Theses for the Reformation

The List of the 100 Theses for the Reformation of Economics

I. On the Purpose of Economics

Thesis No.1. The purpose of economics is to define and understand a healthy economy and to devise the means to cure the unhealthy ones.

Thesis No.2. Unemployment is the central problem in the US and in the world today.

II. On Economic Freedom

Thesis No.3. Economic freedom—the freedom to pursue all legitimate means to earn a living—is our most precious right.

Thesis No.4. Government’s role in the economy should be limited to the control of money and to the production of Public goods, and to the protection of the economic freedom of the individual.

Thesis No.5. The attacks on our freedom come from two opposite sides: from an intrusive government and from the power of the super-rich.

Thesis No.6. The ‘tragedy of the commons’ points to the limits of economic freedom.

III. On The Failure of Economics

Thesis No.7. Most of our economic ideas are wrong. They are responsible for world poverty and our current national decline.

Thesis No.8. Economists provide the intellectual support for the tyranny of the super-rich: the control of the economy, and of government, by a tiny but powerful minority.

IV. On Some Fallacies of Conventional Economics

Thesis No.9. He is wrong who says, “Large cuts in federal spending would do more to create jobs in the US”

Thesis No.10. He is wrong who says, “The best way to stop fiscal deficits is to cut government spending.”

Thesis No.11. He is wrong who says, “Taxing the very rich will reduce jobs.”

Thesis No.12. He is wrong who says, “The rich, through their investments and accumulation of capital, benefit the entire economy.”

Thesis No.13. He is wrong who says, “Taxes are a burden to the economy.”

Thesis No.14. He is wrong who says, “Improved education, leading to productivity increase, is the best way to solve unemployment.”

Thesis No.15. He is wrong who says, “There is a natural level of unemployment, below which it should not be allowed to shrink.”

Thesis No.16. He is wrong who says, “Poverty is the price society pays for an efficient economy.”

Thesis No.17. He is wrong who says, “Salaries are determined by the labor market.”

Thesis No.18. He is wrong who says, “Only the Fed (Central Bank) can create money.”

Thesis No.19. He is wrong who says, “Inflation is caused by government printing money.”

Thesis No.20. He is wrong who says, “Inflation is a serious and ever-present danger.”

Thesis No.21. He is wrong who says, “Raising interest rates is the best way to control inflation.”

Thesis No.22. He is wrong who says, “A recession is a natural correction to an over-stressed economy.”

Thesis No.23. He is wrong who says, “Wealth does not consist in money, or in gold and silver; but in what money purchases.”

Thesis No.24. He is wrong who says, “We live in a world of scarcity.”

Thesis No.25. He is wrong who says, “Supply creates its own demand (Say’s Law).”

Thesis No.26. He is wrong who says, “Free trade benefits all.”

Thesis No.27. He is wrong who says, “Countries exporting those goods in which they enjoy ‘comparative advantage,’ and importing everything else, will prosper.”

Thesis No.28. He is wrong who says, “A nation may import to a greater value than it exports for half a century, and yet its real wealth may have been increasing in a much greater proportion.”

Thesis No.29. He is wrong who says, “Trade imbalances are self-correcting.”

V. On Capitalism

Thesis No.30. Capitalism is predicated on the exploitation of man by man.

Thesis No.31. The capitalistic belief that low unemployment is inflationary is inhumane and economically wrong.

Thesis No.32. The free enterprise system can adopt different forms; capitalism is among the worst of them.

VI. On the Tyranny of the Super-rich

Thesis No.33. In a free-for-all economy, a tiny minority becomes super-rich and tyrannizes the rest.

Thesis No.34. The super-rich control the economy through their power to create money and to charge interest for its use.

Thesis No.35. The super-rich count on the obsolete ideas promoted by our leading economists to avoid paying their fair share of taxes.

VII. On the Bases for a Reformed Economics

Thesis No.36. Economics is a scientific discipline.

Thesis No.37. Scientific statements cannot be proven to be true; they can only be shown to be false.

Thesis No.38. Economic activity is driven by the single most basic human need: the need to trade in order to survive.

Thesis No.39. The economy is a network of free individuals who use money to produce-sell and to acquire the goods necessary for life.

Thesis No.40. Any and all economic activity can be described as an exchange of goods for money.

Thesis No.41. The vendor obtains some income from each sale; the consumer gives up some income with each purchase.

Thesis No.42. The firm’s income is distributed among its members, in the form of profits for the owners and salaries for the employees.

Thesis No.43. The price of any good sold is distributed as income for the entire network of people who contributed to produce-sell it.

Thesis No.44. The sum of all incomes received by the residents of a country is equal to its GDP.

Thesis No.45. Saving satisfies our basic need for economic security.

VIII. On the Nature of Money

Thesis No.46. There are three types of money: currency, buy-rights (purchasing power), and proxy-money.

Thesis No.47. Cash or currency is created by the government, and it can never be increased by the economic activity.

Thesis No.48. Buy-rights are the real money—what give us the power to purchase what we want.

Thesis No.49. Proxy-money is what we use instead of cash in most transactions.

Thesis No.50. Banks and other financial institutions, by their lending operation, create new buy-rights and make them available to the economy.

Thesis No.51. Scarcity of money (or credit) is the most common cause of economic distress.

Thesis No.52. Money does not normally disappear; it just changes hands.

Thesis No.53. The total amount of money in the country can only be changed by the Central Bank, by financial institutions, and through foreign trade.

IX. On the Circulation of Money

Thesis No.54. Money flows from hand to hand until it all gets stored in the financial system, and that flow ends.

Thesis No.55. The flow of money determines the level of economic activity.

Thesis No.56. Inflation is caused by the simultaneous occurrence of an excessive flow of money and the persistent scarcity of an important commodity.

Thesis No.57. A recession is caused by a defective flow of money.

Thesis No.58. The Flow of Savings withdraws money from the economic activity and stores it into financial institutions’ accounts.

Thesis No.59. The Flow of Credit is created by the financial institutions and it replenishes the money withdrawn by the Flow of Savings.

Thesis No.60. There are several flows of money, including the Internal Flow, which consists of the circulation of the operating funds.

Thesis No.61. The Public/Private Flow of money is what allows the production of, and investment in, public goods.

Thesis No.62. The Upward Flow of money accounts for the natural concentration of wealth in the hands of a small minority.

Thesis No.63. The International Flow of money is determined by the account balance between a country and its foreign partners.

X. On Financial Institutions

Thesis No.64. Banks and other financial institutions have usurped the power of the state to create money.

Thesis No.65. Financial bubbles are the natural consequence of our faulty financial system.

Thesis No.66. The multiplication of money by the banks is the most likely cause of the Industrial Revolution.

Thesis No.67. The private privilege to create money disproportionately benefits the wealthy and the financial sector, at the expense of the rest of the people.

Thesis No.68. The current financial system is very precarious, unstable and unjust.

Thesis No.69. Over 99 percent of the stock of money that exists in the country is money created by the private financial institutions.

XI. On Government and Taxes

Thesis No.70. The economic purpose of government is to guarantee and preserve the economic freedom of the people.

Thesis No.71. The economic role of government is that of a large nonprofit firm producing the public goods needed by the people.

Thesis No.72. The money spent by government constitutes a sizeable fraction of the private sector income.

Thesis No.73. Taxes, to be fair, must be paid by those who can best afford them, and in proportion to their excess earnings.

Thesis No.74. Taxes on business activities are bad for the economy: “The power to tax is the power to destroy.”

Thesis No.75. Government should not have to borrow from the private sector.

Thesis No.76. Government has the constitutional power to create and put in circulation the money of the land.

Thesis No.77. Government should not take away business opportunities from the private sector.

Thesis No.78. Government regulation of specific industries is usually ineffective and often counterproductive.

XII. On The Sovereign Debt Crisis

Thesis No.79. Misguided economic beliefs are responsible for the high levels of government debt in the developed countries.

Thesis No.80. The solution to the sovereign debt crisis everywhere can only come from central banks.

XIII. On Foreign Trade

Thesis No.81. When foreign trade is unbalanced, export-surplus countries prosper at the expense of their trade partners.

Thesis No.82. An important fraction of the U.S. trade deficit is caused by American companies producing abroad and importing their products home.

Thesis No.83. Country-targeted temporary import tariffs may be the only way for the U.S. to balance its trade.

Thesis No.84. The consequences of our huge trade-deficit-money falling into the wrong hands could be disastrous.

XIV. On Solving the Last Economic Mysteries

Thesis No.85. The main cause of poverty is unemployment.

Thesis No.86. Financial bubbles are caused by an excessive flow of money.

Thesis No.87. The main cause of fiscal deficits is insufficient taxes on the super-rich.

Thesis No.88. The main cause of chronic trade deficits is insufficient control of foreign trade.

XV. On Reforming the Financial System

Thesis No.89. The privilege of financial institutions to lend from private funds is unconstitutional, and should be ended.

Thesis No.90. The financial system should be subject to a 100% reserve requirement on lending. All lending funds shall be supplied by the Central Bank.

Thesis No.91. Government has the Constitutional power to issue the money of the land.

Thesis No.92. Freed Money would provide the central government with a substantial new source of revenue.

XVI. On Reforming the Marketplace

Thesis No.93. To end unemployment, we must establish salary and income caps.

Thesis No.94. Minimum wage laws are ineffectual and counterproductive.

Thesis No.95. The salary and income caps would be more effective than the thousands of existing regulations at controlling greed, abuse, and predatory behavior.

XVII. On Economic Development

Thesis No.96. Poor countries are poor because of a scarcity of domestic money.

Thesis No.97. Freed Money has the potential to foster economic development in even the poorest countries in the world.

XVIII. On the Prospects for a New Economy

Thesis No.98. Public investment at zero interest can revolutionize our world.

Thesis No.99. In the new economy, individuals may continue saving but governments would not have to.

Thesis No.100. Zero unemployment is not only possible but it is the natural state of a healthy economy.

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