NATİONAL ECONOMİC MODEL

Prof. Haydar BAŞ
November 27^th 2005
Istanbul   / Turkiye

With his historical background of 5000 years, with his Turkish and Islamic civilization of 1400 years, and with his experience due to Republic of 82 years, Turkish Republic and Turkish Nation, lives in a very important and historical region where the continents of Europe and Asia intersects.

Although he is in the centre of and even at the target of political, economical and social wars, Turkey stands due to its power coming from his religion, and is last hope of Turkish-Islamic world and of oppressed nations.

Since the born in history of humankind, Turkish Nation has given justice and human rights to people and taught the civilization and technology them, while he claimed his historical mission raising himself and his values.

21. Century is an age when the concept of national dominance and independency has changed. As a matter of fact, one of the ideologists of globalization, John Naisbitt presents his approach:

We see that the big companies can work better by splitting into smaller and autonomous units. It is the same for countries as well. If we want to change the world to with one market, its pieces should be small.

Our nation ,who faced to being destroyed by a political, cultural and social activities which are executed quietly for ages, had won his dominance due to independence fight which was leaded by Mustafa Kemal Atatürk and had turned back to essence of Kuvvayı Milliye and had been a model for nations which were fighting for their independence.

Atatürk was speaking in the opening ceremony of council, 1 March 1922:

We can not think about anything else different from reaching our national independence which is our aim. That is why the important thing is whether our economic power is enough to get this result or not.

the sources of our country are enough to finalize our national claim safely and successfully. Although it has many lacks, our national power will manage the country without borrowing from foreign countries and will arrive to its aim like we have been succeeding until today.

Mustafa Kemal had emphasized on economics freedom for a complete sovereignty of the republic which was established new and he removed the concessions inheriting from Ottoman named Kapütülasyon. He tried to liven up the national economy by organizing Economics Congress in İzmir in 1923. He said that it was never given up the principle of national independence and that the national development would be succeeded in the boundaries of this principle.

That is to say there is a direct relation between sovereignty and economy which stands alone.

In the period of Atatürks management, namely until 1938, in all fields plans and projects for development had been executed and many big successes had been achieved.

In this period, with the national model which was applied for development, our country had reached to a level that airplanes could have been exported to Belgium. But after Atatürk, Turkey had been again besieged politically, culturally, economically totally. West states were beginning to realize the SEVR which could have not been accepted by Mustafa Kemal, by AB and IMF.

Between the pincers like IMF and World Bank who directs the budget of our country, in a period which all the sources and facilities of our country were used, where privatization, the sale of  public economic enterprises, the international fortification and restriction and harmony laws for European Union were put into practice, Turkey is being the sacrifice of a project where he was divided into small pieces.

We are living in a world where the economic freedom was starting to be accepted as huge determination for independence of states.

We are facing a period which the countries are going under the control of the global forces who lending loans to them which might be described as a cold war.

The troubles of our country lasting for a long time are becoming chronic. The unemployment and impropriety are increasing, the public associations relating to education, health and justice can not issued their functionalities unfortunately anymore. This removes the self trust of our nation and the enculturation activities destroys the national identity.

The number of Hopeless and faithless people reached to top. Our country is being crushed under the global political and economical policies.

Nowadays where the boundaries lost their importance by the means of economy, the ideology which the global forces are imposing to underdeveloped-developing countries is that the comprehension of national state is unnecessary anymore.

As a reflection of this comprehension, the 6th law of constitution namely sovereignty belongs to nation himself unconditionally which must be kept with mechanisms running in Turkey, is commented on again different form the principles Atatürk had remarked.

The folks losing the comprehension of national state are open and defenseless against to obvious or hidden treats. Loans which require heavy provisions, the political compensations which seem like national helps, the remove of all obstacles in front of foreign investors can be counted as a result of this comprehension. The result which is wanted to be achieved with these ways is to destroy the freedom. In these period of course there will not be anyone considering the welfare of the nation.

The industrialized and developed states, who want to command the world, use the sources of the underdeveloped and developing countries for the benefit of their exploitation.

Anyway the aim of the globalization is exploitation of the sources of the underdeveloped and developing countries by the global forces and is to take delivery of them in all fields.

We see that the stronger oppresses the weaker wildly according to rules which capitalist economies have authority on the world nowadays. At this point the welfare of the folks and the development of the countries became an utopia in the systems which transformed to exploitation of emperors.

After Second World War the financial help policies became popular among countries who efforts developing.

But the developing countries, whose development were depending on the investments of foreign investors, yield everything wanted by the countries of them.

As a way of that in the new world order, the less improved countries have been encouraged to implement their development projects depending on foreign debts since the end of Second World War. By the swamp of debt where they were pushed a lot of social and political demands have occurred snare

All the debts taken from foreign countries depend on circumstances. But the companies get the most part of their credits under the name of promotion.

While the government is trying to pay back its credits, international companies get the benefits from the investments they have done in the country.

Thus, as the government and the people of the nation are taking great financial responsibilities, the foreign companies get the profits.

The capital owners in the global economy are implementing the model of earning money from money rather than production. By this method, they get away from the production which depends on risky and difficult profit. These companies make their productions in the countries where labor and other inputs are cheaper because it is easier to get money from the financial markets of unimproved countries.

The name and address of exploitation is the international companies in the new world order. Today, the total assets of 300 international companies represent 25 percent of the production assets through the world. 500 big companies control the 65 percent of worlds trade.

In Turkey there is hardly ever a holding which isnt held by an international company.  While these companies supply the tiny parts of the money which is necessary for their foreign investments by using their own sources, they provide an important part of that capital, almost 85-90 percent, from the assets of the country where they import funds.

This example is a significant one to prove that the international companies in Turkey use the assets of the government and Turkish people for their advantage: in 1973 the companies which were active in Turkey had loans as much as 81 percent of their capital and they got 96 percent of that credit from local sources.

As a final point, the amount of money which overflows thorough the world, aiming to get money from money, has reached almost twenty times of world trade capacity. The speculative and destroying result of such a big amount of money is widely apparent.

Thats why IMF offers some programs to the improving countries like Turkey

But the aim of the advised programs is no to stabilize our economy but to let the global finance groups capture our markets and resources. It is the reason for IMF to demand our most strategic and profitable institutions should be privatized. But the strong state is a obstacle in this process.

The only thing that the global funds want from the unimproved or improving countries is not to pay the money they owe as a response to World Bank and IMF credits. The credit given to us requires implementing heavy programs to devastate agriculture and animal farming, and to make the people starve.

These requests are set in front of Turkey. In the last decade Turkish farmers are in very bad conditions because of the limitations which are aiming to confine of planting some agricultural products like sugar and tobacco.

The Turkish farmers who come to a critical point who can not plant because of that the government quits supportive buying and ends the low interest rates practice and even they cant sell their products anymore. Products like sugar beet, tobacco, wheat, peach, fig, apricot etc. are left over farmers.

The same situation is with stockbreeding.

In Global Economics approach, privatization issue is an important condition for coming of the foreign capital to the country. The corporations which earn much are sold much lower than their real value.

ERDEMİR, PETKİM, POAŞ, TÜPRAŞ, SÜMERBANK, KÜMAŞ, ORUS, ET VE BALIK KURUMU, SEK, TOFAŞ, THY are such corporations.

Especially it is remarked without abstaining that this privatization is under the control of World Bank not the Turkish Government.

Ufuk Söylemez, the chairman of the Privatization Board in 1995, said about the privatization of the part T of PTT: Telecommunication services will be privatized under the control of World Bank according to international methods. We can not move out of the path that World Bank and Counselor Firm suggest.

Uğur Bayar, one of the chairmen of the Privatization Board says: We have managed to follow the way that we promised whenever IMF came here. We said that there would have occurred those things in the first quarter and they occurred. We said that there would have occurred those things in the second quarter and they occurred again. In the third quarter they see that the process we have suggested for THY and ERDEMİR has started.

The prices, that were determined in the privatization which was executed with the impression from abroad and which was executed without any benefit of Turkish Nation, shows these corporations were sold like bargain. For example, POAŞ was sold in March 3rd, 2000 with a price of 1 billion 260 million dollars.

The authorized people say that an association like POAŞ can be built with 8 billion dollars. The purchaser had paid for ¾ of POAŞ with the money which was in the cash register of POAŞ.

In 1998 the rights of operating cell phones were given to Turkcell and Telsim for 25 years. After the agreement whose price was 500 million dollars, those two firms paid these 500 million dollars in two years with the prices that was paid by phone customers as fixed fees.

Dismiss of thousands of employees while these privatizations is another suffering photo Turkey. The results of these global manipulations are here:

1- The income of our country due to taxes can not even meet the interests of our internal and external debts.

2- Our country is in a vicious circle like high interest, foreign currency and debt

3- Privatization of profitable national industrial or communicational institutions such as TELEKOM, PETKİM, and TÜPRAŞ is realized against amounts very under their true values.

4-The national currency on current market circulation is less than required. Who objects that the compensation of this gap would be held by Central Bank, also aims to utilize bank cheques and so called plastic monies, namely credit cards by making use of this financial handicap. These tools support interest system providing an additional income source to banks.

5- Government holds Treasury bids to get rid of some of the burden aroused from debts. In other words, inadequate coinage leads to improper flow of sources to banks and global financial groups which are deriving profit from money itself.

6- Since the government is unable to provide enough emission for the national market, Central Bank of US is compensating the emission gap and thereof a continuous increase of foreign currencies in circulation is observed.

All recent cabinets have had the IMF takes the lead in national economics of the country. The say We will proceed with IMF which was a very popular election slogan, now became one of the main reasons for poverty of Turkish people.

According to a research article issued by Los Angeles Time on Jan 4th, 98; 54% of the countries had a decrease in national economics, and another 36% had a collapsed economy where both parties were borrowed from IMF via concordance credits.

Another research held by World Bank in 1998 resulted that, Turkey is in the leading 25 within countries having worst income distribution among 133 candidates.

Turkey had greatest economical shrinkage in 1999 ever since Republic was formed.

 In 1999, IMF stated some conditions for a new covenant based upon financial support to Turkey, such as performing some pseudo-reforms like issuing Bank Law and Social Security Law, International Arbitration, and Privatization.

Realization of these pseudo-reforms has resulted faster impoverishment of Turkish people where international companies and their local partners having enormous amounts of profit. New laws caused negative financial balance fort eh government and profitable governmental enterprises are being sold.

IMF was advising continuously for new taxes for citizens where they were making things easier for international companies

Officialization of International Arbitration application, which transfers the solution of disputes from Turkish judgment to foreign judgment, makes the capitalist authority work upon countries.

57th Cabinet, which gets the arbitration to constitution, also officialized the reverse processing of arbitration with the law 4501.

The following case is a true story between Mexican people and an US company, sampling why international arbitration is a precondition before foreign financial support:

ETHYL CO, which was a US company, was ignorant for toxic waste mixing to potable city water. Reaction of citizens made the court handle the case, and as the Mexican government was accepted the International arbitration; International court was on stage.

The company won the case since local courts were assigned first; a condition which breaks the agreement.

In the year 2000, IMF had another condition for the financial support; called Additional Letter of Intent, having items even more severe than items of Sevres Treaty.

These conditions, which were accepted by 57th cabinet include; privatization of  Türk Telekom, THY (Turkish airways), Makine Kimya Endüstrisi (Mechanical Chemistry Industries), Tekel,  and Sugar Plants;  electrical market law, sugar law, TEAS law to be issued on time; cancellation of subventions in agriculture, increase in tax rates, decrease in cereal stocks; and  10% increase limit for civil servant salaries per year. Each of these was completed.

It is obvious that, IMF is something far beyond being just an institution which sells money. Loans are also compromising within political, social and economical aspects.

In fact, the government claiming the only way to exit is borrowing from IMF instead of some alternative methods to be declared later by us is maleficent to our nation and people.

The Picture discussed above with sub-headers, is the real situation in Turkey. The country has debts about 400 billion dollars in total, while IMF is leading the economics, production diminished very close to zero, agriculture and stock-breeding almost extinct, underground sources are sold to foreigners and all these items being completing parts of the puzzle showing the situation is far worse than War of Liberation.

Turkish people are the real smashed portion of this table losing their rights. Turkish citizens are wronged all because of this.

This is actually a system requirement in capitalist order to proceed; namely some minor portion has the profit.

Another system is a must if a person wishes not to face all these awkward.

As it is mentioned in the very beginning of this speech, maintenance of financial independence and conservation of national-government are two musts to keep independent country.

This is the only possibility which we can mention true wealth and people well.

This concept is almost unachievable in capitalist system.

It is not possible for a certain group having the financial powers to forfeit their ongoing domination with allowing another philosophy to reign against their own good.

So we have to form and put into practice our own model in order to give the rights to Turkish Nation and to all the people which are overpowered actually by the capitalist understanding

It is strongly inevitable to put into practice a model belongs to us, which will provide our great nation,  -not the global forces- the welfare, abundance and richness status they desire,

Thus this economic model has occurred by this necessity 

We see the examples that to which point our country has been taken by wrong economy policies.

In addition to all those, these following three important cases, which are very vital to world economies, couldnt be resolved during the Economys history

1- a fairly wage distribution

2- reaching a constantly ongoing growth

3- to provide employment  or to resolve the unemployment  issue

National Economiy Model has been developed taking into consideration these three unresolved cases. Infact NEM brings solutions them.

Thats why it is not an anti-thesis but an excellent theory for the solutions of the problems and peoples welfare

Now lets consider our thesis with its main headings

This theory we have served to the economy literature is the answer of the question, as one of our Russian friends said we have suffered socialism but the world is suffering capitalism, what is the model to rescue us and the world and to regulate the distribution of incomes, to provide the constant development and complete employment

This question was asked in the history of economy which is as old as human history, but it hasnt been answered yet

Each economy model is a result of a culture and a point of view. Capitalism is the result of approaches of western people to economy. 

But the National Economy Model has been generated thanks to the values belong to us and the norms that the Muslim Turkish identity has.

With in this context National Economy Model is not an antithesis against the earlier implemented economy models, but entirely   an original point of view with completely original rules. Our thesis is the only resolution to save and supply welfare to  not only our country but also other people on the earth with this aspect . So each subject of NEM should be examined carefully.

Then What is National Economy Model (NEM)

National Economy Model is the science to cover the limited needs of people using the unlimited sources, and also it is the formula that the countries have got the power of producing every kind of goods and services, in addition to the ability of afford the domestic and foreign expenses without loans. National Economy Model is the only way for the development of the nations and countries, and for economic freedom in this sense.

Lets begin to assess our theory with new point of view we have brought to the subject of  needs and sources, which is the key problem of economy.

As we know, the aim of economy is human being. It is too difficult for an economic model to be successful unless it is formed from humans features and needs and even it may be impossible.

The failure of the todays economic models gives us an idea about this reality. All these models have initiated the case in a wrong way by identifying human as fitting their systems instead of describing human.

For example, the concept of ECONOMIC HUMAN is capitalisms model individual, which is aiming to enhance its own profits to the top levels and it is obvious that it cant provide the communities welfare except for a little minority.

The economic systems, which are formed by the point of view of west to humankind, have constructed the subject of economy on the misunderstanding that the needs of human are unlimited. According to them, despite the needs are unlimited, the resources which are necessary for them are limited.

In these systems which accept that needs are unlimited, the answers given to the questions what  Whose How much Will be produced occurred thanks to the resources which are really defined as scarce. Finally they could create some narrow models where only a definite part of the community  get the desired welfare level, but the  hunger and abject poverty of majority of the other peeople have taken part in economy as the problems which can never be solved, in another word the problems that cant be resolved since lack of  enough resources

Thats why sense of exploitation in capitalism is a valid way to reach the limited resources. The workers are seen as slaves because that reason. We can say that the Capitalisms approach to employee is Modern Slavery.

It is a fact that the west, who admit that the needs are unlimited but the sources are limited, hasnt been able to get a success which will provide the people desired welfare so far.

And how is the human factor approached is Model of National Economics

According to our thesis, the claim that resources wouldnt be efficient for human needs is inaccurate. On the contrary thousands of unlimited and renewable resources exist, on earth and space, for very single need of the human beings.

When the concern is human beings, in case we mention some kind of unlimited ness it can only be his passions. Otherwise it is possible to count hundreds even thousands of resources to meet the needs of people like eating, drinking, heating, clothing, housing etc which are quite in complex and limited needs.

To give some examples of these unlimited resources which are evaluated only in our model, we can mention thousands of known and unknown but constantly renewing resources like energy systems (solar energy, nuclear energy, wind energy, geothermic energy, biomass energy, wave energy, flow energy, fuel cells ), agriculture, stock-breeding and its sub product  forest products, sea products.

The deflation problem, Turkey as well as the western nations struggle, is another proof of the accurateness of our thesis suggesting that the need is limited where as the resources are not. This problem, occurring because of the insufficient demand, couldnt exist if there were a shortage of resources.

Since we mentioned about it, lets talk about the problem of deflation which can be fixed with the model of National Economics.  

As can be known, deflation is the name given to permanent decrease in the general price level. Compared to inflation, this problem is more dangerous and today threats the economies of countries from all around the world, especially our country-Turkey.

The decrease in the general level of prices is caused by the inadequacy of aggregate demand. In this case, firms decide to reduce the production capacity and consult the way of dismissal. On the one hand, consumers with the hope of decrease in the prices reduce their existing demands, but on the other hand increasing unemployment pulls down the inadequate demand.

According to classic perspective of Capitalist understanding, the fault that prices and wages are elastic and system should be fixed by its own is accepted.

However, Keynesian approach which rejects the idea that markets should be balanced by their own advocates the idea of supporting the demand by increasing the expenditure. In this application, which works partly in consequence, the reason that money used for government expenditure is costly money leads to both inflation and the problem of debt in these countries as time elapses.

 As a result of the loan taken by, governments are forced to increase tax rates and decrease both current and social expenditures.

In this situation either the costs of productions are increasing because of increasing tax rates or both the decrease in public expenses or absorbing the money from the markets due to high tax rates caused the decrease in demand of folks.

 In these circumstances, on the one hand production costs increase as a result of increasing taxes. On the other hand, the condition that let public to reduce medium-dated expenses and withdrawal of money by taxes leads to a reduction in the household demand. As a result, world economies face a new disease consists of both unemployment and inflation, namely stagflation. The point that Capitalist understanding disregards is that the reason for deflation is the situation which people do not consume, this deficit is tried to met with public expenditures made by costly money.

At this point, before we go on to the solution of the problem, an issue has to be clarified. Why do developing economies go through a period of recession after sometime and cant achieve sustainable growth

Another fundamental question addressed in NEM is; the assumption that every supply creates its own demand is totally incorrect. If you have a growing economy, it is not possible to achieve consumption to meet the supply with the income gained by that same production. In each period, it is essential to meet that deficit of consumption with an increase in emission.

In such countries, when a certain amount of annual growth is achieved, each year the deficiency in consumption also increases.

In a few years, this deficiency of demand becomes an impasse for the growing economies. We might visualize this phenomenon as the collapse of a human being whose body grows continuously as his bones stay the same and ultimately fail under the load.

In the beginning of 90s when we first mentioned these opinions, the world has not yet faced the deflation. In those years, we had also mentioned that the world economies would encounter a serious market problem, and especially the fast growing economies would go through a period of deflation if necessary emission adjustments were not made.

As you might remember, during the mid 90s Japan was the first to go through a period of deflation. Even though the nominal interest rates were zero the real rates were kept positive. The Japanese households lost their power of purchase and their belief in the future, and decreased their spending even further. This caused the prices to go down and stocks to increase. Lay offs followed soon after. The Japanese economy has not yet recovered from the damage.

In addition the Japanese economy is in great trouble because of its US export-oriented nature and 800 billions of USD currency in its reserves.

On the other hand, in our speeches on TV in January 2003, we have forecasted that the German economy would be in regression shortly and unemployment would rise as a consequence. We also declared that Germany would suspend the Maastricht criteria and increase public spending and in short term would be forced to borrow foreign debts.

In a short period of time, all our assumptions started to became real. In the year 2003, the Germany economy went into regression. Then unemployment numbers started to grow. As per today, the Germany unemployment figures are the highest in last 72 years. The number of unemployed is more than 5 million. Germany borrowed 40 billion USD of foreign debt and started a discussion in EU for not meeting the Maastricht criteria.

It became evident that with these policies implemented, as we have mentioned before the EU is bound to disintegrate within the following 15 years.

Germany had a growing economy. After they switched from Mark to Euro, the currency need that has to be present in this growing market was not met by an increase in emission. This was because; the right to print money was taken from the Bundesbank in Berlin and granted to the European Central Bank in Frankfurt.

The only reason for the deflation emerging in economies is not the deficiency in demand. Sometimes the economies may go into recession even though there is a sufficient amount of flowing currency. The unbalanced distribution of wealth is also a fundamental cause of deflation.

If a certain group of the society gets a reduction of income, it might be deprived of the power to consume. Even though there is a surplus of currency in the market, it is not possible to end the recession in the economy unless that community regains its ability to consume. In other words the decrease in the interest rates and the increase in consumptions are not the solutions of this problem.

Already the US example proves what has been said. The FED had decreased the interest rates down to 1% aimed to end the recession but succeeded to a limited extent. This was because the American public had a hard time in their livelihood.

US also feared that the karşılıksız dollar currency in the world would come home, so they couldnt keep on lowering the interest rates down to zero.

If we look at the Turkish example, it is not a different story. As the cost of production increases with high inputs, the demand shrinks because of the suction of money from the market by high interest rates. In such an economy the existing TEFE and TUFE calculations are incorrect.

If an economy has high amounts of cost induced inflation coupled with a serious decrease in demand then these calculation methods became incorrect. Let us assume that you are planting wheat. The price of wheat goes down 30% because of the decrease in demand. But if price of the fertilizer and oil consumed during wheat production increased by 35%, the inflation for the farmer is 65% not 2.5% as calculated by the existing methods.

In that respect, the solution for our country is, to implement a fiscal policy that lowers the production costs and a simultaneous monetary policy that triggers the production.

We also have a serious unbalance in the distribution of wealth. This is also an important cause of deflation.

In the dominating view in todays world, production is not favored against gaining money from money.

In the FEX markets, the daily turnover is 2 trillion dollar, whereas the annual trade turnover is 6.5 trillion dollar. The fact that the money is stock piled at the hands of the few is an obstruction against the formation of the demand in the public. The capitalist approach has no chance of solving this problem with its policies based on interest.

One program is not sufficient to get rid of deflation. A simulations implementation of a monetary, fiscal, accompanying foreign trade policies and actualization of the Social State approach is essential.

I here by declare with absolute clarity that counties may not be exempt from this illness unless they abandon the capitalist approach and implement the NEM.

It is evident that human beings dont have a problem of meeting their limited needs. The problem with the economy is the lack of projects financed by the surplus that would benefit the whole community.

If we accept that the resources are unlimited, the real question in the NEM is to evaluate these resources and to make them benefit all the classes of the society equally.

According to our thesis, the one to actualize this is the man with sense of responsibility and a feeling of giving an account for his acts.

The NEM doesnt evaluate only one aspect of the problem but handles the problem as a whole and resolves every aspect one by one. This is what makes it unique as an economical model, and the most comprehensive model ever compared to other economical models.

According to our thesis all the problems of the economy are linked together. And in order to resolve a question all the other issues related has to be resolved. This Lumpsum Solution Model introduced only by the NEM is the only way out for the world economies.

Let us start introducing our solutions by the NEMs Definition of Money.

According to capitalist view money is merely a tool for exchange and saving. This view denies the fact that money is a driving force and a counterpart of labor and production. In order to understand what money really is, its functions have to be examined.

According to the NEM money has 4 fundamental properties.

1.MONEY AS A DRIVING FORCE:

In the National Economy Model, money is tool that triggers the labor in producing goods and services.

That is to say, it is not neutral (ineffective) as other schools of economy claim. On the contrary, it is an operator which assists the intentions of production and consumption to emerge. This property of money has been introduced to economy literature by the National Economy Model.

2.AS A COUNTERPART OF LABOR AND PRODUCTION
 
In practice, basic needs such as food, clothes, shelter, safety, and health might not be met without money. Furthermore it wouldnt be possible to activate labor to utilize natural resources without it.

Money is equivalent to the goods and services produced by the labor it has activated. Money that starts up the production might not correspond to a real asset. Money has the ability to form an equivalent or even higher value of its own through production. So the cost of money would be much less than the value of the goods and services produced trough the activation of the production factors.

This property of money is also a unique property attributed by the National Economy Model.

Same as the currency flow in the market, the money that triggers the labor that will activate the factors of production is also blank in the NEM. The money having no initial value by its own, gains values with respect to the goods and services production it induces.

The money that comes into play as a counterpart of labor and production puts the idle manpower into action. For instance construction materials lying in the mountains might be transformed into roads for the benefit of man. By doing so, both the manpower gets into action and roads are built as an economical entity.

3.MONEY AS A MEANS OF EXCHANGE

Any kind of commodity or service in the market might be bought by paying money. This is the exchange property of money. It is essential that sufficient amount of money is circulation for exchange to occur properly.

In liberal economies the money in circulation for exchange has a cost. The costly money causes a reduction in production, and also shrinkage in demand.

The liberal approachs fundamental method of drawing money away from the market through interest obstructs the healthy exchange environment. Consequently, the public loses its ability to consume and even the most basic needs could not be met through exchange.

The fact that the growing world population is not able to consume is not because of the insufficient amount of production, but because of the deprecation of money for the people to make that spending.

In NEM the money in circulation for exchange is costless. For this reason money may flow in the market freely and benefit the real economy. The NEM that ensures the exchange to happen widely stipulates that demand & supply reaches a point of equilibrium for the exchange of goods and services at the actual values.

The balance in NEM: The balance is obtained by the mathematical correction of demand and supply together/separately by emission. This approach is also the formula for sustainable growth that will be mentioned below.

4.MONEY AS A MEANS OF SAVING

In liberal economies, the saving of money aims to gain money form interest. The functions attributed to money by liberal approach causes:

a) The withdrawal of money from production and out of the real economy,

b) Money to become monopolized in the hands of a few,

c) The domination of global powers who store the money to rule the goods and services produced all over the world,

d) The increase of production costs,

e) The shrinkage of demand,

f) The decline in workman salaries and productivity.

In NEM the circulation of money in the market is costless. Therefore money is saved in order to;

a) produce goods and services,

b) meet daily consumption needs,

c) meet future need.

e.g. money is saved for the times of a funeral, wedding, hajj, natural disaster and illness.

The function attributed to money as a means of saving causes;

1) the free circulation of money,

2) the increase in production and demand,

3) the improvement of distribution of wealth.

The incorrect monetary policies employed until now has not only prevented the individuals ability to consume at the desired amount but also made it impossible to utilize the resources properly.

In our model, the todays fast growing economies problem of ENDING RECESSION AND OBTAINING SUSTAINABLE GROWTH, and the seemingly impossible problem of UNEMPLOYMENT are both resolved.

The solution is a national mobilization in production, supported by a balance in consumption that is a result of state-public partnerships financed by emission in the form of credits without interest that evaluates the national resources in a Social State approach.

The NEM resolves the INFLATION problem by reducing costs of production by government-financed projects, a tax-free, an interest-free economy, and the strict state control over arbitrarily pricing.

In this respect, the NEM resolves all the problems such as; THE BALANCE IN THE DISTRIBUTION OF WEATH, THE ACHIVEMENT OF SUSTAINABLE GROWTH, AND THE ACHIEVEMENT OF FULL EMPLOYEMENT, which the Capitalist system left unsolved and accepted as unavoidable as seen in the current economical crisis.

In our thesis another crucial task of the state is to make all the national resources which actually belong to the people to benefit the people. In that way, the resources would be fully utilized and the resources would cause a mobilization of productions as they were used in production in the most beneficial way.

For instance, the oil reserve located in any part of the country belongs to the whole country. And this mine should be operated by the government to benefit all of the people. This model is a state-public partnership. The people should hold some of the shares of the mining company and the rest of the shares belonging to the state should be used in public expenditure.

The partnership of the people to these facilities would be possible by the interest-free credits given to the ordinary people through an increase in emission.

This issue is especially important for Turkey. This is because we have mineral resources of worth nearly 3 quadrillion USD and with new legislations our national treasures are handed over to foreign companies nearly for free. As a consequence, Turkey is transformed into a beggar sitting on treasure and borrows debts from the same foreigners with high interest rates. This is nothing but buying back our money with more money.

According to the NEM, we should start a complete production mobilization. The KOBIs and tradesman would be supported by interest-free credits, the farmers would be supported by credits based on their yearly harvest yield before they plant the crop, the transporters, and all the drivers would be supported by long term interest-free credits to buy new vehicles, and the industrialists would be supported by long-term, interest-free, project based credits. By this way both the production and consumption would be encouraged.

According to our model, the states support for the people is an economical rule.

Another project that would boost up production is the support of the state to finance its citizens with interest-free credits for investment and production purposes. In this way both the production would increase and costs would be reduced. The equal conditions of opportunity would be obtained for all citizens. These credits given on project basis should be monitored at every stage and the project owner should be informed of the progress and the process should be secured with necessary legal measures and support.

On the other hand the state also has the duty to market the products of its people both as acting as a Social State and also by implementing necessary monetary policies. The marketing of the products is more important that the granting of credits to the producers. It is because; if the producer cant find market for his products, he is doomed to ruin his business. In other words, the state should be the buyer in the market and support certain sectors, especially strategically industries by public expenditures.

The state also has to be key player in high technology and high capital requiring sectors.

The Mobilization for Production and Lumpsum Growth is an important project of the NEM. The state has to implement this move and work on necessary fields to achieve sustainable growth. This intervention is critical since our thesis disproves the claims by the Capitalist view that the market would eventually reach equilibrium in reaction to outside influences.

As mentioned above, in growing economies there exists a gap between production and consumption. If this gap is not eliminated by increasing emission, it is impossible for the economy to stay stable in time.

According to the NEM, this gap formed as a consequence of the nature of the economy may only be eliminated by the state intervention.

It is essential for the market that the state fills this gap by increasing emission using its senyoraj right.

At the same time, the state has to offer its producers the chance to compete in foreign markets by cost and price advantages made possible by emission.

Along with all these production supports, the state has to implement all kinds of anti-damping and customs fee arrangement in order to protect its people.

In the NEM the TAX issue is also handled in a distinct way. In the Capitalist view the only income of the state is tax. On the contrary, our model classifies the state incomes into three groups.

First is the tax income.

Second is the income of the state from the state-public enterprises that run the national resources.  It is worth remembering again the value of our unexploited mineral resources is nearly 3 quadrillion USD.

Considering that our annual expenditure is roughly 50 billion USD, the money gained by the exploitation of our mineral resources would be sufficient to feed the nation forever. But today we are forced to beg for foreign debts as a result of foreign backed-up, incorrect policies.

It shouldn't be forgotten that our present situation as a beggar sitting on a treasure is to be blamed on all of the past governments which we have supported by our own votes and brought to power.

The third income of the state is the senyoraj income of the state formed by the growing economy.

Our thesis has underlined that the state should be the giving hand not the taking hand. In todays Capitalist economies the state collects the taxes from the people, and returns a small part of it as public services, but most of the part goes to certain capital groups by the means of interest. On the contrary, in the NEM the state returns all or even more than it collects back to its people as services.

Our understanding of tax is different from the accustomed view and our tax is a tax that grows the economy.

But, is it possible to have a tax that grows the economy

As you know the Liberal view aims to shrink the state. What is aimed is to shrink the state, to reduce public expenditure and form a state that serves the public less. On the other hand it aims to increase the tax collection.

In countries where this system is applied, trillion dollars of the tax incomes of the state is transferred to global monetary groups as a back payment for the high interest debts the country borrowed.

If we look closely the Liberal views, as seen also in our country, insists on projects that dont pay the debts but cause them to increase even more. They force governments to implement programs called sustainable debts programs which are in fact continuously borrow debts programs. All the work done is aimed to secure the money of the ones who sell money to the country. Unfortunately, no one cares about the people of the country.  

In the NEM, the first policy would be to implement a costless money model so that there wont be any interest expenditure in the budget. So the state returns all or even more than it collects back to its people as services. Our model introduces two more incomes to the state other than the tax incomes; the senyoraj income and the income from the natural resources facilities.

As known, the tax in Capitalist system not only reduces consumption but also lowers production and increases cost of production.

Let us first look at how the tax rates effect the consumption and who should be the ones to pay tax.

As an example let us assume that we collect 1000 units of tax. If we collect this tax from the lower income people this would reflect to the consumption as a 1000 unit reduction. But if we collect this tax from the upper income group, this would have a minimal, zero effect on the consumption.

In other words as the income of the individuals increases the effect of taxation on consumption is reduced. Because of this, collection of taxes from the lower income people does nothing but damage to the economy.

So what has to be done is to collect taxes from the rich. This specific income level might change from country to country or time to time, but we specify that under current conditions in our country, the ones having an annual income less than 100.000 YTL should be exempt from any taxes.

Not taking taxes from the lower income group would not decrease the tax income of the state, just the opposite it would increase the income. In addition, the lower income groups supported by the social policies of the state, would increase consumption and in turn cause an increase in production. In that way, the tax would act as a lever in elevating the economy.

In conclusion, the state not taxing the lower income group results in an increase of the total tax income.

This also eliminates the unbalance in the distribution of wealth.

If we give an example for this issue, for instance if we assume that a man has an annual income of 20.000 YTL and the tax he has to pay is 8.000 YTL. If the state doesnt take that 8.000 YTL as tax, the same amount will be spent as consumption and exchange from one hand to another in the market.

Considering Turkeys conditions today, we might assume that the money changes 15 hands in one year. So, the total amount of consumption in the market would be 120.000 YTL (15x 8.000 YTL) when the money was not taken away as tax. Following the increase in consumption, the production would increase and this production increase would generate a tax amount maybe 4 times greater than the initial 8.000 YTL.

We wouldnt get the same results if we were not to take the tax from the higher income group, since most of the money would be saved and there would be little influence on the consumption.

After explaining the relation between income level and tax, let us now look at tax influence on investment expendituresNowadays, taxes deprive the small tradesman of the capital he needs to perform small investments. On the contrary, if taxes were not taken from this group they would have the ability to make small investments.

The capital needed by the larger cooperation and investors would be financed by the state with zero interest loans according to the NEM. The small businesses would also have the right to benefit from these credits given on project basis.

The NEM also states that indirect taxes should be removed. Or else, these indirect taxes are applied regardless of the income level and cause great Social Injustice.

The incorrect tax policies applied today not only increase the unbalance in the distribution of wealth but also decrease the tax income of the state.

The collected taxes also have an effect on increasing inflation. High tax rates results in an increase in the production costs. In many countries, especially Turkey the inflation present should be described as cost induced inflation.

It is merely a dream to hope that the inflation would go down without lowering the cost of production.

The distribution of wealth would be balanced by the NEM which proposes that the lower income group (less than 100.000 YTL annual income) would be exempt from taxes, employment would be exempt from taxes, and there wont be any indirect taxes.

Also according to the NEM, the increased consumption would increase production and in turn solve unemployment problem.

As a result the state would collect much more tax from her exponentially growing economy.

It is for these reasons the tax is a tool for economic growth in the NEM.

In Capitalist view, as the people were crushed under unjust taxes, the emerging decrease in demand and loss of currency in the market are not accounted for.

But the NEM proposes a method where the state increases emission and uses senyoraj income to resolve the question.

In a country, the Gross National Product is described as the money equivalent of the total annual product of commodities and services produced. And it is a must that a portion of this money equivalent of these commodities and services be always present in the market for the survival of the economy.

For example; Let us assume we plant 1 bag of corn and harvest 10 bags of corn. If the property of money of being a counterparty of labor and production is not utilized this surplus of 9 bags of corn causes a reduction of demand in the market. The money that has to be in the market has to be the counterpart of these 9 bags of corn.

Emission is the amount of currency equivalent to this production and services.

This amount should be equivalent to the EMMISION as the amount of currency introduced by the central bank, but in Capitalist system it is transferred to the market by different means. In practice, the SENYORAJ Income of the state gained by emission is taken away and in reality by giving foreign loans, the sovereignty of the states is taken away.

As a necessity of  the Capitalist system the ratio needed for the system are gathered from the loans with interest rate to the less developed and developing countries .

We are seeing an example of this horable trick. Nations turning the Center Bank independent from the government; the senyorage income right of the governments over Center Bank is forbidenned.

In developing countriess instead of senyorage income the developed countries Center Bank Money is loaned with an interest rate.  At this case the countries who get the loaned money are obliged to pay interest to the global forces. And they also transfer their senyorage incomes.

As a result countries, as in Turkey case are pushed into a very big debt marsh.

Since years we are trying to take the attention of our public about these topics ; but now in Turkey and also all over the world names who are respected in their areas mentioning the same thing.

As a matter of fact T.C Center Bank former President Mr Yaman Toruner mentioned in his article in Milliyet that; Developing Countries are not allowed to use senyorage income right, instead of this developed countries use senyorage income right on behalf of these developing countries with emissioning their hard currency. By this emission they are getting tax from these developing countries.

Yaman Toruner says Center Banks are very important invention like a fire and whell. By means of Center Banks governments print money and a get a senyorage income  same level of the emission. This means that governments take a tax with the printed money in Center Banks. With this point of wiev Center Banks are part of the countries and they can not be independent from the countries.  

With another way of word the Center Banks being independent means that they are not belong to that country but they are belonged to Capilatist Systemss Directors or Managers. If a country is already ready to obey the Capitalist System Managers requests than with an approve this country Center Banks will be independent.

Real senyorage incomes are gathered in Developed Countries economies. To control this income of developed countries; developing countries Center Banks have to be independent and indepence has to be a principle in operation. olması, bağımsızlığın prensip edinilmesi, We mean that countriess benefits has to be protected.rather than the other countriess benefits. Developed countriess Center Banks mint their hard currency which are accepted real exchange tools. The publics of the developing countries has to pay, use an investment tool, and use as a loan tool the the amount of the hard currencies which has no corresponding.

Independent Central Banks of developing countries provide hard currency money in their reserve. The Central Banks of Countries which can mint hard currency mint many times demand from outside of their country much more than the demand in their country.

Developed Economies mint money with an amount of money which is demand from other coutries. And they collect senyorage income from this money. In an another word developed countries , collect tax from developing coutries over their Central Bank.

International Credit Associations advise us ; Instead of increasing the volume of emission and producing, loan the money by an interest rate and make the production with this foreign money.

The authorities who says; Dont mint money there will be inflation defence their ideas with a hypothysis that If the Central Bank mints money this will create inflation; but if we loan money with interest rate and finance the production with this loaned money there will be no inflation and because of that our country can develop with this way  But these ideas and the proofs to defend these ideas are nonsense.

In the countries affected from IMF wise foundations investments waits for  foreigners to do. The idea that Foreigners will come , they will invest and we will employed there mentality is dominating in our country Turkey. But we also mentioned in the beginning only mine reserves of this country is about 3 katrillion dollars.

What has to be done is not waiting with opening our hands like beggars, to operate these sources with government-public solidarity.

Existing of foreign currency in a country ; means that it will find a correspondance with public labour and production. This is a transfer of wealth and labour to foreign countries and global investors . Unfortunately from many years Turkish economy is living the same consequence over the years. 

Putting reserve foreign currency in a Central Bank other the domestic money or putting into the circulation means that the country which puts money and circulating it are finasing other countries.

Today our country and far east countries Cental Banks have a big amount of US dollars as a reserve. As an example Japanese Central Bank has a US reseve about 800 billion USD. This means that Japanese Public made a 800 billion USD amount production and US mint money absolutely no cost(paper and printing colors) they transfered this production and the labour to itself.

In turkey condition is worse. Because we are giving permission of foreign currency not only in our Central Bank and also in the circulation in national market.

It means that we can not use our senyorage income right with the money in the emission. And more to that we are using foreign papers which Fofeign Central Banks mint and send to us. And we transfer senyorage income right to foreign economies.

Liberal wiev mentiones about The Circulation of Money freely what they are mentioning about is the money in the hands of global investment.  The background of this idea is  to enter the countries economy easily and to exploit that country But the National Economy Model mentiones about money has to reach everbody when we say Free Circulation of National Money

Because if there  an opposite wiev money will be collected in some determined hands; market control will be done by a small group of people. This is the transfer of income with a interest to the same people..

Speculative purpose movement of the money give the same result. All of these conditions , causes unstabilitiy in income distrubition and also economy  will be become narrower.

The other barrier on the senyorage income right of the government is the recorded money that private banks produced in the money system. Private banks produce recorded money by the help of the deposit money they collected. Banks send this money to the circulation as a recorded money.

Issuing of recorded money of private banks prevent the governments to make strong money molicy. So the government loose the guide to the markets and trnasfer this right to the banks.

If the money which has a demand in the markets taken from the recorded mnoney of the banks instead of Central Bank money mint gives the senyorage income right to these banks instead of the government. Recorded money is the compensation of public production and labour ; banks transfer the public and government incomes to theriselves.

As a conclusion to our explanations we say that the only way of saving the countries from loaning swamp is to put the emission in the money system instead of expensive foreign money.

In National Economy Model increasing the emmision volume with determined amounts will increase the senyorage income is an obligation for governments. Otherwise because of there will not be enough consumption and economy will not come to equilibrium.

The idea who are against senyorage income seems to be Increasing amount of money will increases the prices wiev

But the people who put this false claim forward are supporting foreign credits which are taken with an interest and other side they also supported the recorded money system of banks. The statements of T.C Central Bank President Mr Serdengecti are attracting the attention.

Serdengecti says  The ratio of the emission rate to the national income is low. Central Bank is not minting money it has to do for a while. The aim of this is to hold the interest rates high. If  Central Bank stop to serve the people who are winning from money, and if it mints money interest rates will go lower , production and investment will be high, because of production increase inflation rate will decrease. Hurriyet Newspaper 17.01.2005.

The people who are against the senyorage income want to sell money and want to get interest from this sale. If governments increrase their emissiion volume and incres their senyorage inome; tahn the global usurers and domestic Subcontractor  will loose a very big income door.

National Economy Model, takes the Senyorage Income both an economic rule and also it formulates waht factors affect the income.

In our thysis ; government will not loan money it will use its senyorage right and increase the volume of the emission. Thşs means that governmnet will mint the money that will be used domestically. This senyorage income will go social expense. Governent will give salary to housewifes, credits to farmers and and the people living in rural areas. These activities will do;

a) Productin will triggewred.,

b) Consumer will begin to be supporrted.

Seniorage income will be the the main supporter of the Consumer Side in Social Government Project

And than labours, officials, villagers, farmers it means all parts of the consumer side consume capability will be increased. In the opposite of that manufacturers will produce more and contious demand volume will increase the manufacturers production level. These two elements will work like suction and force pump. The desired balance will be caught

The governments which meets  the labour and production with its own money can make public expensen without loaning.

If the money which doesnt meet the labour and the production than there will be lack of money. Markets stagnate. AtEmek ve üretimin karşılığı elde edilen kâr mukabili paranın at thşs stage seniorage will be the source of income.

The other topic in our economy model is At some times seniorage income can be put in the economy without thinking that the production and labour.

The seniorage income which has to be put into practice compesation to labour and the production generally , in some cases can be used without looking for and compensation like labour and production. Than the economy grows again.

As an example; if there is no financial fonds for building main roads, all labours and the machinery belongs to yourself than you can use seniorage income compensating this issue and economy grows.

The same method is applied for underground minerals. The similar example is for agriculture.

You dont need to pay to the farmers money in your hand. You can increase the volume of emission with a seniorage income in agriculture sector because with the compensation of labour and production you can support the production.

We mean that in our thysis we dont need to see the profit of the labour and the production for using emission.

If the profit with labour and the production seen the main of the emission increase is to protect against conditional inflation. If there is any inflation risk governments insist on price controls can prevent inflation risk.

As seen We can not compare the advantages of seniorage income in National Economy Model with the loaning money with interest.

Up to this stage we mentioned about to save the economy from inflation by reducing the cost items with a government support, new wiev to the taxation, increasing the emission volume, and making the interest rates 0 by using seniorage income right.

We state at this stage that interest break the equilibrium point of the economy, and it brings the capital to certain hands and it prevents social justice.

The main source of the big economic problems like recession, stagfilation, inflation and unemployment is also interest.

It is impossible to meet the equilibrium of the market is impossible with interest.

The economies which money is the interest slavery position money can not do its duty; than the mechanism which will bring the economy to the equlirium production and consuption mechanism will not operate effectively. 

The money has to be in the pockets of everyone for producing and the consupting , is not in hands of these people but very small portion of the society.

In the world the money which is turning in the markets for interest sake is much more than the money used in production and consumption.

Leading the developing countries in many of the countries money gathered in definite capital groups. And these groups are levy a tribute all other groups in the public with the power of their money.

The countries which loan money from these capital groups for investment and production ; in a time period firstly to pay back the first loan and also to pay the interst of the loan. And they are tied to these capital groups.

As a result as the example of our country, the collected taxes are not used to serve the public and thay are trsnfered to these global capital groups and their subcontractors in our country. But this is not enough to pay our debts. And our debt is increasing every passing day.

The loans with interest forgives the countriess economy control to hands of foreigners. We can not talk about independence both in econoy and policy.

Interest trap is not good for producer, labour, it is good for people who sists and win money by the money. This money job is a life model which is no good.

If we examine about the Destructions Of Interest in Economies; increasing costs, Stock of money in definite hands,  decrease the demand, decrease the labour rates, decrease the efficiency.

1- Increasing Costs: The manufacturee-r or the seller has to reflect the cost the money to the product or service. This causes cost inflation.  When the interst rates increase prices will increase because of the costs.

In Capitalist Wiev approach this interest- cost relation opposite of this objection we mentioned in National Economy Model. They mention that the şncreasşng amount of interst rates cause the prices  to go down. But the researhes showed that in many coutries, the prices increased whent the interest rate increased.

While explaining the stiuation which is also called as Gibson Paradox, Ficher and Viksel has been claiming that prices are driven upper because of inflation expectations or price rise expectations.

But it is  very simple as we put in our National Economy Model to understand  general price levels and the interest rates increase at the same time.

If you make the money valuable than it is inescable that costs will increase and the price of product or service will increase.

If we look carefully we will see that not inflation increases the interest rates but interest rates increases the costs and the inflation.

2- The other and the most destruction or the interest is it causes the money to gather in definite hands.

The money which has to be in the market , by the affect of interest goes to capital groups hands. With the result of this destruction the money which has to be found in everyone and every time leaves the real market, so the money which help to produce and consume will not do its duty.

In all markets it begins with Demand Decrease but later on this problem causes big economical problems like resession, and it contiues  finally deflation .

Lets explain the stocking the money with an example. The amount of the rain falling to the earth is same. If this rain will not fall  with a same level ratio, some places very much and the whole places nothing. This makes some places torrent areas and the other places desert.

Very similar to this example for the equilibrium of the economy the money will be like desret like in the example if very few people stock the money.

3- Stocking the money increases the nominal value of the money whicch doesnt deserve.

There are two damages of this increase. First because ther is lack of money in the market the money holders want interest inocome from loaning money and also they have many political demands. Today we see that countries like Turkey are obliged to say Yes to IMF and Global Capital Owners every request.

Lets give an example to this situation. Lets take example people having a vacation in desert . Only one of them has water. Even the others are so strong, good working but they have to do what the person handeling the water says.

If there is a race among them, how strong people the others or good capbilities, winner will be one who hold the water.

The world markets are very similar to the example we gave above. Stocking the money, takes it away from its own duty, and also it will be a pressure issue on the reel economy.

Reel economy indexed to hot money, and because of that authority which has this power controls all economy.

The authoritized people in the world are not the manufacturers they ara people who have cash. The government whp makes its money convertible has rights to the some issues in every placa of the World..

4- Another damage of stocking money is the relative value either than the value on it.

The income distrubition problems in all economies caused from this reason.

Now the internal debt is about 250 katrillion in Turkey. But the question; did the loaners  to the governmnet save the money from normal trade Answer is NO. Government prints DIBS bonds. But this money is n ot going to production directly to the capital holders. 

The money minted has no consequence. No product and service for this money. Governments afraid of demand inflation and no power to pay back this debt; with a contious process takes this money from the market with interest and it goes more debt than before.

As a result incomes of the citizens collected by tax and transfer to this side so the income distrubution balance is getting worse every year. And government debts are increasing every year.

5- The other affect of interest to the economy is decreasing the demand. By the outcome of this situation ecomies will go to deflation.

The demand decrease caused by interest occurs several ways. The income distrubution unbalance situation i a time majority of the society loose their ability to consume. But government still take taxes to pay its interest and this takes the money in the pockets of consumers.

On the other side for paying interst payments government expenditures decreased so there will be a very serious demand decrease.

Also consumers put their money to banks for getting interest. So the circulation of money get smaller. And this stage there is cost accounting from one side and deflation from other side this means there is stagflation.

Saving money with production is win, win issue.Because you brought employment when you are making trade.

But saving money with money the mentality is  Loose  win One part loose and other wins.

There is no new working places and new employments in the saving money with money.  It also closes the the existing places with bad effec on econmoy.

As an example you put your money with %20 interest. Bank sold this amount to manufacturer with %30 as a credit. Manufacturer put this cost in to the product. This means price increase.

As a result it seems that consuming power and the money in your pockest increased but the real value of the maoney in your pocket decreased,

6- The affect of interest to the labour rates.

Manufacturer who loaned money with interest has to to put on the interest cost of the product. But Because of the money taken by interest the income distrubition level is broken down; there will be lack of demand

At this condition manufacturer has to take a decision. If he reflects this cost to the product. Because there is no demand he can not sell anything and he willgo to bankrupt. If he doesnt reflect anything.  He will either sell even rather cheaper than the cost.

Or he will reflect the interest rate  with the rate of interest rate; he will cut from other manufacturing costs so he will take partly from the  partly from the profit. And this goes to a situation the prices will go high but slower than the interest rates.

The easiest cost item which can go downb is labour rates.

Because there is no sufficient labour force demand, employer has the right to comment on determining the wages.

Lets talk about the surplus value.

While Karl Marks discuss his approaches, throws the concept of surplus value out for consideration, and states that the profit gained by the employer is a surplus value stealed from the labor.

Whereas the profit is both equivalent given in return of capital and the employer.

Surplus value is as for internest. Marks who believes in interest as a necessary part of economy, understans the employers profit as a surplus value of labour force.

In NEM, the interest of which all distructive factors are mentioned is an actual surplus value. Because the interest cause a cut of labor and so some part of labour wage and some part of employers profit are transferred to entities who sells money.

Interest whis is harmful to economies ; a person who earns money by selling money, as an example will increase his money 1000YTL by 250YTL in a year. Considering money as an equivalent of labour and production; when earning money by selling money there is no production increase but the amount of money whose posses will incrase.

Lets assume that the total amount of goods is 100 units in the market. At starting, while the capital owner whose capital is 1000YTL can afford of 10 units, at the last since his money will increase by means of interest, capital owner will be able to afford much more units. Whereas the rest of the society will have less benefit in return of production.

If a person sells money to govenment , in order the government to compensate the loan , it will transfer taxes to loan and to loan interest. Therefore govenment will do a income transfer to the usurer. And so it cannot give service to the society.

Today in our country, it will be seen that the taxes as surplus out of interest are transferred to rentier, and day by day investments, social and current expenditures are cut off.

If some money are sold to a person, the income of that person are transferred to one who sells the money on a ratio of interest over principal.

This property of the interest is resourced becaused of that money is handled as a commodity in Capitalist model. Just as the host gets house rent when he rents his house, so a person who rents his money must receive a rent in return.

Whereas, the service of house rent is resourced from its functionality, the money becomes the amount paid as the equivalent of this service. On the other hand, the money paid as interest is a relative value beared on because there is no money in circulaiton.

If money circulates as to everbody can reach it, nobody will need to pay interest.

Briefly, by stocking money there becomes an income transfer to some part of the society who owns money, from the rest of the society. At the same time, since money owners will incrase their income and the rest will have less income, money owners will begin to have more share of the total income proportioanlly.

Interest is a basic for both Capitalist and Socialist systems, even if they are sen as different at first look.

Social equity is to balance the income distribution, thus removing interest mechanism which disturbs the equity is the most serious step in ensuring the social equity.

Two main structures of capitalist approach are based on interest. Adam Smith who is the founder of Classical, namely Monetarist approach, believes in economy balances itself and he also claims that each supply will have an equal demand to supply. We explained that this approach is wrong.  In order this virtual balance is to be obtained, all the savings are to be transferred to consumption.

In a classical approach, interest is the mechanism of converting savings into the investment expenditures. In other words, the relation between savings and investments are merely be established by interest.

As to the theory of borrowable funds , capital needed by investments are formed by the funds of savings, of course , by means of interest.

In a classical approach, interest is a blancing element which brings the system into equality.

With respect to Keynes, the other element of classical approach interest is a key factor in getting the money demanded.

Both systems , lets say investment or money demand, the money required by the market is only covered by interest bearing money.

The capitalist model opposing the emission; the printing and circulating of money by Central Bank, supports the private banks supplying money on a interest basis.

The ones who oppose printing money by Central Bank due to the inflation problem,

at the same time supports issueing interest-bearing money by Private Banks, based on the approach that it will not cause to any inflation.

For instance, a state is to build a school; That state will cover the cost of construction by foreign credit or public loans instead of its own emission. Briefly, capitalist approach says that interest bearing money will not cause to inflation. Inflation almost keep quiet when it sees interest bearing money, but it becomes aroused when it sees local currency or the money without interest.

Especially the countries who decided to develop are encouraged to use interset-bearing capital instead of the emission with zero interest. Some group of countries including Turkey, has choosen this method by their preference and becomes deep in debt todays.

7-Regarding the destruction characteristic of interest, another important issue is productivity

Since money blocking will cause of accumulation in certain entities; it is not possible for someone to gain money without capital, even if he is so skillful.

Production can only be done by the people who can obtain money by covering the cost of it. In other words, even if someone is willing to pay the interest, he can not get 1 million YTL without giving the assurance.

As an example, Lets think a sultanate from father to son; someone is very competent in governing, if his father is not a padishah its not possible to ascend the throne and perform the competencies.

Similarly, while someone would become a very successful businessman of the world, he wont find even a job because he is deprived of capital.

Because of interest, the thing which is blocked is not merely money needed by market, but the competency of people at the same time.  Only the money which is rescued from the slavery of interest and become free will go in circulation. Thus the productivity will increase by putting money into use.

Interest affects not only the lender but also to borrower negatively. Since the interest will lose the equilibrium of market, it will affect all the actors of market. Likewise, poverty of the world nations has became destructive to the global capitals. They can not find market for the commodities they produce also can not prevent the excess money in circulation which is many times more of the production.

NEM keeps interest out of system, since it is extremely dangerous to economies. Therefore, money will be free and the barrier which is blocking the production will be cleared. Also, the inequality of the income distribution will be resolved.

As to NEM, since the money is being supplied by the emission of Central Bank without arising any cost, it will not lay the groundwork for the inflation and not allow demand narrow and deflation as a result of money leave from the market by interest.

For your great attention; In NEM (National Economy Model) all the questions of economy are considered entirely and resolved in a way to balance all.

On the one hand efforts are concentrated on production by means of supported consumption, on the other hand contiuous growth is achieved by collobration of production & consumption. Thus, the unemployement problem will have resolved.

Ways to draw cost down are a fair system in taxation, government support to producers and -the most important  remove of interest form the economy which is also a source of inflation.

As known well, continous growth, unemployment, unfair income distribution were the problems all the times of economy, and still are the problems at present.

It is impossible to resolve the above problems out of NEM.

Both socialist systems and capitalist orders are the systems in which conflicts are inevitable among social classes. With respect to these models, social conflicts are the normal situations which people has to endure.

Economy policies in the world always ignored some part of population, while supporting only a part of it.

As to above models, if you increase income tax directly you allocate much more money for public expenses. However you will have decreased the employement since you receive more tax.

As a result, in capitalist model giving unemployement insurance, rising retirement salary are all seen as obligation on the public budget. Likewise, Germany at the top, all EU countries cut social expenses as an extension of the system.

The new definitions given to both money & state and the new tasks charged on them by our thesis, eleminate the errors resulting in inequality of income distribution.

One of the fundemental functions of a state is to use its right of seignorage. In our system since the money is gained as no cost bearing, incomes acquired by efforts of our people are re-transferred to the people under the social state projects.

By helps of the method which allows the income to remain in the country, it will be possible by all to benefit form the total revenue equally. According to our opinion, it is most necessary to control the Central Bank not by IMF but the power representing our people.

The government must act as a referee arranging the market and stop global powers to capture our market.

By rejecting liberal model, we obstruck global powers to catch our market. In this way, both resources and money are set free and so individuals have euality of opportunity.

Credits with no interest which are distributed to everyone who wishes, prevent money monopoly and give an opporunity to people to perform their economic talents and make the income distribution equal as a result.

In NEM, government has to provide people with fundemantal requirements such as taking shelter, food, health and security; These rights are obtained with birth.

As to our opinion, every individual has a right of consumption at every age, wether it has a capability of production or not.

So the state, on the one hand, encourages the production by helps of social projects with increased emission, on the other hand assures fair income distribution by supporting consumption group as a social state.

Our model puts the mechanisms into use so that all the groups benefit from the economy at the same time. For example, supporting agricultural laborer by the emission will benefit to rest of the society.

Likewise, thirty five percent of the population works for agriculture in Turkey. If the producer gets the revenue he desired in a year, it increases commerical activities of tradesman living in town.

Morever, supporting agriculture means that the industry tied to agriculture is to develop, therefore employement will increase.

If our tax policy which removes the tax from the social group of income below 100,000 YTL, is put into practice with our Social Sate approach, low-income group will benefit on two aspects; the income level of poor people will incease to the desired level and comsumption capability will raise, dependent on this the market needed by the producers will be formed.

It is an evident that the individuals who have no money to spend and so are without a job, are not useful both to society and themselves. In our model, there is an opportunity of  no interest credits for projects when it is put into practice, we shall have increase the income level of idle people and production level.

As in our economic model, it is provided improving the individuals income level and so the income level of whole society.

Direct income support such as puting housewifes on a retirement pay, puting new-born childs, unemployed people, old people who has no living relatives on a salary, giving students unreturned scholarship, will give the people who has no consumption capability the opportunity of overcome their needs.

By means of the projects provided by the Social State Approach in our thesis, the people with bottom income level is drawn near the people with upper income level by closing the gap between them.

Therefore, the differences in wealth and income become less, unity and cooperation among people will be formed.

Another case which becomes a reality by the projects above is that they improve the community benefit together with the individual benefit, thus both will win by reaching affluance.

Individuals and the community they form up behave according to their feelings instead of mentality.

Solutions under feelings are even sometimes true but usually wrong and aimed at satisfaction of needs. Reactions against economic events are seen as the same.

While having mentioned the feelings of people, lets also touch on private proprietorship in National Economic Model.

One of the feelings that is acquired by a person in the childhood is ownership. The form it arises in the society is private ownership  a feeling compatible with the nature of man, thus, needs to be taken into consideration when forming the rules of economy.

While this subject is included in the elements of the National Economy Model, it is not accepted in the Marxist systems. In this system, which was formed without considering the feelings of man  the subject matter of the economy, private ownership was rejected, and thus, it was acted contrary to the mans nature.

As regards the benefits of the individual and the society, when compared with those systems which in general satisfy the individuals, and even only a certain group, supply of the total welfare, an issue introduced by the National Economy Model, is an ideal accomplished only by us.

The approach of the National Economy Model to the population issue and increase is also totally different from the present economic systems.

Capitalist theoreticians who set out with the mistake that resources were limited, have accepted the thesis of  Malthus that the rate of increase of the population was much more higher than the increase of the means of subsistence, therefore these limited resources could not meet the needs of the population. According to this system, population increase is a danger and it should be prevented.

When we put aside this wrong approach, and start with the actualities, only the National Economy Model has a remarkable approach and fundamental solution:

Resources to meet the requirements are limitless. When reduction in the money supply and the technical limitations are eliminated, it is evident that these limitless resources would be necessary.

And when the obstacles to the introduction of labour in the economies are removed, the quantity to be produced in unit time by a person shall be higher than the quantity to be consumed in unit time.

We can illustrate this by giving a simple example: Think of a pot of dish cooked at your home... If your mother has sufficient material, then she will be able  to cook as much meal to allay the hunger of the all the guests to come to dinner, not only the amount that she will eat that day.

According to our thesis, each individual is potentially capable of making production in a quantity higher than his/her own consumption. And the resources required for the its realisation are present.

What we consider important is the realisation of economy policies, which introduce this labour in the market and help them in being productive.

And the only system to achieve this is the National Economy Model.

As the National Economy Model considers the fact that the capability of production is higher than the capability of consumption, world population is not a danger for the future but a light of hope.

In our view, each newborn baby is not a burden for the economy, as other systems claim it; but, on the contrary, a power, which through increasing the consumption capability, supports and encourages the production.

According to the National Economy Model, any goods and labour consumed shall not only increase the production capability, but also open the way for production diversity.

Today, the studies made in England, Germany, Italy and Japan, indicate that with the aging of the population, the standards of living have fallen and the level of welfare has lowered. Therefore, manpower sufficient for production is a must.

These studies carried out in countries where capitalist economy system is applied  prove the rightness of the new point of view for population increase, brought by the National Economy Model.

And this is the essential difference of the National Economy Model from those economic thoughts which were tested before. In our view, Economics is a science, which through taking maximum advantage of the limitless resources, enabling us to provide a comfortable life for each newborn.

National Economy Model also deals with and reorganizes the exchange rate policies that should be applied by the countries.

Today, in FEX markets, in various places throughout the world,  trade of national currency is made. In some markets, e.g. London, New York, Paris and Tokyo, the currencies of certain countries are a subject of trading.

However, it is not probable to buy Dollar or Euro from these markets in exchange for Turkish Lira. In other words, TL is not a freely convertible currency.

Although our national currency cannot be converted into US Dollar in any place of the word; hard currencies, Dollar being the first,  are subject to operation in our country, both among the people, and in the interbank markets.

In our thesis, considering that our national currency is not operated in the FEX markets, then there should be no reason for allowing these currencies to be treated as convertible in our country.

It is evident that, countries which keep their reserves in US Dollar could not be able to find its provision in the case that they return these reserves to its initial owner. Looking from this point of view, many countries, which are considered rich, have, in fact, only invaluable bits of paper.

When one looks at the crises occurred recently in Asia and Mexico, he will see that these have similar characteristics with the ones occurred in our country.

While the economy seems to be growing and inflation is in the tendency of falling, then suddenly crises occur. It is a fact, which is worthy of mention, that all these countries have significant portfolio flow before the crises occur.

No matter whether it is a fixed or floating exchange rate, when the value of foreign currency is determined in the free market, those global capital owners, who are dominant in these markets, may suddenly sell or buy national or foreign currency, which in consequence causes turmoil in these markets.

Thus, while everything is ok, current deficit is funded with foreign currency, and then, when the global capital suddenly leaves the markets, it causes a bomb effect.

In the National Economy Model, the Exchange System is a fixed exchange rate based on importation and exportation. In a system based on importation and exportation, the value of foreign currency is determined, not by the global capital owners, but by the Central Banks.

Thus, the Government shall have the control; and the price of the foreign currency shall be regulated at its actual value, and at a price level serving to the interests of the country.

When we consider the fact that Soros, the famous speculator, has even caused the Bank of England to make devaluation, then it shall be much more easy to understand that an exchange system not controlled by the government, would undoubtedly cause major destructions in the markets.

Valuation of foreign currency based on importation and exportation, and determination by the Central Bank as a fixed variable  shall prevent foreign currency to be used as a tool for investment.

Such a condition shall have two important contributions for the country economies. Firstly, transfer of national income to global powers shall be prevented. And secondly, the influence of foreign players on the economy of the country comes to an end.

That is; in Free Market economy, the markets are under the effect of  developed countries and global usurers; however, in the government controlled market, as proposed in our thesis, the nation itself replaces the usurers.

It is evident that the floating exchange rate system currently applied in our country is not to our benefit. The low foreign currency rate, despite our continuous high current deficits, is a clear sign of it.

Although, in countries with current deficit, foreign currency rates should increase due to the demand for foreign currency; it surprisingly decreases in our country. Global capitalists win twice in their foreign currency sales made in our country, one from the interest rates, and the other from the low exchange rate.

In spite of the fact that the value of currency of a country should be determined by  the demand for export goods of that country; today, this value is determined by the global powers, under the name of Free Market.

Foreign currency shall find its actual value only in an exchange system under the control of the government.

Our Model liberates foreign currency markets from being a tool used for controlling country economies.

Another fundamental policies of the National Economy Model is the new regulation brought to the Foreign Trade understanding.

It is a known fact that in foreign commerce, the essential thing is not sale of goods and services. The main target for the government is to start from the demand to its own goods and services, and to enlarge the area where national currency is valid, and help the national currency to become convertible in foreign countries.

Therefore, countries ask for their own currencies when they make exportation. But, in underdeveloped or developing countries, to include our country, hard currency is accepted when making exportation. Such a deal should not be called trade, but transfer of national resources to other countries.

To make a brief summary of the above-said, lets consider that the United States demands wheat from us. If we ask payment to be made in YTL, then the US shall be obliged to sell us goods with current prices in order to provide this YTL.

Lets say that good be a computer. The US, which gets YTL 1000 in exchange for the computer, shall return that YTL 1000 to get 1 ton of wheat. As a result, while Turkey gets the computer, the US gets the wheat.

Now consider that the US gives us 1000 dollars in exchange for the wheat. And consider that we keep this money in the cases of Central Bank or in the market as emission. In that case, the US shall get the wheat in exchange for only a paper with no costs other than printing, and transfer our income to itself. That is the scenario staged in our country.

The reason for the existence of the US despite its deficit of 600 billion dollars p.a. is that she makes importation with her own currency.

If a country does not ask for its national currency in exchange for the goods exported, and say, receives Dollars; and if those Dollars circulate in the internal market as emission; then, in fact, against the goods shipped, the thing received is only some uncovered US Dollars.

And such an event may be called colonialism only, nothing else.

In the National Economy Model, foreign trade shall be changed from being a method of exploitation, and be carried out according to trading rules. Exportation shall be used for constituting the effective areas of national currency. The areas which are markets for our products, shall also be circulation areas of our national currency.

The capitalist understanding has various models in foreign trade... According to the Principle of Comparative and Absolute Advantages, countries should produce and export only the goods that they could produce more cheaper and have advantages, and they should import the goods in which they do not have advantages, that is in which production is expensive.

Some underdeveloped countries, which complied with this recommendation, has during the years submitted to global powers, and became dependant to them in each respect.

This is because of the fact that, a country, if not produces its requirements in the essential fields of food, defence, education, health, etc., even for any cost, could not preserve its existence and survive. That country shall become an open market, and lose its economic and political independence.

Chinese companies, owing to the lowering of the energy, raw material, tax and other expenses below the world standards, have become capable of selling their goods at a price much lower than our costs. According to the above mentioned judgment, we should not produce anything but purchase everything from China.

The USA and the EU countries, give their farmers production subsidies amounting to 100 billion dollars per year, and therefore the cost of their products are lower than our products. Then we should also buy agricultural products from these countries. But, that would make our country only a open market, nothing else.

Based on the Comparative Advantages Theory, once a proposal was made, which stated you produce  agricultural products, and buy industrial products from us; it was properly replied by Mustafa Kemal Atatürk, who established the state production farms and even ride a tractor as seen in one of his photographs.

Moreover, he exported to Belgium airplanes which were produced in the airplane plant established by him in Kayseri; thus, he has disturbed the game of the capitalist understanding.

And the Factor Endowment Theory of Liberal - Capitalist understanding proposes the thesis that countries with rich labour forces should produce labour intensive goods, and countries with rich capital should produce capital intensive goods.

According to that thesis, underdeveloped or developing countries became contract manufacturers of industrialized countries.

As it could be remembered, while our country was making exports to the USA and EU countries in the sectors of textile, shoes, and leather; upon the lowering of labour costs in China and Eastern Europe countries, these sectors were faced with collapse.

With the implementation of these thoughts, our foreign trade deficit began to break records each month. And with the exchange rates which are kept in a low level, importation in each sector has increased as well.

As the protection of national production is accepted as one of the privileged targets in the National Economy Model, national economy shall be supported and thus, importation of goods which could not be produced shall be prevented. National producers shall be supported through export incentives, and the Government shall undertake search and finding of foreign markets.

CONCLUSION

National Economy Model is a sine qua non, that is, essential condition for a national state. And it is the only antidote against globalization.

Implementation of economy policies which were products of other cultures for long years,  has resulted in the situation that we suffer at this point.

Good news for the societies which could not develop, and confronted with new difficulties in any new attempt for development!..

This thesis which puts forward the National Economy Model and the National Social State, which favours not a weak government but a strong one that is hand in hand with its people, namely the father state shall be the guide for our salvation.

Never forget that; this model is not an alternative model in economy.

The era of other economic thoughts has ended, and it is now the epoch of National Economy Model.

Hope it shall be favourable to our beloved nation and all people.