Suppose two cities are separated by a river. Every day 100 people pile into a boat for the 1 hour journey to the other side two times per day. Crossing the river costs 200 person-hours per day. Then civil society decides to spend 1 million dollars to build a bridge to carry 10,000 people across the river every day in negligible travel time = 10,000 person-hours of productivity are added and redistributed to the communities every single day.
These people go on their merry way expressing themselves as intangible assets to create art, raise families, and transfer new ideas to enterprise according to classical Schumpeterian design. They are doctors, nurses, and engineers. They are teachers and students, collaborators and Capitalists.
If the bridge has a service life of 50 years, it will conjure into existence 178 million hours of human productivity. If the average income is 25 dollars per hour, a simple $1M bridge is amplified to a stunning 4.5 Billion “dollars” worth of productive community value. This value never appears on any accounting statement because market capitalism measures value into existence at the tail end, not at the palette. The economy is measured as the stuff that intangible entities (people) are told to produce, not what they actually want to produce.
This 4.5 Billion dollars is uncounted value that is expressed in fiat currency which, through the miracles of the fractional reserve, corporations, and a litany of exotic financial instruments also amplifies 1 million dollars of Real Value into billions of dollars of paper value. In fact, the ONLY reason that the tangible financial system does not yet collapse is that it is being propped up by this “invisible” intangible asset value that never appears on any accounting statement.
Many new money theorists claim that 70 Trillion dollars in debt can never be paid back because the “interest” on that debt does not exist. I believe it does exist, it must exist otherwise the system would collapse. The real problem is that the debt exists in a form of uncounted currency. All we need to do is measure intangible value into existence and trade it directly as a financial instrument – nothing will change and everything will change.
From Charles Dickens’ A Tale of Two Cities :
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”