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Here's the beginning of the end of the idiocies of neo-classical macro and of the fallacy of Dynamic Stochastic General Equillibrium: A 50% Discount/Rebate policy at retail sale and a 50% Dual Gift to the banks and to the individual at point of loan signing and the other policies of the new monetary paradigm. The 50% Discount/Rebate at retail sale doubles individual demand while simultaneously implementing beneficial price and asset deflation which integrates the self interests of individual and commercial agents. The 50% Dual Gift at loan signing implements continuous debt jubilee into the economy thus ending the dominating monopolistic paradigm of finance and the inevitable build up of private debt. It transforms DSGE into DSGMD, Dynamic Stochastic General Monetary Disequillibrium.

The destruction of anomalous orthodoxies and the beneficial inversion of temporal universe realities: classic signatures of historical paradigm changes. All objections are just "truths" within the present paradigm. Align further regulations with the new paradigm concept to solidify and stabilize it because mankind has shown itself to not be an entirely rational or ethical species and "learn by doing". Nuf said.

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A critical element in the law of diminishing returns is the evolution of continuous improvement tools and the Toyota Production System. In this environment we learn to invest successfully at small regardless of scale. Continuous improvement done correctly, destroys the Pareto Principle. We can attain more output from the same fixed cost. From J.M. Clark Overhead Costs in Modern Industry --- "Knowledge is the only instrument of production that is not subject to diminishing returns."

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Continuous improvement, as developed by Deming, ignored by American firms but adopted by MITI, Toyota and subsequently many other Japanese companies, and ultimately the whole world of manufacturing is a crucial part of modern manufacturing. But I would not in any way associate it with diminishing returns--the opposite in fact, as you actually describe it here.

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