Spontaneous Collusion

In the previous post, I hinted at something that needs to be spelled out more clearly. What's taught in economics classes all around the world is, for the most part, ideology (aka rhetoric) posing as science. Even in an ostensibly free society like the United States, ideas are formulated, promoted, and promulgated when they advance an "official" agenda. However, it's not really necessary for any authority to state what the "official" agenda is. The collusion to form and promote it is spontaneous.

The mainstream reaction to bitcoin is a good current example. The value of "bitcoin", today, is sort of like the value of the early world wide web. The WWW is built on a giant stack of hardware, open protocols and specifications. Near the top of that stack is the HTTP protocol. Today, millions of web servers run the HTTP protocol, millions of business transactions take place over the HTTP protocol. Today, the WWW is essential infrastructure worth countless billions of dollars. The value of bitcoin emerges from its utility as a means of exchange, the infrastructure that makes that operate, and the ideas and concepts that make that infrastructure work.

Over the past couple of weeks as the BTC price sky-rocketed, bitcoin attracted the attention of the mainstream media. The reaction is typically skeptical to negative. There's an instinctive wagon-circling; no memo from the central office is necessary to coordinate the reaction of the many apparatchiks who benefit from the current system. (Rather than provide an example here, just read Reggie Middleton's takedown of Krugman's "Anti Social Network".) This "spontaneous collusion" model is also how I view the founding of the progressive era.

Similarly, bitcoin is an example of spontaneous collusion. Many people are waking up to the inadequacies of the institutions they grew up with, really those institutions don't serve any of their needs or further their goals. Bitcoin is one of the potential alternatives. It is part of the DIY movement and a shift to removing responsibility and power from central authorities and their useless technocratic allies and distributing it.

Crass Production

I'm trying to systematically describe how the United States became so fucked up--lay out the history, dig up the philosophical foundations, and stay away from current affairs. But I am going to take a break from that and jump to the present day and talk about negative interest rates.

A recent article in the Huffington Post discusses an idea that's being kicked around by the same sort of people who are the subject of my current inquiry. A century ago there was Charles Conant, and today shills with credentials and public platforms are people like Larry Summers and Paul Krugman.

In 2008, the western banking system died, but rather than composting the carcasses of these criminal institutions and exposing their owners and creditors to financial distress, they were turned into zombies that require constant infusions of cash to stay alive.

The popular conception of banks is they are wealthy institutions (i.e. loaded with assets) because people deposit their money there, and the ATM machine always has cash. In fact, almost every bank is like a middle manager neighbor that has two Lexuses, a McMansion, and kids in college; they basically eke out a subsistence living from what's left of their income after debt service and are constantly teetering on the brink of insolvency.

The story I am telling in this blog is how a really small group of people mostly in New York duped a nation, and put everyone and everything in the United States in the service of these institutions. A hundred years ago, we had the shill Conant arguing:

It is proposed to point out in this article how great this excess [capital, i.e. savings] is at the present time, how profoundly it is disturbing economic conditions in the older countries, and how necessary to the salvation of these countries is an outlet for their surplus savings [imperialism], if the entire fabric of the present economic order is not to be shaken by a social revolution.

Today, we have the shill Krugman arguing:

“Larry’s [Summers] formulation of our current economic situation is the same as my own. Although he doesn’t use the words “liquidity [i.e. "credit"] trap”, he works from the understanding that we are an economy in which monetary policy is de facto constrained by the zero lower bound (even if you think central banks could be doing more), and that this corresponds to a situation in which the “natural” rate of interest – the rate at which desired savings and desired investment would be equal at full employment – is negative.

Of course, the crucial difference between Conant's idea of capital and Krugman's liquidity, is that capital was really the result of industrial production and wealth creation in his day, while Krugman's liquidity is the result of central planners at the Fed hitting the CTRL-P keys and he wants to force that money out into the economy through easy credit.

It's really easy to fall into the public policy debate with these dudes, but in so doing, we enter the Snowglobe of Orthodoxy where sophistry poses as wisdom. That is, we enter a land of make believe where accepted axioms form the basis of arguments that fly like tiny flakes within artificial constraints.

The way out of our current dilemma is to ignore these people. The problem of the past 100 years is that the Western world actually enthroned the equivalent of philosopher kings. We live in a system, for example, where a central banker, by virtue of sitting through economics classes at an ivy league school, gets to make decisions that influence billions of people. Billions of people who become elements of an economic model.

Our fundamental problem is that people confuse symbols with reality. For example, millions believe the goal of life is to create numbers in an account. Billions of people have had this delusion ruin their lives!

Imagine an alternative reality where a craftsman builds a single coffee machine for his own use. He enjoys the whole process and produces exactly what he wants. Then he makes another one to sell. It's a really time consuming and expensive process to make a single coffee machine, but it's enjoyable. Plus, the machine might really last a long time, and will actually retain its value. Let's imagine that he doesn't ever turn to mass production. He forms a small company that makes a relatively small number of coffee machines per year--its goal is not to make money, it's to make coffee machines and to enjoy the craft of making them.

It's really just the beliefs that the society has that keeps the wretched Wal Mart/Wall Street model chugging along. These beliefs are spouted by people pretending to be scientists and philosophers, but they're really just shills.

The German Connection

Get a Poster Here

The Germanness of the American Progressive movement isn't apparent since this contraption that was built by American financiers, intellectuals, politicians, media, and academics is as vast and noisy as America itself. But when you take a look at its foundation, it's loaded with German philosophy; a strain of thought that's diametrically opposed to the ideals enshrined in the US declaration of independence and constitution.

A great reference on this subject is American Progressives and German Social Reform, 1875-1920 by Axel R. Schäfer. According to Schafer, American students of the nascent social sciences sought knowledge in Germany in the middle to late 19th Century, and found, in the Germans' sophisticated critique of the early enlightenment, useful criticisms of the American system of that time.

Really, let's just boil this right down instead of going on and on about it. The thinkers like Locke or Adam Smith, or Even Isaac Newton, provide apparently unsophisticated models of the world, mostly because they view the world as separate from man, that is, as objectively knowable through rational inquiry. While German philosophy is based on the occult understanding of the world, that is, all understanding is subjective. (As above, so below.) So for example, in a field like economics, the objective understanding might be that a man makes a rational decision about the price of a commodity, while the subjective view sees the outcome of a purchase as the result of a psychological process.

Paradoxically, strangely, and really perversely the application of this method of thinking and inquiry about human beings tends to objectify them. That is, the study of the less-conscious action of "people" necessarily requires a higher level of consciousness or alertness on the part of the inquirer. So, inexorably the great mass of people come to be viewed as lab rats by the knowers, while the knowers take on the roll of priests and priestesses. Similarly, by viewing human history as conditional and arbitrary, it gives the knowers and technocrats carte blanche to manipulate and shape the future.

American Clubs and Societies

Red Men Certificate

Long before the Internet and mass media, ideas spread through actual social networks. There are countless examples of people combining together outside the official structures of society, or forming cliques within the structures of society. For example, the cult of Mithras spread within the Roman Legions. Really, wherever there are people, there will be clubs. Where there are clubs, there is specialized knowledge, and where there is specialized knowledge there is argot and cant.

An example I am particularly familiar with is bicycle clubs. Among cyclists, there is deep and specific knowledge of all forms of two wheeled self propelled transport, and likewise there's deep knowledge about the preparation of both of the body and the machine that's required for racing. Out of the billions of people in the world, there are only thousands, or maybe tens of thousands who know these things, yet there is a relatively large industry that supports them, and the cyclists work to promote the sport and to exert political influence, even though their actions are not coordinated in a significant way. Indeed, in cycling, there's even more esoteric knowledge that was and is practiced by the elite athletes in the sport. It's the knowledge of doping, which is like the black magic of cycling. (Read Tom Danielson's deposition for the insider view.)

There's a long history of fraternal orders, some just simple drinking clubs, and others that served financial purposes, like providing life or health insurance to members. The value and influence of these organizations can wax and wane with the tectonic forces of the day. For example, the Order of Red Men and Tammanies formed at the end of the colonial period. The Freemasons formed at the dawn of the Enlightenment. Indeed, maybe the arrival of new ideas spurs the creation of these groups--the new thought, and the reaction to the new thought.

We are currently living through such a time. The systems that were fashioned around the turn of the century are failing (the supposed New World Order), and a new order is emerging. For example, the Eurozone and the Euro currency is a total failure. The long con that made the dollar the reserve currency of the world is failing, and the Federal Reserve is shown to be nothing more than Three Card Monty, bolstered by Nobel prize winner shills, and ivy league shill factories.

The late 19th century and early 20th century were when German philosophy came to America. German philosophical thought is really central to system we live in today.

Who's Yer Daddy

Aum Shinrikyo,
1990s Japanese Cult

Before we continue the dive into the historical rabbit hole of 19th century American politics, lets talk about cults, because they'll be popping up all over the place in various forms as the story unfolds.

The family is part and parcel of being human. It's potentially a great strength for people, sadly though, it's often a great weakness, and the psychological and behavioral patterns that childhood family life imprint on people makes them easy to manipulate. That is, the childhood needs we have persist into adult life--to be accepted, to belong, to be valued--and give manipulators easy ways to exploit us. As an aside, it's pretty interesting that this really basic aspect of human nature is hardly brought off the shelf for discussion and examination through the whole course of education.

Cults take these basic human needs and relationships and repurpose them. That cults form over and over again shows how strong these needs are and how people will bond with almost anything that fills them. The Aum Shinrikyo is my go-to example, over a relatively short span of time, the group grew to have thousands of members and many millions of dollars in assets in pursuit of what appears to be an agenda that, hopefully, any individual member would have rejected were it presented outside the context of their family substitute.

But really, what's a cult? A cult can be the pupal stage of religion, or civilization. Alternatively, a cult can operate in secret, remaining "outside the city" and form an alternative civilization, which can more readily fill the essential human needs of its participants than the established order, especially for the people who have a basic need to be "outside the city". A cult can operate within an established religion, adhering to a completely different set of beliefs than those practiced by the typical congregant of the religion.

Erasing What Came Before

According to Conant, the rapid militarization and modernization of Japan in the late 19th century was a laudable thing. Japan went from an isolated, medieval island nation, to an industrial militaristic empire in a handful of years. (Commodore Perry arrived in Japan in 1853.)

Japan has already made her entry, almost like Athene full-armed from the brain of Zeus [emphasis added], into the modern industrial world. The increased capacity of her people for production, giving them increased command over the products of other peoples, is producing its natural effect in the rise of wages and increased importations.

Part of Japan's "increased command" was raping, murdering, and plundering their neighbors. For example, the Japanese first destabilized, then invaded Korea, looted the country and made a concerted effort to erase all traces of Korean national identity.

That same process has been repeated time and time again on peoples around the world and continues today. Their past is devoured and replaced with a new mythology that serves the invaders. The native Americans were systematically schooled to erase their past. Medieval Europeans' ancient religions were erased and incorporated into Christian myth. The modern American school system, founded in the late 19th century, continues this process of molding people.

The American Counterrevolution

The Snowglobe of Orthodoxy

The current structure of the American way of life, and the establishment of a wasteful and corrupt empire was laid down in the late 19th and early 20th century. This is not an ancient and remote event. My great grandma, who was a constant presence in my childhood, was alive at the time when the scheme was concocted; Much of the story takes place in Ohio.

Furthermore, the history is well documented, so we can easily see how America was remade, and we can see how the construction continue today. (Eventually, we're going to go back farther to get to the older roots, but this is a good jumping off point.)

We live with the legacy of this scheme--vast public debt, and private fortunes concentrated in the hands of a few, lots of violent death, crumbling public infrastructure, and declining standards of living. When you look at the chain of empires, it's almost like an evil moves from the declining power to the ascendant power, hijacks it, drains it, and leaves the carcass.

So, the theme for the next several posts is going to be an investigation of this story. My initial entry point comes courtesy of Murray Rothbard's The Monetary History of the United States, which provides many references for research. Rather than detail and describe the ideology, I'm going to try to document the families and organizations that were involved in originating it, and look at the techniques they used to disseminate it.

The investigation will start with Charles A. Conant. Conant wrote "The Economic Basis of Imperialism" (September 1898) and a number of other works which helped sketch the framework of the new structure.

The United States today seem about to enter upon a path marked out for them as the children of the Anglo-Saxon race, not yet traversed because there has been so much to do at home. Almost as if by magic [emphasis added], the importance of naval power has flashed upon the mind of the country. The irresistible tendency to expansion... seems again in operation, demanding new outlets for American capital and new opportunities for American enterprise.

This new movement is not a matter of sentiment. It is the result of a natural law of economic and race development.

Conant argues that America has too much money to usefully invest at home, so needs to open overseas markets by force when necessary. In other words, by scheming, murder, and by using the resources of the nation, investors will get a better return on their investment. Conant advocated altering the constitution to centralize power in the executive branch, after Tsarist Russia, and also argued for centralized power in industry.

It seems likely that Conant had no original thoughts, but was a talking head of his day, acting as the public face and promoters' of another entity's ideas. So hopefully, it will become apparent where these ideas originated from in due course.

Systematic Laziness

When I was about eight years old, my family lived in a neighborhood where there were several other kids. We often played outside, or when the weather was bad, we played indoors. At that time of life, we were discovering how easy it is to make up rules or change them to suit immediate needs. For example, when playing kickball, if a tree was in the way, it was easy to redefine the field and just keep playing. Comic books and collector cards become types of currency and we easily contemplated the value of any swap with full awareness.

One of the strange things that happens to adults is this ability becomes dormant. In adult life, people seem to set about trying to maximize perceived gains from the systems they've inherited (or that were imposed on them by force). The received systems and ways of thinking take precedence over ad hoc or invented systems that might better suit particular circumstances. Dependence on existing systems is also driven by laziness (energy minimization) and a pervasive desire to avoid thinking, and faith is placed in what already exists, instead of a new design.

In other cases, painful experience resulting in a general loss of trust in others makes the creation of new systems nearly impossible. That is, people invest a misplaced trust in the creators and beneficiaries of existing systems and distrust in their fellows.

Feeding Imagination

I used to live in a house that's on the property of a 3500 acre privately owned park in northeast Ohio. The back yard was a huge field that blended into the park. There was a garden in the back yard, and the tomato plants were constantly under siege from groundhogs. Eventually, we put an electric fence around the garden, but they still got in. One day, I watched a groundhog try and try again to get in. It was persistent, and finally just found a weak spot in the fence and slipped through. I was impressed. I adopted the groundhog as a personal symbol.

Way back, several posts ago, I wrote about how speech and writing are basically a form of lossy compression that are very far removed from direct experience. Speech and writing also have features in common with woodland game trails or inter-city highways, in that they're energy minimizing devices. The mind is lazy, and tends to stay on these well worn tracks, rather than making new ideas. In fact, even though private thoughts should be as free as the wind, they're also influenced by social norms and the urge to be accepted. Also, no matter who we are, we're born into a world that's already underway and we take part in projects that are already started, and sort of depend on orthodoxy to keep them moving.

Direct experience--a personally novel experience, then, is not actually easy to have. And when we have one, we won't have the language to describe it. It can take years to make the translation.

Trinkets and totems can be one source of direct experience. A strange object, like an old coin, or a figurine can provide a momentary glimpse of a new idea. Working and shaping materials like clay or wood provides a direct experience with matter and a conversation with the matter. Drawing or painting allows the artist to see a world that's not there. The direct experience is a momentary escape from the infinitely regurgitated stories, myths, social conditioning and symbols the shape our mind.

A world that relies on systems, like ours, is really a world that's starving for ideas.

Global Mass Society is Rancid

Global mass society is rancid. It's motto is "Get more of what you don't need." The city on the hill doesn't gleam like a beacon of truth and reason. Their city on the hill is a shitty city.

Dudes and dudettes, it's the Matrix. It's a pyramid scheme of the old variety, the kind that involves people wasting their lives stacking up stories of rocks based on stories. But don't despair, unlike the drama of the movie escape is easy--and once you leave the city, you just don't go back. You pursue your happiness. The escape involves discovering your happiness and living your own life and recovering lost power and freedom.

Thankfully, the centralization, corruption, and poverty of mass society makes it extraordinarily fragile and weak. It requires the consent of the people it defrauds and disenfranchises. It requires the work of decent and intelligent people to build systems of control, and systems of commerce that impoverish their friends and neighbors. Those are things good people, the vast majority of people, don't want to do.

The things that keep them on this path are insubstantial and imaginary.

The Money Illusion

In the previous post I continued the thread that where there are people, there should be industry. However, in a global economy, even an activity that's as basic as diaper manufacture, is conducted on global scale. Diapers are made in China using raw materials imported from around the world and the finished product is shipped world wide. This is possible because there are global shipping systems, and because free trade laws allow free flow of goods and money.

The main reason industry flowed from the United States to China or Mexico is that the money that would have gone into local factories went to build factories in China or Mexico. At the same time, those factories reach markets through global retailers, like Wal Mart. The net result of this arrangement is that the benefits of the factory workers' labor flows to global investors, likewise, the profits from retailing those goods flow to global investors. It's easy to conclude that global manufacturing destroys local wealth creation because so many cities like Cleveland or Detroit were ruined by it.

However, obviously because people remain in those cities, the ability to create wealth, to make and invent things is not lost. The thing that disappeared was the ability to organize people based on money, i.e. symbols, and numbers that represent their time, energy, and creativity. A precondition for that organizing principle, was that people were trained to only accept those symbols in exchange for their time, energy, and creativity--they accepted the money illusion.