The Split Velocity test reveals that an imbalance between expenditure on Households and Capital moves an economy into distress and has a greater likelihood of inducing a higher gini coefficient. When the capital base is disproportionately smaller than households it means naturally since industry is inadequately financed it supports fewer jobs and business owners or entrepreneurs. This in turn means that dependency of those without adequate income and earnings on those with adequate income and earnings within the population is high. This is true whether an economy is that of a developing or developed country. What does this mean? It means a country can be considered wealthy because it is developed yet its population lives under higher levels of duress due to a high level of competition for scarce resources; be it jobs, food, housing and so on. On the other hand a developing country with a more balanced split, though less wealthy will have a lower geni coefficient and face lower distress due to lower dependency within the population that has a better distribution of resources.
For instance, the US and the EU have robust economies with decent per capita incomes, however, the split shows underfinancing of capital and high levels of household consumption, which leads to higher levels of dependency within the population where competition for scarce resources is high leading to increased levels of distress. This implies that while a higher standard of living is possible, there may tend to be higher levels of stress, intolerance, unhappiness, mental health problems and general malaise. The worst position is being a developing country with a similar split, that is too consumption heavy, this scenario may lead to this kind of country experiencing what might be considered extreme levels of poverty bordering on internal social conflicts between various groups under duress.
Below is a scatter graph of 24 countries at various stages of development ranging from those with a more even balance between Households and Capital, and those with extreme variance toward consumption that is not balanced by industrial activity.
Countries where the split is high may appear at a greater disadvantage, however, governments that implement Split Velocity here are likely to experience a more profound socio-economic transformation
Interestingly Zambia scores quite high in the group. What the splits reveal is that though Zambia is considered a poor developing country, the income dependency and levels of competition for scarce resources is not as high, which means though you may be more comfortable materially and enjoy a higher standard of living in countries below Zambia, in the list further down, you are likely to experience less stress and therefore greater wellbeing or sense of happiness living in Zambia than any country in the list below it.
A practical way of understanding how inefficiencies in the circular flow of income (CFI) of a neoclassical economy or contemporary economy (CE) affect productivity.
The systemic financial losses to the economy caused by operational inefficiencies in money supply are easily rationalized when how they affect output is analysed. The graph below shows a business’ performance over one month. Every business owner or manager knows that from day one of a new month when the business begins to record sales every dollar or kwacha earned must have a significant proportion set aside for “pay day”.
The business in the graph below pays its staff between the 26th and 30th of every month. But it must begin to prepare for this expense from day one. The business knows that it must set aside income from its earnings to pay workers and to provide income for the business owner and other shareholders. Therefore, for a full business cycle lasting a month a business experiences very significant losses in productivity.
Business owners and staff combined form human capital or “households”. Firms or businesses having to divert earnings from investment in productivity and output (non-human capital) “subtracts” or diverts income from productivity, a process referred to as economic “Implosion” in the GPWN. Consumption is the opposite of production and yet in the monthly business cycle, for close to “30 days”, on any one of those days (at any point in time) it retains or locks away financial resources from non-human capital that could have been contributing to growth in GDP by financing production. This retards industrialization by starving it of useful resources.
The Graph below shows the loss in output caused by an inefficient CFI
The graph below shows that businesses in the economy diverting earnings from non-human capital to ensure they have enough to cover the monthly pay-roll, the business owner and shareholders, under-perform. Over a twelve month period their capacity for productivity can be halved by this practice leading to a stunted annual GDP.
These simple graphs are a practical example and illustrate how subtraction in the circular flow of income (CFI) diminishes an economy’s capacity to grow, create jobs, end poverty and yield greater financial resources to government for its budget.
A Split Velocity system enables a central bank to correct this problem thereby accelerating growth and productivity in the national economy. Split Velocity (SVTech) solves this problem by advancing the cost equation from Profit = Total Revenue (TR) – Total Cost (TC) to the SVTech cost equation Profit = Total Revenue (TR) = Total Cost (TC).
Are human beings the world over meant to suffer due to poverty and scarce resources as we see happening in the world today?
Let’s see, in terms of the bible you suffer because,
You lack faith:
26 Look at the birds of the air; they do not sow or reap or store away in barns, and yet your heavenly Father feeds them. Are you not much more valuable than they? 27 Can any one of you by worrying add a single hour to your life?
28 “And why do you worry about clothes? See how the flowers of the field grow. They do not labor or spin. 29 Yet I tell you that not even Solomon in all his splendor was dressed like one of these. 30 If that is how God clothes the grass of the field, which is here today and tomorrow is thrown into the fire, will he not much more clothe you—you of little faith
In terms of economics, countries can finance the doubling of GDP in one year. *
[*This statement agrees with verses in Matthew 6:26-30. In other words there is a scientific basis in economics for what religion is trying to explain to humanity when it says human beings were not put on the earth to suffer, but to experience incredible abundance. If that is the case why do we see so many jobless youth – many who have qualifications, beggars on streets, families struggling to make ends meet and falling apart, drug addiction, homelessness, sprawling shanty towns, lack of access of large populations to electricity, running water, basic plumbing, businesses large and small in a life and death struggle just to break even, a general and pervasive inadequacy of resources in nearly every endeavour humanity tries to undertake? Why is the economy failing to deliver its bounty and prosperity to every man, woman and child on earth? The scientific reason for this is that the tremendous volume of resources (equivalent to annual GDP) meant to provide the abundance that is due to all of humanity is being cancelled 100% by the defective CFI, which is why the unnecessary suffering, inadequacy and unpleasantness prevails. This defective CFI robs humanity of much needed resources and abundance in broad day-light, it is compared to the sleight of the hand trickery in the video below. Professionals in economics, finance, and accounting need to understand this hidden loss being caused by the faulty CFI and begin to act to recover these losses for their clients, businesses, public and private institutions, government and humanity in general to begin to stop the suffering and for humanity to begin to enjoy the prosperity and abundance it deserves. Advisory & Audit services professionals, businesses and institutions should be leading this effort due to the fact that the public relies on them to find faults (.e.g. the defective design of the CFI) and to find and offer the most efficient tools and methods to apply in operations for managing and growing the private and public sector as well as the economy in general.]
The book I authored, The Greater Poverty and Wealth of Nations (2010) goes to significant lengths to explain scientifically how every economy in the world has the innate ability to double its GDP in year.
Can growth this fast really be done?** The answer to this is very simple. As a citizen of a country you are already experiencing doubling time in one year. You see the circular flow of income (CFI) operates at a 100% level of inefficiency. This means that for a modern day economy anywhere in the world to grow by any percentage, even 0.1%, 1%, 2%, 3% or 7% it must first lose 100% of the capacity to grow it gained to the poorly designed CFI. So, you’re already doubling, the defective CFI is just not letting you have this wealth – its resetting to zero, like a car spinning its wheels, burning rubber, the CFI is making sure you, your people and your country are going no-where.
This is why the modern day economy is referred to as a zero growth economy or system. The economy is designed to shut businesses down. They try to survive and fight back by introducing a process called “cost-plus-pricing” or mark-ups, however, they cannot resist the crushing weight of the defective CFI and at some point the majority of business and industries will fold as they struggle to break even. Size is nothing, it can be a large conglomerate or your corner store business they will struggle with profitability and many will inevitable succumb to the defective CFI. Businesses and industry are therefore in a life and death struggle with the economy, yet they believe its helping them and designed to make them progress. Every economy in the world today needlessly loses 100% of GDP to to the poorly designed CFI.
It is what can be described as a “sleight of the hand” 100% loss that occurs in plain sight .e.g. the 3 cups and a ball are used to illustrate this loss, see the video below.
[**Technically doubling in one year is already taking place. It can be described as a standard characteristic of all economies. Therefore, to ask if it is possible is moot or pointless. This means that tremendous prosperity is grafted directly into how economies are supposed to work. The catch is that this growth is being cancelled by the poorly designed CFI. Split Velocity recovers these resources and restores them to businesses and government.]
You can be 100% certain you saw which cup the ball went under. In other words common sense, your degree or PhD, ACCA, CIMA etc. training and many years of experience can reassure you that you are right and there’s nothing wrong with how the current economy works. Like the image above you therefore point where you know you saw the ball go. But a sleight of the hand trick is designed for over-confident people. The fault in the design of CFI is like “Ka red na ka black” trickster. It will take the equivalent of GDP from your economy while you’re looking, in broad daylight and when you walk away with nothing but 1% growth every year you will blame yourself for all the problems and failures you see around you. Don’t blame yourself. Take the time to understand what’s going on. Study the Empirical test for Split Velocity, understand where 100% of your country’s GDP is being lost for no reason other than the defective design of the circular flow of income (CFI). As much as 100% of GDP per annum can be recovered from the defective CFI, bringing an end to poverty and scarcity, allowing humanity to enjoy the abundance and prosperity it deserves.
Any individual or institution, global or local, that tells you it is trying to solve poverty underdevelopment and slow growth (locally or worldwide), but is not addressing the losses in the CFI either does not know what kind of evil it is up against or does not genuinely understand the problem scientifically. An annual loss of resources equal to GDP that withdraws this wealth from economies every year is why these problems are chronic and have no remedy despite years and years of trying to stop them. The loss being equivalent to GDP and annual is simply too huge for any kind of development strategy or policy to address, except by going straight to the CFI to reverse this loss.
Let’s say the ball’s value is equivalent to annual GDP as has been explained. As a crowd you see the defective CFI place the ball under one of the three cups. It then shuffles the cups around, you try like a hawk to keep your eye on the cup you saw receive the ball. After shuffling the cup the CFI asks you to claim your GDP.
Confidently you point at the cup you kept your eye on and know for sure the ball was under. When the CFI lifts the cup there is nothing there but air. You walk away with the 0.1%, 1%, 2%, 3% or 7% in change you had in your pocket thinking you must have picked the wrong cup.
The truth is that there was no ball under any of the cups you picked because the performer (the CFI) palmed the ball just as you saw it enter the cup. There was no GDP (ball) equivalence under any of the cups. That GDP was palmed by the CFI. And just like that Zambia loses US$28 bn annually to the CFI, the United States lost US$29 trillion to the CFI in 2024, Kenya lost US$113bn, Brazil lost US$2.3 trillion etc to the poorly designed CFI.
The world-wide loss to humanity due to the defective CFI was US$110 trillion in 2024 alone. Ask yourself, what difference would this income have made to governments, businesses and economic activity, as well as to the lives of every man, woman and child – if this loss were recovered?***
[***These are actual financial losses to businesses and industries in every sector of commerce as well losses in revenue to other private and public sector institutions, including national governments. These huge losses are presently unaccounted for, they are hidden in plain sight from economics, finance and accounting practice, as it is applied today.]
But because you blamed yourself, and lack faith in the prosperity you deserve, you remain part of the reason why countries are generally impoverished. [See the video below]
Links to resources to help you learn about Split Velocity:
Like the cup and ball scam in the video, losses to the CFI take place right before the eyes of the public. The poorly designed CFI creates a loss right before economists, and anyone engaged in finance. To find this hidden loss you must familiarize yourself with the Empirical Test for Split Velocity, where the loss is made visible, and thereby it becomes recoverable.
Episodes 1-5 Explaining Split Velocity in as simple way anyone can understand
Split Velocity Solutions Ltd 