Advantages of an Economy Managed using an SV-Tech system
Sunday 14th July 2019
When it comes to the management of national economies anywhere in the world it is unlikely there is any approach, system or technology more effective than a Split Velocity system (SV system) that unlocks resources for economic growth in the circular flow of income (CFI). As mentioned earlier, governments should view any strategy for real growth that does not involve advancements to the CFI that counter subtraction with suspicion. They are not reliable as they represent the transfer of wealth rather than the genuine creation of new wealth in an economy.
Approaches to economic management offered by the IMF, World Bank or other development organisations presently in use or currently offered to countries are unlikely to match the effectiveness, lack of negative side effects, power and robustness of an SV system when it comes to driving growth with development. It is therefore only pragmatic for development agencies to seriously begin to consider engaging an SV system in their operations in the genuine effort to assist countries.
Cruising Velocity Scenarios 14%-48%
“Cruising velocity” is the preferred long-term rate of growth set for a Split Velocity system. Like cruise control in your car, when it comes to the national economy the cruising velocity can be adjusted, but is expected to be maintained at the desired growth rate or at a similar range for a period lasting one year.
For instance, if the SV system were running fully rolled out in the United States at a Cruising Velocity of 20%-25% the US economy would be expected to be able to double in size from US$20 trillion to US$40 trillion in 3.5 – 2.9 years. Applied in China, the economy of China would be expected to double in size from US$14.2 trillion to US$ 28.4 trillion in 3.5 – 2.9 years. If a more aggressive growth rate (36%-48%) is set on the system doubling time for these countries could be reduced to 2 to 1.5 years (this is dependent on the Technology Paradigm). A growth rate as low as 1.9% anticipated for 2020 in the United States caused by a zero growth position in the CFI of neoclassical economics is cause for great concern and a clear indication new more appropriate approaches to economic management are important and long overdue. The world needs faster growth rates in the USA.
Rather than ratings agencies like Standard and Poor or Moodys downgrading sovereign credit in African countries like South Africa and Zambia, what these ratings agencies should be doing, realistically, is downgrading the theory and implementation of neoclassical economics, where growth is concerned, to junk status. It is simply no longer pulling its weight, has become stagnant, redundant and is retarding economic growth unnecessarily in both developed and developing countries.
An SV system can grow an economy of any size. The size of the economy is not significant when it comes to accelerating growth. Large or developed countries and regions such as China, the US and EU today and their citizens are simply no-where near as wealthy as they could or should be and should consider an SV system. This is necessary for ensuring the good health of the global economy.
Developing countries in Africa, like Zambia, South Africa, Tanzania, Botswana and so on require faster and more reliable growth rates in developed countries to ensure the demand for copper, cobalt, iron ore, diamonds, emeralds, gold, silver, nickel, uranium, oil, tin, rare earth and other minerals are maintained at a good price and remain consistently in high demand when traded in international markets through agencies such as the LME. Current neoclassical economic management systems applied to national economies (with zero growth 0%-10%) cannot be relied upon to provide this kind of growth or stability.
Unlike the present ineffective method for economic management of national economies in use around the world the SV system growth rates are not estimations, they are expected to be as reliable as a government bond or guarantee.
After full roll out, when a Split Velocity system is available to the whole economy (a capture rate of 100%) and distributed as a financial product through commercial banks the growth rate in the economy is now controlled. It is not left to chance. The annual rate of economic growth on a Split Velocity system is not expected to fall below 14% p.a. which will be considered the slowest double-digit growth rate for any economy managed on the system. Nevertheless the SV system can drop growth to 0%, the setting of a normal CFI, if this is required.
Resistance to economic shocks
Even at what would presently be regarded as a “blistering-speed”, a growth rate of 25% per annum is effortlessly achieved by an SV system. Neoclassically trained economists would assume these growth rates are unrealistic only because they have been raised on the mediocre zero growth rates of a modern economy which works against businesses, commerce and productivity and would need to be re-trained. However, even at this speed the system is still only using a small value of its potential leaving 75% of its capacity to stimulate economic growth in the national economy untapped. This means that the risk of recessions be they man-made (e.g. subprime mortgages, epidemics, global warming, war, conflicts etc) or natural disasters (earthquakes, floods, droughts, etc) can be immediately addressed by generating more resources to counter them and shorten the time to recovery. To counter recessions the growth rate can simply be adjusted upward until the cause of recession is removed. Greater economic stability of this kind is good for business and ensures populations are protected from unnecessary hardship.
Basic Growth Projections or Scenarios for an economy managed on an SV system
Conservative (Slow) economic growth 14%-15%:
This is where the cruising velocity or economic growth rate is set between 14%-15%. This leaves 85% of the economic resources available to the national economy through the Split Velocity system untapped. At this speed with full roll out at 100% capture rate the economy is expected to double every 5.1 to 4.8 years. Neoclassical economists would be more comfortable with growth rates in this range, however, they represent the lower end and an unnecessary under-utilization of the SV system’s capacity to stimulate growth. Growth rates as low as 0%-10% are too slow and generally too mediocre to be realistic for an SV system.
Considering that the fastest growing economy in 2019 is at 7%, the growth rate on the SV system of 14% (considered slow on the SV system) is much faster. The system does away with mediocrity and is much more efficient and effective when it comes to managing growth in a national economy.
Mild economic growth 20%-25%:
This is where cruising velocity on the SV system is set between 20%-25%. This scenario on the SV system leaves as much as 75% of its capacity to stimulate growth untapped. At this speed with full roll out (at 100% capture rate) the economy is expected to double in size every 3.5 – 2.9 years.
Aggressive economic growth 36%-48%:
Cruising velocity is set between 36%-48%. The SV system leaves 52% of its capacity for growth unutilised. At this speed with full roll out at 100% capture rate the economy is expected to double in size every 2 – 1.5 years depending on the desired growth rate.
[It should be noted that growth in an SV System is scalar where every business unit in the economy is growing in a synchronized manner. Due to increased economic activity, the economy no longer working against commerce and continuous re-balancing of demand/supply the success rate of businesses in the economy is expected to rise dramatically. There can be thousands of businesses formally registered in an economy but only a small percentage of these actually functioning and contributing to growth. With the economy now working for businesses rather than against them, due to an SV system, the majority of these businesses are expected to turn around, become viable and begin contributing to the national economy. There is little or no pre-requisite waiting time to initiate growth and there are few bottlenecks created by time intervals observed in the current linear system of neoclasscial economics, most economists are used to, that are based on resource transfers, therefore economic growth takes place much more quickly than would be anticipated and expected of a normal modern day economy.]
It will be possible to have developing countries on a slightly more aggressive growth setting so they can play catch-up. This will allow per capita incomes and development to rise faster in disadvantaged regions until such a time global living standards become fairly even.
This growth is low risk
This faster economic growth is achieved through businesses and their productivity. An SV system powers commerce in an economy.
Projected SV growth rates on an SV system are expected to be as reliable and dependable as government bonds and guarantees. For instance, if the economy is set to run at a growth rate of 25% per annum businesses and stock markets can rely on this growth projection to plan their investment portfolios and earnings for their clients based on the projection for the prescribed period. An SV system is powerful enough to eradicate poverty and unemployment as well as improve income for all income groups in an economy. It not only distributes income in a national economy more effectively, but also rapidly raises per capita income levels ensuring growth takes place in tandem with development. No one is left behind.
Technology Paradigm
The technology paradigm is the rate at which an economy’s industrial and technical competence converts money into output. It should be noted that a well-financed technology paradigm is constantly shortening turnaround times thereby increasing the rate of productivity due to improvements in the learning curve as businesses continually find faster, cheaper and more efficient production methods. The rate of economic growth on an SV system has to be adjusted higher to maintain parity between the growth rate and technology paradigm, a feature impossible to achieve using current methods used for managing the national economy.
Financial Benefits of an SV system to Central Banks
Normally maintaining money supply can be an expensive exercise for a central bank. This includes general increases in money supply as well as the need to replace old or soiled bank notes with new notes. When a central bank increases money supply via a Split Velocity system it earns rather than loses income from the exercise of supplying money into the economy turning money supply (or currencies in general) from a liability into an asset. For instance, instead of the US Federal Reserve supplying the US economy with money at a cost to itself, it now uses an SV system to cover the cost of this supply and earns a profit of 1.8% for any money it supplies the US economy. The US Federal Reserve turns the need to supply money from a very costly liability into an asset for the central bank which will now earn rather than lose income from supplying money to the economy. This greatly improves the central bank’s balance sheet. The advantage of a central bank issuing money through a Split Velocity system is that:
- This money enters the economy without causing inflation (a cheaper and more efficient operation than buying and stocking gold to back national currency).
- The central bank gains a new revenue stream by earning income from the money it supplies to the economy through the SV system.
- An efficient and robust stimulus is applied to the economy
- The SV system is more stable and robust than a gold standard
The SV system makes currencies and their ownership a huge new asset class and source of income for the owners or developers of robust currencies. This is advantageous for central banks that have an obligation to ensure there is sufficient money in circulation. The standard rate for supplying money to the economy through the SV system is where the profit margin for the central bank is approximately 1.8% of the face value of money supplied. The lower the cost of the method the central bank uses to supply money to the economy through the SV system, the better for the economy and the more profitable it is for a central bank. Emoney is the preferred currency format for an SV system as it is unlikely fiat money alone can keep pace with the new enhanced rates of economic growth (14%-48%) which are hungry for efficient, robust and consistent money supply to support economic expansion. The higher growth rates on an SV system in comparison to a conventional neoclassical economy require a significant supply of money.
If central banks feel they cannot keep up with this supply, to encourage technology transfer, growth and diversity in this new industry, they can opt to offer portions or small segments of market share. For example, 1%-10% of the money supplied to the economy can be offered to private sector currencies owned by reputable financial institutions with proven token currencies so they can become mainstream institution as well as begin to participate and compete in this new market. This will allow the advancement of secure payment technologies such as those that use blockchain technology, which a central bank may adopt for its own secure operations in future. Blockchain, though secure, presently uses an energy intensive mining process to manage its ledger and still needs a great deal of investment in innovation for continuous improvements to be made to the technology to bring its processing costs down. By central banks allowing a choralled and supervised market share for private currencies to go public in terms of normal everyday use many of these new innovations and advancements in money can begin to earn the revenues they need to invest in research and development. Advancements in currency will in future likely be adopted by central banks in their own supply of a national currency to the economy. This sector would be supervised much the way central banks supervise banks and non-banks.
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Financial Benefits of an SV system to commercial banks
Commercial banks that distribute wealth creation alongside credit creation are expected to earn close to the same income from wealth creation that they currently earn from credit creation. This makes the SV-Tech system and the end user product, namely wealth creation, an important new source of revenue for commercial banks. Since wealth creation increases the demand for credit, and lowers credit risk, the two products complement one another.
This wealth is already inherent in the economy, however, it is locked away by flaws and inefficiencies in the CFI that cause financial losses due to subtraction taking place at any point in time, a loss that is currently unaccounted for in neo-classical economics. Wealth creation is a financial product that compliments credit creation that is designed to counter these flaws and generate new resources in the economy at constant price that lower credit risk by moving it from being an asynchronous to a synchronous financial system.
Wealth creation as a financial product that, by correcting flaws and inefficiencies in the CFI, will basically allow businesses, regardless of their size, to spend as much as 100% of their earnings or total revenue on non-human capital that enhances and increases the quality of goods and services, as well as increasing output and productivity.
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