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Science and Christian Healing.
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34
For example, if one owns a share in a corporation that is bought at fair value, then, there there exists a physical equality between the capital value of the share and the physical value it represents. If the share is subsequently sold at an increase, while the value of the company remains the same, that increase in the value of the share is a fictitious capital value that has no physical equivalent in terms of any value to the society or civilization, even though this fictitious capital value is financed with real capital by the purchaser. This fictitious capital growth is destructive, for by this process real capital is drawn away from the physical economy into fictitious capital assets that have neither any real value nor afford any tangible profit for the advance of society. The result is, that economic development of the society stagnates as capital resources are drawn out of the productive economy, while on the other hand the fictitious markets grow and become volatile like an highly inflated air filled balloon.
If in turn, the fictitious capital value (the increase that has no physical equivalent) is traded through a financial system that exists exclusively for this purpose, which by its nature artificially creates ever greater amounts of fictitious capital. By this process, the whole structure that grows in leaps and bounds, becomes fictitious throughout as its entire aggregate becomes leveraged upon ever smaller instruments of real value.
At some point, when the thing has become sufficiently volatile, the leveraging begins to act in reverses. Typically, this is triggered when the fictitious value is called upon to cover loans, which value does not actually exist in real terms. When this reversal sets in, the whole thing tends to collapse due to the tightly interlocked nature of such a fictitious bubble. The actual mechanism that forestalls the reverse into collapse, up to a certain point, is the dynamic growth of the fictitious market. For as long as the fictitious bubble can be kept growing, a possible reverse leveraging can be contained through aggressive manipulation. This growth, of course, can be achieved only by drawing ever greater amounts of real capital out of the physical economy, as an infusion into the fictitious capital market upon which to leverage evermore fictitious capital aggregates.
The growth potential of such a leveraged system is phenomenal, displaying a hyperbolic tendency. However, with this growth increases the vulnerability of the system, which is in direct relationship to its growth. Eventually, when the growth can no longer be sustained, at which point the vulnerability of the system has reached an equally precarious state, reverse leveraging sets in and the whole thing disintegrates.
The system may be termed a negative growth system, because its very development has accumulative destructive effects. It is a suicidal system. In financial terms, the system first loots the productive economy of it life-blood, while the system grows, and then, largely destroys what is left of it when the system collapses. It displays a growth pattern that is both real and quite dynamic in its development, but which is contrary to life, which develops towards a catastrophic termination and not towards infinity. Some call such a system a cancerous growth system, for the growth of a cancer is equally destructive to that which feeds it. It is self-evident from this description that the nature of such a system is totally contrary to the platform that must be established for scientific Christian healing. In real life, however, the distinction is not as clear, especially when the development appears to be benign and desirable.
For example, let us examine the hyperbolic growth pattern of our world's globally outstanding financial derivatives, which, of course, represent almost purely fictitious capital. If one were to plot their growth pattern, one would find that it matches very closely the curvature of a hyperbolic horn, such a trumpet. This type of curvature is almost flat at the beginning, but then it begins to increase evermore sharply until it flairs out steeply at the wide opening of the trumpet. The growth pattern in the world derivative market tells us that we are currently very near the flair-out point. In 1993 the globally outstanding derivatives amounted to roughly 15 trillion dollars. The market had risen to that point over the preceding ten years. However, a single year later, in 1994, this same figure that had mounted up over a decade, was tripled in a single year to the gigantic 45 trillion dollar mark.*(Source: Bank for International Settlements, see EIR, p.29 July 28 1995) In the same ratio that this growth unfolds, the system's feed capital requirement increases, which therefore, likewise approaching the flair-out point. The point of disintegration, is that point at which the feed capital requirement for keeping the system growing, exceeds the capital resources that can be leeched out of the real economy of the nations, which itself is collapsing in proportion to the increase in looting.
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