Quote notes (#1)

Doug Casey interviewed at The Daily Bell:

Things have seemed to have gotten better in the world over the last few years since they’ve had massive quantitative easing – which is to say currency printing. Sure, if you create trillions of dollars of currency units it makes people feel richer than they really are and it encourages them to continue living above their means. It just guarantees an even worse depression. What’s coming up is going to be the biggest thing in modern history. It’s not just going to be financial and economic. It’s going to be a political, social, and military earthquake, as well.

And:

The 19th century was the most peaceful and prosperous time in the world’s history. And the rate of growth was far higher, and sounder, than it is today, as well. That was largely because the state was a relatively minor influence in society. Inflation didn’t exist because gold was money – gold was the international currency – taxes were extremely low, regulations were low. The answer is to go back to something that actually worked, which was the economic system we used in the 19th century. It wasn’t laissez-faire capitalism, but it was far closer to it than what we have today, which is to say nothing but variations of socialism and fascism.

May 19, 2013admin 50 Comments »
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50 Responses to this entry

  • Handle Says:

    Maybe, maybe not. Here’s the excess reserves earning -1% (!) real rate of return. That – in the accounts of banks that can’t think of anything else to use it for – is where most of the cash-money printing has been tucked away from the global economy, and it’s a gift from banks to the Fed to Treasury to USG of about $20 Billion a year in real terms.

    Of course, that “gift” is repaying the gift of taking bonds and MBS off their books at above market prices. Still, whatever that benefit was, those are “sunk gains”. Cash is only inflationary if it is used for expanding credit or given directly as gifts to consumers, which, currently, it isn’t. Well, except for government-issued student loans, naturally.

    Meanwhile, Actual Broad Money (people, learn about Divisia – that’s how you actually measure money supply, because lots of things are “money-ish”, the market gives you the proper-weightings, so you can just add them all up), has just recently returned to the peak levels of a few years ago and is only growing at a moderate pace – even counting all the cash that’s not doing anything in excess reserves.

    Gold is back to where it was three years ago.

    All of which is to say that I’m skeptical that “money printing” is as big a deal as many in the DEC seem to believe. It seems mostly to have done what it was intended to do – at a significant cost in economic distortions and trust – it saved the current manifestation of the system from going under and taking the rest of the economy with it. That system was and is broken and corrupt, but it’s the rotten ship we’re floating on in the storm until the waters calm and we can disembark and board something better. If we’re not overtaken by other reckonings, which, it seems, we will be.

    [Reply]

    admin Reply:

    If the Austrian-types are wrong about this — and of course, they could be, if reason counts for nothing in economic matters — then Keynes is deeply vindicated, and anyone with intellectual integrity is compelled to become a fascist. Whilst accepting the cosmic possibility of this, I would seek the ruinous comforts of madness (or terminal reality refusal) before bowing the knee to such universe, in which the lies of power are the ultimate foundation of all cooperative activity. (There are subterranean ironies to this speculated defiance, however, which are perhaps not entirely invisible. The option of an evasive madness would be refused, because the idea of anything other than madness would no longer be a tenable one. Maniac authorities would reign without fear of any rejoinder from reality — a ‘cosmos’ worthy of Lovecraft at his bleakest. As for ‘intellectual integrity’ under these circumstances, the raging shattered laughter of the ‘asylum’ begins …)

    [Reply]

    Handle Reply:

    The always extraordinary Interfluidity has a series of posts on opaque finance that generated a lot of interest (more heat than light, alas) and is definitely worth a gander.

    This is the financial facet of that shadow-jewel I called The Darkest Enlightenment – the inescapability of obscure esoteric structure amongst all the temporarily stable systems that frame human relations. “A sort of Phoenician tale” indeed. Perhaps it complements Michel’s Iron Law of Oligarchy and Moldbug’s Conservation of Sovereignty. Handle’s Inevitability of Delusion.

    [Reply]

    admin Reply:

    Deeply dark, indeed. If we explore this path, what remains as a guiding ‘regulative ideal’? Superficially, it looks as if a fissile ultra-nihilism prints out, with all commitments succumbing to utter arbitrariness, splintering along trajectories of whim.

    Vladimir Reply:

    There is also the middle position, which doesn’t fully vindicate the Austrian prophets of doom, but is still even further from vindicating Keynes. It’s the theme on which I’ve been writing a lot lately in various places, including here — namely, the remarkable stability of bureaucratic Brezhnevism. (With an emphasis on the peculiar characteristics of the modern-day Cathedral-run Brezhnevism, which still gets a lot of mileage from tolerating some remaining oases of free innovation and enterprise, and which also lacks destabilizing external examples of clearly superior social orders, and is supported by a propaganda system of unprecedented power and resilience.)

    Even when their criticism of the reigning progressive-Fabian-New Deal-Keynesian-neoliberal tradition in economic theory and practice is spot-on, Austrians have the bad habit of extrapolating this valid criticism into unjustified predictions of some imminent grand catastrophe. The psychological roots of this error are evident: they are rightfully angry at the reigning lies and delusions, and easily succumb to wishful thinking that soon a cataclysmic crash will sweep away the whole rotten, corrupt, and mendacious edifice and prove them right once and for all. Hence they fail to see the other way in which their theory might be correct, i.e. that this reign of mendacity and corruption will lead to a long era of a Brezhnevian sclerosis, in which the society is becoming ever more dysfunctional, mendacious, and ugly as time goes by — but only slowly and gradually, while it’s still able to trudge on indefinitely without any apocalyptic crash putting a sudden end to it.

    So no, it’s certainly not the case that “reason counts for nothing in economic matters” — but it’s also not the case that a major violation of reason necessarily invites the immediate punishment of a decisive crash. Our rulers have certainly been taking us on a path of Rake’s Progress, but it’s a long path where they’re smart enough to avoid a sudden Janis Joplin outcome.

    [Reply]

    admin Reply:

    There’s a lot of wisdom in this, and the psychological insight is especially acute. The most persuasive Austrian comeback, it seems to me, would be to point to the exponential trends registering the financial (and wider economic) system stress. If trend lines are curving upwards like this — with a discernible doubling period — it’s hard not to think that nemesis is something more than a psychological demand, but rather a mathematical necessity. Austrian commentators are united in arguing that government spending and debt levels are not steadily deteriorating, but accelerating into a crisis, whilst democratic shrinking-term pain-aversion politics seems to make deceleration impossible. ‘Austerity’ becomes politically unmanageable before it has even seriously started, and it is only extreme financial repression — holding real interest rates near-zero (or lower), i.e. pure anti-capitalism — that makes things look even imaginably sustainable. The cost of stability under deteriorating conditions is an increase in systemic risk, which suggests that the objective probability of catastrophic nemesis is continually rising.
    None of this is meant to be a dogmatic defense of Austrian catastrophism. It is merely intended to suggest that certain signs of impending crisis are not reducible to psychological or moral fantasy (even when such fantasies reinforce their prominence).
    The underlying argument — or at least one important strand of it — takes us back to the question of State competence. The Brezhnevian prolongation model is quite respectful of State capability, whilst the Austrians tend to see democratic sensitivities disabling government responsiveness, and thus making calamity inescapable. Are our contemporary Western governments best conceived as a metastasizing cancer, or something more like a chronic non-life-threatening disease?

    spandrell Reply:

    I think it’ll be funny to see how NeoBrezhnev is going to deal with the coming famines in Egypt et al. There’s a lot of funny stuff coming on, and USG is overreaching way more than Brezhnev ever did.

    Handle Reply:

    As a random example of what I’ll call, “What is, at bottom, an argument about which sets of social delusions are preferable.” See the latest from Kaus. (By the way, Et Tu Charles Koch? Where will we find our billionaire patron?)

    Anyway, back to Kaus.

    To give low-skilled Americans enough to live on, in other words, Nowrasteh and his allies would rather have low global-market wages + welfare or “transfer payments.’ I’d rather have higher market wages within an enforceable border and no need for welfare or transfers. That’s the debate in a nutshell. I note that it’s very easy for policy planners to ignore the dignity that is lost when a $15/hour job is replaced by an $8 hour job and $7 in transfer payments

    “… the dignity that is lost …

    This “Dignity” is like the Market Monetarist theory of Nominal GDP. It’s an illusion, but one that has real positive motivating effects. Dignity helps make better people, who live the upright lives they want to live, with spillover “neighborhood effects” that benefit the community at large and are hard to capture in direct market transactions.

    Either way, it’s the government making sure you receive more that you’d get in a global free market for your labors – either by acting as the Great Union – reducing incoming supply of labor and goods through low immigration or tariffs and redistributing income to you from consumers, or as the Great Father – Stealing from the evil “rich” and giving you “free” cash and goods and services (which, naturally, shows that it doesn’t trust you to give only cash).

    One delusion is welfare-state entitlement, with its political effects, the other illusion is “dignity” of being made to believe you earned your bread yourself without an equivalent amount of government help.

    I’m with Sailer and Kaus (and, I think, Moldbug). I think subsidizing maximized employment is important (well, for the time being, anyway). I think tight or balanced borders for goods and labor helps achieve that at low social cost. Though, I concede, at high counterfactual cost for prospective immigrants and foreign manufacturers. I care more for my countrymen and the qualities of the neighbors I’ll have to live with, and their children I’ll have to raise my children among, than I do about the interests of those foreigners because I am simply so, so evil. The current structure of taboos allows no other explanation for my preference.

    But I think preserving the delusion of the dignity of self-reliance and not harping on the point, “You know, if you stop and think about it, it’s really all kind of artificial and unearned subsidy too) builds better men for your community.

    So, is it, this contest between us and the Cathedralists, really, in the end, “The Tournament of Illusions?”

    [Reply]

    spandrell Reply:

    Well there’s an epistemological wall that all people crash against, but that doesn’t mean that your beliefs are necessarily illusions. Call it a battle of preconceptions.

    But of course the Cathedral’s preconceptions are patently false, while the DEC’s are yet to be proved so.

    VXXC Reply:

    Dignity is no illusion Dearies.

    Arabs still kill over it. We used to.

    For instance no Dignity; no Patriarchy and so on.

    And Dearies you are all rather too in love with your marvelous Brains.

    We must make allowances that ye are nearly all converted Progs, but be cautious.
    Ye may Drift.

    Nick B. Steves Reply:

    All of which is to say that I’m skeptical that “money printing”…

    Alright Handle. You’re messin’ with the Consensus 😉 Said my piece over at my place.

    As for the larger question of the Necessity of Social Delusions, well… I remain, shall we say, agnostic… about whether they are necessarily necessary or necessarily delusions.

    [Reply]

    Posted on May 19th, 2013 at 5:33 pm Reply | Quote
  • Nicholas MacDonald Says:

    “The 19th century was the most peaceful and prosperous time in the world’s history. And the rate of growth was far higher, and sounder, than it is today, as well. That was largely because the state was a relatively minor influence in society. Inflation didn’t exist because gold was money – gold was the international currency – taxes were extremely low, regulations were low. The answer is to go back to something that actually worked, which was the economic system we used in the 19th century. It wasn’t laissez-faire capitalism, but it was far closer to it than what we have today, which is to say nothing but variations of socialism and fascism.”

    Well, yeah, it was pretty good if you were a white European elite, and after the Napoleonic wars (aka the real First World War), Europe was pretty peaceful. But let’s not forget that the US fought it’s deadliest war in that century. That Euro-Anglo imperialism was raping three continents (when you barely have to pay for your resources, you too can enjoy mega-growth!). That China experienced the megadeath-inflicting Nian and Taiping rebellions. King Leopold’s horror show in the Congo. Overall, it was a far more dismal time than the 20th century to be poor and non-white (or poor and white. And it was certainly a step down from previous centuries for the rich and nonwhite).

    Marx was pretty good at diagnosing what was going wrong; too bad his prescription was worse than the disease. But that doesn’t mean that the 19th century wasn’t horribly diseased, and busily planted the seeds that would explode in the 20th century. Us expats might still wish that we could be Tai-pans sipping our gin and tonic on the Bund (well, heck, we can still do the latter, even on a marketing flak’s salary), but our Chinese neighbors would probably like a word or two with us about that.

    For all it’s ills, I’ll take the Cathedral and the Neoliberal/Keynesian/Globalist order over the murderous, elitist prats that ruled us in those days, but maybe I’m just Scandinavian that way.

    As for laissez-faire capitalism, well, count me in Hayek and Smith’s camp there.

    [Reply]

    admin Reply:

    It was a West-centric observation, definitely. It’s just laziness, but I scarcely ever bother with the Pacific Rim qualifier to the “it’s all going to hell” discussion, because that would just be to change the subject — and our default topic is the Cathedral (i.e our mess). I think your colonialism horror is dialed up several notches too high though — there are plenty of places outside the West (even a majority) that dropped drastically off their established development curves when decolonization got started. I’d recommend testing your priors on the quality of colonial admin — it was generally better than the quality of domestic government in the colonial power (focused on efficient problem solving, with minimal political distraction). Moldbug is an eye-opener on the topic.

    [Reply]

    Posted on May 20th, 2013 at 11:38 am Reply | Quote
  • James Goulding Says:

    Admin,

    There’s a lot of wisdom in this, and the psychological insight is especially acute. The most persuasive Austrian comeback, it seems to me, would be to point to the exponential trends registering the financial (and wider economic) system stress. If trend lines are curving upwards like this — with a discernible doubling period — it’s hard not to think that nemesis is something more than a psychological demand, but rather a mathematical necessity.

    What is your evidence for this claim? I haven’t noticed an exponential trend, or a discernable doubling trend. The stimulus “remedies” may have become relatively large, but this seems to be in keeping with the general increase in size and reach of government, which is not exponential.

    In the 1970s, rampant stagflation was interpreted by many as an empirical refutation of Keynesianism, and in 1974 Hayek won a Nobel Prize for his work on the Austrian business cycle theory. On the eve of Reaganomics, Thatcher slammed down Hayek’s Constitution of Liberty on the table: “This,” she said sternly, “is what we believe.”

    Since then, “New Keynesianism” has replaced the old, flawed iteration, Reagan, Thatcher and Hayek have been and gone, and the (obviously true in substance) Austrian business cycle theory continues to be marginalised by academia. Also note the contradiction between Austrian theory and your claim that economic collapse is a mathematical necessity. Austrians are keen to point out, accurately, that credit cycles and other economic phenomena are not susceptible to (humanly feasible) mathematical prediction, and that the credit cycles we observe are in any case a superposition of numerous smaller cycles.

    Another lacuna in your hypothesis is that the Cathedral can actually benefit from economic quagmire. Economic vitality is power, and it suits established elites to have this develop in squirts rather than floods. That’s why “special economic zones” are never extended to encompass a whole country, despite their evident success.

    *****

    Handle,

    I think there are two issues to entangle in your discussion of darkest enlightenment at Foseti’s. Firstly, the idea that false beliefs are necessary to desirable societies because most humans cannot deal effectively with many unpleasant truths. Secondly, a more technical point about Schelling points and law, which implies that even a society of hyper-rationalists needs must habitually resort to falsehoods and circumlocution.

    On the former point, you may find The Evolution of Morality by Richard Joyce interesting. He argues for “moral fictionalism”, i.e. judicious circulation of socially useful but false ethical beliefs.

    The latter point is dissonant with the Moldbuggian creed of “formalism”, i.e. the idea that power relations should be accurately recorded in law and officially recognised political structures. The darkest enlightenment perspective is that formalism is a chimera, because in the act of recording and enshrining existing power relations one transforms them, perhaps in radical ways.

    However, there is a balance to be struck. We want, e.g., a meaningful constitution, whose language is interpreted in a fairly straightforward, literal sense. A step towards this might be recognition of the fact that our existing constitution is not very meaningful. We would, however, prefer “What does the constitution say about X?” to continue to act as a Schelling fence, which cannot be dismissed on the formalist grounds that judges do, in fact, have power to interpret this document in fantastic ways. It seems to me that the more dishonest the polity and crude the system of law, the more dangerous become steps towards formalism.

    This is the kind of coercive, game theoretic problem that I would like crowdfunded researchers to examine at some point. This scene from The Maltese Falcon, in which Bogart skillfully “formalises” elements of a fragile power balance in order to manipulate it in a desirable direction, suggests that radical dishonesty and rank metaphysics aren’t the only plausible solution to such problems.

    <a href="Where will we find our billionaire patron?"

    If the Koch brothers were to fund Reactionary research, they would severely endanger their status. There is a sufficiently broad power base and niche to support high-status funding of a watered down Tea Party, but not black enlightenment coffee.

    [Reply]

    admin Reply:

    Wikipedia provides these data. I won’t critique them from an Austrian PoV (although I think they greatly understate the true extent of USG liabilities), because even as they are, the pattern is pretty clear: a long-term trend to exponential debt-growth, complicated by long waves (especially the two World Wars), but unmistakably on an upward course since the beginning of the 19th century. In the current upswing, since the mid-1990s, the debt to GDP ration has increased from 32.5% to 99.6% (calculated with extreme conservatism). Before Lincoln’s anti-secession war, it was close to zero.

    For Austrian catastrophists, the crucial modern point is that the post-WWII debt reduction occurred under very different conditions — without a welfare state, and without economic exit within a globalized economy. Neither popular pressure, nor capital flight (from financial repression) were factors of comparable importance. As we have seen, similar sharp debt-reductions are politically impossible today, when a reduction in accelerating debt is perceived as harsh austerity.

    “Another lacuna in your hypothesis is that the Cathedral can actually benefit from economic quagmire.” — but a quagmire is a type of equilibrium, so unless the first point goes through, ‘quagmire’ remains an obtainable goal for a system undergoing critical deterioration.

    Mathematical necessity is not mathematical predictability. A system can be destined to collapse, without this inevitability yielding useful dates, or even exploitable investment opportunities. As Handle pointed out on an earlier occasion, even a weak version of the Efficient Markets Hypothesis makes the idea of exploitable predictions incredible. Nevertheless, Herbert Stein’s Law holds: “If something cannot go on forever, it will stop.”

    [Reply]

    Handle Reply:

    Superb James. I’ve browsed “The Evolution of Morality”, but perhaps I should take a deeper second look. I came to some of the same conclusions myself through some Evo-Psych socio-biological thought-experiment speculations, and when writing to a friend about it, he said it sounded like what was already in the book. My Owl of Minerva flies past curfew, apparently.

    The outline is simple. Start with primitive humans living in small groups at about the Dunbar number. There should be huge individual gains to both intelligence and rationality in the Machiavellian Chess-Player Maximizie Self-Interest uber alles sense of things. But if everyone is Machiavellian, you get social coordination problems like the tragedy of the commons and a dozen other multi-player, iterated game-theory problems.

    So nature has no choice, she had to make us at least a little bit individually irrational in a variety of ways. We call these Evolutionary Environment of Adapatedness Irrationalities “Moral Instincts” or “Common Sense Morality”. Just like a worker ant has absolutely zero self-interest when it comes to defending the colony. So humans are 80% Machiavellian lone wolf and 20% ant (made up numbers, obviously).

    My guess is that the longer your ancestors have been civilized and “optimizing for civilization” (that is “optimizing for the ant-colony” or “optimizing for Marx”), the more of this you’ve got. So some humans at 10%/90% ant/wolf, and others are 30/70. My guess is that this correlated strongly with intelligence, the r/K procreation model axis, and the paleo-diet / grain-diet axis.

    Anyway, we’ve got to live with the mix of humans we have now and all their dispositions and the frameworks of ideas they require to be motivated toward whatever Telos we happen to settle upon. I’ve got a theory for what that Telos could be too, but, some other time perhaps.

    … or maybe I’ll give a little preview. Here’s another “Darkest” thought for everybody. I’ve been thinking about Land’s “Optimize for Intelligence” teleology. Now, the obvious question, I think it was “RS” at Foseti’s making the implicit challenge, is “Why Intelligence?”

    Well, what is “Intelligence”, an end, or a means? Both. It is something with option value (in finance terms), and so it has value in the execution of its function, and value in itself as (in military terms) a capacity or capability or room-for-maneuver or strengthened-position.

    That is to say, Intelligence is just an element in a set of a class we can name “Power”.

    And “optimizing for power” as an end in itself the accomplishment for which one should unleash one’s will is … exactly the same way that others emerged from the Abyss of Nihilism starting about a hundred years ago.

    They were the Fascists.

    [Reply]

    James Goulding Reply:

    They were the Fascists.

    New game: darker than thou. Who can furnish the least palatable argument, consistent with plausible and non-sophistic reasoning?

    My guess is that the longer your ancestors have been civilized and “optimizing for civilization” (that is “optimizing for the ant-colony” or “optimizing for Marx”), the more of this you’ve got. So some humans at 10%/90% ant/wolf, and others are 30/70. My guess is that this correlated strongly with intelligence, the r/K procreation model axis, and the paleo-diet / grain-diet axis.

    I agree with the rest of your hypothesis, and second your friend’s comments. However, although it is very interesting I disagree with the above claim.

    Firstly, it seems to me that some of the most fecund and successful people in civilisation are less ant-ish than our tribal ancestors. Apart from anonymity, lack of iteration and generally transformed game theory, many kinds of good behaviour and reciprocation are coerced by law in civilisation, so emotions (which, as Haidt and Joyce reveal, are closely related to morality) that allow us to credibly pre-commit to reciprocation are redundant.

    Secondly, my perception is that Machiavellian individuals tend to be highly intelligent. This is probably not due to a diminished capacity for moral reasoning and moral urges, but an enhanced ability to see through and overcome these. In fact, I have a heuristic—the Lenin-Flanders heuristic—which predicts (somewhat crudely) political phenomena according to a model in which powerful people are amoral Machiavellian power-maximisers, and everyone else tends to obey socially recognised moral laws.

    This may not be strictly inconsistent with the above quoted excerpt, but doesn’t sit well with this:

    Anyway, we’ve got to live with the mix of humans we have now and all their dispositions

    Since there is, in any case, a large difference between the “innate” moral dispositions of our mix of humans and their eventual behaviour. And I suggest that the highly intelligent humans are the ones we particularly need to understand and, in a sense, control.

    [Reply]

    Posted on May 20th, 2013 at 2:02 pm Reply | Quote
  • vimothy Says:

    Question for Admin and anyone who thinks that the Fed’s “money printing” is about to cause some kind of economic conflagration: Exactly how big should its balance sheet be?

    [Reply]

    Handle Reply:

    I’ll ask a more pointed question, where’s my hyperinflation? When is it supposed to happen? Why hasn’t it happened yet? What was the fundamental error is the implicit models of all those “Internet Austrians” who predicted imminent radical debasement?

    In the BBC today they fall over themselves trying to explain the non-warming while preserving the apocalypse. This, plus Climate-gate, leads one to think, “Hmm … there’s obviously something very, very wrong with the model they were using to predict apocalypse. Their desperate attempts to salvage it in the face of non-apocalypse, as opposed to a simply honest confession, seem awfully results-motivated and suspect.”

    An Austrian monetary theory, if it’s worth anything, should be able to 1. accurately forecast monetary phenomenon, and 2. the way it accomplishes those accurate forecasts should be widely understood by those that call themselves “Austrians” in more than a folk-affiliation manner – that is, the content of that prediction function would be understood to be Austrianism.

    What I remember from 2008-2011 was a lot of hysterical panic and alarmism predicting an impending Zimbabwe-ization of the dollar / other hard currencies. Which didn’t come to pass, and there is no evidence, as I understand it, to suggest that it will come to pass in the next few years either.

    Were the “real Austrians” cooler heads of more reasonable disposition who simple neglected to police their own self-certified adherents. Or is there something wrong at bottom with it? There is plenty wrong with New-Keynesianism too, of course. And yet it moves.

    [Reply]

    admin Reply:

    This is complicated, and needs a serious discussion-sequence, with a focused main post as a minimum. Of all the engrossing Dark Enlightenment thought-processes underway at the moment, it’s probably the one that occupies central position for me. A superficial place-holder:

    According to Austrian monetary theory, an expansion of the money supply is not a trigger for inflation, it is inflation. But what is the money supply? As fascist-phase capitalism evolves, this question becomes ever more taxing. For sure, whatever it is that central banks are printing, it is only one component of the total monetary base, modified additively by increasingly arcane forms of credit, and multiplicatively by monetary velocity. Austrians, monetarists — even Keynesians — can probably agree that if massive money printing doesn’t produce (or find expression in) runaway inflation, there has to be a compensatory process, something that generates a flight into money, roughly balancing the flight out of it. If we can accept that money-printing is, definitionally, debasement, how do we label the complementary trend? Once again, I think broad economic consensus is achievable if we conceive it as a rising appetite for security, or risk-aversion. Demand for fiat-denominated assets is the pure political-economic testimony of belief in the State, embraced as a refuge against catastrophe. Hyper-inflation is buried in fascist religion.

    For the Keynesians, this is quite wonderful, and exactly as things should be. They are extremely lucid on the subject — there will be no hyper-inflation for as long as we truly believe in the State. In this respect, Japan is an even better example than the United States. The country’s colossal implicit inflation, or latent hyper-inflation, is compensated by a seemingly limitless popular confidence in the credibility of its government, allowing 1,000,000,000,000,000 yen to be frozen in public liabilities. When a people is prepared to do this, storing financial promises in government bonds, with velocity near absolute zero, the discretion of the money-printers rises proportionately. Inflation is sublimated into Statism, on a hyperbolic trend to infinite devotion. This is how the end game is structured …

    ADDED: This crude little model is linking up with the Handle-Goulding hypothesis from the other side, bonded to it by the arithmetic of zero. An exponential or even hyperbolic deterioration trend is indefinitely sustainable, as long as zero (or an infinitesimal, close approximation) serves as its reciprocal. Concretely, ZIRP is transformed from a managerial tactic into an irremovable axiom, since departure from zero produces spontaneous positive expression of the monetary aggregate, in an explosion that is immediately hyper-inflationary. The longer ZIRP — or absolute State-credit monetary immobilization — is allowed to permit the continuation of the trend, the more impossible it is that it could ever be ‘unwound’. The system can’t be unfrozen without infinity spilling out.

    Of course, interest rates and monetary velocity aren’t supposed to be coupled like this — ZIRP is defended as a stimulus to MV. If there’s a fact to be extracted from the Japanese and American experience, however, it’s surely that financial repression is a reliable monetary decelerator. The people queue up to be cryogenized. According to all orthodox economic thinking, this is highly paradoxical. It’s weird enough to provide a theoretical clue …

    [Reply]

    Handle Reply:

    So … this could be a long discussion. Not the best place to put out my own monetary theory.

    I will put my cards on the table and say that I think that having different definitions of “inflation” in different economic perspectives is unhelpful. 99% of the world understands “inflation” as having something to do with “the increase over time of the average price-level of marketables denominated in a currency”. 1% (if that) means “expansion of the formal, explicit liabilities in the ledger book of the central bank, regardless of anything else that happens, or that market actors experience, in the real economy”. This should be called what it is, “Expansion”. The concepts are very different and deserve different markers, and I surrender to the pragmatism of interfluency.

    To say that “expansion will lead to expansion” is an evasion of the problem, and that’s not what people were screaming from the rooftops. They were saying “expansion leads to inflation … and a lot of it .. and any minute now!” They didn’t say, “Unless, you know, there’s a lot of liquidity and safety preference and faith in the state, in which case, the status quo goes on, more or less. Until, one day, eventually, interest rates rise and this all comes back to haunt us.” That’s Kling’s position. I share that concern.

    Maybe that’s the simple error that needs to be confessed. “We thought people would lose confidence, but they didn’t. I concede, we’re not able to forecast confidence, and if that’s such an important variable in our prediction models, then we don’t have Austrian prediction models.” But, so far, the TIPS-spread market has been doing an decent job estimating short-term inflation, so somebody’s got a decent prediction model. So, if one can’t predict when the lunar eclipses occur with one’s own theory, but someone else can, then what should one conclude?

    Now, measuring “the price level” is fraught with pitfalls and intractable philosophical dilemmas, but, I’d argue, so is a myopic focus on the pure monetary base, because of the “money-ish” character of so many other financial instruments in the marketplace. That’s why I am persuaded that the market-determined Divisia-M4 optimal-weighted-aggregation is the least-worst way to measure the whole picture. What that shows is a collapse in the “market-money-supply” that the Fed’s expansion sought to reverse. That is, vs pre-2008 trends and expectations, money suddenly became very, very tight, and the Fed compensated in extraordinary and unconventional and certainly corrupt and illegal ways to balance this collapse (though ‘illegal’ and ‘wrong’ or ‘imprudent’ have no relation in this context).

    This model of what happened is most definitely not the narrative that is spread around the DEC. It’s more the Market-Monetarist perspective like that help by Scott Sumner. I don’t see eye-to-eye with Sumner on a lot of things, but I’m persuaded his core model is imperfect but good, and more to the point, consistent with some Austrian thoughts on Monetarism (Hayek, for example, said some positive things about stable NGDP paths). Alas, it is not consistent with almost 98% of what people are calling “Austrian” Monetarism on the internet.

    If the Austrians and Paul Krugman had placed public bets on the future price-levels in 2008, Paul Krugman would have won. He did win. He crows about it constantly. That’s embarrassing. It’s time for a new take on Austrian Monetarism.

    vimothy Reply:

    The problem with Austrian predictions of hyperinflation on the basis
    of the Bernanke’s (and other CBers) money printing ways is that they
    fundamentally misunderstand basic principles of central banking,
    banking and financial accounting.

    When an economic entity, like a bank or a corporation, wants to
    acquire assets, it finances this programme by issuing liabilities. To
    reiterate, any exxpansion of the asset side of an entity’s balance
    sheet /necessitates/ an expansion of the liability side. That’s just
    the inescapable logic of double entry bookkeeping.

    So that’s common to all economic entities. But banks, and in
    particular central banks, are special. A central bank’s liabilities
    /are money/. That’s what money (outside money) is: central bank
    liabilities. So that if the central bank wants to use its balance
    sheet to support particular asset markets, or particular financial
    institutions, then an expansion of the (outside) money supply
    (i.e. the reserve balances held by financial institutions at the Fed)
    follows as a logical consequence.

    Okay, but maybe those higher reserve balances are themselves
    inflationary. They might be in some contexts, but at the zero lower
    bound, by definition reserves and t-bills are functional
    equivalents. So any hyper-inflationary would have to explain what
    makes reserves more inflationary than t-bills, even though they are
    basically identical in all relevant respects.

    [Reply]

    admin Reply:

    You just love that sweet fiat!
    Everybody’s limbering up for a serious onslaught on this topic — within two days — (kind of) promise.

    vimothy Reply:

    Sorry — that was a rushed explanation. But I’m sharpening my blades in anticipation …

    vimothy Reply:

    Maybe I can phrase my objection a bit more crisply. A central bank is
    an institution that manipulates an interest rate on very short term
    interbank loans, and it does this by buying and selling treasury
    paper. When that interest rate is at zero, which for all intents and
    purposes it is today, money and treasury paper become equivalent. They
    are the same thing: a government liability that pays no interest. Therefore,
    when the Fed buys a bunch of tbills, expanding the money supply, it’s
    effect is precisely nothing, because it has swapped one asset for another
    that is equivalent, because the interest rate is at the zero lower bound.

    Any explanation of the hyper-inflationary consequences of this course
    of action, then, needs to spell out what it is actually going on at
    the zero lower bound that makes this story wrong.

    Nick B. Steves Reply:

    Expansion of the money supply always goes somewhere, i.e., it is always inflationary in some asset class. So it doesn’t go into consumer prices? So what?? It went somewhere. Nothing violates the laws of physics.

    Currently all the QE is propping up housing, equities, and (the 8 hundred quadrillion pound gorilla) US treasury debt. This money has to eventually leak out into people’s perceived wealth, i.e., bid up consumer prices, or it has to be withdrawn taking us back to a crash in housing, equities and the 8 quadrillion pound gorilla. I personally think the Fed will act to defend the US dollar, even if America goes Mad Max. So I happen to agree with the deflationists and disagree with the hyperinflationists. Hyperinflation will kill the US Reserve currency status. Deflation, even with ghettos aflame and dead bodies on suburban streets, will not.

    Why the hell I’m holding so much gold right now, I do not know!!

    But it is simply inarguable that QE causes market distortions, distortions that wouldn’t exist, or would be quickly corrected by natural market forces, if the Fed wasn’t putting its thumb on the scale to begin with. Interest rates are (and only are) the price, a fundamental market signal, of money. And price controls never work very well or for very long… although they can work longer than I can stay solvent.

    Posted on May 20th, 2013 at 5:20 pm Reply | Quote
  • vimothy Says:

    Expansion of the money supply always goes somewhere, i.e., it is always inflationary in some asset class.

    I don’t follow you. If you mean that when the central bank issues money to finance the acquisition of some asset, the marginal effect on the price of that asset is to raise it–sure. I don’t think that anyone would disagree with that, but I don’t see why anyone would necessarily care. It’s not the same as inflation, though, which is the trend in the level of *all* prices. Movements in the price of individual goods or assets are relative of real price changes.

    It seems that (some) Austrians say that money printing will cause hyperinflation. When pressed, they claim that money printing and inflation or hyperinflation are one and the same thing. That’s when the rest of us lose interest. To me, hyperinflation is when inflation (defined as the proportionate growth rate of the price level) goes exponential. If you translate “money printing will cause hyperinflation,” not as “money printing will cause exponential rates of inflation,” but rather, “money printing is the same as money printing,” then I agree, but it’s not a very interesting proposition.

    [Reply]

    Nick B. Steves Reply:

    It’s not the same as inflation, though, which is the trend in the level of *all* prices.

    No. “Inflation” as popularly understood, and as Handle wants us to accept, is a rise in consumer prices. I suppose that CPI tries to account for rent equivalents, e.g., housing bubbles, but it utterly fails to take account of equities and debt markets–the latter certainly a massive bubble. I’m not sure how well it takes into account higher education (massive bubble), healthcare (massive bubble).

    The point is that it will cause a market distortion somewhere. By definition, the money printer benefits some market actors at the expense of some other market actors—in this case debtors over savers. But money printing always benefits the earliest holders over the later by way of seignorage.

    Aggregates such as CPI and GDP (and NFP, etc. remember: all large calculations are wrong) are simply clever ways to hide the invisible thumb of the Fed. So to me, it is a simple question of justice: Who? Whom? And my take on it is: TBTF banks are the who. And the whom is everybody else.

    [Reply]

    Nick B. Steves Reply:

    And actually in a housing bubble, rents are suppressed… which is pretty much the definition of a housing bubble. Does Core CPI account for that?

    [Reply]

    vimothy Reply:

    A non-Austrian economist’s definition of inflation is the
    proportionate growth rate of the price level. The CPI and the RPI are
    *measures* — highly imperfect measures, from a theoretical point of
    view — of that growth rate.

    The point is that it will cause a market distortion somewhere. By
    definition, the money printer benefits some market actors at the
    expense of some other market actors—in this case debtors over
    savers.

    In what sense? If money printing causes inflation, and the inflation
    is unanticipated and so not priced in by market participants, then
    there will be a redistribution of wealth. However, if there’s no
    inflation, then none of that matters. So, will there be inflation? In
    particular, *why* will there be inflation, given that we are in a
    place (the ZLB) where the central bank’s actions are limited to swapping
    one type of asset for another completely equivalent type of asset?

    But money printing always benefits the earliest holders over the later
    by way of seignorage.

    I don’t see how. If anything, the opposite is true. The longer I hold
    a dollar, the more I stand to lose from inflation.

    [Reply]

    admin Reply:

    “… the central bank’s actions are limited to swapping one type of asset for another completely equivalent type of asset” — according to your analysis, why are they doing this?

    Nick B. Steves Reply:

    Vimothy, I seem to recall talking past each other in the past. It seems to be happening again.

    If money printing causes inflation, and the inflation is unanticipated and so not priced in by market participants, then there will be a redistribution of wealth. However, if there’s no inflation, then none of that matters. So, will there be inflation? In particular, *why* will there be inflation, given that we are in a place (the ZLB) where the central bank’s actions are limited to swapping one type of asset for another completely equivalent type of asset?

    But there will be “inflation”…. in the price of a particular type of asset. Just because the CPI doesn’t measure it, doesn’t mean it isn’t there. Look at the chart of the 10 yr treasury yield for 50 years. Are you telling me there are no losers with that? Are you telling me that that behavior is merely a random walk driven naturally by more or less rational speculators? Are you telling me that a 2% gross yield (net near 0% of inflation) is attractive for a TEN YEAR horizon? No. No. And No. A big bettor came into the casino who happens to own a money printing press. Pension funds, retirees, lotsa ordinary people lose. Suckahs!

    The longer I hold a dollar, the more I stand to lose from inflation.

    Right. And that’s why you don’t want to be holding it down the line. And that’s why there’s seignorage. Obviously, as long as the TBTF banks bury the cash in their back yard (to shore up their books) it doesn’t affect the consumer price level. But as soon as they unleash it, i.e., loan it out, it will… and you won’t wanna be the dude holding the dollar last. So maybe The Bernanke takes it back and it never gets released… okay… but then we’re back in Sept 2008 and the spring gets back to unwinding.

    There may of course be better and worse ways to unwind unsustainable (i.e., financially unproductive) debt. But no one seems to even want it to unwind… even slowly.

    vimothy Reply:

    according to your analysis, why are they doing this?

    The problem that the central banks have is that they don’t really know
    how to do anything else. It’s also not that easy for central banks to
    do anything else, even if they had a lot of great ideas. A central bank,
    after all, is just a bank. It can purchase other assets (aka “quantitative
    easing”), but no one has a good theory of why this should work, and,
    in any case, it hasn’t worked.

    vimothy Reply:

    Nick, I’m afraid that’s just how it goes in cyber-space.

    There is no such thing as inflation in the price of a single good or
    asset. That’s not inflation. If the CB raises the price of some bond,
    say, that isn’t inflation. It’s not inflation if JP Morgan does it
    either. We’re talking about trends in the level of *all* prices.

    Look at the chart of the 10 yr treasury yield for 50 years. Are
    you telling me there are no losers with that?

    I’m sure I wouldn’t know. What I /am/ telling you is that the quantity
    of reserve balances issued by the Fed is irrelevant as far as
    inflation goes at the zero lower bound.

    And that’s why you don’t want to be holding it down the line

    I don’t see how that follows. If I was deciding whether to go long or
    short the dollar, inflation wouldn’t really be a huge issue. If I
    thought that there will be a hyper-inflationary event in the US in the
    near future, I’m sure that it would be, but I don’t. In general, as
    long as inflation turns out to be roughly what you expect it to be,
    then it shouldn’t matter, because you can price it into whatever you
    are doing.

    Nick B. Steves Reply:

    We’re talking about trends in the level of *all* prices.

    Yes. And it is EXTREMELY convenient for the Central Banks and Primary Dealers that certain prices do not go into that equation, because if they did, the net GDP gain due to money printing would be (definitionally) zero and the fraud would be exposed in precise accounting terms for what it is.

    You cannot get growth by printing money, and anyone who says you can is a Charlatan or deluded but honest believer in Charlatanism. Which is why macroeconomics is charlatanism.

    So if you don’t want to call the trend in the level of *ALL* prices “inflation”, what do you want to call it? Isn’t it interesting that there is no word in English for it? Do you think that is an accident? Our cultural masters taught us to equate inflation of the money supply with a general rise in consumer prices. It was a very neat trick. And now we don’t have a word for what used to be called inflation.

    Posted on May 21st, 2013 at 7:30 pm Reply | Quote
  • RS Says:

    > And “optimizing for power” as an end in itself the accomplishment for which one should unleash one’s will is … exactly the same way that others emerged from the Abyss of Nihilism starting about a hundred years ago. &&They were the Fascists.

    Sure.

    I’m a hellenic eudaimonist, I (flatter myself that I) like increases in power, intelligence, beauty . . . not mere increases in pleasure. I concluded a few years ago that the fascists were also basically hellenic eudaimonists, drawing mainly on Stirner and Nietzsche — same Nietzsche I’ve been basting in since 1999. Read him, contemplate him is by far the one thing I’ve done most.

    I characterize fascism as hysterical hellenism/ classicsm/ eudaimonism/ virtuism.

    The only solution is to just not be hysterical. Nietzsche came up a little short there. The classical mediterranean he adored had the ideal of the golden mean. And it had the ‘halcyon’ element of human nature. Arguably a lot more than he did. The basic answer is right there on page ten or so of Thucydides, when the Athenian emissaries said, the best is he who can recognize that might ‘sort of’ makes right, you can’t pity everyone, and that the very spirit of life is lust for further power, glory, beauty — while also paying a deal more attention to justice than he is strictly compelled to. This is an ‘arbitrary’, unphilosophic path to take ; intuitional, irradical, and not really ‘justifiable’. We just know it’s best for our nature, and we just know it’s the sane path between the value nihilism of infinite holier’n-thou pity-piety correctly diagnosed by Stirner and Nietzsche — which suffocating treacle we now swim through as our native matrix (I was born SWPL and used to spew the stuff) — and the moral nihilism of the fascists they inspired.

    ‘Just do it.’

    > I’ll ask a more pointed question, where’s my hyperinflation? When is it supposed to happen? Why hasn’t it happened yet? What was the fundamental error is the implicit models of all those “Internet Austrians” who predicted imminent radical debasement?

    I dunno. I’m not well-informed about these things, so my efforts to follow high-flown work on the subject don’t really pay off that well. So I mostly just follow Jim: just look at real consumption. Meat. Miles driven. Cars per head. They look bad. They are pretty linear-ish I guess ; you don’t see vertiginous lurching. But it’s not hard to see that it looks bad. I would emphasize that private cars are largely a means of production not consumption. When you see the means of production contracting, its like, whoa, that’s obviously going to have knock-on effects, even though the people who have lost car ownership so far are surely not very productive. What about the next batch of people to lose their cars? And the next? This cannot go on particularly long.

    [Reply]

    Posted on May 21st, 2013 at 9:24 pm Reply | Quote
  • RS Says:

    > The longer ZIRP — or absolute State-credit monetary immobilization — is allowed to permit the continuation of the trend, the more impossible it is that it could ever be ‘unwound’. The system can’t be unfrozen without infinity spilling out.

    Sure, Kyle Bass is always saying this. It’s locked in, setting aside nugatory or symbolic increases of no true relevance. And I’d be the last one to understand how much and how exactly the central bank interest rates alter/delimit rates in the real economy, but I think Bass suggests, if I understand him, that you can’t really get investment and growth if you can’t get interest on capital. –I gather this has to do with what you and Handle mean when you discuss all the infinite fresh dollars being parked in ~zero-return assets rather abstract in nature. I can see why you might describe this as unbounded fascist self-worship by the power structure.

    Someone as dumb as me will just have to wait and see. Maybe meat and cars /head have declined only pro tem — because there is a new batch of zero marginal product workers, or something. In that case, maybe the curves will go flat again for some period. Or even up. Scenario Vladimir. If they just keep sagging and sagging, I am going to keep increasing my attention towards plans A thru E3 for preserving my sweet hide in a Weimar/ end-USSR type scenario, or, less likely, something even worse.

    [Reply]

    Posted on May 21st, 2013 at 9:56 pm Reply | Quote
  • RS Says:

    > Currently all the QE is propping up housing, equities, and (the 8 hundred quadrillion pound gorilla) US treasury debt. This money has to eventually leak out into people’s perceived wealth, i.e., bid up consumer prices, or it has to be withdrawn taking us back to a crash in housing, equities and the 8 quadrillion pound gorilla.

    Well what if Handle is right, the ‘real’ money supply had contracted, and they had to print — and what if they just stop printing now? Can they?

    What does it mean to ‘withdraw’ the QE money, as opposed to just ceasing to create more of it?

    Suppose they stop, and housing just goes flat, equities (does that largely mean stocks?) just go flat, GDP/head just stays flat-ish. Could we then ‘merely’ balance the fiscal deficit, and live stagnantly ever after? Or do you instead contend that we must keep printing just to keep housing and stocks flat?

    Perhaps ‘flat’ would be an interesting model for those more sophisticated than I. Nevermind growth, what are the requirements for just being flat, per capita? One might ignore, for the nonce, dysgenesis and such like.

    [Reply]

    RS Reply:

    > higher education (massive bubble), healthcare (massive bubble).

    I’ll expand my question a little. What if those two things just stop happening? Would that be — OK, in the larger picture? It seems to me it would be OK per se.

    I know a lot of bio/medicine ; I feel I can vouch for the Robin Hanson view that — probably — we get very little on the margin for the recent spending increases there. Though some of it is caused by demographic aging of affluent subpopulations.

    [Reply]

    Nick B. Steves Reply:

    Japan’s got a lot more experience with that than us… balancing a dying economy on the edge of the abyss. But I don’t think the American people are going to go so willingly to the financial slaughterhouse as the Japs. We won’t, I think, have 20 yrs of stagnation.

    Handle is definitely right that the money supply contracted. That is what happens when bad debts are liquidated (at below face value). It used to happen ALL THE FREAKIN’ TIME in what people, in saner times, used to call “panics”… but now My God if that happens it’s the end of the world. People should take their lumps and whatever they have left and turn it toward more productive utility. But the forces of heaven and hell colluded in 2008 (Bush, Pelosi, Reid, and McCain, Paulson, and Bernanke) to prevent that unwinding… and new bosses same as the old bosses doing the same damn thing.

    And mark my words it does not end well. But when it ends is anybody’s guess.

    What if those two things just stop happening? Would that be — OK, in the larger picture? It seems to me it would be OK per se.

    You mean stopping the education and healthcare bubbles? Well sure. It would be better than okay.

    I think the health care bubble is fueled by two additional things on the cost side: 1) pharmaceuticals play an ever bigger role; and 2) at a diminishing cost/benefit. The biggest problem is the insurance model… which we just recently enshrined into law in the States. Insurance is supposed to be a bet you hope you lose.

    [Reply]

    Posted on May 21st, 2013 at 10:30 pm Reply | Quote
  • On shits and fans | Bloody shovel Says:

    […] an interesting discussion at our dear friends at Outside In precisely on the topic of collapse. Mr. Land has a very low opinion on the Cathedral’s […]

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  • VXXC Says:

    @vimothy— hold the gold.

    HOLD IT

    [Reply]

    Posted on May 23rd, 2013 at 11:07 am Reply | Quote
  • VXXC Says:

    ZIRP for MBS et al is not “money”. Or it’s not intended to be, it’s intended as a debt sponge.

    It soaks up the debt, the debt is sterilized. It never happened.

    That seems to be the plan. Basically a complicated Jubilee. But for bankers not GenPop.

    I agree that it’s actually money and going somewhere, it will probably leak or pour into the system with disastrous consequences. It’s fantastically arrogant to think you could create Quadrillions to no effect because of the power of Marvelous Brains.

    Your inflation can be discovered at the Supermarket. It’s not just Jim, it’s Schiff and others. If you index food alone, Big Macs or not you see it. If you shop you see it.

    If you eat at the Faculty Canteen you ask: Where’s my Hyper-Inflation?

    Hold the Gold.
    Hold Silver.
    Above all hold Lead.

    [Reply]

    vimothy Reply:

    Let’s step bank from central banks for a second. When a bank expands its balance sheet, creating inside money — i.e., money in the broader sense, i.e., “fiduciary media,” in Austrian terms — is that inflationary? Necessarily inflationary? Why, or why not?

    [Reply]

    admin Reply:

    If this expansion takes place faster than the general rate of production growth, then (in Austrian terms) it has to be inflationary unless money preference (the reciprocal of monetary velocity) rises proportionately. Necessity runs all the way through.
    If this isn’t tautological, why isn’t it?

    [Reply]

    JC Hewitt Reply:

    ‘Inflation’ per Mises is not the same thing as the modern definition of ‘inflationary.’ There is no such thing as a ‘general increase in prices’ unless you arbitrarily define which prices you believe constitute ‘general.’

    This is his definition from Human Action: “In theoretical investigation there is only one meaning that can rationally be attached to the expression Inflation: an increase in the quantity of money (in the broader sense of the term, so as to include fiduciary media as well), that is not offset by a corresponding increase in the need for money (again in the broader sense of the term), so that a fall in the objective exchange-value of money must occur. Again, Deflation (or Restriction, or Contraction) signifies: a diminution of the quantity of money (in the broader sense) which is not offset by a corresponding diminution of the demand for money (in the broader sense), so that an increase in the objective exchange-value of money must occur.”

    There’s no controversy or confusion if you’ve the proper understanding of inflation, there’s no ‘egg on your face,’ or anything like that. Using the proper understanding you see odd boosts in the sectors of the economy where new money equivalents are being created to buy up those sectors. Tuition increases abound in higher education, where student loans boost the prices. It’s also not really possible to measure the ‘demand for money’ with precision.

    Inflation channels new money into certain sectors of the economy at a higher rate than to others.

    Prices don’t increase in a magical manner in lockstep with one another. If you’re using an invalid word that rests on magical thinking in its definition, you’ll be perpetually confused. I’m cribbing from this paper: http://libertarianpapers.org/articles/2009/lp-1-43.pdf

    Posted on May 23rd, 2013 at 11:23 am Reply | Quote
  • VXXC Says:

    Current Hierarchy

    Marvelous Brain Academe Overlords – with psychopathic detachment governance over the governed. They make the decisions. Their qualified because of their Marvelous Brains, and their objective detachment. They are the actual contributors. All the rest are parasites who must be tolerated, as the MB do not wish to muster the will for the horrible logical conclusion.

    Warden – cops, social workers, EMTs, soldiers, teachers who are unfortunate enough to have to interface directly with the governed GenPop, and so on.

    GenPop – the rest of us. We can either be employed at whatever wages to keep us busy and to create the delusion our tiny brains contribute, creating the illusions of worth and dignity. We could either have wealth transferred to us by direct transfer without the phenomenon known as “work”, but that seems to lead us into mischief. So work in exchange for subsistence and sensations of worth and dignity will be created. This may involve a combination of work and direct transfer called “welfare”, as full protected wages would endanger the stock market, MB overlords Hedge Funds, and the rest.

    Mobility in this system is by academic achievement. Hence GenPop and Warden can rise. No point in wasting the material, as noted [really] by Dr. Mengele and others.
    ================================================================
    Yes it is.
    ================================================================
    Proposed modification to Current Hierarchy – known as “Reaction”.

    Marvelous Brain Overlords on Left Side of Office will be replaced and cast DOWN by New Right Side of Office. MB/R shall no longer have to tolerate physical proximity of GENPOPS elevated by race/gender in the office. If fortunate we’ll never see or in particular hear them ever again.

    Wardens remains as are, but with less job protections in exchange for more traditional latitudes in their powers – aka THE LASH and BEATINGS of GENPOP.

    GENPOP will know their place, be told it directly, and be told to stop fornicating and other vices in such an uncontrolled fashion. Their living conditions will be improved by far more work, far less direct transfer, far more Warden control. Sadly the people have been degraded to the point where this is probably necessary.
    ===============================================================
    May I suggest you start thinking about what you’ll offer the Wardens at the very least. Try and understand we come usually from GENPOP. You may also want to consider that being of lesser brains we believed in our Oaths. Ahem. And good morning.

    [Reply]

    Posted on May 23rd, 2013 at 11:57 am Reply | Quote
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