Showing posts with label aggregate. Show all posts
Showing posts with label aggregate. Show all posts

Thursday, June 4, 2015

Local AND Aggregate Rationality. It's About A Whole That Is Greater Than The Sum Of It's Parts, Folks.

(Commentary posted by Roger Erickson)
Individuals not clear on the Paradox of Aggregate Thrift argue that it's perfectly rational for any individuals anywhere, no matter their aggregate context, to seek personal savings as a solution to their retirement needs.

Yes, that may seem rational, but it's not rational enough, by a mile!

If the cells in our body had such a definition of rational ... we call them rogue adipose cells, or even cancers.
Once aggregate investment falls short of the demand leakages ... the boom cycle ends in another bust.
(And yes, for those new to semantics, aggregate financial savings is called a "deficit in fiat" ONLY in narrow accountants jargon.)

Yet everyone also knows that it's not enough to act on what's ONLY locally rational. Personal, local, regional and aggregate rationality all matter, in everything we do, or we wouldn't call ourselves a social species! A modern culture formed by a social species requires that the sum of all local+aggregate rationalities be greater than the sum of it's respective parts. And that's just the 1st step. It's the ante for even being in the cultural competition game.

We're never acting alone, and we all know it. Everyone is interconnected to those we have affinity for ... and responsibility for.
Somehow, our current training & education is failing to scale that affinity and responsibility past the primitive state of NeoLiberalism.
We're failing to keep our aggregate from unraveling and dissociating.
Why? And how? Distraction, I'd guess. Wealth breeds complacency and narrowing tunnel vision, until the next train comes down the track. Learning well comes down to teaching well ... to aggregate context, not arcane tests minus context.

If we don't do a better job of teaching emerging citizens how to optimize the optimal sum of personal savings PLUS aggregate options ... the only thing we'll accelerate is our Output Gap and our cultural demise.


Tuesday, February 24, 2015

Aggregate Dystopia – Groupthink and Denial on a Grand Scale; Refusing To Acknowledge The Simple Act Of Aggregate Growth

   Commentary posted by Roger Erickson


Take another example, please!
Eurozone Dystopia – Groupthink and Denial on a Grand Scale

Once considered from another perspective, why should this surprise anyone? Is pan-cultural "dystopia" really so different from the painful, required responses required of other, observable growth spurts? Do the random DETAILS really matter that much? There are 1001 ways to reconfigure any nation, culture or economy. Yet it has to start with a consensus Desired Outcome, and the distributed will to achieve it, regardless of how.

Look at it this way. Just like human adolescents, any aggregate undergoing a rapid growth spurt HAS to get clumsier before it can re-establish how to rewire it's feedback & self-control instrumentation & management apparatus (e.g., "neuronal" systems), in order to regain and/or add aggregate agility for the new, enlarged size.

The red lines in the plot above are hypothetical, but believable, based on what we've already observed. Do institutional, national and cultural rates of change HAVE to peak, and decline? Is death and rebirth also the fastest way for nations and cultures to grow, just as for individual humans? Or can the pattern of cultural growth rate transition to a smoother, continuous progression?

Clearly, subtle extensions to Darwin's theory of evolution must be appreciated. Species and aggregate survival depends NOT just upon adaptive rate, but also upon the ability to sustain positive adaptive rates, and then also upon the ability to avoid intervening backward steps. It's the evolutionary rate, stupid! That rate is the running sum of all Output Gaps and Adaptive Gaps. Once opened, those gaps can never be regained. Allowing those gaps takes our destiny out of our own hands, and increasingly places it in the hope that competing aggregates may be even dumber and lazier than we are. Good luck with that hope.

For now, it's enough to stress that for a growing aggregate, e.g., a growing nation and/or human culture, it's the institutions which have to emerge, disappear or evolve in some new pattern, in order to fit changing scale. Even literature majors eventually catch on to this primordial reality.

"Everything [beneath the surface] needs to change, so everything can [appear to] stay the same."

Ya think? By one perspective, some quite obvious stages of adaptation are:

1) Recognize that self-awareness & self-control changes with size;
    (That's when honest feedback says things aren't working; "frictions" start to accrue,
     from skinned knees in adolescents, to depressions/recessions/class-wars in aggregates)

2) Prepare to change many things, as size changes (practice);
    (In physiological systems, various agents (molecular signals and/or hormones) have 
     evolved which help to actively grease the skids, so to speak, so that rates of 
     deconstruction & reconstruction in neural systems tracks the rate of growth in other 
     organ systems. This is true for everything from pupating insects to molting birds to
     growing human teenagers - and is still evolving in human super-aggregates, i.e., nation 
     states & human cultures)

3) Define success (what should the new-size aggregate be capable of accomplishing?) - and then don't settle for anything less.
    (Individual human "outcomes" and adaptive responses have slowly been defined, over 
     millenia of evolution. Human cultures are virtual machines, capable of rapid 
     adaptations ... when they select to adapt. If this perspective was instilled in our 
     education process, maybe our schools wouldn't be so obsolete.)


Why can't national populations re-define and "re-wire" their national institutions? And why won't they do so a helluva lot faster than in previous decades? Only for lack of intent, education, preparation and practice? What else do we have to do, that is all that more enticing or important? Watch videos? Overeat? Get drunk & pass out on the curb? Hoard nominal currency units?

All that is at stake is our cultural adaptive rate.

And all that's waiting is our endless list of expanding, aggregate options.

What are YOU waiting for?


Wednesday, October 22, 2014

No Wonder Fed Bankers Wear Dark Suits ....

(Commentary posted by Roger Erickson)




So no one will bother looking for the splatters .... while Fed guys claim that they're valiantly pissing into the wind? (On demand? Following whose demand? Not aggregate, that's for sure.)
:(
They doth protest too much?

While getting rich in the process?

(What do we pay Fed "regulators" for anyway? To just LOOK like regulators?)

Tuesday, October 14, 2014

Bill Mitchell: Available Operations ... Are Not The Same As Initial, Past, Current & Eventual Use.

(Commentary posted by Roger Erickson)


MMT – lacks a political economy?
What was the phrase?
First they ignore available operations, then they laugh at the idea of exploring options, then they fight to constrain aggregate options ... then the aggregate survives.
With inspiration from Gandhi, as well as evolutionary history. , where natural SELECTION = Outcomes Based Training & Education (same thing).


Sunday, October 12, 2014

So Why DID The Moronic Aggregate Ever START Pounding It's Head Against The Wall?

   (Commentary posted by Roger Erickson)




Because it would feel so good when they stopped? :(
"pressure on the European Central Bank to do “something” to prevent outright deflation is growing"
ECB translation: "Finally. Some signs of growth in Europe!!!" :)

Somehow this reminds me of the old moron joke.

So stop, already. And start asking why you started.

Or ... you could just do "QE" for a few years.*

Tempo is everything, is separating agile vs moronic aggregates.


* Why didn't the moronic aggregate ever ASK itself what QE is, and does? Because, because, because, BECAUSE ... because of the moronic things electorates do (at the request of orthodox economists). Of course that begs yet another question, but too few have the attention span to ask it, and more. They're busy pounding lemming heads against unemployment walls ... in unison. 
Capitalists? Their only suggestion is to start selling headache pills. Doh!



Monday, July 21, 2014

Translating Aggregate Laws to Some Specific Laws of Sovereign Currency

   (Commentary posted by Roger Erickson.)





FDR said something similar, about 10 years after after Shewhart, although in a narrow context.

So let's turn our attention to observing some of the many, emerging "Aggregate's Laws" empirically documented in the course of evolution.

It is much easier to understand Aggregate Laws if one keeps in mind one reference Aggregate Rule, or rule of autocatalysis:
"The whole point of aggregation is to VOLUNTARILY [and doggedly] swap SOME local degrees of freedom, for SOME uniquely aggregate degrees of freedom, exactly because of the net BENEFIT of that exchange. That's what we call a SOCIAL species."
Rigorous selection is required, of course, and the corollary trick of adaptive aggregation is to slowly figure out context-specific methods which make it harder for potential aggregate members to work at cross purposes. Building up the requisite array of feedback loops that shepherd more coordination and less friction is the secret hiding in plain sight.

Any aggregate must - to be an aggregate - attend to an unpredictably large & diverse set of hard-learned coordination lessons, and hence to the rules-of-thumb that result. The beginning of these rules predate the dawn of human culture, and hence are even more ancient than homo sapiens. The following 10, trivial rules & points of logic just happen to be some that comically bedevil the ~320 million supposedly intelligent humans in the USA, in the year +200,000 of homo sapiens history - not to mention multiple billions elsewhere on planet Earth.

Yet don't laugh. It's actually not funny.
"We sent men to the moon 40 years ago, cram mind boggling technology into
cell phones, do robotic surgery, and don't understand how a simple
spreadsheet called the monetary system works."
 Warren Mosler

Currency Law 1) Sovereign currency "comes from" the distributed IOUs inherent in dynamic Public Initiative. Sovereign currency denominates the constantly increasing volume of social credit, and all forms of “money” represent inter-person IOUs. (a)

Currency Law 2) Aggregate austerity obviously can't work. The more that aggregate initiative - e.g., "Public" initiative, aka, currency budget - is constrained, then the lower the aggregate capabilities, options and outcomes are. (b)

Currency Law 3) There is a fundamental difference between a Currency Issuer, and the distributed Currency Users, so that a "balanced budget" for a currency issuer is an absolute oxymoron, unless an aggregate has "achieved" zero aggregate growth. (c)

Currency Law 4) The unit of social credit - and also a given currency unit - naturally & constantly depreciates in evolving real terms. (d)

Currency Law 5) The purpose of right-sizing & right-distributing currency supply is to constantly grow cultural agility and policy agility. 
  The concept of a "deficit" in fiat currency, fiat or Public Initiative is simply arbitrary & misleading use of variable semantics, and a logical oxymoron if any meaning outside the narrow jargon of accounting is applied. (e)

Currency Law 6) To constantly enlarge national National Policy Space and increase Policy Agility, inter-national currency Exchange Rates absolutely must float. (f)

Currency Law 7) There is no national challenge which is not optimally addressed through collective policy, aggregate mobilization and distributed adjustments in coordination, invariably involving an increase in Public Initiative and it's corollary, public spending. (g)

Currency Law 8) The core purpose of National Monetary Policy is Banking Regulation, not trying to manage patterns within aggregate demand by micromanaging interest rates. (h)

Currency Law 9) Foreign Currency Reserve policy is always politics by any other name. (i)

Currency Law 10) Fiscal Policy is the final arbiter of National Adaptive Rate.
  To both grow and adaptively tune aggregate degrees of freedom, any aggregate population is required to manage distribution, in real time, of enough sovereign currency - through agile combinations of public spending, taxing and regulation – to do 2 things.
One) grow the nation's Adaptive Rate as our primary Desired Outcome,
(by enforcing and self regulating aggregate policies, specifically by allowing residents to pay all enacted taxes enforced in that currency,) 
AND ... 
Two) protect & grow the distributed Adaptive Rates of all citizens, as our key methodology (By constantly providing enough extra currency - i.e. purely nominal "deficit" spending - to allow residents to adequately explore all distributed options which also help coordinate evolving aggregate policy). That requires allowing ALL citizens to:
i) efficiently transact all necessary exchanges of goods & services (i.e., full involvement and employment);
ii) maintain SHORT TERM buffer currency savings adequate for exploring & selecting novel, adaptive innovations and transaction patterns.
###

a) While it is theoretically possible for aggregates to be highly organized WITHOUT some tax-based or penalty-based currency system, none that I know of seem to exist in nature. The very process of being organized indicates that some aggregate scoring method to "trust but verify" is in use. Failure to meet the measurable level of trust standard set by the aggregate triggers a statistical range of vetting processes, ranging by uncorrected decay & attrition to active auto-immune rejection of a component by the aggregate. It seems that only the form of currency systems vary, their function is always to mediate information AND accurately denominate levels of coordination demanded by the aggregate. In the case of modern humans in the USA, public currency is distributed ONLY via public initiative, as public spending. Some is returned as public taxes, and residents use the excess (nominal “deficit” spending in accounting jargon) for nominal private financial savings or multi-step liquidity allowing highly agile and distributed transaction chains to be easily interleaved. Modern currency is simply bookkeeping, tracking individual responsibility for social credit within a nation. Given a prepared electorate, there is always room for more, and never any sense for less.

b) Why? The whole reason for being an aggregate, i.e., a social species, is because the highest return of all is always the return-on-coordination. Said inversely, the cost of coordination is always the highest cost, and the return-on-coordination is the only return that outstrips the coordination cost. Our path is clear, though littered with obstacles.
  To visualize this, compare the different methods employed by less capable versus more capable aggregates. All branches of organization tuning boil down to "staging, linking and sequencing" disparate actions coordinated across aggregate subparts.

Staging requires consensus desired outcomes, plus preparation of static & dynamic assets.

Linking requires understanding of interdependencies, & reliance upon feedback and timing.

Sequencing, the last & devastatingly effective step of aggregate agility, specifically requires differentially timed actions by all aggregate parts, whether cells in muscle groups, or humans in cultural groups. To take increasing advantage of sequential actions, the parts of an aggregate must extend & rely upon increasingly extensive inter-component credit, in order for all to reap the return on group coordination. If you can picture the range and frequency of credits extended and received, then you can understand sovereign currency and the method for denominating, tracking and managing social credit. If persons A, B & C each agree to perform distinct actions on days 1, 2 and 3, in order for all to participate in the outcome generated - say on day 5 - then they have all extended credit to one another, and expressed it in the form of their cooperation and shared return. Rather than only repeating their actions, if they all want to take their cooperative spirits elsewhere, or just simultaneously participate in distinct & interleaved transaction chains, then they may utilize a group-backed credit-scoring or credit-denomination system, often called a Sovereign Currency. Simplistic currency systems may take the form of distributed IOUs, while more sophisticated currencies allow more agility, by replacing all IOUs as multiple units of some standard unit of social credit.

c) An organized aggregate cannot run out of sovereign currency any more than it's citizens can run out of IOUs to exchange with one another. All they can run out of is the memory of how they once organized & created their currency system, or the practiced capability & intelligence to keep the currency system organized. Arbitrarily railing against increasing currency supply is like railing against increasing blood volume as a child grows. Growth, blood supply, sovereign currency and what an aggregate DOES with it's growing "limbs" are orthogonal issues. The only solution is tuning, and NEVER arbitrarily limiting any of the above. National currency supply balances must float automatically, as a function of distributed citizen transaction rates. Currency Issuer and Currency User currency budgets are completely different. Populations distribute currency in order to efficiently denominate and manage distributed social-credit contributions to public purpose. National budgets are formally denominated terms of public initiative, and “balance” only when nations achieve zero net growth rates. Sub-national budgets are formal judgments of sub-population use to a nation, as measured by currency throughput. Subcomponents seeking budget portability between nations are, like stockholders, risking citizen benefits and responsibilities for commodity measures. Nominal, national currency budgets have no relevance to sub-groups accounting for local responsibility. National populations are NOT COLLECTIVELY ACCOUNTABLE to one another for how much currency each circulates (see corollary A).
  The ONLY thing a modern currency is guaranteed "convertible" to upon demand (collectively, not even personally) .... is national initiative. $US international exchange value is based entirely upon confidence in US initiative.

d) Why? It's a simple function of dynamic system logic. Currency supply must expand as some function of the net amount and rate of social credit being expressed, as Public Initiative. With any combination of changing aggregate numbers, changing individual & group capabilities, changing transaction rates, and changing complexity of interleaved transaction chains .... the net flow of the linked social credit & sovereign currency must constantly grow, just to satisfy the demand for increasing liquidity. Since the aggregate is evolving new capabilities, the very form, number and unit of 1 instantaneous social credit is constantly depreciating - as new aggregate capabilities diversify beyond the relevance of old aggregate capabilities and old social credits.
  Simply put, while adaptive rate is non-zero, the return on future coordination swamps the return on simple hoarding of static assets, and neither social credit nor Public Initiative can be saved at all, only invested. Hoarding current fiat only reduces future options.

e) How good would an Army remain if weapons sat in warehouses while soldiers were under-equipped, or if the officers and especially generals hoarded all the weapons? Ditto for an electorate and it's currency supply.
  And the semantics? Humans use dynamic semantics in order to maintain a small linguistic base applicable across multiple contexts. As a result, many if not most words mean different things in different contexts. For Jane & Joe Sixpack, the typical meaning of a "deficit" is that something they require is missing. However, in the formal practice of Double Entry Accounting used for currency tracking, every new social credit or currency unit created is labeled as a "+" or source, and must be matched by an equal and opposite numeral in a matching column, labeled as a "-" or sink ... or, in accounting jargon, as a "deficit" - even though nothing at all is missing, except the logical capability of those people who are alarmed by semantic diversity. If you ran around a track 5 times, and entered a "5" in your exercise chart ... and used Double Entry Bookkeeping ... you'd have to enter a -5 in an opposite column, and declare a "lap deficit." Heck, to accountants, you'd even end up with an accumulating personal exercise debt. Some slow thinkers would even conclude that you're passing on that exercise debt to your grandchildren, thereby condemning them to be couch potatoes. Sheesh! You call this an informed electorate?
  After removing maladaptive constraints, then national budget balances for a purely NOMINAL currency matter no more than how many points are used during a hockey league season. Do leagues worry much about the # of points scored or taken away? No. During play, does it matter how points are awarded and/or penalized? Yes. Overall, stakeholders track individual, team and league initiative - the plus/minus transaction ratings of players and teams throughout games & seasons - as indicators. However it doesn't matter whether a league balances nominal "hockey point" budgets. Nor does it matter whether a nation balances a purely nominal currency budget which - like hockey points - is used only to instrument transactions. [It would matter, if hockey-points & currency were made of or guaranteed convertible to gold at FIXED rather than floating rates.]
  Can either access to hockey points (tickets) or national currency be traded for, say football tickets? Certainly. Do leagues compete to create demand for their as opposed to other league's points & tickets? Certainly. Yet they do so through initiative, not by manipulating interest rates on storage or trading of league points .
  Neither a league or a nation, however, can function if there are not enough hockey points or currency to allow "transactions" to occur. If a league lets the supply of hockey points get too low, or arbitrarily restricts their use too much, then aggregate demand from stakeholders may melt away and take years to rebuild - if it recovers at all. Ditto for modern currency.

f) Modern currency reserves can be used to affect currency exchange rates, but cannot guarantee stable buying power of ANY commodity, goods or services. In contrast, public initiative, like a hockey league's initiative, sets the value of a national currency. International exchange value of the $US is most efficiently managed via collective initiative, which does more to inflate $US value than any interest rate set by bankers.

g) Solvency and Deficit Terrorists. For modern or nominal currency, supposed fiat currency "deficits" have become exactly that, NOMINAL - just as with hockey leagues. Modern currency is simply less cumbersome than attaching spreadsheets to every citizen. We needn't run out of spreadsheet columns, leagues needn't run out of hockey-points, and we needn't ever run out of our own, monopoly currency. Granted, international exchange rates can fluctuate, based upon demand by international traders. IF that ratio matters to enough co-citizens it is best managed via national initiative, not by constraining use of either hockey points or sovereign currency.

h) In the USA, the purpose of "Monetary" policy is to preserve the sovereignty and trustworthiness of the national currency and our banking system. Attempting to do that by manipulating the cost of currency generates more complications than it can possibly solve. Therefore the core purpose of Banking Policy is regulation, so that banks meet the terms of behavior dictated by local and national banking licenses. Correspondingly, the purpose of collective, civil government is to protect REAL net aggregate demand as the sum of adequately distributed demand. No part of our economy should ever be allowed to hinder net aggregate demand simply for fear of not balancing purely nominal currency budgets. Manage public initiative & aggregate demand, not "hockey point" balances.
  Exactly how much money we do or don't print matters little, other than that we should never have so little circulating that people can't easily transact business (deflation), nor so much that it becomes a nuisance (inflation) - nor confuse buyers & sellers with frequent & swings which they cannot easily anticipate. It would be better to track only too-little/too-much ratings, like plus/minus ratings in sports leagues.

i) Given that the purpose of Government Policy is to serve national interests, it is impossible to separate Foreign Currency Reserves from other policy processes. The immediate corollary of this reality is that "Free Trade" is a complete oxymoron, as much as "Free Crime," "Free Patents," "Free Citizenship" and "Free War." Every inter-nation interaction, not just war, is an extension of politics by any other name.
  We needn't much care how much of our currency other countries hold, since reserves only affect exchange rates, and we have adequate policy options in response to ANY moves by any other country to increase or dump their foreign currency reserves. It is only a question of exercising policy agility. If a population desires different Fx rates, the best tool is national initiative, not confusion about whether to express more allegiance to international traders or to our nation. Modern currency does NOT store intrinsic value. If robbers instantly stole all cash throughout the USA - leaving behind only empty ATM machines, a barrel of oil, and toys with lead paint & melamine - citizens could simply distribute a new currency and take the initiative to find alternatives to imported oil, lead & melamine.


Monday, May 19, 2014

The Law of INEFFECTIVE Aggregate Finance?

   (Commentary posted by Roger Erickson.)




Gordon Chang of Forbes writes about India:
The 'giant sucking sound' you will soon hear is money, once headed for China’s shores, on its way to India's instead.

The sad part of this is a billion people in India, sitting idly by as they wait for some other population's fiat currency to arrive in their pockets (along with effective ownership)

This reminds me of the so-called Law of Effective Employment, which I'll restate as the Law of INEFFECTIVE Aggregate Finance.

"The person who know HOW will always have some currency, and the person who knows WHY will always effectively own them, by controlling the currency supply."

Have Fiat .... Won't Use It

Thursday, February 6, 2014

Fascinating Reads: John Boyd And Orienting to Context (i.e., Driving Adaptive Rate)

   (Commentary posted by Roger Erickson)




For those who know, there's a unbroken, inter-disciplinary link between:

Wallace_&_Darwin => Walter Shewhart => W.E. Deming => Toyota Production System => John Boyd

There's too much to discuss or read in one post, so here are some references just about Boyd, to start with. One can work backwards from there, just as Boyd did.
On The Making of History: John Boyd and American Security
http://www.usafa.edu/df/dfh/docs/Harmon54.pdf

BOYD ON AL QAEDA'S GRAND STRATEGY
http://globalguerrillas.typepad.com/globalguerrillas/2004/05/journal_boyd_on.html

Boyd: The Fighter Pilot Who Changed the Art of War
http://www.booknotes.org/Watch/158365-1/Robert+Coram.aspx

John Boyd’s Art of War
http://www.theamericanconservative.com/articles/john-boyds-art-of-war/

Introduction to the Strategic Theories of John Boyd
http://chuckspinney.blogspot.com/p/compendium-colonel-john-boyds.html

ps: Paradigm, of course, refers to the set of methods which an aggregate (molecular, CNS or culture) uses while attempting to orient - successfully or not - to context, as the backbone of Adaptive Rate.

ps: ps: Shewhart's PDSA cycle looks at mfg adjustments post policy decisions, a method which Deming tried to push into policy & governance itself, and which Boyd re-named from the policy/goal/outcome perspective as the OODA Cycle or OODA Loop.



How Do Growing Aggregates Support Evolution Of Their Own, Emerging OODA Loops

   (Commentary posted by Roger Erickson)




Developing A Faster/Leaner/Better Aggregate OODA Loop