Creating and Destroying Money .

Creating and Destroying Money .

Andre Willers

10 Nov 2013

Synopsis :

How to destroy money .

Discussion :

1.Creating money :

http://en.wikipedia.org/wiki/Money_creation

http://en.wikipedia.org/wiki/Money_supply

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)
• MZM: Money with zero maturity. It measures the supply of financial assets redeemable at par on demand. Velocity of MZM is historically a relatively accurate predictor of inflation.^[16][17][18]

The ratio of a pair of these measures, most often M2 / M0, is called an (actual, empirical) money multiplier.

Fractional-reserve banking[edit]

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]

1. central bank money (obligations of a central bank, including currency and central bank depository accounts)
2. 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 .

See http://en.wikipedia.org/wiki/Long-Term_Capital_Management

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

See http://en.wikipedia.org/wiki/Long-Term_Capital_Management

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 .

See http://andreswhy.blogspot.com/2013/10/yellen-as-fed-chair.html

Live long and prosper .

Andre

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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 .

http://en.wikipedia.org/wiki/Ground_effect_vehicle

Not even this is needed .

http://en.wikipedia.org/wiki/V-1_flying_bomb

“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).”

See http://en.wikipedia.org/wiki/Ramjet

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

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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

http://andreswhy.blogspot.com

“ 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 .

See http://andreswhy.blogspot.com “Artificial Intelligence” , et al

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 .

See http://andreswhy.blogspot.com “Facebook , ExchangeRate and the Singularity”

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.)

See http://andreswhy.blogspot.com “Infinite Probes” and other arguments .

(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.

This ties in with http://andreswhy.blogspot.com “Infinite Probes”

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-à-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

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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 .

See http://andreswhy.blogspot.com “ Artificial Intelligence”

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 13^th 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

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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

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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 .

Else the attackers can dismantle the defences at their leisure .

3. Aggressive Counter Hacking . (Knights , Navy)

See http://www.giac.org/paper/gsec/3538/aggressive-counter-hacking-past-present-future/105759

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)

http://en.wikipedia.org/wiki/Glorious_Revolution

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

http://www.darpa.mil/

“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 .

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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

See http://en.wikipedia.org/wiki/Elinor_Ostrom

To quote from Wiki : (comments in brackets are my own ).

“ Ostrom identifies eight "design principles" of stable local common pool resource management:[10]

1. Clearly defined boundaries (effective exclusion of external un-entitled parties;
2. Rules regarding the appropriation and provision of common resources that are adapted to local conditions; (Equal sharing of debts and rewards)
3. Collective-choice arrangements that allow most resource appropriators to participate in the decision-making process; (Consensus decisions-no leveraged hierarchies)
4. Effective monitoring by monitors who are part of or accountable to the appropriators; (Policing)
5. A scale of graduated sanctions for resource appropriators who violate community rules; (Opportunity to learn from mistakes )
6. 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.)
7. Self-determination of the community recognized by higher-level authorities; (Autonomy within clearly defined levels . Something like a Federation.)
8. 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

See http://andreswhy.blogspot.com

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 :

1. Wealth is a process , not a state .
2. 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 .
3. 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 .)
4. If Humans are in the loop , the system is non-linear .
5. 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 19^th 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 19^th and 20^th 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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