Friday, July 11, 2008

The Realities of Understanding Capitalist Free-Trade, vs., Communist Controlled Trade, Intents and Practices…

“Perpetual Economic Suzerainty”___The Free-Trade Limit…
“Perpetual Economic Suzerainty”___The Nation to Nation Transactions’ Flows, Until A New Nation Is Crowned___King!
The Self-Arbitrage of Capitalism Into Communism…?


“It‘s all a matter of currency exchange rate laws, and true ppp’s.” me

We need to raise the stage of understanding to higher levels of perception. At present, the highest levels of vision seem to be divided between the special interests of free-traders, and the special interests of controlled traders, with the middle position of universal sustainability and subsidiarity of all, being completely ignored, as it seems not yet, to be clearly defined. The special interests, of both sides, are both worshipping conflicting and unsustainable systems of laws, which have mainly evolved over the last century, whose ideas were developed over many centuries of trial and error. The standards of value, which guide both these diametrically opposed systems, have very different fundamental principles, but are very much identical in total transactions’ results___They both wish to maximize profits, over the greater good, for all their citizens___This is a cruel truth we all must accept, to understand the world’s true law and money dynamics. Capitalism cherishes liberty and a semi-freedom of the people, the sovereignty and security of state, and the general welfare, wealth and protection of its international community. Communism cherishes extreme governmental freedom without freedom of its people, a similar sovereignty and security of a highly protected state, and a very different controlled welfare and rent, yet protection, of its special invested international community.

Let’s look at what makes these two law systems so very different. I think it easiest to understand by a new view and open-eyed perception of recent history. By recent, I mean from 1775-2008. In 1775, America was just a fledgling, fighting for survival, baby nation, yet she had an un-precedented access to free-for-the-taking commodities, land and resources, allowing her to experience the lowest real wages, in all of history, to that point in time. Is it any wonder why she eventually assumed, by perpetual economic and trade suzerainty, financial dominance over the known world, by WW I? At the same time, communism was still just an ideal, in the books of Karl Marx, who had only written “The Communist Manifesto” in the 1850’s, and in the 1870’s he’d penned “Das Capital”. It was not until WW I, that the markets brought any true fruition to Marx’s ideas, and then they remained quite fledgling, for many years, in Russia. China started its long march in the 1920’s, with Mao not achieving communist victory until 1949. She really remained just a fledgling nation until the `70’s and `80’s, when she began to make her presence known, on the greater world stage, but from the `80’s to `08, she’s truly become a dominant force, not only on the world military and political stage, but the economic and trade stage, as well, especially in Africa, as pertains to commodity, other resources and oil extractions. Of course, we are all familiar with the rise of Lenin/Stalin’s super-power state, it’s fall in the `90’s, and its new emergence, as one of the BRIC’s,(Brazil, Russia, India, China), growing very rapidly. I could go into all the intricate law system evolutions of both the capitalist and communist/socialist systems, but I wish to concentrate on the trade and money systems’ laws, and their intricate inter-actions of transactions’ evolutions, over the last 213 years…

Economic law systems’ evolutions have been un-successfully penetrated by all the world’s major historians, economists, systemologists and universologists, to this point in time, yet I intend to develop this higher level of perception and understanding, to clear and simple visions, of new knowledge. There are several old tools, laws and theories I intend to use, and some new ones. First of all is law itself, especially long and short positions’ laws of trade transactions and contracts. Next is the natural law of “perpetual economic suzerainty”, where nations’ laws, and money systems of, short sell themselves, through co.’s/corporate, labor and trade arbitrage, to other nations’ laws, and money systems of. Incentive point theory and facts will be used to clearly see these transactions, in our present world, as well as their clear facts in history, such as the Spanish Empire’s over-acquisition of gold, causing over-incentivization and specie point inflation/deflation and decline, leaving the English Empire in control, by the natural law processes of, over-arbitraged and over-short sold, “perpetual economic suzerainty”. True PPP(purchasing price parity, and not Arrow-Debreau’s black hole of false purchasing power parity, false neutrality of money, and false equilibrium theory, and other monetarist false money theories) and real money reality, will be used to clearly show the comparative dis-advantages of empires’ declines, and true PPP’s will also be used to show other empires’ comparative advantages’ rises, and eventual over-beliefs’ of free-trade comparative advantages’ falls. All the economic history books, especially Dr. Paul Einzig’s, Lord J.M.Keynes’, Dr. Hyman Minsky’s, Dr. Paul Davidson’s, Dr. Paul Krugman’s, Jane D’Arista’s, and Robert Skedelsky’s, the banking history books, and all government documentations, are very clear to the facts backing my words, when today’s, overly glaringly obvious, history of global transactions’ law systems, are clearly transposed onto the English and Spanish Empire’s past history of slowly short-selling themselves to the “American IMF Empire”(and I am aware the IMF didn‘t exist until 1945), of global transactions’ trade and law evolutions, through the systems’ law processes, of the un-intended natural law of “perpetual economic suzerainty”, from the period of 1875 to 1945. Further, the above also pertains, now, to “America’s/OECD's IMF Empire”, arbitraging, off-shoring, and short selling free-trade and transactions’ law capitalism, to controlled-trade and transactions’ law communism.

The imperial preference laws in play, of Spain and England then, and America now, through the IMF and the “Washington Consensus”, are the major arm and culprit, in the battle of global transactions’ true law systems’ battles, pushing free-trade capitalism into controlled-trade communism, and not what China is doing to us. We are the ones responsible for our own nefarious laws’ and transactions’ realities, of blind irrationalisms and outright self-inflicted currency-trade-market suicide. We threw down the very IFA Bretton Woods I system, China is now punching us in the trade face with, called IFA Bretton Woods II… It’s always been the play between imperial preference laws, and currency law realities, of their true PPP’s, controlled by the true incentives’ points, and the specie points of, held in over-all play by the IFA laws, of all concerned___It’s just the fact that we’ve thrown our IFA away, and freely opened ourselves to outright law and money systems’ manipulations… The Spanish and English Empires’ imperial preference IFA laws over-exploited their satellites self-sustainability, by setting currency and commodities’ prices at low un-fair market rates, first over-benefiting the empires, thus reducing the satellites to the conditions of the “over-development of under-development”, as Andre Gunderfrank has so aptly labeled it. It’s an overly fair assessment, as all history clearly records it, and now, when transposed up to the present, we have the “American/OECD's IMF Empire” creating the same global conditions, in its satellite nations, of nothing short of the “over-development of under-development”, or over-exploitation of subsidiarity and real and fair sustainability... Well, when nations are exploited to the levels Spain and England practiced, one must realize currencies drop to levels where a common subsidiarity and solidarity develops by the underdogs, to go after the giant who’s been stealing their food and shelter, and that’s just what happened, with America being one of the exploited, by imperial preference laws, and she joined in solidarity and subsidiarity with Spain’s and England’s satellites, to over-take the major empires, as is clear of all historical evidence. The PPP, currency, trade and commodity numbers are all there for everyone to investigate, especially in William Spaulding’s and Dr. Paul Einzig’s currency history books… This is nothing but the ruling empires short-selling, arbitraging, off-shoring and free-trading their empires away, to the satellites, by the over-arching IFA(international financial architectures’) laws of the time, through the natural total transactions’ realities of “perpetual economic suzerainty”(evolution of nation to nation transactions’ power flows), the highest truth and understanding level of perception, of global markets and free-trade transactions, possible___“Perpetual economic suzerainty”___The free-trade limit___if you wish to maintain eco-geo-political sovereignty, subsidiarity and true sustainability...

And finally, we come to the China/America conundrum, of a seeming free-trade, transactions and markets’ capitalism, verses, a known controlled-trade, transactions and markets’ communism, or at the least autocracy, and at the most totalitarianism. Do we want to free-trade capitalism into controlled-trade communism…? This is the heart of the two IFA law systems’ intents and realities COLLISIONS, of the existing systems___Which road? What road…? If we sincerely again transpose the past actions of capitalist nations onto the present capitalist/communist collisions, we clearly see the same identicality of PPP’s, currencies, trade and market transactions taking place, with the added dis-functionality danger, of the highest natural law of “perpetual economic suzerainty”, playing directly into communist China’s hands, yet we, through our imperial preference IMF empire laws, created the very market, trade and transactions, of the “over-development of under-development” taking place, reducing our satellite countries to the PPP, commodity and currency levels, more aligned and beneficial with and to China than ourselves, putting our very national security at stake, our national freedom at stake, and our national economic security, in the hands of the enemy, as China will never turn real power over to democracy, as many falsely believe. They’ve the best of all possible world’s___Absolute power over wealth and security___Why give up power and success to a shared democracy? They see they have the most powerful system of law, to ever share the world stage, and know its true intent and abilities, if they only maintain the autocracy they have. This is why America must internally and externally change course___If not___We become the underdog satellite of communist China, the BRIC’s, and their minions, of other China satellites. The mathematics of “perpetual economic suzerainty” are irreversible through free-trade, as we now know, and have it constructed, which can be described as external un-regulated transactions free-trade and markets___That’s irreversible…? As we know it…but, it is reversible by internal transactions’ law changes, coupled with external law changes of the IFA laws___to avoid the “perpetual economic suzerainty”, of free-trade’s limit, we all by now know, as a devilish black hole, of all the world’s past empire experiences, since it’s actually true, no matter which empire we study, as Dr. Paul Einzig’s anthropology, “Ancient Money”, and “History of Foreign Exchange”, clearly show………………….

What’s your choice? To continue short selling, arbitraging, off-shoring and free-trading capitalism into the black hole of controlled-trade communism, or REAL CHANGE…?

I choose CHANGE…!

Just another short warning to Obama, about America’s NATIONAL SECURITY…


P.S.
All free-traders should realize high and low currencies are nothing but extreme tariffs and opposite direction trade subsidies, and have been since abandoning any semblance of any real standards of value, truly principled, capitalism, in the `70’s___The death of Bretton Woods I. Free-traders have been screaming for trade barriers to come down, as they’ve really been jacking them with currency bands widening, with their false floating exchange mentality and reality, fostered and furthered by the false “Washington Consensus”, of the academic pin-heads, and the political and economic pin-heads, all thinking and falsely believing, absolutely inane money mechanics’ non-sense, for over 35 years…

We now have the BRIC’s Bretton Woods II system, of superior trade mechanics operations, also known as Mercantilism eating us alive, and we are the seeming helpless, diminishing power Hegemon, as were Spain and England, years past…

This my friends, must change…!

America definitely needs “A Grand Independent Finance and Energy Strategy”___Immediately…!!!

Remember, they’ve got the money, we’ve got the debt___A $9+ trillion national debt, and $1+ trillion leaving the nation for the oil autocracies/dictatorships, and the trade-goods autocracy of China, every year___How long does anyone, truly, think this can last…? We’re free-trading the Eagle’s paper money, into the mouth of a Fierce Fire Breathing Dragon…!!! Last I checked, fire burns paper eagles…

America must realize, “You can only free-trade, until cheap labor, out-trades you.” This is the #1 law of capitalism and free-trade, and China has clearly, out-foxed, and out-traded us. The BRIC’s and Japan, have $3.5 trillion of our hard currencies, while we have the debt of that plus, and they will burry us alive, unless we change course___immediately___I can ADD…!!!

I think it’s high time to awake…America…!

P.S.
U.S. Busy - China On The Move
The most interesting dynamic in the world is China as a capitalist power, a huge future economic powerhouse. How will America fair in the dynamics of this great competition? Will we awake and rise to the challenges posed, and reform the international financial architecture, as needed, so fair trade can finally start the long journey to rebalance the world's markets? Or, will we play Rip-Van-Winkle too long? I have no idea which choice we will make, but, I do know if nothing is done America Inc. will pass by “perpetual economic suzerainty”[just as England did to America] from our hegemonic power to the hegemonic power of China Inc. Some may say, here, that China has no chance of this, it will go the way of Russia. Well, maybe so, but again, in this case due to the massive amount of global derivative insurance contracts, foreign direct investment, and global treasury instruments invested in or held by China - a controlled capital market, the rest of the world would trip over itself being first to either help or support China in any future serious financial market troubles, as such could bring down the entire house of cards. This would then leave her strong enough to become the example of the first scenario - global eco-political hegemon. I'd say we'd better soon awake from the Great Cold War Snooze.

The Liquidity Conundrum
China, the global wages dynamic and the global resources dynamic - is this all the story or is this a much more complex dynamic? My answer to this is one you may never have thought of. I've recently been involved with many academic and intellectual groups pouring over the world's problems, and mainly from economic perspectives. What has struck me as novel is the fact the U.S. and many western nations preached for the downfall of Marxist philosophy nations for over 75 years, yet never penned hardly a word about what the world would be like if their dream came true - what the economic, ie., wage, inflation and resource dynamics set in play would truly be. By this I mean Marxist nations for all these years had barely any inflation in wages and internal resource prices compared to the western world. Then I got thinking about colonialism and imperialism exerting a very similar economic dynamic in the countries where practiced for centuries - and then them also re-entering the free capitalist system mostly after WWII. Most of the colonial nations didn't experience the rates of inflation their host countries did either, much the same as the Marxist countries, since they were manipulated low - kind of like capitalism's socialist surrogates. This means that a huge, more than huge, economic dynamic has been released on the world, first by the post colonial period after WWII, and then by the post Marxist period since the early `90's.

After thinking about the above I got thinking about what my grandfather had told me about time - ie., empire time and timing of nations' integrations and re-integrations. Looking back over history we all recognize the many great, and not so great empires that have existed. They all existed for a time - time and the timing of empires and nations' existence is key to my thinking. If we boil this down to a basic model of ET=WIR, or empire time equals wages, inflation and resources, I think we can see quite a simple example of otherwise complex data. It matters not which empire or nation we use, as our model, as all work the same to these four factors - time, wages, inflation and resources, since these four items can represent everything present in any and all empires and nations. Nations and empires all started out with cheap wages, low inflation and cheap resources. Time, there it is again, time changes this dynamic and only time does. Now, that may seem quite obvious but, over time any empire or nation, such as the U.S., starting out with practically free for the taking resources, which in itself would have created cheap real wages, was a huge dynamic on the then existing capitalist world. Defining this further, we were a mercantilist nation entering the hegemonic capitalist world of the European empires. By us having such cheap real wages and resources we couldn't help but accidentally grow into the greatest power and wealth nation the world has ever known, but now we face the same problem from China that we then posed on the capitalist hegemonic world of 1791. We are now the hegemon and China is the mercantilist with the cheap wages and internal resources - not to mention her mercantilist minions all over the globe.

This timing dynamics has been going on since the dawn of economic time. Any one nation or potential empire starts out with the cheapest wages and resources, whether it be Egypt or the Mayan's, and over time inflates to higher levels than the periphery, and at some point the periphery becomes a new center. This happens due to nothing more than the time and timing growths and integrations of wage prices, inflation rates and resource prices. Low price nations and empires become high price nations and empires over time, and thus trade places one after another through the process of “perpetual economic suzerainty” - the never ending cycle of the circle of nations' time cycles. So time and re-timing the global cycles into and by global re-balancing through sliding time scale law structures is the only way this author sees to solving this greatest of history's global problem.

P.S.
A Note To Paul Krugman

Excellent view of Keynesian thought, Paul. I'd just like to point out something you wrote, but may not have realized its thorough implications. WWII, as you rightly mentioned, was a public works project, but a massive one, and is the most important implied aspect of Keynes' entire manifesto, imho. Expansionary fiscal policy, alone, doesn't cut it. It must be accompanied by public works, in the most dire of times, as the `30's certainly were, and WWII’s recovery, clearly shows, etc., as fiscal stimulus, only, simply goes up the chimney of Wall St. investment and speculation, far too quickly, thus lowering TFP(total factor productivity). It must be spread to Main St., through public infrastructure spending, as Keynes suggested, in the worst of times, to spread and slow the velocity of stimulus mechanics, throughout the entire economy, to truly raise TFP…

As to the deeper analysis of Keynes' great work, his "IFA-international financial architecture", of which you do not mention, in your piece, since it really wasn't in his "General Theory", yet is the central achievement of his thought, must be brought to the front, and thoroughly re-interpreted. I would title such a work, "The General Theory of Massive Currency Tariffs, Massive Currency Credits, and TFP Decline"___What Keynes/Einzig tried to prevent in 1945___Nixon instituted in the 1972 era, and evolved by 2008___to the highest, most nefarious, currency trade tariffs, credits/subsidies and off-shoring incentives, the world has ever known… Skedelsky is quite clear on the importance of Keynes IFA contributions, and further, his yet untried balance of payments "Bancor" system. I think if we were to work through a re-interpretation of these more central mechanics of Keynes' thought, we would be better prepared for what the world may shortly face…

Thanks for your great thinking,
and with due respect,
Lloyd Gillespie
(a polymath, autodidact, true Keynesian economist) The American Mind

Thanks to Obama___Change the world? YES WE CAN…!

Sunday, July 06, 2008

Gustav Cassel - PPP's - China?

Gustav Cassel - PPP's - China?___An older article, updated and re-published, yet still very pertinent...
Over the past week I have posted several articles about the international financial architecture, the IMF, WTO, sweatshops, FTAA, etc. I felt I should expand my ideas to bring more clarity to these posts. I thought I'd use the case of China - U.S. trade and purchasing power parities. Below is quoted a few lines about Professor Cassel, the creator of purchasing power parity theory. I feel this is the most important economic theory, especially in trying to understand the global labor and wealth arbitrage now going on in the world. Many have argued trade will eventually rebalance markets. As I have already pointed out in a recent post, "the glaring imbalances in global wages is beyond economic reality, no matter what other economists' dribble may say. This sweatshop situation will almost empty America of jobs befor trade realities rebalance markets to fair global ppp's if let to continue." Let me expand.

Let's just take Wall-Mart for an example as it is the largest corporate footprint between the U.S. and China trade and economic realities - close to a trillion dollar corporation. It would be one thing if we only had to deal with a currency value at 6.86 to 1. It's quite another when the internal value of that currency is another 25 to 50 times cheaper[depending on location in China] than ours, making real wages for Wall-Mart sweatshops at an average of 10 cents/hr. to an average of 25 cents/hr. for their retail stores' workers in China(86 cents average for entire country). I think all the economists writing on this subject should get a handle on it by rereading Professor Cassel's books again. They may wake up and come to different conclusions about trade and economic realities being able to rebalance world markets over time - how much time, a hundred years? China is in real deflation, while also inflating, making matters worse, not better. They have lost 22million jobs, themselves. World demand has shrunk tremendously since the crashes of `95 to 2002. We have never been here befor as Edward Hugh often points out.(Much of this needs updating, but the point remains, massive losses of jobs in certain sectors, as other sectors add more workers, yet overall decrease of jobs, even today).

The NGO's around the world are trying to wake up everyone, but the sleep seems to be a Rip-Van-Winkle reality. Befor the Elite Consensus awakens we will have arbitraged every democracy in the world to corporatocracy(and communism). Do we want that? America has been nothing but a giant dump truck full of corporations, with the body slowly going up for the last thirty years, spewing extractive corporations to every nation. No one wants them coming in and destroying but they are there doing just that. Now at this point economists and others will scream what are you a kook? No, I am not. I am simply pointing out a powerful economic reality. It is impossible to build locally, or nationally fast enough to keep up with the international economic extractive capabilites of the corporations. As Steven Roach pointed out, global trade has risen from 11% of global GDP in 1970 to 25% of global GDP in 2003(and when derivatives are added in, a massive 95+%), with no end in sight. Pretty soon the oceans and skys are going to be overfull with cargo carriers, polluting and using massive amounts of our precious fossil fuels, for nothing other than infectious greed.

Corporations operating out of China are making as high as 40 to 90 cents profit on every dollar. This is outrageous, and it will not stop, and they surely arent sharing out of the 37+ tax havens. Not only are they not sharing the wealth but the internation dynamics of credit producitvity and multiplication factors of drastically reduced reserve requirements' banking, is contributing to an ever faster creation of massive asset bubbles that will surely end in crashes, sooner or later. The major question is how soon, and where?

Now if anyone still thinks trade will rebalance world markets in a climate of global deflation, of 31million manufacturing jobs vanished from 1995 to 2002, let me know. Even if the currencies between China and the U.S. were floated and reached 1 to 1 the internal ppp values would still allow corporations plenty of profit to continue the madness for years to come. An does anyone seriously think the U.S., or other nations, is going to let the dollar become cheaper than the yuan? It would have to be .87, or there abouts, to the dollar to balance ppp's, and truly rebalance these markets. This is why I say this situation is beyond economic realities' solutions - future crash guaranteed if let to continue.

Gustav Cassel

Gustav Cassel, a Swedish economist, developed the theory of exchange rates known as purchasing power parity. He did so in some post-World War I memoranda for the League of Nations. The basic concept can be made clear with an example. If 2 U.S. dollars buy one bushel of wheat in the United States, and if 1.6 German marks exchange for 1 U.S. dollar, then the price of a bushel of wheat in Germany should be 3.2 German marks (2 * 1.6). In other words, there should be parity between the purchasing power of one U.S. dollar in the United States and the purchasing power of its exchange value in Germany.

Cassel believed that if an exchange rate was not at parity, it was in disequilibrium and that either the exchange rate or the purchasing power would adjust until parity was achieved. The reason is arbitrage. If wheat sold for $2.00 in the United States and for DM4 ($2.50) in Germany, then arbitragers could buy wheat in the United States and sell it in Germany and would do so until the price differential was eliminated.

Economists now realize that purchasing power parity would hold if all of a country's goods were traded internationally. But most goods are not. If the price of a hamburger in the United States was $1.00 and in Germany was $1.50, arbitragers would not buy hamburgers in the United States and resell them in Germany. Transportation costs and storage costs would more than wipe out the gain from arbitrage. Nevertheless, economists still take seriously the concept of purchasing power parity. They often use it as a starting point for predicting exchange rate changes. If, for example, Israel's annual inflation rate is 20 percent and the U.S. inflation rate is 4 percent, chances are high that the Israeli shekel will lose value in exchange for the U.S. dollar. ....Article Continued