The intrinsic value of essential goods and services can only be calculated in terms of a "parity price". This true and honest parity value has it roots in the laws of thermodynamics and energy transference. At this parity price level, all goods and services can be produced and consumed without adding non repayable capital debt to the economy during each annual economic cycle..
Capitalists economies have strayed far from this truth because so many modern services provided by technical advanced have clouded the true value of the intelligent labor and raw materials that comprise the true cost and value of everything.
In today's modern world, it is easy to forget that the continuous production and flow of raw materials through the economy (driven by an intelligent and skilled labor force) forms the physical building blocks of an organized society. Accurate pricing of these materials and the labor necessary to transform them into the products we use every day are necessary prerequisites to the creation of full employment and consistent prosperity without the need for perpetual debt expansion.
Underpayment for raw materials production and labor creates a corresponding loss in National Income which forces more borrowing and causes entire populations to suffer in the midst of plenty. This was the lesson of the Great Depression, where America was producing as much as ever, but the lack of earned income due to the depressed value of raw materials and basic labor eventually brought poverty to millions in the land of plenty.
Policies which recognized the need for parity prices for raw material production were implemented with success in World War II. Parity production policies worked to win the war without a depression later.
Unfortunately, this common sense truth has been sacrificed for financial schemes that favor maximum economic gain without adherence to sound economic principles. This is where ProducerCoins and EmploymentCoins can make a positive difference.
ProducerCoins and EmploymentCoins have the potential to fill the gap between the current poverty level minimum wage and a real living wage for labor and small farmers, resulting in local economies that accurately reward work.
The successful launch and adoption of ProducerCoins and EmploymentCoins must adhere to the natural economic laws encompassed within the study of RME. These laws are based upon the flow and value of energy (both physical and mechanical) and define the parity price, or the accurate price (based upon the state of the art) of everything that aggregates into annual National Income.
National Income (NI) is defined as the income resulting from all annual production. Raw materials are defined as the harvested, mined, or extracted production of :
(4) Mining... quarry and oil products
Historically, farm products, which represent a majority of all annual raw material production, are consistently under priced by the market, especially storable commodities like corn, wheat, Milo, oats, etc., where it is necessary for a society to produce a year's supply in advance of a one-day demand. Due to this necessity, the market tends to view all inventories of storable commodities as surplus which drives the price down to the cost of production each time we have a bountiful harvest.
After several years of drought, yields returned to normal in 2013, and within the last year, farm gate prices have dropped by ½ and are now below the cost of production.
To fully understand the importance of paying a parity price for raw materials and labor, simply look around the room. You will see all sorts of raw materials that have been transformed by intelligent labor into a usable place to work or live that is filled with usable things.
All the raw materials you see are credits of nature and they have a parity value that must exceed the cost of their extraction and manipulation into usable goods, otherwise the economy becomes all costs and no profit.
The parity cost of transforming raw materials to something usable is the true value of labor. We are all debiting nature in our own way. The net value derived from this simple equation is the intrinsic value of everything that surrounds us. When the net balance sheet of the country is tallied, the value of raw materials is the national wealth.
It’is so simple. The value of raw materials and labor form the basis of any economy. The services we enjoy are afforded to us by a prosperous and profitable production economy because services can’t live off other services. When it happens for too long, the currency becomes worthless.
This type of preventable economic tragedy happens over and over again around the world because people and governments refuse to acknowledge the necessity to place the correct value on labor and raw materials, even when the need to do so is crystal clear.
ProducerCoin seeks to reduce the effect of this fundamental flaw, which again, is a society's blind refusal to pay itself properly at this basic level.
In the next paragraph, you will read "Rule One" of parity. It's the most important Parity equation of all. It literally anchors a capitalist system. When this rule is ignored for too long, the private enterprise economy falls into a death spiral of perpetual borrowing and debt expansion, punctuated by cycles of boom and bust, and the ultimate harm of the consolidation of wealth at the top of the economy.
Rule (1) An hour of labor at minimum wage must have the same value as the parity price of a bushel of wheat at the first point of sale.
In the year 2014, these two numbers must be $18.00 if the economy is to function without subsidizing the income of those who earn less than this living wage and subsidizing more than a million farmers.
Instead of properly monetizing the value of raw materials and labor, we have created a paradise for mega-banks that bring all currency into circulation as interest bearing debt that's recapitalized year after year, because repayment becomes impossible without reducing the amount of money in circulation.
The introduction of ProducerCoins and EmploymentCoins begins to break the cycle of perpetual borrowing. These coins provide potential escrowed value when they are issued into circulation instead of creating interest bearing debt like currency lent into circulation.
To fully understand the concept behind these coins, let's begin with the price of wheat, the so-called staple of life.
The current wheat price is $6.19 per bushel.
The national average cost of production is over $8.00 per bushel
The value of wheat as calculated by the USDA is
December Market price All wheat............ bushel: $6.36
USDA Parity Price All Wheat.....................bushel: $18.00
Percentage of Parity All Wheat....................................37%
As you see, the wheat price has dropped further since December of 2013.
In short, this is why so many farmers go broke and rural communities stagnate. It causes millions of people to end up in cities without jobs, who should have remained on farms and in small communities producing something.
You can run the same equation for all farm commodities. Wheat is only one example.
You can also run the same equation for everyone paid less than $18.00 per hour for their labor. It’s all tied to energy.
The ProducerCoin bridges the gap between the market price and the USDA Parity Price, all of which is easy to calculate.
Every USDA Farm Services Office in every county has an established historical yield average for each commodity grown in that county. Each farmer has a known amount of acres allocated to each crop.
To begin, coins should become available to each producer at par with USD (100 ProducerCoin bits make one ProducerCoin) and the amount of ProducerCoin in circulation should be adjusted annually to reflect yield and price.
ProducerCoins should only be issued to verified NON GMO PRODUCERS. This consumer incentive is essential to coin adoption. Over time, a market will emerge for ProducerCoins (based upon USD or other currencies) from exchanges offering buybacks or by derivatives or hedging.
All farm records are public. Land can’t be invented, so the volume and speed of ProducerCoin issuance can be governed to fill the price gap between the lower market price of the commodity and the higher parity price.
Over the long term, these ProducerCoins can potentially replace USD as the currency of choice by both producers and consumers who use them to buy and sell a broad range of goods and services.