Fakirnomics or Don’t Shoot! or The Permanent Credit Economy and the Point of No Return


George Osborne Needs You To Borrow Billions To Make His Plans Work

The Huffington Post UK  | By Asa Bennett tp://www.huffingtonpost.co.uk/2014/12/05/george-osborne-debt-obr_n_6274264.html?utm_hp_ref=uk

Revealed: how the wealth gap holds back economic growth

OECD report rejects trickle-down economics, noting ‘sizeable and statistically negative impact’ of income inequality



If a believable mainstream justification for Quantitive Easing is possible, it must centre on the restructuring of national economies in the aftermath of the Financial Crisis.

Both the Bank of International Settlements and the International Monetary Fund have called on national governments to use the window of opportunity provided by QE to carry out this restructuring. Indeed, they have expressly stated on more than one occasion that QE is only really justifiable if this restructuring happens.

But attempts at restructuring have met with at best mixed success; not least because it is very hard to get a concrete idea of that this supposed restructuring would actually mean. How can we know if restructuring has successfully taken place? Well this question at least does have a clear answer that everyone can agree on: there will be renewed growth in the economy.

By this measurement the most successful examples of economic restructuring are Britain and America. Unlike Europe and Japan, which have been balancing on the edge of recession for the past six years, Britain and America have experienced some level of growth. So if we understand what has changed in Britain and America we will have a pretty good idea of what restructuring actually is.

Have banks and financial institutions in Britain and America fundamentally changed their structure or the way they operate?


There has been some regulatory tinkering round the edges of speculative banking operations but the core activity of manufacturing derivatives is largely untouched, even bonuses have not been substantially affected.

Does the financial sector play a smaller role in the economy now?


Financial services continue to play an ever -growing role in the economies of Britain and America, there has been no real resurgence in manufacturing or traditional industries. These economies continue to be increasingly unbalanced in historical terms.

The growth we have seen in the domestic financial economy of Britain and America has centered on asset growth in the form of stocks and bonds, new derivatives and profits from privatised sectors like education, war, prison provision etc.

For ordinary people in the old fashioned economy there has been asset value growth in housing. This growth in the financial and legacy economies is financed though credit, not through wage growth. Mass immigration and an intensifying attack on trades unions and workplace rights means that wage growth is effectively impossible under the Monetarist regime.

In other words there is an ever increasing reliance on money itself as a vehicle for creating value, not only for the financial elite but for society as a whole. Rather than reducing the financial sector in favour of the real economy, the real economy is being made ever more like the financial sector. This is what restructuring has turned out to mean.

Contrary to the rhetoric of the Neo Liberal project, the mass scale extension of credit is effectively creating a fully planned economy. But instead of governments, it is private credit agencies that increasingly decide what resources are allocated where. The financial and political elite are moving towards comprehensive planning without the political problem of having to admit that the free market is a mirage. This will be quite some trick if they can pull it off.

This is the Permanent Credit Economy. Where credit is not an optional decision, but a permanent necessity of economic life.

But there is a cost to the use of credit as the brain and the heart of the economy. As more and more people integrate more and more credit into all their economic activity, the ever increasing burden of interest payments diminish earning power at an even faster rate than immigration and deregulation does.

Wages have to be allocated to paying off the interest on student loans, mortgages, car loans, credit card and other unsecured debt . This money taken out of the commodity economy is one major cause of the deflation we are now seeing across the developed world. People simply don’t have as much money to spend on commodities as they used to have. In other words there is less and less discretionary spending; you have less and less choice where your money goes.

Increases in credit push up prices on student loans, mortgages, cars, and credit card debt. The more credit that is available the more can be charged for the things that are bought on credit. Were it not for the financialised restructuring of developed economies, the I Phone would cost no more than $200…

But even more insidious than the ratchet effects of interest and credit, is the control and planning effect of credit I refer to above. What you buy is increasingly determined by credit agencies. You are able to get credit for any purchase to the extent that the purchase has a commensurate value and to the extent that you are able to service the payments on that purchase. You can’t borrow $2000 to buy an old car that is only determined by the lender to be worth $1000. This is the flipside of the end of discretionary purchases, even if you are allowed to have the money (credit), you are not allowed to spend it as you wish.

Economies all across the developed world are now growing or not growing entirely to the extent that financial institutions are successful in getting people to take up the offer of credit. There has been some take up of credit for housing in Britain, the market has been goosed by government subsidy. This housing asset recovery is taking place in parts of America also. (San Francisco for example).

On the other hand the failure to take up credit is reflected in the gloomy headlines with regard to the economies of Europe and Japan. In Europe there is at best stagnation and more often contraction in housing credit. Japan is notorious for its domestic populations tendency to save and avoid credit. Shinzo Abe has resorted to shock and awe tactics to firebomb the savings of the Japanese public and force them into the speculative credit marketplace.

A recent article in the Huffington Post made explicit that George Osborne is counting on a further massive increase in secured and unsecured debt as the means to ‘grow’ the British economy.

The HP tells us that:

‘the Office for Budget Responsibility, …forecast that Britons will need to add £360bn over the five years to its levels of unsecured lending, which includes credit card debt, payday loans, and bank overdrafts’.

The £360bn figure represents a £41bn increase on the OBR’s forecasts just nine months ago and would take households’ unsecured lending, as a share of total household incomes, to a record 55%  by 2020. This would be well above the pre-financial crisis unsecured debt ratio of 44%.


APPG member Willie Bain, member of the Commons business committee, told HuffPostUK:

“The chancellor promised in 2011 that the government would lead an export-led recovery, yet this week the share of growth coming from net trade was predicted to fall further in each of the next five years. As the Bank of England said recently, recovery needs to be based on policies which boost wage growth, raise productivity and create more higher skilled jobs. Growth based on soaring levels of personal debt is no recovery at all on living standards for millions of working people in Britain.”


Hand in hand with the extension of credit comes the shrinking of the real economy. When the real economy shrinks, the state that relies on the real economy is forced to shrink too:

This comes after the Institute for Fiscal Studies warned that Osborne has “colossal cuts” left to make in order to meet his deficit reduction plans that would leave the size of the state “changed beyond recognition”.

Despite ministers’ indications that the bulk of the austerity agenda is over, the economic thinktank said that just £35 billion of the cuts in spending by Whitehall departments have already happened, with £55 billion yet to come.

You cannot have a viable consumer society without a welfare state. The efficiencies and security that comes from knowing that education, health and housing are backstopped by the state means that people can afford to spend on consumer goods. Without this state guarantee, people are forced to take up private insurance to cover necessities. This is risk that has been transferred from collective provision to the individual.

This is money that no longer goes into the commodity economy which shrinks as a result. This shrinking in turn causes more redundancies and less income and lower tax receipts. Which shrinks the state, which further shrinks the economy, and the process starts all over again ratcheting ever tighter.

As reported in the Guardian:

[the data collected from the thinktank’s 34 rich country members] suggests it is inequality at the bottom of the distribution that hampers growth.”

Rising inequality is estimated to have knocked more than 10 percentage points off growth in Mexico and New Zealand, nearly nine points in the UK, Finland and Norway, and between six and seven points in the United States, Italy and Sweden.

The ‘old’ economy serviced by government issued is shrinking. The ‘new’ economy serviced by democratised money goes from strength to strength.

Indian fakirs are famous for holding an arm aloft for years and years at a time until it finally begins to shrink and wither away. It is a demonstration of extraordinary willpower. The population of the developed world has stood before the Monetarists with  hands in the air for six years now. They are withering away. Soon we will be past the point of no return.

Posted in Crackernomics | Tagged , , , , , , , , | Leave a comment

We Need to talk About Kapitalism or Big or Just Because You’re Used To Something Doesn’t Mean You Like It..

updateTue Nov 19 2014    The Guardian is the latest to report on  an impending bottleneck in cocoa production resulting in sharply rising prices…


I was predicting exactly this development four years ago in commodity supply as a direct result of the democratisation of money. I even accurately predicted the excuses that economists would make to try to explain this bottleneck away!

‘The result of all this will be an increase in basic commodity inflation. Foodstuffs and other resource commodities will begin to exert a kind of internal ‘barter’ value irrespective of money value. When ‘Classic’ economists observe this effect they will claim it is a by-product of increased global scarcity’

July 12 2010 Effects of The Democratisation of Money.

NOBODY else correctly predicted this development and even the response that economists would make to it. Which is all the more remarkable given that I made this prediction four years ago. Which all goes to show that understanding The Democratisation of Money is the only way to really understand what is happening now and what will happen in the near future…





We Need To Talk About Kevin is a prize winning novel and a film. A mother reflects on the development of her son in light of a disaster: the boy has massacred students and staff at his high school but not before killing two other members of his family- his father and his sister. The boys mother is left to deal with the consequences of this mayhem and her part in it…


‘We Need To Talk…’ can be read as satire as much as anything else. From the privileged position of hindsight we are invited to watch the undermining and eventual collapse of the American dream- not just for one family but for everyone around it.


Ambiguity as to who is guilty and who is innocent is never far from the surface. The cartoonishly optimistic American dad refuses to see a dangerous pattern emerging in his son- even as it results in the loss of an eye for his daughter. The mother cannot see beyond her own neurosis in her dealings with her child. The cult of fame and celebrity works to magnify whatever poison is growing inside the boy.. All these factors lead us to question whether the oncoming catastrophe could have been avoided and if it could, who is at fault for not preventing it?


I have visited this idea before in ‘MAD or It Was Only A Matter Of Time…’ Posted on February 19, 2014. I drew attention to the character of Ely wandering through a hellish post apocalyptic world who says;


‘We knew this, or something like it, was going to happen’.


This is particularly poignant on the Centenary Anniversary of the 1st World (Germanic) War. Lots of people knew the War To End All Wars was coming without what exact shape it would take. And the same is true of the war that followed it. And the same is true now. You know something is going to happen. Its shadow looms but we cannot tell what the shape behind the shadow is.


Very, very few people are really stupid or completely blind to the truth, though lots of commentators like to imagine that the majority of the public is. It is a way of explaining the recurring disasters that plague human society. The truth is that like Kevin’s parents, people are emotionally invested in the beliefs and groups they are part of.


Our economic/political system and the society that supports it, did not come down from heaven, nor was it the result of a logical quest by the brightest minds on the planet to find the best system possible. It is the historical product of a specific society and its people at a certain time.


Like a child reflects its parents so this system reflects the people that created it. And they see themselves in it. In the same way that parents contemplate the end of their children, the creators of this system contemplate its end as the end of themselves. And they are right. The end of Capitalism will be the end of Germanic culture as a world force in human history. So they will NEVER willingly turn against this system. And they will ultimately always justify it, no matter what. Because their very identity depends upon it. This is the death grip embrace between a society and the people within it.


Which brings us to the myth of the changeling; the belief that a child has been substituted by another creature that looks and sounds the same, but is very different underneath. The name of the changeling in this case is Crony Capitalism; the product of Globalists and Neo Feudalism who smuggled this cuckoo into the Free Enterprise nest. The complaint of crony capitalism is the same as a parent complaining that he does not recognise the boy he sees rampaging through college on the six o’clock news.


Whatever our economic system was in the past, it is very clearly now unable to exist without abandoning the systems and controls of the past. Isn’t this what is really meant by ‘too big too fail’?- That the consequences of a free market can no longer be supported by the system? That we are committed to a system that can no longer support its own internal logic?


Since logic is no longer supportable, the parent invests in the myth of the idealised child was with ever greater determination. Libertarians tout a return to the golden youth of free enterprise in the midst of an unprecedented state control of the economy; like an accountant deciding to blow his retirement fund on a Harley Davidson and a set of leathers. And this would not matter so much, might even be funny in a way, if it were not for the tragedy that we can see approaching.


Can you see any way that state control of the economy can be replaced by a return to ‘free markets’?

Can you see any way that ordinary people will ‘freely’ agree to the mass impoverishment this would cause?


Can you see any way that the debts that have been run up by the advanced economies can be paid off without destroying the economy as we have known it?

Can you see any way that advanced economies can run a massive permanent debt, (openly acknowledging it will never be paid off), and still call themselves capitalist?


Can you see any way that China will agree to be managed FOREVER as a junior partner in its own sphere of influence by America ?

Can you see anyway that America can avoid trying to manage and retard China’s growth without its own interests being permanently, irrevocably damaged?


Can you see any way that NATO and Europe can continue to expand without impinging on Russia’s fundamental interests?

Can you see any way that Europe can avoid the expansion necessary to secure its economic interests in Europe and Eurasia?


And if you can’t face all that, you can perhaps face this one little truth:


Is the Quantitive Easing ‘allowance’ Anglo Saxon parents pay to this boy every week really a gift?

Or do they pay it because they fear what he will do if he doesn’t get it?…


Isn’t it really protection money?


Posted in Crackernomics, WHITEISM | Tagged , , , , , , , , , , , , | Leave a comment

Commentary 9 November 2014


update12 November 2014

They Will Have Blood



Ed Miliband is being slowly skinned alive by the press in England. Every day there is a fresh story detailing Millibands latest fall in the polls and  warning of the terminal damage he is doing to Labours chances of getting elected next time. It’s not only the press pack who are on Milibands tail. It seems that an ever larger group of his own MP’s are openly briefing against him as well. So what is the cause of all this dissension and hostility? What is so wrong with Ed Miliband that wave after wave of insults are to be  heaped upon his head?

In a word- decency.

Ed Miliband refused to go along with the stitch up on Syria last year. He refused, for whatever reason to sign off on the slaughter of Syrian men, women, and children and the installation of a Takfiri Pol Pot style regime in Damascus. And that makes him unreliable. That makes him downright dangerous. And so he either has to get in line or get lost. And that is what this is all about. Don’t be surprised if a new line of attack on Assad is unveiled over the next couple of weeks. The BBC is running a week of ‘Syrian themed’ coverage- I don’t need to tell you what the general tone of that coverage is. And you don’t have to have a degree in media studies to see where this is all leading. And Ed has got to decide just how badly he wants to be Prime Minister. The going cost is roughly about, one soul.

But they will have blood either way- Milibands or Assads.


update10 November 2014- The Sin of Wages

CBI calls for childcare subsidies and tax cuts for working families


Business lobby claims radical ideas are needed to raise the living standards for families and low-income workers

The Confederation British Business  -CBI,  is trying to call the Monetarist attack dogs off the people! Well, they are actually advising the dogs to bark more and bite a little less. Presumably they think that the mangled and torn victims of the past six years might just give up the ghost unless they get a little relief. You could argue that this is more about image control than real economics and no doubt there is an element of that  in these policy recommendations. But nevertheless, it’s hard to avoid the feeling that a substantial section of the real economy (which includes management and bosses) is getting seriously nervous about the deflationary effects of ongoing austerity and wage stagnation. (see the Yellen submarine below). So they are looking to the state to subsidise some kind of consumer revival through deficit spending.  Of course, the other option would be to remove some of the restrictions on trades union activity that would be GUARANTEED to get wages moving upwards again. But that is not something the CBI or the Monetarists are prepared to consider- is it.


starthere1.New World Disorder- The Secret Economy and Everybody Gets To Go To The Moon

Can you have a system of disorder – Or is that a contradiction in terms?

I was chatting to Dave Harrison @ tradewithdave.com  about transitioning to a new digi/crypto economic system and the implications for the global world order. Will national systems be superseded by a single global system that is even more controlling and oppressive? I argued that the new system would be based on disorder rather than order:

I remember a recent  item on BBC news covering Chinese exploration of the Moon and the way that this impacted ‘traditional’ national rivalries and the ‘Cold War’ etc.

The long and short of it was that the tide was inevitably running against ‘small state’ economies and in favour of ‘big state’ economies when it came to resource intensive projects like space exploration, mass transit systems etc. In other words all the things that will define progress in the future require complex, system wide integration to achieve them- the very antithesis of privatisation.

The interviewee observed that it would be in the interests of ‘small state’ societies (primarily the Anglo Saxon bloc) to promote the all out privatisation of moon exploration etc as this would level the playing field; Chinese private companies competing with American private companies. This is basically what is happening in the global economy, we are not transitioning to a NWO, we are transitioning to a New World Disorder.

To the extent that all national economies have been infected with Democratised Money (derivatives,financialisation etc), their respective national economies and political structures  have been weakened. The USA led the way into QE and is the first to end it. Other economies are being forced down the same route as a consequence of Americas actions. But the USA economy has not been repaired as a consequence of QE, it has been permanently restructured. This is supposed to happen to all world economies.

The upcoming Pacific and European trade agreements are meant to irrevocably destroy the power of national states and societies to regulate their internal affairs…. Imagine you could permanently tilt the chess board so the pieces kept sliding off. It would make it hard to know who was winning and losing wouldn’t it?

You can think of this as the difference between a naval battle fought between ships that float on the surface of the water and a naval battle fought between submarines

2. We All LIve in A Yellen Submarine- The Secret Economy 2



Q.E. purchases have been concluded in North America which of course immediately led to the argument over what this means in particular and what Q.E. means in general.

Almost immediately as USA called time on purchasing, Japan has started another round of  Q.E. and Europe has started QE-sort of. This leads some to conclude that a kind of international round robin is taking place with economic blocs taking up the slack and injecting liquidity into the global system as the USA wound down its buying operation. The argument is that all major nations cooperated in the aftermath of the credit crunch and this is just a continuation that co-operation by other means.

Others  see Japans QE as tantamount to economic warfare, lowering the value of the Yen and exporting deflation to its competitors. They see this as evidence of a breakdown in international co-operation.


Central banks taking on corporate and government paper is the same as a submarine taking on water to create negative buoyancy-which is really controlled sinking- (for understandable reasons not a phrase widely used by submariners!). The captain takes on enough water for the boat to safely sink to the level beneath the surface he or she wants. Of course this is done on the understanding that at some point the boat will expel the water and return to the surface. But there is always the unfortunate possibility that too much water is taken on board, in which case the only way the boat is going is down.

There are some real indications that the English and American boats have taken just about all the water on board they are able to. Commodity deflation is taking place and despite supposed rises in employment, wages are failing to grow. Worldwide deflationary tendencies. Genuine danger.

When the major economies agreed to drop interest rates as an immediate response to the Credit Crunch, it did not really mean that they were collaborating on an international plan. In essence they agreed to move from old fashioned naval warfare where each party could see the other vessels to clandestine submerged conflict now you have to guess there the other side is. A global game of ‘Battleships’ as it were.

3.Credit and Credit Crunch

Steve Keen appeared on a recent episode of Max Keiser . He is probably best known for arguing that at some point the revenue generated from credit fuelled growth will no longer be sufficient to pay the interest on that credit, resulting in a financial collapse. He has dubbed this inflection point a ‘Minsky moment’. Here is some of what I contributed to the discussion thread:

The broad thrust of Steve Keens argument is that Capitalist systems have been shown to be unable to achieve a self sustaining equilibrium, especially in regard to the production and valuation of credit. An emphasis on credit in this context is an important insight, especially in respect of the financialisation of Anglo Saxon economies since Milton Freakman.

But Steve Keen is wrong when he argues that the latest round of credit is the cause of renewed growth in certain economies, in particular the Saxon Axis economies. This credit growth is a symptom and not a cause. The cause of recent ‘growth’, (for what its worth), is the successful restructuring of the economy in line with Monetarist doctrine. Interestingly, this explains some of the anomalies we have seen in recent growth figures. We know that the Anglo Saxon economies have been growing; this would be expected as they are the most ‘flexible’ and open to labour market ‘reform’ (zero hour contracts). But we have also seen growth in both Spain and Ireland, both nominally outside the Anglo Saxon bloc. What these economies both do have in common with England and America is that their populations have taken a fearful hiding over the past couple of years and it is reasonable to suppose that they are now willing to go along with terms, any terms, that are offered.


Growth is essentially a measure of the level of economic interaction between the component parts of an economy. When the components, (you and I),of an economy refuse or fail to interact it is because either we don’t want to, (we don’t like the terms), or don’t need to,(we are self sufficient).

Keynesianism differs from Monetarism in that it sought to induce economic interaction as opposed to coercing it. The essence of Monetarism is the systematic destruction of any possibility of self sufficiency for the vast majority of the population, forcing interaction within the economy. They call this ‘supply side economics’. I call it the Participation Economy. You are forced to participate in the economy under the terms dictated by the Monetarists.

When Monetarists proclaim they will do ‘whatever it takes’ to maintain the system, what this means is that they are prepared to supply the means (QE),  to allow the finance sector to wait the real economy out, until the real economy is forced to participate (come crawling back) under Monetarist terms…In other words we will take the credit offered, as opposed to wages, because credit is all we can get.


Posted in Uncategorized | Tagged , , , , , , , , , , , , , , , | Leave a comment

The Wheels on the Bust….or SPEED or Peanut Butter Pancakes or Do Ya Feel Lucky?

speed r scorpio-and-the-chubby-kid‘The wheels on the bus go

round and round

round and round

round and round

The wheels on the bus go

round and round

All day long…’


Well, it looked for a moment back there as if the wheels might finally be coming off; but somewhow the Great Western Credit Crunch bus is still on the road and rolling on; true, it’s swerving wildly and threatening at any moment to tip on its passengers onto the road; but it’s still truckin’ !


‘The people on the bus go:


All day long..’


EBOLA, China slowdown, European stagnation that even cripples the German economy and American retail numbers; all heart stopping bumps in the road. The economy is motoring at top speed in the pitch black night- if you hear a bang, don’t get out and see what (who), you hit- you really don’t want to know.

Remember the thriller ‘Speed’ where a public bus is hijacked by a loony with a remote bomb? Well it’s like that, except instead of Sandra Bullock we have Janet Yellen keeping the QE needle above 50 mph or else…

On the bus itself, there is an ongoing game of musical chairs with certain ammendments apres Rosa Parks. No matter who is actually ‘out’ when the music stops, certain citizens will be required to give up their seats for the benefit of other, more entitled players. So the designated losers move further and further to the back of the bus.

And since all they are paying is peanuts:


‘When civil rights activist Rosa Parks died in 2005, this recipe for ‘feather-light’ pancakes was found among her papers, on the back of an envelope.

 Makes 16 small pancakes

Sift 150g plain flour, two tablespoons of baking powder, a quarter-teaspoon of salt (or less, if the peanut butter is salty) and two tablespoons of sugar. In a separate bowl, whisk one egg, 300ml milk and 100g smooth peanut butter. Add the wet ingredients to the dry, whisk smooth and leave to stand for 10 minutes.

Put a frying pan on a medium heat and add a knob of butter. When the butter is foaming, add a dessertspoon of batter and spread out slightly – the pancakes should be quite thick and fluffy. Cook until golden on the bottom, then flip and cook on the other side. Repeat with fresh butter, cooking three or so at a time and keeping the cooked pancakes warm. Serve with maple syrup, or melted butter and jam.’


As I noted previously, we have settled into the tried and tested Hollywood script system of one scare every fifteen minutes or so: Surprise! falling retail, Surprise! trade deficit etc etc. Stocks and Shares and Shocks and Scares are interchangeable now. It is very hard not to form the impression that the public is being conciously and systematically pounded by ‘information’ as in ‘Shock and Awe’; as in ‘Shock Doctrine’.


The driver on the bus says: ‘Screw you buddy!’

All day long


The amount of money in circulation is falling. This is readily observably in the fact that the velocity of money moving through the economy is falling. Employment is going up, but prices and wages are falling.

To put it another way the money bus route is shrinking rapidly. The bus just does not stop in all the places it used to stop. And when it does stop that’s all it does. You jump on the bus and it just sits there, engine idling. Or else it motors on past your stop without even giving you a chance to jump on…

And it’s all because there are three bus companies where there used to be only one.

You are constantly told by monetarists and their fellow travellers that money is being printed hand over fist. This is true but it is not state money that is being printed and distributed. There are now three quite distinct money networks operating in the globalised money system:


State money. This is the standard old fashioned money you and I use day to day.

Privately issued (Democratised), money. This is derivatives issued by financial institutions.

State money issued on a private basis. (including credit). This is the QE money that although issued by Central banks, this only circulates in a sealed system innaccesible to ordinary people.

When you add up the amount of Democratised and QE money and compare it to the amount of state issued money you realise that PROPORTIONALY the amount of state money circulating in the economy has fallen by a MASSIVE amount. This is the deflation that you are experiencing.


Scorpio Rising

Milton FEDman often repeated that:

‘Inflation is always and everywhere a monetary phenomenon’.

This is not as some believe, a theoretical observation. It is a political statement of intent, that is to say a description of how Monetarists are going to regard inflation from now on. As in:

If you don’t say anything when I take over your home and use it as a brothel I am going to take that as implied consent.’

As in:

‘If the city does not give me 5 million dollars in used notes I will shoot random passers by, hijack a school bus etc.’

In other words; these are the rules I am going to act under.


The Cylinder on the Gun Goes Round and Round..


Just like Dennis Hopper in ‘Speed’ and Scorpio in ‘Dirty Harry’ our Monetarist hi-jackers have laid down the terms under which they will operate. And you either comply or face the consequences. Now instead of all the myriad and complex risks they faced under the previous system they face only one: That you might not go along with their demands, that you might say:

‘OK Callaghan, it’s highly unorthodox but I’m going to let you go after these sons of bitches with everything you’ve got!’

All throughout ‘Dirty Harry’, Scorpio uses the inherent weaknesses within the system as a means of getting what he wants. He even goes so far as to get himself beaten up to deflect attention elsewhere (see above)- More QE anyone?


In fact he nearly outfoxes Dirty Harry until Harry realises that the way to beat Scorpio is to take advantage of his weakness- that he is a psycho and will always take the risk no matter what the danger. Because he can’t help himself.


So he offers Scorpio the roulette with the Magnum 45.


And that is how we will take down the Monetarists, by going after them and forcing them to take one chance too many.


Or you can just sit around and hope you won’t be one of the unfortunates actually taken hostage by the Monetarist psychopaths.


Do you feel lucky?




Do Ya?

Posted in Crackernomics | Tagged , , , , , , , , , , , , , , , | 2 Comments


EscapeToVictory2 copyThe Scottish referendum is over but the battle has just begun.


In the WWII adventure film: ‘Escape To Victory’ the Nazis decide to stage a football match against a scratch team of prisoners of war as a propaganda stunt. Of course the Nazis rig the game to make the result a foregone conclusion..


The story of how the disparate prisoners get their collective act together and stick it to the Germans is the main stuff of the drama. But the moral of the film is that the prisoners don’t just accept the hand they have been dealt and even though the game is rigged against them, they fight back and win a victory.


Which bring us to the Scottish referendum.


If you have just come in, the film has already started. Here is where we are up to so far. The teams have just been selected and we are getting into the match.


The German side are:


The Monarchy and monarchists

Anglo Saxons- overtly nationalistic and otherwise


Right Wingers -moderate and extreme,


The Anglo Saxon ‘left’,

Bankers and international investors,

Main stream media

Business and shop owners,

Property speculators

The European Union

Barack Obama and the American government

Recent immigrants

Located primarily in the East of Scotland


On the Prisoners side:

The Non Saxon left

The post industrial working class

Small business

Born in Scotland

Located primarly in the West of Scotland


Supported by no large scale business

Supported by no large scale media

Supported by no outside major political power


As for the spectators, you can see for yourself how they are divided. Write down on one side who wanted Scots independence to win and on the other, who wanted the Union to remain. That will tell you all you need to know.


And now the match begins.


The Unionists kick off and immediately attack: Their opening move is that everybody must stop talking; the union is the ‘settled will’ (because that sounds traditional and authoritative), of the Scottish people. Immediately the referee comes to their aid: continued dissent and questioning of any aspect of the referendum and how it was organised is a ‘conspiracy theory’ and therefore disallowed.

The Saxon ‘left’ wing has moved quickly up the field into Scottish territory, trying to put distance between themselves and their friends in the multi national corporations and the Royal family. Perhaps they are frightened that without green space between them no-one will be able to tell them apart…

Meanwhile the Saxon right wing hang back and take advantage of their early game rigging, including beginning the bombing of Iraq and Syria and 25 billion of government cuts, at least half of which will come from unemployment and other welfare benefits.

Down at the Saxon goalposts the rump of Englands defence is milling around trying out a new ‘English parliament’ formation…

Oh, wait, here comes the first bit of really dirty play. Targetting nationalists who voted for independence with back payments of the hated Poll Tax that helped begin the war decades ago. Many Scots who refused to pay the Monetarist Poll Tax dropped off the Electoral Register, meaning they were no longer eligible to vote. After as long as 20 years these Scots emerged from hiding to register to vote again because independence was so important. And now they are to be punished by the Saxons by being chased down for ‘unpaid back taxes’ for having the termerity to join in the political debate.


Back up at the front the Labor party is busy developing its new role as the Scottish Colonial Office, positioning itself as interlocutor with the main Saxon government in Wesminster. The basic plan is to turn everywhere outside of the Saxon Heartland into a colony on the Northern Ireland model. A ‘peace settlement’ is to be put in place where competing groups of Saxon/Protestant settlers,native Britons and new immigrants will compete for the favours of the Westminster government-who will be the arbiters for who gets what.

And just in; a new twist in the dirty tricks campaign! The referee is advancing the introduction of an ENTIRELY new system of welfare rules before devolved Scottish powers are agreed. So that whatever powers are ‘granted’ to a Scottish administration they will be face with the fait accomplis of a preordained New German System!


Like the Third Reich, modern Germanic nationalism is ultimately a bust. All it can offer is a little piece of plastic with a picture on it, a share of the ‘National Debt’ and news updates from whatever dirty colonial war is being conducted at the time.


What are these things compared to blood, memory, family, humour, music, shared grief and happiness- in other words culture? Compared to these things modern nationality is less than worthless. Which is why the modern nation state tries to cut you off from blood, memory, family, and culture because they recognise that these things are death to the modern state.


To want these things is not nationalist; it is the fundamental antithesis to nationalism. Nationalism is a legal right a piece of plastic. This is the moral right to live in a community; what you owe to the community and what community owes to you.


This is the antithesis of Germanic land democracy.


This is the basis for human life.


There is no other.


This is what this match is being played for.


And whether you are in the stands or on the field, this is what you have at stake in the game. Either way.


Latest update.

 Firm tackle from Alex Salmond blocks the dirty Poll Tax play. The Saxon hits the grass with a bump. His lip trembles… gestures to the referee…











Posted in Uncategorized | Tagged , , , , , , , , , , | Leave a comment





I can usefully examine the analogy of the three men and their goat(s) a little further.


One man has twin goats (exactly the same as each other) to sell. The other two men have money; One of the buyers has fifty coins and the other has forty nine.


The seller sells the first goat for fifty coins which is the maximum available bid, but he also wants to sell the other goat. However, the second buyer only has forty nine coins, therefore the price will be forty nine coins -that is all it can be although it is exactly the same as the first goat and should by any logic therefore be the same price

What to do?


If buyers and sellers allow the price to remain at forty nine coins, then goats have fallen in value despite the fact that the two goats for sale were exactly the same in every way and should be the same price. But more importantly, at a new sale price of 49 coins, 50 coins now equals a goat plus one coin- the seller has made an extra two percent profit from his first sale, just by virtue of owning money!


So where did this unearned profit come from?


From the value of the first goat. It was worth 50 coins and now it is worth 49 coins- it has lost 2% in value. Every time a goat is sold at a cheaper price the value of ALL goats falls by that amount and that value is transferred from goats to money. And prices will always fall where money supply is restricted.


What would the consequences of this be on a larger scale?


Imagine a goat seller with ten animals to sell. He decides to do it through an auction. (The animals are all identical by the way- genetic clones!) So he calls ten local farmers together and calls for bids. It so happens that each of the farmers has one more coin than the next so the first has 50, the second 49 the third 48 and so on. Here is a table of the results….



The first column A shows the goats if they were sold at a fixed price of 50 coins.


The second column B shows the actual available bids. The first goat went for 50 coins, the second goat went for the second highest available bid (49 coins) an so on..until the price reached 41 coins.


The third column C, shows the total individual loss each purchaser suffered at a final price of 41 coins. If you paid 50 coins, at the end of the auction your goat was worth 41 coins and you lost 9 coins in value. If you paid 49 coins, at the end of the auction your goat was with 41 coins and you lost 8 coins in value and so on.


If you look at column D you will see that the seller on the other hand made money on each deal. He received fifty coins for the first goat which only turned out to be worth 41 coins so he made an excess of 9 coins and so on…


If we look at the row marked ‘Total’ at the bottom of the table we can see the cumulative effects of all this.


In column A total we see that if the seller had sold all his goats at a fixed price of 50 coins he would have received a total of 500 coins.


In column B total we see that in fact he received a total of 455 coins, an apparent loss of 45 coins.


In column C we see that the total losses to the purchasers as a result of the falling price was 45 coins also.


But in column D total we see something very odd. We see that the seller actually made a total GAIN of 45 coins as a result of the falling price. When he has sold all his goats he has enough money to buy 11 goats at the latest price and still has 4 coins over!!


In fact there has been a transfer of 45 coins in value from the buyers of goats to the seller of goats as a result of the 10 transactions that have taken place. The seller has made approx 11% profit as a result of just ten transactions.


Every time a commodity is sold at a progressively cheaper price the value of ALL similar commodities falls by that amount and that value is transferred from commodities to money. And prices will always fall where money supply is restricted.


Imagine this on a scale of millions of sellers and purchasers….


This is what Monetarism is by definition, a restriction on the supply of money….


It seems incredible doesn’t it? Perhaps you are thinking I must be wrong, there would be evidence if this were actually happening on a massive scale.


Look at the housing market. All over America there are cash buyers of houses. Cash buyers are propping up the housing market. Just like the goat seller, these buyers have ‘earned’ enough spare cash to buy another house! Just like the goat seller they are cashing in on the unearned increase in value of their cash. Unearned increases in value that are a direct consequence of the monetarist religion of restricting the supply of money.


In fact we are fast approaching an asset value IMPLOSION – chaotic deflation on an unprecedented scale.


Wages have again recently fallen in Britain and price inflation has fallen as well. It is important that you grasp the significance of this; the prices of commodities are starting to chase wages downwards. This is Black Hole deflation just as destructive as runaway inflation.


Is there any way to avoid this Black Hole? Lets go back to our auction. What would happen if we created another 45 coins and distributed them so that every buyer could afford a goat at 50 coins? The buyer would get his asking price of 50 coins per goat. And they are all exactly the same so this must be right. Every buyer would get a goat.


But wouldn’t creating this money result in inflation? The money supply would expand by:


45/500 or 9%


This would equate to a nominal drop in value of the money available to approx 92% of its previous value. Not a real drop in value mind you; you still get your perfectly healthy goat!

But just for the sake of it lets work through the effects.




This table shows a comparison of the amount of money owned before and after the ‘loss’ due to the creation of 45 extra coins. Every owner experiences some loss, but the loss is less, the less you originally owned.



This table shows the ‘loss’ after it has been adjusted to show the effect of the new 45 coins being distributed among the ten farmers. In all but the case of the richest farmer the ‘loss’ is mitigated by the distribution of the coins. For a majority of the farmers there is a net gain.


This table shows the actual loss that results from coin creation in comparison to the loss that occurs from deflation and falling prices. In every case the loss from coin creation is less than would occur from deflation. Even the farmer who gains the least from coin creation cuts his losses in half.


So everyone is a winner then (or at least not a loser) well, sort of.. the real revelation is in the fortunes of the original seller of goats.

In the deflationary scenario he ended up able to afford another goat with four coins to spare- effectively an 11 % increase. That is all gone under the coin creation scenario. Now he has 500 coins, just as he should have. If he wants to buy a goat the price is 50 coins, same as it is for everyone else. Just as it should be.

Every time a commodity is sold at a progressively cheaper price the value of ALL similar commodities falls by that amount and that value is transferred from commodities to money. And prices will always fall where money supply is restricted.

 Imagine this on a scale of millions of sellers and purchasers….


This is what Monetarism is by definition, a restriction on the supply of money….









Posted in Crackernomics | Tagged , , , , , , , , , , , , | Leave a comment

Quis custodiet ipsos custodes?




If only I had known, I should have become a watchmaker.”

Albert Einstein


There is a famous quote that half of the money spent on advertising is well spent and the other half is wasted. The problem is that nobody knows which half is which.  The same thing can be said of Karl Marx.Half of what he wrote was true- the trick has been to figure out which half.

One of the really good, really perceptive ideas that Karl Marx crystallised was that in the modern world, material objects are the expression of social reality. In other words instead of a formally stated hierarchy in the form of law and custom we have an implicit hierarchy embedded in the material form of the society we see around us.

This is a truly profound insight.

The flip side of this insight is the realisation that technology is culturally specific. Since the concrete objects we see around us are the realisation of social reality they must express the society and the culture that gives birth to that social reality.Technology and culture are much more closely linked than you might be led to believe. Cultural artefacts can be more clearly understood as a form of technology.

Which brings us to money (surprise, surprise!)

One of the most difficult problems in explaining Crackernomics and how money is developing is to get people to understand that money is a dynamic, fluid technology. Not a static fixed expression of value.

This technology can be uncovered and examined in detail.

In The Great Money Train Hijack I suggested that you can understand money as a train ticket, that is to say a permission to ride on the rail system within the parameters of the contract embodied in the ticket. A money note is a permission to participate in the economy within the terms of a contract. The parameters of the contract determine the value of the ticket/currency note at any given time.

At its simplest level this means that a ticket on a notoriously inefficient rail system prone to breakdown and likely to deliver you to your destination late, is worth less than a ticket on an efficient system that is comfortable and punctual. This is a good working definition of inflation. The later a train will be, the less a ticket to ride on that train is worth… Inflation is an indication of the efficiency of the money train network.

I can focus in on this interactive, dynamic aspect of money more accurately by using the analogy of money (a coin), as a watch. Modern currency and modern watches were invented and popularised at around the same time and this is not a co-incidence; they are both fundamental parts of the social mechanism that allow the functioning of modern societies.

As any curious boy will tell you, a watch can be prised open and its workings exposed for examination. I am presently working on a new short film entitled ‘The Structure of Money’ which will do just that. But for the moment let us just focus on the surface, the watch face as it were.

The first thing you notice about a watch face is that it is constantly changing, providing information about a common abstract known as time. A coin performs exactly the same technological function. It provides and stores changing information about a common abstract known as value.

There is no more absolute value than there is an absolute time. They are both social constructs, that gain their social power exactly to the extent that they are held in common by the societies that adhere to them. It is only 4 o’clock because we agree it is. A 1 euro coin only has a specific value because we agree it does.

A watch changes its description of the time constantly. That is why it is useful. But the important thing to understand is that although the time constantly changes on the watch your relationship to the watch itself does not change. You do not disagree with your watch just because it shows that you are late for an appointment! You modify your behaviour accordingly. You take a taxi instead of the bus. If you simply moved the hands on your watch twenty minutes into the past would it mean that you were no longer late? Of course not. You would still be late and you would also be a fool.

The same is true of money. The value of a pound coin at any one time is a reflection of its commonly held value. And like the time, that value is constantly changing. It is always ‘getting’ later and money is always ‘losing’ value.

This reveals clearly the stupidity of those who argue for ‘sound money’ which is supposed to be money that never changes in value. This is the same as arguing that you should set your watch to twelve o clock and never wind it up so that you can always know what time it is without having to look!

The next important insight from this analogy is to understand that value is not embodied in a coin anymore than time is embodied in a watch. Time is not divided up between each individual time piece and value is not divided up between each and every note and coin. If you gathered every watch together and put them in a pile, would you have gathered all the time there was in one place? Nonsense.

And if you make a thousand more watches, is time diluted in some way? Of course not. But the more watches there are, the more people have access to information about the commonly held idea of time. More people can interact in a more complex way

Who could be against the idea of the maximum number of people having access to time? Who could be against the maximum number of people having the most efficient information possible about the common social idea of time?

Here is a simple example of the benefits of the maximum possible knowledge of value

e.g. 1

There are three people on a desert island, one of whom has a goat.

One of the other two people finds a coin on the beach and successfully buys the goat from its owner. The ‘value’ of the goat is one coin. It can’t be anything else.


Same three people, same one has a goat. But now both of the other two find a coin on the beach. What is the value of the goat? The value cannot be determined by price since there is only one price; (one coin) but two examples of it (two buyers). If the goat is sold it must be on some other criteria than the most money offered.


Now say that the one buyer finds 50 coins on the beach while his competitor finds 49 coins. When the goat is sold its value (the differential between available money) is described down to 2%. And if it were 500 coins vs. 490 coins the value of the goat is described down to 0.2% and so on.

In other words, the more money there is in circulation, the more accurate the value placed on any given commodity will be. In exactly the same way that the more watches there are in circulation the more punctual a society will be.

Who could be against that? Let us take our example a stage further.


Suppose the first man has two goats to sell. One goat has three legs. As in the beginning, there is only one coin in circulation. The price of a goat with three legs and the price of a goat with four legs is the same. There is no ‘price mechanism’ since no price variation is possible.


Say both purchasers have one coin each. Still no price mechanism.


Only when there are enough coins in circulation for there to be a twenty five percent differential in price (four legs vs. three legs), would there be anything like enough money to take account of the real value of the goats.


And what if the three legged goat miraculously grew another leg to make up for his perceived deficiency? The two goats are now more or less the same. Does that mean that now there is less meaningful difference (information) that we can safely diminish the money supply?


The information that a particular goat can grow another leg to replace one that is lost is surely likely to form a vital part of any further negotiations on price !. There is now very much more information than there was before so there needs to be very much more money to express that historical information.

Knowledge and information about the economy and its history are always expanding. Therefore the money supply will always have to correspondingly expand to take account of this fact. As knowledge and information about human history have expanded so the methods to record them have expanded.

So I ask the question again:

Given that money is an expression of information and that the availability of money is an expression of the availability of information who could be against having the greatest possible dispersal of money?

Who wants to restrict the flow and the amount of money and why?

Who are the Monetarists?








Posted in Crackernomics | Tagged , , , , , , , , | Leave a comment