What kind of aggregate is afraid of it's own shadows? Essentially, a moronic one.
We desperately need growing populations to grasp - by mathematics alone - that aggregate capabilities and options are NOT constrained by derived accounting metrics.
"Let's look at the substance, and not the shadow." Marriner Eccles, Fed Chief, 1938
All currencies, by definition, are simply the data thrown off by interacting citizens, not the inverse.
"The substance of our wealth is the production of our [citizens]. The shadow is our money."
Now, as in 1938, the heads of our banks and banking organizations are the LEAST systemically educated of our citizens, and it remains for us to explain to them the difference between shadow and substance, between nominal and real.
Human aggregates everywhere are constrained primarily by confusing derived with real feedback signals. It is up to all of us to systemically educate our many specialists, so that they may keep sight of growing context, and not get lost entirely within their various data streams which are producing as many incidental shadows as relevant feedback signals.
Any naive or isolated person can be easily impressed by big numbers. It requires education, training and practice to keep track of what those mean for real contexts.
Imagine how good it will feel when the moronic aggregate stops pounding it's head against it's own fiat!
Let's look at some real examples.
Scary Numbers, example #1.
Soon after you started as a single egg cell, if someone had told you that your "Inter-cellular Signalling Debt" would soon be overwhelmed with the responsibility for 40 Trillion new cells, would you have stopped growing, and laid off all your cells?
In what order? Red blood cells first, then all the other 300 subtypes, in some imagined order of aggregate value? Some humans saw this dis-unity problem coming long before we were even aware of cells to count but never quite enough to assuage our aggregate fear of aggregate shadows.
Scary Numbers, example #2.
Currency supply.
How does a currency supply work? It "denominates" all the transactions citizens can and will muster. Hence, currency supply has to grow, as a derived "shadow" (record keeping) for real citizen transactions. When any & all desired transactions can be denominated without spurious constraints, then the return on coordination is truly stupendous, as Benjamin Franklin noticed early on. OVERLY constraining a currency supply has, of course, dire consequences, then and now.
Given simple realities, what currency supply might we need today, with the many types of our 330million residents? The answer clearly depends entirely upon:
1) the rate of transactions,
2) the number of transaction types, and
3) the unconstrained distribution of transactions (so that any novel transaction chain can be created, upon demand).
As a start, just imagine that every citizen did execute just ONE sort of $1 transaction with every other citizen - per year. In that case, the year-to-year currency supply REQUIRED for rapidly denominating aggregate transaction completions would be N-factorial dollars (i.e., each citizen does a transaction with 3.9 million others in 1790, or 330 million others in 2015).
Population N-factorial in 1790 would be 3.9million factorial, (a truly big number).
Population N-factorial in 2015 would be 330million factorial, an even far larger number.
What would 330million factorial be? Awfully big. So big we don't even have everyday jargon for naming numbers that large, which are way past the $10-to-$75 trillion commonly described as circulating dollar-denominated assets (M2 + debt).
A fiat currency system addresses this scalability task by continuously & asynchronously creating & destroying "dollars" (denomination units), in multiple, dynamic ways, including loan creation, loan-repayment, fiscal spending, and taxes, while (supposedly, pending national policy) placing no control over the absolute number of transaction units available to denominate transactions.
The only thing we have to fear is fear of the number of accounting numerals we use? Seriously?
That final task, accounting, is essentially all that a banking system is required to do. It's very simple, actually. Bankers & economists are the only ones who can't seem to see their function for their imagined complexity!
Yet we clearly are not growing our currency supply anywhere as fast as we could, if we removed all constraints on citizen interactions and transactions. That's a problem.
We are holding ourselves back, essentially withholding fiat (public initiative). What are we afraid of? Our aggregate shadow? Afraid of what our kids may invent next? (If we LET them, anyway.)
What kind of fool tries to save (too much) initiative, aka, fiat, aka, fiat currency?
That's like accumulating energy, or fat, unused, in the hope that you can make better use of it later. As with all things, there are rather tight tolerance limits on the utility of hoarding initiative. The more of a resource you hoard, the less agile you are in wielding it's use. Yet if you have none, you're also not agile.
Soon after you started as a single egg cell, if someone had told you that your "Inter-cellular Signalling Debt" would soon be overwhelmed with the responsibility for 40 Trillion new cells, would you have stopped growing, and laid off all your cells?
In what order? Red blood cells first, then all the other 300 subtypes, in some imagined order of aggregate value? Some humans saw this dis-unity problem coming long before we were even aware of cells to count but never quite enough to assuage our aggregate fear of aggregate shadows.
Scary Numbers, example #2.
Currency supply.
How does a currency supply work? It "denominates" all the transactions citizens can and will muster. Hence, currency supply has to grow, as a derived "shadow" (record keeping) for real citizen transactions. When any & all desired transactions can be denominated without spurious constraints, then the return on coordination is truly stupendous, as Benjamin Franklin noticed early on. OVERLY constraining a currency supply has, of course, dire consequences, then and now.
Given simple realities, what currency supply might we need today, with the many types of our 330million residents? The answer clearly depends entirely upon:
1) the rate of transactions,
2) the number of transaction types, and
3) the unconstrained distribution of transactions (so that any novel transaction chain can be created, upon demand).
As a start, just imagine that every citizen did execute just ONE sort of $1 transaction with every other citizen - per year. In that case, the year-to-year currency supply REQUIRED for rapidly denominating aggregate transaction completions would be N-factorial dollars (i.e., each citizen does a transaction with 3.9 million others in 1790, or 330 million others in 2015).
Population N-factorial in 1790 would be 3.9million factorial, (a truly big number).
Population N-factorial in 2015 would be 330million factorial, an even far larger number.
What would 330million factorial be? Awfully big. So big we don't even have everyday jargon for naming numbers that large, which are way past the $10-to-$75 trillion commonly described as circulating dollar-denominated assets (M2 + debt).
A fiat currency system addresses this scalability task by continuously & asynchronously creating & destroying "dollars" (denomination units), in multiple, dynamic ways, including loan creation, loan-repayment, fiscal spending, and taxes, while (supposedly, pending national policy) placing no control over the absolute number of transaction units available to denominate transactions.
The only thing we have to fear is fear of the number of accounting numerals we use? Seriously?
In fiat currency, we have found a way to make our IOUs, and count them too!
That final task, accounting, is essentially all that a banking system is required to do. It's very simple, actually. Bankers & economists are the only ones who can't seem to see their function for their imagined complexity!
Yet we clearly are not growing our currency supply anywhere as fast as we could, if we removed all constraints on citizen interactions and transactions. That's a problem.
We are holding ourselves back, essentially withholding fiat (public initiative). What are we afraid of? Our aggregate shadow? Afraid of what our kids may invent next? (If we LET them, anyway.)
What kind of fool tries to save (too much) initiative, aka, fiat, aka, fiat currency?
That's like accumulating energy, or fat, unused, in the hope that you can make better use of it later. As with all things, there are rather tight tolerance limits on the utility of hoarding initiative. The more of a resource you hoard, the less agile you are in wielding it's use. Yet if you have none, you're also not agile.
It's the dynamic tolerance limits, stupid!
Our aggregate limitations are organizational limitations, imposed by lagging technical capabilities and aggregate training and practice, but NOT by the size of the numbers used to count the ongoing interaction messages, or "currency" units we use.
So, in 1790, what if someone had pointed out the colossal number of dollar bills we'd be responsible for managing one day, once our population reached 330 million, today? Should we have panicked at the sheer size of that fiat number, laid off all workers, and decided to stop all population growth (or cultural evolution) right then and there, at 3.9 million?
Lay off workers? Isn't that what we routinely do? In which order? We have thousands of types to choose from. All necessary but not sufficient, and all must be adequately provisioned if we're to increase national resiliency as well as agility. Is laying off workers a sign of aggregate intelligence?
Not if, like the proverbial egg cell, we wanted our culture to keep growing.
If there's one thing that defines American Exceptionalism, it is our historical ability to almost maintain an understanding of the power of fiat currency, and return on coordination.
Note that maintaining that perspective was a constant battle, waged largely as class war. The US currency supply was highly politicized from the onset, in two key developments, notably championed by Alexander Hamilton and the largely British Banking Lobby. The politics of money is, in reality, inseparable from class war, clan competition and frictions between individuals.
Whatever the class politics, in 1790, ~4 million citizens started our post-war currency system, printed and circulated, out of thin air, what we can call (for the sake of argument) the first $80MILLION dollars of IOU notes for prior debts alone, ignoring everyday transactions. Today, we're afraid of denominating another trillion dollars of transactions? So afraid that we're instead limiting our real interactions and NOT exploring our emerging aggregate options?
What should we be more afraid of?
Such people are a threat to themselves, as well as to their own aggregate. To evolve, we have to save them from themselves, as part of saving ourselves.
After all, what's more valuable, current fiat, or future options? Isn't the point to optimally combine the two? It boils down to what your definition of "value" is. Possessions here & now, or future survival of your lineage.
No comments:
Post a Comment