The dilemma of fake money

Thursday, 09 May, Year 5 d.Tr. | Author: Mircea Popescu

Senator Elizabeth Warren, of whom you've likely never heard, has maladroitely just stepped on it.

She's what you'd call "a populist", which in this case is what the entrenched socialist elite (ie, the US Democratic Party) labels the competition - various unalligned socialists. She's what you'd call "junior", which in this case is what the entrenched bureaucratic elite (ie, everyone not dancing topless in Washington DC) labels anyone it perceives may be inclined to shake things up.

As you'd expect from underneath those labels, the woman came up with an disproportionate, ill-fitted, ill-suited, ill-timed, improper, inapplicable, incongruous, inconsonant, incorrect, indecorous, inept, irrelevant, left-field, out of line, out of place, tasteless, unbecoming, unbefitting, undue, unfit, unseasonable, unseemly, unsuitable, untimely and outright wrong! proposal, which boils down to something like this :

Hey Fed ? If you have all this free money, give everyone some!

Seems shockingly reasonable after all, doesn't it ? Well... on the face of things it is.

There's more to that face of things, namely the festering purulent mass of maggots that the substance of things actually is. To wit, you know all that money the Fed is supposedly lending banks, all those untold billions the ECB is lending whatever country and so on and so forth ? Well... they're not really money.

They're not money in the sense of take a dollar, buy a bun, take a billion dollars buy a billion buns - there aren't a billion buns to buy. The fictitious billions the central banks are pushing around "to provide liquidity" are the very core of the "too much" part in the too much money problem of fiat, they're that money which only exists as long as nobody seriously intends to spend it. You know all that gold the US supposedly is storing in its vaults, just as long as nobody actually asks for it being returned ? That's exactly the situation here too, because that's exactly how the current financial world works, on the macro level.

The Fed can easily push "liquidity" into the market, and by the boatload if "need" be, but only inasmuch as it's properly "sterilized", which is to say only as long as proper safeguards are in place ensuring that money never gets spent. Which is fundamentally the problem that the junior populist senator is exposing, much to every senior elitist's chagrin : the Fed now has before it the uncomfortable dilemma of either publicly admitting that all that liquidity is meaningless, a publicity exercise sensu stricto or else... explaining to the hungry, to the desperate, to the young and frustrated why they can't have some. I suppose we've identified the exact place reality clefts, that proverbial hole through which the night comes in.

The Fed will obviously avoid the dilemma, as there exists no possible resolution of it in any world in which anything like the current Fed or current Washington also exist. On the other hand the hungry, the desperate, the young and frustrated obviously won't avoid the dilemma - it is in fact nothing short of a miracle they've neglected it for so longi.

So... arise, ye poor, ye hopeless, ye burdened by "education" debt, ye unable to pay rent, ye who have to chose between 16 hour workdays in the cramped cubicals under the neon lights and life out on the street, ye proud owners of fifty dollars in a savings account on the continent your fathers conquered. Arise and ask : if you live in the most prosperous country in the world, how come your life sucks so ? Methinks somebody's been lieing to you, and maybe it wasn't all those beardy fellows who hate America - if for nothing else then because hate is always more honest than love ever gets.

In closing, I would like to recount a very old soviet joke. During the class of "Appreciation of the Great Accomplishments of the Soviets under the Englishtened Guidance of Comrade Stalin, Defeater of the Saxons, Sovereign of Everything" (AGASEGCSDSSE for short) this guy in a suspicious dark suit and wearing sunglasses indoors is explaining to the famished kids how great life is for children in Stalin's Soviet Union because they get icecream, and how horrible life is in the Evil Capitalist Pig Empire of Imperialism, where children have to take it in the ass during private parties for the old rich folk. At about this point in the festivities, Svetlana starts crying.
"What's the trouble, little girl ?" asks the friendly doberman.
"I want to go to the Soviet Union!!!!"

———
  1. The only possible explanation I can come up with is something like "the complete intellectual and cultural bankruptcy of the humanities in the US has brought the situation there to the unfathomable depths of horror and despair wherein all Occupy Wallstreet can rely on for intellectual leadership are illiterate bums a la Cornel West". []
Comments feed : RSS 2.0. Leave your own comment below, or send a trackback.

12 Responses

  1. J. K. Galbraith's "The Great Crash: 1929" suggested a wonderful word for exactly this phenomenon: "bezzle."

    "To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months, or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. there is a net increase in psychic wealth.) At any given time there exists an inventory of undiscovered embezzlement in - or more precisely not in - the country's business and banks. This inventory - it should be called the bezzle. It also varies in size with the business cycle."

    But of course you can't beat thermodynamics. "First ecstasy, then laundry."

  2. Mircea Popescu`s avatar
    2
    Mircea Popescu 
    Thursday, 9 May 2013

    You are very much right of course, and oddly it hadn't occured to me, but the word I'm looking for is the bezzle.

  3. I'm curios if you recalled that joke because Stalin is somewhat associated with "safekeeping" gold and spending it at big rate, gold of Romania or Spain for example.

  1. [...] Cornel West was an illiterate fuckwit, to the degree a barn would have kicked him out. This is scarcely any sort of argument, it simply reads "the militant marxists have betrayed the revolution because while they're very good at pushing it, nevertheless they're acting according to what works and that makes them stinky elitists - why even last week they wouldn't promote some fuckwit who delivered no results at all!" I think Lubos needs to grow up a little regarding this right wing crap. He is objectively wrong regarding certain things. Global warming is not made up, [...]

  2. [...] itself, because otherwise it will presently get discounted out of existence. Once this is ensured, the bezzle becomes possible, and it no longer really matters what numbers you print on the website that you've [...]

  3. [...] that they mismanage finance, like so : in the depths of a currency crisis, the extreme excess of the bezzle becomes apparent, and with it all the ugly, unseemly attendants, moral hazard and misallocation of [...]

  4. [...] society" ? That's okay, I'm opting out. It'd be fucking ridiculous if I took my capital out of the bezzle, but allowed the emotional soliciting nonsense to continue. I guess that makes me a terrorist AND a [...]

  5. [...] SIDE) was reshuffled coupla days ago, getting a new chief and second. [↩]Remember that bit in The Dilemma Of Fake Money going "Hey Fed ? If you have all this free money, give everyone some!" [...]

  6. [...] so-called certification is a preminent and widely reviled part of the bezzle that the USG mostly consists of, and while their execution is exactly as appallingly poor as you'd [...]

  7. [...] same exact reasons, and to the same degree. Not just this, or that, but everything you ever had, everything your forefathers ever left you, as well as the possibility even, no matter how remote, of any kind of future. You're now in that [...]

  8. [...] of course brings to mind a "joke", oft retold on Trilema in its neverending quest of silencing idiots, pompous nitwits and other steve dutches : [...]

  9. [...] people are brought in by force of arms; on the right, people pay to enter. What's the difference? Bezzle for re-education flows through the left side of the street, while bezzle for they never educated in [...]

Add your cents! »
    If this is your first comment, it will wait to be approved. This usually takes a few hours. Subsequent comments are not delayed.