Sunday, June 26, 2016

A Capitalist Economy is a Ponzi Scheme

It might be shocking to learn this if you haven't already worked it through, but as you might imagine the truth about a capitalist economy is that it is really a #CapitalistPonziScheme. I have understood this for years, but didn't write it down because I assumed more people knew it than didn't.

There are others that explain it in specific terms like city growth rate versus property taxes is a Ponzi scheme like Charles Marohn: The Growth Ponzi Scheme, Part 3 .

But essentially a total capitalistic economy is an expanding bag of assets and liabilities. Things and work are monetized, and then traded, and the value is supposed to go up. Fractional banking allows more people to borrow against the same assets and thereby increase the money outstanding. Provided more people are confident that the economic outlook remains positive for them personally, they are willing to sign up for more debt they will transform into work.   That allows the economy to expand and propagate to further people benefiting. Economic laws like supply and demand govern the general application of these transactions.  Of course, the best capitalists are the ones that figure out how to extract all the value and avoid paying for liabilities in order to sustain them personally.  You've probably realized that by yourself, they are the flashy self-important ones that have acquired all that wealth.  But so long as the ones at the top continue to make money available through fractional banking for those at the bottom, and the sentiment to keep investing remains positive, then the system continues.

Here is how it succeeds. So long as the sentiment of the people participating in the scheme is generally positive, then they continue to live by those governing economic rules and the economic assets and liabilities continue to grow over time. Those rules work so long as the wealthiest people and corporations continue to play by the rules of economics.  As long as people are generally treated well, they continue to produce and that leads to growth that increases the amount of assets and liabilities.

This all seems shocking but there's really nothing more complicated than that. It's like a combustion reaction seen above; continue to feed a mixture within the experimentally-proven range of energy and reactants, and they will continue to produce output within that range.  Too much, or too little, and it stops working. As an analogy of course red-ox reactions do not adequately consider all the nonlinear/emotional/actuarial factors of human beings but in essence just consider those second, third, and fourth order effects.

Just like a Ponzi scheme, the system continues to work so long as it is operated properly. It's like solipsism, one can argue till your blue in the face if I'm an illusion or not, but as long as you continue to treat me as if I am a real person things tend to go better for you so long as you follow the rules and assume I exist. When you don't accept it, that's when there's a problem.

Here is when a capitalist Ponzi breaks down. When those that operate at the highest levels of an economy do not follow the expected behaviour, when they take money out of the system or they change the rules to benefit themselves exclusively, then the sentiment of the people changes and they stop producing.  This is seen now when free money is being created with nothing to back it up through quantitative easing and it still hasn't worked. The economy has more money that it ever had and yet it can't sustain growth, how is that possible?  Those in major currency management, like the Fed banks, Bank of Japan, and ECB, have demonstrated they do not understand what they are in charge of if they can't control corporate banks to make the economy work again.    The corporate banks are running amok unchecked and politicians are attempting to white wash the episode and fake it till they make it. That is why the people are not happy and it doesn't matter which people you talk about they are all living under the tyranny of incompetents. This is why desperate people are turning to the most regrettable options.

When the people are unhappy, they stop producing, and the entire system collapses on itself. That is a major problem that, cynically, the wealthiest people plan to avoid by means of their wealth. They can buy there way out of dire situations.

And here is the most ironic point, the wealthiest wealth is meaningless without the sentiment behind it propping it up with work. They will gamble and lose huge portions of imaginary money and still be rich but it's meaningless all the same. Humanity is suffering and will continue to suffer until the system changes back to within experimentally-proven ranges.

Friday, June 24, 2016

So the Americans aren't the only fed-up antiglobalization people...

This is a warning sign for voters in the USA, and especially the ruling plutocrat class.  The people that started the globalization movement - the people of the British Empire and then the people of the American Empire surrogate - are not benefiting enough from continuing the free and "fair" trade treaties with allies and poorer nations. That's basically the truth, it is hard to stay rich when your work can be done cheaper by cheaper workers in cheaper and cheaper nations.

I am reminded of what Adam Smith stated in  The Wealth of Nations:

“The interest of [businessmen] is always in some respects different from, and even opposite to, that of the public ... The proposal of any new law or regulation of commerce which comes from this order ... ought never to be adopted, till after having been long and carefully examined ... with the most suspicious attention. It comes from an order of men ... who have generally an interest to deceive and even oppress the public”

The people are fed up with losing ground, while corporations reap bigger profits. The businessmen eventually lose to the will of the people This sounds doom for complacency and the status quo.

Yet one more reason why Trump will win.

Thursday, June 16, 2016

Certain Words mean Certain Things

It was my august infantry instructor who commanded that we understand what words mean (by august he meant venerable not regal).  After all, you don't want someone setting up an ambush if you said delaying position because that implies two different things. It is important in society to spend as much time understanding the words people use as much as it is to spend time.

His credo was, "certain words mean certain things". I altered that slightly to consider and understand the definitions of words so I can understand better what people meant.

I just wrote a blog post calling Clinton and Obama plutocrats. Here is the wiktionary word definition - not meaning because people can intend many meanings.

plutocrat ‎(plural plutocrats)
Someone who rules by virtue of his or her wealth.

In this revealing article below, it explains why that applies to Democrats;

Thomas Frank on How Democrats Went From Being the ‘Party of the People’ to the Party of Rich Elites Democrats have gone from the party of the New Deal to a party that is defending mass inequality.

Today's Democrats are the party of professional, well-off, elites and not of labor. They went to school and that's how they got ahead. In their mind, everyone should go to school like they did and they will succeed.  Job seekers today know different.  While they intend that everyone can get to the top if they go to school, the reality is they can't all make it. That makes them plutocrats because they believe they got their by earning it in a meritocracy; which in reality was part other factors including luck.   I could have called them oligarchs but that's an even less used term and it makes me sound more gauche and elitist. Nothing is further from the truth.

Now, I don't use big words to demean people that don't know them, this is not an ego trip. I use the words because they fit the pattern and behavior of the person or thing I am commenting on.  I am an INTJ on the Briggs-Meyer test, a mastermind, I describe things accurately to make sense of my world. But I also learn the words. Rather than spending time on emotional reactions, I go and look up the new word people used I don't know and then think carefully about how that applied to the situation at hand.

So go and look up words it's never cheaper and easier at wiktionary. And if you stare at Obama and Clinton long enough, you will not say that annoying person didn't know what he was talking about, you will realize there was a specific reason why that word was used. And whole new worlds will open up to you, as you increase your deeper understanding.

Certain words mean certain things.

Saturday, June 4, 2016

Existentialism and self determination

I was reading Jean-Paul Sartre's "Existence Precedes Essence" and it struck me quite precipitously, where had this philosopher been all my life?

Here was a man, a soldier like myself, one that had lived and learned; and regretted. Here was a war-weary reflector on humanity.   He was not speaking from an airy perch without connection to the mucky ground below. He had pulled himself from the muck and after attaining that perch considered how it was he was fortunate.

After all that he had done; he arrived upon a deep introspective viewpoint on mankind. Man was responsible and accountable to no one or thing other than mankind.

Man is nothing in his dreams. Does he wage war or paint his feelings in reality, it is by his decision alone. There may be probability involved in the outcome but he alone casts the die to start.

The answers do not lie outside oneself in determination.

Quietism as he calls it, is the abrogated  chance to change the outcome.

To accept the rules, to accept the status quo, to stay silent is a decision against one's own best interests. No matter what the reasons behind that decision are. It is acceptance of defeat a priori.

When you die, no one will remember your beautiful corpse. They will reflect on your actions. They will consider your corpus.

Go, there is time. Time enough to vouchsafe a lasting legacy.