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Economic Accounting as prescribed in the Torah

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Humanity in the world currently has a population in great excess of six billion people. A small percentage of these people are devout Jewish people, and many more are descendant of these devout followers of long ago. As someone who has studied Accounting and Economics, Chapter 25 in the book of Leviticus has intrigued me as group of passages less publicly distorted than others. My deepest reason for intrigue is that after reading Chapter 25, I am left with the impression that it must somehow make "economic" sense, despite what I may think of the book of Leviticus as a whole.

Despite a great number of years since its proposal, the concept of Sabbaths, and of Jubilee, may hold promise as a economic solution for the modern age. I believe if a multidisciplinary school of knowledge were made available to judge the concept of Jubilee in relation to the worldwide economic panic that began in the early 21st century, those with keen enough insight would have the means to prove the merits of this concept. This concept, for the economy, has been prescribed a long time ago in the ancient text of the Torah, in plain sight of many people who have read the Bible.

Demystifying the number 7Edit

All renowned dictionaries define the Sabbath as the last in a series of seven time periods, where the sabbath is distinguished as a time of rest equal to the each of the prior six periods of work. So the most basic definition of the word Jubilee is not in dispute in academic circles. However what is so special about it then? What is the difference between defining a period of seven, than say, a period of nine?

Seven is a prime number, meaning that is it not the product of any two whole numbers greater than one. Although 7 is a prime number, it is not the only prime number. This observation fails to show that the number 7 has any unique property.

Upon any successful attempt to distinguish the number 7 from others in a way that is not superstitious or plain trivial, one must realize that the only case where one may understand the unique mathematical properties of the number seven is if it has a special property that transcends from its position on the real number line. Fortunately for the argument in this paper, higher mathematics can prove that the number 7 has unique properties just as how similar proofs have been demonstrated unique properties for the numbers of pi(=3.1416...) and e(=2.718...).

A preliminarily start on this train of thought may begin with the fact that nontrivial binary cross products can only exist in either 3 or 7 dimensions. A seven dimensional cross product results in a matrix containing 49 separate products. This may be likened to the 49-years, or 7 times 7 years, as described in Leviticus Chapter 25.

What exactly is prescribed in Leviticus Chapter 25Edit

Property: Original ownership and transfer of propertyEdit

The price of all fixed assets, such as land, is to be determined according the number of years remaining until the end of a 49-year period. Therefore, that time difference will be a lowest common denominator, but not an absolute setter, for the various market selling prices of all land and other fixed assets. It will therefore become easier to purchase the same land within a few years of the end of the 49-year period than many years before it.

The end of the 49-year period is followed by a 50th year, which overlaps the first year of the next 49-year period. The 50th year is known as the Jubilee. In some translations of the Bible, the Jubilee is called the Year of Restoration.

The Jubilee is a period where it is intended that all financial debts on property will be forgiven, on the condition that such property be returned to their original owners or their descendants. The original owners are those who built the property themselves, as they are the people from whom the property originates. Thus the original owner or their descendants must assume the highest level of responsibility for the property itself, lest they decide to leave the property to the governing authority.

As long as that property lasts, the income from the property will serve as an inalienable source of basic sustenance for the owner and his/her descendants.

In this market, a house of a certain quality will have a market value that falls until the 49th year. At first, this seems to completely arbitrary. One may notice however that the only way this practice could be justified is by virtue of effect, and not by how it was decided to be the case.

Looking upon how the market is right now, we can easily observe how credit and the perception of falling interest rates has been used and abused to artificially stimulate demand, as though the home buyers could not stimulate themselves enough to buy a house with the house values increasing as they are. Interest rates on liabilities have been used as a tool to spread liability due over a long period of time, which may not reflect how much has already been paid into the house by a previous owner. It is also very rare that someone can pay for the cost of a house all in one go, to avoid incurring a long-term liability.

The reduction of house prices over the 49-year period sends a signal through the economy that the prices of houses should naturally decline overtime. If not justified by their appreciation of the perceived value of the home, the amount due must be limited by factor proportional to the falling number years over which future payment may be distributed. A owner who severely, but not totally, damages the property, will incur a loss that increases not only with drop of period market value, but also with the number of years remaining in the 49-year period. As the market prices(=periodic fair value * remaining periods) earlier in the 49-year period are relatively higher, it would be better to start sooner rather than than later to repair the house to restore its market value.

If a house's construction is completed by its original owner near the end of the 49-year period, it becomes clear that the original owner would deserve to see the rents from the property in the coming 49-year period. This makes is clear that the governing authority shall not obtain ownership of the property's income. If the original owner is not alive anymore, then his living descendants may still live in the property freely or rent it out to others. With no more years of life for either the original owner nor the living descendants, the governing authority then must obtain ownership of that property, and it must assume the highest responsibility for maintaining its upkeep and value, lest it demolishes the value entirely.

In this system the original owner, followed by his descendants, and ultimately the governing body, must see to it that no other party assumes the duties of landlord for their property. Thus, if payment is not made on the property by the tenant, then the original owner, or his successors, may be the only one to retrieve the property to account for the damage losses.

Savings and Loans: Repayment and forgiveness of debtEdit

While slavery in the United States as well in many other developed countries is usually understood as a civil rights issue, in one passage in the Bible, it is stated that a borrower is slave to his lender, which implies that its definition slavery is not only limited to the typical imagery associated with the some of the worst violations of human rights, but extends also to the relatively mundane relationship that occurs through a system of financial borrowing.

Leviticus Chapter 25 elaborates on how a borrower should be able to earn back a decent living. One provision is the lack of interest on borrowed funds. Instead of this, what is done instead is that this person who borrows the funds from the lender must be hired as a worker for that lending institution (or just the lender if the lender is an individual), with the same classification of pay as their fellow co-workers.

A person may be literally "bailed out" out of debt at price proportional to both: 1) The annual salary the lending institution pays the borrower to work for them. 2) The years remaining until the end of the 49-year period.

At the end of each 49-year period, all debts are forgiven by the lending institutions and every financial indenture between lender and creditor must be dissolved.

Modern application of the economic provisions described in Leviticus Chapter 25Edit

In a economy where a single person may be indebted to many dozen lending institutions, it does not seem practical at all to work directly for the people whom one is borrowing from. A train of thought must begin from here concerning what financial medium could be required to implement this periodic accounting system. Because the idea is strongly linked economic accounting, a table of financial accounts, most likely in the digital format, would be the means of implementation.

In accounting, the notion of average accumulated expenses is used to describe the time-weighted average of accumulated expenses. That means if a single purchase is made earlier in the period rather than later in the period, then the effect that same purchase has on average accumulated expense is higher rather than lower.

If one matches the accumulated expense with accumulated borrowed money, one may set a periodic due for that borrowed money proportional to average accumulated expense since the beginning of a common period. In this case, the period in question may be 7 years in duration as opposed to 49-years, just to be more frequent. Therefore, if some latter portion accumulated expenses are twice as close to the end of the seven year period, that portion's effect on average accumulated expenses weighs half as much periodically.

All overpayments to periodic due (which are most likely to occur earlier in the seven-year periods) will act as though they were payments to cover a higher accumulated expense than was accounted for. This value over that of the actual accumulated expense will be counted as equity. The value of this equity consists of a value product of time and money. Thus accumulated equity can be used to own a property of a certain value for a certain amount of time. For the exact same equity, one could possess $400,000 of hard assets for five years, which would be identical to possessing $200,000 of hard assets held for ten years.

The equity and debt would be saved between each of the 7 year periods, until the year of Jubilee where the equity resulting from all overpayment is 100% canceled with the debt resulting from all underpayment.

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