only way they could ever show that they are effective is by invading the privacy of US citizens and casting judgment on innocent citizens.
Get rid of the Department of Education. Statistically, there is less likely to be a shooting at a private school than a public school. Most of the well-known school shootings took place at public schools. This is not a coincidence but a personification of how a culture of fear leads to violence. Rather than determining the motives and reasons behind all actions and outcomes, laziness allows fear to prosper. Ignorance and hate soon follow. Liberty brings together people of diverse backgrounds. Thus liberty can only make us stronger. I hope one day a person’s success will be measured by their peaceful actions not how wealthy they are, who their parents are or how powerful they are. I believe in a free democratic republic or small government because I believe people have the skills to run their own lives. US citizens do not need the US government coercing them with a narrow scope of majority views. Government will never be able to discern what type of environment or circumstances everyone is in. Keep programs that provide true security or increase economic efficiency (i.e. NASA, Department of Agriculture, Department of Commerce, and the Department of Defense…)
These peaceful wars of aggression are destroying the fabric of the constitution. Ronald Reagan noticed this, “Peace is not the absence of conflict. It is the ability to handle conflict through peaceful means.” The wars in Iraq and Afghanistan need to stop to promote economic efficiency. If you are fanatical on spreading liberty, freedom, and peace build back the infrastructure destroyed in unstable nations. People can remember your actions even if you can’t. Thus god may not be watching but your neighbors from a different perspective certainly are. Only send engineers with the necessary materials without any weapons, not even for defense. This is extremely dangerous for the engineers sent but it sends a message of peace. If the engineers are attacked than the citizens will see this and fight the terrorists. They will learn to fight for their own freedom, liberty and peace. We could never fight for their freedom because we are simply not from there. As Martin Luther King Jr. once said, “Wars are poor chisels for carving out a peaceful tomorrow.”
Stop all foreign aid and treat all countries equally. As Thomas Jefferson once said, “Commerce with all nations. Alliance with none.” Only when the US legally declares war should any alliances be made. Only send engineers if a country is very unstable to help rebuild their infrastructure and do not expect anything in return. They will see this as a kind gesture and increase our security domestically. This will allow our embassies and foreign military bases to be dissolved. Only an idea can defuse the greatest military force the world has ever seen. Any army or any government cannot stop an idea whose time has come. Only an idea can give the power back to the people.
I’ll leave you with a quote from John F. Kennedy, "A Government that makes peaceful revolution impossible, makes armed revolution inevitable." I hope there will not be unnecessary casualties due to stubbornness. I am a peaceful person and will never hurt anyone no matter what threat that entity poses. However some other citizens are not so peaceful. I wish this wasn’t the case but our current culture influences a violent response to foreign threats.
Sincerely,
Kevin Patrick Cronin
M.S. Applied Meteorology
Plymouth State University
-Here are ideas for two new parties in US government
Peace/Freedom party- Dove with olive branch (closest to Republican ideology)
Security/Wellbeing- Bulldog with spiked collar (closest to Democrat ideology)
-I’ll leave you with an afterthought. How accurate can statistical economic models be if weather models, which are based on scientifically proven atmospheric physics, can only give accurate forecasts 2 to 3 days out? Think of the implications of chaos theory (i.e. initial conditions, rounding errors, mathematical mapping errors and observational errors).

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