Stephen David Mauldin
8 min readNov 19, 2020


“Zero Money”: First Principles Thinking About Monetary Value

Change the Money, Change the World (12)

Part 3 — Ending Keynesian Inflation and embracing deflation

“What no historical record of previous debt crises could show is the incredible deflationary force of technology … most of the deflation is still in front of us. That deflationary force, combined with a global market where all state actors need to drive growth and higher paying jobs in their own economies, sets us up for a future without precedent. Where the rules need to be rewritten.” — Jeff Booth 2020

The Price of Tomorrow — Why Deflation is the Key to an Abundant Future by Jeff Booth

Ya basta! What are we to do? Clearly we cannot continue to participate with an inflation based fiat currency system. How are we to extricate ourselves from the overwhelming systemic political economy of Badiou’s false ‘world’ of untrammelled capitalism that rejects the majority of humanity of another, devalued ‘world’. How do we first save ourselves then others left in total poverty, victims of the criminal ideologies that prosper on the back of all this chaos. Some of us are denizens of the limbo between these two worlds: we have the financial resources to begin. We can take personal sovereignty over our savings, and so initiate a new world separate from the banks and their political overlords, who are existing from the pockets of heartless oligarchs (or are they just blind to or ignorant of what they are doing?).

The quotation of Jeff Booth from his book “The Price of Tomorrow” suggest recessionary forces of technological innovation will require the rules to be rewritten. I think the case has been made for ending the prevailing Keynesian inflationary policy. More housekeeping is needed, however, before turning attention to a critical new aspect regarding this objective: It may no longer be the case that a better policy is unavailable, and it can no longer be the case if recessionary forces are understood to be beyond being stopped by the power of of a continued inflationary monetary policy. The rules in question are those of the legacy Keynesian paradigm, but, always apparently, the conditioning of a long standing paradigm is not always easily overcome even by the best of minds:

“The key to handling debt crises well lies in policy makers knowing how to use their levers well and having the authority they need to do so, knowing at what rate per year the burdens will have to be spread out, and who will benefit and who will suffer and in what degree, so that the political and other consequences are acceptable.” — Ray Dalio 2018

Principles for Navigating Big Debt Crises by Ray Dalio

Ray Dalio, one of the most successful investors in history, has provided us an analysis of the cycles of recessions that have been handled by the Fed successfully in the fiat currency paradigm. Political and central bank governance have averted a Great Depression for 80 years. Ray Dalio’s thesis is that debt cycles display a cyclic series of smaller growing to larger degrees of crisis. These culminate in a single major crisis that when again navigated, according to the stipulations in the above quote, reset the economy for the next major series of boom and bust. Dalio clearly chooses to maintain his allegiance to the governance that has arguably navigated the waters of crises well enough so far to avert a new Great Depression. He fully acknowledges that in 2020 we are on the cusp of an 80 year cyclic major crisis and presents a brilliant analysis of its structure and a prescriptive response. The question I have: is not this entire prescriptive process, based on continued use of fiat currency, actually a manifestation and perpetuation of “Negative Money”?

The answer is yes, he is not saying we should look to abandon fiat currency, he is focusing on a new scrutiny on how fiat is being governed. So it is actually a question as to whether what has saved the economy before will work again, or is it true as many, including myself think: “not this time”. Is it not a matter of urgency to begin a transition to a new economic model based on a new medium of sound money, or is it the existing governance and money medium we should continue trust but verify? Answering that question begins with listening to what Ray Dalio has to say about the levers available to policy makers:

“There are four types of levers that policy makers can pull to bring debt and debt service levels down relative to the income and cash flow levels that are required to service them: 1. Austerity (i.e. spending less) 2. Debt defaults/restructuring 3. The central bank “printing money” and making purchases (or providing guarantees) 4. Transfers of money and credit from those who have more than they need to those who have less”

We can make an assessment of which combination and to what degree these levers are being pulled given the current political parties influence. The social environment of populist divisions, the economic crisis exacerbated by the pandemic, and the resistance of an entrenched oligarchic system are all in play. Imposing austerity may have been an option earlier before the pandemic, though a politically difficult decision that was obviously not taken. The “printing money” lever has been pulled again and again, compounding debt to a degree multiples of ever before in history. The present use of these levers is very heavily balanced towards unprecedented money printing. As in 2008, but to a much higher level than then, bailing out debt defaults of private companies and banks “too big to fail” have already happened, it being too late to head off this consequence by restructuring. As for transferring money and credit to the poor from the rich we will see how that goes. I won’t hold my breath.

None of this is an argument against Dalio’s analysis and prescriptions; however, as we always hear from financial advisors, the past not a prediction of the future. One may agree with Ray Dalio that it could rhyme. One could also well conclude “not this time”, especially when no historical record of previous debt crises has shown the impact of the incredible deflationary force of technology, most of which is still in front of us. Even putting aside that most important consideration, there are more reasons to question whether the current political parties and central bank configuration are likely to perform in accord with Ray Dalio’s additional caveats regarding “a beautiful deleveraging” using the levers by:

“… striking the right balance between them. In this happy scenario, debt to income ratios decline at the same time that economic activity and financial asset prices improve, gradually bringing the nominal growth rate of incomes back about the nominal interest rate … These levers shift around who benefits and who suffers, and over what amount of time.”

It seems there are plenty of loopholes so that Ray Dalio remains correct about the best continuation of the prevailing economic paradigm no matter what happens, but what is likely to happen? He even laments for policy makers who “are rarely appreciated, even when they handle the debt crisis well”. Little wonder that his book has received rave reviews from the pantheon of Keynesian all time greats Ben Bernanke, Larry Summers, Hank Paulson and Tim Geithner. These, we have to suppose. each handled the crises well through their leadership of the policy making in their time.

Still, there are concerns affecting Dalio’s thesis that supersede the performance results of our fearless leaders. It is not only that a geometrically larger amount of money been printed this time. Additionally his thesis is likely nullified by a growing rate and impact of technological disruption, which is a hopeful thing, as we will examine in a later part of this essay.

Those who have benefited most from the global hegemony of the dollar being the world reserve currency can continue to follow the policy that has saved us before, but the risk of this not working this time are significantly higher. Here is another assessment of Dalio’s dilemma:

“The Dalio view is roughly what I settled on: economic activity rises and falls with the supply of credit, not the quantity of dollars, and when total credit has been a large multiple of total dollars, a small drop in the amount of credit per dollar of currency can only be offset by an enormous increase in the quantity of currency … In a closed system where “consumption,” “investment,” “cash,” and “credit” are all heterogeneous, the model works just fine … But we don’t have a closed system, and these things aren’t heterogeneous. There are different populations in the US with different marginal propensities to spend, and the financial world is global: monetary stimulus in the US has effects worldwide, and in a global recession, other countries’ stimulus programs affect us, too.” — Byrne Hobart

Big Debt Crises, Bigger Debt Crises by Byrne Hobart

The closed system indicated is first a system rooted in the fiat dollar and the inflationary paradigm, which I am arguing has an inherent weakness in violating the first principle of scarcity, and is therefore a negative store of value. Now as never before this closed system is not a closed system and there is open competition regarding the dollar reserve currency status. Most significantly given the progression of technological disruption, all the fiat printing all over the world is simply a manifestation of Keynesian hubris: that wage rates ought to go up or down or adjust themselves to the level of prices uniformly. Decades of history have shown the only response to crises has been printing more fiat, prices going up and wages not keeping pace. Why does this continue? Because this is the model owning the allegiance of those with the power of governance. To this we add that the rising prices have to be able to service the debt assumed by unbridled printing, meaning prices and wages both have to go up. Given the amount of increased debt, that won’t work anyway.

But what if the dollar or the RMB hyper-inflates, each unit of account losing purchasing power, while at the same time there is technological deflation of the price of goods and services? That decrease of prices will also be generating lower wages but not necessarily a lower standard of living. As Jeff Booth proposes in “The Price of Tomorrow”, a deflationary policy could be an abundant future for the whole of humanity, a radical new paradigm supplanting Badiou’s description of our current dystopic trajectory. However, what Booth implies by embracing a deflationary economy cannot be accomplished with an ever inflating currency based on no actual true value. I hope enough has been said already for the reader to be open to the understanding that a new paradigm for a global monetary system which employs a new monetary medium is mandatory for our future. Such a system also has to have a structure that eliminates the possibility of bad governance. I think there are several simultaneous phases that need to occur, while each successive phase is built on the previous ones, as the previous ones are completed. Part 4 describes the necessary nature of such a transition.

Change the Money (1) Preamble — Monetary value true by nature

Change the Money (5) Introduction (1) — Zero Money & First Principles

Change the Money (8) Part 1 (A) The technological solution

Change the Money (10) Part 2 (A) The Naming of the Beast

Change the Money (11) Part 2(B) Market forces/crime against humanity

Change the Money (13) Part 4(A) — Phases of transition 1



Stephen David Mauldin

DOB 1946 Retired Counseling Psychology M.S. Consciousness Studies — Interests: Citizen Diplomacy, Digital Currency