How you can have your cake if somebody else is providing free biscuits in the meantime
The proof of the mooncake is in the eating (or not as the case may be..)
Here is a post that appeared on the Max Keiser site. The ‘mystery’ of how everyone could seem to get something out of mooncakes without actually making any, perfectly illustrates the point I have been making in the past two articles.
The China Money Report: Repurchasing mooncake discount coupons
Posted on October 1, 2013 by Stacy Herbert — 22 Comments ↓
Stacy Summary: This is fascinating. I’ve got to get Max to comment on this. We need a weekly Google+ Hangout! There just isn’t enough time in the 13 minutes we have with each Keiser Report first half. Anyway, to me, this story really highlights the saying from Karl Menger (as told by Sandeep Jaitly) that ‘value cannot exist outside of human consciousness.’
Nine ways to make money ‘Chinese style;’ number two: Repurchasing mooncake discount coupons
Mooncakes are more widely presented as gifts than actually consumed during the traditional Mid-Autumn Festival each year and manufacturers have found a way to make extra profits without needing to go to the trouble of making any cakes. A baker can print a coupon for its mooncakes with a face value of 100 yuan (US$16.30) and sell it to a retailer for 65 yuan (US$10.60). The retailer then sells it to customer A for 80 yuan (US$13), who in turn presets it to customer B as a gift. Customer B then sells the coupon for 40 yuan (US$6.50) to a street peddler, who would in turn sells it back to the manufacturer for 50 yuan (US$8.65). The manufacturer thus makes 15 yuan (US$2.45) on the coupon and all parties are happy, having either made a small sum or given face without any actual product changing hands at any point.
Mooncakes are just one manifestation of this scheme — there is a market in China for discount coupons on most goods.
Read more at http://www.maxkeiser.com/2013/10/repurchasing-mooncake-discount-coupons-to-make-money-chinese-style/#zL9OJ6D54ty2ALxC.99
Andy Perry says:
October 2, 2013 at 9:05 am
The clue is in the title: ways to MAKE money. This is an example of Non Governmental Money. Like all conjuring tricks it works because you fail to see the trick being set up before you began paying attention. The NOMINAL value (exchange rate) of the mooncake dollar was 100 yuan. This NOMINAL value relates to the value of the mooncake itself which may or may not actually exist. This is exactly the same con as a mug with a betting slip thinking he is gambling on the ability of a horse to win a race when in fact he is really gambling on the ability of the bookie to pay him! So at no time was the mooncake dollar worth actually worth 100 yuan, it was only ever actually claimed that the mooncake was worth 100 yuan, and since the moonacake was never actually produced, consumed and eaten I guess we will never know whether it was or wasn’t will we?
Check out SAWING THE LADY IN HALF and THE EXCHANGE RATE IS THE KEY on the UNITED STATES OF EVERYWHERE/CRACKERNOMICS (Google)
CRACKERNOMICS is just a cheap card trick
Andy Perry says:
October 2, 2013 at 11:18 am
I just thought of a way to make it crystal clear.
The specific method by which all Democratised Money is called into existence is to use the price of the commodity that backs it as the initial exchange rate for the issued notes.
So the mooncake maker uses the nominal price/value of the actual (non-existent) mooncake as the opening exchange rate for the notes. A credit agency uses the actual (non-existent) value of a lump of mortgages as the opening exchange rate of a (NGM money) derivative. This is the specific, actual trick that makes it possible.
October 2, 2013 at 11:37 am
Nice posts Andy Perry.
October 2, 2013 at 11:50 am
The mooncake is never marked to market, the book value is never tested in a competitive market to see if it actually holds up. If no-one is eating the cake, there is no test to see if it is worth the $16 compared to the next baker’s mooncake at $12.
This mooncake coupon scheme is one to completely avoid competition or any assessment of value at all.
A method also fully exploited on a grand scale by the banks.
I guess Customer A is the slave here – a slave to social convention which means they feel obliged to pay $10 to the “social convention” god else be whipped by the rest of society.
Art, music and cultural revolutions – hippy movement, punk movement etc – have been very important in freeing us from such enslaving cultural obligations. Flipping the bird is probably the most important symbol of our times – there should be a big brass middle finger in every western city.
Nat is not quite right when he says
‘I guess Customer A is the slave here – a slave to social convention which means they feel obliged to pay $10 to the “social convention” god else be whipped by the rest of society.’
It was not social convention that prevented customer A testing the valuation. In the case of mortgage backed derivatives there was nothing you could test. These were sliced and diced fruit salads of different real mortgages.
They never could have existed as a priced commodity in the real world!
How could you test the reality that someone would or would not pay a given mortgage, (which is what you were really betting on)?. If you could not do that you could not test the valuation at point of sale placed on the derivative.
The trick is that a derivative, like other kinds of money democratised or state, cannot be priced because it has no intrinsic value. It only has an exchange value.
It could only ever have been money, so that is what it is -democratised money
Robert J Shiller is one of three economists who won the Nobel prize for Economics this year. The other two were a couple of Chicago School Friedmanite pinheads. What all three had in common is a belief in the nasty monetarist state and therefore no love of free market capitalism.
The Nobel Committee is running a tough cop/soft cop scam with Shiller playing the role of slightly nicer cop.
All Shillers talk of ‘productive’ contributions to society and condemnation of Vincent Price style feudal financial lords is there to justify a non market solution. Monetarism meant the death of any semblence of free markets.
So it seems strange on the face of it , that Shiller would rely so heavily on a crude, strident, almost cartoonish expression of capitalist ideology as a means of understanding their own nostrums and their consequences in the form of the Credit Crunch.
But ideology is most laid bare right at the moment of its maximum emergency.
And as I said in ‘Crackernomics’, they worship the straw dog most fervently at the moment it is cast on the fire….