THE CRACKERNOMICS EQUATION

The Equation

Lets make it simple:

N.G.M.=G.M.O

N.G.M. -Non Government Money

G.M.O. -Genetically Modified Organism

From

N.G.M.=G.M.O

can be derived:

GMO is to Agriculture as NGM is to Economy

COMPARISON OF FEATURES

GMO NGM
Is justified because of ‘crisis’ in food production Will be justified because of state currency crisis
Takes commonly held good – seed-stock and modifies it to produce privately held GMO Takes commonly held good -state currency and modifies it to produce privately held NGM
Replaces natural seed that can reproduce itself State Money now produces no interest
Requires proprietary weedkillers ‘Roundup’ etc Will be used to control what can be bought where and when
Contaminates natural fields Is mixed with state currency through purchasing by Federal Reserve etc
The law is being rewritten to force natural farmers to comply with the introduction and proliferation of GMO The law is being rewritten to force everyone to comply with the introduction and proliferation of NGM
Is being introduced in semi-secrecy Is being introduced in semi-secrecy

Who benefits from the introduction of GMO? Who loses out?

Who benefits from the introduction of NGM? Who loses out?

It is the same trick being applied in agriculture and economy

 NGM=GMO

CRACKERNOMICS: The Exchange Rate Is The Key

 

*NGM- Non Government Money

A standard bubble begins when one investment has a more productive rate of earning than any other in the economy.

In other words when lots of people can make more money investing in one particular thing (as opposed to anything else), a bubble begins.

In the first phase of a bubble, surplus (discretionary) wealth in invested; people put their spare cash in.

When that round of inputs is exhausted new people enter the bubble; investment wealth is put in. Now the bubble is at its maximum ‘credibility’. Investing at this stage is seen as common sense.

When investment cash is used up, credit is obtained and invested. At this stage the bubble changes its character because now the investment is valued not against other investment opportunities in the economy, but against the investment value of money itself. As more and more people try to get in on the bubble using credit, interest rates rise and the supply of money dries up.

The bubble deflates.

In the housing bubble that is supposed to have led to the credit crunch, the money in question was NGM.* There was an inexhaustible supply of NGM because the financial institutions kept creating it. This made the Credit Crunch bubble fundamentally different from what had gone before. The bubble could not end on its own because there was no limit on the amount of NGM money that could be printed and moved around on the back of  it. (Does this remind you of anything? It does? There is a reason for that….)

The more NGM that was created on the back of housing, the more opportunities there were for ‘earning’. The more opportunities for earning an investment offers, the more investors it draws in and the more NGM is printed. It is like a financial Black Hole collapsing under its own gravity and sucking in more and more material forever!

But the Credit Crunch ‘problem’ actually started when the exchange rate between state issued money and NGM came under scrutiny. The banks refused to lend STATE ISSUED MONEY (SIM), to each other when they asked this question: What is this NGM actually worth in comparison to SIM? It got so bad they were not even prepared to lend to each other SIM overnight. The risk was not worth it.

I had  thought that  the Credit Crunch appeared to have left the supporters of NGM with two difficulties:

1. The bubble relationship between housing and NGM This unique, unprecedented ‘sovereign’ bubble allowed the production of NGM to spiral out of control.

2.And the value relationship between NGM and SIM.

I now realise that the bubble problem is actually an expression of an economic problem in the exchange rate between NGM and SIM and the value relationship between NGM and SIM is actually an expression of a political problem in the exchange rate between the two.

Both these problems are really the political and economic expressions of the same problem: The exchange rate problem.

Look at the solutions that have been adopted.

First the bubble relationship between housing and NGM.

The solution to this problem requires that the value of NGM in relationship to housing has to be raised or at least maintained. This means that somehow the supply of NGM has to be cut off, (The equivalent of raising interest rates in SIM). But by definition the state cannot control the issuance of non-state money- that’s the whole point of NGM after all. So what can it do instead? The authorities can force the banks to carry more state issued money for the NGM that they issue.  In a bizarre way they really did ‘force’ the banks to accept free state money! By forcing the banks to acquire SIM in relation to the amount of NGM they have they are effectively enforcing an exchange rate between NGM and SIM.

The second problem is that the value of NGM in relationship to state money has to be raised or maintained. At the moment the democratised money gang want the exchange rate to be 1:1.  It follows from this that to the extent that NGM is worthless then state money has to be worthless. Printing seemingly endless amounts of SIM and then swapping it for NGM moves you along this road. But remember this is a political statement of support for NGM and carries with it political problems.

The key point to understand is that Q.E. is NOT a ‘negative’ interest rate. It is NOT extending zero interest rates into negative territory. This is mindless and impossible.

It is trying to manipulate the exchange rate between NGM and SIM.

This helps us to answer the question: How long will Q.E. go on for?  Which brings us to the Democratised Money Conundrum which is this:

Individual instances of NGM must be allowed to fail but NGM as a principle cannot be allowed to fail. In the same way that individual businesses can go bankrupt but capitalism cannot.

And that is the present problem. Since there is only one major type of NGM available at the moment (mortgage based), if it collapsed it might take the entire principle of democratised money with it. And that can’t be allowed to happen.

This is what all the radicals cannot understand. The proponents of NGM  are fighting for the establishment of an economic and political principle- the principle of Democratised Money. What you have seen so far is not a ‘mistake’. It’s not nasty bankers buying corrupt politicians. It’s the birth of a new political and economic structure.

So,

Individual NGM has to be allowed to fail-its a matter of principle, but NGM as a class cannot be allowed to fail-its a matter of principle. And at the moment there is really only one viable individual example of the class of NGM. Funnily enough, again it calls to mind a Black Hole, where the world of relativity and the world of quantum somehow exist in uneasy mutual contradiction.

But the contradiction does allow us at least to answer in part one question: How long will government intervention go on?

The answer must be until there is more than one kind of NGM.  I would imagine that when there are say, over ten types of different NGM the state will stop managing the transition. Then there will be room for individual NGMs to collapse without damaging the principle of NGM as a whole.

Or until someone stops them.

*NGM-Non Government Money

v

CRACKERNOMICS PARTICIPATION 3: WHAT’S LOVE GOT TO DO WITH IT?

‘What’s Love go to do, got to do with it?’

 Tina Turner

You have probably have, or will have a reason at some time in your life to ponder the question:

What is love?

And of course you will come to the conclusion that there are as many different definitions of love as there are sentient people on the planet.

So the question might be more usefully asked:

What is the value of any particular love?

In other words, if we accept that if someone proclaims love, then it is love, the real defining difference is that the love from a self obsessed alcoholic is worth a lot less than the love from a kind thoughtful person. Someone might genuinely offer you their love, but that does not mean that love is worth anything to you.

Which brings us to money.

There has been a largely fruitless debate over what money actually is between Gold Bugs, Bitcoiners, and the mainstream.

It is much more useful to accept that if someone says something is money, then to all intents and purposes it is money and instead ask the question; What is the value of this money?

So we  need a useful definition of the value of any particular money. The only definition of money value that does not rely on relative values is how acceptable it is.

In other words the power of any currency rests on how many people use and accept it. In fact you could argue that any given society is more usefully defined by the currency it uses than anything else. After all, the national boundaries of a nation can be violated by an immigrant hiding in a lorry, but that same immigrant cannot spend his home currency in the place he has penetrated. You can think of currency as a little national flag that you carry around in your pocket. National territory, it’s political and economic norms are defined by currency.

So if there were to be more than one currency operating in any given territory that would cause some interesting consequences.

It has been the  policy of governments in the Saxon Axis to allow the creation of NGM (Non-Governmental Money) for over a decade. The Credit Crunch and the reconstruction we have experienced are all direct results of the operation of the NGM (Democratised Money).

Since it is the purpose of governments in the Saxon Axis to encourage the use of NGM they wish to make it as valuable as possible. How is this to be achieved? by maximising the number of people who use NGM, to maximise the territory it covers. How is this being achieved? By swapping state currency for NGM, in other words Quantitive Easing. By purchasing Mortgage bonds, with freshly printed state currency, governments explicitly back the value of mortgage derivatives. By purchasing Government debt with freshly printed state currency governments explicitly devalue their own currency.

More importantly this increases the territory covered by NGM. Up until Q.E., NGM was limited to the financial sector, accepted and traded nowhere else, (most people did not even know it existed!). Now NGM is held and traded by your Government. Ideally, the proponents of NGM want it to be held and traded by you but in order for that to happen there has to be a number of further modifications to the system.

At the moment, NGM is traded at 1:1 with state issued currency. The state purchases NGM at its nominal value. But in order for it to be a truly sovereign currency, it has to have a floating exchange rate. How can this be achieved?

The purchasers will have to pick one. They have to break the existing link between the amount of mortgage NGM they purchase and what they pay for it. The difficulty is that they have no idea how much of this paper is actually out there, so they cannot assign it a value based on how much there is. What they can do is maximise the territory it covers by mixing the national money economy as thoroughly as they can with the NGM money economy before they are stopped.

Notice I say before they are stopped.

So who is going to stop them?

You can refer to Crackernomics for a fuller list of those who will lose out as a result of NGM but for the moment I want to concentrate on national governments. It has been pointed out that debasing national currencies in the Saxon Axis has led to debasement of foreign held debt and manipulation of exchange rates. This is the basis for the idea of ongoing ‘Currency Wars’. ‘Abenomics’ in Japan in cited as an example. After implementing Crackernomics to the power of ten in Japan in order to ‘stimulate’ the economy, it is anticipated that Japan will have to go even further to offset the fact that the Fed failed to taper last week. This in turn will cause other players to devalue their national currencies and this is a ‘ currency war.’ This, in turn, is taken as an indicator that things are getting out of hand. But if every nation state continues to devalue and QE then cumulatively it becomes a war on state currency itself! This plays directly into the hands of those who want to devalue the very idea of state currency and to promote the idea of NGM!

In other words those who promote NGM are more than happy to see a head fake national state currency war in the same way that Israel is happy to see the two sides tear each other to pieces in the Syrian national war.

Let your enemies fight till you are the last one standing

My friend, you would not tell with such high zest
To children ardent) for some desperate glory,
The old Lie; Dulce et Decorum est
Pro patria mori.

Wilfred Owen
8 October 1917 – March, 1918

CRACKERNOMICS: Participation Economy 2

Record 90.5 Million Out Of Labor Force As Half A Million Drop Out In One Month; Labor Force Participation Rate Plunges To 1978 Levels

Submitted by Tyler Durden on 09/06/2013 08:47 -0400

Look at this stuff from zero hedge. It shows a massive fall in the number of people participating in the economy, or should I say participating in the open economy. An ever increasing proportion of the workforce is simply disappearing off the books, to levels last seen in the late seventies when the cult of Monetarism was introduced.

‘the Labor Force Participation Rate declined from 63.4% to 63.2%: the is the lowest print since August 1978!’

I am coming to understand that this question of participation is of fundamental importance.

Consider this proposition: That the fundamental difference between Catholic and Germanic economies in Europe is the amount of labour participation in their respective economies.

In Greece, Italy, Ireland, Spain and Portugal, economies have been characterised by the relatively large amount of non state sanctioned economic activity, in other words low participation as defined by Monetarists. This has shown itself in low tax collection rates and perhaps more importantly the difficulty in understanding the real composition of these economies and predicting what will happen to them.

This explains the accusations of fraud while joining the Eurozone that were levelled as a result of the Credit Crunch. Credit agencies and governments simply did not know what people were really up to in these economies. Now these are the economies that the Germans want to reform- they want to increase participation but on Monetarist terms.

I have written previously about post Germanic war policies in Europe and the Saxon Axis to encourage participation in the economy and how they differ from the new forced participation policies.

This is a much more useful way of understanding developments since the Second Germanic War than left or right or Keynesianism or classical economics.

Why?

Because it allows us to see past the nonsense of a two party system or opposing political blocs. Now we can see that both sides of the mainstream political spectrum are concerned with achieving high levels of participation and the political and economic argument, such as it is, is about the best method to achieve this.

I would like to propose this prototype of a Spectrum of Participation as a way of understanding contemporary political and economic forces:

Maximum Monetarist participation (Formally known as Neo-Con/Liberal or ‘right wing’)

No use of cash.

Minimal discretionary spending.

Private provision of everything.

Complete integration of activity.

Social participation (Formally known as Keynesianism or ‘left wing’)

No use of cash

State provision of health education etc

Consumer society

Complete integration of activity

None participation (Broadly known as ‘Libertarian’)

Black activity

Use of gold as store of wealth

IMPORTANT

This is not a linear spectrum- drop this crap about left right etc.

These three types are arranged as the points of an equilateral triangle.

WE MUST DROP THIS IDEA OF A LINEAR SPECTRUM OF POLITICAL THOUGHT THIS IS THE SINGLE MOST IMPORTANT POINT TO UNDERSTAND.

Back to Zero Hedge:

‘Whether or not this means the Fed will continue QE at this point is largely irrelevant: what is more relevant is that the Fed so far has failed miserably at its core mandate: to boost real employment.’

At least we understand the priorities of the fed a little clearer now. We can now clearly see that participation is a major strategic objective of the Monetarists. We can say with certainty that their next moves will be aimed at this end.

By the way, I would now like to formally proclaim the end of the consumer society

CRACKERNOMICS: THE ‘PARTICIPATION’ ECONOMY

The earliest print cite to the phrase was 19 March 1876 in a short story about Mexico, an American being held up by a Mexican bandit, and the outcome. “Go-!” said he sternly then. “We will call it a stand-off, a Mexican stand-off, you lose you(sic) money, but you save your life!”

Wikipedia

In my short film The Great Money Train Hi-jack I describe how the QE program has turned into a financial Mexican standoff between the Monetarists and the public at large. In the aftermath of the crash, the workforce in the Germanic territories have been ‘invited’ to go back to work on the post Credit Crunch economic reconstruction on new terms.

On Wednesday Ben Bernanke decided to keep riders on the Democratised Money train supplied with a blizzard of free tickets, (much to the surprise of everybody), specifically citing as one justification the participation rate of employment in USA. Bernanke cited falling participation rates as evidence that the employment figures were not as rosy as first seemed. Since Bernanke expressly targets unemployment in his QE program it is just as well to consider this concept of ‘participation’.

As I said in Money Train Hi-jack, in 1945 the Anglo Saxon elite were forced to encourage a much larger than ever before participation in the post war economy by means of offering limited access to the money train in the form of credit – a form of economy saver ticket on the Money Train if you like. Access to washing machines, cars, houses etc funded by credit got the people working for the system again. Perhaps more importantly, state spending on health and welfare meant that the nature of the economy was changed. Welfare spending underpinned what we came to understand as the ‘consumer economy’.

Seventy years later the Anglo Saxon elite is no longer under the intense political  pressure of the post war years at home and abroad so now the message is : take it or leave it. Now the free tickets go to the bankers, not the people. This means that the recipients of QE can happily sit in the money train buffet car for as long as it takes until finally the people realise its clear the track under the new regime or starve.

And this in the end is what the labour participation rate is now all about. Its not about someone leaving the labour market because they are discouraged, it’s about too many people finding a way to slip through the net. So its keep the money train in a siding until the livestock can be rounded up and put back on the cattle truck

Participation has changed from something that was voluntary into something that is forced. In you want further proof of this new form of pleb participation in the economy try this

King Willem-Alexander delivered a message to the Dutch people from the government in a nationally televised address: the welfare state of the 20th century is gone.

In its place a “participation society” is emerging, in which people must take responsibility for their own future and create their own social and financial safety nets, with less help from the national government.

The classic welfare state of the second half of the 20th century in these areas in particular brought forth arrangements that are unsustainable in their current form.”

After several consecutive years of government spending cuts, the Dutch economy is expected to have shrunk by more than 1 percent in 2013, and the agency is forecasting growth of just 0.5 percent next year.

Willem-Alexander said that nowadays, people expect and “want to make their own choices, to arrange their own lives, and take care of each other.”

The ‘participation society’ has been on its way for some time: benefits such as unemployment compensation and subsidies on health care have been regularly pruned for the past decade. The retirement age has been raised to 67.

costs for the care of the elderly, for youth services, and for job retraining after layoffs will now be pushed back to the local level, in order to make them better tailored to local circumstances.

Eurozone rules specify that countries must keep their deficit below 3 percent, and Rutte has been among the most prominent of European leaders, along with Germany’s Angela Merkel, in insisting that Southern European countries attempt to meet that target.

However, the government said Tuesday it has decided once and for all not to abandon the U.S.-led “Joint Strike Fighter” program to develop new military aircraft. The program has suffered cost overruns and created divisions within Rutte’s governing coalition.

it must seek help from opposition parties to have the budget approved.

Rutte insisted in an interview with national broadcaster NOS on Tuesday that he ultimately will find support for the budget.

“At crucial moments, the opposition is willing to do its share,” he said.

Geert Wilders, whose far right Freedom Party currently tops popularity polls, called Rutte’s budget the equivalent of “kicking the country while it’s down.”

Dutch King Willem-Alexander declares the end of the welfare state

Tuesday 17 September 2013 Independent

http://www.independent.co.uk/news/world/europe/dutch-king-willemalexander-declares-the-end-of-the-welfare-state-8822421.html

Lets run the main points:

No more welfare

Look out for yourself; health care, education, old age

Local provision of services don’t bother the government it’s not our problem

Money for weapons

An opening for the far right as the post war consensus ends.

After the reconstruction everyone must be forced to participate in the economy on the new terms. Non-participation will not be an option.

Conversation on WHITEISM: PLAYING FOR KEEPS or: What the Hell is Obama up to? or Washington’s Secret Civil War.

ReflexRedux posted the following comments on

WHITEISM: PLAYING FOR KEEPS or: What the Hell is Obama up to? or Washington’s Secret Civil War.

I have commented on his comments below.

‘Okay I’m not sure, even granting the assertion that a moral narrative is a standard component of a socially functional personality (after all, presumably not having one is tantamount to being a psychopath yet, as we know, many psychopaths are socially functional and effective), that this is especially relevant. We don’t have access to Pres. O’s moral narrative except via such clues as he may choose to present us with, and the objective record of his actions and decisions (determined by factors of which we have only limited knowledge) with the result, as indeed in ordinary social life, that multiple opinions and interpretations are possible concerning an individual’s moral narrative and, by extension, their motivation. So it may be that, as you suggest, in his own mind Obama is a moral hero whose cause is the eventual full enfranchisement (beyond formally constituted, as at present) of black and other non-white people in the USA – but he can’t say this openly because it would involve a) too radical a critique of current formal freedoms and b) he would potentially attract dangerous opposition. This is an interesting hypothesis – I can’t say that you’ve provided evidence. What you have done is suggested a context (almost certainly correct) of competing factions and pressures around Obama which he has to negotiate in order to survive politically and, accepting your interpretation become the symbol of a success which will facilitate a development in US politics for which demographic trends are currently providing a potential base.

What I like about your observation is that willingness to contextualise Obama and his power instead of (as a majority of commentators tend to) assuming that his role and title confer absolute uncontested political sway. And I think your suggestion about his _personal_ vision and motivation are interesting, ingenious, possibly persuasive, but unproven.

I’m very interested by what you say in closing about ‘the moral rehabilitation of Anglo-Saxon America’ and ‘Whiteism’ as a discussion. To take the moral rehabilitation point first, there is surely no official recognition of moral collapse, so the rehabilitation ‘project’ is presumably more a pet fantasy of a liberal-left constituency in the USA (which does feel the moral taint of the slide towards a fascist police state and the global military grandstanding and trashing of international law that are projected externally), including a few voices in the commentariat. Regarding ‘Whiteism,’ which I take to be your coinage, I thought from reading you this was a political stance based upon a background assumption of ‘white’ superiority (in effect, one possibility of a ‘speciation’ model of human variation, which reifies visible physiological differences into differing core endowments and then takes this to imply a hierarchy of human sub-species). If this understanding is correct (I’m really struggling to understand ‘Whiteism’ as a discussion) then I think it is fairly clear to see the cultural narratives which are already in place to make ‘Whiteism’ possible and, given that the background assumptions _are_ background and culturally tacit, the ease with which what is effectively a global _supremacist_ political stance/project can draw strength and support from large numbers who are not consciously committed to global apartheid. How an ideological position can be a discussion (as opposed to being discussed) I don’t see. Alternatively, to describe as a discussion the historical struggle for such a position to become politically dominant or hegemonic seems to stretch the boundaries of metaphor unnecessarily.

I am genuinely interested in your ideas and in particular your reading of the global economy today resonates very strongly with my own experience, so I hope you won’t be offended by these comments, which might appear somewhat critical. My own blog, reflexredux, is where I am trying to map my own struggles to comprehend the world but it is private and, having tried to invite you to it, I find that I don’t have the wp ID required to do so successfully.

I have grouped together related comments and then responded

We don’t have access to Pres. O’s moral narrative except via such clues as he may choose to present us with, 

and

multiple opinions and interpretations are possible concerning an individual’s moral narrative and, by extension, their motivation.

This perspective assumes that the moral narrative Obama operates within is somehow generated by Obama alone which I point out, would make it powerless. Obama’s moral worldview was not created by him and in truth has not even been taken further by him. (It would be hard to argue that Obama is an intellectual in that or any other sense). Obama’s moral narrative was created outside of him, it is something that he portrays. Two elections show that the narrative is  demonstrably held by a large majority of non-whites and a substantial majority of Saxons. In fact, Obama’s moral worldview and even his ‘personal’ vision of himself was created by Anglo Saxon society! This is what  is worth writing about. Not the second rate politician Obama actually is. To attempt to ‘understand’ Obama and his actions on a personal level is as odd an enterprise as those people who shout at an actor in the supermarket because of something the character he portrays said or did in a soap opera. The Obama you know is a social construction and that is all. You or I will never know anything truly personal about Obama- it is bizarre to think you or I ever could. Once you begin to grasp the implications of this you can begin to consider Nelson Mandela, the template for Obama. Who created Nelson Mandela? And what is the name of this soap opera?

Moral narratives are group creations and the debate over Obamas morality is a moral, social and political debate. Think about the critique of the way that Obama operates politically and as an individual. Even the ‘Obama is a Muslim’ meme has a moral component. The moral debate over Obama is really : ‘Did we do the right thing in inventing civil rights? Have we done the right thing in allowing a ‘black’ man into the Whitehouse?’ and so on.

‘he would potentially attract dangerous opposition. This is an interesting hypothesis – I can’t say that you’ve provided evidence.’

‘What I like about your observation is that willingness to contextualise Obama and his power instead of (as a majority of commentators tend to) assuming that his role and title confer absolute uncontested political sway.   I think your suggestion about his _personal_ vision and motivation are interesting, ingenious, possibly persuasive, but unproven’.

I would say Mc Cains attempts to hang Obama over Syria are precisely evidence. Apparently Obama decided to go to Congress without even telling Kerry! Would you do that to a friend and confident? Can you really believe that the alliances and enmities that operate in Washington are those that are reported in tabloid newspapers and on the TV?

I believe that the test of analysis is its predictive ability. What else but the strategic perspective I have outlined can explain Obama’s strange and halting tactics leading to the bizarre, unprecedented stand off we have over Syria now? The proof (in its true sense meaning ‘test’), is my ability to predict Obamas actions and their outcomes more effectively than anyone else.

But let me go further, I would argue that the ‘moral’ narrative that endows Obama also allows politicians like Nelson Mandela to enjoy wealth and privilege while many of his compatriots who struggled as hard if not harder against apartheid, languish in poverty. This is something that should be explored.

there is surely no official recognition of moral collapse, so the rehabilitation ‘project’ is presumably more a pet fantasy of a liberal-left constituency

What about the ‘N’ word, Hiroshima and most tellingly Auschwitz? The entire edifice of modern western politics, has been built upon the repudiation of the history of the Western world. Find me anyone who matters, in any Germanic society who would dare to break these taboos. This is Whiteism. There are those who seek to overturn this straitjacket on Germanic society, they are Post Whiteists. The real division in Germanic societies is the division between Whiteism and Post-Whiteism. You are right that the liberal left was allowed to provide coverage for the discredited Germanic system in the post war period. I have written about this in ‘War, Welfare and Whiteism’ which I will post soon.

Regarding ‘Whiteism,’ which I take to be your coinage, I thought from reading you this was a political stance based upon a background assumption of ‘white’ superiority (in effect, one possibility of a ‘speciation’ model of human variation, which reifies visible physiological differences into differing core endowments and then takes this to imply a hierarchy of human sub-species).

You have hit one of the key points. Whiteism is not based upon an assumption of white ‘superiority’ but on an assertion of common ‘white’ interests. This is what makes it superior and subtle in contrast to white supremacy. I will re-post ‘ Forget about Racism, lets talk about Whiteism’ soon.

If this understanding is correct (I’m really struggling to understand ‘Whiteism’ as a discussion) then I think it is fairly clear to see the cultural narratives which are already in place to make ‘Whiteism’ possible and, given that the background assumptions _are_ background and culturally tacit, the ease with which what is effectively a global _supremacist_ political stance/project can draw strength and support from large numbers who are not consciously committed to global apartheid.

How an ideological position can be a discussion (as opposed to being discussed) I don’t see. Alternatively, to describe as a discussion the historical struggle for such a position to become politically dominant or hegemonic seems to stretch the boundaries of metaphor unnecessarily.

Since Whiteism is the assertion of a common white interest it’s purpose is to persuade non-Germanic whites to participate in white civilisation under Germanic control. Two fascinating examples:

Convincing the Slavs to take part in the war on Islam

Convincing the Irish population to integrate into the German economic system and the collapse it caused.

This is the ongoing discussion.

My own blog, reflexredux, is where I am trying to map my own struggles to comprehend the world but it is private and, having tried to invite you to it, I find that I don’t have the wp ID required to do so successfully.

Thank you for your contribution Reflexredux. Your engagement with the ideas helps to clarify and strengthen them. I look forward to speaking again.

CRACKERNOMICS GETS THE BENDS: ARE YOU BUYING THIS?

September 15, 2013 8:30 pm

Quantitative easing: Tale of the taper

By Robin Harding

http://www.ft.com/cms/s/0/0410f1ac-1c9c-11e3-8894-00144feab7de.html#axzz2f2bKO1wf

The FT tells us that the taper is close, if not already here, detailing

‘ strong reasons to expect a tapering of asset purchases this month’

FT goes on:

‘Compared with last autumn, the path back to maximum output – which the Fed puts at a 5.6 per cent unemployment rate – looks much clearer. Even if QE3 gets a reprieve in September its time is nearly up’.

FT goes on to explain that beginning the taper now will not even really affect the final scope and effect of QE3 that much. Tapering now:

‘will make a marginal difference of $50bn-$100bn in the total assets that the Fed will acquire by the end of its programme. The Fed thinks that cumulative total is what sets monetary policy’.

So its how much you end up buying; not when you buy it that makes the real difference.

However:

‘the symbolic effect is huge. A taper would signal the passing of “peak QE” in the world’s largest economy’.

And FT has come not to praise QE, but to bury it:

There is no way to know what would have happened without QE3. It did not transform a weak economic recovery into a strong one – growth has remained locked on a path around 2 per cent and the downward trend in the unemployment rate was in place before the policy started ‘

and

‘What QE3 does seem to have done is reveal the limits of using asset purchases as a tool to stimulate the economy. ..Growing worries about financial stability risks from QE3 have contributed to the move towards tapering.’

So FT is not sad to see QE go but it is worried that tapering is linked in the public mind to a rise, first in long term and then short term interest rates and this is definitely not something they look forward to:

‘As far as most Fed officials are concerned, any decision to taper asset purchases would have nothing to do with the timing of rate rises, which they do not expect to be justified until the economy is much closer to full employment.’

In fact, even some theoretical point of full employment might not be the time for the Fed to stop directly controlling the economy:

 ‘ if the damage from the financial crisis…..could persist for another five years or more. That would mean a slow rise in interest rates back to their long-run level as the economy heals’

So FT thinks that:

‘Interest rates will need to stay low for some time. The Fed and Ben Bernanke, its departing chairman, have to find a way to send this signal on rates even as they start to wind asset purchases down’

Which brings us to the nub of the problem: the credibility of the Fed in making the markets believe that interest rates are staying low for the foreseeable future, irrespective of the tapering of QE. In other words, if the Fed does not actually do anything (e.g. buy government paper), by what mechanism can it effect what the market does? If the Fed stops buying government debt, if home grown buyers for government debt cannot be found outside of the Fed,  and if international buyers such as Japan and China are demonstrably less enthusiastic for government paper, how is this supposed to work?

Apparently the idea seems to be that the Fed will keep saying interest rates will stay low and this will magic that state of affairs into existence. This is not quite as bizarre as it seems at first glance. The Fed will argue that it has a direct line to the public via its authority and access to media. It argues that this means it can influence the public directly, effectively bypassing the markets. As this is the case the public will act as though low interest rates are assured and spend and borrow accordingly. So in effect the Fed is pitting the public against the markets and is betting that the markets will back down and go along- or that is the plan at least. Thus the FT asserts:

 ‘Markets may pay no attention – but the Fed has a loud voice and it tends to repeat itself until the message gets across.’

So it all seems to come down to the credibility of the Fed, which means the continuity of policy in the Fed over the next couple of years or so. And there is due to be a change at the top as Ben Bernanke leaves.

‘…uncertainty about who will be chair – and this person’s commitment to current policy – is likely to make forward guidance less effective, highlighting the urgency of a nomination by President Barack Obama and a prompt Senate confirmation.’

It seems that it all boils down to a question of personalities- Who is at the top and whether that person has got the personality to convince the world that low interest rates are here to stay based on- well, based on nothing really!

Well now, are you buying this?

I ain’t.

The first thing I would point out is the argument that it is the total amount of QE and not the rate of purchase that matters. In other words the Fed has got as it’s overall target an amount to spend, in other words a proportion of something. A proportion of what? And how is this proportion calculated?

The second thing is the insistence that interest rates need to be kept down irrespective of the amount of QE being done. On the face of it, low interest rates and tapering seem like contradictory aims, after all the FT itself draws an explicit link (at least in the minds of the markets), between QE and interest rates- if the priority is to keep interest rates low, surely keeping QE going is the safest bet for making sure this happens.

Which leads us to where Crackernomics argues that the taper can’t happen and the game can’t stop- that Bernanke embarked upon an open ended game that can only end in collapse, but that’s because Crackernomics doesn’t understand what the game is.

So first question to be answered is: What is the total amount of QE to be spent and what does it represent?

The total amount of QE to be spent is a proportion of the total amount of democratised money that has been called into existence. In other words the Fed is effectively devaluing state currency until it reaches a level of parity with privately issued democratised money.

What is this level of parity?

It is the level at which it is generally accepted that the Fed can and will prevent any serious harm befalling any holder of democratised money. In other words no bank will go bankrupt as a result solely of holding mortgage backed NGM (Non-Governmental Money). The Fed is looking to establish an exchange rate between state issued currency and NGM.

Which leads us to the question: What will this exchange rate be?

At the moment it effectively stands at one to one but I think this is going to change.

I think the Fed is going to play the split- it is going to use the two halves of the QE program tactically.

First, the Fed will explicitly differentiate between purchasing government paper and purchasing democratised money.

Second, it will announce the purchasing of democratised money at a reduced rate, and indicate that this rate is subject to change, effectively creating a moving exchange rate between these derivatives and state currency. So the Fed will break the link between the amount of NGM it purchases and what it pays for it!

The Fed will then say that this is now different from purchasing government money. The Fed will then outline a program for continuing to purchase government paper.

So the Fed is going to:

Break the link between buying government paper and democratised paper.

Break the link between the amount of democratised paper it buys and the price it pays for it.

Continue to buy Government debt.

 

 

 

Crackernomics Gets the Bends 2

Decompression sickness (DCS; also known as divers’ disease, the bends or caisson disease) describes a condition arising from dissolved gases coming out of solution into bubbles inside the body on depressurisation.
(From Wikipedia, the free encyclopedia)

These bubbles are really starting to hurt now.

A few years ago when I first began to describe the democratisation of money I realised that the Credit crunch was different from every financial crisis that had gone before because:
‘Standard’ financial crises are a mismatch between the value of any given commodity (houses, tulips, whatever) and the value of money (expressed in interest rates).
But the Credit Crunch was a mismatch between the value of a commodity (housing) and the value of the private democratised currencies (derivatives), that were issued on the back of it.
What this meant was that the state or open economy was effectively locked out of the financial ecosystem built on the last property boom- it had no way of fixing the problem.
The state was forced to devise a new solution:
They would substitute state money for democratised money diluting the private, closed bubble with state money. So state money went into the banks from the treasury and democratised money went out of the banks and into the treasury on a one to one basis.

It is very important that you understand this process accurately.

Imagine that America supported the regime in say, Uruguay and it became clear that the economy in Uruguay was close to collapse and there was going to be massive hyperinflation. How would the USA support the Uruguay economy? The USA would have to use its own currency to support the Uruguay economy. Either it would give millions of dollars to the Uruguay government on loan or it would give them favourable trade deals on even in the last resort (and this kind of thing has happened), it would directly pump dollars into the Uruguay economy which would then be used by ordinary citizens to buy and sell in preference to their own devalued currency. What this means is that the USA state, by using its own money, would put itself in the position to be able to influence or even control, the Uruguay economy.
If you think of the bankrupt banks as sovereign countries whose governments the federal Reserve is pledged to protect, you understand exactly what is really meant by Quantitive Easing.

After Q.E. the housing bubble is not fixed but it is now open to a traditional resolution.

What is that resolution?

A bubble happens when the purchase and ownership of an asset is a more efficient way of earning money than anything else.
If your house is rising ten percent a year it makes more sense to spend all your spare cash on buying the most expensive house you can, than say for example using that cash to start a business. So all of the spare cash in a given economy tends to flow into housing as everybody tries to get on the bandwagon.
Now here is the interesting bit.
This only works so long as more and more people enter the housing market; in other words, buy and sell houses. There has to be fresh blood entering the market to keep prices going ever higher. But there is a limit to the number of people who can enter the market. That limit is the amount of credit that is available. If there is more and more demand for money ( in the form of mortgages), by people trying to get on the housing bandwagon, at some stage interest rates have to go up. New entrants to the market are discouraged. More importantly all those who entered the market in the hope of making a killing are left out on a limb.

The bubble deflates.

There is a clear out of bad debt.

But this has not happened yet. This failure to clear out bad debt is the reason that solid growth patterns have not been established in the economy.

The purpose of central banks throughout the Credit Crunch has been to create a balance between defending certain kinds of contract and allowing certain kinds of contract to be cleared out. The kinds of contracts they want to preserve are derivatives- democratised money. The kinds of contracts they want to be cleared out are mortgage contracts that can’t be paid.

At some point, central banks in the Anglo Saxon zone are going to have to allow interest rates to go up to some extent. Has that point arrived now?