Since the breakup of the Bretton Woods System in 1971, the monetary economy has trumped the Keynesian economy to define the economic paradigm of Pax Americana. However, the inherent deficiencies of the monetary economy have fully developed during the last two decade to give rise to the current economic malaise and political mayhems in the world, spurred by the latest rounds of money printing by national central banks since the 2008 financial crisis.
The most significant deficiency of the monetary economy in the context of political economy is the absence of its economic discovery of incremental risks of financial crises and the resultant failure in its electoral discovery of political representation of competing stakeholders in fair allocations of the incremental economic risks. In other words, black swan events are occurring increasingly more frequently in the monetary economy than before but without any early warnings, such as the 2008 financial crisis and the resultant Trump electoral upset in 2016. In the meantime, the global monetary economy and Pax Americana are careening towards an inevitable collapse, again, without any early warning signals.
How would the GC economy perform relative to the monetary economy in its abilities for economic, electoral discovery of troubles ahead? As the following table shows, the GC economy is opposite of what the monetary economy represents on many political and economic issues that currently dominate the western democratic societies. But the dichotomy is only coincidental because the GC economy is not designed to correct the inherent deficiencies of the monetary economy but to resolve the current economic malaise and political disorder from the most basic element that defines policymaking in the computer age – accounting accruals and realizations of contingent economic costs of assumption-based decision-making and the dynamic matching of assumed economic benefits and contingent economic costs given rapidly evolving circumstances relative to the assumptions of the decision-making. These features are what the monetary economy critically lacks.
Table: Highlights on Significant Differences between GC Economy and Monetary Economy
|Monetary Economy||GC Economy|
|1||Fiat monetary system based on sovereign credits and global currency circulation driven largely by global trades, capital market activities, wars and drug trades.||Ranval monetary system based on rated national valuation and dynamic reallocations of national and corporate valuations driven largely by GC rated electoral discovery and alternative legal discovery that would define new economic calculus to engender more disciplined economic, political, social and legal behaviors than that in the monetary economy.|
|2||Fiscal decisions are made based on a hodgepodge of inconsistent or even illogical economic hypotheses and assumptions without any economic disciplines, legal constraints and any considerations for long-term fiscal solvency.||Fiscal decisions would be made subject to a defined economic terminal event (insolvency) and inter-stakeholder IIR allocations would be dynamically discovered subject to GC economic disciplines.|
|2||Double-entry accounting.||Triple-entry accounting.|
|3||Binary short-term maximization of corporate equity profits based on the shareholder (primacy) corporate governance theory.||IIR driven dynamic discovery of maximum long-term GC value and inter-stakeholder IIR allocations subject to binding GC economic disciplines and based on the stakeholder corporate governance theory.|
|4||Debt-funded, consumer spending driven economic growth (for the past 40 years) and off-shoring of labor intensive industries.
|Investment driven economic growth (for the next 20 years) focusing on dynamic maximization of stable fiscal cash flows of income taxes, property taxes and robotic value-added taxes driven by selective repatriations of labor intensive industries and reindustrialization.|
|5||Low minimum wages and reliance on corporations and governments for healthcare and pensions.||High minimum wages to fund individual insurance and pensions. Healthcare insurance and retirement savings should be responsibilities of individuals instead of corporations and governments.|
|6||A popular culture focusing on individual freedom.||A new popular culture focusing on individual civil rights and responsibilities.|
|7||Income based taxation and issue-identity based electoral politics that breed social, generational and economic inequality and conflicts.||GC discovery of dynamic matching of age based taxation and social benefit distributions via economic issue driven electoral politics that eliminate otherwise competing economic interests of different social, generational and ethnic groups.|
The GC economy is a structured economic system premised on a hybrid social-political-economic-legal (“hybrid”) conceptual construct: economic terminal event (insolvency) and its incremental insolvency risk (“IIR”), representation of money (ranval instead of sovereign credits or gold) and currency valuation (GC discovery of the present value of the U.S. federal tax revenue cash flow discounted by IIR to a 50-year fiscal terminal event), GC rated electoral discovery of political representation of competing economic interests, alternative legal discovery of dynamic economic damages in resolutions of hybrid conflicts, dynamic matching of age-based taxations and fiscal allocations of social benefits based on GC rated intergenerational economic exchanges.
The most basic abilities of the GC economy to convey early warnings of financial crises and electoral upsets are its triple-entry accounting and timely realizations via GC rating discharges of accrued fiscal uncertainties arising from assumptions in public policymaking, thus achieving timely matching of assumed economic benefits and contingent economic costs of assumption-based policymaking. Furthermore, the cognitive discovery and dynamic inter-stakeholder IIR allocations would not require extensive statistical discovery of correlations of historical time series of GC economic activities, i.e. historical matching of assumed economic benefits and contingent economic costs of assumptions, because timely realizations of fiscal uncertainties via GC rating discharges would convey information on prospective IIR causalities instead of retroactive default correlations, which is conveyed by credit ratings. Hence, the GC economy possesses significantly superior cognitive abilities to that of the monetary economy.
The GC economy is therefore a viable roadmap toward a global civil society where Pax Americana would once again be a global public good backed by real, lasting and common (ranval) values shared by competing political systems (common representation of national economic values in the world by democratic and authoritarian societies) and religious systems (common IIR-based economic discovery of national economic values by western and Islamic societies).
Given the diametrically different economic premises and political doctrines represented in the GC economy and the monetary economy, the migration from the latter to the former would be fraught with surprises and setbacks however conceptually viable the GC economic reform roadmap would be. Nevertheless, the biggest leverage of the GC economy in political persuasion is the rapid devaluation of the fiat monetary system and the inevitably excruciating choices facing America in the next ten years:
- Continue the monetary economy and let it implode in a 2008 Financial Crisis 2.0 but on a different quantum scale, in a catastrophic discharge of a significant amount of monetary economic bubbles, in which the U.S. global leadership role would be significantly reduced. This would be the most ideal scenario for Russia and China.
- Continue the monetary economy and wage a nuclear war with Russia and China to get of the monetary economic malaise.
- Abandon the monetary economy and enter a strategic alliance with Russia and China to define a new global economic paradigm in which the U.S. would most likely be reduced to the status of an equal partner in the alliance. Various political attempts in the West are already underway. Russia and China would welcome this option.
- Implement global GC economic reform as a political-economic ecological change for the global civil society that would offer innovative common values to friends and foes.
The Trump electoral upset has basically eliminated No. 2 given its implausibility. Under his electoral promise of “America First”, the Trump administration has in fact made attempt for No. 3 but the attempt has met with strong political resistances from both sides of the aisle, which have practically eliminated No. 3. Hence, No. 1 appears to be the only choice for the Trump administration and his selections of cabinet members appear to confirm that – Wilbur Ross and Steven Mnuchin, the vulture investors; and Gary Cohn, one of the chief architects for the 2008 financial crisis. In implementing No.1, it would basically be a U.S. national sellout of many of her portfolios of global interests in a distressed monetization of Pax Americana discounted by the Russian and Chinese national interests.
No. 1 and No. 3 would offer a similar outcome – a significantly reduced U.S. global leadership role – the only difference is how the economic damages and political fallouts of the tragic decline would be allocated among the competing political factions in the U.S. and within the West to a lesser extent. In light of these unappealing political choices under the monetary economy, GC economic reform would be the only plausible, viable political choice for the renewal of Pax Americana without risking a nuclear war with Russia and China or potentially catastrophic impairments to the American political institutions in the distressed sellout of monetized Pax Americana.
Meanwhile, the Doomsday Clock was advanced to two and half minutes to midnight earlier this year given the poor prospects for world peace. Tick-tock, tick-tock…….