Bell Curve Economics

by Shelby Henry Moore III

(Almost) everyone is wrong, and that is the way it must always be...

New $100 dollar bills cost 10 cents to print, so who keeps the $99.90 profit?

I will show a mathematical proof that the Quantity Theory of Money does not predict that increases in the money supply always result in general price increases. A feedback loop of irreversible hyper-deflation has started since the marginal-utility-of-debt went negative in 2008.

If the government gives this newly printed money equally to every person, then the value of hardworking people's savings is diluted (decreased), if prices increase due to increased quantity of money floating in the economy, while lazy people get some free money. Even if all people hoard the new money causing price decreases, the future value of savings is still decreased because interest rates decrease as more people compete to save (i.e. loan money to banks). If the government spends the new money for projects, the money enters the economy and has same effect as two prior scenarios, plus projects never benefit all the people equally and the government is never successful at choosing the projects which generate the most business and prosperity.

But worse than all that irreversible structural damage to the real capital economy, every government in world borrows all new money from their central bank, and central banks are secretly controlled by the small group of super rich families, i.e. the plutocracy, aka the "banksters". Because all money is debt! payable to the plutocracy in the fiat (paper) money system (either to their central bank or to their private banks), eventually the annual interest payments on the debt grow so large, the payments consume all the new money that is created, thus making it impossible for prices to increase. It becomes evident when the interest payments to the plutocracy are consuming all new money, because the marginal-utility-of-debt goes negative and the government gives most of the $trillions of new money to the largest banks. Over the next several years, we will all be experiencing a horrific, bankrupt world depleted of savings (capital), that will worsen as the governments create more new money to feed the plutocracy. Hyper-deflation of prices ends only when nearly everyone but the plutocracy is bankrupt and unable to work.

The only other possible direction is hyper-inflation, if the governments hand out money directly to the people (not to the banks) in the $trillions, which also ends only when nearly everyone but the plutocracy is bankrupt and unable to work. The hyper-deflation scenario is more probable while the net worth of the private sector is still significant (e.g. $14 trillion in USA), because hyper-inflation is not due to rise in prices but rather a fearful stampede from the plutocracy's fiat system to gold, whereas hyper-deflation causes flight to the "too-big-to-fail", lowest interest rate government bonds, which gives the plutocracy more time to transfer this wealth to themselves by a zigzag (crash, stimulus, "green shoots", ... repeat) mechanism I will explain below. This can explain why Exter's inverted pyramid has Treasuries above gold on the funnel time-line. I explain this further and simplify the math of this paper here. The likely scenario is an abrupt hyper-inflation after an extended hyper-deflation, with most people fooled by a falling gold price (see below), when they should be watching the declining contango basis, much worse than the instant 69% hyper-inflation by revalution of gold from $20 to $35 in 1934.

Before proving we are in hyper-deflation, and the myriad of popular misunderstandings, I first want to share my Theory-of-Everything, which has implications on investing and the concept of knowledge.

Herd Psychology Peaks Growth

Disorder, or entropy, is a measure of the clustering of matter. The more clustered matter is, then the less the entropy, i.e. the more ordered it is. Matter is a general term for anything perceived, i.e. mass, gravity, energy, inertia, electromagnetic waves, quantum effects, thoughts, imagination, feelings, etc.. The act of perception (or measurement) means there is a clustering away from the "invisible" vacuous disordered ether. Disorder (uncertainty) is information. Thus only rare perceptions are knowledge, because if everyone shared only 1 perception, there is 0 information.

Information increases more slowly as the number of (equally probable) perceptions doubles exponentially:

Binary Bits
of Info
# of
Derivative Potential
Potential Derivative
Binary Bits of Info
41621 trillion44.3

Thus since the Bell Curve is the predominate distribution of clustering in nature, then in spite of exponential growth (e.g. of the population), then information does not increase, because perceptions become exponentially more shared (i.e. clustered) as they become more numerous. Thus every exponential growth phenomenon peaks, then decays, because "the entropy [information] of the universe tends to a maximum". Information actually increases while exponential growth peaked and is decaying.

Thus decentralized communication of knowledge potentially increases information if it permutates increased diversity of derivative thought. This potential factorial growth of perceptions is reduced to exponential growth, due to scalability limitations. For example, the extent of shared agreement (perceptions) decreases information again. Widespread centralized communication (e.g. TV, central government) replaces continued thinking, and traps the lazy population in set of shared opinions (aka culture and sub-cultures), thus decreasing the information of the society and limiting exponential growth. All forms of insurance mathematically guarantees failure, because the diversity of allowable outcomes (perceptions) is insured to be one, thus the information (and knowledge) is reduced to zero. Ironically while concentrating control of major media has been justified as necessary for breaking down local cultural impediments towards a new world order, in fact top-down control of herd psychology is unsustainable and will peak at the point the world reaches zero knowledge with a single entity controlling all thought, transactions, and economic activity.

Interestingly, computer chip density can only exponentially double every 18 months due to Moore's Law, but nature is potentially evolving factorially the permutations of communications between N neurons and the communications between M brains. The internet has a similar mesh-of-meshes (hub and spoke) network topology, factorially increasing the permutations of communications between the brains.

Sheep Can't Do Slaughter Math

Widely parroted that price (P) inflation will result from an increase in the money supply (M), due to the Quantity Theory of Money (QTM). QTM makes no such prediction. QTM states that if the GDP (which is roughly proportional to P * Q) increases, then either M and/or V must increase, or vice versa. Thus if M is increasing, and Q divided by V increases more, then there is a deflation of P. An increase in the quantity (Q) of transactions, coupled with a stagnant or decrease in the number of times the same money changes hands (V), can cause P to decrease even while M is increasing. Mis-allocational of capital means increasingly redundant economic transactions have lower multiplier effects (are useless and do not ripple through the economy). For example, the "Cash for Clunkers" stimulus destroys capital (e.g. affordable used cars for college students) and transfers other capital away from optimum individual decision makers (i.e. taxpayers), who have the local knowledge to maximize the multiplier of local investments.

Besides the fact that M is arbitrary, QTM does not model that M, V, and Q are mutually dependent variables in fiat economies, but they are because M is a debt! that transfers capital from borrowers and savers to the plutocracy. Former US Asst Secretary Catherine Austin Fitts explains that in the same town there are neighbors, some are paying 13% on their credit cards, while others only earning 1% on their time deposits-- a 12% annual drain of capital away from the local decision process to bankers in New York, IMF, WorldBank, BIS, and their political henchmen in Washington D.C., UN, WHO, and all the nations' capitals. Local banks are eventually merged for profit or by force of regulation, as the plutocracy controls the government.

Fiat money is a ponzi scheme, because as M grows, then M must continue to grow in order to pay the interest on the M (M is debt). That cancer accelerates when the marginal-utility-of-debt goes negative, as each newly printed dollar of M (a debt) is actually decreasing the GDP, i.e. increasing M is decreasing P! The transfer of private wealth to the plutocracy has reached the terminal phase where the government is creating new M (debt!) to offset the withering private sector. The exponentially increasing budget deficits radically understate the time-bomb of unfunded government promises. Millions of private economic decisions (perceptions), transferred to a single-minded plutocracy, knowledge is rapidly approaching zero, and thus the exponential economic growth has peaked and is in exponential decay, i.e. hyper-deflation. This is a global implosion towards more powerful central governments (step closer to "one world order") with both States of USA, and the nation-states of the EU, being allowed to go bankrupt.

In a vicious feedback spiral, as the GDP shrinks, the private sector income shrinks and needs more debt (or government subsidies) to pay the interest on prior debt, but the additional government debt spending destroys more of the useful production and capital of the private sector (see aforementioned "Cash for Clunkers"). The only way to make the marginal-utility-of-debt go positive, is to decrease the debt load back to a level where the private sector can produce more than it's interest payments. At this terminal phase, both increasing or decreasing M (debt), shrink the GDP, i.e. hyper-deflation.

Ironically, hyper-deflation must end in hyper-inflation or rationing, which are equivalent in that in people will have less. Or, rationing can also be equivalent to massive decrease in population, which history predicts, and is already occurring. Hyper-inflation results if there is a stampede from hyper-deflating fiat, or if the plutocracy dictates a new non-indebted currency. Do not confuse this with a prosperous sustained deflation that results from the increased (useful) production on a gold and silver money standard, where millions in the private sector make the economic choices thus increasing knowledge. The plutocracy must manipulate the price signals to prevent a pre-mature hyper-inflation flight from their fiat system.

Knee-deep Warm Manure Huddle

Given knowledge is heading to 0, there must be widely shared popular delusions. An economy without risk is analogous to one unstable shared perception, i.e. minimum entropy = minimum disorder = minimum knowledge. Statisticians believe in the infinity fairytale. Since 99.9% of the wealthy people (and the governments) who think they own gold and silver, really own a debt, then fiat price signals for gold and silver will act like any other commodity (fall in this deflation). For as long as the mainstream has 999.9 times (99.9% / 0.1%) more mass in the "paper" gold and silver (debt!) pricing markets, I expect fiat prices of gold and especially silver to fall, as they've made lower highs since hyper-deflation started after March 2008, especially silver which outperformed the S&P500 from end of April until since under-performing from the $16 peak at start of June. I expect silver below $12 in 2009, between $7 to $8 in late 2010 or early 2011, and gold to dip to between $700 to $800. Smoothed gold price should outperform or be constant relative to an average basket of everything else, except volatile dips relative to cash and Treasuries (we are one level above gold on Exter's inverted pyramid) until the end-game of hyper-inflation, or forced rationing (e.g. WW3, etc). Money is a socialized symbol for stored production, so for as long as 99.9% of the wealth doesn't believe physical bullion is money, it will not price (act) as real money. Ultimately gold and silver have theoretical efficiency advantages as money over barter, fiat, or theft, but irrationality (i.e. knowledge heading towards 0), can warp priorities drastically for a long duration, i.e. the Dark Ages persisted hundreds of years. However, if current fiat system is destroyed into chaos of barter or to a new fiat system backed by gold, then at least 15+% of people already believe physical gold is money.

The plutocracy probably has no incentive to move prematurely to the more chaotic hyper-inflation, because the hyper-deflation interventions (crash, stimulus, "green shoots", ... repeat) are enabling the transfer of the formerly $22 trillion private sector notional net worth (down to $12 trillion in March, 2008, back up to $15 trillion in July) of the USA (and globally) to themselves with the high degree of control and certainty that their fiat system provides.

Ironically the plutocracy will lose capital because the entire pie shrinks in the end game, but the plutocracy has no choice, because if they didn't satisfy society's capacity for zero knowledge due to the Bell Curve, then some other plutocracy would. Each individual has the choice to come out of this economic cancer.

Multiple Corrals

Cheerleaders frequent major media to popularize the (now often parroted by gold bugs) certainty that dollar will soon crash and US Treasuries' interest rates skyrocket, as result of foreigners selling both. Massive currency swaps between the US Fed and central banks of the world recently do not tie their fate to the dollar? Derelict third world nations with their corrupt political systems that have been impoverishing their own people for centuries, will suddenly transform all vested interests to a gold money system that reverses the transfer of wealth from the ruling class back towards their impoverished masses? Remember that China garnished 32% of the world's manufacturing by pegging their Yuan artificially low to other currencies, enslaving their own people to forced rationing by making imports too expensive, so they could undercut the pricing of every other developing nation that has free floating foreign exchange rates. Restricting imports made their economy less self-sustaining, because it allowed no competition to the statistical corruption and fixed capital investment corruption of the one-party rule. China recently outlawed fledgling gaming money systems, apparently because they circumvented foreign exchange control. China's recent $1.2 trillion stimulus created a real estate bubble. Centralization of decision making always ends in failure, per to my aforementioned entropic theory. China's depreciating (rusts and needs maintanance) infrastructure is a balance-of-trade liability, similar to how destroying old cars in "Cash for Clunkers" mis-allocates capital via socialized wealth transfer. Remove the exports, the export infrastructure collapses, their people riot because they expect the progress they've worked hard for. Japan with it's 20 years of deflation now on the verge of fascism, is strong evidence that centrally managed trade is not an escape velocity to sustainable growth, and that what goes up on my theory of declining entropic knowledge, comes right back down to the increasing entropic truth. In USA, despite enthusiam over near-term stimulost headline propoganda and cost cutting driven earnings growth, the hyper-deflation in real estate and the delinquencies in banking are accelerating towards widespread bankruptcies.

Globalization has made the entire world symbiotic to the fiat corruption, so decoupling is a delusion. Due to hyper-deflation, price inflation (P) is not coming from increases in the money supply (M). The entire world is currently being pulled into hyper-deflation exceeding that of the Great Depression, so the demand and value of dollars and US Treasuries will go up, which is what has happened. Near the bottom of the hyper-deflation when net worth of west is drained (2012?), the plutocracy may reset the fiat economy (i.e. instant hyper-inflation) with themselves the winner, where due to capital controls only the holders of non-fiat (gold or undervalued farmland?) will gain the instant change of purchasing power. I suspect there are many capital controls already buried in the many bailout bills and homeland security acts, e.g. such as this one which someone is trying to delete from Wikipedia. Interest rates are rigged by the plutocracy with artificial demand from derivatives. This delusion is promoted by the plutocracy, so that interest rates rise on the popular expectation, so the plutocrats (e.g. Godeithner Sachsrifices and JPaulson Morgrins) can buy bonds for free via the secret open market operations to drain more net worth from the private sector, as the "green shoots" crash and the sheep trample each other for safety to buy the bonds from the plutocrats at much higher prices (forcing interest rates down again). Zigzag (crash, stimulus, "green shoots", ... repeat) hyper-deflation is the mechanism to transfer private sector notional net worth to the plutocracy, without signaling to the herd to flee fiat. The serial, secular decline of interest rates will not provide significant relief in terms of lower interest on new debt, because mathematically the total debt must double by the time the total interest rate on the total debt has at most halved. Negative interest would be debt forgiveness and hyper-inflation.

"Human Climate Change"[sic!] and Peak Oil are propaganda to take advantage of the illogical fear that exponential growth of population will necessarily outstrip the carrying capacity of the planet. Illogical because it is only the aforementioned Bell Curve of perceptions which is limiting exponential growth. A certain level of abstract thought is required to understand how global oil production could be peaking, yet not be caused by the highly correlated exponential population growth. Correlation does not prove cause and effect, e.g. the exponential growth of debt has also been highly correlated. Let's dig into some facts. America has traded 73 million free grazing bison, requiring no oil for machinery or fertilizer and only the natural, renewable hydrogen+oxygen+carbon fuel cycle, for 45 million cattle and chickens requiring oil intensive methods. Modern food production and distant distribution by large corporate farms requires 160 times more energy per unit output, but can produce inferior quality food (toxins in many cases) for lower market prices, but with deleterious long-term mis-allocation costs for energy economics, soil, human health, etc.. The average MPG in USA for new vehicles peaked in 1987 at 26.2, dropping to 24.7 by 2004, while new imported passenger cars are at 32 MPG, and $5 - $10 gas could incentivize 50+ mpg. The vast infrastructure and operation of suburbanization has a huge sunk and ongoing energy cost. The new GM Volt gets 230 MPG (city) by using electricity for most of the miles. There is potential to generate unlimited high EROEI (i.e. low price!) electricity from nuclear, especially the new commercialized super-safe, micro-nuclear power plants which are completely sealed, with no moving parts or water (use solid sodium salts instead), get buried in your backyard, and run 7 to 40 years before refueling. We had the base technology (or certainly the resources to have focused research investment) to start building a safe (no external leaks in 22 years with 438 reactors worldwide) Volt+nuclear economy at least 20 years ago. Instead, our increased energy INefficiency is a result of a top-down, mass media and slavery educational system programmed loss of knowledge (shared stupid priorities), and the symbiotic fiat debt bubble which enabled the mis-allocation. Incorrect solutions derive from incorrect assumptions as to the cause of a problem. My point is if oil production is peaking, the root-MOST cause is waste (of time, resources, alternatives, etc) due to decreasing societal knowledge. Additionally we can question if oil production is peaking due to exhaustion of all high EROEI sources that may exist, or if the investment and/or return on investment in exploring for new high EROEI oil declined for other reasons symbiotic to the loss of knowledge from the Bell Curve of shared perceptions. Oil production is a top-down process mostly controlled by plutocracies and large corporations. Note that for Russia, the world's #1 producer, it's peak oil curve was reversed when it's plutocracy allowed the entry of new competition, i.e. less centralization of decisions and thus increasing entropic knowledge. EROEI naturally declines as a society overstretches itself with debt, this not being necessarily a function of geologic limitation but of opportunity cost for all the vested interests. If you had unlimited money (or thought you did via abundant credit), then you would take on growth projects that were less economic. Lastly, measurements of EROEI are mathematically dubious to meaningless (see the discussion of Nyquist below), thus do not get to the root of the problem, because economists are using the oil price as proxy for energy invested (as well double-counting of resources consumed especially with respect to non-linear opportunity cost feedback loops).

Theory Of Everything

Finally, back to my interpretation of the entropy-of-matter as a Theory-of-Everything. Einstein's curved space-time is a unified model (a model is only a reality in the mind of a mathematician) of the simultaneous alternative realities experienced by each observer's perception in the space-time-light/EM physical world. For example, for the person standing along the side of the road, the sound of a motorcycle (moving with constant throttle) changes pitch and volume as it approaches and passes by ("rrroooOOOWWWwwwmmm"), but for the driver of the motorcycle the sound did not change. Or, for the person driving a car traveling faster than a car beside that thus appears to moving backwards, but for the observer on side of the road, both cars are moving forward. For the ant riding a falling apple, the earth is being pulled towards the apple ("by the apple's gravity"[sic]), not the apple towards the earth by the earth's gravity, just as if the earth approached the sun, we would see the sun coming towards us. Ponder the convincing magic trick where hidden mirrors are used to bend the reality that you think you see, were your eyes an absolute measurement of reality? Alter the filter Q, sampling rate, or sample below period or frequency of Nyquist, the measured signal changes. It is crucially important to understand that quantities such as time, space, mass, energy, light, inertia, etc.. are not absolute realities (i.e. do not exist independent of the observer, except as mathematical models), but are manifestations of perception or measurement. Curved space-time is not a model of the totality of the universe, rather only the shared reality up to early 1900s, i.e. space, time, and light/electromagnetism. Einstein said, e.g. "Reality is merely an illusion, albeit a very persistent one", "Not everything that counts can be counted, and not everything that can be counted counts", "If the facts don't fit the theory, change the facts", "Gravity cannot be held responsible for people falling in love.", and "When you sit with a nice girl for two hours, it seems like two minutes. When you sit on a hot stove for two minutes, it seems like two hours that's relativity".

Science models evidence, i.e. "shared perceptions" (i.e. the limitation of individualized perception, i.e. resonance), that describe a shared reality. Popular shared realities are delusions, because the aforementioned limiting effect of the Bell-Curve-of-perceptions makes shared reality false over long enough time. For example, the world was once flat, the universe rotated around the earth at the center, Newton's falling apple was due to the mass of the earth not due to curved space-time. Note that the more intensely you share a reality with a group, the more limiting your life becomes. This is because you have moved yourself towards the center of the Bell Curve. Nature abhors trending to order, and will only tolerate increasing order in local realities (systems) as an interim step towards maximum disorder trend of the universe. Einstein agreed, e.g. "As far as the laws of mathematics refer to reality, they are not certain; as far as they are certain, they do not refer to reality", "The only thing that interferes with my learning is my education", and "Common sense is the collection of prejudices acquired by age eighteen". Unattributed relevant quotes are, "Absolute power corrupts absolutely" and "Trees don't grow to the moon".

In my theory, infinite number of possible simultaneous realities (perceptions) comprise the totality of our infinite universe. So then what is the universe itself? Mathematically, the infinite set of all of the infinite possible perceptions, is maximum disorder (because the order of each perception is a equally possible, i.e. random, due to infiniteness of the set). Bingo! "The entropy of the universe tends to a maximum". Thus my theory fulfills the fundamental law of thermodynamics and the conservation of energy (or information). Thus, a description of the universe as a beautiful symphony of infinite possible simultaneous local orders (perceptions), that even a 12 year old can understand, forming the maximum disorder which is the universe. Thus, I can answer Einstein's question, "What really interests me is whether God had any choice in the creation of the world.". No, if the universe was not trending to maximum disorder then we have no model for it's infiniteness or edge. Expanding space-time does not describe an edge nor accomodate infinite extent, because the space-time model disallows speeds faster than light. Astronomers recently measured space expansion accelerating, in violation of space-time. Einstein apparently (to make speed-of-light an independent variable) ignored the capability of the Lorentz equations to model speeds faster than light in the complex dimension, where the extra dimenion might be consistent with my model of simultaneous realities.

Besides the causative model my theory provides for the aforementioned examples of correlation between Bell-Curve-of-shared-perceptions and limitations on orthogonal exponential change, my theory may also provide a conceptual framework to build a model that unifies the disorder in quantum theory and the determinism of curved space-time, while it already seems to solve some mathematical problems that render current universal theory inconsistent with singularities (black holes). Noteably, my theory predicts that what we perceive as locally deterministic, is random in the scope of the entire disordered universe. Alternatively stated, the more surety we desire, the more we must limit our shared perceptions (refer to prior discussion of insurance). As the measuring capabilities have been proliferated into the quantum realm, the quantum shared reality has become probabilistic, i.e in between deterministic and random. I will agree with Einstein, that the quantum evidence is "silly", and offer the plausible conjecture/prediction that deterministic perception of matter at the quantum scale is possible, because if the current measuring devices are sampling below the period and frequency required by Nyquist, then random aliasing effects are observed. At quantum granularity, the entropy (i.e. disorder, information content) is much greater than at the space-time scale, thus providing a window to many more possible perceptions (realities). In short, my conjecture is that the frequency of the signals at quantum scale is much lower and/or higher than our current measuring devices can detect deterministically.

One of the conceptual challenges with black holes, is where did the information that fell into the black hole go, i.e. the conservation of information? We perceive the existence of black holes by some effects they generate in our shared reality, as matter passes near to them. In my theory, the black hole is a window into some or all of the other possible simultaneous realities, that we are currently unable to perceive or measure directly (i.e. a vacuum in our shared reality), thus the disorder (entropy) of the matter/ether (the information) can still exist (as possibilities) for other observers who (may) perceive those alternative realities. Thus the information (disorder) is conserved.

In Relativity, Einstein realized that time is a variable dependent on perception, because for all our physical senses perception of time occurs within the bounds of space (forming the space-time tensor) and light/electro-magnetism. Thus we are unable to perceive any thing faster than speed-of-light in the space-time reality, thus it becomes a constant in his theory. However, we can not perceive time when all our space-time-light (physical world) senses are blocked and we are entirely inside our thoughts, because we have no space-time-light frame of reference as our thoughts elapse. Without a physical clock, there is no way to be sure how fast our thoughts are proceeding. Perhaps Einstein was on this trail, when he said, "A person starts to live when he can live outside himself." and "Imagination is more important than knowledge.". A theory which allows thoughts to be independent of the limits of space-time, is not inconsistent with Relativity. Indeed my theory of maximum disorder comprising the totality of the universe conceptually fulfills one of Einstein's predictions, "It would be possible to describe everything scientifically, but it would make no sense; it would be without meaning, as if you described a Beethoven symphony as a variation of wave pressure.".

Quantum mechanics is a discrete statistical and Relativity is a continuous functional, geometric model in the physical domain of space-time-light, making them fundamentally incompatible, as they look at different scales of information content. The quantum level contains many more possibilities, thus has a much more rich information content, suggesting that it is interacting with the infinite simultaneous realities in much more complex way than can be realistically expressed with a continuous geometry in the way that curved space-time models all simultaneous observers (of light/electromagnetism). Although I have not yet achieved a formal mathematical unification nor empirical predictions beyond the loose conceptual ones presented in this paper, I conceptually note that entropy relates mass (perceived discrete order) to potential energy (availability of a system to do work) and that Relativity (E=mc2) relates mass to energy. Quantum forces and Relativity's gravity are field (i.e. space-time distributed potential energy) effects. I am interested in exploring a concept of relative entropy among plurality of observers (entropy-observer domain), to model shared perception-- the basis for the physical laws we agree on, hopefully to model inertia. Resonance is the degree-of-focus of perception, i.e. the quality of shared perception, so probably plays a role in my future understanding. This is a work in progress, and contribution is encouraged.

Disclaimer: My writings are my personal opinions, not to be construed as statements-of-fact. Do you own research. Licenses to think and communicate have never interested me too much, so I am not a licensed research, journalism, investment, legal, nor health professional. Please consult the proper authorities for all matters covered in my writings. I disclaim all liability for what you do after reading my writings. No one can predict the future, and if there is a physical world investment that never loses value, I haven't found it yet in my 44.1 years here on Niribu.