Ex-MIT physicist here, engaged (for 45 years at this point; I'm 69) in an attempt at

1. catalysis of social assimilation of a math fact at middle-school level, economic impact in the trillions annually, which has stalled for over 200 years, and

2. exposure of underlying interpretive corruption, culturally transmitted, analogous to drift in AI.

Shrinking Ruler Theorem:

The planetary financial system, which treats the currency unit as though it were a stable unit of value, is based on the false presumption, baked into inherited concepts, that the lower line is flat:

Value of payments defined as multiples of the currency unit follow the chaotic curve — shrinking by a factor of 6 over this 50-year span. Adding a date specification to the dollar sign in contract s — $(2026) for example — makes it specify a unit of wealth, & payment values stay level. Indexing, it’s called. The effect in Canada right now would be to drop rates from about 4% to about 1.1%.

Inconceivable Bonanza Theorem:

indexing has always been instantly feasible & costless & will (at the moment, in Canada) cause rates to drop by about 70% & borrowing power to increase by about 50%.

Effect of [indexing / wealth measure] on mortgage borrowing power over the past 75 years, USA:

data link

What “interest” rates are made of: defining RICTOFI

The financial mechanism: what people call “the interest rate” has three components:

• Real Earned Interest: income lenders derive from lending
• Clawback (my term; there isn't an established one, and most economists are not cognizant of the effect): charge equal to shrinkage inflation causes in principal of loan — how lenders prevent inflation from bankrupting them; premature clawback of real principal. This phenomenon was first mentioned in 1738 by William Douglass, a Scottish physician who had emigrated to Boston and was active in pamphlet debates on many topics, including paper currencies which were novel and a wild frontier in the colonies. His remark: “The quantity of paper credit sinks the value of the principal, and the lender to save himself, is obliged to lay the growing loss of the principal, upon the interest.”
• TOFI: (my term) tax on false income: governments tax clawback as lender income. In Canada, tax rate on bank income is 17%; tax on tax results in a geometric sequence that sums to 20%

So the part of “interest” that is not real interest is mainly clawback, plus some TOFI. Putting all 3 together, we have RICTOFI.

Canada, April 2026 (Vancity 5-year variable rate mortgage):

3.95% RICTOFI = 1.09% real earned interest + 2.4% clawback + 0.48% TOFI

Switch to wealth measure: debt shrinkage is stopped, so clawback & TOFI stop, & rate for everything — mortgages, businesses, nation-building pipelines — drops to the real earned rate: around 1.1%

That’s great for borrowers, obviously; borrowing power goes up by about 50%. But it’s also great for lenders: they’ve been shooting themselves in the foot the whole time — lending is what they do, how they make their living, & for them it’s an increase in lending power, the chance to do more business. A superstitious inherited sabotage of the whole concept of long-term finance gets corrected. There is no downside.

History of Indexing

The best history of indexing is in the early chapters of Irving Fisher’s Stable Money: A History of the Movement So Far (1934). One episode he recounts is a brief practical use of it during the American Revolution, circa 1780. The legislators of Massachusetts were concerned about a looming injustice to their soldiers: their pay was in the form of promissory notes, to be redeemable when peace came; but wars cause inflation, and pay specified in money would likely be worth much less by the time it could be redeemed. So notes were issued with an index actually inscribed on them:

Both Principal and Interest to be paid in the then current Money of said State , in a greater or less Sum, according as Five Bushels of Corn, Sixty — eight Pounds and four — seventh Parts of a Pound of Beef, Ten Pounds of Sheeps Wool, and Sixteen Pounds of Sole Leather shall then cost, more or less than One Hundred and Thirty Pounds of Current Money, at the then current Prices of said Articles

The proposal of national-scale indexing is 204 years old. In 1822, Joseph Lowe clearly explained the difference between money amounts & wealth amounts, & how a price index could be used to define a unit of wealth. (Others in the 19th century: Scrope, 1833; Jevons, 1875; Francis Amasa Walker, 1878, 1883; Alfred Marshall, 1879, 1887; Simon Newcomb, 1885.)

Twentieth century proponents of note have included Irving Fisher and at least a trio of Nobelists: Friedman, Modigliani and Shiller.

It took Lowe just 15 straightforward pages to explain his Plan for lessening the Injury arising from the Fluctuation of Prices, in a 30-page chapter entitled The Value of Money, in a 524-page book entitled The Present State of England in Regard to Agriculture, Trade and Finance: With a Comparison of the Prospects of England and France.

The section ended with words that read strangely two centuries later:

“the rule, that prospective engagements should be framed so as to maintain their bona fide value, whatever be the value of money, is so equitable, and apparently so easy of execution, that there seems no little difficulty in accounting for its not yet having found its way into practice.”

Chile’s unit of wealth

When the bubble does burst, the fix will just be what Chile did generations ago, and it will (briefly) seem amazing. Their government set up a unit of wealth in 1967, and now mortgages and many other things in Chile are inflation-proof. It’s called the Unidad de Fomento, defined as the value 100 escudos had on Jan 20, 1967 — the day the UF was born. People consult the current peso-to-UF rate (actually a measure of the changing value of the peso), and multiply the payment amount in the contract (specified in UFs) by it to determine how many pesos are required. They got used to it a long time ago, and it works fine. It was a life-saver for Chile — making long-term finance possible, inflation-proof even during Chile’s hyperinflation. That peaked at 505% in 1974 according to the World Bank; more recent analyses which take shortages and black markets into account suggest a peak of 1500%. One contemporary peso is worth 1,000,000 1960 pesos. Necessity can be the mother of finally waking up.

Robert Shiller, in a 2009 advocacy piece aimed at the British public entitled The Case for a Basket, says

The UF is used in Chile for nearly all mortgages, car loans, and long-term government securities. All taxes are expressed in UFs. Pension payments are automatically tied to the UF. Executive stock options sometimes have strike prices denominated in UFs. The UF is widely used for rent payments. Alimony and child support payments are often denominated in UFs. Office properties for sale are usually quoted in UFs. Houses for sale are often quoted in UFs, though pesos are also used

Cultural context

The phenomenon here — Pythonesque in its absurdity, and no matter what your expectations are, definitely something completely different from any guess you might have — is superstition. From another angle, it’s SciFi reminiscent of The Matrix — though there is no manipulator running the simulation, only communally drifting human minds. It ends — at some point, if humanity makes it past this hurdle — with superstition brought under the microscope of mechanistic analysis. AI researchers are a plausible pioneer detachment: they grapple with phenomena which are least very similar, perhaps identical, and are building a vocabulary and a literacy that may at some point be brought to bear on the human substrate.

The central procedure of real science is one followed on any school playground where one kid challenges another with: “Oh yeah? How do you know that?” That expresses a literacy about the commonality of reason which makes dialog possible (and, if refined, guides to reliable resolution). Where it comes naturally, we call it common sense.

What goes on in economics… you won’t believe until you look closely, understanding the simplicity of the news and watching how minds with the wrong role-image can fail without even realizing it was failure. I was a very active amateur participant in1981-82, having noticed the mechanism of a [most people: "interest rate" / me: "RICTOFI"] spike which peaked in Canada at 21.5%. (Inflation 12.5%, real earned interest c. 6%.) There was an absolute silver bullet - and almost no-one could believe in it, while those that were finally persuaded did not comprehend the scenario of a counterfeit science exposed and were paralyzed like a horse asked to cross a cattleguard. (I would insert a clipping from the Toronto Globe and Mail here if I knew how to add images. Their finance columnist, Ronald Anderson, was a target of mine; I'd recruited Prof John Bossons from U of T, a Modigliani protegé, to help me get a headline on page 1, and the paper routed me through Anderson. Bossons and I expounded and pleaded for hours; Anderson ended up writing a column entitled "Indexed loan plan is urgently needed" - but would not walk down the hall with us to say exactly that to the editors. He at one point passionately defended paralysis by proclaiming, "I just write a column. I've never changed anything in my life." The column ended up on page B2 while the front page was full the topic but with no grasp of mechanism or cure.

As a Canadian, I find myself with the absurd duty of telling Mark Carney what the so-called “interest rate” really is. Harvard BSc, Oxford MSc & PhD; 13 years Goldman Sachs; Governor of Banks of Canada & England, Davos stalwart, Prime Minister; and no-one along that path has succeeded in making him grasp the point; likely no-one tried.

Robert Shiller is a Davos regular as well, an indexing advocate and historian, chronicler of the Chilean experience; but he won’t have tried to illuminate Carney because his mind is twisted into the absurd belief that other economists understand too, and the barrier is the little people: a view published in Brookings paper Public Resistance to Indexation: A Puzzle. That is a surreal document, in that Shiller is presuming economists all understand the need for indexing and that non-implementation is a great mystery - although the respondent, whose lengthy reply is also posted, is Charles Schultze - head of the President's Council of Economic Advisers, 1977-81 (peak spike) - and he doesn't like indexing at all. (Schoolyard rules: settle it! Reason works.)

(here I would insert a cartoon if I knew how; not on the format bar)

If the news does reach Carney, and he assimilates it, bursting of the planetary bubble will I think be initiated (Canada not as ignorable as Chile): no miracle, just history happening. But reaching him requires finding a path unblocked by logic-gating failures, traceable to the crippling illusion that the Age of Science is up and running properly. This leaves people bewildered when the wizard's curtain is pulled back and what is seen is superstitious simulation of an activity whose real substance is communication, whose constant demand is for sensitivity and tuning in other minds: that has always been the rub.