Elaine Meinel Supkis
We all know that world stock markets are now falling like dominoes due to the sudden hike in oil prices thanks to US efforts to shove Muslim oil nations around. The common trick of the oil consuming super power which always drops the value of the dollar like a rock when oil goes up in price is causing the US itself to fall into the same stupid pit it fell into with each oil price hike due to wars in oil pumping areas. The US has raging inflation at home while international trade plummets. Today, we visit the BIS, Bank for International Settlements to see what is going on over there. The latest paper published by them concerns currency games. It is a weird study that has some unbelievable premises.
Confronted with a speculative attack on its currency peg, an authority weighs the short-term beneﬁt of giving in and ﬁne tuning the economy against the long-term beneﬁt of credibility-enhancing resistance. In turn, speculators with heterogeneous beliefs face strategic uncertainty that peaks at the time of the attack, when the fate of the peg is unclear, and then declines, as the economy settles in a stable currency regime. In this environment, a less conservative authority — i.e. one that stabilises less the exchange rate once a peg is abandoned — may be more likely to withstand an attack on the peg. This result, which strengthens as speculators’ risk aversion declines, casts doubt on the conventional wisdom that greater conservatism enhances welfare.
When facing real life problems, the wisest path is to study all the factors and try to find a solution. There are many methods to this process. None of which are 'purely intellectual' due to the human brain desiring greatly to shoehorn information into positions whereby it 'works out'. In other words, we delude ourselves, ipso facto. Trying to see reality without delusions is impossible for humans due to the way our brains evolved and the way civilization has plastered on thousands of years of cultural training systems. On top of all this, deep inside the parts of the brain that operate unhindered at night while the conscious brain is snoozing, there is the modus operandi center of the Dream World. This is where religion, beliefs, propaganda, outside influences and demonic fears all reside. We imagine they are locked away. But even the most rational scientist is in the grip of this hidden, occult, dark part of the brain, the subconscious mind.
Queer things happen there. Up is down and in is out. It happens to be the Portal to the Outer Darkness I keep talking about here. The Outer Darkness is actually inside our brains and controls our emotional as well as rational response to information and incoming data from the real world we live in. My parents and grandparents were all top scientists and professors. Their collective dark Id world from this dream center were all totally messed up and nearly completely out of control due to them being rational intellectuals. This is why I am so aware of this part of the brain, I suppose. Here is today's article about this sort of thing:
FALSE beliefs are everywhere. Eighteen percent of Americans think the sun revolves around the earth, one poll has found. Thus it seems slightly less egregious that, according to another poll, 10 percent of us think that Senator Barack Obama, a Christian, is instead a Muslim. The Obama campaign has created a Web site to dispel misinformation. But this effort may be more difficult than it seems, thanks to the quirky way in which our brains store memories — and mislead us along the way.
Whole civilizations preen themselves on being 'rational' even as they go careening off into total insanity. The question people ask over and over again is, 'Why did the very cultivated, creative and technical Germans go totally nuts and become raving Nazi murderers?' Every step along that dire road was rational. Every step along the road leading the Jewish people to the Apocalypse in Jerusalem is equally rational. Humans do this because the religious impulse is uncontrollable by rational thinking. It is in this dark, nearly inaccessible part of the brain. Just as we try to remember dreams, they are warped by the memory since we edit them as we struggle to recall the complex, nasty parts of the dreamworld which includes hidden messages, strange shapes of ordinary things and the toxic mix of seething emotions. Especially things we try to rationally repress.
This is why odd, strange and bizarre things are believed in despite obvious flaws. Such as UFOs: we see lights in the sky. Since novelists and movie makers love to scare people with stories about aliens from outer space, people now think that any oddball light or thing they think they see in the night sky or at sunset is really aliens invading the earth! I used to lecture about this matter at SF conventions. This made me VERY unpopular. Far from collecting more and more 'believers' I encountered irrational rage. Even as I explain patiently, 'IF aliens are coming here to look at us, why would they flash lights so we can see them easily? It is totally illogical.'
All kinds of goofy replies are made but the illogic remains. Since I figured this out as a child, I marvel that adults get very angry when I explain this to them. This is because the belief that there has to be aliens out there has been planted in the deep, dreamworld of the brain by various media hammering into that part of the brain where the emotions reside. The irrational parts. Dr. Freud rooted around that part of the brain and discovered many odd and wonderful things. But all of his work has been tossed out in favor of rationalism which is the ruling ethos in science today. Even as it gets quite irrational and totally lost in thickets of misguided systematic studies. For example, the rise of 'Game Theory' which has displaced 'Freudianism'.
Although some developments occurred before it, the field of game theory came into being with the 1944 book Theory of Games and Economic Behavior by John von Neumann and Oskar Morgenstern. This theory was developed extensively in the 1950s by many scholars. Game theory was later explicitly applied to biology in the 1970s, although similar developments go back at least as far as the 1930s. Game theory has been widely recognized as an important tool in many fields. Eight game theorists have won Nobel prizes in economics, and John Maynard Smith was awarded the Crafoord Prize for his application of game theory to biology.
Increasingly complex models of gaming have utterly taken over philosophy and economic studies. This is because it is nearly useless in the real world. Or worse, when applied to the real world, warps it hideously and sets off forces that cannot be controlled. This is due to the human mind wanting things in the Land of the Id that are very bad for the organism that the Id lives inside: the body of the human. Readers here know that I talk all the time about this dark realm which I and Tolkien both have called 'The Outer Darkness'. This entity is human-created and the door to it is in the center of the brain. I discovered this dread place quite accidentally: I was hit by a very powerful lightning bolt when I was 5 years old. Obviously, it disarranged my brain since both it and the brain are electrical in nature. Since I has whacked by this bolt, evidently the electrical connections of my frontal lobes were badly jarred in relation to this innermost part of the 'thinking' brain and since that day, I remember all my dreams.
We have many dreams all night long. Some people are happy if they remember periodic dreams. But trust me, we dream all night. When I was a child, I was so upset with remembering and understanding multiple dreams every night, I became an insomniac. Doctors could do nothing and did nothing so I grew up knowing totally and consciously, what was going on in my dream world. I write many of my stories here at night while asleep and then write them online later. The dream world is also outside normal time. This is why I thought up this article in my sleep and then found the stories in today's news by searching for them. This sort of 'time travel' is certainly odder than aliens from outer space flashing lights to scare humans and then darting off to the nether reaches of our souls.
Back to the subconscious mind: manipulators of humanity know that propaganda, which they work hard to perfect, can plant things in this subconscious part of the brain and thus manipulate masses of humans and thus, enslave them. Whenever outsiders manage to do this too, great wars are fought and the new propaganda brain system is installed and the rulers then settle down to the grim task of manipulating these new religions for their own benefits again. This is why the founders of the great recent religions were totally unable to enjoy the fruits of their labors. They died. But the followers of Mohammed, Jesus, Moses, Buddha, etc all got to live in palaces and be treated like Gods on Earth just as the first Pharaohs. To maintain power, they worked hard and even brutally violently, to keep the new belief system planted in the interior parts of the brain. Disbelievers were murdered or tortured.
In Academia, I could never get a degree in economics. Or philosophy. Or many other fields due to my total refusal to believe in the New World Order system of analysis. I analyze things by looking at the innermost part of the brain, the Dream World, and then seeing how it affects the Waking World. This also means looking at the Cave of Wealth and seeing how it is the mirror of the Cave of Death. This is due to the nature of the Waking/Dream world system which is a yin/yang set up and thus, mirror image. I bet the entire universe is a duality system that has a mirror anti-universe system that is exactly opposite. This can't be proven because when we are in one system, the other becomes totally invisible. Only in our imagination, can we figure out the opposite system. Or, we can be hit by a lightning bolt and suddenly discover the flash point between opposite poles.
To show how fruitless and useless the mania for 'Game Theory' has become and how it is actively destroying economists and their poor students, I want everyone to examine the very latest paper published by a very powerful New World Order organization that was set up to supervise the payments for WWI. This organization was a total failure since Hitler kicked the entire business to the curb only one year after the BIS was launched. And he did this to save Germany. Only he was totally insane and sent Germany straight into the hell of WWII. Ah, a mirror situation if there ever was one!
The global games literature has shown that small departures from the representative- agent paradigm can alter drastically the link between economic fundamentals and market behavior.1 In a speciﬁc application of this insight, Morris and Shin (1998) were the ﬁrst to introduce heterogeneous information in a standard second-generation model of currency crises2 in order to explain abrupt and intense speculative attacks as the unique outcome of deteriorating fundamentals. In studying the robustness of this equilibrium uniqueness result, Vives (2005), Hellwig et al (2006), Tarashev (2007) and others have found that it hinges on the presence of suﬃcient strategic uncertainty, deﬁned as individual players’ uncertainty about aggregate behavior.3
Even when each player’s private information is extremely precise, strategic uncertainty can be high and preclude the market from coordinating on diﬀerent equilibria for the same fundamentals. Building on these results, this paper analyzes the impact of time varying strategic uncertainty on the intertemporal problem of a central authority that governs an exchange-rate peg.4 Given that an attack on the peg is followed by a stable currency regime (whose type depends on the attack’s success) strategic uncertainty declines over time. A seemingly surprising result ensues: a less conservative authority — i.e. one that is less inclined to stabilize the exchange rate once the peg is abandoned — is more likely to withstand an attack on the peg. Furthermore, confronted by a lower probability of such an attack, a less conservative authority may deliver higher social welfare.
HAHAHA. Back to propaganda, culture and the brain: do players in the economic games have real information? Is it precise? Strategic? HAHAHA. NO!
And why is that? Obviously, the people who want to be Pharaohs don't want anyone but themselves to have ANY useful information if possible. The creation of newspapers was due to one guy in England: an ancestor of mine, Sir Richard Steele. Like me, he was a meddler who loved to poke around, collecting information and gossip and then publishing it in his 'Tattler'. An apt name. Heh. He was in the grip of the Dream World. He would write plays chastizing prostitutes but he got a lot of his information about money and power via visiting prostitutes. Since the money mad gnomes need to buy sex, anyone wishing to track them has to go to mistresses and whores and flatter them and promote their affairs while hiding all of this from their lovers and sex slaves. And of course, powerful gnomes who think they rule the world end up being slaves of sex goddesses. Thanks to the Id parts of the brain. But since this is also where money and power well up, it works, obviously.
This long paper that takes the elemental struggle of power between workers, governments and bankers and turns it into a game runs into a problem right off the bat. Namely, the game is, by definition, unfair and unequal. The workers don't control information except their own information. Namely, they can gossip and organize but they can't access the information the bankers and the rulers have. They can only react, often in horror, to the impositions placed upon them by the other two players in this 'game'. Back to the news: once upon a time, the news was published by RADICALS and REVOLUTIONARIES. Like Ben Franklin and Tom Paine. Or much earlier, Sir Richard Steele. It is fascinating, reading 19th century newspaper articles. They are so full of facts, data and information! Takes the breath away!
Karl Marx started out as a newspaper reporter. He developed his narrative, 'Das Kapital' after writing news stories he covered in England and Germany during the boom/collapse/depression of the 1848 cycle. He was NOT an 'economist'. There were virtually no economists! It didn't exist. There were businesspeople and reporters. The Scots spawned a number of economics and history writers like Adam Smith, for example. These people were exactly like me: thinkers who were puzzled about things and curious about where they went. As the big Western empires build universities, they began to create 'Economics Departments' which were inspired by astronomers to set up systems that are mathematical and this, in turn, set them off on this merry ride off the cliff as they neglected the dark, dank, emotional, sexual part of wealth creation and destruction. Nearly every paper I read that is churned out and financed by the bankers and the rulers is full of magic formulas based on bizarre and unreal premises that don't work in the real world. Below is an example of a graph explaining how this 'game' is played as analyzed by the BIS paper:
I love to add information to graphs. Here are my additions:
I left out all the blood, the starvation of workers, the betrayals as the other parties conspire to move manufacturing to places where there are even crueler rulers. The manipulative games played by bankers and rulers working with or seeking to loot the manufacturers, whenever all of this crosses over into the labor side of the ledger, it becomes rapidly very ugly. The workers can fiercely fight back and wrest some power or control from the other three parties. But it is always a dangerous affair. And if the rulers and bankers and manufacturers win, we get Fortress Japan where they crush the workers totally and living activity slows down and eventually ceases entirely. Babies are not born or raised. People commit group suicide. The economic entity dies.
Or the workers fight back. Revolutions topple the rulers who are brutally killed. Wars rage as outside rulers try desperately to crush any worker rebellion. For they fear their own workers! This is why all the despotic Muslim rulers support each other's despotism. The Iranian revolution frightened them tremendously. It still menaces them. The Palestinian uprising scares them as well as the Jews. Both want to crush that spirit totally. For it is a flame that can set the entire Middle East on fire. In Europe, the workers were coddled but now are being told to eat the poison of inflation. US workers have been smashed to smithereens this last 25 years as the rulers ruthlessly move jobs to despotic, communist nations. Which struggle with a rising worker movement that threatens to overturn their ruthless rule. Workers and peasants in China or South Korea are extremely feisty and fight back at every opportunity. Totally in contrast with US or Japanese workers.
This study is, of course, pristine clean and pure and wishes to have a clean slate whereby theories can be tested. Yet the theories, by definition, are FAKE since the BALANCE OF POWER is assumed to be equal. But it is not. The powerful rulers seek to control the workers by lying to them or denying them vital information, just for example. Workers are manipulated by propaganda toys that are parked by devious, trained psychologists working for the rulers, these are put in the brain to distract and make the human target fearful. Like 'aliens from outer space' sort of things. I do believe the bizarre notion of 'bombs in the WTC' were parked in brains by DARPA agents using the internet to spread false rumors designed to distract and isolate anyone questioning the official story about 9/11 which was totally fake as well. Just like the lies about Saddam that were insidiously parked in unthinking minds. So predicting human reactions based on some sort of model of 'what is good for them' is false.
People do really stupid, destructive things if the rulers can manipulate or drive them to this.
Henceforth, the value of the aggregate wage bill wt −1 will also be referred to as the intensity of workers’ attack on the currency. This intensity decreases in the fundamentals zt and the authority’s conservatism χA but increases in workers’ aggregate belief in the attack’s success π.
On the basis of equations(10), expression(5)implies two generic out comes for the authority’s period-t loss, while expression (7) implies two similar outcomes from a social point of view.
Note the business of 'the worker's attack on the currency'. HAHAHA. Since when? When the Black Plague swept away a third of Europe, the survivors discovered they had the power to demand higher wages, more freedoms and the right to build their own associations. The guilds and the ruling aristocracy joined forces to crush this. Harsh laws were passed. Peasants evaded this by fleeing estates and 'freeing' themselves from bondage. The knights killed them. The peasants banded together and had one revolution after another. Disorganized and uneducated, these rebels fell to the armored knights who viciously suppressed these uprisings. But out of the bloody soil arose a new society that rejected feudalism and this enabled capitalism to rise up again. For capitalism can't exist with feudalism. It is inherently revolutionary.
Here is an example of the dense layers of magic formulas the ernest PhD cogs who work for the New World Order came up with to describe their lovely little fake game system:
So scientific! So utterly nothing but total hogwash.
This property illustrates the strategic complementarity between the aggregate action of workers and the action of the authority. Namely, the more strongly do workers believe that there will be a devaluation (i.e. the higher is π), the higher is the aggregate wage bill and, thus, the stronger are the incentives of the authority to validate workers’ beliefs.
Workers who have their own news system like they had in the 19th century can counteract the bankers and the government conspiring to spring devaluations upon their heads! They did this BY FIGHTING LIKE DEMONS. They were shot, beaten and put in prison. The workers retaliated with riots, assassinations and outright revolutions. NEVER EVER do any of the 'authorities' validate ANY worker's beliefs! They would rather rip their own hearts out and feed them to the three headed hell hounds than do that! The authorities have no INCENTIVE to 'validate the worker's beliefs...' about inflation. Inflation is IMPOSED on workers in order to STEAL THEIR LABOR just as it is IMPOSED on the middle class to STEAL THEIR SAVINGS. Period.
Anyone going to a crummy top economics university like Harvard, Chicago or Yale, for example, and thinks this sort of stupid thing, is no economist. That 'scientist' is a FOOL. And a tool. This BIS study is total BS.
This paper has developed new policy insights on the basis of a global games model of speculative attacks. The model features a central authority, which administers an exchange-rate peg and faces a short-term beneﬁt of a devaluation and a long-term beneﬁt of perpetuating the peg. Time-varying strategic uncertainty among private market players is at the root of a seemingly surprising result that the probability of a speculative currency attack decreases and social welfare may increase if the authority is less inclined to stabilize the exchange rate once the peg has been abandoned. This result is stronger, the smaller is workers’ aversion to downside wage risk.
And out of this mass of magic spells and magic incantations pops this egg! It makes no sense at all. Try as I might, it doesn't fit into the news stream nor explains reality. All rulers are stuck on the same Horns of Dilemma as the first Pharaohs: if you debase the currency and run in the red to pay for wars that fail or bring less loot than the cost of going to war, this causes the workers to notice they are being looted in various ways and makes them very, very irritable and might trigger an uprising. So there has to be some method to prevent this. The Romans came up with the 'Bread and Circuses' system which ended with 'Barbarians burning Rome and the Dark Ages.' Not a good plan.
Germany and Japan redirected worker's rage to looting expeditions against the Jews in Germany or the Chinese in the case of Japan. These turned into attempts at conquering the entire planet. Which ended in flames, by the way. This paper above claims the magic formulas say, a DESTABILIZED CURRENCY increases worker's welfare. HUH????? What the hell???? I'm sorry, this is so Outer Darkness! Up is down, in is out!
The first stages of inflation always flows into housing and other things and so the middle class is happy. Workers hate inflation. But if workers are in the middle class due to fighting hard for union powers, they enjoy the fruits of inflation flowing into housing since they become homeowners due to winning fights with the industrial powers and the government! But eventually the inflation ignites all the things workers need to stay alive. Then, wages fall further and further behind. If free funny money is poured into the system via cheap lending, the workers remain happy but are enslaved and become increasingly vulnerable. When the inflated, debased currency finally begins to eat up money via food and fuel, even the properties of the former middle class workers is confiscated by the banks and everything collapses.
Workers NEED currency stability. They NEED traditional banking. They NEED the golden goddess of Libra guarding the Cave of Wealth and Death. Even if they don't understand this. The rulers better understand this. The graves of many a civilization are warnings about this.