Central Bank Control, Reality or Chimera?

By Marc Gauvin (c) 3/1/2015

Reproduction expressly granted provided attribution and original link are given.

"...It is like insisting on building buses out of ice and then inventing a pseudo science based on ignoring that ice melts..."

A friend wrote:  "My understanding has been, for decades, that fiat is created as a ledger entry with a debt (obligation to repay) securing it as collateral..."

The ledger entry is secured by collateral e.g. your house, business, shares, future earnings (in some cases), deposits, etc.. So it is not "created out of thin air" but rather it is created on the bases of a notion of prior value, the Bank of England explains it well here in "Money Creation in the Modern economy"

Thus, the problem is not the money creation model, i.e. where money is a measure of assets transacted that already exist, which is correct.  The problem is the conceptual framework where:

1) Money is considered itself as an asset or collateral on par with real goods and services.

2) Money is made more or less scarce by central control of creation.

Now, 2) above is required in order to make 1) appear to be true when otherwise it would be false.  But point 1) above, breaks the direct lien between real material wealth and its valuation in terms of a common unit. Also, by making money scarce (point 2)),  the door is opened to making the unit value increase as an unbounded mathematical function by increasing scarcity of money.  This leads to rationalising charging for access to value representation (money) which then introduces equally unbounded devaluation.  Thus, by introducing the false premises 1) and 2), money is made unstable as both unit value increase and devaluation subsequently destabilise society and the economy, because both being unbounded in nature, actions exogenous to the money system proper are required to counter act and compensate. 

This, in a completely circular fashion, creates a requirement for control that otherwise would not be.  But, if money is itself unstable, it cannot itself be used to control,  which is why Central Bank Control is a fallacy.  But more alarming,  is the fact that since money control is an underlying cause of instability it cannot 'control' anything, leading to governments desperately attempting to control the economy through manipulating human behaviour,  but no amount of such manipulation is sufficient if the the source of instability through money is not addressed first! 

Since the political class and economics as it is taught today, have no clue about control and stability science it remains unaware of the fact that controlling human activity will not resolve the instability caused by money control and that is why,  they relentlessly continue to propose the manipulation of human activity to greater and greater extremes but ultimately to no avail.

What is worse, is that without knowing it,  the control and restrictions applied on humans disable  adaptability to a changing natural environment.   This creates a vicious cycle of increased suppression and abuse, without ever addressing the root instability of money.  Meanwhile, the banking sector benefits on the short term,  by keeping the political class convinced that their false 'control' is more and more essential to society when in reality it is a massive and deadly chimera.

Endogenous vs Exogenous Value Accounting

It is very important that people realise the difference between tokens as tradable value and tokens as value accounting, these two notions are often confused but can be proven to be separate following this simple logical proof.  The intrinsic value of a token, cannot represent the value of other things, only its own value.  Thus, when we account for value, we cannot consider the value of the token, that is whether we write a cheque for $100 on a piece of ordinary paper or on a more expensive paper, the value of the cheque remains still just $100.  Thus, the value of intrinsically worthless tokens limits their function to accounting of exogenous value (value other than that of the tokens), while the value of valuable tokens can only represent their own endogenous value or risk forsaking it,  thus limiting their function to that of barter exchange.

Tokens can be used as accounting only without the implication of intrinsic value. This useful for recording trade anonymously and for illiterate populations that are able to count.

The confusion between the exogenous and endogenous value of tokens is fundamental to The Money PSYOP because only by such confusion, can we be led to believe that a practically worthless support for annotating exogenous value possesses itself the value being annotated endogenously.  More importantly, only through such confusion, can the true value being represented be arbitrarily devalued as a function of the market value of a worthless token.

Break out of  "The Money PSYOP" and give your kids

a future they can be proud of you for.


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