Over The Rainbow Or Not in Kansas Anymore Or Moral Minority Report Or My Cupp Runneth Over Or What exactly happened back there?


220px-Heimdall_an_der_HimmelsbrückeRanbow bridge to Asgard


A quantum mechanical system or particle that is bound—that is, confined spatially—can only take on certain discrete values of energy’


For the past three or four months race and racism has been the central focus of intercultural discourse in America. A spate of police shootings and demonstrations was followed by the Rachel Dolezal interval, things quickly got serious again with the Charleston killings.


And then everything changed.


Chess strategy was no longer the focus of the game, (see last time). The players put the chess men away and took out an entirely different set of pieces.


Post Charleston shootings, the ‘left’ went after the Confederate battle flag as a substitute for gun control; the next phase of the game seemed more or less set. Then from left field came a Supreme Court decision on same sex marriage and the entire topography of the culture war was changed in a day.


Just as a quantum particle jumps from one energy level to another with no interim stage and no warning that it will do so, the American polity moved into an entirely new configuration. The pro-gay marriage movement celebrated, but it was clear that even they were taken back by the sudden completeness of their victory.


Even more startling was the response of Anglo Saxon Protestants. Like a cage fighter who walked onto a roundhouse kick to the head, the legs buckled. Slo-mo close up showed they were out before they even hit the canvas. Trad WASP’s are slumped in the red corner. They know that they took a heavy beating – they are not looking forward to a second round.


The Moral Majority (remember them?) are now the Moral Minority and suddenly look at risk of becoming politically irrelevant almost overnight. Let’s be absolutely clear; its not going to be enough to grudgingly acquiesce to this dispensation. The Moral Minority will have to willingly accept the new state of affairs and tell everyone: mmmmm! just how much they like it if they want to stay in the political cage fight.


Or, in the words of teary Conservative pundit S.E. Cupp, they risk becoming relics.

Conservative Pundit Starts Crying At Gay Marriage Footage: ‘They’re Patriots’ (VIDEO)

or this:

‘How many fingers am I holding up son?’

‘Er, Tuesday..’

‘That’s fine son, lets get you back to the dressing room..’


So what exactly has happened, and what exactly does it all mean?


From one perspective the Supreme Court decision could be seen as something and nothing; merely the formal recognition of an existing state of affairs. Does the decision simply acknowledge that American attitudes towards sexual practice have changed? It is substantially more than that.


Consider that the Supreme Court decision Roe v Wade is still being venomously contested across America, decades after the actual ruling was handed down. In fact, abortion provision across the USA is decreasing and under constant attack. (Although you can bet there is now going to be some serious push back here as well). How does the retreat in post war women’s rights tie up with the ongoing success of the gay marriage rights campaign?


Obviously rights for sexual minorities (actually I think women are the majority), in America per se is not the driving force in shaping what has happened. In fact, you can’t understand the progress of gay marriage in America unless you understand Whiteism and its relationship to sexual morality.


Whiteism is the ideological belief that white people have something in common. The underlying purpose of Whiteism ideology is to legitimise Germanic ideological control over all white people. In particular, the Germanic Cult Of Capitalism based on Germanic Land Democracy.


The purpose of Whiteism is to assert the supremacy of Germanic culture, first in the context of white people and then in the context of the entire globe. In other words, Whiteism asserts that all white people should have Germanic culture in common whether they themselves are Germanic or not. Put another way, all white people should perceive and communicate through the medium of Germanic culture and morality as a stepping stone to all people everywhere communicating through the medium of Germanic culture.

Post war Germanic culture required white people to subscribe to the ideology of sexual freedom. Let’s get it clear what this sexual freedom means: Not stoning, imprisoning, or punishing in any way anyone who violates the moral or contractual rules of marriage or the associated sexual code. It means that a violated or dissolved marriage must be settled entirely as though it were simply a joint financial contract.


The participants in a marriage have no moral obligation to each other, or to society as a whole (and of course definitely not to God!). You mind find it amusing and instructive to consider that most subscribers to the Germanic morality code consider it more important that members of society fulfil their obligations to a mortgage contract rather than to a marriage contract!


All Germanic people subscribe to this belief system and most demand that it should be propagated world wide, many advocating using force to achieve this if necessary.


Modern sexual freedom as we understand it was pioneered in NW Europe in the aftermath of the Second Germanic War. Scandinavia and Holland became synonymous with black and white porno films, magazines featuring free love in the sauna etc. Anybody who has travelled the territory of the Hanseatic League knows that visiting the fleshpots of German cities now has the character of a cultural historical tour. Like Japanese tourists wandering round the Houses of Parliament (which of course is a different kind of whore..)


(On the subject of the Hanseatic League I recommend Jonathan Meades’ excellent documentary ‘Magnetic North’: https://www.youtube.com/watch?v=Dw6J9bYQ4XY)


The relationship between modern sexuality and traditional morality was very carefully calibrated in post war North Western Europe. Prostitution and associated practices were legally ‘domesticated’; controlled and effectively promoted -as soft drug use in coffee shops and gay activity was. These liberalisations were intended to be understood as totemic representations of cultural freedom, in particular in opposition to Slavic and to a lesser extent Catholic, culture. This is pure Whiteism.


The ‘traditional’ family was domesticated in a slightly different way; through sponsorship and welfarism. Germanic political elites promoted a specific vision of family life through financial and legal incentives and punishments.


‘Modern’ laws on marriage and divorce, the provision of chemical contraception, (think of the Matrix: ‘you can take the red pill or the blue pill’), and the increasing possibility then necessity, of women’s employment, together with state provision of education, medical and other services, dismantled the traditional family and forced it into a supplicatory relationship with the Germanic state.


All of this is open to a variety of interpretations as to its meaning and significance, and as you know, often is. But it cannot be brought into sharp focus until you understand it as the promotion of Germanic pagan thought.


The moral collapse of Protestantism was both cause and consequence of two Germanic Wars in the last century. By the late fifties there was a clear need to restructure the moral landscape in North Western Europe. And if you doubt that such a project would or could be consciously undertaken, what else was the introduction of Protestantism centuries before but this very same thing?


So the post war modern Germanic state supported the traditional family the way that Lenin supported the provisional pre- revolutionary Russian government: as a rope supports a hanging man. And this has gone on for fifty years or so, bringing us to today. Or about ten days ago.


Look at the Supreme Court, and the power structure they represent. Consider the general nature of their recent pronouncements. Are we really supposed to believe that they have transformed miraculously overnight into the voice of ‘liberal’, ‘enlightened’, ‘progressive’ thought?


What nonsense!


Here is the root cause of the confusion on both ‘left’ and ‘right’.


In fact, they are the black robed designated executioners of the Protestant Welfare Family. In 2015, the corpse hanging for four decades still twitches on the rope. The time has come to end it. This last edict is the equivalent of jerking on the subjects legs to finally break his neck.


The Welfare Family was given a very specific structure. Its stated purpose was the raising of children, the provision of medical care and arrangements for old age. A specific substitution arrangement for each of the three main periods of family life.


This new definition breaks that link. The Supreme Court decision effectively means that any two men can get married for tax reasons and of course any two women can also. This means that marriage is now entirely a legal financial arrangement. It is a legal intellectual break from the historical family.


The order of an individuals life will no longer be defined in relation to the order of family life.


There will be a number of consequences that will follow from this:


Non married people and those who choose not to get married are going to ask on what basis ‘marriage’ should have any benefits or privileges. Moral? Intellectual? Political? Try making up some justifications for yourself and see how far you get with it…


It follows that the State will rapidly come to openly regard all family members as discrete individuals. It follows from this that the state will take direct responsibility for the welfare of these individuals, not mediated through the structure of the Protestant Welfare Family. For instance mandated nutrition requirements for children.


Since I have argued on more than one occasion that predictive ability is the validation of analysis, let me end with this:


In short order, (at most a couple of years), a modern western welfare state system will implode completely like a power station relay that cannot cope with altered voltage. It will come as a complete shock (pun intended) to the generality of the developed world. But not to me. And not to you too, now that you understand something of what really lies behind it….

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White Takes Black or Skin In The Game

quote-i-look-to-a-day-when-people-will-not-be-judged-by-the-color-of-their-skin-but-by-the-content-of-martin-luther-king-jr-102475 1984-movie-confess_a

From Wikipedia, the free encyclopedia:

‘The first-move advantage in chess is the inherent advantage of the player (White) who makes the first move in chess. Chess players and theorists generally agree that White begins the game with some advantage. Since 1851, compiled statistics support this view; White consistently wins slightly more often than Black, usually scoring between 52 and 56 percent. White’s winning percentage[1] is about the same for tournament games between humans and games between computers. However, White’s advantage is less significant in blitz games and games between novices.’


If you play chess, (even infrequently and badly), you come to recognise that certain sequences of moves appear again and again. Together these repeated sequences form a lexicon of chess strategy.


Among inexperienced players the outcome of a game is often decided by a disconcertingly small number of opening moves. Developing players learn that a central objective in opening is to prevent the game being over before it has even really begun.


To achieve the space and time to develop position, a player can use the tactic of offering an exchange which can alter the focus and tempo of a game. It is not unusual to see an early sequence where players effectively swap out a number of pieces.


The advantage of exchanging is that it clarifies where players stand. But often the price you pay for simplification and consolidation is to sacrifice the chance for a quick win.


There is such an exchange of pieces taking place now in the American game. Over the past week or so we have seen the Rachel Dolezal incident playing out, quickly followed by the Charleston church massacre.


Some might claim there is no comparison; might even be offended by any attempt to make one. They might claim that the Dolezal case is relatively trivial and the Charleston massacre deadly serious. But the real importance of each event cannot be understood in isolation. Both are part of a bigger, more complex contest. Understanding the nature of that contest and giving it a name is what Whiteism is about.


Rachel Dolezal represents a white pawn that advanced largely unnoticed on the left flank, right up into Black lines. It is fairly obvious even to a novice that this solitary piece is now isolated with little or no support or protection.


Since retreat is impossible, the Dolezal pawn is stymied and waiting to be taken at the convenience of Black..so why has she not been taken already? Because she represents both opportunity and threat for Black.


Whiteism is the ideological belief that:


  1. White people have something in common (This is nothing to do with white supremacy)
  2. White people are necessarily different from non-Whites (Blacks)


For Whiteists, (whether White or Black!), it cannot be that Rachel Dolezal is justified in self identifying as black for the above reasons. But modern day America is divided between Whiteism and Post Whiteism.


Whiteism was the framework within which it was argued that post WWII the belief in White intellectual supremacy should be transformed into belief in White moral supremacy.


Germanic culture was totally discredited by the Second Germanic War. To be rehabilitated, it had to be placed on probation; nurtured, controlled and chaperoned by global white culture, in exactly the same way that the German nation was placed on probation and chaperoned by Saxons in the West and the Soviets in the East. Whites as a whole, would act as guard and guarantor of Germans within the world community.


This meant that in the post war period Anglo Saxons would seek to promote the idea that all whites, including Slavs should be seen as being committed to becoming more ‘civilised’ than any other group of people.


The movement for Black ‘equality’ in the USA comes out of this. Black equality is in essence a claim for white moral superiority. The moral justification for Welfarism is the corollary and counterpoint to Black equality.


If Blacks were to obtain political and economic equality, (or even superiority), through force that would negate white moral superiority. The successful expression of White moral superiority requires that Blacks don’t ever get anywhere entirely on their own merit.


The election of Barack Obama as President of America is cited as proof that America is now a ‘post racial’ nation – an achievement of white America. But can Obama really be legitimate as a Black president if not on his own merits? And if he could become President entirely on his own merits, does that mean that Whites were effectively defeated by a superior force?


It is clear something has to give: Black ability or White morality.


If we are to accept the Martin Luther King dictum that people should be judged on character (whatever that is supposed to be), and not skin colour then the persona adopted by Rachel Dolezal is entirely valid and so are her actions.


But then the entire structure of racism, of black disadvantage and white reparation is blown away.


On the other hand, if Rachel Dolezal’s racial persona is illegitimate then Martin Luther Kings dictum is obviously wrong- we must judge personal actions, at least in part, on the colour of skin. In other words Rachel Dolezal personifies Martin Luther Kings dictum reductio ad absurdum.


It’s little wonder Black is not sure whether to take the Rachel Dolezal pawn…


While Black dallied over Rachel Dolezal, it was swiftly superseded by events on the right flank where Black suffered unexpected loss. This has given rise to a resurgence of an old spat about the rules of the game, specifically what specific pieces are allowed to do, (otherwise known as the Second amendment right to bear arms).


Again, this represents both opportunity and threat for Black.


To characterise Dylann Roof as terrorist and not lunatic, that is to say that his was a political act and not a random, meaningless one, has on the surface obvious advantages for Black. It is much easier to deny arms to ‘enemy combatants’ than American citizens. And if White supremacist violence can be used to bell the right libertarian cat, that would be a substantial strategic advance for Black.


But this means characterising Roof’s actions as both a coherent and meaningful  political act. And this is a high risk thing to do.


At the time that Anders Brevik attacked a group of Norwegian elite kids I argued that this was a significant political event rather than random meaningless act as many tried to portray it.


The standard ‘progressive’ interpretation of the shooting was that Breviks act would show the meaningless madness behind all race hate words and actions and cause repulsion among mainstream society.


Is that what has happened in Scandinavian politics? Hardly. Since the shooting there have been systematic and substantial moves to the right, rolling back the social democratic ‘anti racist’ alliance that has ruled across Scandinavia since the end of WWII. If left leaning Scandinavians hoped that the Anders Brevik incident would corral the populace back into the pro-immigration fold, they have been sadly disappointed.


The same is true in America. If Black chooses to make Dylann Roof an example of a serious anti Black movement, the danger is he might turn out to be one.


So, can this two part exchange sequence tell us anything about the way this particular match in the American game is going?


I think so.


White has made a rushed, undisciplined opening. There is clearly a lack of coherence in the way that White pieces are occupying the board. It seems that in this particular game White is eager to engage with Black but lacks a clear strategy for doing so. I think this betrays a lack of confidence and a confusion about what Black strategy and tactics are going to be.


The Black response so far indicates that it lacks confidence too, it is clearly more hesitant to act than White. It seems that Black is having difficulty calculating the possible consequences of its actions.


Both Dolazel and Roof are left hanging by Black who seems more intent on haggling about the rules than making a forceful response. This shows that Black does not want to make a move until it can negotiate some change in the rules…


You might think it hard hearted, even cynical, to depict events such as these in terms of a game, but my purpose is to point to an important truth. Of course the game of chess is a metaphor. This is not to say it has no meaning. The game is fascinating because it represents a real clash of forces. There is a real prize for the victor and a real price to be paid for losing.


So what is the important truth I want to tell?


That in racial terms Black and White are metaphors.


So what actually is ‘White’? What does ‘White’ actually represent?


White represents first move advantage. White is the side that moved first.White came before black. White was defined before Black was defined. Making this definition IS the White identity. Making this definition was the first move in the game.


The first move in the game was taken before the game even began. That is how the player who took White has won up until now.


So who is the real player moving the White pieces?

And who is the real player moving the Black pieces?


Understand this and you understand Whiteism.


Last point: Not only is White the one who traditionally starts the game, White traditionally has the privilege of ending it. White gets the last move. If I was playing with the Black pieces I would want to think about that very carefully before I decided to argue for minor rule changes. I might want to think carefully about whether I want to go on with the game……


“He examined the chess problem and set out the pieces. It was a tricky ending, involving a couple of knights.
‘White to play and mate in two moves.’
Winston looked up at the portrait of Big Brother. White always mates, he thought with a sort of cloudy mysticism. Always, without exception, it is so arranged. In no chess problem since the beginning of the world has black ever won. Did it not symbolize the eternal, unvarying triumph of Good over Evil? The huge face gazed back at him, full of calm power. White always mates.”


George Orwell ‘1984’


update23 June 2015


Moral Hazzard Or National Lampoons Animal House or Chicago Rules (not) Or This is a Live Fire Exercise

“Theme From The Dukes Of Hazzard (Good Ol’ Boys)”

Just’a good ol’ boys
Never meanin’ no harm.
Beats all you never saw
Been in trouble with the law
Since the day they was born

Staightnin’ the curves
Flatnin the hills
Someday the mountain might get ’em
But the law never will

Makin’ their way
The only way they know how
That’s just a little bit more
Than the law will allow.

Makin’ their way
The only way they know how
That’s just a little bit more
Than the law will allow.

I’m a good ol’ boy
You know my momma loves me
But she don’t understand
They keep a showin my hands and not my face on TV


I wrote that Black doesn’t want to make a move until it can get a little clarification on the rules of the game. Well, it seems like the clarification has come through.

The kids at Yankee Frat House have decided to launch a daring raid on the flag that flies on top of  Charleston House.  They say: ‘We can be in and out before they even know what has happened! What a gas! That’ll teach ’em to mess with Yankee Fraternity..

‘Sort of like one of those army training exercises  where you win by seizing the enemy’s flag. You know, like a war, but not really.’

Might be as well to go careful with this cultural prank though, since we haven’t actually managed to get all the guns away from those rednecks yet…..

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The Democratic Lower Bound


The famous sentiment that ‘Anyone Can Be President of America! ‘ is often cited both as justification and positive evidence of the superiority of ‘The American Way’. It stands as a pillar supporting the arch that proclaims the openness of American society.


Of course, the assertion that anyone can be President is not universally accepted. Oppositional voices contend that anyone can’t be president-quite the reverse. To get anywhere in the world of American politics you need the right connections, political and financial. These voices argue that there is an establishment in America and the Bush and Clinton dynasties illustrate this point.


But although they dispute the actuality, most of the naysayers generally endorse the underlying principle; that it is a good thing that anyone can be President. Perhaps we should think about this a little more closely. If anyone potentially can be President of America, does it follow that anything potentially can be law in America?


You can immediately see that this is not quite so attractive a proposition. Complete freedom to make law as one sees fit is dangerous; not a power that you want to give away to any individual no matter who it is (or isn’t). And you don’t actually know what a President is going to do with power until they actually start doing it. And by then its too late to do anything about it….


Commitment to a moral or even practical set of principles is not required to become President. It is entirely possible that the man you elect might sell the farm out from under you and there is not a lot you can do about it once you have cast your ballot. In light of this it might start to seem that the claim that anyone can be president is more sinister threat than positive affirmation.


‘But’, I hear you say, ‘isn’t that where ‘democratic checks and balances’ come in?’ Except that they don’t really seem to, do they? Certainly not lately. Certainly not in respect of the Credit Crunch and its aftermath. The evidence suggests that   ‘checks and balances’ such as they are can be got around if you know the system well enough.


Most of the financial regulations enacted in the aftermath of the Credit Crunch have been stalled or effectively abandoned. It is hard to avoid the conclusion that for the ‘financial community’ it is more or less business as usual. There is a parallel with the Iraq war and the resulting ongoing devastation and collapse. Nobody has been brought to book for an invasion presaged on weapons of mass destruction that were never there.


Because ultimately ‘checks and balances’ depend upon the people doing the checking and balancing. Which in America would be the two houses of the legislature. But if anyone can be President then anyone can be a Senator. A horrible structural weakness within the system is laid bare. You only need to find a couple of hundred arseholes in a population of over three hundred million and you have a problem….you actually only have to find a majority of a couple of hundred arseholes; after all it’s a democracy.


‘But bad legislation can be overturned’, you will counter. The people will elect an oppositional counter force and bring the system back to centre.


So how much of the bad stuff in the past three or four decades has actually been overturned? Glass Steagal financial regulation was repealed in favour of the rich and powerful but I’m not sure there has been a lot of movement the other way. How much anti trades union legislation has been overturned in Britain or America or anywhere in the Saxon Axis? To what extent have the basic rights of ordinary people been restored or improved over the past decades?


The legislated landscape is massively changed from only a couple of decades ago. If the system were really self correcting towards the centre, shouldn’t it tend to remain broadly the same over time?


OK you say, I concede these broad points but the final safeguard in America is The Constitution and the Bill Of Rights. Here at least we are on solid ground. These are fixed principle driven rules beyond which no elected official can go.


But any fixed set of rules will inevitably be challenged by circumstance. In the centuries since the Constitution was created the identities and values of the men who wrote it have become increasingly marginalised. This change is expressed positively in the many amendments to the constitution and negatively in the effective abandonment of the basic principles that guided the constitution. Contemporary America is not the country the Constitution was written for.


Truth to tell, all of the above is something of a misdirection a la ‘The Usual Suspects’. The details of any western system are irrelevant. The real point is: When it comes down to it, in a modern democracy there is no penalty for governing badly, and there cannot be, or else it is no longer democracy as we have understood the term.


We can call this the Democratic Lower Bound. It operates like the interest rate lower bound. It is the structural limit beyond which the system as it is presently constituted cannot go.


Individual politicians may be liable for ‘criminal’ activity but not for incompetent or even malevolent actions carried out in the process of governing. The penalty for incompetence malevolence is that you are voted out next time around, (maybe), with a nice pension of course. But you and the organisation you represent are free to carry on doing what you did. ‘Elector Beware’ is the principle behind modern market democracy as ‘Buyer Beware’ is the principle behind the marketplace.


From Vietnam through financialisation and on into Iraq, no elected official has ever got into any serious trouble no matter how terrible the crimes they committed at home or abroad. Nor will they ever. Nor can they be allowed to. Democracy offers the same protection to its politicians that the marketplace affords to investors in corporations – limited liability


Nevertheless even this unfortunate state of affairs is not necessarily fatal to the reasonable functioning of the system- if the political class exercises a certain amount of self control. If an elite has a sense of national self preservation the modern democratic system can still work reasonably well.


But in the light of international treaties such as TTP and the European trade agreement we can say that adding Globalisation to the democratic lower bound brings what is the fatal weakness in the system to the fore.


Legislatures across the developed world are entering into permanent agreements that are deliberately engineered to be beyond the scope of national parliaments. The effect is of smuggling the economic and political wealth of the nation state out one piece at a time. Transnational elites are clandestinely stripping the nation state bare. And there is no effective legal response built into the system for this. Once sovereign treaties are signed there is no legal way to unilaterally repudiate them. The Greek people are finding this out to their cost.


I have argued in previous pieces that Monetarism is the end of economics and the consequent emergence of cultural constituencies. This means one culturally self defined group ruling over another, or number of others.


It is becoming increasingly apparent that political elites across the developed world are themselves constituted as a separate cultural constituency. And since it is the entire political class we are talking about, you can’t ever hope to vote yourself out of this dead end, even without the system limitations I outline above. Whoever you vote for, Globalists get in.


Given the democracy limitations that I outlined above those who lose out on the new electoral deals can have no effective recourse other than separation, which is coming to mean the carve-up of national territories between the people and the politicians.


So the rise of Monetarism and cultural constituencies necessarily means every nation state will in the end become a failed state.


A capital city ruled by a Globalist cultural constituency surrounded by a hinterland one or more cultural constituencies of outsiders.


This is what PODEMOS in Spain and SYRIZA in Greece and even the SNP in Britain really mean. That the national states they are nominally part of are becoming failed states. And this eventuality has been foreseen and prepared for.


Aha! Now I can hear you say: ‘This last statement is surely over the top – You had me going for a minute there, but this is bordering on conspiracy theory; world government and so on ‘


But doesn’t this accurately describe what we can see happening and without relying on a worldwide conspiracy theory?


My argument is that when nation states become constrained by a critical number of international treaties, modern national democracy simply cannot be sustained. By their sheer number and scope these international agreements undermine the function of nation states and their national elites. The international ‘free market’ no longer has the room to operate once a critical number of international treaties have been entered into. Capitalist competition has no room to exist. What then, will take its place?


If there is no regulated economic competition between nation states, there will follow unregulated cultural competition within states. Greece is a perfect example of this.


Greece no longer has the means for regulated economic competition with other nation states. It no longer has its own sovereign economy; for example, it cannot devalue which is a ‘traditional’ means of regulating its own international trade competitiveness. As a consequence, Greece is now divided between Globalists and the cultural constituency of SYRIZA.


In Greece there will have to be another election in short order. And the EU political elite will actively try to influence the outcome of this election as a political player.


Ukraine is another more extreme case in point. It is precisely because Ukraine as a nation was so constrained by the competing demands of the European and Russian blocs, that it was unable to operate as a separate economic entity. It is not a co-incidence that the conflict in Ukraine was sparked by disagreement over which of two international treaties Ukraine should sign.

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The Austerity Delusion Paul Krugman Guardian April 29 2016


‘It is rare, in the history of economic thought, for debates to get resolved this decisively. The austerian ideology that dominated elite discourse five years ago has collapsed, to the point where hardly anyone still believes it. Hardly anyone, that is, except the coalition that still rules Britain – and most of the British media’.


In the aftermath of a shock Conservative general election victory there is inevitable fall out across the mainstream left and nowhere more so than in the Labour Party camp.


I argue that ‘classical’ economics has become increasingly irrelevant in the new world. Comprehensive state control of the economy means that there is no economics now; only politics –and that is one party politics.


Since there is no way to manifest and resolve differences through economics, culture is re-emerging as the defining pivot around which social conflict is based. With this in mind I argued that the Conservative victory was essentially the result of playing to a cultural constituency and not any economic rationale.


Nevertheless, despite the widespread admission among the left that culture is raising what they regard as its ugly head, many on the ‘left’ are not willing to kiss goodbye to old fashioned economics just yet.


Two camps are emerging to contest leadership of the English opposition in the aftermath of the elections. In the blue corner we have ‘Blairism’ and in the red corner ‘Keynesianism’ is being dusted off for a re-run against austerity.


The nominal question being asked is: Which of these two economics can best offer an alternative to the program of the Conservatives over the next five years?


Blairism was concocted as a replacement for the Keynesianism that had become   discredited as a result of 1970’s industrial production collapse. Tony Blair famously signalled the end of independent political or economic perspective when he abandoned the Labour Party commitment to Clause 4 and wealth redistribution. Whatever opposition in Britain would be from now on, it would not be based on alternative political economy.


Fast forward twenty years and post Credit Crunch, Blairism itself was utterly discredited. The gap between rhetoric and reality encapsulated in an infamous speech to the City of London in which Chancellor Gordon Brown opined that the world was witnessing the emergence of a ‘Golden Age of Banking’. Then came, well you know.


Following a leadership election Ed Milliband appeared waving the banner of ‘Not Blairism’. That’s not rhetoric on my part – ‘Not Blairism’ is literally what Miliband said he was campaigning under! And now that ‘Not Blairism’ has been roundly defeated there seems to be nowhere left for the ‘left’ to go.


Except perhaps back to Keynesianism, or Neo Keynesianism anyway.


Which brings us to Paul Krugman and his lengthy Guardian piece: ‘The Austerity Delusion’


Written shortly before the British election, it captures the essence of the Neo Keynesian argument; there was no need for Austerity and no economic justification for it. More surprisingly, Krugman then argues that it is only in Britain that a residual attachment to austerity remains,


‘I don’t know how many Britons realise the extent to which their economic debate has diverged from the rest of the western world – the extent to which the UK seems stuck on obsessions that have been mainly laughed out of the discourse elsewhere’.


Even a superficial survey of developed economies would quickly show that this is wishful thinking. All across the globe there is a sustained attack on levels of government spending on social programs. This is Austerity by any definition. The difference between those countries that have severe Austerity and those that don’t is the willingness on the part of the broad population to oppose such attacks and its ability to do so. Austerity is not the consequence of any intellectual difference on the part of politicians and economists.


Krugman argues that the drive for Austerity is motivated by business and media interests that are ideologically committed to ending the welfare state and which used the Credit Crunch as a pretext for doing so. This is essentially a variation on the ‘Shock Doctrine’ analysis popularised by Naomi Klein and this observation is surely basically right.


From this position Krugman continues that Austerity is essentially an optional choice   and that politicians could go another way should they decide to. The Keynesian alternative of deficit borrowing and spending can be used to refloat the economy or at least offset the effects of cyclic crisis. He argues this has happened to some extent elsewhere. He is at a loss to explain why it hasn’t happened in Britain.


‘Is there some good reason why deficit obsession should still rule in Britain, even as it fades away everywhere else? No. This country is not different.’


And since Krugman cannot think of a good reason why there should be Austerity, he is persuaded to think that maybe there is no Austerity, at least not any more:


‘The key point to understand about fiscal policy under Cameron and Osborne is that British austerity, while very real and quite severe, was mostly imposed during the coalition’s first two years in power’


‘Given the fact that the coalition essentially stopped imposing new austerity measures after its first two years, there’s nothing at all surprising about seeing a revival of economic growth in 2013’.


So British polity is labouring under the grip of an ideology – except that it isn’t !?!


Krugman readily understands that his analysis will require some clarification:


‘By this point, some readers will nonetheless be shaking their heads and declaring, “But the economy is booming, and you said that couldn’t happen under austerity.” But Keynesian logic says that a one-time tightening of fiscal policy will produce a one-time hit to the economy, not a permanent reduction in the growth rate. A return to growth after austerity has been put on hold is not at all surprising’.


‘Keynesian logic’ says that permanently lowering wages and benefits for the working population will not permanently lower their purchasing power and affect demand in the broader economy?


How does that work then?


No answer I am afraid, because Paul Krugman has moved onto more important matters. Not only is there not really any Austerity but it turns out that the media that Krugman said helped introduce Austerity never really supported it anyway:


‘…what’s with sophisticated media outlets such as the FT seeming to endorse this crude fallacy? Well, if you actually read that 2013 leader and many similar pieces, you discover that they are very carefully worded. The FT never said outright that the economic case for austerity had been vindicated. It only declared that Osborne had won the political battle, because the general public doesn’t understand all this business about front-loaded policies, or for that matter the difference between levels and growth rates. One might have expected the press to seek to remedy such confusions, rather than amplify them. But apparently not.’


And if you find Krugmans account of the activities of ‘sophisticated’ media outlets such as the FT confusing, wait until he turns to the‘left’:


It has been astonishing, from a US perspective, to witness the limpness of Labour’s response to the austerity push. Britain’s opposition has been amazingly willing to accept claims that budget deficits are the biggest economic issue facing the nation, and has made hardly any effort to challenge the extremely dubious proposition that fiscal policy under Blair and Brown was deeply irresponsible – or even the nonsensical proposition that this supposed fiscal irresponsibility caused the crisis of 2008-2009.


And not only the British labour party but just about everybody else East of New York:

‘… the whole European centre-left seems stuck in a kind of reflexive cringe, unable to stand up for its own ideas. In this respect Britain seems much closer to Europe than it is to America.’


It almost beggars belief that Krugman is seriously trying to imply that Democrats under Obama have offered ANY serious alternative to Austerity and that this response can be compared favourably with anywhere else in the world. And yet here we are.


How can Krugman have drifted so far from reality? The answer lies in his ‘Neo’ Keynesianism.


How does Neo Keynesianism differ from classic Keynesianism? Let’s look at Krugmans characterisation of his opponents as ‘Austerians’; obviously a play on Austrians


‘People holding these beliefs came to be widely known in economic circles as “austerians” – a term coined by the economist Rob Parenteau’


Which is something of a revelation, at least to me. I certainly had never heard of ‘Austerians’ before I read this article; but then again, I don’t move in ‘economic circles’.


Krugman is obviously reluctant to name his opponents as Monetarists, which is what they are. What could be the reason for his coyness?


Democrats in the USA and the Labour Party in Britain both accepted the basic principles of Monetarism over twenty years ago- ‘Blairism’ in Britain and ‘Clintonism’ in the USA. Krugman has no interest in discussing this history because if did, he would have to criticise the so called ‘left’ as much as the so-called ‘right’- if he was really a Keynesian, that is. And whatever else he is, Krugman is essentially a party man.


Outside of ‘economic circles’ the whole world knows that Labour is up to its neck in the Monetarist project even if Krugman is reluctant to come right out and admit it. Instead the truth is obliquely referred to by Krugman when he observes that :


‘ the crisis occurred on Labour’s watch; American liberals should count themselves fortunate that Lehman Brothers didn’t fall a year later, with Democrats holding the White House’


This is breathtaking, absolutely astounding, cynicism. Krugman is hanging the pretence that Democrats can lay claim to anti Monetarist Keynesianism on the fact that they weren’t actually caught with their paws in the Monetarist cookie jar in 2008!

Let’s recap;


  1. The economy is now controlled by the state. This is Monetarism.
  2. There is no possibility of economic conflict as we have previously understood it. Now conflict is cultural.
  3. Blairism expressed this truth (see my last post)
  4. But Blairism was discredited by the Credit Crunch
  5. Now Labour needs an alternative to Blairism. The remains of the ‘left’ hope it can be built on Keynesianism.
  6. But this can’t happen because no genuine Keynesian could support a Monetarist Labour/Democrat party. So now we have got Neo Keynesians, which are Keynesians that accept Monetarism.
  7. Neo Keynesians argue that so long as we don’t actually get caught directly implementing Monetarist policies, we can perhaps convince people that we are Keynesians (sort of).
  8. If we do this we can pretend that there is some kind of economic alternative.
  9. Which implies that some kind of economic debate is possible.
  10. Which means that the debate does not necessarily have to come down to culture.
  11. Because if it does, we are well and truly f*cked.



That more or less covers everything. Oh, except for:


Putting all the cynical narrow political interests of ‘economists’ like Krugman aside, would it be possible to actually implement some kind of Keynesian alternative to Monetarism?


Regretfully, the answer is no.


As it develops Capitalism increasingly makes stuff that is increasingly useless by processes that are increasingly inefficient and chaotic.


But not to worry, Capitalism has an app for that.

It is called economic collapse brand name ‘Creative Destruction’.


All the bad stuff is wiped away and we can all start again. Which is fair enough. Except that when ‘Creative Destruction’ was first cited as a good idea, there were a lot less people who lived in a much more resilient and sustainable way.


In USA for example, the European population lived in relatively dispersed settlements with reasonable access to necessities such as food and water. When there was the inevitable economic crisis and clear out in the late C19th, it could be weathered by the population without much government interference.


But by the early C20th, urbanisation and the concentration of populations meant that it was not possible to have a Capitalist clear out without catastrophic social consequences and unrest. So the state had to get involved.


Enter Keynesianism.


The basic idea of Keynesianism was to use government spending to buy up all the useless inefficiently made stuff that capitalism has produced and so avoid the catastrophic social consequences and unrest that would come from the inevitable clear out we would otherwise have to go through.


And this worked pretty well for a bit until we were just about surrounded by all the useless crap that had been made and we were running out of money to pay for more…


Enter Monetarism.


The basic idea is that the state cannot afford to pay to buy all the useless stuff that is being produced, since in theory the amount of useless stuff is limitless.


So the state is going to have to control what is being produced. But the state will try to keep this control to a minimum.


And this worked reasonably well until the turn of the century when the state found itself having to interfere more and more to try to control what was produced and what was done with the stuff once it had been produced.


And this took us finally to the Credit Crunch in 2008. And with Q.E. now the state is all in.


So contrary to what the Neo Con/Neo Liberal whatever say about the Neo Keynesian whatever, a return to Keynesianism would actually represent a step backward from the existing level of state interference in the economy!


Its Monetarism and Cultural Constituencies from here on.










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Whiteism Cultural Constituencies: States of Mind: Centre Ground


The Years of Culture Begin In Earnest




December 2014 I named 2014/15 as the Year of Culture.




In that piece I described the first signs of a rise of social/political blocs based not on economic rationale, (the ‘traditional argument’ about the production and division of wealth), but on sub national groupings I characterised as cultural constituencies.


I described examples of Cultural Constituencies around the world, including the Scottish National Party in the British Isles. I predicted that the recent referendum for Scottish independence (although it ended in defeat), was far from the end of this cultural dynamic and that the rise of the Scottish National Party would inevitably have an effect on British polity.


So much has been proven to be the case, but the results of the recent British General Election offer more insight into cultural constituencies.


Against every prediction and poll that preceded the election, the Conservative party managed to obtain an outright majority in the House of Parliament. This means that they can implement a political program without the need for coalition.


In contrast their Liberal Democrat coalition partners saw support in the country collapse. This was another cause for some surprise. After all the logic goes, if the Conservatives get credit for the past five years, why do Liberal Democrats get condemnation for exactly the same program?


The Labour Party, despite the anticipation (at least on the ‘left’) that their campaign would take flight, stalled in mid air and then nose dived straight into the airstrip. Again, everyone professed surprise. Not me though.


From U.S.E. November 12 2014:


‘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?


….Ed Miliband refused to go along with the stitch up on Syria last year. ….That makes him downright dangerous.’


I made it clear that the question of Ed Millibands ‘fitness’ to be prime minister was decided there and then. The press and political insiders continued their campaign of vilification. The result was inevitable.


But this alone wouldn’t explain the story of how Labour busted out in their traditional heartland of Scotland- reduced to just one seat! The Scottish response to Milliband was an exact mirror image of the English response. Whatever the English liked about Milliband, the Scots detested and visa versa.


This in turn has provoked an intense battle to interpret the meaning of the election result -just as the meaning of the referendum is still contested long after the result was supposed to be sealed and delivered.


The key to this struggle is Gaelic identity (characterised in Saxon media as ‘dangerous’ and ‘destructive’ ‘nationalism’), against Saxon identity. It seems that every Saxon pundit has been mobilised across the territory to destroy the very idea of an alternative to the Saxon mindset in these islands. This is especially true of the so called Saxon ‘left’. It looks like a national media wartime mobilisation reminiscent of EuroMaidan Kiev.


The more strategic elements of this Saxon Maidan are now looking down the road of federated agreement between Scotland and England and the creation of an exclusively English parliament. Two key elements that work in tandem with this new arrangement are:


Abandonment of the European Convention on Human Rights and its replacement with a Saxon Bill of Rights and


Redrawing the electoral boundaries within England, making it virtually impossible for the Labour Party to ever win an outright majority again.


In the midst of all this domestic constitutional upheaval, more conflict is set to crystallise around the promised referendum on EU membership. The Saxon Maidan could quickly start to look like a northern SYRIZA fighting against the continental Germans.


With this rather more sober perspective on a Conservative victory, it starts to look like success for the Conservatives might prove to be something of a poison chalice. So why were mainstream Conservative Party hacks willing to bid themselves into a potentially perilous and marginalised position?

The answer can be found in the fate of failed party leaders Ed Milliband of the Labour Party, and Nick Clegg leader of Liberal democrats.

Consider the striking image of three main party leaders at the Cenotaph for the VE DAY celebrations, two of them political dead men walking (their resignations were already common knowledge). This is a graphic illustration of the danger of failure in this febrile contemporary political atmosphere. Political ghosts at a political funeral. And the system and the position of its major actors is even more brittle than appears on the surface.


The cost of political failure has gone up considerably because the analysis underpinning individual politicians is no longer trusted. In the Good Old Days there were a couple of alternative approaches to politics based on economic rationale. You were either in favour of redistribution or you were not etc.


Individual politicians might be challenged, but the ideas behind individuals were sacrosanct. It was simply a matter of finding individual politicians to represent the idea. But now Ideas are to be discarded along with the people who came up with them. Because these ideas don’t represent economic rationale which is universal but cultural constituency which is specificThe politician no longer REPRESENTS the universal ideal, the politician IS the cultural specific.


Once you understand this, Barack Obama and Hillary Clinton and David Cameron and Jean Marie Le Pen and Vladimir Putin all start to make a very clear kind of sense.


There can be no doubt that this VE day marks the end of an era. For the first time since the end of WWII ‘western’ leaders refused to turn up for the Victory Parade in Moscow. The message here is unmistakable. Another major piece of the international post war settlement is broken off, dead and gone. But this is an indicator of something even more profound. Just and the international post war consensus is over, so the domestic post war consensus is finished also.


Which brings us to the Conservative surprise victory and in particular the size of their majority which exceeded even revised exit poll estimates produced on election night.


The difference between what the Conservatives were predicted to get and what they actually got can entirely be accounted for by accommodation to the Saxon cultural constituency. Lets look at the Conservative Party program in terms of characteristics of a Cultural constituency as I have described them:


They make permanent rather than transitory demands

Conservatives are committed to:


  • Permanent reduction in the size of the state and welfare.
  • Permanent budget surplus
  • Privatising the National Health Service
  • Redrawing electoral boundaries to permanently advantage their constituency
  • Withdrawing from the European bill of Rights and creating an Anglo Saxon Bill of Rights
  • Substantially renegotiating the terms of the European Union Agreement with, and
  • Possibly leaving the European Union.


Willing to compromise on periphery, completely unwilling to compromise on core; creating new spheres and forums for co-operation, even international organisations that encompass Cultural Constituencies. But less and less willing to negotiate with their own national governments.


Conservatives are floating the idea of federalisation with Scotland, this will cause consternation throughout the old guard of the establishment.


In addition to this innovation, as part of ongoing negotiations with the EU they will try to form a bloc of nations to enhance their bargaining power. This will confound the commentariat in the press.


The Conservatives can reach an accommodation with the SNP but NOT with the BBC and the British Medical Association and the Guardian and so on. What commentators don’t understand yet is that cultural constituencies are all about settling internal scores, in some sense externalities are almost an irrelevance.


So initially it might seem a little odd to think of a Conservative administration in conflict with ‘government’, after all they are supposed to be the government. But the conflict is between Saxon cultural constituency and the British establishment the ‘deep’ state and the post war settlement. As I explain cultural constituencies are:


Condemned by the post war establishment; Pundits and politicians of the post WWII order are not going to like these groups. And they are going to act against them.


And the key cultural characteristic of the Conservative majority is perhaps most tellingly:


Economic demands secondary or irrelevant.




Profound realignment of politics within constituencies; Less and less will traditional areas of contention and politics operate within cultural constituencies. The members will tend to see what they have in common over what they have in difference.


The Saxon cultural constituency is an economic disaster for working class people. It will achieve for the material well being of English society as a whole what the Kiev government has achieved for the majority of Ukrainians.

The Conservative party is run by a cabal of elite public school educated multi- millionaires that express the material interests of a tiny minority of English society. This observation is not seriously challenged by anyone within the English media. The gulf between the political elite and the hoi polloi is summed up by the incident in which David Cameron forgot which football team he supposedly ‘supported’!


The bizarre dislocation between fact and fantasy illustrated by Camerons gaffe went largely unremarked because now there is an unspoken agreement among the Saxons. There really is a conspiracy here! No more dissent within the ranks of the Saxon cultural constituency.


The fact that Poroshenko is a billionaire and represents the interests of an economic elite makes no difference to the Ukraine Maidan. Just as ‘Economics’ makes no difference for Maidan Ukraine, ‘Economics’ will make no difference for Maidan UKraine.


At a fundamental level, what is striking about the Conservative cultural constituency agenda is the extent to which it exactly mirrors the program of Monetarist Tony Blairs New Labour program. This illustrates the intimate relationship between Monetarism and Cultural constituencies. As I explain here:




So here is the American/Saxon dream as summed up by Tony Blair*


‘The centre ground is as much a state of mind (!!!!-AP), as a set of policies. It means that we appreciate that in today’s world many of the solutions will cross traditional boundaries of left and right. (ref cultural constituencies). We need not just to be comfortable with this; but actively to seek out the alliances to embrace those outside our tribe as well as within it.’ (ref cultural constituencies)


‘We win when we understand the way the world is changing and make sense of how those changes can be shaped for the good of the people.’(by which he means Saxons ref cultural constituencies.)


Here Blair plays the role of a slightly noisier ghost of Banquo with some evident relish. But who can blame him, after all:


“blood will have blood”,


which encapsulates cultural constituencies to a tee.


Yikes! That was quick..

Tories go to war with the BBC

David Cameron, infuriated by the corporation’s election coverage, appoints BBC critic John Whittingdale to “sort out the BBC” ahead of the royal charter review next year



update15 May 2015

Chukka Ummuna widely seen as the heir apparent to the ‘Modernising’ wing of the Labour Party threw his hat into the leadership contest and then…er took it out again. Now why would that be I wonder?



The politician no longer REPRESENTS the universal ideal, the politician IS the cultural specific.

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Do Banks Create Money? or No Big Deal



To get a real insight into whether banks do indeed create money, we must first sharpen the focus of our enquiry:


If banks do create money, what kind of money do banks create?


For instance, do banks print foreign money?


It has been rumoured that in the past North Korea has printed North American dollars, but for the most part this practice is frowned upon and we can say that generally banks and governments refrain from printing each others currencies.(Although that might change in the Eurozone quite soon).


Do banks create their own private money? Is there such a thing as Lehman dollars?

Banks printing money in this form is not generally held to be the case, (at least not yet), but we can come back to that later.


Since it is clear that private banks don’t create money in general we have refined the question to:


Do banks create the national money used by you and I? Or to phrase it using democratised money theory language: Do private banks issue Government Issued Money?


And of course, when you put it in these terms, the answer has to be ‘no’.


Problem solved to my satisfaction at least.


But maybe not quite to yours.


In my last post I commented on a quarterly bulletin of the Bank of England that seems to suggest that banks do indeed create the majority money in circulation in the form of debt. This capitulation to the radical interpretation of economics piqued my interest. Putting aside the question as to whether banks do or don’t create money, why would the Central Bank retreat from earlier positions and just as importantly, why would it do so after all this time?

One plausible reason for a tactical concession to the insurgents is to better position the Monetarists for the next assault in their ongoing campaign to control the future of money.


It could be that central banks are positioning themselves so that it is not such a big shock when they come clean about derivatives being money. The message will be; Sure, private banks and financial institutions print money of one kind or another; they always have. So what’s the big deal? Perhaps the arrival of this political concession actually means that the time is approaching when the shadow economy will be coming out of the shadows.


This would be a reasonable assumption if there is a need for some kind of normalisation of interest rate policy. It will be impossible to significantly and permanently raise global interest rates without some corresponding amendment of national and international banking and exchange rules. These rules would need the justification of a new worldwide orthodoxy on money and banking. This might be the actual truth behind all those predictions of a world currency.


If orthodoxy were to concede that derivatives were to be regarded as a form of money it would confirm what I have been arguing for more than five years. But I don’t think I will be celebrating my intellectual success. Any successful attempt to conflate bank credit or anything else with Government Issued Money can only serve one purpose: to discredit and denigrate cash money. And that is nothing short of a disaster for you and for me.


There is a horrible synchronicity here between both orthodox and unorthodox wings of the monetary conflict; Monetarists and radical Bitcoiners. The message from Bitcoiners and Monetarists alike is leave government cash behind, the battle has moved on.


Bitcoiners argue that their cryptocurrencies are democratic and free from central bank oligarchy control and therefore better than cash. Monetarists argue for a technocratic ‘non politicised’ control of money issuance; effectively privatisation of money control in a credit card world. Both result in the end of cash money guaranteed by the state, under political control. Both result in the privatisation of the issuance of money.


In the light of these developments the strategic imperative for us is to ague for the sole primacy of Government Issued Money as the only form of currency. Let me explain why.


There has been a constant attack on the use of cash for at least two decades and this attack has been centred around the point of contact between cash and banking. The introduction of numerous legal requirements on bank reporting of activity as well as private petty restrictions on how much cash you can depots and withdraw have had a chilling effect on cash based banking.


At the same time cash has been increasingly frozen out of commercial activity- many utilities are virtually impossible to purchase with cash unless you use prepaid cards and are extorted by the utility provider for the privilege.


For the past six years or so this attack on cash has been masked by the attack on savings deposits expressed through negative interest rates. Not only do deposits not pay interest, but bank accounts and their supposed contents are rapidly losing their legal status.


The end game in all this is bail ins where banks simply convert deposits into shares, which you are not even allowed to freely trade! If bank credits really are money as the Bank of England paper argues, on what basis is this being done? Follow the actions not the words and you will at least begin to question any supposed conversion of monetary orthodoxy to radicalism.


It is possible to cut through the confusion between cash and credits illustrated by comparing the decision to hold goods, cash or credit.


Let us say that due to deflation you decided to put off purchases, that is to say to hold cash or bank credits. Are the risks and benefits the same in each case?

Holding and using cash offers the benefits of anonymity and privacy. Does bank credit offer this?

Cash money offers the benefit of dealing with no ratification, in other words no-one oversees and confirms any deal you might choose to make. Does bank credit offer this?

Cash money is legal tender, it has to be accepted in settlement of debt. Does bank credit offer this?

Cash money offers complete liquidity. Does bank credit offer this?

Bank credit is subject to seizure, forfeiture and conversion (as in bail ins). Does cash money suffer from this?

Cash money clearly offers a number of benefits and guarantees that bank credit cannot. Bank credit suffers in the comparison with cash money.


It should be clear from this that as bank credits become denigrated by the state it increasingly becomes necessary for central banks to delegitimise cash to at least a corresponding amount. Because if only a very small minority of the general population decided cash was the better option that would cause a lot of problems.


Only around 3-5% transactions are cash and this proportion will significantly diminish further if Monetarists have their way. But if usage of cash was to increase significantly, the plans of Monetarists would start to run into serious trouble in short order.


Firstly, cash is hard to take back in a way that credit is not. Paying off bank created debt ‘dissolves’ credit money but cash money has to physically be withdrawn from the economy which is much more difficult to do- this means hard inflation. The kind that central banks cannot control except by raising interest rates.


But even more important is the relationship between cash money and banking reserves. Cash money is directly created by central banks and obviously bank deposit credits are not (this is the essential complaint of unorthodox economics). The creation of cash money directly affects the amount of reserves required to be held by each private bank and by the central bank.


Bank credits can be created forever without necessarily altering the requirement for reserves. If people take their physical money out of the banking system for use they are effectively calling it into physical existence– forcing the banks to actually print and therefore again forcing them to raise interest rates.


These two reasons why bank credits are not Government Issued Money are still within the bounds of standard economics but there is a further more fundamental reason within Democratised Money theory.


I have argued previously that money makes a proclamation as part of a general contract between issuer and user.

This proclamation takes the form of the Base Interest Rate which determines the nature and scale of the economy. It is something that is universally applicable to the same extent. It affects everyone equally.

It is inextricably bound up with the specific contract of the money itself. Once this printed money proclamation goes out the door of the central bank it cannot be undone.


The cumulative effect of these non- undoable operations is the recorded element of the currency. You can’t undo a money issue interest rate or the effects it has on the economy but you can use the next money issuance to offset the effect. In other words vary the interest rate from issuance to issuance.


In contrast, bank credit is a specific, not a general contract. Credit is offered on an individual basis. The ‘proclamation’ from the lender is concerned with what the individual borrower must do, not the general economy. Because of this the issuance of bank credit requires a separate individual contract, unlike money where the contract is part of the money. This ‘money’ creation through debt is subject to ratification by the legal system; it can be undone if deemed onerous or illegal, unlike cash money.


The cumulative effect of credit creation by private banks does have a massive effect on the economy. But it is not a general effect like money, it is a cumulative private effect. When you borrow from a bank you have to deal with the economic power structure as a lone individual instead of as a citizen member of society dealing with a central bank. In other words it is the ultimate codified example of divide and rule.


If as I argue, Monetarists want to create a Permanent Credit Economy, (that is a decentralised planned economy, with banks deciding who gets credit to do what),

Then deceiving propaganda giving bank credit the status of money can only be to their advantage.


We should oppose it.



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The Truth Is Out- Or Is It? or Do Banks Print Their Own Money? Part 1



The Truth Is Out: Money Is Just An IOU, And The Banks Are Rolling In It

David Graeber



https://s3.amazonaws.com/s3.documentcloud.org/documents/1698915/monetary-reform.pdf *


http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf #


The charge that private banks create money in the form of debt and that debt money creation caused the credit crunch is a major charge against the financialised world economy and orthodox economics. This charge targets the Federal Reserve and central banks across the developed world as authors of the problem.


If this is an accurate understanding of the way the economy works then the solution to the credit crunch and its aftermath is relatively straightforward: ‘End the Fed’ and effectively nationalise it (and all central banks), and money making powers for socially desirable projects (such as reconstructing capitalism along traditional lines!). Proponents of this type of approach action include Ellen Brown on her ‘Web of Debt’ blog and Professor Steve Keen.


This argument does have a number of positive aspects to recommend it. It is underpinned by the desire to reconstitute a commons – money which serves everyone. It is a political solution that emphasises the need to have a political confrontation with the Monetarists that have hijacked the monetary system.


And all of this becomes ever more relevant in the light of a recent discussion paper by Frosti Sigurjonsson commissioned by the prime minister of Iceland* exploring the possibility of nationalising the money creation process. Iceland is noted for adopting a non mainstream approach to the credit Crunch and its consequences, nationalisation would be more of the same non orthodox approach. The most significant thing is that this approach again argues that a political solution to the Credit Crunch and financialisation is possible.


But it is not just the ‘unorthodox’ that are offering new ways of looking at money philosophy. A discussion paper by the Band of England ‘Monetary Analysis Directorate’# makes the admission that banks do in fact, print their own money, just like the insurgents claim. This document is startling for a number of reasons and well worth reading.


In a Guardian opinion piece by David Graeber more or less gets the tone of the insurgent ‘victory’:


‘Last week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called “Money Creation in the Modern Economy“, co-authored by three economists from the Bank’s Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox (‘insurgent’- AP), positions more ordinarily associated with groups such as Occupy Wall Street are correct’


Surely, the first question that arises from this development has got to be: Why now? The Orthodoxy after decades if not centuries of standard monetary theory is now suddenly throwing in the towel and telling us the great unwashed occupy insurgents were right all along!


As David Graeber puts it:

‘Why did the Bank of England suddenly admit all this? ‘

And the answer?

‘Well, one reason is because it’s obviously true.

Hang on a minute, its obviously what you want to hear, but does that mean it is necessarily true?…and even if that is so, truth did not seem to be a consideration before…To be fair, David Graeber senses that this is not really an adequate explanation so he offers the following elaboration:

‘The Bank’s job is to actually run the system, and of late, the system has not been running especially well. It’s possible that it decided that maintaining the fantasy-land version of economics that has proved so convenient to the rich is simply a luxury it can no longer afford.’


Which itself leads to many more questions than it answers; Why has the Bank of England decided to deep six the elite it served so faithfully now? Better to turn to the paper itself, which after a first reading the text turns out to be a little more subtle and nuanced than might be supposed from reading the Guardian opinion piece about it.


In fact the paper itself turns out to be essentially a semi-orthodox defence of QE that smuggles a number of unorthodox ideas in the body of the argument, a kind of intellectual Quantitive Easing if you will. Nevertheless, the concessions it makes appear to be remarkable.


Still it would be good to keep this question in your mind as we proceed:

Why would the keepers of monetary orthodoxy need to make concessions to opposing points of view and why now?


Lets have a look at the concessions themselves. First of all the concession that private banks make money:


‘The reality of how money is created today differs from the description found in some economics textbooks:’


  • Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.


  • In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money ‘multiplied up’ into more loans and deposits.


The paper goes on to say that ‘lending’ out and ‘multiplying up’ of existing deposits in banks is little more than a childs bedtime story:


‘While the money multiplier theory can be a useful way of introducing money and banking in economic textbooks, it is not an accurate description of how money is created in reality’


So bank lending is not related to deposited money from the public in any way; the money is created from scratch. However, the paper repeatedly and forcefully argues this is not carte blanche to print:


‘Banks themselves face limits on how much they can lend. In particular:


  • Market forces constrain lending because individual banks have to be able to lend profitably in a competitive market.
  • Lending is also constrained because banks have to take steps to mitigate the risks associated with making additional loans.
  • Regulatory policy acts as a constraint on banks’ activities in order to mitigate a build-up of risks that could pose a threat to the stability of the financial system.’


Having disposed of deposit and money multiplier orthodoxy, the Bank of England goes on to attack the Monetarist quantity of money theory as another bedtime story:


‘In no way does the aggregate quantity of reserves directly constrain the amount of bank lending or deposit creation…..

Rather than controlling the quantity of reserves, central banks today typically implement monetary policy by setting the price of reserves — that is, interest rates’.


Cutting through the circumspect language, the core message is clear: The quantity of money is not a concern for the Bank of England. Targeting money quantity is voodoo economics; in other words the amount of money in the economy does not directly lead to inflation or anything else. The right wing shibboleth of hyperinflation through excessive printing is dismissed as a childish preoccupation, just like deposits and money multipliers.


Now we have got all that out of the way we can have a look at how things really work:


‘Banks first decide how much to lend depending on the profitable lending opportunities available to them — which will, crucially, depend on the interest rate set by the Bank of England’.


Let us be absolutely clear; this means the end of ‘risk’ as a supposed factor in the activities of banking. The ‘risk’ that lenders undertake in return for the ‘reward’ of interest is the risk of not making a profit – NOT the risk of losing their money. If a money lending institution makes no profit it will cease to exist just as surely as if it had lost all the ‘money’ it had ‘bet’ on various business enterprises.


And the paper freely admits that profitability is the province of the central bank. The Bank decides what will be profitable and what will not be profitable through the medium of interest rates. It must logically follow that the amount of ‘risk’ in the economy is entirely the creation of the central bank. (If you doubt this for even a second, just consider that this is exactly what ‘Too Big To Fail’ actually means…).


David Graeber makes this point quite elegantly in his Guardian piece:


There’s really no limit on how much banks could create, provided they can find someone willing to borrow it. They will never get caught short, for the simple reason that borrowers do not, generally speaking, take the cash and put it under their mattresses; ultimately, any money a bank loans out will just end up back in some bank again. So for the banking system as a whole, every loan just becomes another deposit.


And here is the Bank of England making the point ever more clearly:


‘The ultimate constraint on money creation is monetary policy.


By influencing the level of interest rates in the economy, the Bank of England’s monetary policy affects how much households and companies want to borrow. This occurs both directly, through influencing the loan rates charged by banks, but also indirectly through the overall effect of monetary policy on economic activity in the economy. (my emphasis). As a result, the Bank of England is able to ensure that money growth is consistent with its objective of low and stable inflation.’


Leaving the last bit aside for a moment, this again makes explicit the proclamation function of interest rates that I have discussed before. Bank money loans are made and bank deposits called into existence on the basis of the central bank proclamation of what will be profitable. Risk is not a factor. Amounts are not a factor. The only significant factor is the proclamation of profitability as expressed through interest rates. This is precisely democratised money theory as applied to credit.


Lets apply this radical orthodox/unorthodox anlaysis to the historical devleopment of democratised money and see what we come up with.


The economy is divided into two spheres; state and private.


  1. High interest rates are a central bank proclamation.


They proclaim the extent tow which the economy will be profitable by decree; i.e they say you should be able to make at least this much (base interest rate plus bank mark up) on any investment you undertake.


Profitablility expressly and explicitly means efficiency.Too many low productivity workers is inefficient- rationalise them. Government lending for social services is inefficient- cut back on it and so on…


This rationale describes the intent and effect of the famous Volcker interest rate rise that kicked off the Monetarist project in earnest. High interest rates served the Monetarist objective of diminishing the state and all ‘indulgent’ inefficient capitalist business.


  1. Low interest rates are a central bank proclamation.


They proclaim that the economy will be not be profitable by decree. i.e. they say you should be able to make little or nothing (base interest rate plus bank mark up) on any investment you undertake.


Lack of profitablility expressly and explicitly means inefficiency- many low productivity workers employed in low wage, low value added service sector jobs. Government lending for Quantitive Easing and TARP supported by low interest rates


This describes the intent and effect of the famous Bernanke interest rate slashing that kicked off the Q.E. project in earnest. Low interest rates served the Monetarist objective of making the state the entire guarantor of the post credit crunch economy, protecting all ‘indulgent’ inefficient financialised business.


High interest rates in the 80’s signalled shrinking the state, the end of ‘socialism’ and the consumer society post war settlement.

Low interest rates in the ‘00’s signalled an UNPRECEDENTED EXPANSION of the state in order to usher in an age of socialism for the rich….


Next time, Q.E.

But bear this in mind;


If banks really do print money, how come you never hear of anyone caught trying to get through airport customs with bunches of bank statements hidden in their underpants?…

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