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Nondominium - a Caspian Solution

by ChrisCook
Fri Sep 23rd, 2011 at 10:47:50 AM EST

I was going to write an article about Hong Kong's currency peg, when events took a hand and I wrote an article which appeared today about Nondominium - a Caspian Solution instead.

Nondominium occurred to me as describing rather well the sort of Gandhian stewardship which underpins the new framework agreements for the Property and Money relationships which are capable of completely changing the game.

Maybe the first candidate for nondominium is the word itself - avoiding the nonsense of Chris Cook's Nondominium TM........

Read more... (4 comments, 997 words in story)

Printing Oil

by ChrisCook
Mon Aug 29th, 2011 at 09:20:56 AM EST

Here, under the distinctly idiosyncratic title bestowed by my friendly Editor....

Asia Times: "....slippier to boot" my latest 'Asia Times' article in respect of the completely distorted oil market, and the reasons for that distortion as I see them.

In a nutshell, I believe that the Saudis - and others - have simply been 'printing oil' other words.....monetising it.

On Friday, all eyes were on the Federal Reserve Bank chairman, Ben Bernanke at the annual conference of US Federal Reserve Banks in Jackson Hole.

As an expert on the Great Depression of the 1930s, Bernanke knows that a further round of Quantitative Easing (QE3) will lead to negative interest rates in the US, and the danger of debt deflation.  He also implied, in his oracular way, that the only solution to current problems lies in fiscal action through taxation or spending which is not within his power.

In other words, the Fed steering wheel has come off in his hands, so forward progress will be difficult. But if he were to look in the rear view mirror, he would see that the recent completion of the QE2 round of $1.6 trillion of Fed purchases of US Treasuries might now be having unforeseen consequences.

Read more... (21 comments, 1561 words in story)

Aliens to save the Global Economy

by ChrisCook
Thu Aug 25th, 2011 at 04:55:31 PM EST

Izabella Kaminska has been writing some thought-provoking posts on FT Alphaville of which her two latest today are fine examples.

Firstly re Krugman's recent departure into alien country Aliens to save the Global Economy

Alternative working title: When Orson Welles meets finance.

We discussed Fantasy Fed options on Wednesday. But here's one from Paul Krugman, which we definitely overlooked -- ironically, possibly the most fantastical of all.

So, working with the notion that peak debt and peak oil possibly mean peak civilisation -- and that there's no World War II style economic kick coming around the corner -- Paul Krugman's decided that there might just be some logic in staging a fake alien attack on the world. You know, to get the economy going.

Her later post then suggests that Bernanke might be indulging in Jedi-style mind-games as a sort of Jedi Economics......

These are not the policies you are looking for......indeed.

One of the results of this Guerrilla Journalism is that it has opened up some superb comments, and I could not let pass the following epic by 'skwosh' - with whom I have had a couple of run-ins before now, but who maybe repenteth.......

Read more... (13 comments, 1415 words in story)

Disruption in the UK

by ChrisCook
Tue Aug 9th, 2011 at 08:30:25 AM EST

There is in the UK an evolving police strategy, particularly in dealing with the drug traffic, known as 'Disruption': it's an updated approach to the First Commandment of fraud investigation - 'Follow the Money' - and along the same lines as the tax evasion charge that saw off Al Capone.

This recent article outlines the Disruption strategy's use in Scotland

Scottish FBI arrests over 70 Scottish Crime Lords

MORE than £33 million worth of drugs have been seized and a record number of crime bosses arrested in the past year, according to figures that reveal how Scottish police are cracking down on serious and organised crime.

The Scottish Crime and Drug Enforcement Agency (SCDEA) - nicknamed Scotland's FBI - said it had been able to use better intelligence to pinpoint "soft spots" in sophisticated criminal operations.

It said more so-called "Mr Bigs" than ever had been arrested in 2010-11. Over that period, 73 of the 195 people taken into custody were "level 3" criminals and effectively ringleaders of major crime gangs, compared with 136 arrests, with 67 at level three, the previous year.

An interesting take follows below from someone I know in London who has pretty good high-level contacts. I take it with a pinch of salt, of course, since as far as the authorities go, I favour cock-up over conspiracy every time.

Rather than the crack-down he clearly favours, I think - as a Civil Liberties type myself - a better approach might actually be to treat the causes, not the symptoms. ie legalise and regulate drug use, and give people something useful and fulfilling to to do instead of dealing and using drugs.

Read more... (193 comments, 678 words in story)

The Eighth Wonder of the World

by ChrisCook
Wed Aug 3rd, 2011 at 05:55:44 AM EST

My last Asia Times article A Very Secret Agent generated immense interest, particularly once FT's Alphaville picked up on it The Fed's 1.6 trillion Somethings.

As a result of the discussion which followed on Alphaville, I completed my post mortem study of the dollar's pathology, and the title of this article The Eighth Wonder of the World is lifted from Investopedia's apt description of the Fed's balance sheet.

The key - Doublethink - point is that we are asked to believe two mutually exclusive descriptions of the Fed's role: the Fed may be the Treasury's fiscal agent in issuing currency; and it may be the Treasury's bank; but it cannot be both in relation to the same transactions.

Read more... (9 comments, 1218 words in story)

Solidarity with Norway

by ChrisCook
Sat Jul 30th, 2011 at 06:40:25 AM EST

Two sites

First, an amazing image, in which every pixel is itself an image....

Roses within Roses

Secondly to show solidarity simply Join the chain  - this is spreading at a staggering rate.

Comments >>

A Very Secret Agent

by ChrisCook
Tue Jul 26th, 2011 at 08:07:36 AM EST

I had one of those 'A-Ha' moments the other day through which I fitted the final piece in the banking jigsaw. I felt I had finally grokked how the system works, and the flaw at the heart of it, and having posted here on the subject, I thought I should aim to follow Frank Schnittger's sage advice and attempt to explain it a bit better.

The result is A Very Secret Agent in 'Asia Times' today/tomorrow.

Two key points.

Firstly, the relationship between the Treasury and the Central Bank is in reality an agency relationship: not a conventional counter-party banking relationship as is widely supposed.

Secondly, the credit created by private banks does not consist of the loans they make ('money as debt'), but is the thing or object which they loan, and of which their borrowers have the use.  These 'things' are in fact look-alikes of tax credits.

The outcome is that all mainstream economics is based upon a fundamental misconception through the reversal in accounting polarity that arises out of the 'agency' error. ie what is an accounting credit is assumed to be an accounting debit and vice versa.

Read more... (34 comments, 1760 words in story)

The Money Shot

by ChrisCook
Sun Jul 24th, 2011 at 06:27:24 AM EST

The intervention below the line was on the Social Credit Google Group in respect of a typically robust discussion between the feisty moderator William Ryan and one of the followers of the chartalist millionaire, Warren Mosler, who apparently has been funding MMT economic research.

The key points of my intervention are that:

(a) fiat currency is not bank debt - it is the object of bank debt; and

(b) the Fed is not in fact the counter-party of the US Treasury - it is the agent of the Treasury.

Here's a recent interchange which lets the cat out of the bag.

Congressman Sean Duffy: We had talked about the QE2 with Dr. Paul. When -- when you buy assets, where does that money come from?

Ben Bernanke: We create reserves in the banking system which are just held with the Fed. It does not go out into the public.

Congressman Sean Duffy: Does it come from tax dollars, though, to buy those assets?

Ben Bernanke: It does not.

Congressman Sean Duffy: Are you basically printing money to buy those assets?

Ben Bernanke: We're not printing money. We're creating reserves in the banking system.

The Fed is the custodian of these reserves, and chooses to pay interest in respect of reserve balances. This money created by the Fed has nothing whatever to do with taxes, which are in fact the only means of retiring fiat currency and reducing the surreal National Debt - which IMHO should rightly be considered as the National Credit, or National Equity since it funds national productive assets, whether in private or public ownership.

As I have pointed out before, 'Fractional Reserve Banking' is a myth, because currency creation precedes deposits and not vice versa.

'Tax and Spend' is another myth, because government spending precedes taxation, and not vice versa.

But the mechanics of the process have been hidden by smoke and mirrors which obscure the true relationship, and it is only now - finally - that I have the complete relationship clear in my head.

Communicating that is not easy - but my first attempt is re-published below the line...

Read more... (36 comments, 1188 words in story)

Plan G for Greece

by ChrisCook
Thu Jul 21st, 2011 at 05:46:16 AM EST

Well Cook's Consol Plan for Greece has certainly got them talking on the FT Alphaville blog.

Read more... (315 words in story)

LQD: Mode 4 - Neo-liberal Economic Migration

by ChrisCook
Wed Jul 20th, 2011 at 06:09:33 AM EST

Linda Kaucher is a London-based activist who has been researching some of the murkier aspects of globalisation.

Her recent written evidence to the UK Parliament's Business Innovation and Skills select committee is worth publishing in full. (my bold)

Read more... (3 comments, 6404 words in story)

Money, Money , Money

by ChrisCook
Thu Jul 7th, 2011 at 07:33:19 PM EST

I thought I might chuck in, along with some light entertainment, a little dialogue from Ellen Brown's Public Banking discussion group.

My correspondent, Marc Gauvin, is very clued up in respect of banking systems, but in my view, shares a misapprehension about the nature of our government-backed 'fiat' money which is held even by experts on the subject.

Read more... (72 comments, 1321 words in story)

Quantitative Greasing

by ChrisCook
Fri Jul 1st, 2011 at 04:07:07 AM EST

Out today is the second of two recent articles at Asia Times Online within a week.

This one, which I termed Quantitative Greasing concerns the IEA's attempt to get oil prices down, and thereby perhaps enhance Obama's chances of re-election.

My long piece last week Price Dollars in Gas concerned the transition to a resilient low carbon economy through the correct valuation of natural gas, and a de-centralised, dis-intermediated  collaborative and transparent approach to a global market in gas to facilitate the transition.

Notes: 1/ The fact that oil and gas are finite resources and that the long term trend price is up is not in doubt;

2/ The Saudis in fact switched their US pricing from WTI to a different US index price - ASCI - and priced other destinations against the BWAVE index of Brent futures traded on ICE Europe (which in turn is ultimately based on Brent/BFOE physical prices and shenanigans);

3/ The piece is published here with the kind permission of Asia Times, who seem to like my stuff enough to actually put a few dollars my way in respect of it....

Read more... (33 comments, 1615 words in story)

The Irish Patient

by ChrisCook
Fri Jun 10th, 2011 at 06:42:19 AM EST

I was recently appointed as a Senior Research Fellow of UCL's Institute for the Security and Resilience Studies,

ISRS was set up and is chaired by the Labour politician Lord (John) Reid and has an interesting and rapidly growing set of Associates and Fellows, and its origins lie in defence security matters. Particularly, Cyber-security, where ISRS is launching its first book "Cyber Doctrine" on 29th June

However, the financial collapse in late 2008 - and the fact that we came an hour away from the ATMs being switched off and maybe 48 hours away from anarchy - concentrated a few minds in relation to the security implications of the existing financial architecture.

Having previously contributed to an international symposium in respect of 'Economic Terrorism' - where my case was that the only difference between an Economic Terrorist and a hedge fund in terms of risk to the market is motive - I couldn't turn down the offer to contribute.

My focus is therefore on 'Resilient' (ie networked, de-centralised and dis-intermediated) Markets, and I have already made a submission in respect of UK Electricity Market Reform in response to the Department of Energy & Climate Change's consultation. I'm not holding my breath.

The first 'Resilient Market' seminar was earlier this week at UCL Getting to There from Here

My presentation was subtitled Flight to Simplicity

My account of the Seminar proceedings - The Irish Patient - is now up on the ISRS Resiliblog, and now below.....

Read more... (17 comments, 1329 words in story)

LQD: A Brief History of the Corporation: 1612 to 2100

by ChrisCook
Fri Jun 10th, 2011 at 05:47:34 AM EST

Here's a colossal blog post by Venkatesh Rao at his Ribbon Farm site.

A Brief History of the Corporation: 1612 to 2100

I have no time to do a critique, but will hopefully be able to contribute to any discussion among those not intimidated.

Meaty stuff, as Venkat postulates the dawn of Coasean Growth

Read more... (4 comments, 7885 words in story)

LQD: the Importance of Fiscal v Monetary Stimulus

by ChrisCook
Mon May 23rd, 2011 at 05:28:05 AM EST

Interesting post on the WSJ Blog

A couple of lazy quotes...

Will monetary policy be enough to allow a smooth adjustment from public-money-dominated growth to a sustained privately-driven expansion?

Unlikely, according to Richard Koo, Nomura's chief economist and a specialist on Japan's lost decade. Countries suffering balance-sheet recessions, like Japan faced during the 1990s and the U.S. and U.K. are struggling through now, need fiscal life support for a long time, he argues

More to the point.....

In the U.S., the deficit reduction isn't expected to show until next year, but then it'll be more than three percentage points. If GDP growth remains as reliant on government as Mr. Koo thinks, that shrinkage in the government deficits will be significant.

What does this mean for the markets? Well, he argues that the liquidity provided by quantitative easing did a lot to boost asset prices, but not much to help the underlying economy. Remember, the economy has been driven by government spending. The end of further monetary stimulus takes away a key support for asset prices. And a withdrawal of government support for the economy takes away a major economic justification for why those asset prices might be where they are.

The result could be a serious decline in asset prices. And another crash could fuel the second leg of a deep recession, maybe to the point of depression.

In relation to the 'real world' of retail pricing - as opposed to the FIRE (Finance, Insurance and Real Estate) world of financial asset prices - the truth is that conventional economics is completely and diametrically wrong.

The reason for this reversal of polarity is that it is based on the bollocks ideological assumption that a claim issued (eg by a credit institution or bank) over value owned or created by someone else is functionally equivalent to a claim issued over value owned or created by oneself.

The monetary reality is that bank lending (and spending) precedes - and creates - deposits, and not vice versa - contrary to the 'Fractional Reserve Banking' myth.

The fiscal reality is that public spending precedes taxation, and not vice versa - contrary to the 'Tax-payers' Money' myth.

While the reality of retail price inflation is that it is everywhere and always a fiscal, rather than a monetary phenomenon, with money being 'printed' to accommodate fiscally incontinent spending - contrary to the Friedmanite and Austerian myths.

Comments >> (4 comments)

Of Insurgent Finance.....and Venture Communism...

by ChrisCook
Mon May 16th, 2011 at 05:55:20 AM EST

Last week, on my way back to Scotland, I dropped by a conference on Platform Politics at Cambridge, and met a couple of people I have been hoping to meet for a long time.

The first of these was Michel Bauwens - who is behind the Peer to Peer Foundation - and the second was Dmytri Kleiner, whose Venture Communism project on worker ownership I have often referred to on ET.

Dmytri's talk at the conference was interesting, and  concerned the need for conventional Capitalism to maintain a 'Star' (super-node; intermediated ) network topology as compared to a 'Mesh' (P2P) network topology.

We subsequently had a great discussion over a drink or two, and Dmytri was enthusiastically telling me about his view that a revolution is necessary - but that the revolution might take the form of what he calls 'Insurgent Finance'.

Read more... (22 comments, 923 words in story)

The End of Labour in Scotland?

by ChrisCook
Thu May 5th, 2011 at 05:51:01 AM EST

There is a parliamentary election in Scotland [today] at which the Scottish National Party (SNP) are hoping to be returned, after four years of minority government.

There was an excellent article [Saturday] in the Scotsman by Gerry Hassan, now posted on that excellent commentator's blog.

Election could be big crunch for SNP and Labour

He begins

The Scottish elections have been shaped by two diametrically opposed campaigns, with two different themes and moods, one SNP and one Labour.

They have met with very differing responses from voters, with the SNP surging ahead in the polls as Labour have badly stumbled and blown a double-digit lead.

He goes on to compare and contrast the positive SNP campaign with the negative Labour campaign based essentially on fear and concludes.....

frontpaged with minor edit - Nomad

Read more... (28 comments, 692 words in story)

Re-imagining the State

by ChrisCook
Sat Apr 16th, 2011 at 07:04:07 AM EST

There is an interesting post on the Labour List blog today by Michael Merrick.

The State is 'A Good Thing'

Merrick focuses on the emerging thinking of the 'Red Tory' Phillip Blond, and the 'Blue Labour' thinking of Maurice (now Lord) Glasman both of whom offer a critique of the State, albeit from different starting points.

Merrick concludes.... offering an exciting vision of the reciprocal, mutualist, co-operative and associative society, and the ways in which mechanistic, technocratic and bureaucratic systems can stifle that organic flourishing of human relationships, both Red Tory and Blue Labour have neglected to seriously consider the way in which the state underpins, facilitates and enables exactly the kind of society that both would recognise as consistent with the `good society' we ought to be aiming for.

I then weighed in with the following comment....

Read more... (3 comments, 447 words in story)

LQD: Soros and Bretton Woods 2

by ChrisCook
Thu Mar 24th, 2011 at 09:29:15 AM EST

My invitation is in the post.....

Bretton Woods Conference | Institute for New Economic Thinking

INET is pleased to announce that it will hold its annual conference April 8-11, 2011 at the Mount Washington Hotel in Bretton Woods, New Hampshire, the scene of the great conference that established a renewed global economic architecture as World War II drew to a close.

Read more... (5 comments, 237 words in story)

The Aftershock Doctrine

by ChrisCook
Mon Mar 21st, 2011 at 05:59:20 PM EST

The following article was published by Asia Times on Friday, which I was pleased about, since it as much of a 'thought piece' as anything......

The Aftershock Doctrine

As Japan, probably the most resilient nation on Earth, begins to mobilise to rebuild on an almost unimaginable scale, we are already beginning to see the first signs of another neo-liberal attempt to apply what Naomi Klein refers to as the 'Shock Doctrine'.  

Machiavelli wrote to the effect that a crisis should never be wasted,. We are already seeing suggestions that the enormous financing and funding necessary to rebuild the devastated towns and cities of Miyagi prefecture and elsewhere is possible only if Japan - which is still hugely indebted 20 years after the deflation of their property bubble - undergoes 'Reform' in the neo-liberal pattern.

Read more... (18 comments, 1279 words in story)

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