To: The Wealthy Healthy Intelligent and Powerful folks (WHIPs)
on my copy list who could make this subject newsworthy.

Good day folks,

In my most recent email, 06-14-03, "Was The Second Tithe Enough
To Keep The Levites Honest?," I removed three attached files. Those
three graphic files contained five charts which are more instruction
material than could be effectively presented in one email. Perhaps
the five charts would have been more effectively handled as a three
part series, so:

Fig. 4-3, National Macro Model (2 of 3) this post you are reading.
Figs. 7-9D, National Micro Model (1 of 3) my post of Sun, 8 Jun 2003.
Fig. 8_1, US Defect of Omission (3 of 3) forthcoming.

In my Sun 8 Jun 2003 post (1 of 3), Figure 7, "Life Cycle Of A
Productive Asset," is the centerpiece of the three charts on Fig7-9d
because it identifies the commonality between capital assets and
human assets, and more important, Figure 7 shows the feedback of
"value added" to support that part of the population still in
development. Those WHIPs who reduce that feedback below an
adequate level are practicing genocide, slowly. Figure 7 also shows
the necessity of a reliable "store of value" (feed-forward) to enable
the present workforce to provide for their own retirement. Notice
that "productive capital assets" are not allowed to sit in retirement
for 18 years, and counting, as this retired engineer (a productive
human asset?) has been privileged to do at the expense of the
young folks who now pay a 15% S. S. Payroll Tax on all earned
income between zero and $76,000/year, and a zero% S. S. Payroll Tax
on all income, earned and not earned, above $76,000/year. A
technically valid micro model of a national economy, such as
Figure 7, which was widely accepted by the public, would be a great
help to members of Congress when they reform Social Security. All
programs funded by tax revenues are "pay as you go" programs.

Figures 8 and 9 on Fig7-9d were drawn, rather inappropriately, to
represent capital assets with significant internal fixed expenses
(no-load losses) and large variable expenses (fuel costs), and are
more familiar to electric power engineers than to liberal arts
graduates and lawyers with a degree in communication technology.
The more appropriate presentation of human assets, for this
discussion will be shown Fig. 8_1, US Defect of Omission (3 of 3)
forthcoming. Enough said about (1 of 3).

The centerpiece of this post (2 of 3) is Fig. 4-3, National Macro Model,
because it helps the reader visualize every aspect of a corporation.
A corporation not only concentrates wealth, as every protester claims,
it is also the universal financial structure of every human enterprise,
from a subsistence family farm up to the global economy. As the
instructors at GE's Advanced Engineering Program used to say in the
1950s, "If you've seen one system, you've seen them all." The smallest
enterprise will exhibit each of the three flow paths shown, to some
degree. At the macro level of a national economy, the business to
business transactions will be about 150% of the GDP (value added
by the US workforce), the GDP flow path will be 100%, and the
Speculative Transactions flow path (not drawn to the same scale as
the 250% of GDP "Real Economy") will be an order of magnitude,
or more, larger than the GDP flow . At any level of the model, the
capital plant at 90 degrees is the "Node" of the enterprise.

Any one not familiar with the term "Node," used when describing
fluid, electrical, or money networks, might want to consult an
exchange of emails on the subject of "Nodes," a year or so ago,
between William B. Ryan and John C. "The Banking Systems
Engineer" Turmel. In Fig4-3, the fact that the capital plant is the
"node" of an enterprise, means that the flow of money (M1)
through the workforce, which defines GDP or Value Added by
the enterprise, may divide and pass through each or all of the
four paths shown on the world market at 360/0 degrees on Fig4-3.
As an example, a corporation in a primary industry would have
most of its flow of M1 from its customers (and counterflow of
goods or services) circulating through the Business to Business
loop, some flow through the "Tax Gap" in the world market,
and an uncertain flow of M1 in the speculative loop.

To the contrary, firms like "Bronson Capital Markets research,"
which provided data for Fig10d, would have most of its M1 flowing
through the speculative loop. In other words, the macro model
does not change as we move from a family farm to a national
economy, but the number of "Nodes" becomes large. When we
move the model from a national economy to a global economy, the
imports and exports vanish and the mean value of the income
distribution "Bell Curve" moves from $31,910/year, for the US, to
about $4,000/year, for the global economy. That change will be
more vividly shown on Fig8.1 in part (3 of 3).

Danial Yegin's June 14 issue of "Commanding Heights" on PBS put
"global trade" in real goods and services at $8 Trillion/year and
"speculative transactions" in currencies and debt instruments of
the private and public sectors at $288 Trillion/year. So "global trade"
is rapidly approaching the US GDP of $10,000 Billion/year which flows
through Fig4-3 as twenty-six biweekly payrolls of $384.6 Billion in M1.
In addition, we assume that the Business To Business transactions
of $15,000 Billion/year flows as twenty-six biweekly billing periods of
$576.9 Billion in M1. Together, these two flows of M1 amount to $961.5
Billion out of a present M1 of $1,200 Billion, as defined by the Federal
Reserve System, and nearly constant since 1994. Now comes the
tricky part. Since all three segments of the capital plant provide
employment, earned income, interest and dividends to the workforce
at 270 degrees on Fig4-3, the question left unanswered from previous
posts is: "How much of GDP (M1) flows through the speculative loop?"

My best guess is, just enough to pay the earned income, interest,
dividends, and profits received by that part of the workforce that
works in the speculative loop. The "speculative transactions" in
currencies and debt instruments of the private and public sectors,
which flow at the rate of $288 Trillion/year, are primarily book
entries of titles to wealth already produced and owned by WHIPs
who make their living in the speculative loop.

Speaking of timely information, the July 14 issue of
THE ECONOMIST, Page 13, published tables for the tax rates
(% of GDP) and personal income ($GDP/capita/year) for thirteen
nations. I have not seen that set of data published anywhere
since I plotted Fig1 in 1994, and then I had to use two sources.
Watching global economic development is like waiting for the
hundred monkeys to type Lincoln's Gettysburg Address. But I
digress, the proportions (150% and 100%) of the real economy in
Fig 4-3 are based on Wassily Leontief's 1966 book INPUT- OUTPUT
ECONOMICS, and help to explain why capital investment rates of
15% or 16% of GDP were typical for the US and UK in 1995 while
Europe and Japan were investing 25% of GDP in their capital plants.
In 1995 Europe and Japan were closer to the "Optimum Policy" than
the US or the UK were. The 2001 issue of the World Bank ATLAS
puts the capital investment rate of the US and UK at 20% and 18%
of GDP, respectively. So the US is dragged, kicking and screaming,
toward a closer compliance with the law, which GE observed to stay
at the top of FORTUNE's 500 Industrials, and Westinghouse neglected
to drop out of the 500. And neither management, nor the governments
of the winners and losers of World War II, will put the Law in the
public domain. It is still not newsworthy. Enough said about (2 of 3).

On to (3 of 3).

Kind regards,

Wes Burt