Sunday, March 5, 2017

Wednesday, April 15, 2015

Necessary and Proper Category Logic__Cultures’ Varying Intelligence Collisions, and Why, Where and How Values Were Cast Aside…

I finally figured out why true intelligence is missing from our modern world. We all know the world has experienced many periods of great flourishing of many cultures’ brilliant intelligences, but I’ve been extremely puzzled why nations, that once were intelligent, lost or lose their intelligence of sensible action, over time. To figure this out, I’ve extensively studied Peirce’s category logic for the last 10+ years, without really laying my mind to exactly what was so important about it, until just recently, when I decided to do a serious comparative analysis, of the interaction of varying nations’ intelligences, over historical time. What I discovered really shocked me, as it’s really so simple to understand, but will take a considerable explanation of a few of these simple facts…

First, let me break down intelligence into a few philosophical categories, we can generally accept as having the capacity to hold most other philosophical intelligence categories under them. Historically we’ve long known about idealism and realism or nominalism and realism, as two majors from Plato and Aristotle to Kant. Since Kant, we’ve had rationalism and empiricism in the modern sense, generally speaking, as it’s really earlier, but anyway… We’ve further and more modernly developed six major additions to these older systems; positivism, logical positivism, Peircean pragmatism, James-Dewey pragmatisms, continental philosophy and analytic philosophy of the language and linguistic brands. I’m purposely not listing others such as transcendentalism, existentialism, nihilism, skepticism, etc., as I feel these can be generally taken up under the above more widely studied systems, and the points I wish to make more concern the category mistakes made by most of the main systems mentioned…

Now, since the early Greeks, mathematics, values, esthetics, ethics and logic played large roles in all the philosophies for some 2500 years, with these mentioned systems being categorized near the top of the priority lists, with lesser prioritized subjects below. Of course the arguments went back and forth between all the metaphysical, ontological, epistemological, phenomenological, etc., discussions all through the 2500 year period, but math, values, esthetics, ethics and logic were all held in high esteem, except of course through the European Dark Ages era, yet these early Greek sciences and values systems were kept in play by the Arabic speaking lands, and finally transferred to Europe during the enlightenment and reformation periods__and greatly admired, I might add. But, something began to change between philosophy’s values and category systems in relation to its more scientific studies, as they were in battle with the Church over the definition of values, and just who was going to control such values, and herein begins the split between values and the more scientific systems of knowledge and intelligence, of these periods. But, this isn’t the main part of my story. It’s only the prelude to what was to take place within Philosophy’s category systems, in the more modern era…

To put this as simple as possible, what was in general standard category logic, from the early Greeks to the positivists, had been the math, esthetic and ethical values, fully joined to logic, at the head of the major category systems. But, this all started to change with the first positivist, Compte, where he promoted math, science and logic above the older and standard Greek values, thus divorcing esthetic and ethical values from his_‘thought so’_more modern scientific view. Now, at first glance, this may not seem to harmful, as science has the right to develop its own independent systems and methodologies, and it’s true, this wouldn’t be much concern, until one realizes this system takes on an entire cultural identity through academics, over the years_as younger students are rote-programmed/educated/trained with this new way of priority categorizing academic knowledge and possible or impossible intelligence, which also filters out into the general society, over time. Still, you may say, “…not such a problem as you make out…” Well, that’s before one realizes the rest of the story…

Since we have more information from Peirce and Frege’ onward, let’s see where we go by dealing with modern logic and psychology, as per the category system of math, logic, language and linguistics’ priorities, in relation to producing nominalism or realism, which existed, more or less, before this period. To the point; Frege’ tried to promote logic and language up the category list, above mathematics, and also tried excluding metaphysics, psychology and values, almost completely from his category system_which was followed also by Russell, Wittgenstein and others, to the present co. of Quine and Chomsky, etc._Thus turning standard logic, values and knowledge on its head_banging itself into egoic nominalism_and eliminating any possibility of true intelligence, guided by community, esthetic and ethical values, in recognition of Greek, Roman, natural, logical, syllogistic and common law__Which had been the sensible way for centuries before…

At this same time, Peirce was working the bugs out of his own system and brand of pragmatism__Where he found that mathematics was necessary to be stationed at the original top placement of the category list, as logic, when attempting the super-fine structures, runs out of explanatory power, and math must take over. Also, Peirce discovered by studying the scholastic logicians, they’d concentrated heavily on values being very important to their logic, thus giving logic its purpose of reasoning, in the first place, not to mention maintaining the personal and social values, the Church had always failingly tried to foster, due to its metaphysical nominalist stance, which is no more than taking belief too far into extremes_but, that’s a story for another book, or more_And I’ll pass on that... Thus we have the opposite ended systems of the logical positivism of Frege and co., and the analytic pragmatism of Peirce, with entirely opposite values and operations, especially when academics filters all these oppositions into culture at large…

If one looks carefully at Frege’ and co’s. system of prioritizing logic, language and linguistics over math and values_and Peirce’s system of prioritizing math, esthics and ethical values over, through and with logic, language and linguistics, one can easily see the clash of civilizations’ intelligences, in an unnecessary battle over priorities_and instead of increasing knowledge, such a conflated battle simply and naturally decreases knowledge, by destroying the necessary and proper values of societies, founding and grounding the continuity of any possible true meaning and learning. Without esthetics and ethics guiding logic’s proper decisions into the maths and sciences, Frege’ and co’s., mistaken category logic priority system simply destroys values and true intelligence, as there’s no continuity to such a bastardized logic system__Thus, such a system ends in pure dialectical nominalism, or the worship of the ego of false logics’, languages’ and linguistics’ idealisms__lacking all true meaning, to the real world of necessary and proper cultural values, knowledge and true intelligence… Oh, and btw, James, Dewey and the Continental philosophers have simply waffled between these two systems of Frege’s nominalism and Peirce’s realism…

Finally, analytically comparing our six original chosen modern philosophic systems; imo, only Pierce’s pragmatic analytic teleological realist system, does not suffer from the others’ egoic nominalist dialectical redundancy.  It’s simply all a matter of prioritizing real effectuated esthetic and ethical values over logic, language and linguistics to produce the desired values for all our sciences, experiences and actions. Of course, this system will need be made widely known and recognized by the academic community, who already threw away Peirce, long ago__Yet, he’s actually the only person to have ever lived, who put the entire philosophical system of true knowledge, science and psychology together properly, which also saves values, by having logic itself, depend on these very same values, in all its analytic systems of actionable use. I think academics has a lot of steps to retrace, to see just what they threw away…

The choice is yours__Values and true intelligence or no values and pseudo-intelligence, for our future…

Friday, December 26, 2014



"All problems using crude money must be overcome to survive the future eco-techno-electrosphere."

"Since the first wave agricultural revolution only required simple single entry banking –– and the second wave industrial revolution invented and required double entry banking –– then the third wave technological revolution [will] invent and [require] "TRIPLE ENTRY BANKING.""

In 1982 I empirically discovered an entirely new capitalist monetary system. This system is in direct evolution with the existing system. It is fully compatible with all known forms of money systems –– past – present – or future. The system is INTERNAL EXCHANGE CLEARING –– TRIPLE ENTRY BANKING – a transactions truth. This new monetary system can be implemented cost free and effectively either unilaterally or globally. It can be instituted on a percentage basis from one percent, to twenty percent –– its most cost effective and productive percentage of operations' basis.

In this short paper, I will explain why I feel a new monetary system is necessary –– what it exactly is –– and how to painlessly implement it. First, I will discuss the present capitalist system to make clear why such a new system is needed. I will frame my discussion on four tenets –– demographics –– jobs and wages –– the present floating exchange rate non-regime –– and the technological revolution.

Many falsely believe the miracle of capitalist markets will cure all our future problems. Let me see if I can change your mind, to show markets of the future may need some new help. The most glaringly obvious problem is one of demographics alone. With the nation five trillion dollars in debt and both political parties fighting for the next spendable penny, when we at present don't yet have a demographic problem –– where do you think the money is coming from to support the retirement of the massive increase of baby-boomers?

This is not only a problem of our nation, but that of all industrial nations and many of the world's lesser nations as well. Japan has been flat on its economic back for five years now. Europe also has flat growth, high unemployment, massive debts, and intolerable rates of taxation. We need say little of the lesser nations as everyone is well aware of their bankrupt conditions. If we are short of the necessary funds now, what nation or group of nations is going to grow enough to resolve the present quagmire –– let alone the future's massive demographic increase of tax burdens? How will they grow? What economic incentives and organizations are presently planned and feasible? Are they capable of meeting future needs? I simply ask you to be the judge.

If nations are to grow their way out of the demographic problems of the future, where are the jobs and wages necessary to do so coming from? At present we are downsizing every economy in the world –– with massive mergers, outsourcing, and layoffs. Wages for forty to fifty percent of the population of America alone have declined over the last twenty years. Yes, it is true some at the top have benefited precipitously –– but at the cost of the bottom? High skilled jobs, such as unions, have shrunk dramatically –– from thirty-six percent of the work force to sixteen percent of the workplace. Are these evidences of true growth in jobs and wages over the last twenty years ––– as many would have us believe? And they fight against an increase in the minimum wage! Where will jobs and wages come from when the computer-robotic-revolution displaces more human workers ––– daily?

I don't mean to sound pessimistic, as I am not. I am only painting a true picture of present capitalism's stature. The system I am proposing –– INTERNAL EXCHANGE CLEARING –– is thoroughly optimistic. So bear with me while I make my points about the present system's problems.

If you think these problems can be easily solved by conventional policy and market performance, you know little of the workings in the foreign exchange markets. These markets exist wherever a foreign exchange takes place –– sort of everywhere and nowhere. They exist everywhere a computer-telephone link is, and nowhere is there any real control. This system is an absolute free-for-all buying, selling, and swapping trillions of dollars and other currencies around the world at the speed of light twenty-four hours a day –– three-sixty-five days a year. The global transactions' figures presently stand somewhere between two-hundred-fifty and two-hundred-seventy-five trillion dollars per year. They are well over a trillion dollars per business day.

In order to understand the above, you must know these markets encompass the Euro-dollar system – the entire foreign exchange system – the forward exchange markets – the entire international banking system – interest, goods, and services arbitrage and hedging – derivatives – swaps – fixed and floating currencies – nations' inflation and tax systems – and all nations' governments and actions –– to mention just a few. The above includes the most intricate and complex of markets in the world. When the courts can't even understand these intricate markets –– how are the policy makers supposed to?

Let me give you a clear example of the above. George Soros has stated "Speculators can short the markets a trillion dollars quicker than governments can print it." He should know as he made one billion dollars on one speculative trade in 1993 against the European Economic Community –– which he documented in his book "SOROS ON SOROS". This is no isolated case, I assure you. Andrew Krieger has also written a book of his speculative exploits titled "THE MONEY BAZAAR – Inside the Trillion-Dollar World of Currency Trading." Both these books are excellent first hand sources of information about speculating against the present easily manipulated floating exchange non-system. Systems of this character must change to survive the ever increasing encrypted computerized future.

If you think the above issues can be brought under policy control – of two warring political parties in our country – I think you have missed the boat. Not only is it almost politically impossible in our own country, but it is even more politically unlikely to succeed globally. Internal tension and gridlock prevents local problem solving, while global tensions of Chinese communism, and Islamic fundamentalism prevents international problem solving. For these reasons, I have designed INTERNAL EXCHANGE CLEARING to be instituted and function properly unilaterally –– with the support and respect of both warring political parties –– and to further be complementary to and compatible with external international processes.

Before explaining the above system, we must explore my fourth tenet –– the technological revolution. Professor of history Paul Kennedy has done the definitive work in this area. I would like to add my vision about the future of technology. I can nowheres near compare to the stature of Mr. Kennedy, but I have a unique perspective –– as I am an international currency and market speculator –– with considerable computer and robotics expertise.

Mr. Kennedy has rightfully shown the nightmare scenario we could be headed for if change is not undertaken. For his part of warning us, he has received the title of "Dr. Doom." Not only is his work not about doom, it is the most accurate possible course of history I have seen. We have a choice to let the future play out terribly ––– or to change it for the better. We had better listen to those who have better ideas than our own.

With all nations being forced by competition to adopt the latest advances in technology –– we are locked in an ever increasing scenario of technological evolution. The forces of markets are pushing us closer to a robotic and databased wage and pricing mechanism future. As the power and agility of robots increase, companies and corporations will be forced by competition to implement this new technology –– thus eliminating more human jobs and wages. Already, Japan is re-importing jobs they earlier outsourced to human labor, to be handled by robots cheaper at home. In other words, even some of the third world's labor is losing to robots –– and we have just begun. Databases, once simply a tool of improving efficiency within companies and corporations, are now being employed to handle massive world pricing mechanisms and on time global delivery systems. Competition in this area will be the most fierce, because it is the most cost effective method to improve profits. This area alone will be where massive layoffs of upper income workers will come from. So ––– while robots lay off the bottom tier –– databases lay off the top tier! And if you don't think this is true –– just check out who is tops on the web ––– Digital and Inktomi – the fastest!

The future will see massive increases in the use of robots to eliminate human labor and wages' costs –– competition requires it. We will see massive increases in the use of giant supercomputer databases and on time global delivery systems to eliminate human labor and wages' costs –– competition requires it. These two technologies alone can do nothing but downsize further the entire global economy ––– eliminating massive human work forces and wages –––– for the bottom line –––––––– profits!!!

There is no turning back. We must go forward with new monetary systems.



"All problems using crude money must be overcome to survive the future eco-techno-electrosphere."
"Anyone who thinks the use of crude money will not be necessary in the future is crazy!"
"The present electronic world is diminishing collective opportunity ––– fast!"

Over the past two centuries we have built a wondrous spectacle for the rest of the world to emulate. We have set the standards high for civil human conduct and happiness. The moral, ethical, and family stance we take should make us proud and respected. The institutions we have erected set the rest of the world at awe. Our scientific and industrial evolution and strength have revolutionized the entire planet –– especially since the end of WWII... So why do we feel so insecure?

The reason is we have reached economic entropy under the present world monetary systems and organizations. The technology revolution is creating real job and wage decreases as population increases. This is why we feel so insecure and helpless. To this point in time there are no serious conventional solutions being put forth. This is why I am offering an unconventional solution to our present economic stalemate.

On the surface "INTERNAL EXCHANGE CLEARING" is not a difficult system to understand. It is simply a system to reorganize the control of the foreign exchange market to function more efficiently through internal mechanisms instead of external –– thus making more productive use of our or all nations' national debts. This system will stabilize exchange and inflation rates internally and externally when instituted. This is the real solution we truly seek –– to once and for all end inflation and disequilibria of the exchange rate mechanism. Only this solution will increase real jobs and wages in the coming eco-tecno-electronic revolution of the twenty-first century.

Why? You may ask will this system work better than the present one? What? You may ask is this system and how does it work? I should warn you, this system should not be confused with external exchange clearing advocated by Plato and Dr. Paul Einzig –– though they are the inventors of the groundwork of this system. Plato first advocated such a system some twenty-four-hundred years ago, and Dr. Paul Einzig (the WWII Finance Minister of England) has written the only book on exchange clearing I believe to be in print (Exchange Control, Macmillan and Co.1934). "INTERNAL EXCHANGE CLEARING" is simply a higher evolution of these two great men's work.

"INTERNAL EXCHANGE CLEARING" is based on a new framework of laws for existing markets to function under more efficiently. These new laws recognize and solve the existing problems through a one-fifth military style "P.X". and a "TRIPLE ENTRY BANKING" system. You must realize we do not have a production or resource problem. We have a monetary problem the above system solves at no cost to any parties involved. You say, "This is the old free lunch impossibility." I say, "The future being fast diminished by technological evolution requires a semi-free lunch." Notice this system is only a one-fifth change of existing structures –– and when further inspected is even no total change in existing assets. The system I am proposing takes from no-one, yet has the ability to operate semi-philanthropically for the benefit of all.

The one-fifth level mentioned above does not require being instituted at the twenty-percent level. The system can safely evolve to the twenty-percent level in small increments per year –– through the guidance of the new social contract laws we pass. At present, most every nation of the world is governed approximately twenty-percent by the external forces of multinational trade and international financial flows. "INTERNAL EXCHANGE CLEARING" simply moves the control of the functioning of the mechanics of these markets from external malfunction to internal function. It does not change any actual control of these real and complex markets. They are still free to function as is even after institution. The real change only takes place internally, where we set government in competition with existing business at the one to twenty-percent over time level. By this I mean a reduction in present nationalization from its some forty-percent level to its new twenty-percent level.

To accomplish the above, a national set price "P.X." will be instituted, where one to twenty-percent of everything from dust to diamonds is available to all comers alike –– citizen and entrepreneur alike. This is a government created independent "P.X" market totally separate from all present existing businesses –– yet set in competition with all existing business to create truly competitive and fair markets for all players and citizens alike. This market by the very existence of its instituted mechanics automatically controls all inflation, exchange rates, and prices into fair and equitable balances –– once and for ever!

The above market will be semi-philanthropically subsidized by the new "TRIPLE ENTRY BANKING" system –– which must be instituted along with the "P.X." and "INTERNAL EXCHANGE CLEARING" systems. The functioning of the above markets' instituted mechanics make the semi-philanthropic system possible. The system will function unilaterally or universally. It is best recommended as a universal system –– though there is nothing to prevent its unilateral success as well. The advantage of multilateral acceptance is the cooperation of all nations advancing in unison to lessen world tensions. The philanthropic percentage could be set by agreement among many or all participating nations' equal ratios of GNP expansions.

I often state,"We need a fixed value monetary system. At the present time, we have none. Under floating exchanges, America is simply a powerful ship on an ocean, with no rudder. Old gold, silver, and other known standards will no longer work. They will not work due to the massive increases in communication's speed, the varied endowments of nations' natural resources, and encrypted international speculative opportunities. Therefore, we need a new system. INTERNAL EXCHANGE CLEARING is such a system. It is an entirely new fixed value enhancing - [production standard] - monetary system, to benefit all humankind."

It all comes down to: "If we set up government – all government – in business, in competition with existing private commercial business –– we can unilaterally make unlimited reasonable use of the printing press!"

Let's stop the ridiculous political and class battles and consider the abilities of the above to solve our problems ––– and once again unite us in all our desired goals and destinies.

Thank you,
L.A. Gillespie

Saturday, August 9, 2014

Metaphysics of Emergence

Metaphysics of Emergence A Strange Kind of Being Emerges; Kent D. Palmer, Ph.D.

Saturday, April 5, 2014

A post by, Beate Reszat from my twitter account...

The foreign exchange market in London in the 1920s and a newly arrived young financial journalist with a passion:

Monday, December 2, 2013

A Universal Geometry of The Mind’s Eye P=NP Complete

Wednesday, April 10, 2013

A Rational Morality...

A Rational Morality


I’ve found on a number of occasions that people who conceive of morality as something handed down from on high don’t understand how there could be any alternative to that view. “If you don’t get your morals from [deity of choice], where do you get them?”The frequency with which this line of questioning appears demonstrates a profound misunderstanding of what sort of a concept morality is and how we can coherently define it. The assumption at the heart of the misunderstanding is that morals must be things in the world—not necessarily that they must be tangible, but that they have an existence independent of the human mind. For a person holding this view, morals are fixed, constant, and external.
(Continued below the fold.)

The Source
This notion of external moral values is equally ludicrous whether the perceived source is a deity or a dictator. Morality is a value-based judgment system, a human-created way of applying conceptual labels to human interaction and decision-making. These labels, the words of moral judgment—good, bad, right, wrong, just, unjust—have no real-world referent, the way ‘pencil’ or ‘babboon’ do. They only exist in the abstract, which is to say that they only exist as products of the human mind, and this is the only way they really make any sort of sense—as linguistic constructions for describing and evaluating human behavior. People intuitively understand this, I think, but they persist in thinking of moral values as something existing independent of human reason (and often not even accessible to human reason).
Nature certainly doesn’t make sense as a source for morality, given that nature (pathetic fallacy aside) has no particular interest in whether we act “morally” or “immorally.” This is to say that two actions, one “moral” and one “immoral,” may have markedly different consequences, but nature has no real investment in one over the other for the sake of adhering to a moral system. Examined in this light, moral actions are not qualitatively different from immoral actions from any perspective other than a human one. The only distinction between actions, from a natural standpoint, is due to a difference in the direct consequences of those actions. Any attempt to claim the natural world as a source for arbitrarily chosen moral values is bogus, and is most likely an attempt to rationalize a supernaturally-based view of morality.

Defining the System
It is important for us to understand why morality exists, what purpose it serves in human discourse. Morality is most readily understood as a system we impose in order to make our lives easier—in terms of both individual quality of life and overall utility—and to turn them into something other than ‘kill or be killed.’ In its rational form (as distinct from the sense of ‘public morality,’ where things are arbitrarily chosen as ‘good’ or ‘bad’ for no logical reason), it is a product of extrapolating from rational self-interest. The impulse towards morality is not, fundamentally speaking, an impulse towards treating people justly or fairly for its own sake, but rather an impulse towards treating people justly and fairly in the hopes that they will treat us in such a way. An appropriately chosen moral value within such a system is one that strikes the right balance between self and other, in the sense that the negatives of obeying it ourselves are balanced out by the positives of everyone else obeying it. The most obvious example is the widely held moral prohibition against killing for reasons other than self defense. This is an appropriate moral value for us to hold, because we can reasonably (there’s that word again) expect that the desire to not be killed is more or less universal, that the convenience of not worrying about being murdered will outweigh the inconvenience of not being able to slit the throat of someone who pisses us off. That this is often overlooked in moments of passion in no way invalidates it as an ethos—it just means that there are situations in which people will make decisions based on something other than morality.

Extrapolation and Universality
You will undoubtedly notice a certain degree of speculation within such a system. This is unavoidable, practically speaking, given the overwhelming numbers of people on the earth; it’s not even remotely feasible that we interview the entirety of the human population, in order to have a truly universal representation of human desires. We must rely on experience and reason to give us a sense of what humans value, and which of these values must/should be considered unimpeachable—life, liberty, property, pursuit of happiness, etc. As we’ve previously established, reason is the only universal language available to us for discussing and analyzing these issues; emotion is not irrelevant, especially when utility and happiness are so closely linked, but the fact that something makes us feel good doesn’t in and of itself make it a universal good in any sense. And there is a need for morality to come from a universally accessible source, because otherwise it becomes meaningless as a system for human behavior. If, say, concepts of morality were bestowed by Hypothetical Supernatural Entity #1, and Hypothetical Supernatural Entity #1 was only perceptible to a certain subset of the population, then the rest of the population couldn’t be fully participating in the system, in the sense that they wouldn’t have any direct access to these “moral values.” Likewise, there is a need for some sort of universal morality in our increasingly global culture; if ever there was a time when different cultures could function with drastically different moral systems without affecting each other, that time is long since gone.

To What End?
The end result of this sort of moral reasoning (post-conventional, under Kohlberg’s very useful rubric, which I expect I’ll discuss again at some future point) is less clear than the merits and methods of the process itself. The only coherent theory of morality, it seems to me, is one which falls under the heading of a social contract, given the lack of justification for drawing moral values from external (non-human) sources. We identify, by careful reasoning, certain values which we all implicitly agree to live by, in order that we may enjoy the advantages of civilization over a more animalistic, survival of the fittest system. The logistics of this are troublesome, as is determining the ideal relationship of morality and law, but the point is that we must embrace a rational definition of morality, wherein we recognize that moral frameworks exist only insofar as we create them and impose them on ourselves and, by extension, on others. It should also be recognized that morality is not, from a broad perspective, a necessity; rather, it is a particularly useful system we’ve concocted to keep from killing and raping and stealing from each other (which is to say: to keep from being killed or raped or stolen from). The sooner we recognize the necessarily rational nature of moral judgments and stop trying to assign some absolute “moral” status to random beliefs and prejudices, the more just and pleasant our world will become, and the less we will abridge the fundamental rights of others.

Monday, December 31, 2012

Testimony of Marriner Eccles to the Committee on the Investigation of Economic Problems in 1933

London Banker...

Below are excerpts from the testimony of Marriner Eccles to the Senate Committee on the Investigation of Economic Problems in 1933. It is an historic document – laying out the future terms of the Federal Deposit Insurance Corporation, the management of money supply nationally through open market operations, the Bretton Woods Accord on currency stability, mortgage refinancing as monetary stimulus, and reforms of the Federal Reserve System to eradicate the excesses of untamed capitalism and financial dominance of Wall Street. He proposes higher income and inheritance taxes as essential to promote economic growth, curb inequality and forestall political instability. He encourages federal regulation of child labor, unemployment insurance, social security and other farsighted reforms. And he avows himself a capitalist throughout.

Although he was a titan of industry - with banks, railroads and corporations spanning the American west - Eccles was born the son of an illiterate, bigamist, Mormon, Scottish immigrant. He was about as far as you could get from the Eastern elite ranks that ran US banking on Wall Street. But he sure understood money, economics and trade, and had the personal drive and charisma to carry his point with the president and with Congress.

Following his testimony, the Utah banker was invited by Franklin Roosevelt to come to Washington to spearhead legislation to enact his proposed reforms. Within two years he had drafted and enacted the Securities Act of 1933 and the Banking Act of 1933(a.k.a., The Glass-Steagall Act, which separated investment and commercial banking and established the FDIC) and the Banking Act of 1935 (which created the modern Board of Governors of the Federal Reserve System and Federal Open Market Committee). He served as Chairman of the Board of Governors of the Federal Reserve System from 1934 until 1951.

Read this and know that just one person, with vision and principles, can make a difference to the world in a time of crisis, establishing the basis for decades of prosperity and growth.

[page 8]

Before effective action can be taken to stop the devastating effects of the depression, it must be recognised that the breakdown of our present economic system is due to the failure of our political and financial leadership to intelligently deal with the money problem. In the real world there is no cause nor reason for the unemployment with its resultant dsestitution and suffering of fully one-third of our entire population. We have all and more of the material wealth which we had at the peak of our prosperity in the year 1929. Our people need and want everything which our abundant facilities and resources are able to provide for them. The problem of production has been solved, and we need no further capital accumulation for the present, which could only be utilised in further increasing our productive facilities or extending further foreign credits. We have a complete economic plant able to supply a superabundance of not only all the necessities of our people, but the comforts and luxuries as well. Our problem, then, becomes one purely of distribution. This can only be brought about by providing purchasing power sufficiently adequate to enable the people to obtain the consumption goods which we, as a nation, are able to produce. The economic system can serve no other purpose and expect to survive.

If our problem is then the result of the failure of our money system to properly function, which today is generally recognised, we then must turn to the consideration of the necessary corrective measures to be brought about in that field; otherwise, we can only expect to sink deeper in our dilemma and distress, with possible revolution, with social disintegration, with the world in ruins, the network of its financial obligations in shreds, with the very basis of law and order shattered. Under such a condition nothing but a primitive society is possible. Difficult and slow would then be the process of rebuilding and it could only then be brought about on a basis of a new political, economic and social system. Why risk such a catastrophe when it can be averted by aggressive measures in the right direction on the part of the Government?

* * *

[page 9]

We could do business on the basis of any dollar value as long as we have a reasonable balance between the value of all goods and services if it were not for the debt structure. The debt structure has obtained its present astronomical proportions due to an unbalanced distribution of wealth production as measured in buying power during our years of prosperity. Too much of the product of labor was diverted into capital goods, and as a result what seemed to be our prosperity was maintained on a basis of abnormal credit both at home and abroad. The time came when we seemed to reach a point of saturation in the credit structure where, generally speaking, additional credi was no longer available, with the result that debtors were forced to curtail their consumption in an effort to create a margin to apply on the reduction of debts. This naturally reduced the demand for goods of all kinds, bringing about what appeared to be overproduction, but what in reality was underconsumption measured in terms of the real world and not the money world. This naturally brought about a falling in prices and unemployment. Unemployment further decreased the consumption of goods, which further increased unemployment, thus bringing about a continuing decline in prices. Earnings began to disappear, requiring economies of all kinds – decreases in wages, salaries, and time of those employed.

[page 10]

The debt structure, in spite of the great amount of liquidation during the past three years, is rapidly becoming unsupportable, with the result that foreclosures, receiverships and bankruptcies are increasing in every field; delinquent taxes are mounting and forcing the closing of schools, thus breaking down our educational system, and moratoriums of all kinds are being resorted to – all this resulting in a steady and gradual breaking down of our entire credit structure, which can only bring additional distress, fear, rebellion, and chaos.

* * *

As an example of Government control and operation of the economic system look to the period of the war, at which time, under Government direction, we were able to produce enough and support not only our entire civilian population on a standard of living far higher than at present, but an immense army of our most productive workers engaged in the business of war, parasites on the economic system, consuming and destroying vast quantities produced by our civilian population; we also provided allies with an endless stream of war materials and consumption goods of all kinds. It seemed as though we were enriched by the waste and destruction of war. Certainly we were not impoverished, because we did not consume and waste except that which we produced. As a matter of fact we consumed and wasted less than we produced as evidenced by the additions to our plant and facilities during the war and the goods which we furnished to our allies. The debt incurred by the Government during the war represents the profit which accrued to certain portions of our population through the operation of our economic system. No Government debt would have been necessary and no great price inflation would have resulted if we had drawn back into the Federal Treasury through taxation all of the profits and savings accumulated during the war.

* * *

[page 11]

How was it that during the period of the prosperity after the war we were able in spite of what is termed our extravagance – which was not extravagance at all; we saved too much and consumed too little – how was it we were able to balance a $4,000,000,000 annual Budget, to pay off ten billion of the Government debt, to make four major reductions in our income tax rates (otherwise all of the Government debt would have been paid), to extend $10,000,000,000 credit to foreign countries represented by our surplus production which we shipped abroad, and add approximately $100,000,000,000 by capital accumulation to our national wealth, represented by plants, equipment, buildings, and construction of all kinds? In the light of this record, is it consistent for our political and financial leadership to demand at this time a balanced Budget by the inauguration of a general sales tax, further reducing the buying power of our people? Is it necessary to conserve Government credit to the point of providing a starvation existence for millions of our people in a land of superabundance? Is the universal demand for Government economy consistent at this time? Is the present lack of confidence due to an unbalanced Budget?

What the public and the business men of this country are interested in is a revival of employment and purchasing power. This would automatically restore confidence and increase profits to a point where the Budget would automatically be balanced in just the same manner as the individual, corporation, State, and city budget would be balanced.

[page 12]

During the past three years there has been such tremendous liquidation and scaling down of debts that extraordinary measures have had to be taken to prevent a general collapse of the credit structure. If such a policy is continued what assurance is there that the influences radiating from a marking down of the claims of creditors will not result in a further decline of prices? In other words, after we have reduced all debts through a basis of scaling down 25 per cent to 50 per cent, what reason have we to expect that prices will not have a further decline by like amount? And then again, the practical difficulties of bringing about such a adjustment on a broad scale seem to be insurmountable.

The time element required would indefinitely prolong the depression; such a policy would necessitate the further liquidation of banks, insurance companies, and all credit institutions, for if the obligations of public bodies, corporations, and individuals were appreciably reduced the assets of such institutions would diminish correspondingly, forcing their liquidation on a large scale. Nothing would so hinder any possibility of recovery. Bank and insurance failures destroy confidence and spread disaster and fear throughout the economic world. The present volume of money would diminish with increased hoarding and decreased credit and velocity, making for further deflation and requiring increased Government support without beneficial results until we would be forced from the gold standard in spite of our 40 per cent of the world’s gold, and, at that point, an undesirable and possibly an uncontrolled inflation with all its attendant evils would likely result, and thus the very action designed to preserve the gold standard and re-establish confidence would destroy both.

[page 13]

We have nearly one and a half billion currency more in circulation at the present time than we had at the peak of 1929, and under our present money system we are able to increase this by several billion more without resorting to any of the three inflationary measures popularly advocated. There is sufficient money available in our present system to adequately adjust our present price structure. Our price structure depends more upon the velocity of money than it does upon its volume.

* * *

In 1929 the high level of prices was supported by a corresponding velocity of credit. The last Federal Reserve Bulletin gives an illuminating picture of this relationship as shown by figures of all member banks. From 1923 to 1925 the turnover of deposits fluctuated from 26 to 32 times per year. From the autumn of 1925 to 1929 the turnover rose to 45 times per year. In 1930, with deposits still increasing, the turnover declined at the year end to 26 times. During the last quarter of 1932 the turnover dropped to 16 times per year. Note that from the high price level of 1929 to the low level of the present this turnover has declined from 45 to 16, or 64 per cent.

[page 14]

I repeat there is plenty of money today to bring about a restoration of prices, but the chief trouble is that it is in the wrong place; it is concentrated in the larger financial centers of the country, the creditor sections, leaving a great portion of the back country, or the debtor sections, drained dry and making it appear that there is a great shortage of money and that it is, therefore, necessary for the Government to print more. This maldistribution of our money supply is the result of the relationship between debtor and creditor sections – just the same as the realtion between this as a creditor nation and another nation as a debtor nation – and the development of our industries into vast systems concentrated in the larger centers. During the period of the depression the creditor sections have acted on our system like a great suction pump, drawing a large portion of the available income and deposits in payment of interest, debts, insurance and dividends as well as in the transfer of balances by the larger corporations normally carried throughout the country.

[page 15]

The maladjustment referred to must be corrected before there can be the necessary velocity of money. I see no way of correcting this situation except through Government action.

[page 21]

Mr Eccles: Of course, the way I look at this matter is that we have the power to produce, just as in the period of prosperity after the war demonstrated when we had a standard of living for a period from 1921 to 1929 which, of course, was far in excess of what it is now. Yet in spite of that standard of living we saved too much a I have previously tried to show.

Senator Gore: You have got Foster in the back of your head?

Mr Eccles: I only wish there were more who had. We saved too much in this regard, that we added too much to our capital equipment. Creating overproduction in one case and underconsumption in the other because of an uneconomic distribution of wealth production. . . . Of course, we are losing $2,000,000,000 per month in unemployment. I can conceive of no greater waste than the waste of reducing our national income about half of what it was. I can not conceive of any waste as great as that. Labor, after all, is our only source of wealth.

[page 22]

There could be no waste in post offices or in roads or in schools. You would have something to show for it. With war all you have left is the expense of taking care of maimed and crippled and sick veterans. That is what is left from war. And it is all wastage.

Senator Gore: You have touched the point. The real cause of the existing trouble was the war, with destruction of over 300 billion dollars of wealth in four years. We are paying the price now. The boys paid the price in blood on the field. We are paying the economic price today. And you may just as well pass a resolution to raise the dead that fell in France as to try to pass laws to avert the inevitable consequences of that war.

Mr Eccles: It is true we are suffering the consequences of the war, but there is no reason why we should be suffering from the consequences of the war if it had not been for the international or the interallied debt that resulted from it. WE are suffering from a debt structure. We are not suffering from the waste, because after all, we know today that we have the power and the facilities to produce certainly all that the people of this country need and want.

* * *

We now see, after nearly four years of depression, that private capital will not go into public works or self-liquidating projects except through government and that if we leave our “rugged individual” to follow his own interest under these conditions he does precisely the wrong thing. Each corporation for its own protection discharges men, reduces pay rolls, curtails its orders for raw materials, postpones construction of new plants and pays off bank loans, adding to the surplus of unusable funds. Every single thing it does to reduce the flow of money makes the situation worse for business as a whole.

[page 24]

I am talking about private credit. If it is credit we need why do not say 200 of our great corporations controlling 40 per cent of our industrial output that are in such shape that they do not need credit – they have great amounts of surplus funds – if it is credit that is needed why do they not put men to work? For the very reason that there is not a demand for goods, that we have destroyed the ability to buy at the source through the operation of our capitalistic system, which has brought about such a maldistribution of wealth production that it has gravitated and gravitated into the hands of – well, comparatively few. Maybe several millions of people. We have still got the unemployment and have got no buying power as a result.

[page 25 – proposal of bank deposit insurance and failed bank resolution]

[page 27 – laying out the basis for what was later to be the FDIC]

However, there is always this danger about that class of thing [Government guarantee of bank deposits]. It encourages bad practices and bad management. It may put a premium on them, which of course we do not want to do, and if it is done there must be rules and regulations for the proper conduct of banks requiring eligibility, and if they fail to meet the eligibility they would be suspended after so much notice, and the fund would be drawn upon to take care of any loss.

[page 31]

Farm mortgages at present are possibly the most undesirable and frozen of all loans, and frozen loans are preventing, to some extent, the necessary expansion of credit. The plan I have proposed [to refinance existing farm mortgages at new lower rates] will very effectively and immediately make liquid billions of dollars of assets for which there is no market today, while at the same time it will bring about a reduction of at least one-third of the average annual payments on the farm debt now required to be made by farm mortgage debtors without requiring any financing or loss by the Federal Government, thus bringing about the necessary relief in the farm mortgage field. This plan has the advantage, as a result of the Government guarantee of the Federal land bank bonds, of diverting surplus funds carried in the great creditor sections into the indirect financing of farm mortgages where it is impossible even at a high rate of interest, which farmers can not pay, to attract those funds directly.

* * *

No program designed to bring this country out of the depression can be considered apart from the relations of this country to the rest of the world unless a policy of complete isolation is adopted and an embargo put on gold exports and our domestic economy adjusted to meet such a condition.

Our international problems are far more difficult and will be slower to work out because of our inability to control the action of other nations. These problems can be met only through international conferences over a period of time. The most important of these problems and the one which must be settled before any progress can be made in the meeting of our domestic or other foreign problems is the problem of interallied debts.

There is a great demand on the part of the public and most of the press of this country that these debts be paid. It seems to me that our political leaders have lacked the courage to face this problem in a realistic manner. This has greatly contributed to prolonging the depression. The public, generally speaking, is not fully informed as to the impossibility of our foreign debtors complying with these demands, which cn only be complied with at the expense of our own people.

[page 32]

It is elementary that debts between nations can ultimately be paid only in goods, gold, or services, or a combination of the three. We already have over 40 per cent of the gold supply of the world – that is not true; it is between 35 and 40 per cent – and as a result most of the former gold standard countries have been forced to leave that standard and currency inflation has been the result. This has greatly reduced the cost of producing foreign goods in terms of our dollar and has made it almost impossible for foreign countries to buy American goods because of the high price of our dollar measured in the depreciated value of their money. This naturally has resulted in debtors trying to meet their obligations by producing and selling more than they buy, thus enabling them to have a favourable balance of trade necessary to meet their obligations to us. If this country is to receive payment of foreign debts, it must buy and consume more than it produces, thus creating a trade balance favourable to our debtors.

* * *

We must choose either between accepting sufficient foreign goods to pay the foreign debts owing to this country, or cancel the debts. This is not a moral problem, but a mathematical one.

[page 33 – the outline of what later became the Bretton Woods Accord]

Cancellation, or a settlement of the debts on a basis which would practically amount to cancellation, in exchange for stabilisation of the currency of the debtors, together with certain trade concessions and an agreement to reduce armaments would be a small price for this country to pay as compared with the great benefits which the entire world, including ourselves, would derive therefrom. Without a stabilisation of foreign currencies it will be difficult, if not impossible, in my opinion, to substantially raise the price level in this country as long as we stay on a gold basis. Our debtors will default and we will likely be forced to abandon gold and depreciate our currency in relation to that of other countries in order to raise our price level in this country and to meet foreign competition unless we are instrumental in inducing foreign countries to stabilise their currencies on a gold basis, or gold and silver basis if action is taken internationally to remonetise silver.

[page 33]

Senator Shortridge: Then I take it you would have the tariffs reduced?

Mr Eccles: No. Debts cancelled. Then I think with the prosperity that you would get in this country you can collect more than that in income and inheritance taxes when you stop this loss of $2,000,000,000 a month through unemployment. You start the process of wealth, and even a capitalist is far better off. I am a capitalist.

* * *

The program which I have proposed is largely of an emergency nature designed to bring rapid economic recovery. However, when recovery is restored, I believe that in order to avoid future disastrous depressions and sustain a balanced prosperity, it will be necessary during the next few years for the Government to assume a greater control and regulation of our entire economic system. There must be a more equitable distribution of wealth production in order to keep purchasing power in a more even balance with production.

If this is to be accomplished there should be a unification of our banking system under the supervision of the Federal Reserve Bank in order to more effectively control our entire money and credit system; a high income and inheritance tax is essential in order to control capital accumulations (this diversion of taxes should be left solely to the central government – the real property and sales tax left to the States); there should be national child labor, minimum wage, unemployment insurance and old age pension laws (such laws left up to the States only create confusion and can not meet the situation nationally unless similar and uniform laws are passed by all States at the same time, which is improbable); all new capital issues offered to the public and all foreign financing should receive the approval of an agency of the Federal Government; this control should also extend to all means of transportation and communication so as to ensure their operation in the public interest. A national planning board, similar to the industries board during the war, is necessary to the proper coordination of public and private activities of the economic world.

Such measures as I have proposed may frighten those of our people who possess wealth. However, they should feel reassured in reflecting upon the following quotation from one of our leading economists:

It is utterly impossible, as this country has demonstrated again and again, for the rich to save as much as they have been trying to save, and save anything that is worth saving. They can save idle factories and useless railroad coaches; they can save empty office buildings and closed banks; they can save paper evidences of foreign loans; but as a class they can not save anything that is worth saving, above and beyond the amount that is made profitable by the increase of consumer buying. It is for the interests of the well to do – to protect them from the results of their own folly – that we should take from them a sufficient amount of their surplus to enable consumers to consume and business to operate at a profit. This is not “soaking the rich”; it is saving the rich. Incidentally, it is the only way to assure them the serenity and security which they do not have at the present moment.

[page 35]
I feel that one of two things is inevitable: That either we have got to take a chance on meeting this unemployment problem and this low-price problem or we are going to get a collapse of our credit structure, which means a collapse of our capitalistic system, and we will then start over. And I therefore would like to see us attempt to regulate and operate our economy which today requires more action from the top due to our entire interdependency than it did in our earlier days.

The quote I have bolded is my favorite part of this testimony, though it is not Eccles' own words. I would be grateful for anyone who can track down a proper citation for the quote. Eccles thought it was either Stuart Chase or William Trufant Foster.

If you've made it this far, you might also enjoy: Fisher's Debt Deflation Theory of Great Depressions and a possible revision

Monday, December 17, 2012

What Is Law…?

What Is Law…?

Scientific Method:

"Therefore, the seeker after the truth is not one who studies the writings of the ancients and, following his natural disposition, puts his trust in them, but rather the one who suspects his faith in them and questions what he gathers from them, the one who submits to argument and demonstration, and not to the sayings of a human being whose nature is fraught with all kinds of imperfection and deficiency.

Thus the duty of the man who investigates the writings of scientists, if learning the truth is his goal, is to make himself an enemy of all that he reads, and, applying his mind to the core and margins of its content, attack it from every side. He should also suspect himself as he performs his critical examination of it, so that he may avoid falling into either prejudice or leniency." Abu Ali al-hasan ibn al-hasan ibn al-Haytham_11th century

Hi, name’s Law. Thought I’d pay you a visit. You’re probably thinking, “Who is this entity calling herself the Law?” Well, I am what I am, but, it’s really quite a deep story__a very deep story. I’ve written thousands of books, built courthouses, libraries, law archives and hired judges and lawyers, tried millions of cases, jailed many criminals, built countless institutions to teach you, and you still ask the question, “What is Law?” I must be quite a mystery to you, when you have to sit down and truly figure out what I really am. Let me see if I can help you out.

One thing I know is, just by you still asking what I am, certainly tells me you do not really know what I am. You seem to be as perplexed as ol’ Socrates was, especially after the Oracle had pronounced him “Wiser than the Gods”, and someone asked him “What is Law?”, and he was completely perplexed. It wasn’t because Socrates didn’t know what the written law was, because he certainly did, but the question was asked in the wider context of its deeper meaning, “What is Law?” How do we completely define Law? What makes law, Law? Why do Chiefs, Kings, dictators, monarchs, church fathers or any other figures of governments, or authority have the power to pass laws for and against the wishes of the people? Oh, I full well know there are good laws, but there are also many bad laws people don’t agree with, when such laws limit the freedoms they feel they have the full free-will right to exorcise. So, what’s up? How can we have a good society, when bad laws, to certain groups, are also needed? Or are bad laws even necessary? We certainly know we do have bad laws, as well as many good laws. Is this necessary? It seems quite contradictory.

If I ask you the question, “What comes first to your mind?” And, I mean absolutely fundamentally first, that very first presentation. “What do you see?” Don’t tell me Law, because I’ll know you are lying. When you first awake in the morning, “What exactly comes to mind?” Is it words, images, pictures, ideas, sentences, propositions or what? Think about it, but don’t think too deeply or you’ll go right past what I’m asking. Let me give you a hint. “Isn’t it a presentation of pure awareness, of that ol’ global or universal general image or movie, you’ve been carrying with you since childhood?” Don’t tell me it’s not there anymore, because it’s been replaced by all the ideas and education you’ve been bombarded with all your adult life__that’s just a cop-out. Relax, let your mind drift to its pure awareness state. And, no you don’t need any Buddha, yoga or meditation to see the pure awareness state__it’s right there behind all the noise you listen to. And no, don’t block it out, just relax and let your initial image come to you, in its largest possible sense. It’s the most huge image-state you ever experience__It’s pure experience__pure awareness, and it’s beautiful. That’s part of what I am. No, it’s not Law, but it’s the similar territory Law covers, as it’s the highest state of universal generality of perception. You can’t see me until you can see you. Don’t kid yourself, you’re there, hidden behind all that excess noise.

Now, I can try to describe this initial awareness presentation to you, but it loses all meaning when too much description is added, as it’s not a logical, psychological, propositional, syllogistic or any kind of normal description, other than pure 1st state direct perception, of all inner and outer experience__metaphysics, theism, ontology, materialism, capitalism, Marxism, Democracy, epistemology, rationalism, idealism, nominalism, or any other form of axiology or teleology, etc., except it’s simply the pre-position view of all these states, as a totally conflated ‘oneness of parts’, completely as presented by the natural neuro-biological functioning of the mind, in its purest state, before you tamper with it with words, thoughts or feelings__simply put, it’s “The Soul of the Everything State of You.” Nothing is more beautiful than seeing this initial state of nature, in its purest naturally given form, as that 1st initial vision. Now, you may ask, “But, what’s this got to do with law?” Simply put, that’s just how huge the definition of Law truly is. There is no possible way for you to see the Law until you can see this 1st initial natural image of the presented whole of all the parts, lil’ ol’ nature naturally gives you. The general aspects of this image, or movie to some, and its contents are generally the same, in the fact we all will be presented with the real world of known objects_trees, lakes, frogs, etc., and basic feelings and instincts, about what we see in the raw, of this 1st innate state of mental projection. “How do I know this?” I know nature is ‘gazillions of times’ more vast than any of us, and she puts that ‘gazillions of times’ more vast picture of herself, in all of us, by simple independence of our meager choices, without one speck of aid from us, other than opening our eyes and ears. Nature works the wonders of perception and memory, totally independent of us measly beings, all by herself, and this makes up our most fundamental auto-logical background system, lying right there in memory, of the 1st law assists of Myself__Law. She’s Law, because she’s absolutely auto-logically independent of our personal actions, but she’s only a general normative influence on us, with her much weaker “Normative Generality”, than our “Social Esthetic Normative Generality.”

You say, “There’s no such auto-logical entity in my mind.” Oh no?, then please explain to me where all those real world perceptual images and sounds go to, if not into your memory, as long as your eyes are pointed at them, and the sounds are loud enough for you to hear them, as per say, music? And further, please explain to me how the world of nature and even the universe of real world objects and actions is not a rational existence and action system creating this auto-logicality I speak of, except of course for our meager meddling, with feelings and personal counter-rationalisms. You can’t, because there’s simply no exit from the effects of real world objects and actions upon us. You are trapped in the 1st laws of Law, within the universal law systems, and I’m trapped inside your self-created law systems, due to the fact that you can’t, not only see what I am, you can’t even fully see what you and nature truly are. Now, “Ain’t that quite a pickle we’re both in?” You, trapped in ignorance, and me, trapped in your ignorance, but, “I’m Law, and I want out of your ignorance.” “Please, help me to escape this legal stew.” “I don’t like it any better than you do.”

If you allow me to look deep inside you, as you look deep inside of me, I think we can both help each other out of this smelly stew. “What do you say?” Here’s how we’ll go about it. We’ll start from that “Highest Normative Esthetic State Vision” of “Nature’s Pure Image”, or our “Soul as The Same Vision”, deduce a few laws, ideologies and basic instincts and desires from it, rework a few pre-suppositional ideologies and dogmas, build a few virtual systems of comparative Law, talk a bit about which entities have the most power at dynamic, normative, natural, common and positive Law__and see just what we can come up with. It’s gonna’ be a bumpy ride, but I’ll run the air in the tires as low as possible, to soften it a bit. First, “What basic element do you think is the most formative of Law?” Is it The positive Law? The natural Law? The common Law? The Laws of Nature? Political Law? Contract Law? Social Law? Economic Law? Social Contract Law? Constitutional Law? Mickey Mouse Law? Goofy Law? Or, “What Law takes precedence over any of the above?” Or, Is it even any one, or a mixture of all?, the old “One and The Many” problem. See what I mean about them thar’ bumps? Now, add in all them thar’ pesky ol’ ideologies, dogmas, skepticisms, criminals, greedy Grinches, thieves and what-not, and we start to get a picture, quite different than that 1st pure initial image. “Why don’t the two match?” “Could it be you humans ain’t paying enough attention to the 1st initial vision?” “Do you suppose, you may be just a tad incompetent?” Just a tad?

In that last paragraph, I asked, “What basic element do you think is the most formative of Law?” That’s Me, in case you didn’t notice. “How about considering your-self, or really all of humanity, and their basic instincts, emotions, wants and desires as the most formative element of the Law?” You’re probably saying, “How can that be, with all the a priori rationality, a posteriori empiricism, a fortiori debate and all the institutional intelligence, and you say it’s fundamentally basic innate common sense?” My answer is simply, “What to hell do you think is the foundation of all your ‘iori-ism-ology’ nonsense?” “Wake-up, it’s basic common sense.” Though it is basic common sense, nothing could be more complicated than when all these ‘ioris-isms-ologies’ get involved in Law, never such a cross purpose set of common sense motives you’ve ever seen__hundreds of cultural cross-purposes feeding into the formation of the Law systems, over history, multiplied by millions of varying degrees of legal ideas, wishes and desires within the citizenry. Nothing imaginable could be more complicated__Nothing. At first, kinda’ even makes me a bit teary-eyed, to think about it. No fret, I’ll straighten you out. Just follow the yellow brick road__That’s some lotta’ gold there, ya know.

You may ask, “Why do I need all this noise to understand Law?” Well, that’s not my fault. It’s you humans who wouldn’t believe the first great men who told you the truth about Law, so now you’ve got so many varying degree arguments involved, it’s no wonder the average yokel can’t even begin to see the light of day. Let’s see, if you can simply first realize you are going to need a new vehicle to get from a, to b, to c, to d, and not e__just maybe we can come to a mutually beneficial understanding. Most of the vehicles you humans threw away millennia ago were and are what you truly need to get from a, to b, to c, to d, and not e, due to all the arguments seeming to have logical validity enough, so’s you’ve ended up with cultures of nothing but useless nominalism and cultural relativity. Each of the foolish negative arguments against sound ideas have made the sound thinkers think they don’t think right any more, but in fact, they do__but they simply know of no new mental-vehicle to get from a, to b, to c, to d, and not e, as it’s simply been lost to history’s massive schools of negative arguments. Those vehicles are “The Methodological Sciences” and “The Normative Sciences.” Culture has simply lost track of the fact that all those ‘-isms and -ologies’ I mentioned in paragraph #4 all started out as “Methodological Sciences” and “Normative Sciences”__Yet, modern society has completely gutted their real meanings, in favor of some cultural relativisms, extreme rationalisms, extreme natural rights experientialisms and even more extreme nominalisms, if not even worse absolute skepticisms and solipsisms. We’ve gotta’ shine those old vehicles up again.

Since the anti-realists and anti-intelligence groups have destroyed most all connections from values to rationality, new bridges must be built for our shiny new vehicles to drive over. The shiniest vehicles needed are “Normative Esthetics” and “Real Scientific Respect” as relates to fundamental meanings. “Why do I say Esthetics?” “Is there any other known vehicle to be both instinctual emotional sourced and intellectually rationalizable, at the same time?” “None that I know of.” Well you may say, “Just why is this vehicle needed to bridge the gap between values and intelligence?” “Ahhh, didn’t I just mention above about the empty-headed critics destroying all possible bridges of communication from a, to b, to c, to d, and not e?” Since they’ve blown up all the bridges, we done gotta’ build em’ anew, once again. You see, Esthetics is sourced in emotions through its infinite side of beauty, idealism and perfection, and also sourced in real world objects through its finite side of form, function and action, thus allowing the intellect to intellectualize instinct and values, fully valid and compatible with rationality and the hard sciences, which it at present is not able to do, as the critics have built contradictory cross-purpose schools of thought against sensible uses of such pragmatic values, experience and common sense of “Normal Experience and Rationality.” “This is why we need the shiny new vehicles and bridges, of “Normative Esthetics” and “Scientific Methodologies of Thought”, to reach the yellow brick road of real truth and wisdom, once again.” The most basic foundation of Law__“Me”__is Esthetics and Science, as it takes Esthetics and Will to intellectually import values into ethics, and it takes the Scientific Method to fully understand, communicate and institute the Law of such values, because feelings and values can’t talk sensibly about feelings and values, to Law, without becoming thoroughly lost in feelings and values, due to its required circular reasoning within its own naked self__that’s just a fact of the nature of private personal language, lacking the Esthetic go-between vehicle. Sorry__but, The ‘Big-Shot’ a priorists defeat the minimalist experientialists, at intellectual contest, almost every time, otherwise.

Ok, back to “What is Law?” Let me take a new route to more deeply explaining law to Law. Law can only be thoroughly explicated by an “Analytical Scientific Method”, as all other methods fail, by not being dynamic enough. By dynamic, I here mean changing over time, which the Analytic Scientific Method allows, as Science readily admits its subject, “Method”, is always evolving, and never complete, as culture adds new material and actions every day. Of what has been mentioned above about ‘ioris-isms-ologies’, etc., and possible bridges of communication from a, to b, to c, to d, and not e, let’s set up a few virtual models of Law Systems to see if we can begin to put the story straight, in our minds.

A comparative analysis of any of the present pre-suppositional ‘ioris-isms-ologies’, etc., will quickly reveal their strengths and weaknesses. Let’s take the “Common Law” first, as it’s the most studied of all the “Law Systems” from Cicero onward, if not earlier, but the earlier and some later periods are more dominated by the “A Priori Rational Systems.” The “Common Law’s” strength is in its highest plurality of citizens’ considerations and actions involved, compared to any other system. The “Common Law” is the second deepest sourced system, being that of most of the populations’ wishes, desires habits and actions__even though not all the citizens directly participate in this Law’s enactment, they all are indirectly involved through the social function of personal and community values’ “Normativity.” Now, of course right here, the “A Priorists, A Posteriorists and A Fortiorists of Law” will stand up and scream, “Sir, you are absolutely wrong; The rational and experiential instinct of intellect is by far the most controlling aspect of all laws passed. Who do you think the Legislators and Justices, passing all the laws, have studied most?” Well, they have a point, but, only at the great expense of ignoring “The Deepest Natural Law”, “The Common Law” and “The Normative Law” as well, and concentrating solely on “The A Priori, A Posteriori and A Fortiori” nature of the laws and Law. They completely block out the “Descriptive” and “Prescriptive” “Normative Functions” of “The Natural Law” and “The Common Law”, to hoist their “Naked A Priori” or “Naked A Posteriori” or “Naked A Fortiori” upon the feelings and intellect of the culture, at least as much as they can get away with, and believe me, that’s quite a reasonable sum, especially when they mix “Natural Law” in, to strengthen their own positions, but totally deny they are doing so. They fail to realize “Natural Law” is the pre-suppositional state__visible or invisible, admitted or not__of just about everybody, at the core of fundamental thought and action.

By doing this, the “A Priorists” “A Posteriorists” and “A Fortiorists” are missing one of the most important aspects of the Law, which is “The Normative Law’s” actual street to legal functions; all the people’s traditions, habits, mores, ideals and histories, as are so aptly pointed out by such notables as Cicero, Grotius, our Founding Fathers, Holmes, Hand and Griffith, just to mention a few who dealt with the “Norming Functions” of History’s “Natural and Common Laws.” But; What of the weaknesses of the “Natural and Common Laws?” And, here again we see the problem of ignoring the other side’s “A Priori” “A Posteriori” and “A Fortiori” views, by not analyzing the full and true depths, breadths and effects of the others’ “Law Systems” which in actuality do have the same but different degrees of “Norming Affects” on society, to produce the “Legal Effects” of its cultural habits’ coercions and enforcements upon culture’s “Final Legal Product.” So both sides of these “Legal Ideologies and Dogmas of Law”, and I’m only taking a few here to not be too long winded, are ignoring the “Greater” part of “The Law”; the “Normative Sciences” and “True Actions of Law”, not to mention, the “Real World Effects” of “All Systems’ Cultural Normative Forms and Functions”__Which almost entirely are lost to the “Historical Stew of Thoughts and Ideas’ Collisions.”

For just a short and trivial note about most all the other confusing ‘ioris-isms-ologies’, etc., being impossible and possible bridges of communication blocks from a, to b, to c, to d, and not e, which prevents the good of the other systems not being, or being, generated, due to the fact, most of them are confusing and conflating most of the “Legal Points” addressed in the previous few paragraphs. Just take “Skeptics”, “Nominalists”, “Relativists” and “Solipsists for a few examples; of them filling the “Mental and Legal Gaps” being missed; mainly “Social Normativity”, and one quickly sees what gives these false and pseudo-systems their seeming room to operate, and heavy weight, that they can’t cross the new bridges “I, Law”, am trying to build for the shiny new vehicles to travel across, to true knowledge, best liberty states and possible wisdom, unless they themselves hitch a ride in the new vehicles. Most all these other ‘ioris-isms-ologies’ simply block the necessary mental paths, roads and bridges our proper communication and understanding must follow, to rise to the “Truth of Law.”

Finally, maybe I can get to that, all this time waited for, definition of, “What is Law?” Law is the interactions of everything mentioned in this paper about human motives and habits; that is as far as the social Law created by all our self-controlled human actions and interactions __ psychological, theistic or logical, etc. Of course, self-controlled human actions and interactions involve all the varying degrees of emotional motives, desires and values of all humans in competition with all the opposing varying degrees of others’ emotional motives, desires and values__through the free-wills of all involved. This action and interaction also involves all the cross-purpose and cross-motives of all these minds’ rational intelligences as well as the personal motives, habits and actions, also in competition, through free-wills, of all opposing and compromising actions and interactions. This all comes down to simply personally thinking out all the feelings, habits, motives, experiential and intellectual potential of all the people’s actions, especially including one’s own, being applied to Law, from and to all the disparate sources, where a realization of governmental restraint’s necessity begins to seem natural to be the core arbiter of all these differences, through its necessary governments and courts, due to frail humanity’s lack of enough “Esthetic Virtue” to do without such governments and courts. Law is the complex dynamic organization of being the high “Normatizing/Normalizing Overseer Power Arbiter” of all social change over history, showing itself in much the same vision of that natural 1st state vision of pure nature, except it’s, at bottom, a purely human, mostly self-controlled creation of Law, where, Law’s purpose is to “Normatively” reign in the evils of human nature, thus creating the good. Law is fundamentally, “A Normative Scientific Form and Function” upon all cultures__Being individually and collectively or group self-imposed upon all modern highly developed cultures, by all upon all, if only all were to choose to participate, so they’d realize their part. Whether they participate or not, “Law” is still a “Normative Scientific Function” upon all cultures__Self-imposed upon all modern developed cultures, by an “All Upon All” “Cultural Effect and Action Process”, as long as they have some form of participatory governance, as even the least participate at some level, even if it’s only no more than executing a seeming invisible contract to buy a hot-dog. That’s still a real “Norming Effect” upon society, as the hot-dog purchaser sees the habitual actions of other hot-dog buyers acting either civilly or uncivilly, and due to “Normativity”, chooses to follow suit, or not.

Hi… “Law” here; Kick the tires a few times, to see if the shiny new vehicles are sound.

Good night all,

“The Law”

P.s. “Normativity”__or “Liberty” and “Morality” as symmetrically the same__is also a “General Universal Idea and Ideal”, but is real world measurable through history’s court records’ and libraries’ largest “Scopes of Evidence”, possible to recover and measure, in all forms of Law.

Morality requires a “Scientific Vehicle” to transport Morality into Science. That Vehicle is “Esthetic Normativity.”

You are a “General Normative Moral Soul” if you choose to be__It’s your ground__That’s it…

Wednesday, November 14, 2012

Mr. Global Economy – The Economic & Psychological Prognosis

by Satyajit Das(A must read, as Satyajit has done an excellent job of a round-up view)

    As requested, I have undertaken an extensive examination of Mr. Global Economy, both physical and psychological.
Patient History
The patient’s history includes a seizure in 2007/2008 – financial losses, banking problems, a major recession, etc. Liberal injections of taxpayer cash avoided catastrophic multiple organ failure assisting a modest recovery.
Governments ran large budget deficits in the period after the crisis. Interest rates around the world were reduced to historic lows, zero in many developed countries.
With interest rates constrained at zero, central banks have adopted “innovative” treatments, referred to as quantitative easing; the fashionable appellation of a more old-fashioned procedure – printing money. Balance sheets of major central banks have increased from around $6 trillion to $18 trillion, an unprecedented 30% of global gross domestic product (GDP).
As evident from the anticipation of and reaction to decisions by the U.S. and European central bank to provide further support, the global economy is now addicted to monetary heroin. Increasing doses are necessary for the patient to function at all.
Lifestyle Changes
Mr. Economy has also not made the recommended changes necessary for a return to full health. He seems to have taken rock star Steven Tyler’s advice: “Fake it until you make it.”
Borrowing levels remain unsustainable. Debt levels for 11 major nations have increased from 381% of GDP in 2007 to 417% of GDP in 2012. Debt has increased in Canada, Germany, Greece, France, Ireland, Italy, Japan, Spain, Portugal, the UK and the U.S.
There has been a shift of debt from private borrowers to governments. There has also been a change in the identity of the lender – governments and central banks have heroically stepped in to take over debt from commercial lenders and investors.
Global imbalances – major current account surpluses and deficits – remain. Large exporters like China, Japan and Germany remain resistant to abandoning their export-based economic model.
Little progress has been made in bringing the banking system under control. Regulatory initiatives involve activity if little achievement. New regulations of stupefying complexity run to thousands of pages.
The process provides continuing employment to thousands of needy policy advisors, regulators, lawyers and lobbyists, who would otherwise struggle to gain productive employment. Without their heroic efforts and stoic acceptance of privations (first class travel, 5-star hotels, constant conferences and symposiums etc), the recovery would be even more tepid.
Major Organs – U.S.
Physical examination revealed that the U.S. is in marginally better condition than other organs – the “cleanest dirty shirt” is the expression. Despite a $1 trillion annual budget deficit (6% of GDP) and zero interest rates, growth is a tepid 2%.
The housing market’s rate of descent has been arrested but prices remain 30-60% below highs. New housing starts have stabilized, at around 50% below peak levels. Benefiting from a weaker dollar, manufacturing has improved. Lower oil and natural gas prices have benefited the economy.
Employment remains weak. If discouraged workers who have left the workforce and part-time workers seeking full-time employment are included, then unemployment is over 15%, well above the headline 8% rate. The total number of Americans now employed is around 140 million, well below the peak level above 146 million.
Consumer spending remains patchy. Job insecurity, lack of earnings and wealth losses are causing households to reducing spending and repay debt.
Record corporate profits have been achieved mainly through cost reductions and minimal revenue growth. Investment is weak due to the lack of demand.
Bank lending is sluggish due to lower demand for credit and problems of financial institutions.
Federal public finances remain unsustainable. Hardening of the political arteries means that there is little resolve to deal with deep-seated problems. There is risk of a “fiscal cliff” episode.
If there is no political resolution, then automatic tax increases (non-renewal of tax cuts) and spending cuts equivalent to about 5% of GDP, mandated under the 2011 increase in the national debt ceiling, will automatically occur. This would mean a contraction equivalent to more than $600 billion in the first year and $6.1 trillion over 10 years. This would improve the budget deficits and slow the growth in debt, but adversely affect growth.
State and municipal finances are also under stress, with an increasing number of borrowers filing for bankruptcy.
Other Developed Organs
Many European countries have high debt levels, budget and trade deficits, social spending inconsistent with tax revenues, poor industrial competitiveness (with some exceptions), a rigid monetary system and inflexible currency arrangements. This is compounded by weaknesses of the European banking system with large exposure to sovereign bonds issued by peripheral nations.
Intellectually and institutionally, Europe is unable to deal with its debt crisis. Europeans believe stabilization and recovery can be achieved through greater integration. Even if issues of national sovereignty can be overcome, integration will not work. Unsustainable levels of debt do not magically become sustainable by changing the lender or guarantor. The monetary arithmetic of European debt problems is that the EU and Germany, its main banker, does not have enough funds to rescue the beleaguered euro-zone members.
Austerity dooms Europe to a prolonged and severe recession as the debt burden is worked off. The alternative, a debt write-off, would result in significant loss of wealth for the mainly Northern European lenders triggering an economic contraction and prolonged period of economic stagnation.
Japan is in a state of advance atrophy, despite decades of therapy. The temporary rebound, mainly the result of the recovery from the tragic tsunami and government spending, is running out of steam. The political system is even more blocked than that of the U.S., allowing only a trickle of oxygen to circulate, impairing function.
Japan’s primary investment merit is that almost all possible manmade and natural disasters have happened and the worst is factored in.
Emerging Parts
Mr. Economy’s physicians originally hoped that the BRIC (Brazil, Russia, India, China) nations would offset weakness in more developed and weaker elements. Unfortunately, China’s growth is slowing rapidly. India and Brazil have also lost momentum, with growth weakening. Russia is dependent on high energy prices.
BRIC weakness is a function of lower demand from developed countries reducing exports and weaker commodity prices.
The withdrawal of European banks, historically major lenders to emerging markets, has decreased the flow of money to countries needing foreign investment. For example, in 2011 large European banks accounted for 36% of global trade finance, based on a World Bank study. Some 40% of trade credit to Latin America and Asia was provided by French and Spanish banks. As the European banks, besieged by financial problems at home, reduce their international activities, the supply of financing has decreased and its cost has increased.
Emerging markets also show increased susceptibility to the developed world credit virus. A rapid expansion of domestic credit in China, Brazil, Eastern Europe, Turkey and India will result in banking system problems. The combination of external and internal weaknesses threatens emerging economies, naturally prone to serial crises.
Psychological Assessment
As requested, Dr. Freud assessed the psychological condition of Mr. Global Economy.
He concluded that Mr. Economy is delusional, believing complete recovery is imminent. Presented with contrary evidence, he quoted philosopher Friedrich Nietzsche: “There are no facts, only interpretations.”
Like many terminally ill patients, Mr. Economy has embraced faith healing techniques. Keynesian and monetarist regimes, he believes, will boost demand and create sufficient inflation to bring his elevated debt levels under control.
Keynesian Kool-Aid
The Keynesian cure entails government spending financed by taxation or borrowing to restore Mr. Economy’s health. There is no evidence that it can arrest long-term declines in growth.
Government spending boosts activity temporarily, but may create excess capacity in the absence of underlying demand. Nostalgia about President Roosevelt’s infrastructure projects during the Great Depression is misplaced. Excess electricity generation capacity from dam projects was only absorbed by wartime demand for defense equipment.
As tax revenues have fallen due to slower economic activity, governments have already borrowed to finance large budget deficits.
Government ability to borrow to finance further spending is increasingly limited, without resort to the innovative monetary techniques. In recent years, the Federal Reserve has purchased around 60-70% of all U.S. government debt issued. The European Central Bank is now financing governments indirectly by lending to banks to purchase sovereign bonds.
The ability of the U.S. to finance its large budget deficit relies heavily on several unique factors. The Federal Reserve and the banking system flush with central bank funds have been a large purchaser of U.S. government bonds. The status of the dollar as the major trade and reserve currency has allowed the U.S. to find buyers of its securities, even at very low interest rates. The U.S. ability to finance is also underpinned by the balance of financial terror – overseas buyers, such as China, Japan, major oil producers are forced to continue purchasing U.S. government debt to avoid loss of value on existing large holdings.
The limits of government’s ability to borrow and spend are highlighted by the European debt crisis. Investors are increasingly concerned about public finances, becoming reluctant to finance nations with high levels of debt or demanding high interest rates.
Monetary Boosters
Having reduced interest rates to zero, central banks are giving Mr. Economy the modern Monetarist prescription, changing the quantity of money available. Under quantitative easing, they buy government bonds injecting money into the banking system to lower borrowing costs and increase the supply of money to stimulate demand and inflation. Central banks believe they can keep rates low and print money to finance government debt purchases indefinitely.
But greater government spending, lower rates and increased supply of money may not boost economic activity. Crippled by existing high levels of debt, low house prices, uncertain employment prospects and stagnant income, households are reducing, not increasing, borrowing. For companies, the absence of demand and, in some cases, excess capacity, means that low interest rates are unlikely to encourage borrowing and investment.
Loose monetary policies may not also create the hoped-for inflation, needed to lower real debt levels. Banking problems and the lack of demand for credit means the essential transmission mechanism is broken. Banks are not using the reserves created and money provided to increase lending. The reduction in the velocity of money or the rate of circulation has offset the effect of increased money flows. The low velocity of money, the lack of demand and excess productive capacity in many industries means the inflation outlook in the near term remains subdued.
Side effects
The treatments being taken have serious side effects. Low rates entail a transfer of wealth from investors to borrowers, with the lower coupon payment acting as a disguised reduction of the principal amount of the loan. They provide an artificial subsidy to financial institutions, allowing them to borrow cheaply and then invest in higher yielding safe assets such as government bonds.
Low rates discourage savings, creating a disincentive for capital accumulation. They encourage mispricing of risk and feed asset bubbles, such as that for income (high-dividend-paying shares and high-yield low-grade debt) as well as speculative demand for commodities and alternative investments.
Low policy interest rates have created massive unfunded pension liabilities for governments and companies. S&P 1500 companies have aggregate pension deficits of $543 billion, an increase $59 billion in the first half of 2012.
In the long run, economies become dependent on low rates as high debt levels cannot be sustained at higher borrowing costs.
Internationally, low interest rates distort currency values and also encourage volatile and destabilizing short term capital flows as investors search for higher yields. Attempts by nations to increase their competitive position by weakening their currency also threaten tit-for-tat currency wars, trade restrictions and barriers to investment flows.
The faith healing cures provide symptomatic relief but do not address fundamental problems – the high debt levels, lack of demand, declining employment, lack of income growth or the problems of the banking system. It is not clear how if at all any of the cures being pursued can create real ongoing growth and wealth to restore Mr. Economy’s health.
Limits to Knowledge
The number of medical advisors involved and variety of drugs – stimulus, austerity, quantitative easing, leeches, cupping, witchcraft – is unhelpful. While doing nothing is politically and socially impossible, the treatments may be doing more harm than good. As French playwright Moliere noted: “More men die of their remedies than of their illnesses.”
Interestingly, these same faith healers until recently oversaw Mr. Economy, prescribing regimes that caused the present financial and economic calamity. Perhaps like writer Samuel Beckett they are keen to fail better next time.
There is no recognition of the limits to knowledge and policy tools. Economic relationships are poorly understood, complex and unstable. Cause and effect is uncertain – does money supply influence nominal income or does nominal income affect velocity and the demand for and thereby the supply of money? The ability of governments and central banks to influence economic activity is overstated. As economist Wynn Godley put it: “governments can no more control stocks of either bank money or cash than a gardener can control the direction of a hosepipe by grabbing at the water jet.”
To paraphrase Voltaire’s observation on doctors, Mr. Economy’s faith healers prescribe medicines of which they know little, to cure diseases of which they know less, in economic and financial systems of which they know nothing.
Prognosis for Mr. Economy
Mr. Economy now has a serious chronic condition with limited prospects of a full cure. He might continue to live but in an impaired state of no or low growth for a prolonged period. The threat of a sudden life threatening seizure cannot be discounted. Constant management will be needed.
Happily, Mr. Economy remains remarkably optimistic. Perhaps he recognizes the truth of Mark Twain’s observation: “Don't part with your illusions. When they are gone you may still exist, but you have ceased to live.”
© 2012 Satyajit Das
Satyajit Das is a former banker and author of Extreme Money and Traders Guns & Money