Sometimes in this blog, I dont finish sentences I start. Sometimes what follows is obvious or unimportant, and I may have something more important to
I generally just follow a freewriting style, and if you have any questions, just ask me directly. Email me: derek7mc@gmail.com
So the question is "why now?" Why is now the most important time to fix economics? Is it really that important for us to properly understand what interest rates really mean and how they work? If people could raise families, build homes, and solve problems in the past, even with a hazy understanding of finance, why not just move on with your life?
That point is true. In the past, proper understanding of finance was much less important. At one point in time, understanding how to be blacksmith or carpenter, or how to fight with a bowstaff would have been much more important than understanding whether interest is really just a "natural" cost of doing business, or whether it represents fundamental credit inefficiency.
That is my central thesis, that interest is just a form of credit inefficiency, and that in a perfectly efficient financial world, we would all just create our own money.
One major problem is, economists are trained to only think about scarcity, not costs. So if we are in a scenario without a fixed resource limit, economic thinking breaks down. The "economic problem" is often described as "How do we resolve unlimited ends with only finite means?"
Well, that makes it sound like the problem economics ponders is whether you want a pizza or calzone, a hamburger or a hotdog. In reality, economics is much deeper than that, it is about resource management within social systems. So economics is not about exclusively about "ends", and it does not only need to address "scarcity", it is concerned with the identity problem: "What are we?". Knowing how to use resources, is fundamentally about understanding your relationship to your environment. That is your identity.
In the modern world, logistical advancement and technological improvement have rendered many conventional notions of scarcity obselete, but they raise new issues. It is very easy for us to stop looking at nature, to ignore the natural world around us, and only focus on human accomplishments, and human wealth. But that is a mistake. If you lose the ability to move, walk, or run, you significantly limit what you can do. Lifting weights is not an obselete skill. Your strength determines to what extent you are dependent on a domesticated environment for your well being and protection.
We should constantly be nurturing and maintaining our "natural selves", our physical health, our ability to move and breathe, to sweat when the sun is hot, and shiver when it's cold. These are technologies, that we need right now, and we will continue to need in the future.
In society, firearm training may be more practical than bowstaff training, but legal training may be more practical still
This is the identity issue I am talking about. Are you dependent on your car to get to and from places? Could you shelter yourself? sanitize water? dispose of your waste? cook food? Can you do these things without the main piece of technology we rely on every day: Our homes?
Bleach and basic cloth filtering does a decent job of decontaminating water, but you have to know how much to use. 6% bleach requires 8 drops per gallon, and 8% bleach requires 6 drops per gallon. Then wait half an hour. If you need to shelter overnight in cold, collect plant matter you can sit on, to insulate yourself from the ground, and wrap yourself in whatever tarp/blanket, poncho layers you can. If you need to cook, well, you probably dont to be honest. It's more useful to be able to soak dried food in a water bottle like pasta. You can make coffee too without heat, but that shouldnt be a necessity.
But while we shouldnt ever abandon these basic skills, we cannot rely on them long term, not at the current population levels. Humans like all animals are territorial, which is why I dont support a land value tax. Territory was never meant to be democratic, and it never has been. Territory is the precursor to property.
Information systems are more impactful and powerful than ever before, and THIS is why it is 100% critical to have a deadly accurate understanding of what money and interest are, how they work in society, etc.
Economists play with numbers the way that a child might finger paint playing with colors. It is amazing how incompetent and useless their framework is. This isn't really a function of lack of intelligence though, its just a function of lack of real practice. Unlike computer programmers, which must debug small and large systems constantly, or mathematicians, which is really about creating sensible definitions of things, economists just are very uninitiated
Economists, it seems to me, are generally the "cool" nerds. The do decently well in math and science, but aren't really dedicated to those things. Take a look at Noah Smith on social media, or even someone like Paul Krugman or Robert Reich. Conventional status tends to be important to economists.
This isnt actually entirely true. There is a sense in which economists are good at taking on new perspectives. This is more in the behavioral vein, freakonomics type sense. If you take two random variables, and suggest there might be a connection, economists can get pretty creative in imagining how those might be related. But this fails miserably when you ask them to rethink their entire framing of basic definitions. Then they fall flat on their faces.
So if you suggest drug use in tanzania might be related to over fishing in australia, economists will jump all over that like busy bees. The only problem is, this isnt really particularly useful in the long run. Its more of a fascinating exercise. This is why freakonomics is one of the best books on economics written by an economist. Because economists arent good at economics they are good at statistics.
Well statistics isnt particularly useful in understand information systems, because mechanics is much more important. Computers have a high degree of reproducibility and complexity. It's easy to run experiments. But you quickly learn that those experiments cant be all over the map. They have to be focused on the core mechanics, because you can be testing and debugging stuff all day.
People with these kinds of skills do not go into economics. They typically do not understand the appeal of being an economist, which is about free status based on nerd flexing. Their creativity is discombobulated and irrelevant. People with these skills, go into computer science, engineering, or hard sciences. Economists are frequently people who dropped out of these pursuits, because they were too hard.
What's actually impressive, is that Kenneth Rogoff is a high rated chess player. The fact is, chess is a more mechanically complex simulation of a social system than anything economists really deal with. So the issue is not that there aren't any smart economists.
Chess and face cards are more nuanced economic simulations than most modern models. The first thing these games do, is teach about class and rank. Class and rank affect all the dynamics.
Economists as obsessed as they are with prices, they aren't actually in the business of pricing anything themselves. This is why they don't understand MMT. They couldn't even try to price a countries currency or outstanding bonds. The mechanics of debt is not about valuation, but perception and circulation. I will go into this more in a new post about "scary numbers". Suffice it to say, inflation is a derivative of a reciprocal disaggregate(of total debt). Total debt becomes dollar purchasing power(disaggregating), then you reciprocate that (dollar depreciation becomes cost inflation), then you take the derivative. All these steps turn a sane comprehensible number for measuring a cost phenomenon, into an erratic perception based quantitative nightmare.
MMT talks about price level. That's the first sign they have a sane theory of, well prices.
Economists don't price anything, they just are in the business of ascribing causes to price changes, without any accountability for actually being right or wrong. "We can't do real experiments, just guess you'll have to pay us money to fingerpaint with numbers".
If you thought, inequality, incoherent policy, stupid wars, and propaganda were bad from 40 years ago, you aint seen nothing yet. Information systems will not fix your logic for you. They take whatever logic you are using, and accelerate and amplify it. They allow you to do it bigger and faster and in more places.
THIS is why "ECONOMICS NOW!!!" We can't tolerate bullshit logic and tea leaf statistical methodology any longer. We need design, and people good at making definitions, and not empirical wizardry for dissecting inscrutable relationships. Throw those NAIRU smoking motherfuckers out of the window, defenstrate them(with cushioning to catch their fall). We don't need to harm economists, we just need to embarass them out of their fucking jobs. This is a war of pure logic.
Fuck economists. GTFO. You are good at talking, but can you code fucking fizzbuzz? If not, I promise you, you have no business making policy recommendations or trying to describe how interest rates work.
Interest IS credit inefficiency. ECONOMICS NOW!!! Interest is credit inefficiency. ECONOMICS NOW!!!
In the past, we could get by with loose ideas of what finance was, how debt works, and how money gets created. We had smaller populations, less powerful technology, and we were tied more closely to the land.
You should definitely learn basic survival skills, but that's a short term stopgap. You can't fight off a juggernaut by learning to build a composting toilet to shit in a bucket. Stop the lies about interest rates NOW. ECONOMICS NOW!!!