How About Fiat Currency Operations 101, For 5th Graders? Or "Context-101" For All Citizens?

   (Commentary posted by Roger Erickson)

"Recent accounts of athletes falling into financial distress have spurred some business schools to create specialized MBA programs for [athletes]"

? Business Schools?

Why not start long before that? With citizens? With an ounce of cheap prevention, instead of a MiddleClass flesh-pound of expensive repair? Especially since the repair so far is grossly too little, too late. [Yes, because of the lame fear that we've "run out of fiat."]

And no, an MBA wouldn't save us. They're among the dingbats saying that we're out of fiat. :(

How about mandatory, early Citizen Schools, for all citizens? Wow. Wotta concept! :)

To do something that simple, it seems that we have to STOP doing a lot of dumb stuff - but that list of dumb does NOT include constraining Public Initiative. Just redirecting MORE of it, to exploring more of our constantly emerging new options.

How much? As much as is needed to improve the quality of distributed decision-making ... because that ALWAYS pays for itself, by definition.

We need more - many more - reasonable people with context awareness.

Marriner Eccles types?

Luther Gulick types?

Beardsley Ruml types?

Warren Mosler types?

You know, people with common sense, and the audacity to simply insist on using it.

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).

All Tools, Math & Theory ... and forgotten operations? Why ... THAT SOUNDS LIKE ORTHODOX MACROECONOMICS!!!!

   (Commentary posted by Roger Erickson)



Who's tugging your aggregate's policy? To where? And WHY?

Jim Valensi writes:   Social theory vs Un-Social Outcomes  (Ok, it gets a bit smarmy, but the message starts out well.)
 
Well duh! This is both tragic & comical. Can't see an operation for the theory? Economists have forgotten that behind all the theory, there are real people there?

The fact that people even have to be told the obvious ... questions the changing meaning of what really is obvious!

When the obvious is no longer obvious, what does that say about the observers? Can't see a context for the operations? So they make up a bunch of BS theory, and theorize that it needn't be tested against real outcomes? Sounding more orthodox all the time! Anything to sell more theory, and tools. (Oh yes, don't forget to blame the stagehands for accepting the script. They just used to work ... here & elsewhere.)

All tools, math & theory ... and forgotten operations? Why ... THAT SOUNDS LIKE ECONOMICS!!!!

Why Isn't Aggregate Policy A Science?

   (Commentary posted by Roger Erickson)



A very useful review article has been posted at NEP, by Randy Wray, about JF Foster

The Reality of the Present and the Challenge of the Future: Fagg Foster for the 21st Century

Reading the Foster quotes drives home that enough Americans understood aggregate economics ... but never managed to convey their insights to enough Americans to consistently leverage those insights.

One in particular stands, out, a conclusion that is stated differently in system science. Namely, that most people get no practice discerning the difference between current fiat and future options. Foster clearly did, 50 years ago, rather like Beardsly Ruml, Michael Kalecki, Abba Lerner, Marriner Eccles, and a few others, on to the present flowering of the miniature MMT community.

So how many people must understand MMT, before it matters? How many Americans must know what some Americans know - to reinstitute operations allowing political economy?  

If we're lucky, even 50 Key People in Key Positions in Key Institutions can make a dramatic difference, as FDR's Brain Trust did. 

However they obviously couldn't ensure that our electorate could MAINTAIN that level of success. To RETAIN aggregate success, many have estimated that 10% of the electorate must grasp the emerging operations that made success possible.  Today that would mean at least 16 million citizens!

It's ironic that the legions of Keynes' followers & opponents alike largely misunderstood the messages of Lerner, Kalecki, Ruml & Keynes.

Worse, it's doubly ironic that the legions of Americans, in both policy positions, universities & electorate, didn't understand the operational functions that Marriner Eccles & the rest of FDR's Brain Trust introduced ... who themselves DID NOT READ Lerner, Kalecki, Ruml or Keynes, or acted largely before most of their summary articles were published.

Finally, it's triply ironic that pundits throughout the ages were right. Humans - and human aggregates too - often stumble over new truths, then pick themselves up and go on in their old ways - for astoundingly long periods of stagnation - as though nothing new had happened.

Yet does that seem to happen MORE often in disciplines not yet favored with the audacity and openness of a science? Other professions glom onto every new advance like a dog on a bone, using the basic, questioning methods of the "scientific method" - aka, to question EVERYTHING, and answer every operational RESULT relentlessly, with yet more questions.

This sums to a simple but profound question. Why isn't aggregate policy dealt with as a science? 

It's not that difficult for aggregates to determine the best course of aggregate action. We mobilize to do it well, in times of crisis or war, but during peacetime we go right back to purposely maintaining a significant, completely unnecessary Output Gap. 

Is it only the frictions of politics that makes us treat the operations of functional democracy (always changing, uniquely scale-dependent) as a fearful taboo? Is that what FDR meant when he said that the only thing we have to fear is fear itself? We're afraid to play as an aggregate team? We're terrified of the return-on-coordination? 

Maybe we should let sports coaches, choreographers and band-leaders run the country? They'd remind us that there's no "I" in team, and also nothing taboo about teamwork.

Why The Gritty Details Of Operations Matter - While Pondering The Madcap Effort To "Balance" Fiat

   (Commentary posted by Roger Erickson)



One simple example:

Functioning militaries prefer not to send soldiers into the field, until they can, proverbially, disassemble & reassemble their weapons in the dark. One of several reasons is that without that detailed familiarity, they won't know the limits of what their tools are and aren't capable of in different contexts, when there's a need to push them to survivable limits.

In general, every functioning system known - from physics to biology to human cultures - is incredibly densely engineered, and is rife with useful shortcuts & hacks. The next iteration of any system is built by those who can navigate the DETAILS of the prior iteration.

Here's another useful insight into why given operations matter, and how much, in given contexts.

We need more tables analogous to this, for other contexts and disciplines.

Such tables could be very useful, even for economic theorists. Any suggestions?

As just one application for the table given, you can look at the details of why these operational issues mattered to the software running competing computer-networking protocols, and which ones survived.

http://en.wikipedia.org/wiki/Berkeley_sockets
http://en.wikipedia.org/wiki/DECnet
http://en.wikipedia.org/wiki/Excelan

So how on Earth did orthodox economists (& religious ideologues) end up presuming that banking operations don't matter, only pure theory?

Whatever the obtuse explanation is, the real issue is how to correct that flaw. Rather than telling people HOW to do that, let's leave it up to distributed human ingenuity. My only prediction? Orthodox macroeconomics is NOT going to survive the demands of reality.

(Either that, or we'll kill ourselves trying to make it work. Bill Black pictured that in a group email several years back - something to this effect. "If one country seemed to thrive by balancing it's budget and being a net exporter, then we'll all be better off if EVERY country was a net exporter, with a balanced budget, right?" Is that why several countries are discussing bases on the moon? To accommodate the excess exports, while the orthodox achieve Earthly gridlock, by "balancing" aggregate fiat?  That or pinning themselves down with one or a few fixed, Pyrrhic tactics, while ignoring any & all ways of actually achieving a Desired Outcome.)

How Marriner Eccles Saved Democracy 81 Years Ago, & The Bank Of England Finally Admits It - After 20 Years Of Prodding By Warren Mosler

(Commentary Posted by Roger Erickson)



There's this pragmatic concept, call Fiat Currency Operations. Periodically, all theory - even that dictated from whatever-orthodox-economists-are-high-on - must re-orient to naturally evolving operations ... which actually work.

How Marriner Eccles saved America 

Money creation in the modern economy

Money in the modern economy: an introduction

Fiat Currency Creation Video1

Fiat Currency Creation Video2

Mosler's Mandatory Reading: 1994-2014

ps: Mosler & his growing ranks of "MMT" colleagues freely quote all relevant economists from all countries, something which cannot be said for the Bank of England, even after 81 years. Marriner Eccles, thankfully, never read any economic theory at all. He just reinvented the actual operations to fit ongoing requirements. :)  We could use a few more people like that?

We Can Do Anything ... Yet Are No Longer Capable Of Coordinating Anything Except Looting One Another

  (Commentary posted by Roger Erickson)

Many of the images listed here are of ongoing protests against austerity.

A friend from Ukraine writes: "There are some very good people living in Kiev who are choking in the insane tornado of corruption and violence. Breaks my heart."

In parallel, a friend from Bulgaria writes: "Turned out BG antigovernment protests [Nov, 2013] were kidnapped by the opposition, .. which is the same as the government :-(
.. So now we are waiting the misery to make all Bulgarian people go out and protest. 2 million young already left the country during the last 20 years. Mostly old are left. Old people don't protest, or do they??"

Other contacts, from Latvia, Lithuania, Estonia, Spain, Portugal and Greece have all sent similar emails - about most of their talented people and/or youth simply leaving, or becoming a lost, unemployed generation. And our coping methods in the USA are not much better.

Will Europe survive this? Will we?

That such stupidity could re-occur, in the 21st Century .... is simply unbelievable! 

How is this happening?

Humans can't possibly be this selectively stupid ... can they?

Sadly, I think yes. I still routinely meet highly "educated" and/or experienced people in Washington DC - from all kind of professions - who truly believe that we should simply return to the gold standard, stop welfare, stop immigration ... yada, yada. Every blind person groping every context is increasingly certain of their view on parsing a human context, the vast majority of whose operations they are not even aware of, let alone understand!

Millions of specialist plumbers, programmers, PhDs, Engineers, Physicians, Bankers .... even priests, you name it .... and 99% of them are so narrowly informed so as to be more trouble than their talents are worth.

In the midst of all this talent, we need to remind ourselves that organized teams can do amazing things ... yet we somehow find ourselves no longer capable of coordinating anything except looting one another?

The trivial, distracting details DO NOT MATTER. We first need to decide to stop being this stupid.

Then, as always, anything is possible. All we need to do is simply remind ourselves that coordinated teams, especially whole electorates, can accomplish truly amazing things.

If it doesn't have to be this way, then it won't ... as soon as people decide that it doesn't have to be this way.

Please stop all the preaching and protesting, which only trigger defense mechanisms (exactly what the worst frauds WANT to hide behind). Then please start PATIENTLY engaging all the disconnected people, on what desired outcomes they'd like to see happen. Only by patiently going over the actual operations, context and finally data ... can all people get on the same wavelength, and work well together.

What we're doing now simply isn't working. We're smarter than this. There is ALWAYS a better way, but only if we're willing to look for one, and are then persistent and patient enough to avoid useless argument.

The few frauds who want to see us all arguing are the very idiot savants who pursue their looting strategy of divide & conquer. 

Do NOT let the idiot savants conquer us! 

We can be smarter than them, but ONLY if we choose to act more intelligently.

It's A Pity That The Entire DNC Fails To Realize That One Of Their Stated Goals Precludes All The Other Ones!

  (commentary posted by Roger Erickson)

They need help finding a graceful path to occupying more consistent logic, not just fervor. Fervor is a necessary start, but it's not sufficient. Conflicted logic precludes return-on-coordination?

Do you have additional suggestions for encouraging well meaning people to dig into actual currency operations, not just superficial semantics?

Apparently Marriner Eccles and Beardsley Ruml weren't enough, not to mention Warren Mosler, or Bill Mitchell or Randy Wray or Stephanie Kelton.

This could be critical step in educating tens of millions of citizens, so please be very careful and very encouraging when responding to the originator of this twitter poster.

Vote Democrat ... to support this agenda ..? or help them update it?

We Need A "Defense_Against_Our_Own_Dis-Organization" Plan?

   (Commentary by Roger Erickson)

United Nations to Adopt Asteroid Defense Plan

Really? Instead, how about a plan to protect grandchildren from having to re-learn tough lessons their grandparents learned the hard way, and their parents either forgot, or never learned?*

Is there an entry for that in ANYONE's economic ideology equations?

I thought not.

We need an Index Fund that allows citizens to invest in Democracy, and common sense, by exploring workable operations with a completely open mind.

The ideology we can discuss each evening, over whatever your particular ideology allows.

As an example, here are some suggested Criteria of a Sensible Grand Strategy.

* call it a Dumb-ass-selves Defense Plan? or just the Our_Own_Mistakes Defense Plan. No Asteroids required.

Fusing Evolution of Nations and Cultures With the Crudity Called "Economics"

Commentary by Roger Erickson

Quantifying sustainability: Implications for [capitalism]

If we can't fuse the management of crude, static-asset markets back into a small subset of all the dynamic values that have driven 3.5 billion years of evolution on planet earth .... we deserve to die out.

Economists as naval-gazing dinousaurs? Only one of THOUSANDS of NAICS feedback channels? There's nothing essentially wrong with orthodox economists existing. There are complete fools & irrelevant Luddites in EVERY profession.

The problem is the weighting of the feedback!

Why on earth do electorates elect policy-staff fools who listen PRIMARILY to theoretical-economist Luddites? Why not just maximize our REAL operations, as we've always done? And in the process, improve the quality of our own, distributed decision-making?

There's little theory needed for catching mice. Just assign many people to catch mice, and review what actually works best. Note to electorate: It's ALWAYS a complete surprise. So please quit trying to make our policy operations into a durned religion! There's a reason to separate Church & State. Religion applies to the things we DON'T understand, NOT to the little stuff we can discover through trial and error. We have ZERO predictive power! Luckily, however, we seem to have near infinite ADAPTIVE power - but only if we actually use it. It's called accelerated trial and error, and it's quite easy.

So just explore our options, see what works, and go with the distributed sum of all the things that make our whole greater than the sum of our parts? That makes everything easy. It's called auto-catalysis. Catalyzing national, not just personal, success yields the highest return by far. If you don't think so, move to Russia, or China, or Zimbabwe, were it's every person for themselves.

We have to work hard to fail at operations. That only occurs when religion runs amok into micromanagement of the operations were supposed to render unto Caesar - or our own initiative. We have constant reminders NOT to do that, but we don't weight that advice highly enough to follow it?


Please, weight your vote where your mouth is.

Our Only Real Goal is Operational Agility

Commentary by Roger Erickson

Our Only Real Goal is Operational Agility

Why Operations Actually Do Matter, Not Just Theory or Ideology

commentary by Roger Erickson

Several articles this week sum up the critical state of confusion over our budget process. Yes, people are trying to deal separately with the inseparable issues of constraining and directing fiat, but there's a deep lack of operational and situational awareness at every turn. It's not just banking.

When literally everyone doesn't understand some key operational aspects of the situation they're proposing changes to ... then we're in deep shit as a group. And, is it clear that our situation is ALWAYS getting more complicated, and is not static? Time to initiate a very patient and continuous group discussion, with people from at least 2000 - and growing - distinct professions. We need that just to stay aquainted with one another, and to stay oriented to our own changing situation, with all it's increasingly interdependent operations. Otherwise, the relative heat loss from our entire economic engine will tip uncontrollably towards 100%. At this rate, we'll soon be burning calories, oil, coal and everything else at record rates ... while going nowhere.  Or are we already doing that?

Obama, The US And The Muslim World: The Animosity Deepens

A Stampede of Hysterics

Panetta’s Phony Doomsday Scenario

A Pentagon Budget Primer, Leading to Two Questions for the Defense Secretary

Hat tip to Dan Flemming, Chuck Spinney, Winslow Wheeler and Lynn Wheeler

Scott Fullwiler — Timeliness and the Fed's Daily Tactics

Abstract
Recognizing that analysis of the daily activities have recently become a standard part of the monetary economics literature, this paper provides a detailed description of the Fed’s daily tactics from an institutionalist perspective. The three relevant categories of time in the Fed’s daily operations — daily, maintenance period, and seasonal — are described within the context of the institutional working rules giving rise to each category. This framework is used to explain recent events in monetary policy implementation. The final section of the paper illustrates how the discussion of time and timeliness in the Fed’s daily tactics can be used to inform research on traditional topics in monetary economics and argues that (1) the payments system, rather than reserve requirements, is the proper starting point for analysis of the Fed’s daily tactics; (2) there is no liquidity effect in the federal funds market; and (3) direct control over the monetary base is not possible.

SSRN — Social Science Research Network
Timeliness and the Fed's Daily Tactics (2002)
Scott T. Fullwiler | James A. Leach Chair in Banking and Monetary Economics and Associate Professor of Economics at Wartburg College
(h/t Dan Lynch in MMT Deficit Owl USA Committee at FaceBook)

Heisenburg's Economic Principle vs Nomenklatura (Lenin's and the Chicago-Economists non-answer to a General Staff?)

commentary by Roger Erickson

Are Nomenklatura simply crude caste systems,masquerading as a cargo-cult parody of open coordination?

Do methods always precede understanding, throughout early steps in situational awareness and situational shaping? Are those early stages always comical in retrospect - or tragic? Depends on whether you can see tomorrow's comedy as tragic today, and today's tragedy as comical tomorrow.

http://www.youtube.com/watch?v=tBN49_HED4o

http://www.nakedcapitalism.com/2012/12/obama-and-boehners-grand-bargain-gullible-democrats-are-falling-for-the-ol-good-cop-bad-cop-routine.html

Back to Heisenberg, cultural methods development, and cargo-cult Nomenklatura. If militaries can experiment with General Staff, why can't cultures experiment similarly, even faster, on a larger scale, and in the process accelerate exploration of OpenSource Cultural Staff?

Historically, we'd like to plot the time delay between the appearance of every multi-member culture - regardless of whether on a multi-molecular, multi-cellular or multi-citizen scale - and the refinement of it's Nervous System (i.e., it's Automatic Stabilizer Operations Functions for coordinating all inter-dependencies). Such a graph would help us parse and list the key principles common to all methods driving refinement of any complex system, on any scale.

Where would our current culture fall in such a graph? How long will it take our current-size US culture to refine a cultural nervous system able to keep it's own proverbial hands off a hot stove? If that estimated time seems to involve a lot of waste, are there straightforward methods to employ, to accelerate adaptive tuning of our own culture? If so, why not put our heads together, discuss them all, openly, and see what we come up with?

Mathematics alone dictates that - by definition - tuning of all dynamic systems depend upon just-in-time, just-as-required, just-as-distributed data/response cycles. The cycle steps include sampling, analysis and utilization of just-as-much situational awareness is needed to drive adequate responses to changing situations ... aka, just-survivable-outcomes.
JIT/JAN/JAD/JAMSA ==> JSO

For organized systems increasing their complexity, that boils down to complex interplay between 3, increasingly distributed mapping functions:
..feedback sampling permutations;
..simultaneous feedback filtering/distribution permutations;
..option exploring permutations.
(Note: increasing AND accelerating distributions does NOT occur without scalable social liquidity methods.)

If you think sexual recombination is complex, Cultural Recombination occus at scales & speeds that are orders of magnitude larger, and with many more degrees of freedom. Orthodox economics as we know it is pathetically simplistic, and should not be allowed anywhere near adaptive policy formation operations. The only contribution of it's practitioners is negative and limiting - and they should have the humility to act accordingly, with more care for the culture they're tasked with first, doing no harm to.

Moving on, we can simulate our situation as Fxyz[JIT/JAN/JAD/JAMSA] = JSO,
where JIT/JAN/JAD/JAMSA are all time-variant polynomials, each a sequence of inter-dependent variables. Further, x,y and z are all interleaved dependent matrix operations, operating asynchronously on all variables of all 3 polynomials - continuously.

Such complex mathematics sums to probability waves which are - so far - impossible to predict, but possible to surf - with clever methods. Instead of arguing over whether such complexity should or shouldn't be amenable to gross simplification ... can't we just concentrate on surfing? And have a blast doing it?

Who came up with this idea that we shouldn't be having a blast surfing the unknown? Who are the real Refuseniks here?

Anyone who claims they KNOW anything about how simple reality should be - and arrogantly resists it's diversification - is doing far more harm than good. When experiencing FutureShock, it does no good to shout "stop." In fact, it only delays adaptive responses. As all should recognize, Heisenberg's mathematical proof implied a scalable truth. Insisting that escalating probability waves surf us, instead of us surfing the waves, simply causes us to fall off our surfboards.

There's a simple moral to this discussion. Let Theory chase Operations. Stay away from the opposite, which only slows adaptations, and causes wipeouts.

Should we Practice Narrative Led Operations?

An article at SWJ asks an obvious question. Rather than deducing the operations first, and then trying to build a campaign around them, hasn't group perception of success (goals) vs actual achievement of success (methods, operations) always followed parallel paths, displaying hysteresis? We make goals, make presumptions about how to get there, but ALWAYS arrive by paths that differ unpredictably from those we imagined.  Build a narrative bridging from present situation to desired situation, and let people rediscover the obvious operations on their own?
 
That way they feel like they discovered, and own, their own solutions. People are recruited by potential, sensed through narrative. Operations & tools are always incidentally adopted while pursuing potential.

There are obvious implications regarding currency operations. "It's the narrative, stupid!"

People don't like the attributes of the situation they're in. So elicit a list of the attributes of the situation they'd LIKE to be in, then simply insist on getting from here to there. Currency & other operations will be incidental ... as always. That's how Marriner Eccles & FDR took us off the gold-std, incidentally. Lord knows Richard Nixon & John Connally acted for the same reasons, in 1971-1973.

Campaigns which manipulate narratives can always stay inside the social OODA loop of campaigns that try to propagate operations sans narrative.

Noirp Social Diseases and Lunchhaving by Proxy Syndrome

(Commentary posted by Roger Erickson)



Reading the daily news makes me realize that we're suffering from a highly distributed, scalable, Lunchhaving by Proxy Syndrome, where we're always convincing ourselves that something that is NOT wrong with us, is somehow to be considered as systemically wrong - all so that our Upper Looting Class sociopaths can get intellectually & culturally obese, by uselessly eating everyone else's lunches.

Take our politics, Please! We just saw the instant when most Republican voters could realize that they've been duped again ... or at least get a chance to start realizing it, since the self-deception actually runs to even deeper levels.

The Real Romney Captured on Tape Turns Out to Be a Sneering Plutocrat

Will voters catch on, soon enough to matter, and start selecting from an entirely different class of policy candidates? Only if we accelerate our electoral dynamics by the bare minimum now required. Those few Dems who actually exercise  their capability of reading WIDELY realized they'd been duped, about 6 months into Obama's admin. Prior to that the time lag to catch on was traditionally 4-8 years. When will GOP party members also start abandoning the gang process? You typically need a tattoo to join a criminal gang. To join a political gang, ... er, "party" you need to accept something more subtly damaging, a brain-taboo, or an agreement to stop thinking. It's infectious simply because it unburdens people from the calories required to engage their brains and actually think. Yet that culturally-infectious disease has been killing our culture ever since George Washington warned us not to become susceptible to it.

When will enough citizens catch on to our deeper self-deception, and junk the now-useless political party baggage altogether? If we ever get that far, then maybe we could get on with the simple task of setting national goals and organizing our national culture to achieve them? A country capable of setting and achieving adaptive goals? Now that sounds like a Desired Outcome worth achieving, and then maintaining. Doesn't sound difficult either. Why are we MAKING it so difficult?

Surely citizens now have a historic opportunity to realize that the real dupes are themselves - whenever they accept that they have only 2 choices?

Next, take our stupid fiscal policy, Pretty Please?!!

MMT - by describing fiat currency operations, and basic reserve-banking operations - addresses only a process, not the original reasons why we are misusing that process to begin with. We need wider sharing of common sense, across our growing lists of modern cultural operations. Call it modern operational operations. MOO! :)

Look, if a cow can exquisitely integrate gazillions of biochemical processes, within trillions of cells, of hundreds of types, across dozens of organs ... and make a behaving unit called a cow ... then surely a band of supposedly more intelligent humans can organize a national economy? Doesn't seem so difficult, in comparison. Yet, despite the obvious, expect many sheople to carry on saying baaah, by sheared statistics alone.

Yet why are we expressing so much collective stupidity, in the midst of so much distributed knowledge and skill? It's curious. Perhaps our culture is infected by a group-intelligence-altering cultural-parasite, a cultural-virus or even a cultural-prion agent?

That would help explain our baffling, unusual group behavior. On the cultural level, the closest concept I can think of is the INVERSE of a prion disease process. Instead of a diabolically unpredictable lock-&-key agent which recruits & perverts individual processes throughout a system, we now have a diabolically unpredictable system process managing to invent virtual, systemic but entirely nominal "process problems."

For effect, I'll call that inverted phenomenon a "Noirp" cultural disease, and even go on to predict higher order versions of the same cultural perversions, to be labeled Uoijd cultural diseases (double-inverse-font of "prion").

Our culture needs an advanced semantic immune system - just to protect itself from itself.

Just as Socrates saw through the Sophists who were saying that "your mother-dog is YOUR 'mother'" ... we need a modern day "Setarcos" to reverse our nonsense back to sense. Socrates' reverse-image might convince us of what we have backwards vs forward. Hopefully, she could remind us that "our nominal debt is our real private currency stock" rather than believing in what is functionally backwards, i.e., that our fiat currency accounting, "nominal deficit" figure is our real debt.

In the process of draining entirely nominal banking reserves by finagling double-entry accounting gimmicks, and then confusing those gimmicks for REAL process constraints, we're actually draining our situational awareness, and our group intelligence too! Both Socrates & his double agent Setarcos would be appalled at our lack of policy agility, operational agility and semantic agility. They're all linked.

Forget showbiz, there's no degeneracy like semantic degeneracy. As a remedy, let's just try to have our pace of group discourse keep up with dynamic situations! Loose paradigms sink economies.

Fascinating Parallel History of Canadian Banking

Why Did Canada Have no Mass Banking Failures in the Great Depression?

It's very sparse, but fascinating.

The answer is mostly "public guarantee of solvency" for the nation's currency system, acting through it's banking industry. It's quite revealing to see the many, different ways in which Canada did similar things as we, using slightly different operations. This article should be distributed nationwise, just to get people to think about what really goes on in operating a sovereign currency system.

(Hat Tip, AustralianMMTer, @AUSmmt)

Could We Do This for All Members of Congress, the Fed, and the Treasury Department?

commentary by Roger Erickson

How to Think, Not What to Think at Leavenworth

Ft. Leavenworth's new commanding general, Lt. Gen. William Caldwell, ... believes ... the Army's professors, instructors and doctrinal writers must not "tell or teach our young officers here about what to think. What I want you to do is teach them how to think."

He said one way is to allow officers to spend a year working at a government agency or a think tank.


Shades of Gen. Patton!  

In the case of policy staff tasked with budget and fiscal policy issues, wouldn't it make sense for them to actually worked at the Reserve desk of a bank, so they'd at least have seen existing monetary operations in action?

Has Tim Bernanke ever worked in an actual bank, at the Reserve Desk?  How about anyone on Congressional Budget or Banking committees?  How about Nobel Prize winning economists?

Intuituion is Meaningless Without Situational Awareness

commentary by Roger Erickson

In Germany, "Merkel is voicing the household analogy. It’s intuitive, MMT is not. That is the challenge we face." [Dan Lynch]

Who says existing monetary operations are not intuitive? By definition, existing operations are ALWAYS intuitive, that's how they end up being existing operations! It's not that the obvious isn't intuitive yet to some, it's just that those not yet finding it obvious haven't yet been exposed to the context that led people working in that area to come to obvious conclusions and practices.

Confusion over what is & isn't intuitive always reflects isolation, lack of communication, and lack of connections in a struggling organization.

You know, putting together what people from John Law to Marriner Eccles to Warren Mosler have said, plus what Robert Heinlein said, plus what Walter Shewhart said, plus what Dan Lynch said, above, [plus a little intuition :) ] we get:

"Data is meaningless w/o context. Therefore, what's intuitive is not intuitive w/o a proper grasp of context. Therefore, if you want to bamboozle most of the people most of the time, it's better if you don't let your marks catch on to actual context."  Otherwise, called "divide & conquer."

Grasp of context is what we call "situational awareness," hence the post title.

Why is it so hard to get individuals to examine context first, and data secondarily? It goes back to a saying by an 19th century naturalist: "People will do anything in their power to avoid thinking." Why? Because it's actual work. To think, one must burn calories, and people have multiple mechanisms for conserving calories unless absolutely necessary.

Why is it even harder to get whole groups to simultaneously examine context first, and data secondarily?  First, there's the extra work of alignment - called the "cost of coordination."  Second, there's the lack of exposure to the payoff, the return-on-coordination.

Reassessing context before interpreting data is an endless, indirect process further developed only with practice. It also requires a more agile - i.e., interconnected - mind to start with. That's why humans are better at it than most other species. And it's also why kids are better at starting it than adults ... but the habit grows & persists only if practiced - and can be completely suppressed with enough drill.

As a corollary, a group can't be agile if the group-mind isn't kept adequately connected.

Finally, thinking can be a very domain-specific habit. Angela Merkel had years of practice thinking about chemistry & physics - sometimes twice before lunch! Yet she may never have acquired the habit of actually thinking about operations in other areas, such as fiscal & monetary policy.

That's a bad sign, overall. When it comes to thinking, the best habit of all is to be fiercely independent about when to think, how much, how thoroughly, and how well. The glory really does go to those who find a better way, faster ... and there's currently no fiscal operations glory (and precious little overall) in either Germany or Greece.

Group thinking?  That's defined as the body of messages passing between the elements of a group mind.  Our group intelligence is held in our "cloud," our body of public discourse.   If that body of discourse on any topic isn't sampling enough diverse perspectives, across multiple disciplines, it can't claim to have enough situational awareness to adequately assess the implications for a group of any amount of data.

If we're going to discuss what's intuitive for one person, we have to also ask what's coherent intuition for a group mind?  That obviously depends on the amount of experiences, observations and discussion that are shared across statistically significant fractions of the group.

We're back to some simple truths.  First, every process is too important to be left to the presumed process owners.  Second, fiscal and monetary policy as an example, cannot be improved without widening the base of people and perspectives involved in the discussion.

What doesn't yet seem intuitive for too many people can only be solved by ending their isolation, and bringing them into the experiences, observations and/or discussion of contexts they're simply not yet adequately aware of.

Only then, intuitions in operations and policy circles converge to some form of adaptive common perspective.  Only then will our group situational awareness allow shared data to be more useful to us.

Economics: A Gaping Separation Between Theory and Operations

commentary by Roger Erickson



I've posted a longer essay on this topic, at Global Economic Intersection.

Since the two sites attract different readers & comments, the link is also posted here.