A New Consumption Function PDF Print E-mail
Written by Paul Douglas Katchings   
Sunday, 01 February 2009

A New Consumption Function

A New Consumption Function
SCB©-PEV©-VCF© (vc=axb/c)
All rights reserved 2008-2012Paul Katchings
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Finally we have the economic solution for 2012 – a tool that solves the economic problems for all Americans and the globe.  

A “new consumption function” creates unprecedented demand while increasing the customer’s value by multiplying each individual’s expenditures by 11.5 times or more!  A “magic bullet” increases the customer’s confidence by automatically balancing the customer’s consumption with equity, thus turning daily expenditures into savings and sparking a new American preeminence in global economic affairs.

 (2012 pending book publication...)

Table of Contents

INTRODUCTION    2
DISCUSSION    3
MASTER ONE LAW    5
ENERGY AND ITS TWO LAWS!    6
THE FIRST LAW FOR THE CONSERVATION OF ENERGY    6
THE SECOND LAW OF THE CONSERVATION OF ENERGY    7
FOUR STATES OF ENERGY OR MATTER    8
TWO FINANCIAL SECRETS ARE REVEALED HERE    9
ECONOMICS FOUR FACTORS OF PRODUCTIONS    9
ARE WE CLEAR SO FAR?    12
THE SINGLE ECONOMIC SOLUTION    12
SOLAR CYCLE BUDGET    13
PRODUCT EQUITY VALUE©    16
THE USE OF PRODUCT EQUITY VALUE©    17
WHAT MECHANICS DETERMINES THE DISTRIBUTION OF EQUITY FOR A PUBLICLY TRADE COMPANY?    18
FREE COMMON SHARES    18
COMPANY A    18
"CAVEAT EMPTOR"!    19
STOCK BUYBACK PROGRAM    19
“CAVEAT VENDITOR”!    20
6 BILLION EQUITY OWNERS!    20
COMPANY B    21
CURRENT CONSUMPTION FUNCTION    22
NEW CONSUMPTION FUNCTION    23
BUSINESS ENGINEERS    24
14 MILLION CUSTOMERS STARTS THE GLOBAL PROCESS!    25
VALUE OF NEW PEV© PUBLIC COMPANY    26
CONCLUSION    28


FAQ - WHAT IS THE IMPACT OF PRODUCT EQUITY VALUE© ON SAVINGS?    29
FAQ - WHAT IS THE IMPACT OF PRODUCT EQUITY VALUE© ON JOBS?    29
FAQ - WHAT IS THE IMPACT OF PRODUCT EQUITY VALUE© ON CRIME?    30
FAQ - WHAT IS THE IMPACT OF PRODUCT EQUITY VALUE© ON EDUCATION?    30
FAQ - WHAT IS THE IMPACT OF PRODUCT EQUITY VALUE© ON GOVERNMENT?    30
FAQ - WHAT IS THE IMPACT OF PRODUCT EQUITY VALUE© ON HOUSING?    30
FAQ - WHAT IS THE IMPACT OF PRODUCT EQUITY VALUE© ON FOOD?    30
FAQ - WHAT IS THE IMPACT OF PRODUCT EQUITY VALUE© ON HEALTH?    31
FAQ - WHAT IS THE IMPACT OF PRODUCT EQUITY VALUE© ON INFLATION?    31
FAQ - WHAT IS THE IMPACT OF PRODUCT EQUITY VALUE© ON STOCK MARKETS?    31
2008 – MAJOR MARKETS FALLS (WITHOUT PEV©)    32

Figures

Figure 1 Four States of Matter    8
Figure 2 Four Elements    9
Figure 3 Four Factors of Production    10
Figure 4 Alignments of Four States of Matter and Four Factors of Production    11
Figure 5 $1 Assigned to Four Factors of Production    13
Figure 6 Sample GM SCB Four Factors of Production Percentages    14
Figure 7 Sample GM SCB and Four Factors of Production    15
Figure 8 Sample GM SCB Percentage Increases    15
Figure 9 Default Delineation of $1 for a Public Traded Company    16
Figure 10 Three Economic Reforms    17
Figure 11 Value Creation Formula    24
Figure 12 Here is the PEV© four part distribution of PEV©    26
Figure 13 Distribution Value of Sample PEV© Company    27
Figure 14 One Multiplier Formula One Solution Model    28
 

Introduction

The “immediate American and global economic solution” is an expanded application of a “value creation formula” used in the initial “free” distribution and valuing of shares in public companies.

The valuing and distribution of free and super-discounted shares in the design stage of pre-public corporations is not a set of variables reserved only for the entrepreneurs, venture capitalists and institutions – the traditional players who dominated the ownership of publicly traded companies.  These traditional practices came about from a limited view of the entire global economic system – which, in absolute reality, is a system for the transformation of energy.

Presented here is one economic solution consisting of one formula using the law(s) of energy.  This formula already exists in unrecognized pieces, which several noted economists in recent years were grappling with without success.  The “solution variables” when combined into a formula creates an explosion in sustained consumer value which is turned into “cash savings” that will start in 2009-2010.

The “New Consumption Function” consisting of one formula is a “paradox of sustained consumer spending” while increasing individual savings automatically at an average ratio of 11.5 to 1, thus solving the economic problems of America and the rest of the world in 2009-2010.  This means that an individual spending $12,000 on needed products and services will realize $138,000 in value-savings.
    
This is not voodoo or non-sense economic reality.  What must be understood now is that the economic fundamentals are totally misunderstood even by economists!  This is the number one problem that is corrected in this paper.

When twelve 4-4-4 precise value creation variables are placed into a formula where the consumer is placed first in the “free distribution of equity” in new corporations, then the entire global economic system is placed into an instant state of permanent equilibrium resulting in and from a “new consumption function.”

Wait!  Do not let yourself be sidetracked by the statement of “free distribution of equity” in the design stage of public companies.

Do not jump to any incorrectly perceived notions here about how value is created until you understand the reality of what is being presented.  The more the consumer consumes the more the savings-value by formula.  This “new consumption function” is actually an unknown secret resulting from a mastery of the incorrect belief of chaos being random and probabilistic because the initial economic system is defined incorrectly.

The discovery of the “value creation formula” is a profound insight into an incredibly simple overlooked practical reality in economics, thus completing where Ludwig Heinrich Edler von Mises (Human Action), Friedrich August von Hayek (The economic calculation problem), John Maynard Keynes - Richard Ferdinand Kahn - (Macroeconomics – Spending Multiplier), and Milton Friedman  (Consumption) left off.  The logical microeconomic conclusion is the consumer.

“In economics, the multiplier effect refers to the idea that an initial spending rise can lead to an even greater increase in national income.” This is an accepted but limited (macro) “nation income” understanding in view of the speed of communications favoring the (micro) individual from the bottom up.  It is views from the multiple micro units that make up the one macro, and not the reverse view.  This multiple-micro-to-macro dynamic will require a more penetrating analysis of how existing financial tools are used.

The speed of communications, the speed of financial transactions and the centrifuge have revealed something fundamental, utterly profound and absolutely simple.

In this paper we will discuss and explain exactly “how and why” an individual’s spending on everyday items multiplies into direct increases in value-savings for the individual when the economic system is correctly viewed as a system of the transformation of energy between individual consumers and producers.  Therefore to direct financial-energy with the right formula is to create sustained equity value for each consumer.

The absolute understanding of the physics of energy is the root-basic understanding, producing an instant and miraculous economic recovery in 2012.

Discussion

Global consumers are not purchasing because they have no “consistent” income to purchase.  They are not purchasing because the “old consumption function” is broken.  They are not consuming because the financial tools that the consumer uses for labor, credit card, and the mortgage instrument are flawed in their designs.  These tools are not suited for the speed of capital flows in the information age, hence the exposure of the structural flaws in these tools.  The faster speed of this age has driven away the fog of delusion for anyone to perceive accurately the true state of the globe – as one economic energy system where the consumers are the first and last considerations.

Working and consuming are the only two functions for economic humans. Both are functions of energy.  Therefore economics starts with a mastery of the energy of physics before any other consideration.

The one solution to the individual consumer’s financial structure is available now with a “new consumption function” – a consumption function multiplier that will get the economy moving again.  New customer-driven organizations, correctly designed to apply a single formula, will increase individual value-savings from the bottom up continuously.

Some will argue that this 1929-2008 “boom-bust” economic crisis was generated by the financial markets themselves.  A whole host of observations and commentaries will be made without pinpointing the real source of the problem.  Statements like ”something is [so] fundamentally wrong with the prevailing economic theorizers” and “irresponsible executives will allow sub-prime and derivatives to blow out the economy” do not address the heart of the matter.  There is no identification of the lack of consistent consumer spending as the long-term structural problem that must be addressed in order to find a solution.

Yes, markets do tend towards equilibrium when the market is fair and the consumers are actually factored into being the primary players with fair balanced financial instruments as tools of stability.

A new economic reality demonstrates that the market cannot find its “true equilibrium” when the value created is directed and concentrated in the hands of too few players by laws and the cost-shackling of individuals.  It is this concentration of equity value [energy] in the hands of the few by man-made law that is the problem.  It is this fact that the macro economists have missed.

Therefore sub-primes, derivatives, and executive mismanagement are the effects of not identifying the “root economic problem” for long-term “smooth” economic stability.

Without understanding the “root cause” of the global economic problem made visible by the “speed” of modern communications, subsequently any so called “reactions” absent the correct structural solution are simply knee-jerk responses.  No matter how meaningful and no matter how well contemplated, such initiatives will not solve the economic problems instantly where a structured solution is required.  A very simple instant structural solution is available now that will immediately bring the globe’s economic system into balanced equilibrium where both the “haves and the have-nots” benefit from stability.

No one alive today created this cumulative debt crisis, which is the heart of our 2012 economic problems.

So for the first time in the lives of many decision-makers, a little humility and patience is required in going back to a “root” not sufficiently internalized by experts and a basis that is not sufficiently internalized by decision-makers.  The rewards for this patience and humility will enhance the careers of many and lead to a balanced global economic system starting in 2012.

The structural solution using one formula - one economic solution - simply requires placing into the hands of the global citizens a simple tool, a simple opportunity.

The answer is a simple tool that will bring freedom to millions of consumers and homeowners who are suffering from the flawed designs of mortgage, labor and plastic instruments.  It’s also a structural tool where one simple economic formula corrects the flaws in the existing global economic systems automatically.  Consumers are not left out of the business model but are primary for the economic system’s survival.

What is presented here is the “one sound economic solution” that will instantly solve the globe’s economic problems by solving the problem of global consumers’ “self directed spending” by presenting “a new consumption function” in economics where one hundred percent employment and economic stability is the norm.  What is presented here is one simple economic solution consisting of three “roots” combining for a new standard in economic thought.
    
This one sound economic solution consisting of three “four part roots” will instantly restore the housing equity value, instantly solve the auto [electric] industry problems, instantly solve the stock market melt-down problems across the globe, instantly solve universal health, life-long education, and the end to unemployment.  All these restorations will happen at the individual level simultaneously when the new economic standard is put into place.  Consumers will use this new tool instantly.  It does not cost anything… It is a “new consumption function.”
    
Does all this sound like a tall order… or magic… or something that is too good to be true?  Yes it does when the parameters of current economic systems are neither clearly defined nor clearly understood.  It is this misunderstanding that has given us a flawed labor-equity-savings structure, flawed plastic and flawed mortgage instrument.  But most of all, this misunderstanding has permitted the introduction of trillions in “derivatives” to infect the globe wiping out $50 trillion in shareholders value.  It is no wonder that no one understands this viral effect even though we are all affected by it.

Yes this transparent solution which the least consumer can understand sounds too good to be true when the actual solution already exists and only requires decision-makers to understand the “root cause” of the problem and then get out of the way while the global citizens solve this economic problem for themselves by merely producing and consuming.

Each individual’s economic problems is solved from the ground up by the individual’s purchasing decisions using one simple economic tool.  Please keep in mind that we have not had a new consumer economic “thought” since Adam Smith’s “invisible [energy] hand!”
 
Until now the consumer’s hands have been tied by the non-automatic allocation of “equity-value” each time the consumer purchases.  The “new consumption function” solves this allocation.  Stay with this discussion and you will be surprised and rewarded at how profoundly simple and powerful this solution and formula is.

Master one Law

To understand this “one sound economic solution now” we need to understand, indeed master one fundamental - actually the first scientific law that all other laws of reality stem from, including the “invisible hand” of Adam Smith’s economics.

to be continued...

(2012 pending book publication...)


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