Wednesday, November 15, 2017

Money and a Heterodox Monetary Model

I think that every economist and every economic blogger would like to build a better monetary model.  Those with computer skills would like to build a better monetary  computer model. Unfortunately, modelers will find one problem thwarting predictions that cannot be overcome--shocks to the economy on a monetary level are driven by human decision.

Somewhat amazingly, economist and bloggers find little common ground when it comes to money and monetary matters. Instead, they divide into camps and choose sides. This results in discourses that are little on discussion and heavy on salesmanship, with repeated rehashing of the same boxed-reasoning and frozen perspectives.

This post will be different. Here you will find a mechanical framework that builds upon a fundamentally different initial conceptual base. The approach will be heterodox while still containing some recognizable elements found in the boxed and frozen discussion. After all, even boxed and frozen discussion must have at least some kernels of accepted truth to keep linkage to reality. We will try to find and preserve those kernels but will leave it up to the reader to identify where tradition folds into heterodoxy.

Following a non-economist understanding of money

Our first break into heterodoxy will be to conceptually follow a commonly held public-view of money. We will be thinking of 'fiat money' which is commonly understood to be money printed by the government that has no formal backing other than a guarantee to replace with equal kind. The public thinks of fiat money as a physical object that can be exchanged for value. That is the way we will think of it here.

As a physical object, the public thinks of money as being durable over time. We will honor that concept and add an economist twist: A physical object that has persistence through time periods must have a point of creation, a period of existence, and a method and point of de-creation. To the mainstream economist, we are already preaching in a heterodox fashion. Brace your self--we will find and discuss these three events with differing degrees of thoroughness.

We will be careful to keep descriptive contact with commonly experienced monetary phenomena. Being a heterodox presentation, there will be a need to conceptualize commonly experienced monetary phenomena from different perspectives (yes, plural!).

We may as well open our unorthodox monetary description by using an unsavory contrast. We will ask why counterfeiters want to create money? Our conventional answer will be that they want to create money rather than earn money by doing conventional things. And why do they want to create 'money'? Our heterodox answer will be that they really are trying to create a gift certificate similar to the gift certificate each of us may receive on birthdays or Christmas.

Frankly, I don't know which would be easier to counterfeit--money or a Lowe's gift certificate. If I had either one in hand, I could get something at Lowe's. Obviously, having money in hand would open the door to much more than only Lowe's, so money would be the more desirable counterfeit goal.

We will think of the gift certificate similarity to money later when we consider how money takes on value. Until then, the concept does little for us as we turn our attention to the creation of money. (Beware! The concept may mold our thinking into unexpected pathways.)

Physical money must be created some place, at some time

Consistent with a gift certificate model, we will locate a place of beginning for each certificate. Continuing the dangerous tact of using an illegal act as the initial reference point, we observe, much to everyone's dismay, that counterfeiters can create physical money. This is a fact of reality--an annoying fact. We could say that counterfeiters print their own gift certificates.

Obviously, governments can do anything that a counterfeiter can do.

Now we take the strikingly heterodox position that official government fiat money is nothing more than a product created by government. This money is not 'counterfeit' so long as it is 'official'. This money also has 'gift certificate' characteristics but hopefully government will carefully manage this product to retain value. Methods of value management will be discussed peripherally later in the post. For now, it is sufficient to say that the local counterfeiter prints currency (money) to benefit his personal desires; government prints money to benefit the political desires of a much larger consistency.

I think most readers will be uncomfortable with the idea that government simply prints money. While they may think that this occurred in countries like Germany in the Weimar Republic era, or Zimbabwe of a few years back, or maybe even Venezuela today, they cringe at the thought that ALL modern fiat currencies are printed money.

Brace yourself--governments print money! How else can it be when we see every measure of money increase as the years pass? We need to understand exactly how this printing is done and how government printing differs from counterfeiting.

Governmental creation of money--management and ownership

Fortunately, printing money does not need to be destructive (and something to cringe over) if it is done prudently. The trick is to print and retain value. This can be done if the rate of printing is carefully managed. The key to careful management is ownership. We will point to the printer as the obvious first owner of printed money.

Our counterfeiter, being the first owner of money he prints, can spend his money whenever he wants. If we postulate that he can print a perfect product, his product could be used in parallel with official government printed money, without any problem.

So why is counterfeiting not allowed? It is because the counterfeiter has reached around the trade-of-value-for-value assumption that underlays a viable economic system. The counterfeiter requires very little effort to create money when he creates a paper currency. Despite this recognized fact, this nearly cost-free product can be traded for a days work or other object of value. The future value of money depends upon a reliable translation between units of money and every other traded thing. Uncontrolled creation of money would threaten or preclude stable relationships that might be formed.

The initial dilemma of unequal value exchange does not disappear just because government makes itself the only legal producer of money. After all, the cost of production of the monetary product really is near zero. As the initial owner, government can trade this 'free' money for valuable goods and services. This value windfall is known as 'seigniorage'.

For the non-government sector of the economy, seigniorage is a negative value event. Valuable products and services are traded for pieces of paper-with-numbers. Our next goal is to understand how paper-with-numbers can be translated into a reliable storage-of-value product.

The link between 'ownership' and 'value'

Many introductory economic books will contain a history of money with links of direct conversion to a commodity. In these cases, direct conversion is offered by government in an effort to give creditable value to the monetary product. For example, for many years the U.S. Government offered to convert $35 to one ounce of gold. Convertibility ended in March, 1973 when the world effectively went off the gold standard and adopted the current system of floating exchange rates. The fact that currencies, which are now purely fiat-in-character, continue to retain value emerges as somewhat of a mystery.

 [As the reader continues, he may wonder how the Bitcoin phenomenon can be woven into this mystery.]

Modern Monetary Theory (MMT) (a currently emerging economic theory) points to taxation by government as the driving link to give fiat money value. In my thinking, taxation is a factor but the gift certificate concept offers a much more satisfying valuation method. Money conceptualized-as-a-gift-certificate offers access to the national equivalent of a private business with products to sell. Money is like a National Gift Certificate.

Without a doubt, this is a heterodox concept which may be a show-stopper for some readers with a mainstream economic foundation. But what-the-heck--if we are going to be unorthodox, we may as well let our analogies morph as well. The important thing is to keep links to the real world and gift certificates are definitely a real world phenomenon.

In the gift certificate world, newly printed certificates have a fixed face value but an unknown commodity value. The person receiving a gift certificate, if it is a gift, welcomes the freely given generosity.

As a separate case (but still in the gift certificate world), gift certificates may be accepted as payment for services or products. By accepting gift certificates as payment, we can safely assume that acceptance followed an evaluation of the prudence of completing the exchange. Anyone accepting fiat money with National Gift Certificate characteristics can be safe in assuming that it will have some future value. Finding that future value will be the responsibility of the money owner.

At this point in our heterodox presentation, we have physical fiat money acting like a National Gift Certificate that has been evaluated by the entity owning it. If money is to have a predictable FUTURE valuation, fiat money needs to be carefully managed to avoid the danger of unlimited gift certificates (which would destroy value). How can this be done?

The need for good accounting

It is still dangerous to refer to illegal activity as a reference point but it is done here again to make a point. Let's assume that our local unlawful counterfeiter kept a careful record of the currency he created. Let's also assume that the currency printed was identical to the currency printed by government. How long would it take before our criminal was caught?

I think he could continue for a lifetime if he was careful to not attract attention to himself. He would need to live no better than his surrounding neighbors so that they would not look carefully at his source of income. He would need some sort of fabricated but plausible income source should the question arise in casual conversation. Only a careful trace of the currency he used would reveal that he never went to a job nor a bank nor any other source outside his residence that might be the source of legal money.

While not locally noticeable, this unlawfully produced currency should be noticed by accountants who care for lawfully produced money. These accountants should know how much lawful currency has been issued but they face a daunting task of counting currency in every pocket. The existence of banks makes this task easier.

In the modern world, banks are places where the public keeps most of it's money. Of course, only some of the government issued money should be in banks with the rest residing in the pockets of the private sector of our economy. Our counterfeiter would use the pocket-to-pocket method of money issuance. With his money being identical to 'official' money, counterfeit money would blend seamlessly and inevitably flow into banks. Sooner or later, government accountants should notice that they have someone helping government in the money printing effort. It would take careful accounting to catch our counterfeiter.

Bank loans create money

The task of our government accountants is complicated by banking practice. Banks do more than just take deposits of government printed money. Banks also loan money both to the private sector and to government itself. Great confusion arises as to how this lending gets recorded into the basic deposit system described above. Exactly what does a bank loan to a borrower?

Government has given banks the ability to loan by deposit-entry. This ability allows banks to create a deposit for a borrowing customer, enabling the borrowing customer to spend money up to the amount on deposit. Once created, the borrowed deposit increases the total amount of money apparently on deposit at the lending bank even though government has not printed additional money.

This ability of banks to create money-as-a-deposit is the reason mainstream economist consider money to be ephemeral in nature. Notice that physical money has not been created--only deposits. But deposits are the same as money in the eyes of the money receiving private sector.

We have here a dilemma of definition. How can money be defined to the common satisfaction of both economist and public users?

This dilemma of definition is resolved by observing governmental regulation of banks. Banks are effectively allowed to loan money up to a named fraction of the amount of money controlled by the individual bank. This practice allows banks to expand the apparent money supply (measured by deposits found) to some multiple of the base amount of money previously printed by government.

The money definition dilemma itself is solved by recognizing two classes of money--'reserves' printed directly by government (important to economist and money managers) and common money as in 'money' or 'deposits' (which is important to everyone).

We could say that private banks multiply money, governments add money.

Summing up, we could say that bank lending capability has increased the amount of deposits recorded at banks. This capability adds one step to the task of government monitors seeking our counterfeiter--they need to subtract loans from the total bank deposits which will leave only government printed money on deposit. Now our auditors should be able to detect our counterfeiter.

Not a hard job, but accurate accounting is required.

WHOA! Our banking model has glossed over a vital detail!

Rather offhandedly, I mentioned that banks can lend to government, which increases deposits in banks. This opportunity acts to give government three sources of money needed for governmental purposes--private bank loans, direct printing, and loans from private non-bank entities. Both private bank loans and direct printing increase deposits in banks but only direct printing increases the base money supply  (reserves) without question.

Loans to government from private non-bank entities recycle previously created money and are useful to protect the value of the fiat currency.

It is important to recognize the difference between private banks and central banks when central banks are assumed to be owned by government. If government owns the central bank, loans from the central bank to government are loans to one's self. How does it work to lend to yourself? You issue a bond promising to repay the notes you just created! When the notes are 'green money', you have just printed money. Hence, we observe that government loans from the central bank act to 'print money' and clearly result in increased reserves.

On the other hand, loans from private banks to currency issuing governments should be counted as increasing deposits when we try to catch our counterfeiter. These loans do not increase reserves until the loan itself is sold to the central bank.

Skeptical readers may claim that in the United States, the central bank is forbidden to lend directly to government. This prohibition does not prevent the CB from buying government debt from private debt holders.  The prohibition is effectively bypassed with a three way sequential trade wherein government issues debt, government debt is bought by private traders, and then private debt owners sell to the CB who has created reserves (green notes) in the form of deposits-available-to-the-private-sellers-of-government-debt.

There may be readers who are still skeptical of a relationship between reserves and government debt. Figure 1 confirms the relationship from 1970 through about 2008. During or after 2008, the Federal Reserve (Fed) began buying mortgages. Of course, the Fed has no earning power of it's own and must return all profits to the government. The only reason the Fed can buy mortgages (or treasury notes, for that matter) is because the Fed can print money by increasing reserves. After 2008, the Fed decided that the rate of increase of the base money supply, limited by flowing through the government budget process, was too slow.  A faster way to increase reserves was needed so the Fed joined other central banks (such as the JCB and ECB) in buying equities of some nature from the private sector. These purchases resulted in reserves far larger than would exist if reserves represented only government loans as had been the case before 2008

Figure 1. The relationship between government debt and the St. Louis Adjusted Monetary Base. The period after 2007-8 is distorted by QE programs.

We have seen how government and banks can create money. The de-creation of money is accomplished by reversing the process. Any reduction of government debt or reduction of outstanding bank loans will de-create money. Any money removed from the economy will no-longer be available for cycling within the economy.

Building models that predict lending

It would certainly be nice if a model could be built that predicted bank lending. To some extent, it should be possible if the model is based on past history. That said, it would always be possible to increase or decrease the annual rate of lending at a whim. This 'whimish' nature of lending would render any monetary model vulnerable to human disruption. It would also render any forecast offered by a model to be nothing more than the extension of the parameters cast into the model.

Models would be projections of the builders thinking, not generators of economic foresight.


We have here a monetary model and economic framework that fits with the economic perceptions found widely spread among community members. Following an analogy between money and gift certificates, money is allowed to be physical in character with time persistence in the form of both currency and currency-as -deposits.

Money, being physical in character, must have an originating event. An originating event occurs when fiat money is first made available for spending and subsequent measurement. Money is spent to acquire value in comparison to whatever is purchased.

Consistent with the limitations placed upon physical objects, we theorized the counterfeit creation of fiat money and asked if accounting could detect such an operation.  This question was answered by developing a logical, mechanical, path of money creation (similar to the path found in MMT) and observing that careful accountants watching over 'official' money creation should be able to detect counterfeit operations if the created size became large enough.

Finally, we noticed that money is a human creation, subject to human vagaries which renders economic predictions vulnerable to human realignment. Hence, models that make economic predictions based on monetary performance are vulnerable to human disruption.

This heterodox formulation challenges theoretical claims that  fiat money is debt. In substitution, a claim is made that fiat money is a product requiring careful management to retain value.

(c) Roger Sparks 2017

Friday, June 16, 2017

Wealth is a Micro/Macro-Economic Concept

I am still thinking about the concepts expressed in this post by Jason Smith (including my comments). Maybe I am thinking out loud (as I write this).

Income and consumption are first of all "micro-economic concepts". On the other hand, "wealth" is easily seen as a "macro-economic" concept for the simple reason that wealth is always a relative term. This difference needs a little explaining.

We can write

Individual wealth equals individual income less individual consumption.

This is clearly a micro-economic concept. It would only have broader macro-economic meaning if the wealth term was compared to other individuals who may or may not also have wealth.

We could also write

entire economy wealth equals sum of individual wealth

which is clearly a macro-economic concept.

The two concepts converge at the formula level except for one thing. What is the unit of measurement?

Of course, we use "money" as the measurement tool. In both formulas the units of money are counted as if money was a physical object.

Now if money really is a physical object, it must have a physical creation and a mechanism of destruction. Bank loans are the usual mechanism assigned to accomplish this task when physical money is allowed into theory.

Further, if money is physical, it is subject to capture. To illustrate this concept, we need to ask where money may reside (among many individual potential owners) at each measurement point in time? Will the same owners have control at every measuring point?

The answers to these two question will have an influence on the concept of wealth itself. I would expect that in a capitalist system, nearly all the money would be under private control. In an oligarch system, nearly all the money would be found under the control of a few "wealthy" private groups. In a communist style of government, nearly all the money would be found to be under government control (in one way or another). No doubt, there would be many flavors of monetary distribution.

Returning to the question of the physical nature of money, money may come from banks but what gives it value? We have already recognized that wealth is relative to the wealth of others. Is money also valued as relative to something?

I would answer "yes". I would suggest that when an individual accepts payment for labor in the form of money, he is accepting whatever currency has been borrowed to make the payment possible. With currency in hand, it becomes the responsibility of the new owner to gain maximum value for the currency from the next exchange.

Why (the reader may ask) would anyone take currency unless they knew the value of that currency? Well, if a person was unemployed, would he seriously consider working for a store owner who offered to pay in the form of "gift certificates"?  If  the person trusted the store owner, no doubt the answer would be "yes". Gift certificates earned in this fashion would have the same physical character as money so long as they were used (finally) in the issuing store.

When money is considered as if it were a gift certificate (issued on the national level) the concepts expressed herein begin to flow into a very understandable context.

Can we fit the concepts expressed here into the data found in the National Income and Product Accounts of the United States (NIPA)? Only with difficulty. The NIPA data is filled with imputed information that detracts from the strict monetary measures suggested here. It would take considerable research to sort the available data into the classifications that are suggested herein. We would also need to sort money created by borrowing into the categories of money-newly-created and money-previously-created-borrowed-again.

"Weath" (as a guiding concept) may be a useful bridge between micro and macro economics, worthy of additional study.

Friday, May 26, 2017

S = I + (G-T) and National Gift Certificates

Brian Romanchuk was discussing general equilibrium and the discussion wandered into the creation of money.  Joe Leote offered a comment that tied savings to the system of general accounts. His comment included the equation I support in the following comments. (The following quote is my return comment to Joe Leote.)

"@Joe Leote
"S = I + (G - T)"

I completely agree with your equation.

One method for supporting the logic behind the equation is to apply it to the accounting for a locally issued gift certificate. Ownership of a gift certificate is identical to owning money so long as we are shopping in the issuing store. We can call the gift certificate "mercantile money".

What happens if a merchant issues a gift certificate in exchange for electrical repair labor? New mercantile money has entered the economy.

The merchant had better account for the claim he just issued on the goods in his store. (A gift certificate (or mercantile money) is a claim on goods, limited to the amount of value on the certificate.) The merchant should record "investment = value of the electrical repair" and, in a second entry for double accounting, "savings = value of the gift certificate issued".

The savings value was created right out of the blue. Labor was performed and, at least for a while, was paid for by newly issued savings.

Now who owns the savings? I think the merchant owns the savings until the gift certificate is finally satisfied. However, one could also make the argument that the electrical worker owns the savings. The worker is richer because he has the ability to claim goods at any time. The worker also has savings.

So we see that both merchant and worker can claim to be richer because mercantile money was issued and electrical repairs were made.

"S = I + (G - T)" allows us to see that savings are created by people working for government and receiving National Gift Certificates in payment."

The final quoted paragraph is a little cryptic. The link between money and mercantile money prompts us to compare gift certificates (merchant issued) and National Gift Certificates (money issued by the national government). 

I think the parallels are very complelling.

Tuesday, May 16, 2017

A Crisp Definition of Money

The blog "The Epoch Times" had a post by Valentin Schmid "The Economic School You've Never Heard Of". I wrote the following comment:
I have not yet seen where "Austrian economics" recognizes how government spending violates the "trade-for-trade" (Note one) rule. To understand this concept, we must recognize that government never produces a product--government can only produce money to pay for a product.
Where does government get money to pay for a product? Taxation is one method but tax (in the form of money) is only collected if someone first produces products that can be traded for money. Government spending financed by taxation is following the "trade-for-trade" rule.
The second source for government spending may not follow the "trade-for-trade" rule. Government can borrow money for future spending.
Government has two sources of lenders; one follows the "trade-for-trade" rule, one does not. Government can borrow from private lenders who do follow the "trade-for-trade" rule. Government can also borrow from itself by borrowing from the central bank. THIS SECOND SOURCE OF BORROWED MONEY VIOLATES THE "TRADE-FOR-TRADE" RULE (because no-one ever worked to first earn the money marked for future government spending.
*Note one: "People come together to voluntarily engage in commerce with one another for their mutual benefit." I sum this phrase with the term "trade-for-trade". As an entity (not a productive individual) government has no ability to be creative. Government can only work in terms of monetary exchange. Hence, the source of money for government exchange becomes crucial.
In reply to my comment, Richard wrote:
 In order for your comment to have greater validity, wouldn't it help to define the concept "money", to include its purpose and source of creation? Of course everyone uses the term 'money' without giving it a moment of thought as to what it is and how it springs into existence. 
         I suggest a thorough reading of E.C.Riegel

In reply to Richard's comment, I wrote:
Yes, it would help to have a crisp definition of money.
I used a birthday gift certificate a few days ago. As I wandered the store (which issued the certificate), I realized that, so long as I was in the store, the certificate had equal value to the "money" i had in wallet or national credit card.
"Is money just a National Gift Certificate?" I wondered. That thought led me to think deeper into the idea of "merchant money", which is money issued by merchants and commonly known as "gift certificates". How does the merchant issuing certificates account for the certificates, print them, and redeem them? Can "merchant money" be traded or issued as payment for services rendered?
The answers to these questions (and more) seems to be parallel with our expectations from our everyday money. Our everyday money seems to be "merchant money" traded on an international scale.
To integrate this idea with my previous comment, think of the Central Bank acting as an arm of Government, issuing "National Merchant Money" or "National Gift Certificates". It all seems to fit together quite well.

These comments tie with my blog post  "The NGC Model, Banking and the Creation of Money" The recent comments contain an new idea, which is to identify "gift certificates" as "merchant money". The term "merchant money" translates easily to the money we handle on a daily basis and seems to convey an accurate impression.

Maybe "mercantile money" would be a better term, more general than "merchant money"?

Richard is right. We (as economist) need a crisp conception of money, and how it is created and destroyed. A crisp analog seems to be available in "mercantile money" commonly known as "gift certificates". This "mercantile money" must be created by the merchant, be properly accounted for, be used in trade, and have the possibility of direct dissemination by the merchant in exchange for goods and services.

Our crisp definition for "money" is "Money is a National Gift Certificate". An analog of "money" is "mercantile money", commonly known as a "gift certificate".

I think the crisp definition  and analog work.

Monday, February 6, 2017

The Natural Monetary Chart

Here at the Mechanical Money blog site, the philosophy is to make the monetary system as mechanical as possible. This requires each monetary concept fit seamlessly into the next concept.

Our Questions

A question that frequently arises in basic monetary discussions is the initial pricing of the reference item. How do we decide if the initial price is 100 units or just 10 units?

The second question is a follow-up of the first. Knowing the first price, what is a second item worth?

Some Background

Now assume that we have no monetary system at all. How do we select the first price? Logical deduction supplies no answer. We must simply pick a beginning point.

Wait! Pick a point? Where in the mechanical world might that be?

Let's assume that our model society understands arithmetic. They would understand a measuring stick that was scaled between zero and some commonly used maximum measure. An example would be a 'yard stick' that is measured in inches, having a maximum scale of 36.

Our Monetary Scale

We can build a monetary scale that begins with zero and expands to infinity. The width of each unit is completely arbitrary. We will call this imaginary line "The Natural Monetary Scale".  It can drawn onto paper but we don't  yet have scaling units. Scaling will follow after we introduce another concept.

More Background

The reason we are considering the money concept is because we would like to theoretically move past the barter system. In barter trade, dissimilar objects change ownership group-by-group. For example, five arrowheads could trade for one elk antler. This is very inconvenient if the antler owner, wanting to not break his elk antler, wants only one arrowhead. Money is a standardized physical object (some claim an "abstract or non-existent" object), available in very small sizes that can easily be aggregated and stored. The use of money (if he had some) would simplify the antler owner's trade decision.

The Value Question

The problem faced by the antler owner is faced by every owner of every item. The value of the item is not the same as the item potentially purchased. Money does not solve this problem. Money is just another item (whether physical or abstract). Money has it's own valuation problem.

Further complicating the value question, the value of any item varies in the eyes of the trading persons. The person owning eight arrowheads will have a different unique value assigned compared to the person owning just one arrowhead. A red arrowhead will have a different value than a black arrowhead.

If we expect to value property, it will need to ranked and scaled just like money needs to be scaled. The money scale will have one advantage--it will be a scale with uniform steps.

The Chart

With this background in mind, we can draw Figure 1, the Natural Money Chart.

Figure 1. The Natural Monetary Chart. The uniformly increasing numbers on the x-axis constitute the Natural Monetary Scale.                                
We use the Natural Money Chart by entering the item-of-interest onto the vertical axis. In Figure 1, we see that several apples are worth about 3 units on the Natural Money Scale. Gold is more valuable but not yet evaluated. One apple is less valuable than several apples but (again) not evaluated.

The Natural Money Chart is a purely arbitrary chart. The Money Scale is arbitrary. The single factor that makes it  (the scale) physically real is the decision to relate several apples to a point on the scale. In Figure 1, several apples translate into 3 natural money units.

We will need to add more items into our Natural Money Chart. To do this, find agreement on the relative value of any other item. A single apple is an easy example. Assume that several apples are counted to be seven individual apples. We would calculate that when seven apples are valued at 3 units, one apple would be worth 3/7 money units. Draw the connecting lines to 0.42857 on the Natural Money Scale. One apple is worth 0.42857 units of money. [We already assumed that our society understood arithmetic.]

There is a second way to set the scale units on the Natural Money Scale.  Any two dissimilar items can be picked and assigned an arbitrary value [preferably an evenly scaled value such as when the more valuable has seven times the value of the less valuable]. To make the chart, place the physical items on the vertical line and the arbitrary values on the horizontal line. Following the scale lines, establish a reference line with the correct intersecting slope.


Once we have monetary units, we can begin bookkeeping.

The Natural Money Chart allows a seamless transition from physical property to money-as-a-physical-object. It is immaterial whether money is considered as abstract or physical; all that is important is that a seamless translation from socially acceptable value to a uniformly scaled number be made.