Creating
and Destroying Money .
Andre Willers
10 Nov 2013
Synopsis :
How to destroy money .
Discussion :
1.Creating money :
See Appendix B
- M0: In some countries, such as the United Kingdom, M0 includes bank reserves, so M0 is referred to as the monetary base, or narrow money. (Currency)
- MB: is referred to as the monetary base or total currency.[8] This is the base from which other forms of money (like checking deposits, listed below) are created and is traditionally the most liquid measure of the money supply. ( Vault cash or Reserves )
- M1: Bank reserves are not included in M1. (Credit)
- M2: Represents M1 and "close substitutes" for M1.[13] M2 is a broader classification of money than M1. M2 is a key economic indicator used to forecast inflation.(Credit)
- M3: M2 plus large and long-term deposits. Since 2006, M3 is no longer tracked by the US central bank.[15] However, there are still estimates produced by various private institutions. (Credit)
The
ratio of a pair of these measures, most often M2 / M0, is called an
(actual, empirical) money
multiplier.
Main
article: Fractional-reserve
banking
The
different forms of money in government money supply statistics arise
from the practice of fractional-reserve
banking.
Whenever a bank gives out a loan in a fractional-reserve banking
system, a new sum of money is created. This new type of money is what
makes up the non-M0 components
in the M1-M3 statistics.
In short, there are two types of money in a fractional-reserve
banking system:[19][20]
- central bank money (obligations of a central bank, including currency and central bank depository accounts)
- commercial bank money (obligations of commercial banks, including checking accounts and savings accounts)
In the
money supply statistics, central
bank money is MB while
the commercial
bank money is
divided up into the M1-M3 components.
Generally, the types of commercial bank money that tend to be valued
at lower amounts are classified in the narrow category of M1 while
the types of commercial bank money that tend to exist in larger
amounts are categorized in M2 and M3,
withM3 having
the largest.
This is the easy bit .
Six different ways of creating money .
We can add Derivatives (call it M7)
Promises to pay . Uses no capital , but
can create money by being used as collateral for loans orfurther
trades .
This nearly wrecked the world’s
financial systems in 1998 because they had no formal way of
destroying the money created .
In 2007 the same mistake was made in
the bond market .
2.Destroying money .
Destroying Money .
Money is extraordinarily hard to
destroy .
Just spending or taxing it means moving
it from pocket A to pocket B . It is still there .
And the owners vehemently object
against anybody taking it away .
Some ways of destroying money:
2.1 Fiat or default . M(-0)
The government declares the currency
null . Eg Reichsmark in 1948 in Germany
The person or institution is bankrupt .
All debts are null .
Call it M( - 0)
2.2 M(-3) New currency replaces old ,
but with a conversion from old currency to new after lopping off some
zero’s .
Eg . Ruble , Franc , Lire
Eg One New Franc equals 1000 old Francs
destroys 999 old francs .
Call it M( - 3)
2.3 M(-2) Conversion rates between
currencies if relative rate falls . The relative money in a loop is
destroyed .
Say a loop $ -> Fr -> $ if the
dollar strengthens before the last transaction . You end up with
fewer dollars .
With no counterbalance .
A form of credit destruction . Hence
classified as M( - 2)
Stuttering defaults . Of course , the
opposite would be M(2) money creation .
2.4 M(-7) Derivative credit money
destruction :
Derivatives with no or small hedging
counterparty . Basically a gamble . Any money lent (credit) leveraged
on the derivative is destroyed
2.5 M(-3) . What is happening now .
The US Fed is creating $85 Bn / mth
(M0) , but it is not going into circulation , merely going back into
another pocket without stimulating inflation . In effect , M(-3) is
offsetting M(0) .
2.6 M(-3) Interest rates
This also destroys money .
For instance , the present US QE3 is
$85 Bn/mth on a GDP of about $17Trillion . About 6% .
Cutting back on QE3 in 6 stages while
increasing interest rates by 1% at each stage will greatly ameliorate
any inflationary shock .
2.7 Still , a mechanism of channeling
created money into more productive enterprises is desperately needed
.
See Appendix A . Blue sky research can
create real wealth , while destroying a lot of ersatz money .
So , expect QE3 to ease by 15 Bn/mth
while interest rates increase by about 1/3% per month from December
2013 .
Live long and prosper .
Andre
Xxxxxxxxxxxxxxxxxxxxxxxxx
Appendix A
This
post was published to Andre's Why at 10:38:30 PM 2013/01/23
World
economy March 2013
Andre
Willers
23
Jan 2013
Synopsis:
What
will the World Economy look like if the US defaults in March 2013 due
to political gridlock about raising the debt ceiling (80% prob) ?
Discussion
:
1.Review
Money (Appendix IB) and Exchange Rates and Social Media (Appendix
IIB)
2.The
massive creation of money after the financial crises of 2008- present
(Jan 2013) has mainly been parked in the future . Promises to pay ,
promptly re-deposited with the Central Banks . Little got into
circulation . Inflation thus stayed low . Especially food inflation ,
that fuelled the Hysterical Focus Food Riots of 2007-2009 .(Remember
them ? The Arab Spring was a small outflow from this .)
3.Countries
like USA , EU has to bring their Current Deficit down to start
whittling away at the massive total national debts , without causing
major inflation , especially food inflation . Also , defaults are
verboten (the tricky part)
4.What
they need is a politically accepted way of destroying money . (They
are paying the price for not developing one )
5.There
is one trusty way of destroying money without too much pain :
Exchange Rates . It is after all one of the ways of defining money .
The trick will be to control the changes of the exchange rates to
slowly phase out effects of excessive money creation . See Appendix
IIIB
6.This
will be the Sticky Point .
Interested
parties standing to lose wealth will scream Currency War .
But
remember , these are just promises to pay . Restructuring the
promises along temporal-contractual terms (like venture-capital
governmental guarantees based on exchange rate surpluses ) will help
.
7.Another
trusty way of zapping money are bubbles . See Appendix IVB for a
general discussion of Bubble Management .
8.The
best way is invest in High-Risk R&D . Blue-sky research . But on
a large scale .
This
soaks up a lot of money , but pay-offs are huge and are in Real
Wealth , not inflationary fiat money .
In
effect , you trade in inflationary money for a steak in a potentially
wealth creating enterprise . This is what Venture Capitalists get
rich on .
On
large scale , the Champions of the various States (eg DARPA-USA ,
Russia Champions , China Red Army) , instead of funding it all ,
would invite investors holding large amounts of newly created money
to fund these projects . Small ones too . The odds are better than
the Lottery . Crowd-funding would soak up a useful amount .
See
Appendix VB
8.1
Security :
These
champions handle very security-sensitive investments . But there are
very good anonymizer systems available .
8.2Essentially
, the Invester puts his money in a proven track-record system ,
backed by a national government .
The
Government gains by sterilizing toxic debts . The Invester gains by
getting at least 4% yields . (The Average Wealth growth of Western
Civilizations over the last 130 years . This is an extraordinarily
hard figure to get . Apart from inherent data-problems , everybody is
lying their heads off.)
8.3
And there are the Derivitive Markets , soaking up even more money
(and losing them even more easily)
8.4
It will help if only ring-fenced toxic debts are allowed into these
derivitives , but I wouldn’t hold my breath .
9.So
what will happen on March 2013 in the USA ?
9.1An
eye-ball to eye-ball confrontation seems inevitable . Both sides are
sincerely convinced they are right . They are thinking of their
grand-children , not their own money .
Lincoln
was right to say that the Union MUST be preserved .
But
he meant the political Union , not the Financial Union .
9.2The
Way Out :
The
measures as discussed above . The most likely is Currency War on the
exchange rates , but the rest follows from this .
Three
hundred million people in a democracy simply does not just lie down
and starve .
This
will happen regardless whether the gridlock happens or not .
This
a Financial Secession , not a Political Secession like the 1860 AD
Civil War .
9.2.1
Expect new Exchanges and Bourses , especially in Mid-Western states
like Texas .
9.2.2
The first flashpoint will be Energy Markets , because of Fracking .
9.2.3The
more Exchanges , the merrier . Arbitrageuring between many markets
(in essence , playing with exchange rates) , favours efficient
systems and destroys created money . (Think it through : the more
markets , the more examination of information . The less chance of
liers distorting the market .)
9.2.4
How many markets :
From
General Reserve Principles , between 27%-37% (Avg 33%) of the 50
states .
The
Fed will create 16 New Stock Exchanges , with one roving Exchange
(just to stir things up)
If
the Fed does not create them , they will evolve if there is a
Financial Secession . Lots of yakkity-yak .
10.
USA IRS
The
USA tax should increase . All those newly created dollars are being
churned through the new exchanges , generating a tax .
The
USA does not need to be the world’s policeman , but it still needs
a Big Stick . For that it needs a big income .
Everybody
(except the baddies) benefit from this . It is only fair they pay
their share . But how ?
The
Military Industrial Complex is a large manufacturing system . Some
parts (like Boeing) has a civilian income stream .
This
can be privatized , but care must be taken to anonymize it . Else you
end up like the Late Roman Empire . An Army with a state .
11.
What does all this mean ?
A
Financial Secession in the USA seems inevitable , either by gridlock
in March 2013 or reform .
This
will take the form of Regional States . About 17 of them . They are
not autonomous political units (the Union is Preserved) , but an
individual can move from one to another subject to very different
Federal benefits and taxes .
“You
pays your money and takes your chances .”
Something
like the Provinces in China . A very successful model .
There
will be an explosion of investment products . You can make money out
of them , but the odds favour the House .
DARPA
investments will warrant a second look after the dust has settled
down .
11.1
Inflation : expect low inflation to continue . Everybody is scared of
the combination of Food Inflation + Social Media .
11.2
While this continues , I am keeping my money in Money Markets . When
things have settled down a bit , I will consider flutters (1/9) on
interesting DARPA investments .
12.
All this seems fanciful . But no more than FDR’s New Deal .
Obama
cannot be re-elected . One of the strengths of the USA system . He
has about two years to really change the system . To do this he has
to change some of the concentrations of money . This was done before
by Theodore Rooseveldt with the Sherman Anti-trust act.
Just
breaking up the wealth concentrations into mutually competing systems
with CEO’s of monumental ego’s was sufficient .
The
same with multiple Exchanges .
13.
An interesting aside:
Concorde
II
Concorde
I was the equivalent of a single DARPA project . It came to a sticky
end because of insufficient skunk-works and funding only from the EU
Concorde
II would be a ballistic hypersonic vehicle . It can bypass all the
previous environmental concerns . Working ramjets have been tested .
Funding can be done as discussed above .
Not
even this is needed .
“It
is a common myth that the V-1's Argus As 014 pulse jet engine needed
a minimum airspeed of
150 mph (240 km/h) to operate. The Argus As 014 (also known
as a resonant jet) could in fact operate at zero airspeed due to the
nature of its intake shutters and its acoustically tuned resonant
combustion chamber. Contemporary film footage of the V-1 always shows
the distinctive pulsating exhaust of a fully running engine before
the catapult system is triggered and the missile launched.[citation
needed] The
origin of this myth may lie in the fact that due to the low static
thrust of the pulse jet engine and the very high stall speed of the
small wings, the V-1 could not take off under its own power in a
practically short distance, and thus required to either be launched
by aircraft
catapult or
be airlaunched from a modified bomber aircraft
such as the Heinkel
He-111.
Ground-launched V-1s were typically propelled up an inclined launch
ramp by an apparatus known as a Dampferzeuger ("steam
generator") which used stabilized hydrogen
peroxide and potassium
permanganate (T-Stoff and Z-Stoff).[9][page needed] Takeoff
speed was 360 mph (580 km/h).”
We
can design a solid-state ramjet that operates from standing still .
Some
nifty design and execution is called for .
Basically
, what you need is a feedback device that feedbacks the high-pressure
after the fuel ignition to near the intake to cause intermittent
locks .
These
are machined at precise intervals and sizes .
We
make these effective at various Mach numbers . You will have to sum
the effects . This should give a ramjet that can start from zero to
hypersonic velocities . It gets rid of those pesky vibrations because
of the feedback from all the takeoff holes . You can use a car’s
fuel injection electronics to fine-tune fuel injection into the
feedback tubes to get an even burn in the combustion chamber . Simple
and elegant .
A
cheap way to get into orbit .
Also
a huge small-aircraft market .
This
idea is free .
There
is a huge market (see Virgin Intergalactic (sic)) .
But
getting Europeans to agree on anything is like herding cats .
----------------
If
you understood what I meant , you must have understood what I said .
(I
am not a Central Banker)
Andre
Xxxxxxxxxxxxxxxxxxx
Appendix
IB
Money
Andre
Willers
26
Oct 2008
What
is money ?
This
, funnily enough , is a Hard Question , both in the ordinary and the
mathematical sense . It is linked to any sapient past and future .
We
try to sneak up on it by looking at what it is not .
1.Money
is meaningless to a lone individual .
You
cannot eat a coin or a diamond or a note . It only has value if you
can interact with another individual and trade .
This
sounds trite , but it immediately enables us to apply the powerful
algorithms of Artificial Intelligence (see
http://andreswhy.blogspot.com
“ Artificial Intelligence” et al .
Money
can be described as a language , defining the AI’s (humans) . We
all know people whose main sense of self comes from money .
2.
If it can’t be counted , it’s not money
.
The
basis of the long love-affair between science and business .
“If
it cannot be put in numbers , it is not Science”
Trade
implies repetitiveness over either time or space dimensions . This
implies delineation . No fuzzy currencies , thank you .
Since
even bacteria can count ( eg quorum systems) , it might be profitable
to look at them in monetary terms .
How
much will it cost to pay an infection to go away ? A cancer to
de-metastize ?
We
suspect that large part of the success of the immune system is due to
payments of this sort .
3.If
it can’t be exchanged for some other currency , it is not money .
The
exchange mechanism forces abstraction . Regardless of how many
dimensions the currency operates in , there is always one outside it
.
(A
direct consequence of A plus non-A less than Universum) .
So
, any currency must be an abstraction .
Without
the Market , there is no money .
This
is actually a restatement of Item 1 above , but in terms of groups .
Seller
A shops around for the best countable value . But he can only shop
around if there is a group of sellers with a spread (uncertainty) of
selling prices . The same is true of sellers . This creates the
Market .
Market-mechanisms
are created by traders watching each other and trying to outguess
each other . Infinite sequences are established , especially in time
.
This
creates the mathematically hard part .
This
enables the powerful , symmetry-breaking algorithms as set out in
“ Financial
Crisis 2008 : Exchange Rates “ and
“Facebook
, ExchangeRate and the Singularity”
4.
If it is not a mathematically Hard Question , it is not money .
This
means that if there is no uncertainty (risk) , there is no money .
The
proof of this is obvious . (It follows directly from Item 3 above)
Second-guessing
by both sellers and buyers might have some very fancy mathematical
terminology , but they all depend on a measure of uncertainty (the
price spread on beth(0))
Hard
Questions here is used in the sense of problems whose solutions need
computation resources that grow faster than that available to the
applicable society .
Computation
resources are defined by AI(m) as previously described .
There
is a relationship between computational resources and bandwidth .
Increased
bandwidth means an increase in m of AI(m) .
The
mere existence of money is a powerful evolutionary force , increasing
the bandwidth between segments of AI(x) .
Time-binding
(like future promises , interest , etc ) stitches together the fabric
of Social-Capitalism . How individuals can work together for the
greater good (Adam Smith’s “Invisible Hand”)
Because
humans are Beth(n>1) , if they are in the loop , they can always
think up a scheme that reduces risk .
This
involves heavy computation . We are now (2008) living through the
wreckage of a period when ALL financial institutions tried to reduce
risk to zero .
Reduction
of all risks to zero is not possible to any sapient that uses the
Axiom of Delineation .
Bounce
Back (2008)
The
bounce-back will be interesting . Hundreds of thousands of AI(3.0x)
individuals are suddenly at liberty to explore different avenues .
Refer
to the Eastern Europe bounce-back after the collapse of Communism .
This
collapse of Capitalism will be seen as essential to the Singularity .
Pathways
discouraged by capitalism will be aggressively explored by
social-combines co-ordinated through high-bandwidth peer-systems such
as Face-Book .
Historical
Analogue
The
Low-Countries’ (Netherlands , Belgium) after the collapse of the
Western Roman Empire .
Virtual
money
Well
, all money is virtual . So-called hard currency like gold simply
quibbles about the rate of exchange . The essential point is
agreement amongst groups of entities to have a reasonably stable
value that can have reasonably stable exchange rates for goods and
services , other currencies , and a degree of uncertainty . These are
elements (1,2,3,4) above .
As
can be surmised , Item 4 is the problematic one , since it is
open-ended .
Linden
Dollars are now one of the few virtual currencies that have
convertability , but this is set to explode .
“The
Next big Thing”
Multi-dimensional
currencies amongst various virtualities will evolve .
Values
which cannot be expressed in dollar terms (ie favours) , but which
have countable values and exchange-rates with other currencies .
Parallel-Processing
Groups
Example
:
Parallel-Processing
Groups will make their Attention available at a multi-dimensional
price .
A
creative FaceBook Group Alpha might sell its future Attention on an
Exchange .
(This
is already being done in embryo form by virtual markets on decision
points .)
The
Attention of the FaceBook Group Alpha is split pro-rata to the
shareholders’ interest .
The
system is inherently parallel-processing .(Why the Attention can be
split)
Payment
is on negotiation in terms of various currencies of the problem .
A
futures market on the various currencies of FaceBook Group Alpha is
inevitable , per currency and per FaceBook Group .
As
you can see , things are about to get very complicated in a hurry .
Dollars
will not be the only currency .
$Newness
, $interestingness , $meaningfulness , $for-the-hell-of-itness are
some currencies that spring to mind . They still have to be
quantified and a range (uncertainty) of exchange values established .
(Something
like this has happened many times before in aristocracies , but they
never had mechanisms of quantifying it , and , more importantly ,
establishing exchange rates .The casualty was innovation . The
remnants were favours .)
Transhumans
The
same as above , only more so .
The
interesting thing is that the run-up to the singularity is smooth .
Will
this be true of every sapient civilization ?
We
refer to Pohl’s Question : “Where are they ?”
Planets
are nurseries .
We
can say that any sapient civilization that uses money will have
smooth run-up to the Singularity .
The
question is whether there will be any high-tech remnants after the
Singularity .
The
answer is usually no .
A
responsible civilization will let stay-behinds alone on a replenished
planet .
But
there is not enough money of various currencies to sustain the
infrastructure .
Not
enough $Goodwill , $Innovativeness , $Caring , etc.
The
society devolves .
Remnants
of irresponsible civilizations that allowed replication machinery to
remain are gently reminded by the introduction entropy viruses into
their replication processes . (Older civilizations are still around)
In
any case , it is extremely doubtful whether a Beth(2) civilization
could create an entropy-free structure . And immature civilizations
usually go into singularity on beth(2) levels .
The
Others:
Any
expansionist civilization will sooner or later run into a
civilization close to the singularity and get smashed for their pains
.
To
put it into Earth-understandable terms : there can be no forced
empire if everyone has nuclear weapons .
The
critical thing to watch out for are the exchange
rates
. Once exchange rates between “Innovativeness” and some
realizable value is established , the system will explode into a
positive feedback loop . (This has happened before to a lesser degree
with the establishment of the Patent Office in the early US.)
(Universum
minus (A plus non-A) ) is mined for insights . Creativity abounds .
God’s
Snowball :
God
is the ultimate snowball .
He
put his thumb firmly on the scale through the Distributive Axiom of
ArithII .
To
recapitulate the Distributive Axiom of ArithII .
Z(1)=(1+x)(1+y)
Z(1)=1+x+y+xy
Z(2)=1+(-x)+(-y)+(-x)(-y)
Z(3)=z(2)+z(1)
=2(1+xy)
That
xy term is the killer . If x and y are both negative , xy is positive
. This breaks the symmetry . Any exchange rate is a multiplication of
terms .Symmetry is broken in any exchange rate in an ArithII system .
The
underlying system has a tendency to increase at any iteration . The
snowball grows bigger . As described , if one integrates it over
infinity of values it is 2/3 of basic value .
This
is the added value of all the interactions.
The
basic observed value has a reserve of 1/3 of the value . This has
immediate physical significance with quarks .
To
summarise:
Any
Universe that has money , has symmetry breaking on exchange-rates in
purely physical particle-particle terms . This leads to quark
electric charges of multiples of a 1/3 , as well as no negative mass
(unless in carefully structured environments) .
A
good example of how top-level feedback mechanisms are related to very
low-level mechanisms .
Also
why singularities are inevitable . Increasing complexity and wealth
is built into this Universe .
Humans
have to work hard at screwing it up , and so they do with great
enthusiasm .
One
of the great Reality Shows ..
Human
growth rates .
God
can thus use financial growth rates to estimate how things are going
, without having to count where every sparrow falls . Which is handy
. Not only for God , but for humans as well , anxious to know how
they are doing vis-Ã -vis God .
God
went to great pains to create an inherent 2/3 gain in the system .
The system is fractal . Being fractal , a third of this has a beth(2)
probability (2/3/3=0.2222) . Another third has a beth(1) probability
(0.074) and another third has a beth(0) probability (2/(3^4)=0.02469)
Interesting
is that a beth(-1) probability has a growthrate of (2/(3^5)=0.0082)
Beth(0)
means normal chance . Beth(-1) means determinism : a command economy
.
Social-Capitalism
(China) fluctuates between 7.4% and 22%
Pure
Capitalism (USA) fluctuates between 2.5% and 7.4%
Pure
Socialism (Cuba) fluctuates between 0.8% and 2.5%
You
can see where things are going .
There
is room at the top . Call it FaceBookism
FaceBookism
fluctuates between 22% and 67%
Going
into the Singularity .
The
Hoag Rating .
(From
“The unpleasant profession of Jonathan Hoag” by Heinlein .)
If
you were a Universe Critic , how would you rate our universe?
On
a scale of one to five .
I
would rate it a two .
It
is insufficiently challenging .
The
light-speed barrier between solar systems make nice crèches , but
does it really prepare a youngling for diversity ? Ditto the absurd
conservation laws . Even the indigenes have to use ridiculous
make-believes like “potential energy”
The
locals even have a term for it : Beta-testing by the user .
As
contradictions are observed , the physical laws are patched .
And
so it goes .
Andre
Xxxxxxxxxxxxxxxxxxxxxxxxxx
Appendix
IIB
Facebook
, Exchange Rates and the Singularity.
Andre
Willers
21
Oct 2008
As
requested .
Discussion
:
Descriptive
Axioms.
The
principle underlying our description of the universe is heavily
influenced by our physiology . The fire-nofire structure of neurons
tends to an Aristotelian view with a delineated structure . But there
are also concentration-gradients of chemicals (ie hormones ,
neurotransmitters, etc) which are not delineated except at molecular
level (and not even at sub-molecular level) .
Axiom
of Delineation .
We
assume that it makes sense to talk of something separate of something
else . In a non-trivial Universum , this means there are a lot of
somethings , and they interact .
The
way they interact can be described by exchange rates between the
separate entities . Notice that this is the definition of relativity
.
We
use descriptions like energy , information , aledicnander , money ,
quantum levels , momentum , etc to describe the exchange rates .
Just
to make things interesting , Russel , Whitehead , Godel et al proved
that this is not internally consistent (ie there are “somethings”
which cannot be delineated ).
Being
humans , they promptly delineated them and used probabilities in a
very loose fashion in wave-mechanics .
So
, now we have exchange-rates not only between somethings , but also
between non-somethings and all the various permutations thereof .
No
wonder quantum mechanics drives them mad !
The
metric .
The
further thing we need is some way of counting (ie an Arithmetical
System) .
The
classical one is the Standard one we all learned at school .
Call
it ArithII . Its distinguishing characteristic is that the number
line does not circle
around
and cross itself . (ie a+1<>a)
If
it does circle , it is known as an ArithI system .
ArithI
plus at least one extra axiom can always be described by ArithII .
Think of the extra axiom as the number where the ArithII line crosses
itself , and/or the radius . One can add axioms with gay abandon ,
but the core of ArithII remains .
ArithI
generates quantum systems , but these can always be related to
ArithII + ExtraAxioms . This is the basis of present quantum physics
.
Exchange
rates .
See
Appendix A . I am not going to go to the trouble of creating another
example .
This
example alone is enough to make anyone as rich as he wants to be .
In
Warren Buffet’s terms , it identifies the Snowball .
The
values in the table is the phase-space . Draw any line or curve
through them and you describe the path of any system that can be
described in two dimensions . Ie any delineated systems (A and non-A)
in a non-trivial universe .
Sum
the values in the table along the curve .
If
the path is Beth(0) random , the value approaches 2/3 of the basic
interaction .
Your
attention is drawn to quark descriptions .
Charge
.
The
conclusion is that electric charge is a property of the symmetry
break in Beth(0) exchange rates between particles .
Mass
The
conclusion is that mass is a property of the symmetry break in
Beth(n>0) exchange rates between particles .
Mass-Charge
Relation .
The
conclusion is that mass can be described as a function of Beth(n>0)
of charge .
This
translates as multiple crossings of the number-line in the
phase-space .
Curlicues
in the phase-space path .
This
is equivalent to spin . (Multiple ArithI systems)
Gravity
and Anti-Gravity
The
symmetry-break means that this Universe will only have one type of
matter (+2/3) . But we can have Beth(m) systems that curlicue in the
negative return sections (ie anti-gravity) . These would be functions
of mass-charge spin in very specific configurations .
Hint
:
See stable orbital configurations of two masses . There are hundreds
known . Possibly an infinite number . Most are very fancy , the later
ones with path crossings .
Summing
all possible curlicues gives the value of G.
Inverse
square law :
Note
the x squared value in the derivation below in Appendix A .
This
is derived from a Beth(0) randomness .
Beth(n>0)
systems will deviate from this .
Singularity
.
A
workable definition :
The
information flow between two delineated entities approaches infinity
.
The
bandwidth approaches infinity .
The
traditional view of the singularity is of a small group using
mind-computer interfaces to bootstrap up .
What
is happening is that massive number of humans are interacting via
social networks like Facebook (ie AI(3.0x) , where x->999999… to
AI(3.1) ) .
The
effect can be seen , as expected , first in Universities . New ideas
and patents are ascribed to genuine idea-associations , not the old
leader + team . This is a real effect .
The
mechanisms enabled by things like Facebook , are bringing about a
factorial increase in the number of interactions between groups and
individuals .
This
is the definition of increasing the bandwidth between AI(3.0)
entities .
An
example : it is faster and better to interrogate the AI(3) system to
get a datum than to try AI(0) (memory) , AI(1) (ask someone verbally)
, AI(2) (look it up in a book)
AI(3.1)
Mind
computer interfaces are then phasing into existing structures without
too much fuss . (Except for those outside it , who are left at an
extreme and increasing disadvantage .)
AI(4)
There
is a real discontinuity here . Quantum systems are inherently
different from AI(3.1) systems . They are sufficiently different that
we can assign a new dimension to them . We can then use the
ExchangeRate mechanism (between AI(4) and the other AI’s ) to
really ratchet up the gain .
When
and how will this happen ?
Not
by small patches . Whole segments of societies will move
imperceptibly into the singularity .
Their
exchange rates will use larger and larger bandwidth .
Capital
(ie usable human knowledge) increases in proportion to bandwidth .
Time
Travel .
Think
of the phase-space below as being time-independent .
The
only interventions locals would notice would be beth(1+)
interventions .
Beth(0)
interventions would be superfluous , since the system would already
incorporate them .
Beth(1+)
interventions does happen , but in true human fashion they are swept
under the carpet .
Purely
technological interventions are far between and extremely difficult .
The
only ones I can assign some degree of confidence in is the magnetron
in WWII and mass-production of spectacles in the 13th
century .
The
magnetron is a typical beth(1) technology . Rotation and constriction
.
After
5 decades they are still stuck on the waterhole frequency . Even
supercomputers won’t help . If they really understood this , they
would have tunable lasers .
Hint
: use genetic algorithms on the constriction structures and the
accellerations of the rotating magnetic field .
Andre
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Appendix
A
Appendix
IIIB
Financial
Crisis 2008 : Exchange Rates.
Andre
Willers
16
Oct 2008
Summation
:
1
.Economies with different currencies and exchange rates are extremely
lucrative in a real basic sense .
2.If
the dominant share index growth (we will use the DOW) goes negative ,
the exchange rates will strongly track the DOW .
3.If
the dominant share index growth goes positive , the exchange rates
will weakly track the DOW rate .
4.
Recovery rates of established economies after a downturn are faster
because they use the emerging economies as a chaos (entropy) sink .
Discussion
:
Examine
the table in Appendix A carefully .
This
is applicable to any system that is identifiable and follows at least
the distributive
Axioms
of Arithmatic .
Notice
the breakeven diagonal line from bottom-left to top-right . This is
the attractor in this phase-space .
Especially
the top-right . As the DOW losses increase , the rand-exchange rate
has to track it if no losses are to be sustained .
The
systems all track zero losses as goals . Remember , not only do
humans think this way , but their computer programs are written this
way .
While
this was written with rand-denominated fund like AllanGray
GlobalOrbis FeederFund in mind , the argument is valid for a foreign
investor as well . If there is little likelihood of a rand-exchange
strengthening , he has to make a rand profit . Hence , he has to
follow the above relationship between DOW and Rand-exchange .
The
gain :
Jump
through the positions in the table .
The
feedback systems ensure that systems spend most of their time in
positive return territory . Another way of putting it is that the
chances of profit and loss are not equal.
That
is not Beth(0) . Not classically random .
But
even if it was beth(0) , there would still be a bias to profitability
built into the fabric of the universe .
Look
at the top left of the table (max 19% loss) to bottom right(21% gain)
. The values around them show a similar bias .
This
means , that even if you move at beth(0) random through the table ,
summing the values , you will still end up with a 66.66% gain . This
is inherent in the mathematics of this universe. (That pesky third
multiplicative term where two negatives multiply to form a positive
value : God’s Thumb on the scale.)
This
has tremendous significance to any socio-economic system . A 2%+ gain
, century after century is a hell of a compound gain . But empires
retard it , as there would be no significant exchange rates . Hence
the decrease in populations at the height of isolated empires .Cf
Roman Empire .
Sigh
. So much for World Empire or Galactic Empire .
That
2%+ gap is just too much . No single empire could compete to unify
them all .
The
world compound growth since 1900 is but about 4% , half of which now
seems systemic to multi-nationalism .
Things
don’t look too good for compounds like the EU economic zone . They
would be better off with fewer zones (eg France , Germany as Euro1 ,
etc . Not exactly back no national currencies , but more profitable
than the present setup . This will probably evolve from the present
strains on the system . China’s special Economic Zones are creating
similar problems .
Social
Capitalism can handle both problems . Divorce the short-term and
long-term and connect them with futures (Socialism ) .
Recovery
rates and Entropy Sinks :
Think
of an entropy sink as the black-hole of all the failed ideas ,
irrecoverable debts both monetary and morally and generally all the
bad things you would prefer to forget.
Also
known to the particle-physics trade as symmetry-breaking .
To
religionists as forgiveness .
Western
civilizations are something of specialists in this .
The
twentieth century alone saw the demise of numerous currencies ,
political systems , empires , countries , etc .
Not
to mention the divorce rate .
The
meme-machinery to do this has spread planet-wide .
The
meme is to cut away and eliminate .
Hitler
who ?
The
Arms-trade
An
interesting corollary is the Arms-Trade .
A
real relic , a luxury that will be cut . An interesting form of
reserve .
This
is a toxic-meme dump site . The arms are merely a small part of it .
The
ideal way would be to set up Special-Meme Zones , where persons with
toxic memes can be relocated and eliminate themselves . Somalia is a
good example .
In
any case , the arms-trade is history .
An
unlamented casualty of the present crisis .
The
Critical Point
.
One
asks what was the cusp between a new future and a replay of WWII in
this crisis ?
It
was when Gordon Brown convinced the other states to use investment in
the share-capital of banks to save them . This automatically limited
the state’s involvement in recovery process .
The
temptation to use protectionist legislation was severely limited .
(
In the Big Depression of the 1930’s, it was the protectionist cure
that killed the system . Like SARS )
All
credit to Gordon Brown .
This
model has numerous other applications .
Andre
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Appendix
A
Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Appendix
IVB
Bubble
Management
Andre
Willers
3
Oct 2008
Synopsis:
We
try to find a general algorithm for bubbles .
Discussion:
Delineation
.
We
know that defining something as delineated enables us to use the fact
that the number of permutations of n elements = n!
This
enables us to say that e = 1 + 1/1! + 1/2! + 1/3! + …
This
enables a number of powerful statements about reserves , etc . See
previous posts
Http://andreswhy.blogspot.com
“Infinite Probe” etc
Note
that e is not a rational or irrational number . It is an aleph(2)
number , and thus can describe beth(2) systems .
Undelineated
fuzzies.
I
use the term “fuzzies” because
English
does not have a term for undelineated existences .
We
use this as a term for unknown laws and genuine fuzzies . They are
synonymous at any point of ignorance .
This
is provable from the proof that (A + Non-A < Universum ) . See
previous discussions . (Russell , et al)
How
do we handle fuzzies mathematically ?
Well
, we know we need at least two dimensions . But we cannot know the
exact value of the second dimension , since it probably has no single
value . But we can assign values.
Imaginary
Numbers are assigned using the i=Square root of (-1) as a designator
. This is aptly named . It denotes the collapse of an infinite number
of dimensions into one value . This value may take ranges of values .
The
usual interpretation is a single value at right angles to the real
number subset , but this is but a subset of possible values .
The
result is Complex numbers (z=a+ib) . These are fundamentally
different from normal numbers , since they take fuzzies into account
(depending on the interpretation)
Tying
them together
We
can take the definition of e and say
e^(f(j)
= sigma ( f(j) / j!) , j=0 to infinity . f(j) need not be continous .
For
instance , f(j) can be zero for every second term of j , etc .
F(j)
can also be a complex number .
Then
we can say
S=sigma(j^z)
=
sigma( j^a . j^(ib) )
Interpretation
: every term of j jitters around at random . Remember (ib) means
fuzzy . This is simply the definition of a random walk , and we know
the solution to that .
S=n^(0.5)
. It is trivial to show that if every step j decreases by the square
root of j , then the sum of such steps to infinity does not go to
infinity . They can go to zero , or take up orbitals .
Thus
S can only be 0 if a=(-0.5) .
This
is the Riemann Theorem .
But
S (also called the Zeta function) treats clumps of infinite sequences
(like e ) as units .
But
an inverse square value to fuzzy measurements show the fundamental
difference between beth(0) and beth(1) systems .
Another
way of seeing it , is that our physical laws measurements that
involves inverse squares measures our ignorance pretty accurately .
Furthermore
, we can say that every value in any possible bubble of e can be
found in the Zeta function. This is why it is used widely in
cryptographics .
What
about Beth ?
Can
you see that orders of Randomness are built into the uncertainty of
the
i-dimension
? . Matter can be seen as beth(2) bubbles .
Therefore
, bubble management also means matter management . Whether you do it
by hand or by more direct physical means does not matter .
Beth(2+)
Systems
Now
we get to real bubble management .
There
can be no internally stable bubble(x) management if the management is
of order (x) .
A
static hierarchy would result if not for the fact that ( A + Non-A <
Universum ).
What
does happen is a pulse-system . Also called life-death . Transition
states .
It
is a dynamic system . Bubble(x+1) manages bubble(x) states . Your
attention is drawn to the definition of human minds in
Http://andreswhy.blogspot.com
“Artificial intelligence”
Smith(“The
wealth of nations”) , Marx (“Das Kapital”) etc still manages
the bubbles .
But
with interpretations .
Physical
immortality is immaterial as long as the memory is a traveling wave ,
dropping things off at the back end . Real immortality means an
external database immune to time , as well as interface systems .
This is a beth(3)system .
Can
you see the relevance to present information storage systems?
Even
a nuclear war with EMP weapons will only be a hiccup to systems like
the US . They have hardened disaster recovery sites storing
everything . Systemic interruptions are catered for . Notice the
shorter and shorter recovery times after each market downturn .
The
system is heading into a singularity .
The
timeline for this is about 2030 . Twenty years away . Do you know
what this means ?
The
momentum is about unstoppable . It is too late to think that internal
dichotomies can tear the system apart . Nothing I can think of
(except planetary sterilization) will stop this process .
This
is the pulse process I was describing above . The last pulse before
the Singularity.
Social-Capitalism
will be the governing system as they go into the Singularity .
Can
it be otherwise ?
Purely
capitalist or socialist systems would not be able to amass the wealth
or connectivity for a Singularity .
Green
Social Capitalism is not too bad a way to manage the transfiguration
of the human race.
They
will even let die-hards survive .
Restocking
the planet is a given .
The
ultimate bubble management .
PS.
Buying
from Universes-R-Us would have saved a lot of bother .
Have
fun
Andre
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Appendix
VB
This
post was published to Andre's Why at 09:59:34 PM 2013/01/04
World
economy March 2013
Andre
Willers
4
Jan 2013
Synopsis
:
Strategically
, the Information Age is like the Light Horse Nomads vs the
Knights-and-Castles defense , or Navy vs Outpost system .
Discussion
:
1.Hackers , pedophiles and similar nasties can strike from anywhere in the world (Huns , Mongols ) . Or a deepwater navy .
2.A Defensive Structure (Castle or Outpost = computer security) is insufficient . A striking force (Knights or Counter Navy) is also needed .
1.Hackers , pedophiles and similar nasties can strike from anywhere in the world (Huns , Mongols ) . Or a deepwater navy .
2.A Defensive Structure (Castle or Outpost = computer security) is insufficient . A striking force (Knights or Counter Navy) is also needed .
Else
the attackers can dismantle the defences at their leisure .
3. Aggressive Counter Hacking . (Knights , Navy)
4.
What happened historically ?
Even
where they won (China) , the Ming rebellion eventually destroyed the
Mongols after centuries of bloody warfare .
In
the West , the Castles-and-Knights defense held . (Barely )
In
both cases , it resulted in tighter centralised control , as
agricultural and co-operative systems maximised their advantages .
In
the Naval case , it ended with the Glorious Revolution of 1688 . The
naval empires (English and Dutch) amalgamated and carved up the world
between them , squeezing out other competitors in the succeeding
century (1759)
The Glorious
Revolution,[a] also
called the Revolution
of 1688,
was the overthrow of King James
II of England (James
VII of Scotland and James II of Ireland) by a union of
English Parliamentarians with
the Dutch stadtholder William
III of Orange-Nassau (William
of Orange). William's successful invasion of England with a Dutch
fleet and army led to his ascending of the English throne as William
III of England jointly
with his wifeMary
II of England.
An
Interesting aside :
See
http://en.wikipedia.org/wiki/Treaty_of_Westminster_(1674)
. Lots of skulduggery leading up to the Great Merger . the Dutch
realized they were too small to survive and needed a Big Brother .
Hopefully the same common sense still holds . As I said , they
survived for a long time and will cut their losses if forced to .
5.The
same is happening today , only faster.
See
Appendix IA .
The
three major knights (DARPA , Russian Champions , Chinese Red Army)
already have de-facto cooperation agreements about Lawless Nomads .
6.What
does mean for Freedom of Information and the Internet ?
While
the Internet might have started as a network to bypass damage , it
has been undone by it’s success . A few router farms have grown to
handle the traffic , and they are vulnerable . But more telling , the
Knights (like Darpa) are putting controls on the wild elements .
Using aggressive counters .
Look
what happened to Iran’s nuclear program .
Not
exactly a New World Order , but heading there .
Good
thing or bad thing ?
Who
knows . But from the history example , a major World Unitary
Understanding is inevitable , has indeed already happened .
7.What
about Europe ?
Sigh
. See Appendix IA .
Clutching
all , they stand to lose all .
“Oh
my daughter , oh my ducats”
Their
window of opportunity (especially the Dutch) is rapidly closing . An
Ostrum Deal can still be made . But they will have to get a move on .
Brussels
is trying to recreate the old Roman Empire model . Ostrum systems are
too formidable competitors in the Information Age .
A
Mega-Merger anyone ?
The
first knight that marries the distressed maiden will dominate till
the Singularity .
Andre
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Appendix
I A
Bilderbergers
: SuperHeroes or SuperVillains?
Andre
Willers
11
Dec 2012
“Give
me chastity and continence , but not yet.” St Augustine
Synopsis:
Humans
act in irresponsible ways , threatening their future survival . They
know this , but expect some outside agency (SuperHero , God ,
Technology , etc) to save them from themselves .
Discussion
:
1.
I use the term Bilderbergers as a convenient label for the Interest
group of capitalists concerned about the long-term survival of their
descendants , and the concommittant plebeians .
2.Origin
:
The
Lowlands of North-Western Europe (present Holland , Belgium ,
Flanders) did not de-civilize or de-populate at the fall of the
Western Roman Empire . Ie , Roman-Dutch Law , technological
advancement in powertools (windmills , weaving) , sailing , commerce
, etc .
See
any Economic History textbook .
This
laid the foundations of structures like the VOC , the Great
Amalgamation with England (1688 Velvet Revolution- see Ferguson) ,
Limited Liability Companies , Stock Exchanges , etc .
Large
capital concentrations that used technological advances , but under
controlled conditions .
Then
Jethro Tull and his Planter happened in 1700 AD . There was no
coherent policy . The pulse of wealth created more pulses of wealth
and Europe descended into a welter of war that has not stopped to
this day .
In
this process , technologies were created and used that threatens the
ecosystem everybody depends on .
Like
sitting on a branch while sawing it off . And paying bonuses to those
who saws fastest .
Insane
.
A
typical Tragedy of the Commons , you say .
The
Bilderbergers at present have no coherent strategy . They are but a
bunch of very rich persons worried about the survival and legacy for
their descendants , but without much idea what to do about it (except
dominance , a proven failed strategy – cf Napoleon , Arab spring ,
etc ) .
Far
from being the Masters of the Universe , they are a group with wildly
divergent interests , with no coherent strategy , in competition with
the Russians , Chinese and DARPA . At serious risk .
3.Ostrum
– an unlikely SuperHeroine
A
way out of the Tragedy of the Commons .
But
it needs some clout (that pesky para 8 – see Appendix II)
A
proven strategy .
3.Organizations
like China nad Russia and DARPA are already applying it . Hence the
high growth rates .
4.Another
one is DARPA (see Appendix I) . The west’s counter to USSR’s
Science Cities . Controlled openness won . Notice how quickly the
Chinese copied it . A winning strategy .
5.Europe
is trying the same with Bilderbergers .
But
they need to take some lessons from Ms Ostrum . This should not be so
onerous , as many sub-systems in their civilization are already using
the Ostrum Principles . A Quiet Revolution .
6.
Heroes or villains ?
The
power of free information and capital cannot be gainsaid , but the
excesses of sociopaths in control of major corporations like Enron
cannot be countenanced .
The
trick is to balance them .
7.
The SuperHeroes are sitting this one out . Humans can , for once ,
solve their own problems .
But
I suppose the Chinese , DARPA or Bilderbergers will do it for them if
they cannot even ensure their own survival .
8.An
interesting aside :
Jungian
prescience in the 1930’s would be mass hysteria like Godzilla (US
bombing of Japan 1945) , or Frankenstein in early 1800’s
(automation) , vampires in late 1900’s (AI’s) , SuperHeroes 1900’
s (Oops! We messed up ! Save us ! But don’t ask us to do anything
.)
The
SpiderMan meme (“With great power comes great responsibility” )
can be discussed at leisure with Genghis Khan before he lops of your
head . Or a wizard of Enron before he shuts of the power , or a
banker before he kicks you out on the street .
“The
tree of liberty must be refreshed by the blood of tyrants and
patriots . “ Jefferson
Things
are bubbling at the moment . It is for this exact reason that the
supervillains would be inclined to be reasonable given a logical
alternative to mutual destruction .
And
if they are not logical ? Oh well .
9.”Does
anybody know what he is doing ?”
The
heartfeld cry from the humans , acting like sheep .They blame
everybody except themselves for the actions of their chosen
representatives .
When
their extinction looms , they suddenly realise their chains of debt
and pay their obligation to Gaia by fertilizing the planet .
Overdrawn
at Gaia’s Bank and Casino .
And
the enforcers are at the door .
(Maybe
they can get a short-term , high-interest loan from those friendly
Scientists)
10.
Another interesting aside .
If
the Bilderbergers don’t get their act together , DARPA , the
Russians and the Chinese will eat them alive . After being
billionaires , they could easily end up labouring in the fields they
used to own . (Happened during the last Great Disturbance (Napoleon))
.
11.
Even another interesting aside : The Russian equivalent .
Vladimir
Putin laid it out when he was still a lowly colonel in the KGB :
Russian Champions (his term . State sponsored private enterprise .
Basically the origin of the Oligarchs (same as Larry Ellison with
Oracle)) . A DARPA recipe .
They
are all using variants of the same Ostrum principles . Remember ,
Ostrum published in 1990 . All these systems developed after that .
The Quiet Revolution . Something that actually worked .
12.
Which brings us back to the Bilderbergers : they are busy losing .
Far from getting a grip , they are being eaten alive by DARPA ,
Russia and Chinese . The mess in Europe is the death struggles of a
system which could not adapt .
13.
The end of the Roman Empire
Like
a bump in the carpet , the Roman empire kept on resurfacing . Roman
Catholic Church , Greek Orthodox , Dutch , Swiss . The Dutch have
lasted the longest (2 000 years , not bad) . But I would not
write them off yet . Another trick like the Great Merger with Britain
in 1688 , but this time with
Russia,
China or DARPA is quite within their capabilities . They have a lot
to offer . And they are not under the gun . But they will lose if
they continue the way they are going .
14.
So much for the Bilderbergers .
We
have merely swapped king log for wannabe king stork .
15.As
the Singularity rolls in , a peasant can take satisfaction that as
money is equalized , at least his money is equalized less . But long
before that , he will have to get of his lazy ass and take charge of
his or her own life .
16.
Poor little rich men . The Bilderbergers are quite rightly running
scared . None of the competing systems (especially the Russian ones)
will have any mercy . As much mercy as what was shown them . What
comes around . Oh Well , Ostrum left mercy for the religions .
17.
Isn’t history exciting ?
When
I started writing this , I thought the Bilderbergers had the upper
hand , but as the argument progressed I could see they are desperate
. The Ostrum Principles are eating them alive . Literally . Taking
away resources .
The
Predators are called DARPA , Russia , Chinese , but all the same
thing .
The
Unity of Europe is dead . The Ostrum Principles works best on small
scales .Except for that pesky para 8 . I thought the breakdown of
Europe would lead to incessant warfare . This would have been true if
not for the presence of three competing Ostrum Systems : DARPA ,
Russia , China .
Europe
then classifies as a failed state , mainly due to the incompetency of
its bureaucracy (Brussels)
The
same thing that sunk the old Roman Empire . They never learn .
Expect
some fancy footwork by the Dutch . Well , they have been doing this
for at least 2 000 years and still going strong . Masters at
betrayal .
So
much for the Bilderburgers.
18.
Controlled break-up up EU .
Greece
and Italy as semi-autonomous provinces of China is quite possible .
Their own currencies and economies , like hong Kong . Subject to
Ostrum Principles . The probability is nearly unity . The command and
Control economies cannot compete with Ostrum principles .
The
Russian Champions (Oligarchs) and DARPA Champions will be right in
there .
Greed
and Stupidity will get its own reward .
And
so the human dance goes .
Andre
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Appendix
I
DARPA
“Creating
and Preventing Strategic surprise”
Their
Mission Statement for once is spot on .
To
do this it needed more than control . It needed enthusiastic ,
well-rewarded open participation . But under it’s control . The
Recipe of an Ostrum System .
Note
the successes of Oracle , Internet , GPS ,Siri , etc to mention only
a few .
Also
note the absence of former adversaries .
Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Appendix
II
A
very short summation .
Professional
and Ostrum .
Andre
Willers
25
Nov 2012
Synopsis:
We
analyse demands on the Professional’s attention using Ostrum
Metarules .
Discussion
:
The
eight actual metarules are in Appendix I .A below . Humans do not
have the capability of grasping or seeing them all at once , so we
will have to do them item-by-item .
Can
humans actually “grow”” to encompass all the 27 Rules necessary
and Sufficient to describe the Universes ? . Not difficult at all .
They then create new Universes , but make them more interesting by
pinching boundaries .
1.The
Common Resource is all the Information Demanding systems wanting a
portion of the Professional’s attention .
2.Tragedy
of the Commons variant .
Exploitation
of the free information to the max , with attempts to inhibit certain
channels . Doomed to failure . The resource is effectively infinite ,
because (A + ~A < Universum) . No constraint is possible in the
long term .
Short
term constraints are possible .
3.Network
Theory :
“Small
worlds” networks are the general human networks of pushing
information . This simply means that most information is sent and
handled by “close” nexi , but there are long-range neurons that
carry information to other nexi (or mirror networks) .
4.First
Pass on Overstimulation of Information :
Simply
pass it on to onto the subsidiary networks , except for Amygdala
Interrupts . (See Appendix II)
5.
Second pass :
Correlations
have been made at very low levels . Rethinks .
6.
Third and n’th passes :
You
get the drift . The system refines itself through feedback processes
.
7.Predictive
rewards :
This
is where we get to the nitty-gritty of Ostrum Systems .
Any
farming system , agricultural or not, foregoes present reward for
future benefits . You have to get Oabout eight things right to make a
living .
Thoe
domain of dopamine-systems . Once you enter it , you cannot leave it
.
8.
Humans farm the noosphere the same as they farm the land . But that
same pesky 8’th term disturbs things . The relationship to higher
Beth(x) beings . The disturbance is built-in and unavoidable.
9.
Osrtum managed to get 7/8 system rules independent of the observer .
A significant accomplishment .
What
does this mean ? Small scale systems can be predicted and manipulated
.
10.
This means you !
A
Small thing , but my own .
Andre
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Appendix
I
The
only Game in town .
The
Ostrum Game
Andre
Willers
30
Oct 2011
“One
Game shall bind them all .” , ( with apologies to Tolkien)
“This
time , we know for sure the grass is greener somewhere”
“A
Revolution , any Revolution.”
Synopsis
:
A
Game for Grown-ups .
The
Eight Ostrum Design Principles are Meta-rules that generate
self-consistent sets of rules that encompasses competition ,
co-operation , catastrophe , hierarchies and other systems undreamt
of , all between discrete , interacting , self-organising systems .
Your
avatar can go from SecondLife to Simworld , to War Worlds , to any
desired locale .
Reality
becomes a subset .
Discussion
:
1.An
incredible amount of money can be made .While money still has some
meaning .
Without
too much work . See Para 8 in Appendix A
Each
Game Company is a base nested institution .
They
bind easily together , releasing a lot of energy and money .
Explosive
Feedback Synergism .
A
run-up to the Singularity .
2.Feedback
between Games and Reality :
The
Meta-rules make no differentiation between Game-characters and
Real-characters .
Indeed
, many Real-characters have been spun into Game-characters , and
vice-versa .
Think
Sherlock Holmes , MacGyver , Gauss , young Werther etc
See
“mirror-neuron networks” , any soap opera , etc .
Real-life
problems get treated the same way as Game problems . The more diverse
and sophisticated the Game interactions become , the more effect on
any real or Game system .
Eventually
, they become undistinguishable as technology progresses .
3.The
Grass is provably greener somewhere .
Long
known as a wishful thinking fallacy , until Ostrum published the
Design Principles in 1990 .
This
was the trigger event of under-the-surface knowledge about Ostrum
Rules building up .
Suddenly
, it became possible .
A
Phase-change in the noosphere occurred .
It
meant that a Disaster of the Commons or an Empire was not inevitable
. Grandchildren could survive .
WE
CAN MAKE THE GRASS GREENER , EVEN IF WE HAVE TO PAINT IT ONE BLADE AT
A TIME .
Enormous
tensions began surfacing . These effects are still playing out now .
A
really , really major Hysterical Focus started forming , and is still
intensifying .
Now
, are you surprised that 1990 was the year of huge revolutions , when
the USSR collapsed ?
The
Ostrum Game beat the Ring of Power .
And
you have not seen anything yet .
The
pace of Revolutions is intensifying .
A
good thing , if Homo wishes to escape extinction .
4.Automating
Ostrum Rules :
They
might be Meta-rules , but they are still rules .
We
can certainly write programs that can serve to guide past most of the
pitfalls and suggest alternatives .
5.Multicellular
Bodies as Commons :
We
can certainly analyze bodies in terms of Commons . The Dear Reader
will find many interesting things if he does that .
Note
the emphasis on communication .
Talk
to your body . Aloud . And listen in the silences in between .
Create
a virtual body and note the interactions .
Use
the Ostrum Design principles .
6.Singularity
:
It
is immediately obvious that humans are then not limited to Real
biochemical definitions of personality . The emphasis on
communication means that personalities are distributed across Real
and Game spaces . The Game space personality segments are only
limited by internal non-contradictory rules . That can be done via
Ostrum Design principles .
Not
exactly instantaneous , but I can intuit that the time can be
calculated . It would be less than real time .
The
putative developing system would have ethical constraints on
abandoning Real-part personalities under Ostrum Rules .
Told
you it would be kindler , gentler .
7.Phase
Change :
The
system has already undergone an irrevocable phase change in 1990 .
You
can fast-forward the rest .
8.Did
Ostrum know what she was unleashing ?
The
Revolutionary aspects , nearly certainly .
In
her quiet way , she is one of the greatest Revolutionaries in Homo
Sapiens history . Worthy of being called a Matriarch .
The
Singularity aspect is more uncertain . She certainly knew that she
unleashed major fairness , but the phase-change in the Noosphere I do
not know .
Still
, a tour-de-force .
How
do feel like being a pet of your avatar ?
Andre
.
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Appendix
A
To
quote from Wiki : (comments in brackets are my own ).
- Clearly defined boundaries (effective exclusion of external un-entitled parties;
- Rules regarding the appropriation and provision of common resources that are adapted to local conditions; (Equal sharing of debts and rewards)
- Collective-choice arrangements that allow most resource appropriators to participate in the decision-making process; (Consensus decisions-no leveraged hierarchies)
- Effective monitoring by monitors who are part of or accountable to the appropriators; (Policing)
- A scale of graduated sanctions for resource appropriators who violate community rules; (Opportunity to learn from mistakes )
- Mechanisms of conflict resolution that are cheap and of easy access; (Fair and Fast Justice . See how Inquisitorial Justice systems like Chinese , French or Sharia does it.)
- Self-determination of the community recognized by higher-level authorities; (Autonomy within clearly defined levels . Something like a Federation.)
- In the case of larger common-pool resources,organization in the form of multiple layers of nested enterprises, with small local CPRs at the base level. (Clear and quick relations with others. A potential sticky point with states.)
Governing
the Commons: The Evolution of Institutions for Collective
Action Ostrom,
Elinor, Cambridge University Press, 1990
“
The
most important book in the Twentieth Century .
Try
to read it .
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Appendix B
Wealth
, Riches and Money .
Andre
Willers
20
May 2007
Synopsis
:
By
use of brutal reductionist arguments , we find the underlying
relationships between Wealth , Riches and Money . Only Homo Sapiens
(not Ants , etc) economies are considered .
Discussion
:
Wealth
:
The
end-users define wealth .
The
entities that create the definition of wealth are Homo Sapiens . As
biological beings they have an irreducible rate of using Air , Water
and Food . (Ref Maslow) .
This
is the brutal reductionist part , since we only consider these three
factors .
For
the species to remain in existence , they need to be sustained at
minimum levels at least for a term equal to the time it takes for
children to start having children of their own . (Say 15 + 15 =30
years .) .
Most
human societies have evolved another term (the Grandmother effect) ,
and optimizes on the grandchildren ( ie 45 years of good nutrition is
needed .)
The
crucial points :
- Wealth is a process , not a state .
- A Monetary system that does not destroy money to mirror the underlying wealth fluctuation , locks the society into a limited number of states , and , even worse , a fixed sequence of these states .
- Systems which are non-linear will hunt for stability (ie if the control system is monetary , it will attempt to bring the monetary system into a one-to-one correlation with the wealth system .)
- If Humans are in the loop , the system is non-linear .
- The System will try to destroy Money to keep it in synchronization with Wealth .
A
human is wealthy if the rate of income is bigger or equal than the
rate of expenditure . The difference is stored if the society has the
mechanism for storing wealth (ie air , water , food equivalents) .
Stored
wealth is defined as riches .
A
hunter-gatherer is wealthy if his food intake exceeds his body’s
rate of usage .
Later
on , when surpluses could be stored , the concept of riches = saved
surplus evolved . Eg Egyptian or Mesopotamian food surpluses .
This
is Capital by classical definition .
A
surplus means trade . This led to Money .
Money
is an analogue counter of Saved surplus wealth (Capital) , not of
Economic Activity . The Free Market is then the most efficient way of
apportioning surpluses . But it breaks down (ie liquidity vanishes)
when there are no surpluses . Then central planning is more efficient
to ensure the survival of what is deemed essential .
Hence
the well known mechanisms of war-time and famine rationing . Marxism
evolved out of the famine-type conditions caused by the Bust part of
Boom-Bust monetary based economies . These cycles developed partly
because the monetary systems could not mirror the economic activity ,
as money was not being destroyed .
Humans
also optimized on making money instead of creating wealth , under the
impression that the two are synonomous . But they are not . They can
only be interchanged if there is a large surplus of wealth (eg food)
. Note that the Free Market locks up into illiquidity long before the
surplus is zero . This is well known from famines in India and China
. (The rich merchants lock up their warehouses once they know that no
new supplies are coming in . Even if a lot rots , they could still
make more money by selling the remainder at hugely inflated prices .
The
State , Mandarins , Empire etc has to step in .)
Once
again , Wealth is a process , not a state .
This
was how it developed right from the start . For instance , taxation
in the late Roman Empire and Medieval periods worked quite well on
kind , without money .
This
confusion had an unfortunate side-effect : Wealth is used up
day-by-day by human metabolic processes . Money has no equivalent
destruction process (since it originally evolved to count only
surpluses) .
Original
coins or paper notes tied to the gold-standard ( ie British pounds
circa 19 th century) had a physical life-time , but modern electronic
money lasts forever until it is deliberately destroyed .
The
politicians could not bring themselves to do this .
Hence
the present (2007) system where a Central Bank creates money , and
lends it out at the repo rate , but does not actively destroy it .
This causes severe distortions when money is tried to be used as an
economic activity indicator .
This
argument has to be seen over a number of transactions:
A
very simplified Example will clarify this :
The
Central Bank lends $10 trillion to distribution banks at 3% pa (the
repo rate) for 1 year . They lend it out in turn at 10% for 1 year .
New
higher repo rate :
(Say
from 3% to 5%)
After
one year , the distribution banks repay the $10 trillion plus 3% ,
then promptly borrow only $8 trillion (less than the previous amount
because of the higher repo rate) at 5% (the new higher repo rate) .
The profit (7% = 10%-3%) accumulates in their capital account .
There
is thus an effective destruction of $2 trillion due to free market
forces caused by the increase in the repo rate . This destruction of
money is not offset against any accounting item , and is a
singularity point in the accounting system . But note that the
capital growth in the Distribution Banks’ Capital Accounts remain .
New
lower or same repo rate :
The
same argument as above , except that there is now no destruction of
money .
But
the concentration of capital in the hands of the distributing banks
continues .
Note
that in all three scenarios above , capital increases in the hands of
the distributing banks , but in only one is money destroyed . This
leads to asset inflation .
Inflation
strategy :
The
present recipe is to aggressively increase repo rates , which does
destroy some money in circulation . Then it falls (the whole aim) .
But it concentrates capital , mainly in the hands of the distributing
banks and other “haves” . This gets worse when rates have to rise
again (the system is never stable) . The result is asset inflation.
The
results
can now be seen planetwide (due to globalization) .
Wealth
per global capita (ie food , water ,air) is increasing planetwise ,
mostly because of decreasing population growth in North America ,
Europe , Russias or China . Other areas like South America , Africa ,
India , Indonesia are becoming more impoverished in real wealth terms
. In the mean time , money (ie the number of units of dollars , yen
,yuan ,etc) are increasing . This causes a major asset inflation
mostly in the hands of the distributing banks and other “haves” .
Property and share prices shoot up into unrealistic levels , where no
rental that has to be paid from non-shareholding income can compete .
Eventually
this spills over into the price of food-producing areas , which
stimulates inflation in food prices (Cf the price of wine). Ie wealth
decreases per capita for a non-shareholder . Social unrest increases
and Fundamentalist Religions (which arose out of exactly similar
conditions at the fall of the Roman Empire , Christian as well as
Muslim) resurges .
The
system has very cleverly recreated an aristocracy and a starving
proletariat .
Does
this sound familiar ?
This
system limps along as long as there are no severe shocks .
Capital
accumulates with Credit .
A
basic principle .
This
is equivalent to statement that large cross-subsidising concerns can
weather temporary downturns that wipe out smaller individuals .
Ho-Ho-Ho
!
Many
companies have followed the pernicious advice emanating from the US
economic gurus to create profit centers . Once they have conveniently
disentangled their affairs , the predators , in old times called
corporate raiders , but now usually in-house management , do a
leveraged buy-out . The finance is done on debt from credit companies
(banks) on collateral from the accumulated capital as described above
.
Also
known as private equity . The planet is awash with capital (ie large
numbers of currency units , which should have been destroyed , but
were not .)
The
other factor .
Why
did limited liability companies evolve ?
These
are after all the defining characteristic of Western Civilization .
The
humble company is the generator of the Western world’s riches .
And
the Stock Exchange is it’s handmaiden .
Answer
:
It
is cheaper to finance expansion into an envisaged increasing market
via a Stock Exchange than borrowing or issuing bonds , since buyers
of the shares think that the increase in the capital value of the
share due to increased market share will make up for the smaller
dividend .
This
has been generally true since Jethro Tull invented the seed-drill in
1701 . There has been a sea-change in this attitude .
The
Market is increasingly beginning to think that the present growth
rates cannot be maintained . More money can be made by moving out of
equities into bonds and promises to pay by companies and governments
, hoping that they will survive the coming upheavals .
A
side effect of this is that there is a large surplus of capital
sloshing around . These are huge systems , which do not turn on a
dime . One of the symptoms of this that the capital available for
Private Equity buy-outs increases.
Another
way of looking at it , is that the low birthrate in Europe and US
means that the capital growth component of shareholding is worthless
and everyone is scrambling for income . This is exactly what Private
Equity is doing .
The
social consequences are devastating .
The
middle class are excluded from mobilizing capital . Exeunt middle
class . Back to the aristo’s and serfs . Social mobility between
classes decreases to nearly zero .
The
small man can only invest his little surplus in an enterprise where
the most lucrative returns already belong to a small group . He can
only be mercilessly exploited by the whole system , which has ground
to halt in terms of wealth .
Sounds
familiar ?
This
happened towards the last two centuries of the Roman Empire
Remember
Credit concentrates Capital .
Hence
the violent Christian and Muslim abreaction to interest rates .
Their
original founder members had all been screwed by the Roman banking
system into penury .
The
History of the Humble Company.
How
to destroy money without beggaring the shareholders .
The
price fluctuations in the stock market made certain periods of
unrealistic pricing possible . The shares were overpriced .These made
money destruction possible , thereby making the system more realistic
as far as using a monetary system to control an economic system . See
below
Note
, that if Company builds a widget and pays cash , the number dollars
(the money) does not decrease . Money is not destroyed . However , if
it uses credit (like an inflated share price based on unrealistic
future income) , then if it crashes , the number of monetary units in
circulation does decrease . Money is destroyed .
In
accounting terms , the debt must be offset against capital . Capital
being the saved surplus of wealth . Wealth eventually being based on
something like food . Do you see how it worked ?
It
made it possible that an exuberant stock market can exist . That the
same individual can risk small amounts on say twenty different stocks
, win on two and lose on eighteen and still survive and maybe come
out ahead . Hence the extremely exuberant stock markets of the 19th
century .
Money
was destroyed in unsuccessful enterprises , since most of these
involved building something physical , using credit based on the
stock price (cf Suez Canal)
An
intriguing speculation is that the 19th
and 20th
century propensity for very large ,very expensive science projects
with little return is based on the attempt to destroy money . As any
real scientist could have told them , Blue Sky projects have an even
higher return rate than venture capital enterprises .
Hence
the old standbys : weapons and war . The more useless and expensive ,
the better . The system is not creating a lot of new wealth (ie food
, etc) , but it certainly is creating a lot of extra monetary units .
They have to be destroyed , but the politicians do not have the
courage to simply decreate them the same way they created them , so
we have the Battleships , the Maginot Line , the ICBM’s , the
Pentagon , etc , etc .
Most
wars are financed by credit , so this is an easy way of destroying
money .
Are
we condemned to repeat this cycle ?
Do
not make a mistake , persuading highly competitive , effective
individuals to destroy their money ( the result of their hard work )
for some putative future reward has worked before (Christianity) in
the building and gilding of Cathedrals . The only problem is that
they must be convinced to sink into something with no conceivable
return .
More
seriously , for themselves , no . Their children , maybe . Their
grandchildren , probably .
After
all , it has been done before .
Ho-Ho-Ho
!
Money
in those medieval days could only be destroyed by locking up gold or
silver in religious objects . It locked up (destroyed) money in
untouchable holy relics . Even today it will be a brave burglar who
thinks he can get away with stealing religious relics .
The
Muslims gilded whole buildings .
The
Egyptians buried it .
But
look at the effect . The destruction of all this money stimulated
intense searches for new sources of silver , gold or other wealth .
The other wealth usually proved more enduring and important .
The
building of cathedrals in Europe had a direct effect on technological
development in Europe .
Creating
money is easy .
Creating
wealth is not much more difficult .
Creating
lasting wealth is worthy of marks : Mark one century , Mark two
centuries ,
Mark
three centuries , etc .
What
benefit can it have to the major shareholders ?
None
. The religious trick will not work twice ,
Survival
of the gene-line . The children .
A
Modest Proposal :
That
the inherited wealth is shotgunned into limited liability companies ,
with a bias to benefit the son . But not enough to give decisive
advantage .. He will have to pull finger .
This
does not sound like much , but you have to see it over a spectrum of
about a million individuals .
Fat
chance . To enforce this a world government will be needed .
Humans
simply will not relinquish their perceived game-playing advantages ,
even if it means the demise of them and their line .
Actual
Monetary Destruction in history :
The
German Mark 1923 , Reichsmark 1947 , Franc 1950’s , Lire 1950’s ,
Ruble 1990’s etc , etc .
Notice
that each economy rebounded , especially the German one after the
destruction of the Reichsmark in 1947 . Most of the others were an
ostensible conversion between the old unit and the new one , with the
actual destruction of money hidden in the fine-print for political
reasons . The Americans could dispense with this nicety in 1947 , yet
the effect was stimulative , not destructive .
To
get back to the Limited Liability Company :
It
originated in the Netherlands . It was a method of mobilizing small
groups of capital , without incurring crippling losses . (Limited
liability companies were illegal under Roman Law ) .
It
must be noted that the Netherlands and surrounding lowlands , never
suffered catastrophic depopulation in the aftermath of the Roman
Empire’s collapse . This means that they were not looted , and
taking the times into account , means that they more likely charged
the looters (eg the Angles and Saxons on their way to England ) a
hefty fee . Invaders like Attila , the Vandals , etc also bypassed
them . Presumably a combination of diplomacy and a hard nut .
Brittany
and Normandy are pointers as well . What do they have in common ?
They are not in the Netherlands , the easiest reachable and fertile
area .
Yet
these toughest SOB’s around never settled in the easiest target .
The AngloSaxons did not settle in the Netherlands , neither did the
RomanoBritons or the Vikings . William the Conqueror thought it more
politic to marry Matthilde (from Belgium) .
The
Dutch saw off the Spanish , on level ground .(Like facing the
Wehrmacht Panzers on their best day .)
They
also saw off the English in the Spicy East and New York . But the
long heritage of survival shows in the merger with England (See Niall
Ferguson) . They were simply too small and exposed to land-warfare
from the continent . Yet today Brussels is the capital of Europe .
Looking at Medieval Fair maps and trade routes of old Europe . It
always was the capital .
They
fight to win if facing annihilation (Phillip II) , but otherwise seek
accommodation and survive .
Hence
the history of useful traitors in old Dutch colonies like SA . The
memes are there from Roman times .
As
Sun Tzu would say : “The Belgian reeds bend with the wind , but
shelters the skugtere fish .”
So
let us hope that they face the threat of rising sea levels due to
global warming with the same resolution . A Solar Umbrella is well
within their technical and financial reach .
Homo
Sapiens has free will , and does not have to repeat these patterns .
Andre.
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