Cultural Revolution Part 1 Or It’s Not EU It’s US

The description of Cultural Constituencies that I began to develop a couple of years ago was a natural progression from an analysis of the political and economic changes that had occured in the global economy as a consequence of the credit crunch. Economics as we had known it had ceased to exist and been replaced with a hybrid semi- Marxist control and command economy..the Free Marxet.

Marx was absolutely right when he deduced that the political structure within developed societies is a direct consequence of the economic structure of these societies. In order to support our previous form of political democracy it was necessary to have an economic arena wherein two opposing sides could work out a compromise of economic interests. This was a form of market in labour, wherein under controlled circumstances, ‘workers’ and ‘bosses’ could compete to secure relative econmic advantage.

In our present command economy such an arrangement is clearly insupportable. A command economy cannot allow independent institutions such as genuine trades unions that would forcibly prosecute the interests of members to the detriment of the overall planned economy.  It follows that the economic and political dichotomy required for traditional political democracy is not viable.

In this altered environment Cultural Constituencies emerge as the only possible vehicle through which differing social groups can identify and pursue their interests. The Brexit vote is the latest and most spectacular evidence of the emergence of Cultural Constituencies as the prime political force at work in the developed economies today.

The Brexit referendum was won by a little over 30% percent of the total population of Britain – a sizeable minority but not by any means a majority of the population. Despite this observation it cannot be argued that Brexit victory is somehow illegitimate. There is no minority within Britain that is greater in size than the Brexit gang so by the terms of formal democracy the vote stands.

Despite this unavoidable truth it is absolutely clear that Remain does not intend to accept the political reality of the Brexit vote or its legitimacy. This clearly brings the entire democratic framework within which the referendum was carried out into question.

Fundamental questioning of the existing democratic system is an inevitable consequence of the emergence of Cultural Constituencies. The reason for this is not complicated. The political system as we know it is designed to service economic constituencies groups who identify themselves and their interests in primarily economic terms.

If economic constituencies are no longer to be the prime building block of the system how can that system remain unaltered?

Imagine a large university building in the process of being constructed over two or three generations. Half way through, the builders find out that the red brick they have been using will no longer be available. The alternative building material they are being offered has a different tensile strength, water absorbance characteristic etc. which means that the structure that had originally been envisioned cannot be supported by this type of brick.

The part of the building that is not already built using the old brick will have to be extensively redesigned if it is to be built using the new brick. This is the political process we are watching being worked out now in Europe and around the globe.

This tension between the old plan and the new is now beginning to make itself felt through the altering structure of political parties.  Political parties as we know them represent a hybrid solution to the problem of ‘modernising’ Germanic land democracy.

Germanic Land democracy is based upon the free ownership and transfer of land. In all the Germanic democracies, land ownership was originally the prime requirement for the right to vote- to participate in the democracy. No land, no vote.

However, with the development of the cult of Capitalism and large numbers of landless ‘workers’, who were by definition disenfranchised, it was necessary to develop a hybrid solution. Cities rapidly became large centres of landless people which gave birth to an alternative ideology to Germanic Land Democracy- later identified as Communism.

This Communism would inevitably challenge the existing order and given the superiority of urban areas in numbers and productive capacity would win.  The solution was the creation of geographically constructed constituencies that expressed an economic justification for their existence through the party system.

The voting system would formally be based on geographical location, but the motivating political dynamic for taking part in that system, the parties, would be economic in character. This is the basis for so-called modern‘universal sufferage’-the right of everybody to vote.

From the point of view of stabilising Germanic societies this served the dual purpose of avoiding a direct challenge to Germanic land democracy by those who had no land, while at the same time avoiding the obvious conclusion that the political system should be formally organised upon economic or class lines.

Geographic boundaries as the basis for politics and democracy were preserved. And this is fundamental to the continued existence of Germanic Land Demorcacy.

Despite the rhetoric to the contrary, this form of compromise has proved to be inherently UNSTABLE and prone to periodic seismic crisis. Universal suffrage only became widespread in Europe around the turn of the last century and immediately produced a series of political and economic shocks that have increased in severity to the present day.

As a consequence of these shocks, the ideology of welfarism was developed to mitigate the obvious disparities of political and economic power. Welfare is the bounty paid to the landless to prevent their overthrow of land based Germanic Land Democracy.

However, these internal developments in the Germanic economies did not occur in a vacuum. Across the world changes in the balance of power meant that developed nations were having to modernise Germanic Land Democracy against a backdrop of relatively diminishing international power.

In the late 1960’s this reached a point of absolute crisis and the formal intellectual abandonment of the free market economic model in America. The Free Market was replaced by monetarism –  continual state control of the economy through the amount of money allowed into the economy by ‘independent’ central banks.

As the effects of Monetarism became apparent, we could see the end of the distribution of wealth and resources through the work and production model and its replacement with the distribution of wealth and resources through a property or asset ownership model.

This intermediate property or asset ownership model reached its own breaking point with the snapping of the link between taxation and asset and property ownership – what has come to be known as Neo Liberalism, and just as significantly, Globalism.

In essence globalism is not the movement of capital around the globe, that has been a greater or lesser feature of economy for thousands of years. It is most significantly the break between wealth generation through asset ownership and taxation by national governments.

This gives rise to the present crisis which is expressing itself at the weakest point of the chain- the joint between economic political parties and geographic political system. In Britian today the political system is physically imploding in front of our very eyes.

The two major parties have no effective leadership and furthermore, they have no prospect of establishing effective leadership in the short to mid term foreseeable future. By this I specifically mean that they have no plan to deal with the consequences of Brexit that will not necessarily entail their own eventual political destruction!

The two opposing sides in the Brexit conflict represent not economic differences, but cultural identity differences. This has become all but impossible to hide.

The Brexit side is perfectly willing to accept any short to mid term financial problems including uncertainty and some degree of isolation so long as it achieves their long term goal of disentangling English politics from Europe.  Likewise, the Remain side is entirely comfortable with ongoing hardship,especially for young people, in the form of mass immigration and competition for resources so long as they can stay within the European ideological mindset.

These are political AND personal decisions made by the individuals who have voted for each side. In this new political environment, the existing political parties simply have no way to lead ‘Leave’ and ‘Remain’ to some form of traditional compromise. There are no economic incentives they can offer to achieve compromise.

Madness or The Price Is Wrong or Neo Is The One

madness

 

The following is an excerpt from Crackernomics 2: The Structure Of Money

 

‘Nowadays people know the price of everything and the value of nothing’.

Oscar Wilde

 

Modern money operates as a universal Lingua Franca – a common language. It has gained this pre-eminence by promising ordinary people a way of understanding an otherwise incomprehensible world

 

But the understanding of reality that modern money offers is warped and mutilated. Modern money actually offers a facsimile of knowledge – an hallucination of the way the world is.

 

The ideology and rhetoric of modern money was created to seal this hallucination off from physical reality. This ideology permanently and irrevocably FRAGMENTS reality so that the cult of modern money cannot be challenged by human experience.

 

The ideology of modern money exists to mutilate your mind by partitioning it.

 

Priests of modern money claim that anything outside of their money model world is irrational and essentially meaningless. They insist that everything experienced outside their framework must be disregarded.

 

The priests of modern money claim that their parody of reason is the end point of the search for universal truth. They say that all other conceptions of value, truth and meaning are primitive, parochial and limited and in the end they will be swallowed up by the cult of modern money. They seek to persuade that the rise of this cult is irresistible because it is Progress.

 

A Kind Of Magic

 

The modern money knowledge hallucination is predicated on creating a description of the world that does not require any actual understanding of the physical characteristics of this world.

 

This claim to produce knowledge without understanding is a magical claim. To produce knowledge from nothing is alchemy- as preposterous as the claims of a fairground clairvoyant.

 

Take a moment to think about this. Across the globe there are vast markets which comprise of commodities being traded by people who in reality know literally nothing about these commodities. The system works because these traders are not required to know anything.

 

The speculative method of extracting wealth is predicated not upon understanding any particular commodity but upon predicting the prices that markets will create for commodities and reacting to them.

 

In other words market speculators are not trading on the knowledge they have but rather trading on the knowledge that others do not have!

 

For instance, a commodity trader is not required to know anything about an actual steak and its physical value to know what it will be ‘valued’ at. If he knows that any particular group of customers only has £5 to spend on steak, then he knows that the price these customers will pay for steak will not and cannot be more than £5. The steak will be ‘valued’ at worth £5 or less, irrespective of any actual physical value and worth.

 

This is an insight into ‘price discovery’. Prices are created not discovered. Contemporary prices are a consequence of previous prices. Monetarism is predicated on this observation. As such it is a repudiation of classic capitalist ideology.

 

Price ‘discovery’ is an illusion in the same way a student takes LSD and ‘discovers’ a whole new world previously unseen. But the truth is that he has not discovered anything. He has created this world by means of introducing a chemical into his brain.

 

Well you might say, how come descriptions of this LSD world seem to be so similar when people recount them? I am afraid the answer is that most people lack the imagination to create anything novel, either under the influence of drugs or not..

 

The money/price hallucination is another created virtual hallucination. It allows the raw resources of the world to be leveraged to extract value by people who will never actually see anything of these resources and who never have to directly face the consequences of their market manipulation.

 

This process reaches a new high (or low), point in HFT-high frequency trading. Modern networking computer technology allows analysis and manipulation of the market to be carried out in amounts of a nanosecond. Now no longer even knowledge of the other market participants required, only knowledge of the technical structure of the system expressed through computer code.

 

Is HFT the end game in the cult of modern money? Or is it possible that money can become even more sealed off from physical reality even as its dictatorship over lives becomes ever more tyrannical? How has money become transported over time from the population to a hermetically sealed dictatorship isolated in an intellectual palace?

 

The claim is made that the modern money hallucination is based on reason and reality. This is the historical link between the modern world of the money hallucination and the ‘Enlightenment’ which was supposed to be founded on reason.

 

The religion of Economics preaches the story of progress from the concrete world of the senses to the transcendent heaven of modern money. How is a system that was supposedly based on reason transformed into one openly based on ‘animal spirits’, fear and greed?

 

Understanding the relationship between the two rests on the difference between a proper description of reality and a money description of reality.

 

Proper Description

 

Here ‘proper’ is not intended as some kind of value judgement. It means to describe real artefacts in the real world using real descriptors- a physical description. A proper description of any particular object has two elements.

 

The first dynamic of proper description defines the commonality of objects. In the case of an apple we can describe an apple as ‘plant’ and then as ‘fruit’. Using the plant…fruit descriptor we associate the apple within an ontology, a systematic description of plants.

 

The second dynamic of description differentiates an object as different from other objects within a class. e.g. Fruits are consistently different enough from all other plants to be defined in their own right. ‘Apples’ are consistently different enough from all other ‘fruits’ to be seen as something definable in their own right. We can further subdivide ‘apples’ into different varieties and then further refine the subdivision process.

 

In theory it should be possible to create a description for each individual apple that locates it within the entirety of nature- by which I mean not just an abstract description of type, but to locate a particular apple within time and space.

 

We start from broad categories:

 

Plants- subdivided to Fruit – subdivided to Apple- subdivided to Variety- subdivided to Location- subdivided to Farm – subdivided to Tree – subdivided to Time of harvest.

 

When we carry out this process something peculiar happens along the way. Numbers begin to substitute for names. There are no longer absolute descriptors (names), such as ‘Apple’ only relative ones; weight, colour, sweetness etc. These require relative numeric values.

 

As we move towards capturing a specific instance the uniqueness we seek becomes lost in relativity. The harder we seek ‘uniqueness’ the more it is revealed to be a chimera. Names are subdivided into numbers. But then numbers are subdivided into codes.

A code is in fact a name constructed from numbers. But where numbers are real e.g. they are descriptors, codes are not real (they are names), and require descriptors!

 

If I describe an apple as the fifth apple picked from a tree, I am not describing something uniquely real about that apple. I am describing something relative- something that only has meaning in relation to all the other apples on that tree. ‘Five’ is a number and it is real; ‘Fifth’ is a code and it is not.

 

And once we have allowed the creation of number/code/names all Hell breaks lose shortly after.

 

The number 400 is divisible by the number two to create the number 200. But the code/name/descriptor 400 is also divisible by the number 2 to create the code/name/descriptor 200. The meaning of this observation is that codes can be made to parallel the logic of mathematics.

In other words CODES can relate to each other numerically and consistently the same way that NUMBERS can. But they are NOT required to be defined and relate to each other LOGICALLY the way that NAMES are. This means that results can be produced from manipulating codes that are consistent but not logical or real.

 

Codes operate in the gap between names and numbers. This is where the hallucination is situated.

 

You can numerically binary encode an image (description) of Superman in a Computer Generated Imagery program. And then you can numerically manipulate that code to make him ‘fly’ in encoded space. The description of his flight will be entirely consistent within the encoded universe. But it won’t be real. It will be a model.

 

When that model is intercut with ‘real’ live action you have real problems telling what is real and what is not. This is how CGI/Live action movies work.

 

At the moment we are not required to act as though a Superman film is a real documentary. (Well, for now anyway). But we are required to act as though climate change models are real. And climate change models are essentially the same thing as a Superman film, real footage intercut with numerically manipulated code descriptors.

 

Climate change models take real stuff and code it. Then they produce a film, (a model), based on that manipulation. The film IS consistent. It DOES make numerical sense. But that does not mean it is logical or real.

 

In order for the climate change ‘model’ to be plausible it has to be cut off from the real physical world so it cannot be challenged by experience. And so it is. It is placed in the future where our real physical world experience cannot go.

 

Superman lives in Metropolis. Batman lives in Gotham City. Climate change lives in the future.

 

The same applies to price. Price is code masquerading as number. As a consequence modern money ‘value’ is also code masquerading as number.

 

Most of the people reading this will be well informed enough to know and understand that the ‘Federal Reserve’ is nothing to do with the Federal Government of America. It is just a name.

 

But do you also understand that the ‘10’ printed in the corner of a dollar note is not actually a number but also just a code/name? And the ‘$1’ price tag printed on a stick of celery at your local market is also actually a code and not a number?

 

The implications of this are massive and staggering.

 

Just as the name ‘apple’ is used in England and ‘pomme’ is used in France and ‘manzana’ is used in Spain, so this artefact is given a different price in all these different territories.

 

What is the relationship between the different names used in the different territories? Is it logical? It is the same relationship as that between the different ‘prices’ for this artefact. There is no real, logical relationship.

 

Outrageous nonsense! I hear you cry. There is a real consistent relationship between prices and the value of money notes. They vary but they make sense in national and international markets.

 

No. There is a consistent real relationship between NUMBERS and codes steal this relationship and use it to masquerade as logical, rational and reasonable under cover of it. It is a parody of reason.

 

Money value is something that various disparate artefacts are held to have in common. As Oscar Wilde famously said :

 

‘Nowadays people know the price of everything and the value of nothing’.

 

It is hard to over emphasise the profound intelligence of this remark.

The deeper truth is that we know the price of everything precisely because we don’t know its value. Price is the only way that the Germanic cult of Capitalism can make practical, intellectual and even moral sense of the world.

 

We don’t know the actual value relationship between a red pepper and a box of matches. But if the pepper is priced at 50p and the box of matches at £1 we say that the matches are twice as valuable as the pepper. Of course this is absolute gibberish, but the world is made to conform to this madness…

 

In another example, two things that cost the same are said to be the same. This gives rise to the outrageous example of the inflation substitution calculation in America.

 

When any particular item in the basket of goods used to calculate the rate of inflation actually inflates in price, it is simply substituted for an alternative at the old price! When steak becomes too expensive to fit the ‘inflation rate’ it is removed as an embarrassment and hamburger is substituted. Quality is not a concern when inflation substitution is made.

 

This outrageous abuse of reason works on the basis that anything at a given price is the equivalent of anything else at that same price. Reason, life and the world are mutilated so they fit the price hallucination.

 

I will finish with a broad description of price rhetoric.

 

Say you wish to buy a vacuum cleaner. You are presented with a list of three possible vacuum cleaners priced at M50, M80 and M600. (M is any standard unit of currency)

 

The prices given generate two categories of apparent ‘information’:

 

1.’Information’ about each particular vacuum cleaner in relation to the others and also

 

2.’Information’ about vacuum cleaners in general as a group of products.

 

Information about each particular vacuum cleaner in relation to the others

 

That M50 and M80 are similar but that M600 is considerably superior in some way; as expressed in price. You can understand this as the quantified (of course no actual ‘quantity is identified, just a code name), difference between a standard saloon and luxury sports car.

 

’Information’ about vacuum cleaners in general.

 

The value of vacuum cleaners in relationship to boxes of matches or whatever. e.g. all vacuum cleaners as a class of product are more expensive and thus more valuable than all boxes of matches as a class of product.

 

It follows from this that if we alter the price list relationship between the three vacuum cleaners we say something different about these relationships and generalities. The price mechanism generates a grammar and a logic upon which the rhetoric of marketing is based.

 

However, the problem is that this information is based upon assumptions about price that are not necessarily true. In order to create a semblance of general logic they assume:
The seller wants to sell at any particular price.

The seller wants to sell as many elements as possible at any particular price

Each price describes an independent entrant into the market

There is a relationship between price and intention

 

But it is often the case that:

 

The seller does not want to sell at any particular price.

The seller does not want to sell as many elements as possible at any particular price

Each price does not describe an independent entrant into the market

There is no relationship between price and intention

 

In other words the market cannot really capture the reality of intentions: Sometimes the market is ‘rigged’, which really means sometimes market participants do not act in the way that the priests of the ‘free’ market claim they should act.

 

And so the free marketers relaxed laissez faire attitude is transformed into rage and they rush to pass laws to protect free markets from… freedom. The free market always becomes a dictatorship of rules to make sure it remains free.

 

 

At the conclusion of the Matrix the ‘Neo’ Man discovers that the whole universe he has been living in is the expression of code. It has consistency but it is not real. Once he sees the world as merely code he can manipulate it in any way he wishes.

 

The Matrix was all about financialisation.

 

It was made in 1999, just when financialisation was really getting going.

 

What else would it be about?

BLINK: Apr 12 2016

 

eye

Nose on your face..

 

In this piece Mr Edelman says:

 

‘Remarkably, today the derivatives positions held by the large banks approach 10 times those of 2007-2008. In four banks alone, they exceed the GDP of the entire world. This is the interesting consequence when unchecked risk management rests in bankers’ hands.’

 

Is this a co-incidence? If it is not a co-incidence, then it must be intentional musn’t it? What could be the intention behind creating ten times as many derivatives as there were in 2008?

 

It seems that central banks and politicians must want lots of derivatives what else could this mean? Why would they want lots of derivatives? What is it about derivatives that central bankers and politicians like? If you visit USE regularly I think you already know…

I’m the real-life Gordon Gekko and I support Bernie Sanders
Asher Edelman

The potential for a depression looms on the horizon. The Vermont senator is the only candidate who can stop banks from spiraling out of control again

 

http://www.theguardian.com/commentisfree/2016/apr/12/real-life-gordon-gekko-supports-bernie-sanders-wall-street-banks-regulation

 

Things Fall Apart..

 

This diagram shows in a very clear and succinct manner the point I have been making in Vector History about capitalism and financialisation DISINTEGRATING society..

 

@ian bremner

 

The best explanation so far

 

 

Head-Brick Wall

 

American Trotskyists can’t seem to understand why information like this doesn’t provoke a move towards ‘class’ politics but instead provokes a move towards what they call ‘identity’ politics. Until they address the arrival of CULTURAL CONSTITUENCIES, they are going to have to continue stumbling around in the dark..

Life expectancy gap between US rich and poor widens
By Jerry White
12 April 2016
http://www.wsws.org/en/articles/2016/04/12/life-a12.html

 

Roll over
Reuters coverage of the Syrian theatre of war just seems to get more ridiculously lopsided by the day..

Syria’s Assad shows no willingness to compromise
CAIRO | By Samia Nakhoul

 

http://uk.reuters.com/article/us-mideast-crisis-syria-insight-idUKKCN0X50O0

 

Cake or Ha’penny
 

You can have millions of pretend jobs or you can have productivity growth but you can’t have both at the same time…

Britain suffers biggest downturn in productivity since the financial crisis
Figures a bitter blow to hopes the UK is finally escaping the stagnation that has bogged down the country since the banks crisis

 

http://www.independent.co.uk/news/business/news/britain-suffers-biggest-downturn-in-productivity-since-the-financial-crisis-a6974011.html

 

Uppity
 

This black gentleman might not quite be on the ball about everything, but he is having a go at thinking about Eurasia etc., so good for him. He seems to me like a reasonably nice, relatively harmless type.  But oh dear, check out the response..

 

Imagine a world without whiteness

Professor Calls For “Whiteness” to be “Abolished”
 “We need to….demolish the whole concept”

Paul Joseph Watson
Prison Planet.com
April 6, 2016

Professor Calls For “Whiteness” to be “Abolished”

 

Living History

 

This is what ancient Greek democracy actually looked and sounded like. It wasn’t Lawrence Olivier and Marlon Brando walking about in bedsheets making speeches over Gina Lollobrigida, it was this: Rape, torture, cruelty and murder. All over Athens, all over Sparta, all over. Next time someone tries to give you the spiel about how noble and great democracy was/is, show them this….

 

‘House of horrors’: Police find apparent sex slave chained to stripper’s pole in Detroit home

 

By Peter Holley April 6 Follow @peterjholley

 

When police searched the run-down, two-story house on Tuller Street in Detroit, they found something that took even longtime cops by surprise: a woman chained to a stripper’s pole, with a padlock around her neck.

 

https://www.washingtonpost.com/news/morning-mix/wp/2016/04/06/house-of-horrors-police-find-apparent-sex-slave-chained-to-strippers-pole-in-detroit-home/

 

 

 

Notes on the Standard Narrative..

 

http://www.theguardian.com/business/2016/mar/05/timeline-seven-years-of-record-low-interest-rates-bank-of-england

The Guardian recently published a potted history of interest rate setting and associated financial shennanigans, seven years after the start of the Credit Crunch. I have reproduced it here in full along with a few comments of my own (in bold) offering an alternative interpretation of central bank policy and what its real purpose is.

From ‘The Guardian’

By Katie Allen Saturday 5 March 2016 07.00 GMT

 

Seven years ago on Saturday (5 March), the Bank of England slashed interest rates to a record low of 0.5%. At the time, the cut and plans to pump billions of pounds of electronic money into the economy seemed like an emergency measure to cushion the UK from the global financial crisis. But borrowing costs are still at their record low and amid warnings that a new global slump is around the corner, Bank policymakers show no signs of raising rates any time soon.

 

We look back over seven years of ultra-loose monetary policy:

March 2009: The Bank of England cuts interest rates from 1% to 0.5%, the lowest since the central bank was founded in 1694. Policymakers also push the button on a quantitative easing programme – which will pump tens of billions of pounds of newly created money into Britain’s troubled economy.

 

‘The lowest (interest rates) since 1694’ – effectively since the beginning of capitalism.

 

If the base interest rate reflects the value of a national currency, and a national currency reflects a nation and its economic system, this is another way of saying that as of March 2009 the net added value of three centuries of modern capitalism is zero!

 

‘Pump tens of billions of pounds into…’

As though something is actually being put into the economy instead of the value of existing money being debased by ‘printing’ more money without any increase in production…

 

‘ into Britain’s troubled economy..’

Guardian being careful not to specify which part of the economy all of this money is going into- so as to imply it is going to all parts of the economy equally (which it did not, and was not intended to ).

 

It is the sixth time that UK borrowing costs have fallen since October 2008, when rates were still 5%. Announcing the cut to 0.5%, the Bank’s monetary policy committee, led by governor Mervyn King, notes a slowdown in the global economy and “persistent problems in international credit markets”. In the UK , it highlights a drop in economic output at the end of 2008, a rise in unemployment and tight credit conditions for businesses and households.

 

King says it is unlikely that the bank rate could go any lower and policymakers will shift focus to creating money instead. “We are very close to zero. What we are doing now is switching to injecting money into the economy directly.”

In the case of the Bank of England, QE took the form of banking ‘other institutions’ as though they were licensed banks- effectively giving them the status of licensed banks.

 

This means taking them directly under the wing of the Bank of England and licensing them to create money just as private banks do, with protection as privileged institutions. Non bank ‘financial institutions’ were given the same status as banks. And their products- private democratised money in the form of derivatives, were given the SAME PROTECTED STATUS as private bank credit issued in the form of loans.

 

May 2009: The Bank of England surprises the City by announcing it is to increase the size of its quantitative easing (QE) operation by £50bn to £125bn, amid growing concern that the programme announced in March is failing to turn the economy around. It is the first of many increases in QE to come over the years that follow, taking the total to £375bn.

On the same day in May 2009, the European Central Bank (ECB) cuts interest rates to a record low of 1% and says it will follow the Bank of England in launching QE in a bid to pull the Eurozone’s stricken economy out of recession.

 

Part of a co-ordinated global response to the crisis. By devaluing ALL government issued money simultaneously, Monetarist cabals are launching their all out war on government issued money – which is now intensifying as the War On Cash’.

 

May 2010: A new coalition government is formed by the Conservatives and the Liberal Democrats after the general election. Bank of England governor Mervyn King gives his strong backing for spending cuts in new chancellor George Osborne’s first budget to come later in the summer.

 

The breathing space granted by QE was designed to be used for the restructuring of western economies and the end of post WWII welfare states, to get them in line with the new privately issued money system. This process is being led by the Monetarists of the Saxon Axis.

 

June 2010: George Osborne announces the biggest shakeup in City regulation since 1997 and hands sweeping new powers to the Bank of England designed to prevent a fresh financial crisis.

 

King emerges as the big winner from the chancellor’s shakeup of supervision that will abolish the Financial Services Authority. The Bank is given new tools to prevent bubbles from developing in the financial system, including the right to force banks to hold more capital during boom periods.

 

This is the formal recognition of the new structure whereby private financial organisations are brought under the wing of the Bank of England and granted money creation privileges. From now on there is to be NO formal democratic political control of the money issuance process at all. It is entirely privatised.

 

September 2010: The Bank’s deputy governor Charlie Bean urges Britons to go out and spend to help invigorate the UK’s economic recovery.

Rising inflation stokes rate rise bets

Inflation rises, pushed up by higher petrol prices

 

‘Britons’ are supposed to max out credit cards to wet the head of the democratised money baby. A bit like your wife telling you that her pregnancy is the product of a sexual liaison with her personal trainer and then demanding that you organise and pay for a baby shower..

February 2011: Following a VAT rise and a pick-up in petrol prices, official figures show inflation hit 4% in January – well above the Bank’s 2% target. Inflation goes up further over following months and peaks at 5.2% in September 2011.

 

City speculation rises that the Bank of England will be forced to raise interest rates within months to curb price pressures. The CBI business group predicts interest rates will begin to rise in the next few months and will end the year at 1.25%.

 

Minutes from the latest monetary policy committee meeting show concerns about inflation are growing there too. Two members voted for a quarter-point rise in interest rates while a third urged a half-point rise.

 

All of which goes to show that the Bank Of England never had, and never will have, any intention whatsoever of ‘fighting’ inflation. The purpose of these maneuvers is to devalue all government issued money and raise the relative exchange value of privately issued money (derivatives) in relation to the pound.

 

July 2011: The Bank of England’s Eurozone counterpart, the European Central Bank, shrugs off the region’s debt crisis and raises interest rates for the second time in 2011 to curb inflation. The move takes the ECB’s benchmark rate to 1.5%. The ECB is forced to start reversing those rises before the year is out amid fears the eurozone crisis could tip economies in the single currency bloc back into recession.

 

Unlike the Anglo Saxon oligarchies, the continental Germanic government which controls Europe has two factions; one which fully embraces Saxon financialisation and one which seeks to hold on to the post WWII social corporate state system. Guess which one has more or less lost the battle…

 

August 2011: Against the background of wild swings on world stock markets, the two hawkish members of the Bank’s monetary policy committee abandon their calls for borrowing costs to rise.

 

Get away- you don’t say !

 

November 2011: The world’s major central banks pledge concerted emergency measures to underpin fragile eurozone banks and prevent the global financial system from freezing up.

 

After a teleconference chaired by King involving six central banks, they announce “coordinated central bank action to address pressures in global money markets”.

 

The moves are reminiscent of autumn 2008, when central banks came together to slash interest rates and inject liquidity into financial markets in the wake of the collapse of Lehman Brothers.

 

More QE and a new funding for lending scheme

How did Katie somehow forget to mention at the beginning that all of the central banks had been co-ordinating an attack on government issued money from the very beginning of the crisis?

 

July 2012: The Bank’s monetary policy committee votes to raise the total amount of quantitative easing to £375bn, citing signs that the global economy is flagging and having knock-on effects on the UK’s recovery. The move coincided with interest rate cuts in the crisis-hit eurozone and in China.

 

Later the same month, the Bank of England unveils a scheme to boost lending to first-time buyers and small companies in a move that ministers hope will inject fresh funds into the ailing UK economy.

 

The “funding for lending” scheme is welcomed by the chancellor, George Osborne, who says the launch of the £80bn emergency facility shows Britain is “not powerless to act” in the face of the eurozone crisis.

 

The scheme offers cut-price loans to banks and building societies, which are expected to make the money available through mortgages to homebuyers and loans to small businesses. But experts warn the new cash may not reach those who need it the most.

 

August 2012: A Bank of England paper concludes that Britain’s richest 5% gained most from quantitative easing. Threadneedle Street said that wealthy families had been the biggest beneficiaries of its £375bn QE programme but also insists the scheme has helped all sections of the population by sparing the country from a deeper slump.

 

In order to protect existing ‘Mortgage Backed Securities’ and even more importantly to protect the PRINCIPLE that private entities will issue democratised money and the state will clean up any resulting mess, the housing bubble has to be protected as the basis for Mortgage Backed Securities -financial instruments- derivatives-privately issued money.

 

November 2012: The Treasury announces that big cash balances amassed by the Bank of England as a result of its electronic money-creation programme will be used to pay down the national debt by £35bn over the next 18 months. Osborne wants Threadneedle Street to hand over the interest payments it has received on the gilts bought since the start of the QE scheme in early 2009.

They steal your car but they leave your furry dice on the pavement as a consolation..

 

November 2012: George Osborne springs a surprise on the City by announcing Canada’s central bank chief will succeed Mervyn King as governor of the Bank of England.

 

Mark Carney, the governor of the Bank of Canada, is the first non-Briton to become Bank of England governor. He is largely unknown outside the cloistered circles of central bankers and financial regulators, but has gained a reputation as a tough operator able to confront leading banks at the heart of the financial crisis.

 

It later emerges that Carney will pocket an annual £250,000 housing allowance, taking his total pay package to £874,000 a year when he takes the reins in the summer of 2013.

 

July 2013: Mark Carney takes over from Mervyn King as Bank of England governor. On his first day in the new job, Carney arrives in Threadneedle Street by tube.

 

First of all the idea was to make the Bank of England run by a group of non elected technocrats. Then the idea is to give it over to be run by someone who was not even English! The next appointee will be someone wearing a black hood and you won’t even be allowed to ask his (or her) name…

 

August 2013: New Bank of England governor Mark Carney unveils a strategy of “forward guidance”, under which policymakers will not consider raising rates until unemployment declines to 7% (from 7.8%). The Bank’s own forecast puts unemployment above 7% in 2016.

 

The governor says the Bank will only think again about its pro-growth stance if there is a threat of higher inflation or asset bubbles.

 

The scheme is greeted with skepticism in the City. Long-term interest rates, set by investors in financial markets, rise after forward guidance is first announced, amid a slew of upbeat data about house prices, retail spending and business confidence.

 

September 2013: Chancellor George Osborne says he is giving the Bank of England greater powers to prevent the government’s help-to-buy scheme causing a property boom.

 

The ‘fighting inflation’ story was shown to be nonsense, so then the Bank Of England concocted a story about unemployment being the most important indicator. Anything to avoid the truth, that it was the relative value of derivatives in comparison with the state issued currency that was the most important factor.

 

November 2013: Bank governor Mark Carney reins in the mortgage market in a bid to prevent five years of ultra-low interest rates and George Osborne’s help-to-buy scheme from fuelling a housing bubble. Carney announces he is refocusing the funding for lending scheme that gave lenders financial incentives to provide home loans. The focus will now be on business lending, the governor says.

 

February 2014: Just six months after forward guidance was launched the unemployment rate has already dropped below 7% – two years earlier than the Bank had been expecting. Carney signals, however, that the Bank will keep interest rates at the record low of 0.5% for at least another year and that policymakers “will not take risks with this recovery”. He also insists “forward guidance is working”.

 

Inflation was a nonsense excuse for QE now unemployment was shown to be nonsense excuse for QE

 

May 2014: Mark Carney warns that the housing market poses the biggest risk to Britain’s economic recovery as a shortage of new homes drives up prices.

June 2014: Bank of England gets new powers to control the size of mortgages. Carney warns that interest rates are likely to rise before the end of 2014.

 

Later that month, members of parliament’s Treasury select committee accuse the Bank of behaving like an “unreliable boyfriend”, giving mixed messages on when the first rise in interest rates is likely.

 

September 2014: Carney warns workers they face higher interest rates in the spring of 2015 before they receive rises in real wages.

 

The Bank of England, like the Fed desperately wants to ‘normalise the situation, by getting off zero interest rates.

 

 

Deflation threat sparks rate cut talk

 

March 2015: With inflation falling closer to zero, Bank of England chief economist Andy Haldane suggests policymakers may be forced to slash interest rates to zero in the coming months to tackle the threat of deflation.

 

Official figures after Haldane’s remarks show that inflation has dropped to zero for the first time on record in Britain. Inflation was pushed down by a deep oil price slump and a fierce price war being fought out by supermarkets. Inflation, measured on the consumer prices index (CPI), turns negative in April.

CPI inflation.

 

May 2015: The coalition government is replaced by a Conservative government. The coalition was the first administration in more than half a century to enjoy unchanged borrowing costs for its entire term. In the first announcement from the Bank under the new Conservative government, interest rates are again held at 0.5%.

 

New rate rise hints from Carney

 

FFS!

 

July 2015: The BoE governor says an interest rate hike in the UK is “moving closer”. He tells the Treasury select committee households should start to manage their finances with a future hike in mind and he notes the UK economy has been performing well, that wages are starting to pick up and that employment has seen a big increase.

 

Later that month, Carney suggests the first interest rate rise since the global financial crash could come around the turn of the year. In a speech, he adds that after an extended period of what were expected to be emergency rates, borrowing costs were likely to peak at just over 2% – half their average historic norm since the Bank was founded in 1694.

 

‘borrowing costs were likely to peak at just over 2%’

There is a direct relationship between the total amount of money in circulation, the amount of the economy it services and the base interest rate. The long term average interest rate is PROCLAIMED by the Saxon elite henceforth to be around 2% as a clear statement of intent: From now on, Government Issued Money will only service a fraction of the total British economy.

 

What fraction is this?

 

The previous average post war interest rate is approx 5%, so it will be 2% divided by 5% – or 40%. In other words, the elite have proclaimed that in the medium to long term OVER HALF the British economy will be serviced by privately issued money.

 

But minutes from the Bank’s latest rate-setting meeting show concerns among policymakers that slow progress resolving the Greek debt crisis could delay a rate rise.

Chinese slowdown fears intensify

August 2015: China devalues its yuan currency against the dollar, sending shockwaves through global markets – already jittery over signs of a worsening slowdown in the country’s economy and wild swings on its stock markets.

 

The currency move dampens talk of interest rate rises in the US and UK given the prospect that cheaper Chinese goods will reduce inflationary pressures in those countries.

 

But Carney says that while a slowdown in China’s economy could push down further on inflation, it does not change, for now, the central bank’s position on when and how it might increase interest rates.

 

Carney really wants to push the button and get on with it. Raising interest rates is an important signal that the democratised money project is concluding its initial stage.

 

September 2015: BoE chief economist Haldane again warns that interest rates may have to be cut further from their record low level as he highlights signs that the global financial crisis is entering a third phase of turmoil.

 

Haldane is speaking a day after the US central bank decided to delay an interest rate rise for the world’s biggest economy. The US rate-setters blamed a more fragile global outlook in remarks that further rattled jittery financial markets.

 

November 2015: The Bank of England is ready to step up controls on the housing market if a prolonged period of record low interest rates risks inflating a property bubble, Carney says. As he signals that interest rates are likely to remain on hold well into 2016, Carney suggested the Bank may have to revert to other measures, such as tighter lending rules, to keep a lid on house prices.

 

KATIE YOU FORGOT TO MENTION THAT THE FED RAISED INTEREST RATES IN DECEMBER!!!

 

What does this tell you about the quality of economic reporting in the Guardian and the media generally with regard to finance and the economy?

 

February 2016: Carney says policymakers in the UK could cut interest rates to zero if necessary, but would seek to avoid following Sweden, Denmark and the eurozone by setting negative rates to bolster growth and inflation.

 

Responding to questions from MPs on the Treasury select committee, Carney says the world economy has entered a period of low growth and low interest rates and is likely to be prone to financial shocks.

 

March 2016: The UK marks seven years of record low interest rates.

 

New research marking the anniversary claims rock bottom borrowing costs and quantitative have cost savers an estimated £160bn, but supported strong increases in the prices of property, stocks and bonds. In its analysis, financial firm Hargreaves Lansdown suggests loose monetary policy has “annihilated” returns on cash.

 

Savers have net transferred value to speculators to the tune of £160bn (and you can bet it is considerably more than that). More importantly, the ‘interest bearing function’ of money is being destroyed. One of the benefits of government issued money is being destroyed, taken away from you. What is the effect of this? It makes the alternatives to government issued money seem a lot more valuable. One of the alternatives of course, is Democratised Money.

 

Throughout the entire Guardian narrative the central bank response to the Credit Crunch is presented as being fundamentally arbitrary, contingent and chaotic. In other words there is no fundamental perspective or purpose that is driving the logic of central bank actions.

Actions and consequences happen in a confusing and sometimes contradictory swirl of intention and understanding.

 

So the drama unfolds as a revelation to the authors of the crisis as much as it does to us.

 

But from the perspective of privatising the supply of money- the democratisation of money- the actions that have been taken by monetarist central banks and the consequences that these actions produce, suddenly seem straightforward and entirely predictable.

 

 

 

The Real Name Of The Game.

 

 

The referendum on Britain remaining part of the European union has focused minds on the benefits and disadvantages of membership.

In truth it is impossible to make a rational and considered case for staying or leaving on the basis of a simple comparison of National Advantage or disadvantage for any member of the EU.

Political, economic and cultural relationships between the signatory states are so entangled and interdependent that there is no simple way to conclude that any one aspect of the EU agreement is either all beneficial or all bad.

In addition the entire European Union project has historical components that cannot be reduced to contemporary accountable credits and debits – the political and cultural rehabilitation of Germany being the foremost of these.

These complicating factors mean that both sides of the argument are finally reduced to motivating their respective constituencies through vague fears and even vaguer aspirations.

Pro-EU argue that the dangers from leaving the European Union are too great. Anti EU argue that fear of change reflects an unpatriotic lack of confidence on the part of their opponents. They say that Britain can be great outside of Europe. For anyone who wants to really understand the underlying meaning of the European referendum debate this superficial tub thumping is pretty depressing stuff.

There is a way to make a rational accounting of the pros and cons of European membership. But in order to do this we must have an understanding of what membership of the European union actually means within its component states.

Let us start from deconstructing the ‘national advantage’ perspective.

The relationship between Britain and Europe is based on treaties that specify certain obligations. Either the disadvantages arising from obligations outweigh the benefits of membership, or the benefits outweigh the obligations. That seems straightforward enough.

So from the national advantage point of view, our task would be to determine whether Britain or Europe is the net beneficiary of the relationship.

Let us assume that membership of the European Union is net beneficial for Britain and correspondingly less beneficial for the rest of Europe. If this were the case, European elites will be in favour of Britain leaving the European Union. But all of the European union leadership is increasingly openly bargaining for Britain to remain part of Europe.

If on the other hand, membership of the EU net benefits Europe more than Britain we would expect all sections of British society (including the financial elite) to argue that Britain should leave the EU. This is clearly not happening. The financial and industrial elites of Britain are increasingly openly arguing that Britain should remain part of the European union.

The actually observed behaviour of European and British elites does not correspond to a situation where Britain net benefits from the association to the detriment of Europe, or Europe net benefits from the association to the detriment of Britain. From this we can conclude that neither side has net national benefits or disadvantages from this association. Or at least, any comparative advantage or disadvantage is so small as to be incalculable.

If this is the case, comparative national advantage cannot be the rational basis for national elites (or anyone else), deciding either to remain or leave the EU. If the difference is so small as to be negligible why does it matter to anyone either way?

Because the significance of the EU does not lie in the formal relationship between the nation state members and their respective elites.

The first thing most important thing is to establish is that EU is an agreement between elites. European ‘politics’ is actually based on media and politicians doing what is necessary to get respective populations on board with ever increasing integration.

A classic example of this was the excruciating Irish referendum where the people were forced to keep voting ‘until they got it right’. The subsequent political and economic European gangbang of Greece was a further extension of this process. The people don’t ever get a say is a fundamental principle of the EU..

That Europe is a project of elites is hardly a revelation, most people get that. But what most people don’t understand is the consequences of this state of affairs.

Europe is effectively creating a new DEMOS – a new constituency; actually a new republic funded by wealth redistribution within nation state members. The EU is using the existing wealth of nation states to fund the creation of a new organism from within the shell of the old one. It is doing this by redistribution.

What is the nature of this internal redistribution ?

In a British example redistribution means that those who are disadvantaged by various European agreements are effectively paying a toll to those who are advantaged by those same agreements. Of course, it will come as no surprise that those who are disadvantaged tend to be the already poor and those who are advantaged are the already rich.

Here are a couple of specific illustrations of the redistribution process in Britain. They are illustrative of the process as it applies to all relatively affluent nations in western Europe:

Rents

Increased immigration (labour force mobility), from Europe means that rents rise due to increased demand for lower end housing. As a consequence of these rent rises landlords benefit directly. House prices in general are also pushed up as a consequence and all those who profit from housing in general benefit. People who have to pay rent lose out correspondingly. Where do immigrants tend to congregate? Not in affluent areas- prices are already too high! The congregate in poorer areas. Rents and house prices in poorer are pushed beyond the reach of local poor people.

Schools

Increased immigration means that more children are forced into existing provision. Foreign children who do not have English as a first language require many more extra services. These extra services have to come from the provision from existing children.

Where do immigrant children go to school?

Where they congregate of course.

Where do they congregate?

In poorer areas!

Healthcare

See above

Wages

Supply and demand. Increased immigration leads to lower wages.

There is a clear process that can be observed. Over time, the wealth and living conditions of immigrants tend to converge with the wealth and the living conditions of the local host community. In other words, the living standard of a Romanian immigrant into England will tend to rise somewhat and the living standard of the English people around him will tend to move downwards towards the Romanian standard.

This is not controversial. It is an openly stated objective of EU policy to harmonise living standards across the EU. What is not openly stated is that this harmonisation will involve the falling of living standards for a considerable section of the European population.

With this process in mind, one or two things become immediately clear.

There is no national interest as such, in voting for the EU, there never can be. By its very nature the purpose of the EU project is to divide nations up; it is meant to do this. It can never be in ‘Britain’s’ or any other nations interest to stay in the EU or leave because this is a fundamentally mis-stated question!

If you are in an area, that is targeted for transformation, (i.e. if you are a relatively poor member of a relatively rich society), your immediate interest is in stopping the process, since you will immediately lose out. Of course, the poor and ignorant are the least likely to vote or take part in the politics. This accounts for the relatively easy ride the process has had so far.

The areas transformed by immigration will necessarily expand over time. The longer the process goes on, the more that people ‘doughnutted’ in wealthier areas around immigration hotspots will start to feel the effects of the process and realise that they should oppose it.

Because of this, it is CRUCIAL to have as many referendums etc as early in the process as possible (and it is still relatively early in the process), since the longer it goes on, the more likely there is to be organised resistance to the process within relatively wealthy sections of national communities.

And doesn’t this, rather than the supposed national advantage perspective, more accurately correspond with what we actually see?

All over Europe it is people who live in the ‘immigration doughnut’ regions of western Europe who are protesting most about EU integration. (NOT, you will note, those on the EU periphery such as Greece..)

All over Europe it is those sections of national communities that have clearly benefited from ‘freedom of movement’ that argue for increased EU integration. (In Britain, this would be the City of London etc)

To go back to the original question:

Is it possible to make some kind of rational assessment of how much EU has benefited its constituency and disadvantaged those around it?

Well a couple of graphs here* can point towards an estimate:

This is the Earnings to mortgage ratio.

house-price-to-earnings-ratio-600x536

And this is  Bank of England base rates:

base-rates-bank-rates-mortgage-rates-500x354

You can see that broadly speaking, house prices take up an ever increasing proportion of wages in Britain. This process has begun to accelerate in the last decade. The only reason it has not accelerated even more is explained in the second graph which shows that the Bank of England policy of keeping base rates at zero has meant that mortgage rates have been ‘artificially’ held at a relatively low level. As a consequence mortgages are an artifically low proportion of wages.

You can see that where immigration and in particular European immigration is at its most concentrated, in the London region, the disparity between housing and wages is at its most acute.

This is what we would expect to see in line with my description of the redistribution process.

If I had to make a guestimate of the total loss to the poorest part of the British population as a result of European integration I would say:

Loss of wages.

Lack of access to health and education.

Increased rents

Increased house prices

Lost social benefits,( denial of trades union membership, denial of social welfare benefits)

All adds up to a loss of 25% of total wealth so far.

And this is only the beginning.

 

Typical tenant pays £40,000 in rent over five years, report finds

http://www.theguardian.com/society/2016/mar/03/tenant-paid-40000-rent-five-years-shelter

Wages for British workers will rise in the event of a Brexit, head of in campaign says

http://www.telegraph.co.uk/news/newstopics/eureferendum/12181385/Wages-for-British-workers-will-rise-in-the-event-of-a-Brexit-head-of-in-campaign-says.html

*http://www.economicshelp.org/blog/5709/housing/housing-market-stats-and-graphs/

 

There is more to say here:

The Fall of Europe and the Rise of Eurasia

The geo-political reality is that Europe -whatever it’s disputed borders might actually be- is the western part of EURASIA. Europe has managed to exist ‘separately’ for 4-500 years or so because of its relative economic and cultural advantages over the rest of the landmass. It was an economic/cultural grouping strong enough to keep Eurasia out. That relative strength adavantage is evaporating quickly now. The fall of Europe is the rise of Eurasia.

The elites of Europe (and Anglo Saxon elites) are entirely aware of this process. They are ALREADY ‘democratically’ transforming Europe into a LATIFUNDIA system- pockets of relative wealth and stability within the larger western Eurasian area that will be subject to falling living standards and relatively high insecurity.

There will be no progressive, social Europe or EU to be part of in the next decade. There is no possiblity of reforming Europe or the EU. They are both the creation of western European elites and will always continue to be.

These elites were forced to pay lip service to the Anglo Saxon ideal in the post WWII period. But that is no longer possible or desirable for these Europeans.

 

 

 

 

PART 2 Back To The Future Or Actually The Future Is Exactly What It Used To Be Or Neo Feudalism Or Now Listen You Queer, Stop Calling Me A Crypto Nazi Or I’ll Sock You In The Goddamn Face!

 

The general political and economic history we are taught focuses on forms of society over the functions that form represents. It teaches economic and political structures are primary and the forces they actually represent are secondary at best.

 

This creates a history and a politics that are at best really only a series of snapshots strung together in the semblance of a storyboard, or at worse a single blurred image, the import of which we endlessly haggle over with no hope of ever coming to a clear resolution.

 

If we accept this fragmentation of history and politics the best insight we can hope for is the pyramidal model of society that the ‘left’ and ‘right’ use.

 

The understanding we have of history and politics is not the result of unknowable abstractions, it is the concrete result of the most powerful forces in the society we live in. A fragmented and disintegrated political/ economic system inevitably produces a fragmented and disintegrated understanding of history and politics.

 

The disintegration of capitalist society we experience can be sourced to an elite – traditionally seen as the ‘top of the pyramid’, effectively drawing off a vector of wealth and power from society but not redistributing any of that wealth and power back.

 

Capitalism did not always do this, nor is it necessarily forced to this, but it has the tendency to do this. The potential to systematically and permanently vector wealth away from society to a specific elite differentiates Capitalism from all the other forms of society, contemporary and historical. It is what makes capitalism special.

 

Capitalism is a form of society where economics really can be separate from politics -an observation the left vehemently denies and the right celebrates but refuses to acknowledge the consequences of. But why does the ‘left’ deny this simple observation? Understand this and you understand the relationship between War, Welfare and Whiteism.

 

In the Divergent Split Stream Model the capitalist elite draws off wealth and power through the capitalist vector . (shown here). This wealth and power becomes increasingly INVISIBLE and UNKNOWABLE to the remaindered feudal integrated vector. For mainstream economics and politics (which are the province of feudalism), more or less the whole purpose of existence has become to try to understand what your elite is doing at any given time and hopefully to influence it.

ssm

Understanding the process of disintegration can give us historical insights into the motivations of the elite and their consequences for society as a whole.

 

At a crucial stage in its development, a capitalist elite is no longer automatically obliged to organise or defend the society they benefit from, symbolised by the moving out of military uniform that all capitalist elites eagerly undertake when they are able. I pointed out that kings and barons rise and fall with the redistribution systems they service. This is as true for contemporary feudal/integrated societies as for those that existed 500 years ago.

 

Capitalists are consciously ‘Independent’ when they no longer go to war to defend the society that protects and benefits them. Think about George Washington and the American War of Independence in this context. Think also about Adolf Hitler and the Nazis.

 

At the time of George Washington, nascent Anglo Saxon capitalists in America were in the process of creating a new separate system of wealth accumulation and redistribution based on the wholesale theft of that continent.

 

If anything distinguished the emerging Saxon American system from its European counterparts it was the fact that it sought to be pure and whole. The Anglo Saxon American process was entirely one of transferring a territory and its wealth from one racial cultural group to another; there was literally nothing else happening in America at that time. Proto America understood itself to be entirely a redistribution system.

americanmodel

And everyone who benefitted agreed that the process had great potential. It became the American Anglo Saxon evangelical project to demonstrate to the world that such a thing as a society running with only a capitalist vector was actually possible!

 

Here is America’s specific claim to moral, political, and historical uniqueness in the world; Germanic Land Democracy that you can successfully run a society without a feudal/integrated vector. Damn the Pope! Damn the European hierarchy of Church, Nobility and Society! And Double Damn Noblesse Oblige!

 

Just as ‘The King’ is the personification of the feudal/integrated system so ‘The Individual’ is the personification of this Capitalist vector. Summed up in the truly bizarre Saxon cri de coueur : ‘The Englishman’s Home Is His Castle’. Feudalism and Capitalism fused together; Germanic land Democracy.

 

At the precise historical moment of Americas birth, two imperatives clashed in the person of George Washington. One moment he was required to act as feudal king fighting a war as guarantor and defender of a uniquely American redistribution system. The next moment he was President; a mere elected functionary.

 

Washington hovered between these two states of public (and internal!), being. As feudal king his purpose was to integrate American society, as President he was representing the interests of forces that were striving to create the first permanently disintegrated society.

 

If you doubt the feudal personification of Washington and the American elite, remember that they named America’s capital city after this single man. And they did it with straight faces and no hint of irony. Isn’t this the very essence of ‘primitive’ feudalism?

 

Now compare the American Continental War with the First World War which was the last time a significant section of European, (in particular continental German), capitalists were willing to actually fight and die for the society they were beneficiaries of. After the Somme there were to be no more trenches for the young men of these elites. It was this change in society more than any other that gave the Second World War its own character twenty years later.

 

In a bizarre mix of comedy and tragedy, German corporate bosses decided to hire a replacement mock-feudal military caste to stand in for them in the form of the Nazis, led by the corporal Hitler! Has there ever been such a catastrophic bungle by any social group in history?

 

The burgher market trader instincts of German capitalists gave birth to the most deadly set of consequences imaginable. Most horribly ironic of all, Germans clearly recognise their propensity for this kind of stupidity in the classic tale of the ‘Pied Piper of Hamlyn’. But they are doomed to go ahead and relive it anyway…over and over again.

 

So here are two Germanic elites and two very different stories. American Anglo Saxon and Continental German had to adapt to and adopt the necessities of feudal integration and both did so in very different ways. These were two nations at different times under existential threat from outside. The Anglo Saxon American revolutionaries took feudalism on wholesale, the Continental Germans tried to buy a ready made version of it off the shelf. The Anglo Saxons in America succeeded wildly and the Germans failed catastrophically. Neither outcome was happenstance.

 

The historical lesson here is that CAPITALISM ALWAYS NEEDS FEUDALISM to survive and develop. If Capitalism fails to harness the power of feudalism, it risks its own existence. You can‘t fake it as the German bourgeoisie found out to its cost…

 

Most exactly of all, Capitalism needs to construct a feudalist distribution sub system if the capitalist elite is to successfully disintegrate itself from society.

 

Who will administer society if the capitalist elite is off pursuing its own interests? On what basis, with what justification, will this administering body operate? Its only viable justification is the integration of society; the essence of feudalism

 

A bureaucracy must be formed representing a new relationship between oppressed and oppressor. Instead of paying money to the King who distributes it to his enforcers, you must pay the enforcers directly!

 

But this capitalist/feudal bureaucracy is different because of a third consequence of disintegration; the emergence of ‘social science’.

 

Social science is only possible and necessary when you want exact scientific knowledge of the ‘mass’ of people as a separate grouping. Enter the new capitalist disciplines of Sociology, Anthropology etc. In the universities and the colleges of the 18th and C19th the foundations of a new priesthood is being created.

 

By the time that the Split Stream Welfare Model is implemented the capitalist elite has effectively reproduced the pre-capitalist system but excluded the itself from it. In other words the elite has become truly ‘modern’ and ‘scientific’ by means of ensuring that the remainder of society is ‘primitive’. And every capitalist society since then is objectively judged to be successful to the extent that it manages to recreate a feudal system and visibly exclude itself from it.

sswm

Of course, we need a name for this new relationship between bureaucracy and society. We can hardly directly admit it is feudalism- that the brave new future we are building is fundamentally dependent on the past. So we give this state of affairs a new name to reflect its ‘social’ nature ; we will call it ‘Socialism’.

 

Now we can see where Germanic ‘class’ politics springs from- a concoction of feudalism, welfare and socialism (or War, Welfare and Whiteism if you prefer). This is the political structure that will support and illuminate the new redistribution system.

 

And so along with Washington and Hitler, vector history brings Karl Marx into focus.

 

Somewhat vain and self important but also brilliant, Marx was a rogue operator in the new emerging social sciences. Like an insufferably precocious pupil Marx constantly disrupts and irritates the lecturer with startling insights, speculations and guesses called out from the back of the class. Some of these catcalls were pinpoint accurate and some were horribly wrong.

 

But by effectively second guessing a whole raft of developments in the emergence of social science, rogue student Marx managed to disrupt the entire inaugural lecture. The carefully planned unveiling of ‘Social Science’ collapsed into chaos!

 

And it has never recovered..Is it any wonder the establishment regards him as they do?

 

It’s hard not to see young Marx as something of a Victor Frankenstein character (as in Prometheus), seeking forbidden knowledge, failing to heed the warnings of his teachers and ultimately heading for disaster.

 

And while we are about it; seeking to raise what was dead through the newly acquired power of science… Given what we know about young Mary Wollstonecraft and her antecedents, I think I can make an argument that the Frankenstein story itself is a metaphor precisely for the emergent scientific capitalist class bringing feudalism back from the dead.

 

This is Not America…

 

By the time America invaded Vietnam in the 1960’s none of its national elite or their children went to die in wars. And nobody seriously expected them to. This certainly gave the Vietnam war its very own peculiar nature. American society at large was well aware of the extent this change even if it did not understand the full significance of it. What this meant was that America and its elite, despite its peculiar development path was becoming more like the European states.

 

The documentary film ‘Best of Enemies’ records the televised debates in 1968 between liberal Gore Vidal and conservative William F. Buckley Jr. and it happens to capture perfectly this moment of America’s final transition from ‘capitalist+’ to ‘capitalist-‘ society. As the publicity blurb for the documentary has it:

 

‘ Intended as commentary on the issues of their day, these vitriolic and explosive encounters came to define the modern era of public discourse in the media, marking the big bang moment of our contemporary media landscape when spectacle trumped content and argument replaced substance’

 

To make it absolutely clear: The Nixonian/ Neo Con movement as espoused by William F Buckley jr that emerged in the late 1960’s is a welfare system just as its liberal counterpart espoused by Gore Vidal was. It’s specific argument is that welfare should be constructed in such a way as to benefit white Anglo Saxon society and particularly white working class Anglo Saxons at the expense of other sections of American society. In other words it seeks to exclude some sections of society to more clearly cohere the remainder around a specific identity.

 

It is no coincidence that Nixonian welfare centered on the Moral Majority emerges precisely when the elite begins to very consciously disengage (as in the Vietnam war) from American society. The project is to then put in place a comprehensive new welfare system that society will rely on to maintain cohesion. Buckley and Vidal are arguing over what the nature of the new sub system feudal welfare system, (LBJ’s The Great Society), will be.

 

It is every bit as consciously redistributive as so called liberal or socialist opponents. Its difference centres on who qualifies. And who qualifies will be decided by which version of the history of America becomes the dominant narrative.

 

From this perspective the animus between the two antagonists comes into clear focus. It is no accident that both are populist disseminators of American history. It is no accident that their central argument revolves around what the content and meaning of American history is.

 

If Thine Eye Offend Thee..

 

And now we can finally move towards a rational explanation for what seems totally irrational oxymoronic Neo Conservatism: It is America’s admission that it needs feudalism in some form if the elite is to successfully disengage. But in this admission America’s previous strength is revealed as a weakness because it has no feudal backstory to hang its welfare state on. It is going to have to invent one.

 

This is the opportunity for ‘right wing’ public intellectuals like Buckley and Irving Kristol to prove their worth. We can explain how Neo Conservatism can draw together an establishment WASP like Buckley and an ex ‘Trotskyist’ like Kristol within the context of American politics. On the surface their political trajectories would appear to be irreconcilable. But if we understand that their shared struggle is not to re-formulate the future but the past, many of the apparent contradictions evaporate.

 

Both Kristol and Buckley realised that in the creation of Neo Conservatism, their shared purpose was to try to find a way to create a vision of the past and to present it as the future; feudalism as welfare. The inspiration of Neo Conservatism is to accept the practical reality of the need for feudalism, while publically denying it with all your might. In a moment of clarity Kristol realised that feudalism/integration was essentially what his Trotskyist Socialism had been about all along.

 

From this perspective we can see that the Cold War arguments over whether communist Russia was more advanced than USA is really an internal argument about the future of America. America is projecting its hopes and anxieties onto Russia and later Japan and China. Because now the American elite continually gazes upon feudalism with fear and a kind of sick desire. They are painted into a corner. They are all turned around.

 

This has reached some kind of crisis point with Islamism. The modern Protestant welfare society finds itself powerless to launch an all out attack on feudalism. How can it? It will be cutting its own throat. No matter how much it is offended it cannot put its own eye out or cut off its own hand.

 

Disintegrated history and politics experiences its dislocation and confusion through the medium of past, present and future. Whenever the West tries to describe an alien society it does so in terms of primitive or advanced etc. The West is permanently confused as to whether China is modern or backwards. Or modern and backwards. Or whether it is going forwards or forwards and backwards at the same time.

 

The West looks for markers of ‘modernity’ like mobile phones or gay marriage. If you have a modern mobile phone network but not gay marriage is your society modern or backwards? Was Iran becoming more modern or less modern when it overthrew the Shah of Iran? Is the Arab Spring a leap forward or backward? Was Morsi and the Muslim Brotherhood progressive or regressive? Confusion multiplies and reigns.

 

Something like this happened with astronomy. Retrograde motion is an observed phenomenon in astronomy in which planets appear to move ‘backward’ across the night sky. Of course, this is impossible, planets can no more move backward in space than societies can move backwards in time. Retrograde movement is the consequence of planets with relative trajectories seeming to accelerate at different speeds. They are all going forward in perfect order, it is just that from one point of view it can seem as though they are not.

 

When a model of the solar system was put forward that more accurately mirrored reality, all the confusion disappeared. Soon astronomers were able to predict the whereabouts of any given planet at any given time. It happened when they realised they could not calculate correctly with the earth as the centre of the system. The same thing must happen now with Anglo Saxon societies. The world does not revolve around them. History does not revolve around them.

 

Societies can appear to move backwards but of course they don’t really. They are all progressing forwards we just have to find a model to explain how. Vector history can do that. The key is to identify or restate a problem in a way no one has before and offer a solution. That is what I have done here.

 

 

 

Pyramid Schemes Or Vector History Or I’m Ready for My Close Up Or There is no such thing as a Disintegrated Society Or Is There?

The structure of pre-capitalist societies is often depicted as a Hierarchical pyramidal structure with the mass of people forming the widest part of the pyramid at the bottom and then progressively smaller echelons forming each tier as it moves towards the top. We can call this a Standard Hierarchy Model and make a simple diagram of it something like this:

shm

 

In this model wealth and power moves upwards from the bottom of the pyramid to the top and wealth and power in the form of patronage is redistributed down from the top to the bottom. In establishment rhetoric this is portrayed as the ‘classic’ ‘oppressive’ state structure.

 

Establishment history argues that this oppressive state structure belongs both to our pre-capitalist past and contemporary non capitalist societies such as North Korea, (which in Establishment ideology are essentially the same thing). But Establishment history argues that in contrast to all other types of societies, present and past, the pyramid structure is modified within capitalist societies.

 

The crudest Establishment description of hierarchy modification is in the Inverted Hierarchy Model. This model shows the mass of people benefiting from capitalism relatively and absolutely more than any other echelon in the pyramid. The argument is that the lower down you are in the oppressive pyramid model the more you benefit from the Inverted Hierarchy Model. We can show it like this:

ihm

In this model it is argued that power ‘democratically’ flows away from elites, up to the mass of people. Then patronage is redistributed down from the mass of people to the elite through the democratic process. As proof of this redistribute process the Inverted Hierarchy Model argues that the mass of people receive invisible, intangible social goods. These include the right to be an individual, the right to express opinions in free speech, sexual freedom etc, As an added bonus these riches get progressively larger and more encompassing with every passing year!

 

This Inverted Hierarchy Model is obviously overtly ideological and tends to be used mostly in Anglo Saxon societies and in particular the USA. But that doesn’t mean that is has no basis in history and culture. The objective is to try to understand what basis it actually has..

 

A more subtle Establishment argument is to agree that we live in a base heavy pyramidal structured society but to argue that who is at the top of the pyramid and who is at the bottom regularly changes over time. In other words the structure remains constant but the composition of the pyramid is open to change. This model accepts the implied need for the state to guarantee some kind of equality to mitigate the nature of the pyramid but characterises this as the need for equality of opportunity.

 

In contrast, anti Establishment arguments emphasise the fact that the structure of the pyramid remains constant irrespective of the composition of any particular echelon. Any movement of elements within the pyramid is limited and inconsequential. It follows that if the pyramid is incapable of internal change, change must come from outside.

So the basic mainstream Establishment position is:

The Capitalist form of society is a pyramid but it differs from previous social pyramids in that its composition changes and will continue to change over time.

The anti Establishment position is:

The pyramid is essentially the same as previous pyramids, has not changed and will not change until political force (usually from below), makes it change.

 

On these two essential positions the matter rests and has rested for some time. But it is possible to conceive of social structure in a different, dynamic way. This dynamic understanding can illuminate the observation people understand the pyramid structure not in abstract or random ways, but in ways that are exactly the inevitable outcome of the relationship between elite and the rest of society and the way this relationship has developed and been subjectively experienced.

 

Instead of the Establishment series of ongoing pyramid ‘snapshots’ or the opposition ‘oil painting’ of a single static pyramid, we can imagine the pyramid form instead as a dynamic vector on a graph representing a flow of wealth and power from the base of the hierarchy to the top and then back down again. This model integrates movement into the basic model itself. It is the difference between the dissection of a cadaver and studying the flow of blood through a living body.

 

Lets go back and look at the classic ‘oppressive’ pyramid structure from the perspective of this Hierarchical flow model. It looks like this:

hsm

Wealth and power moves upwards from the ‘peasants’ at the bottom to the ‘King’ at the top and is then redistributed by the King back down through the lords and barons and so on until a residue of wealth reaches the bottom again. In this model the elite is the mechanism of redistribution and the ‘King’ is the personification of the elite. We are taught that this is how medieval European society or contemporary non capitalist society such as North Korea is structured.

 

The fundamental Capitalist critique of an oppressive state structure like this is that the ‘King’ collects wealth and power from the people and then redistributes it to the power structure that protects him and the echelons below him from the people he collects wealth from in the first place. In other words the process of redistribution reinforces the redistributive structure in place and makes it impervious to change. This can be called a Force System.

 

The people pay to the King and the King pays the bodyguards and so on downwards thought society. Redistribution and force are intertwined. Wealth is redistributed throughout society through the Force System.

 

This process is characterised as a ‘crony system’ by Capitalists. It is also often misrepresented as a Forced System as opposed to a Force System. Capitalists argue that because redistribution is done through the force system it is ‘forced’ – it cannot be to any extent voluntary. They argue that this is morally unfair and/or economically and politically inefficient. They argue that it must inevitably collapse, and if it doesn’t decent people should work to bring about that collapse anyway and by any means necessary.

 

You should note that Germanic capitalist ideology viscerally detests Force System   because it does not reward the personal character traits that German culture and personality  admires and promotes.

 

The Fate of Kings

 

In a fully ‘feudal’ society everybody is effectively employed by government. Your economic boss is very often literally the general who leads you to war. And this political/economic model is reproduced right up to the very top. The commercial and the political is entirely integrated and entirely consistent , (which is to say that the logic of society is reproduced throughout society to the same extent). All of society is integrated and consistent.

 

The king is the guarantor of the system and the network. Consider the fate of Gaddafi in Libya and Ceausescu in Romania. Consider also what is in store for al Assad if his enemies get their way. This fate of kings is not random or happenstance. The fate of the King is absolutely entwined with the fate of the redistributive system.

 

Rather than a feudal society It would be more accurate to call this an integrated society because economics and politics are fused and every echelon is fused to the one above and below it by means of the redistributive system.

 

The popular capitalist ideological critique is that systems like this are static. Everybody is in a place within the system. Nobody can be outside the system and nobody can move within the system. Of course if they see any evidence to the contrary of their assertions they simply ignore it.

 

This criticism fits within the capitalist list of accusations which run from popular to true in descending order:
It is static

It rewards ‘bad character’

It is dangerous for ‘the people’ (which really means it is dangerous for people like us!)

 

If the capitalist system was the opposite of an integrated society it would be a disintegrated society wouldn’t it ? Could there be such a thing as a disintegrated society? A society like this would be a society that is defined by the belief that: ‘There is no such thing as society’. Could such a society exist? If so how could it exist?

 

With the advent of Capitalism instead of one income and dispersal system there are now two systems within society. Where there was only the integrated feudal political system there is now also a separate capitalist ‘economic’ system that mirrors the feudal political system. This can be called a Split Stream Model because there are two separate streams of income and redistribution. It can be shown like this.

ssm

Wealth and power rises and falls on a ‘commercial’ stream (blue) and a parallel political stream (red). Both streams are integrationist which is to say they concentrate wealth upwards towards the elite and then redistribute it.

 

Notice that this model does not differentiate between a ‘feudal’ and ‘capitalist’ elite. There is no need to try to manufacture a fundamental political or cultural conflict between the feudal and the capitalist elite in this model. They have separate income streams and dispersal networks but they are not fundamentally different.

 

This is in stark contrast to capitalist establishment history, (and Establishment anti-Capitalist theory!), for which it is very important to claim that capitalist elite are different from the feudal elite, because they have been transformed by an intangible, magical process called ‘Enlightenment’

 

I’m Ready For My Close Up

 

This Split Stream Model can be regarded as the basis for the idea of a ‘Golden Age of Capitalism’. In as far as Capitalism can be said to be progressive, the justification for it lies in this model.

 

The capitalist commercial blue vector shows Capitalism concentrating power upwards through the capitalist production process and then redistributing wealth and power back down through the very same capitalist production process. It should be very clear that unlike a feudal system wealth and power are NOT redistributed back to the people they had been extracted from. And wealth and power are NOT redistributed to everyone throughout society. But they are redistributed comprehensively nevertheless.

 

Imagine yourself standing on any point on the blue vector in other words, imagine yourself as part of the commercial vector. As part of the process, from your point of view Capitalism really does redistribute wealth and power; you can see it happening, it is happening to you. You are part of an alternative to the feudal redistribution system.

 

This is the form of society that traditional (sometimes ‘libertarian’ and even Neo Conservative) Anglo Saxon history focuses on. This is the basis and justification for Neo Conservative ‘trickle down’ rhetoric and at the same time the reason for its ‘Libertarian’ opposition returning again and again to the period of the American Constitution, and even sometimes the French Revolution.

 

We can look again at the Inverted Pyramid Model from this perspective. For someone at the apex of the blue vector the pyramid is indeed inverted.. power and wealth comes to you and you redistribute it. And that is why this model forms the basis for all pro-market, particularly Saxon rhetoric. Think of it as a snapshot of Germanic capitalism in early adulthood; fresh-faced and looking at her very best. It’s the same snapshot that Capitalism still uses on her Facebook page, although it’s a long time since she looked anything like that….

 

There are two systems co existing, but one of them has a clear future where the other does not. A new Divergent Split Stream Model begins to assert itself where economic wealth and power is no longer distributed back down through the lower echelons. The feudal vector system comprehensively redistributes wealth. The capitalist vector no longer does.

What this means is that in effect the capitalist vector is getting its government for free….It can abandon its obligations outside of the state. That model looks like this:

dssm

As a consequence of capitalists abandoning any social obligations they may have felt they had, the feudal system progressively impoverishes itself in comparison with the capitalists. This is effectively the moment of overt capitalist revolutions, the moment when ‘feudalists’ and ‘capitalists’ understand the true meaning of what is happening and what its inevitable consequences will be. Then comes a decisive political battle. Ironically it is when capitalism stops actually being progressive and revolutionary that an actual capitalist revolution becomes necessary!

 

And now things get really interesting.

The post revolutionary redistribution system bypasses the elite entirely. This is the Split Stream Welfare Model and it looks like this:

sswm

The top echelon elite have taken themselves out of the redistribution process altogether but they are still protected by it. The elite are effectively disintegrated from the system. The difference between an old fashioned ‘oppressive’ pyramid and a modern system is that the people used to pay wealth and power to the King to distribute to his bodyguards. Now they pay to the bodyguards directly. This is called democracy. The system is streamlined.

 

And if the red vector looks familiar from the models above. It should because it is the same one.

Now the Split Stream Welfare Model reproduces the feudal distribution system, but outside of the elite. That is what ‘welfare’ redistribution actually is; a reproduction of the classic feudal non capitalist redistribution system but at a lower level of society. If redistribution is really feudalism, is the left really ‘feudal’?

You betcha!

So what is a ‘progressive’ then?

‘Back To The Future’ Next time….

Spelling It Out or It’s Not You, It’s Me

You can often hear proponents of the ‘Austrian’ school and others on the ‘right’ calling for the market to set base interest rates. This bizarre call is a non sequitur – meaningless.

 

The market is made up of both buyers and sellers and their interests are necessarily conflicting. The market does not ‘speak’ with one voice; by definition, it cannot. How can it set anything?

 

It is like asking a field of runners halfway through a race to come to an agreement on where the finish line should be…

 

Of course the market can’t collectively determine anything. Firstly, when the market ‘speaks’ it is the preponderance of individual views of within the market. When the market ‘speaks’ it is the result of something; it is a reaction; the exact opposite of being the cause of something.

 

Secondly, for communication to convey meaning it has to be the result of some form of reason. For the market to actually express a meaningful point of view it would be necessary for it to consciously arrive at a point of view, enunciate that point of view and stick to it.

 

But the market changes, literally from second to second because the balance of forces within the market changes from second to second. Even if you were to somehow accept the idea of ‘speech’ from the market, you have to accept that the meaning of that speech will change in a couple of seconds time. Even if you try to argue the market has a mind, you have to accept that the market can never make that mind up.

 

Because although the buyers and sellers who make up a market are supposed to be rational agents expressing their own rational self interest, the cumulative consequence of their actions is not. These are the ‘animal spirits’ of ‘fear’ and ‘greed’ that everyone agrees the market expresses.

 

Market religion claims that by means of alchemy the market changes base instincts into what is best for everybody inside and outside the market. Somehow something even better than considered reason appears spontaneously!

 

The market cannot speak because it cannot have an established continual rational point of view and it cannot create a rational point of view because it is made up of conflicting impulses. If there was no such conflict it wouldn’t be a market.

 

It does not matter whether it is a pre-centralised system of private banks or a modern central bank system, a rational market ‘mechanism’ to set base rates is impossible.

 

It follows from this that if base interest rates are to be set for any given period, they have to be presented to the market in advance by somebody outside the market, working to some kind of rationale. And every nation and collection of nations operates on this basis.

 

So what is behind the call for base interest rates to be set by the market? The main reason given is that interest rates are seen to be all going one way. Since the Credit Crunch and the implementation of ’emergency measures’ central banks have followed a Zero Interest Rate Policy.

 

Of course, it is becoming harder and harder to see ZIRP as an ‘emergency’ measure after seven years or so. Direct government dictat has the consequence of shredding the rhetoric of supposed central bank independence.

 

And ZIRP disguises a secular decline in interest rates that has been taking place in the Anglo Saxon economies since the 1980’s. Economists on left and right have no way to explain this outside of tautology: Interest rates are low, well…. because interest rates are low.

 

I argue that base interest rates are proclamations made by an authority, be that authority elected government officials or ‘independent’ central banks.

 

The interest rate setting authority makes a proclamation; sometimes characterised as an offer depending on how you wish to portray it. Depending on how many individuals take up that offer, the issuing authority amends the offer next time, this is the market reasoning justification for the system.

 

If an increasingly large number of people take up the credit offer at a given interest rate the interest rate is increased to stem the ongoing flow of credit applications. If a decreasingly small number of people take up the credit offer at a given interest rate, the interest rate is decreased to stimulate the flow of credit applications.

 

You might ask: Why don’t authorities amend the interest rate from hour to hour or even minute to minute – why do they only change the interest rate quarterly?

 

The answer is they need time to collect, collate and process the information. Because their decision is supposed to be based on reason to some extent. You might not agree with their reasoning, but you wlll see that if a central bank announced that base interest rates will be 1.5% for the next hour based on a ‘hunch’, the economic system it was set up to administer wouldn’t last for very long!

 

In other words the system we used to have and the system as it is now are not the result of arbitrary choices, they operate at the exact limit of development allowed by politics and technology at any given time.

 

Since the system is not really open to arbitrary change what does that say about the decisions that the system makes? It means that the decisions it is making at this time are the only possible decisions it can make given the limitation of politics and technology. If we understand the constraints of politics and technology we can understand what the decisions have to be.

 

With this in mind, we should address the fact that the main decision of central banks seems to be not to make any decision. Interest rates are effectively at zero and staying there. We have the quarterly ritual of: ‘Will they, won’t they move off ZIRP?’ and the answer so far is always no.

 

This is problematic for me as I have argued that moving towards a new baseline average interest rate of 2.5-3.5% is the next step in the implementation of Democratised Money. I have also argued that international exchange rate blocs are a fundamental requirement for the international framework for Democratised Money. And neither of these things has happened yet.

 

It is possible that the delay in normalising interest rates and creating exchange rate blocs is linked to the Pacific and European TTIP agreements. Trade blocs like Pacific and European TTIP are an inevitable part of the Democratised Money world. It could be that nothing else will be done until they are both securely in place. Now that the Pacific TTIP is moving forward again, the increase in interest rates and exchange rate blocs will be implemented.

 

But I think there is another reason for continued ZIRP and it comes from the internal ‘logic’ specific to this exact time and place.

 

All central bank rate setters, be that the Federal reserve, The ECB or the Bank of England are ‘democratic’ to the extent that they vote to decide about where to set base rates but that is as far as the democracy goes.

 

Nobody elects the members of any central bank committee, they are there by appointment. So they cannot claim any democratic mandate per se. The justification for being there is actually an inversion of a democratic argument.

 

Independent central bank advocates argue that political control of base rates by an elected official is detrimental to market confidence in that rate. The rate setter needs to be able to operate independently of democratic ‘pressure’ e.g. pressure from electorates. Democratic voting is the method by which rates are arrived at, but technocratic reasoning is the justification.

 

But this line of argument presents certain problems.

 

The post 1970’s call for independent banking was justified by the Monetarist shibboleth of inflation. This was supposed to be the one and only overriding consideration. Monetarists claimed that if inflation was under control and the money supply regulated all would be well. But as the Credit crunch and resulting QE opened the door to direct political interference reasons had to be found to provide cover for and justify direct interference. And so the mandate of central banks was modified to include macro-economic ‘stability’.

 

When the situation was ‘stabilised’ to some extent it was suddenly found that central banks also needed to target unemployment and so interference would have to continue.

 

When employment seemed to recover somewhat, central banks discovered that broad economic growth must also be added to their macro economic mandate.

 

When growth seemed to recover somewhat central banks discovered the ‘productivity gap’. When it became apparent nobody really believed in the productivity gap or understood what it was, central banks discovered the threat that interest rate rises posed for developing economies and that is where we stand today.

 

The specific logical conundrum is this: If central banks are indeed identifying problems and fixing them as they claim to be, then they either have to find new problems to fix or to stop interfering in the market at some point. On the other hand, if central banks are identifying problems and not managing to fix them, then something is seriously wrong with the central bank system itself.

 

The upshot of this is that insurgents continually claim that central banks have failed to solve any of the serious macro economic problems. The establishment claim that they have solved a number of problems and are effectively managing the new ones that always seem to be appearing.

 

But what unites establishment and insurgents is the claim that central bank interference in the economy is somehow voluntary and limited. The establishment claims that the central banks will stop interfering at some point in the future because they will have fixed all the problems. The insurgents claim that the central banks interfere because they want to protect their fraudulent ponzi scheme etc.

 

But I argue that Monetarists have no choice but to interfere to in order to protect democratised money. Once the creation of privately issued money began, everything else that followed was inevitable.

 

The purpose of QE and ZIRP is to defend and promote the growth of privately issued democratised money. The Fed and the Bank of England cannot and will not stop with emergency measures until they believe that derivatives are completely integrated into the global financial system in a way that means they can never be removed.

 

It is this imperative to protect democratised money that has been the real reason behind the ongoing interference in money markets. It is this imperative that is the logic behind QE and ZIRP. And it was the belief that the project of irreversibly integrating democratised money has largely been achieved that led to the recent hints of a rise in base interest rates in America and Britain.

 

But the Fed cannot bring itself to pull the trigger. They are trapped in their own logic.

 

By citing an increasing number of different reasons for intervening, the central banks built for themselves a new group of constituencies. Effectively Inflation, GDP Growth, Unemployment, Productivity gap and Developing economies all represent constituencies that the central bank committees have come to claim to represent. And this is the argument that has largely been successful in justifying the central bank approach to the markets. It is a polygamous marriage of convenience. But to raise interest rates will undermine the interests of this collection of constituencies and bring to the fore the question of what the purpose of the central banks actually is.

 

This is the reason central banks are reluctant to begin raising interest rates. They cannot say they have fixed the central problem and ‘new normalise’ base rates without saying what the problem they have fixed, is!

 

The collection of constituencies that central banks have gathered together as a justification and cover for the democratised money project has proved to be very useful. But at some stage there is going to have to be a parting of the ways and at that moment a lot of people are going to be asking the central banks: ‘Did you ever really love me?’

The Opposition vs. the oppositions

Imagine a constitutional democracy with two political parties and a permanent electoral majority in favour of one of those two parties. Since only one of the parties could ever be elected to power can this country can still claim to be a democracy?

 

In this hypothetical situation the permanent opposition still has a role to play in questioning and challenging the assumptions, ideas and policies of the majority party. If they do this in a coherent way that represents the interests and opinions of the minority, systematic opposition can force the majority party to make ‘better’ decisions and the majority in society to be aware of the ideas and opinions of the minority.

 

By means of constant and aggressive opposition the majority can be exposed when it has failed in the conception and execution of policy. The population at large can be made to realise when the majority party is incompetent and/or corrupt and encouraged to respond accordingly.

 

Under this ‘adversarial’ model the claim can be made that democracy is possible even if electoral maths do not support a regular change of government. But this system only works to the extent that the opposition is capable of, and committed to, systematic opposition to the majority. In other words it is only possible if the opposition is sufficiently organisationally and even ideologically, separate and opposed to the majority*.

 

But that is clearly not what we have got now in developed capitalist societies. What we do have is often understood as a Controlled Opposition model -a term usually associated with Conspiracy Theory. Head down this road and before long you are in the company of the Illuminati and Worldwide Zionism etc.

 

But conjectures as to the causes of failure of opposition such as these are really simply the expression of not knowing what has changed and how it has changed over the past four decades.

 

A serious discussion of the possibility of controlled opposition leads to two closely related questions:

To what extent is opposition ‘controlled’? and

How is opposition ‘controlled’?

 

The key to answering these two questions lies in understanding the dovetailing of the subjective experience of opposition and the objective needs of the system.

 

The objective needs of the system and the subjective experience of opposition have clearly changed. The way that political parties relate to the public and the way this relationship services the overall polity are clearly not the same as they were in the last century. So the central questions are refined to: What is the nature of the difference between now and then and: What drives it?

 

The Objective Needs Of The System.

 

The 1970’s crisis led to the merging of state and capital in the form of Monetarism and the beginnings of Financialisation. The victory of Monetarist/Marxist theory made permanent political control of the economy through control of the money supply the central plank of economics. The Anglo-Saxon world put all its eggs in the state managed capitalism basket.

 

This approach had an obvious problem though. Since total power over the economy was now vested in the state, if a genuine democratic opposition*(see above) did manage to get control of government it would potentially control everything. It could do incalculable damage to the interests of the elite.

 

This point is well Illustrated by the saga of Quantitive Easing and the ‘printing of money’ to support post 2008 collapsing financial system. Once the politically motivated mass production of money (as advocated by Monetarism), is accepted as a valid economic strategy it is only a matter of time before some bright spark advocates a ‘Peoples QE’ to benefit ordinary people instead of the banks.

 

A people’s QE of course, would mean the effective end of the system… it follows that such a movement can never be allowed to come to power. So in as far as a highly centralised system such as state managed capitalism is vulnerable to democratic political takeover a solution has to be found.

 

The solution to this centralisation problem was the Democratisation of Money and the creation of the Permanent Credit Economy. The Democratisation of Money would take care of the international element of the new system and the Permanent Credit Economy would take care of the national element.

 

The Democratisation of Money is the creation of an international economic alternative monetary system to the nation state system. It is stateless money. No matter what happens to any, or indeed every, state issued currency, the use of Democratised Money in the form of derivatives and other financial instruments means there is a safe haven for international finance.

 

At the same time The Permanent Credit economy creates a decentralised planning system; this is planning through bank credits to control national economies. (This model of decentralised planning through banks is subscribed to by economist Michael Hudson)

 

Now a new decentralised system is nearly in place and successfully stabilised, which means all the eggs are no longer in just one basket. Now there is some room for flexibility. This means that objectively for the first time in four decades some form of opposition is possible.

 

This describes the objective reality of opposition: The amount of opposition in any society at any given time is the amount of opposition that can be afforded by that society. The presence of internal opposition is an expression of power and stability. When a society is fundamentally threatened, as at time of war, it will allow no internal opposition.

 

But the restructured system we have now necessarily means that the nature of re-emerging opposition is fundamentally changed. How is opposition changed?

 

In the transition period after traditional opposition was discarded in the 1970’s and before Democratised Money and the Permanent Credit Economy were bedded down, it was not objectively possible to have any kind of opposition. It was just too dangerous. The economy and society were effectively on a war footing.

 

Beginning with Reagan and Thatcher, through Clinton and Blair and so on, traditional adversarial opposition has been effectively ended. But it is vitally important that you understand that not just ‘left wing’ opposition was done away with –  ALL opposition was done away with.

 

Under Blair and Clinton, ‘right wing’ opposition was decimated and traumatised just as violently as the ‘left wing’ had been under Thatcher and Reagan. Look back to the rise of Newt Gingrich and the emergence of the Tea Party in the USA, look back to the Conservatives in Britain under Hague and Howard, and you will realise that ‘right wing’ parties on both sides of the Atlantic basically had an extended nervous breakdown.

 

Traditional adversarial opposition of the kind I describe at the beginning of this piece requires a legal framework, an open media and society. But after the 1970’s the media became overtly partisan and concepts of legality were revised (e.g. Glass-Steagall repeal and liberal military intervention) so as to be unrecognisable. This affected ‘left’ and ‘right’ in opposition equally.

 

The Subjective Experience Of Opposition

 

Which brings us to the Subjective Experience Of Opposition and the rise of cultural constituencies. There is no societal support mechanism for one unified, critical opposition of the kind I described   any more. This means that existence as adversarial opposition is no longer a viable strategy for mainstream political parties in the Anglo-Saxon world. It means that a party has to get elected at any cost.

 

With media and broader society no longer willing to support traditional opposition the cost of failure is too high. From this perspective you can understand the subjective experience and motivation of Clinton and Blair…The great move towards the ‘centre ground’ started when politicians like Clinton and Blair became conscious of the new reality; institutionalised adversarial opposition was over. You could no longer justify your party’s continuing existence on that basis. Opposition was now to be redefined as meaning solely understudy to government; to be a government in waiting.

 

So how does Jeremy Corbyn and Bernie Sanders and Alexis Tsipiras and of course Donald Trump, fit into this description of the world ?

 

First of all they all clearly operate in stark contrast to the ‘understudy to government’ team. Compare Corbyn to his rivals in the Labour Party leadership race; compare Bernie Sanders to Hilary Clinton or   Trump to his republican rivals.

 

Trump, Sanders and Corbyn all represent Cultural Constituencies as opposed to mainstream understudy politicians. Mainstream politicians are seen as shifting, empty and vacuous, in thrall to corporations, whereas cultural constituency representatives are seen as the opposite of this; vital and authentic. This is because Cultural constituency representatives espouse real, absolute moral positions as opposed to the governmental compromises of understudy politicians.

 

This works because it is not as if the compromises required for national government are even seen as being that practical by the mass of people anymore. Most people understand that international finance and trade have comprehensively restricted the ability of national politician to act freely in pursuit of their goals, whatever the nature of those goals might be.

 

From this point of view, the approach of Jeremy Corbyn is not only morally superior, but has at least as good a chance of actually achieving something as the compromises of a Tony Blair.

 

There is much more to say about all this but for now the main message to take away is that since the elite have successfully created a decentralised financial/political system we will have many decentralised oppositions.

 

And the nature of these oppositions is that they will subjectively be cultural constituencies.

 

Because that is what the new world order can objectively support.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

‘Saxism’ or If It Bleeds It Leads or Beyond The Pale or The Sorcerers Apprentice or ‘Duck, Donald!’ or Or Crazy Like A Fox

The consensus in the press was that remarks made by Donald Trump in the Presidential debate would more or less be the end as far as his political ambitions went. The basic MSM line was that ‘blood out of her eyes and wherever‘ comments wildly overstepped the mark in civilised discourse.

Journalist Megyn Kellys challenge was clearly designed to put Trump on the wrong side of women voters in the Presidential debate and mark him as Beyond the Pale in civilised society. However, instead of offering some kind of lame mea culpa for past transgressions, Donald chose to adopt a combatitive tone himself, forcefully attacking Political Correctness and by extension Megyn Kelly for adopting it..

 

And so far, the popular backlash against Trumps ‘caveman’ attitude hasn’t happened. Instead Trump seems to be holding his own in the court of public opinion. If anything the tide has turned somewhat and the question become: ‘Was Megyn Kelly put up by Fox news to take Trump down?’

 

Corporate conspiracy theory probably has some substance to it but the whole story is somewhat more subtle and interesting than mere corporate infighting.

 

The first thing to understand is the Trump shtick. The innovation lies not really what Trump is seeking to do but his method in going about it. Trump offers a variation on the well worn and well known:

 

‘I buy direct, in volume, and pass the savings on to YOU, the customer!’

 

spiel familiar from a thousand adverts and infomercials.

 

It is standard knowledge that Oligarchs buy politicians through donations and influence public opinion directly through investments in the media.

 

General wisdom is that Oligarchs use this method because they are essentially unattractive to the public. Rubbing the public nose in the methods of the Oligarch system won’t go down well in the long run so national politicians and national media operate respectively the HR and PR departments of American Oligarchy Inc.

 

Donald Trump represents a challenge to this way of thinking essentially saying:

 

I can do media as well as anyone; I have my own reality show- ‘The Apprentice’. I am at least as an attractive a public proposition as Jeb Bush et al. And I have got the money so I don’t need to beg anyone for funding. Lets do Direct Oligarch rule and cut out the middleman passing on the savings onto YOU, the customer!’.

 

It is not surprising that this approach resonates with a lot of people In the home of the Infomercial. But you don’t have to think very hard to see it is pretty deadly for media and politicians in general if this kind of thing were to catch on. This is the main motivation for the establishment to go after him. On an instinctive level it’s all about protecting livelihoods.

 

But what is really interesting is how designated driver Megan Kelly decided to go for Trump. The key to Trump is that he says he is the ‘whole package’, but Megyn is here to tell him he isn’t. Because he isn’t a woman. He doesn’t get women. He doesn’t get the post-post war settlement. He doesn’t get Whiteism. Of course it could have been a black or Hispanic journalist telling Trump this stuff on prime time TV, but that might have been just a little too much….

 

In other words, the whole ideological structure- expressing post war Germanic ideas of sexual and racial identity, family life, personal relations and morality that exists alongside basic capitalist economics has to be taken account of. And the priesthood (not in the exclusively male sense of course..) of this religion has to be taken account of and Donald has to bow down.

And this is where we come to the comedy and the tragedy of the matter:

 

Even if Trump wins he loses. Even if he isn’t cowed by Megyn Kelly or any one of ten thousand media/politician types that stand between him and his goal;

 

EVEN IF HE WINS THE PRESIDENCY he STILL loses.

 

Because actual plain vanilla capitalism, based on Economic Rationale, just won’t cut it anymore. Because capitalism is over. That is what Donald Trump and his campaign means.

 

The essence of the Trump campaign is the final triumph of cultural constituencies. Because under Trump capitalism itself is now just another cultural constituency in the United States of Everywhere.

 

Trump can no more apply for the real job of CEO of Americorp Inc than he can run a real recruitment process on his ‘Apprentice’ TV show. It’s not real if Trump is in it. Trump wouldn’t be interested if it was real.

 

Like Mickey Mouse in the Sorcerers Apprentice, Donald Trump is seeking to usurp the magic of the Germanic Cult of Capitalism.

 

He seeks the keys to the Magic Kingdom so that he can bring the savings direct to YOU, the consumer. But just like Mickey he is more likely to bring the whole thing crashing down around your collective heads.

 

Currency Wars or
Bet Your Bottom Dollar

 

For the third day the Peoples Bank Of China is lowering the exchange rate for the Yuan/Renminbi and nobody is sure what exactly it means.

 

It could be that currency wars involving competitive devaluation of national currencies to gain a trading advantage are finally here. After all they have been predicted for long enough. This is the negative interpretation.

 

Or it could be that China is trying to integrate itself into the global system by doing whatever it takes to make the Yuan a free floating potential SDR reserve currency. This is the positive interpretation.

 

But most people seem to agree that nobody knows what the Chinese are up to exactly.

 

Which is frankly, a load of bollocks.

 

The idea that the PBOC is screwing around with the exchange rate without talking to the Fed is ridiculous. And if the exchange rate alteration is such a big shock why no big brouhaha from America over the move?

 

So what is the deal?

 

Well first of all you can bet your bottom dollar that the PBOC has already let the Fed know that it will be devaluing the Yuan on international markets. And in plenty of good time. You can also bet that the PBOC has let the Fed know what the new target value is and what the time frame for achieving this target exchange rate is.

 

It would be hard to explain why China was doing this if its purpose is to gain an advantage in supposed currency wars.

 

So why is China doing this?

 

Well it could be that China is seeking to fully integrate the Yuan into the global system in the near future.

 

But I suspect the fundamental reason for this movement is because China no longer wants to use up large amounts of dollar and dollar denominated reserves in preserving the exchange Yuan/Dollar rate at the previous exchange rate.

 

Especially as it knows that preserving this exchange rate will become increasingly difficult.

 

Why would this be?

Because the Yuan is going come under increasing exchange rate pressure vis-a-vis the Dollar.

 

And why would this be?

 

Because the dollar exchange rate is going up .

 

And why would this be?

 

Because American interest rates are going to rise sometime soon.