New Dec 27, A Thinker For Our Times, Keynes...by Robert Skildelsky
New Dec 8, Where did all the money disappear? – Liquid Fantasies, by Satyajit Das
The US Economy Must Go To Defcon 1, by Fabius Maximus and Link
"Reforming The World's International Money", by Paul Davidson
The Entire Global Market Law System Is Broken___Throwing Good Money After Bad Law Makes No Sense…!
Let’s Take A Higher Road...
“I’m making an extremely strong statement, as to why, Only international exchange clearing architecture law change, is absolutely necessary, to solve the global derivatives’ nightmare”…
As America tries to rap her mind around the global derivatives mechanics, of the `Shadow Banking’ system’s collapse, this presently expanding `Virtual State’ corporate market is eating more fresh money than the entire world can throw at it___combined. The very nature of this hungry monster is absolute computerized speculative embezzlement, on into deflationary debt depression cycles, bankruptcies and complete destruction of all viable democracies, socialisms and autocracies alike, and all while the nation and world try to find their lost minds, souls and new analytic reasoning abilities___required. What do you think the outcome will be, when all parties involved are admitting they haven’t the present ability to fully understand this entire global mechanics___as is presently true? Especially, in the face of terrorism and potentials of new war outbreaks___Who knows where and when…?
I personally don’t think the prospects of safety and security look very promising thus far, so it’s nye beyond high time more economists, and other seriously interested parties, tried to lend a helping hand, at rapping their minds around this massive international financial problem? As it’s only, an outright plain and simple old bank robbery, except this time, it’s the corporations’ lost computerized mind mechanics, and their wonderful derivatives’ contracts and related trade and transactions’ markets escalation, that’s robbing every nation on Earth, and I might mention___in absent-minded collusion with the Federal Reserve, U.S. Treasury, and all their counter-parties___World-Wide___It’s all simple credit shrinkage, and debt expansion…
Many times over the last six months, in this very blog: http://theawakeningoftheamericamind.blogspot.com I’ve mentioned several different viable legal/financial and economic model methods, to solve this massive global mess. The above computerized summary is the absolute reason, a new international law architecture change is necessary. Without a new internationalized democratic constitutional contract law change, to re-direct the international capital and transactions’ flows, all money systemically added, will just continue being no more than “throwing good money after bad law”. Here again is the simplest and easiest understood model of the law changes needed, offered over 2400 years ago:
"The citizen of the ideal state will require a currency for the purpose of every day expenses; This is practically indispensable for workers of all kinds and for such purposes as the payment of wages to wage earners. To meet these requirements, the citizen will possess a currency which will pass for value among themselves, but will not be accepted outside their own boundaries. But a stock of some currency common to the Hellenic world generally i.e., of international currency, will at all times be kept by the state for military expenditures or official missions abroad such as embassies and for any other necessary purposes of state. If a private citizen has occasion to go abroad, he will make his application to the government and go; and upon his return if he has any foreign currency left over in his possession, he will hand it over to the state receiving in exchange the equivalent in local currency." Plato (The world’s first, most sagacious, political economist.)
Sorry to mention it, but there is no other viable method to stem the flow of debt defaults, originated by the massive global floating foreign exchange, forward exchange, tax havens, and transactions/derivatives’ bubble pervading the entire globe, as the aggregate power of knowledge and computers, have learned how to rob the entire system blind___and can not be stopped, or fixed, otherwise. Believe it or not, this is no fault of any individual, or group of individuals. It’s simply the excessive speed of technology’s evolution out-stripping the capacity of human knowledge systems, and the individuals pace of learning all, needed to handle the complexities of.
Plato’s system of securing national economies’ subsidiarity and sustainability, at the international law change level, has been updated through the years, by many brilliant minds. First since Plato by Benjamin Franklin, then by Paul Einzig, J.M. Keynes, Paul Davidson, Jane D’Arista and myself. The best summations of Keynes’s ideas are presented in Robert Skidelsky’s and Paul Davidson’s books on Keynes. The three volume set by Robert, and the last two of Paul’s. I prefer Paul Einzig’s, Robert Skildelsky’s, and Paul Davidson’s together, as all three are really required to understand all aspects of Plato/Keynes’s local and international complexity, necessary to rap one’s mind around the entire present global transactions’ bubble___sufficiently. I mention Paul Einzig as he’s needed to thoroughly understand the forward exchange market, which is actually the preceding derivatives’ market. He wrote two, one in `36 and one in `66. The titles are “The Dynamic Theory of Forward Exchange” and “A Dynamic Theory of Forward Exchange”, and also his book “Exchange Clearing”. I don’t believe any complete understanding of the entire complex derivatives’ transactions markets is possible without reading and understanding these books thoroughly. Another possible, yet with less depth, is Egon Sohmen’s book on “Forward Exchange”. “Barons” also wrote another, but it’s more technical than factually theoretical, though still worth the read…
I can’t stress enough the necessity of the above, to help rap one’s mind around these complex transactions’ markets. All theory is severely limited without this information and knowledge. We must make use of it, to build the new and proper international constitutional contractual law structures, necessary to return debt default structures, to fair, sustainable and equitable expanding credit and infrastructure systems, for all nations…
A Global Insurance Policy___The Restoration of Truth, Trust and Responsibility In Markets___A Total Global Insurance Policy Path To Prosperity…
As per above, derivatives contracts are at present controlling the destiny of the entire global markets and trading systems, of every nations’ future welfare, or ill health, if not re-regulated properly, and extremely carefully, slowly and safely. I’ve noticed many economists, on TV and postings at Nouriel Roubini’s site, advocating the elimination of the toxic side of this market, immediately, but this is, and would be a great mistake. Links to these articles are posted on my macromouse blog at: http://macromouse.blogspot.com over the last few month’s posts. Many are also listed above and on other posts in this blog. I suggest following the many arguments about how to handle the derivatives fiasco, but caution that too fast an action does more damage than good. Presently, the lack of the `up-tick’ rule and presently existing `mark-to-market’ rules are unnecessarily forcing the extreme pace of derivatives cashing costs, as they are brought back onto banking and corporate balance sheets, to unnecessarily bankrupt many banks, insurance companies, hedge funds, and other corporate entities, and will finally also bankrupt the bond funds, if not properly handled. This major problem must be solved with a thorough understanding of new dynamic “sliding time scale law changes” that must be enacted, thus financing this toxic debt out over a ten year period, of say 10% `marked-to-market’ per year, not to unnecessarily bankrupt many entities, the world can not do without, if she is to survive as a viable capitalist system. Otherwise, we’re sadly going to end up with too many too socialist, communist or totalitarian governments spread around the globe. We must trade the static `mark-to-market’ accounting rule, for a dynamic rule of slower and safer change. The present missing `up-tick’ rule, and `mark-to-market’ rules are collapsing capitalism, unnecessarily. This warning is not to scare. It’s just the fact of markets’ re-regulation moving far too dangerously fast, if not heeded.
Since most of the developed world’s nations’ market interests are fast moving monies to safe havens, mainly the U.S., all should realize the cashing costs of such contracts fall on the nation where the cashing takes place, and not where the contracts were written. If so much of the world’s `hot money’ is moving to the U.S., it only stands to reason most of the derivatives and other contract cashing costs are falling on us. This is the reason this problem must be slowly refinanced over a longer period of time, to prevent the total collapse of the entire global system, as America is still the key trade currency___Remember, “We’ve never been here before”___The world has never had this much leverage, in these international contract markets, at no time in the planet’s history. This is why we absolutely need a global governments’ totally insured and guaranteed emergency international exchange clearing and banking architecture, as without one, the newly evolved computerized cashing costs will eat capitalism alive___Printing new money into a world of `shadow banking’ derivatives’ theft___Won’t Work! The international derivatives market can and will steal more than all can print___Until we change the laws!
We can only safely unwind the derivatives’ market with a 10% per year global exchange clearing insurance policy___A fully insured international exchange clearing bank___A global emergency, fully insured international clearing bank. This must be newly constituted, chartered and instituted. The present situation is simply finance insuring a continuing `Ponzi Scheme’, unless the proper national and international contract, currency and trade laws are enacted___First! All nations are going to have to step up to the responsibility plate as newly realized and created “market-makers” and perform the above tasks, if we are to prosper, once again. The above is a skinny sketch of how to government bond insure the derivatives’ markets, (since part of it is absolutely necessary for world trade), through an international clearing house insurance system of new global growth, for all nations. I can’t state it enough times, derivatives must be slowly reduced by new `sliding time scale laws’, as markets are expanded with massive infrastructure projects and all totally government insured through major new international clearing banks and Keynes’s complete `Bancor International Exchange Clearing System’. We must insure derivatives down, and markets up, by all nations’ governments taking their temporarily necessary new roles as `Market-Makers of Last Resort’. We must move the world from assurance, to insurance___And absolutely government guarantee the world’s recovery…
p.s.
The above post should be read in conjunction with all the links provided, the quotes below, and this entire blog’s economic posts, plus the last several month’s links at: http://macromouse.blogspot.com BTW, all the Obama posts on this blog: http://theawakeningoftheamericamind.blogspot.com/ are also political-economy posts, related to the above… mailto:lloyd.gillespie@gmail.com
"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." Me
“Under floating exchanges the demand for forward exchange facilities would increase considerably while the volume of obtainable facilities would dwindle.” Paul Einzig___ (Just replace “forward exchange facilities” with “derivative contract facilities” above and you have the aggregate derivatives’ system’s cashing costs exceeding facilities ability to pay, due to contract profits being over-hoarded in `tax haven mattresses’, which in turn greatly creates the present global credit crunch. Since computerized derivatives’ systems cashing costs increasing, and exceeding nations’ ability to pay, will continue unabated, in a thoroughly open financial foreign exchange architecture, this is why an updated, and PPP(purchasing price parity) balanced, Plato/Keynes international financial architecture transactions/currency clearing law system___Is Absolutely Needed!)
“Without a full understanding of the functioning of forward markets, all discussion of exchange rate policy must remain seriously deficient.” Egon Sohmen___ (Just replace “exchange rate” with “derivatives” above and Egon’s statement tells a truth of this complex market).
“Forward contract costs fall on the nation where the transaction takes place, and not the nation where executed.” William Spalding___(Just replace “Forward” with “Derivative” above and you have the truth of derivatives’ system cashing costs, as forward contracts are the predecessors of derivatives contracts, and mechanically function most identically, in the foreign exchange markets).
Above quotes copied from my book; “INTERNAL EXCHANGE CLEARING”. The above three authors greatly helped me understand these complex markets, back in the `70’s, `80’s and`90’s. I read William Spalding first way back in 1960, on the sound advise of a classmate___He’s still brilliant, as are the others…
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