Fractal Not Fractional

Alternative Approaches to Contemporary Economics

fractalnotfractional.wordpress.com

December 2008

Fractal not Fractional Banking

This project is dedicated to the closer examination of the current monetary system in hopes to cultivate future models which better suit the needs of the global community in the 21st century and beyond. The title Fractal not Fractional is just one potential approach to many emerging positions on monetary reform. In the world of fractals, objects exist as smaller resolutions of other, larger objects and can exist well on into infinity. In the world of fractional reserve banking, however, an illusion of infinity is presented, but the actual picture is much different.

As global economic reform is underway, we would like to simply present ideas which we feel may help assuage much of the damage that has been done as a result of the fractional reserve banking system. None of the solutions at this time are exceedingly simple, but as a global, interconnected community, we are certainly capable of facing these challenges with respect, honor and dignity.

Thank you very much for your time.

Delinking Money from Value

As this graph shows, United States money supply over a nearly 50 year period has increased exponentially. This is only possible due to a delinking money from value.

In today's world of electronic transactions, money has become almost a pure abstraction delinked from anything of real value.

http://en.wikipedia.org/wiki/Image:Currency_component_of_the_US_money_supply_1959-2007.gif

Money as Debt

As this graph shows, American debt has interestingly mirrored the exponential increase of American money supply, initiating the notion that without debt there is no money.

http://en.wikipedia.org/wiki/Image:US_Federal_Debt(gross).jpg

Vision of the Fathers

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered...I believe that banking institutions are more dangerous to our liberties than standing armies...The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."*-Thomas Jefferson

*United States Congress. Senate. Committee on Agriculture and Forestry, Committee on Agriculture and Forestry, General Farm Legislation: Hearings Before a Subcommittee of the Committee on Agriculture and Forestry, United States Senate, Seventy-fifth Congress, Second Session, Pursuant to S. Res. 158, a Resolution to Provide for an Investigation of Agricultural Commodity Prices, of an Ever-normal Granary... (Washington, D.C.: GPO, 1937), 3607.

The Federal Reserve

In the Federal Reserve of Chicago's handbook titled Modern Money Mechanics, the fractional reserve system is explained.

According to the Fed, an initial $10,000 of reserves distributed throughout the banking system gives rise to an expansion of $90,000 in bank credit (loans and investments) and supports a total of $100,000 in new deposits under a 10% reserve requirement.

http://www.fdrs.org/modern_money_mechanics.html

The Money Game

The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of slight of hand that was ever invented...If you want to be slaves of the bankers, and pay the costs of your own slavery, then let the banks create money.

-Lord Josiah Stamp, former director, Bank of England

In this new market...billions can flow in or out of an economy in seconds. So powerful has this force of money become that some observers now see the hot-money set becoming a sort of shadow world government one that is irretrivably eroding the concept of the sovreign powers of a nation state

-Hot Money, Business Week, March 20, 1995.

Dangerous Divide

What is perhaps most dangerous about such a system is that the growth depends on the system's ability to endlessly increase the market value of the financial assets being traded, irrespective of what happens to the output of real goods and services.

The ability to maintain global stability in terms of resources (such as food, water, energy) is minimal under the umbrella of this system because the individuals cultivating the most wealth are doing so regardless of the status of tangible goods and services.

Fractal Analogy

In The Fractal Geometry of Nature, Benoit Mandelbrot explains his initial challenges in devising geometrical renderings capable of explaining the seemingly formless objects found in nature such as clouds, mountains, and streams.

The existence of these patterns (fractals) challenges us to study those forms that Euclid leaves aside as being formless, to study the morphology of the amorphous. Mathematicians have disdained this challenge, however, and have increasingly chosen to flee from nature by devising theories unrelated to anything we can see or feel. -Mandelbrot 1975

Has monetary policy drifted out beyond the reaches of things common people can see and feel? Furthermore, can one of the core principles of a fractal (i.e. Infinity within a finite boundary) be applied to new forms of monetary policy as well as economic and human development?

*Trees which contribute to the wellbeing of both air and soil grow in fractal forms.

Free Lakota Bank

A small movement exists within the United States to move citizens away from the fractional reserve banking system in order to help preserve their wealth over time as opposed to having it dwindle as a result of the inflation of markets.

As of November 25, 2008, Canupa Gluha Mani, Tetuwan Council Judicial Member of the Cante Tenza "Strong Heart" Warrior Society, announced the opening of the world's first non-reserve, non-fractional bank that issues, accepts for deposit, and circulates silver and gold.

Features of the Free Lakota Bank

Only Gold or Silver Holdings, but with a preliminary period where they will accept Federal Reserve Notes and convert them to metal

Completely Anonymous No names or Social Security Numbers attached to accounts.

Two-Tiered Security SSL Online username, using a strong keystroke encryption program; followed by an automatic phone call for the user to enter a PIN number.

An incredibly inexpensive monthly fee for account maintenance (0.00005 service fee or 5 cents per thousand when calculated at present silver spot).

A General Investment Fund; which allows a waiver of investors maintenance fees and earns a current annual rate of return for the Fund of 7.24%.

A lending philosophy that is a blend of classic Muslim banking and the largely unexploited market of Micro-loans.

Free Lakota Bank Vision

At the Free Lakota Bank, we issue, circulate and accept for deposit only AOCS-Approved silver and gold currencies. Silver & gold are a store of value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Since we deal only in real money, we do not participate in any central bank looting schemes.

Money is made possible only by those who produce. Paper is not money, instead merely a promise to pay. We hope that some day the rest of the world will awaken from the American Dream: the dream that a person can sustain life by consuming more than producing. We call it the American Dream because you must be asleep to believe it. Well, that dream now has a silver lining; as people discover the dream is really a nightmare, the only solution is a return to value: value that comes from production and honest trade.

http://freelakotabank.com/aboutfreelakotabank.php

Final Thoughts

Our monetary system is based on scarcity. And as long as this system (a profit system) is in place, it is unlikely that we will experience sustainability or abundance or efficiency because it is not rewarded in the structure. Problems can only be resolved in society when money can be made from such a resolution.

The idea behind Mandelbrot's fractal as well as the Free Lakota Bank is that within a community (or boundary), if the right insight is applied, endless amounts of whatever it is that we want can be generated. It is sad to see that here in the 21st century, when physicists are continually finding evidence for an underlying unifying structure beneath all material things, there is still tremendous effort being put forth to continue to divide the human race into multiple factions defined by categories of race, wealth, sex, and religion.

Unfortunately, the monetary system is just one facet of a large scale operation seeking total dominance over human freedom and potential. As members of a long standing tradition known as humanity which extends far beyond the boundary lines of nation-states and ideologies let us try our best not to drop the ball which still holds freedom as a wonderful virtue of life on Earth.

Words from the Great Law of Peace

Your heart shall be filled with peace and good will and your mind filled with a yearning for the welfare of the people of the Confederacy. With endless patience you shall carry out your duty and your firmness shall be tempered with tenderness for your people. Neither anger nor fury shall find lodgement in your mind and all your words and actions shall be marked with calm deliberation. In all of your deliberations in the Confederate Council, in your efforts at law making, in all your official acts, self interest shall be cast into oblivion. Cast not over your shoulder behind you the warnings of the nephews and nieces should they chide you for any error or wrong you may do, but return to the way of the Great Law which is just and right. Look and listen for the welfare of the whole people and have always in view not only the present but also the coming generations, even those whose faces are yet beneath the surface of the ground -- the unborn of the future Nation.-Dekanawidah, the Great PeacemakerThe Iroquois Confederacy Constitution

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