Archive for April, 2010

The Money Field

Special Post today from a guest author, Tom Pawlicki, many may know of him by his work “How to Build a Flying Saucer”. Enjoy the concepts and I look forward to reading your comments.

The April Newsletter is to come out today, so please do register (box to the right) to get your copy.

The Black Hole of Ban King
T. B. Pawlicki

Each value in a free market is determined by all other values. For example, the value of a house is determined by the cost of material, the cost of material is determined by the cost of labor, the cost of labor is determined by the cost of food and rent, and rent is determined by the cost of housing and taxes. Free traders make the best deal they can find. Each deal changes the values of all potential deals so that the flow of money becomes too complex to calculate. Money, therefore, can be represented as random vectors moving like particles of gas in space. The financial field might be considered to evolve like a nebula condenses into a stellar system.

In a primitive economy, such as developed among homesteaders in North America, produce is so labor intensive that profit is unaffordable; traders exchanged the product of their labor for products of equal labor. Without profit, the economy stagnates with the production of daily bread.

An economy gravitates on a profit gradient. Profit accelerates the financial field to definition by social-economic class. An ideally stable and equitable class system is attained when half the population yields half its money to the other half; in turn, half the money of half the profiteers is passed to the other half of its members, and so on, until a few gnomes hold half of all the money, in Swiss vaults. As the membership of each class in succession is reduced by half, the money held by each member is doubled, so that each class has the same economic force and no class has the power to strangle the less endowed. The members of each class can afford to pay double their wages for goods and services from a more privileged class, while receiving goods and services from the less privileged at half-cost; even sharecroppers can afford to yield half their produce. A unified democracy capable of economic and technological development requires such a financial gradient.

Field acceleration, however, accelerates. Artificial value and monopoly steepens profit to a gradient corresponding to the universal inverse-square law governing the spread of radiation; money flows like a gravitic field. However democratic slogans are retained, the social-economic structure becomes a dictatorial plutocracy directing rapid imperial and technological development with the stability of a stellar system.
Driven by profit, a free market can be stabilized at the stellar stage by monetary regulations that eliminate the profit of the monied classes. Central control as advocated by Marx, and taxation for public works and social programs as introduced by Keynes, are good intentions that pave the road to perdition with yellow bricks of gold when purchasing power reverts to the plutocracy before reaching the base of the financial pyramid. The stability of the Ancient Egyptian and Inca Empires indicates that the financial field can be stabilized by replacing the profit motive with religious devotion; all goods and services are the property of the divine regent to distribute from each according to ability to each according to need. Ultimate stability is ideal communism is ideal slavery.

Once profit accelerates the financial field steeper than the universal inverse-square gradient, the economy implodes into a Black Hole of banking, beginning with catastrophic collapses of the financial system, temporarily reversed by expedient wars, inflation, taxation, and draconian monetary controls to prevent the base of the socio-economic pyramid from breaking away into criminal and local principalities such as followed the collapse of Rome and Imperial China. Many political reasons are proclaimed for the collapse of the Soviet Union, but they all amount to loss of the people’s purchasing power for consumer goods and services.

This article is adapted from a comparison of the financial field with physical fields of force in a book of heretical essays planned for electronic publication under the title, SCIENCE IS DECEPTIVE.

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Goldman Case in 7 minutes!

Get a really great understanding of what the SEC case is all about against Goldman Sachs and a hint of why it is such a big deal!

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CHINA bubble economics?

Charlie Rose talks with James Chanos, the man who called the Enron short, is now betting on a Chinese Real Estate bubble bursting bigger than what was experienced in the US.

View the interview here.

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Balance Sheet Recession

What happens when all the businesses in an economy start to reduce debt loads using cashflow at the same time?

According to Richard Koo, this action -> response -> reaction is what the “Great Depression” was all about and that the same factors are at play right now…only this time on a global scale.

Below is an except of his address to the Institute for New Economic Thinking at King’s College, Cambridge. Koo is the world-renowned chief economist of Nomura Research Institute and the author of “The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession”.

For more information see the Institute for New Economic Thinking website.

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Path of tears

The Banking Crisis or Credit Crunch or whatever other euphemism you care to attach to the mess that Wall Street financial houses have brought upon the system is now itself coming into question, the time is long overdue … is there time to change?

More important is there a will to change?

Former regulator William Black spoke with Real News director Paul Jay in these insightful series of interviews.

The banking system has itself become the drain upon the economy that it once purported to build.

There are so many shoes to fall from this crisis that it will be like being inside Imelda Marcos’ closet during an earthquake.

Th steps of proposed reform are beyond the political will of Congress or the Administration … the problem continues to not only fester; it is getting larger.

This “path of tears” will continue to be followed and the next ‘big one’ may be larger than anyone can envision right now.

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