Go Money, Go! -- Why Faster Currency Is Better Currency

Everyone should already be familiar with the negative-interest currency of Worgl, Austria, and the known effects of demurrage. Effects such as being an intrinsically loose money policy (forcing government to rely on fiscal policy and work restrictions to prevent asset inflation, as it should!), realigning the discount rate towards a socioeconomic level and a future-orientation, decoupling currency interest rates from asset interest rates, and allowing the limited production of free money (free of inflation and debt). This post addresses lesser-known effects of increasing the velocity of money.

Inflation is the product of the quantity of money X its velocity exceeding the value of the goods and services in the economy. Theoretically, if you increase the velocity of money you need to decrease its quantity to get the same inflation. However, inflation is only one measure of the health of the economy. Unemployment is another.

As it happens, unemployment is not affected by the quantity of money changing hands as much as by its velocity. So increasing the velocity of money takes care of little problems called 'depressions'. Especially if you can do it in a debt-free manner (without putting yourself in hock to creditors) and without inflation.

Intuitively, circulating and causing exchanges is the FUNCTION of currency, so the higher the velocity of a currency, the better it is at being currency. But so much for intuition. Let's look at all four ways in which faster velocity is a good thing:

• overhead
• nucleation from stagnant pools, hoarding
• high velocity jobs
• taxes

Overhead

If you have two currencies A and B and A has a velocity 10x that of B then you can choose to inject either 10,000 of A or 100,000 of B into the economy. Now when you inject money into an economy you usually go through bankers. Either the Federal Reserve Banks or foreign creditors. So if you choose to inject 10,000 of A then you'll owe the bankers maybe 1,000 (10%). If you choose to inject 100,000 of B then you'll owe 10,000 (10%) or 10x as much. This despite the fact that 1 A == 1 B, it's just their velocity is different. Now which would you rather owe, 1000 or 10,000? Of course, this was assuming you go through bankers instead of simply printing the money and spending it, which you can do. But even if you print the money and spend it, printing costs you. And printing 100,000 B costs 10x as printing 10,000 of A. For the exact same effect.

Nucleation

One of the effects of having slow currency is that you end up with large standing (stagnant) pools of currency. This is called "savings" and is supposed to be a good thing. Except it's not, it's a really bad thing. Because it is NOT savings. What it is is hoarding. The difference between savings and hoarding is that savings includes investments and hoarding excludes investments.

So those stagnant pools of money are not doing anything for the economy. They're not being spent and they're not being invested. Now since you're printing so much more money, you'd think those stagnant pools of money wouldn't matter ... except they do. Because currency behaves somewhat like a liquid.

Let's think on that for a minute. Money doesn't behave like a gas because it seeks its own level of return and doesn't fill the space of economic activity equally. Money also sticks together instead of automatically dislodging other money. And most relevant for our concerns, money can undergo a phase transition called a 'depression' where it freezes.

Now as everyone knows from physics classes, freezing occurs around impurities and around already-frozen nucleation sites. So basically, by eliminating all stagnant pools of money and by heating up the money, you are massively increasing your buffer against freezing (depressions). This is a Good Thing.

High Velocity Jobs

Are there any businesses that become viable only with high velocity money? Naively, you wouldn't expect any since businesses still receive money at the same rate either way, and each business chooses for itself how much money it hoards. But upon closer analysis, increasing the velocity of money by setting a floor under it does have some effects on businesses. Specifically, it has effects on businesses that extend credit to their customers and depend on payments.

The reason for this is that by setting minimum velocities for money, customers have an enormous incentive to avoid putting off payments. So long as they have money on hand, they have an incentive to pay off their debts rapidly and promptly. Payments may still be missed if customers don't have money on hand, but they will rarely be late. This greatly reduces the risk for a business that extends credit because they can expect a much smoother and steadier stream of income.

And because of that more predictable income stream, the business needs to keep less money on hand for its own purposes. It can operate under tighter margins, with less overhead, and be more efficient. Thus some marginal businesses that would not exist with slow money, do exist with fast money.

Taxes

One of the surprising consequences is that government and government utilities are such businesses. While government can't typically go out of business, it can end up compelled to lay off people as a result of tax arrears. And as it happens, this is exactly what happened in Austria during the Great Depression and the exact opposite of what happened in Worgl thanks to its negative-interest currency.

George W Bush is the new Hitler

It's official folks, GWB is the new Hitler. A variant of Godwin's law has just been made for him.

Plenty of Jobs left to do in the Old Economy

Ahh karma economies, they are wonderful things. If you haven't already done so, you may wish to read Michael Goldhaber's essays on The Attention Economy on First Monday. An attention economy is evolving right now. Attention economies also figure prominently in fiction such as Elf Sternberg's Journals of Kennet Ryal Shardik.

But there's plenty of life left in the old material economies. Especially if we remove some of the perversities heaped upon them. For example, by substituting a decentralized negative-interest currency such as was used in Worgl, Austria to lift it out of the middle of the Great Depression. The bankers wouldn't like that though. Fuck 'em. Such a currency is necessary because there are still a million different jobs to be done in the physical economy. And millions of people unemployed or underemployed or badly employed that could perform these jobs.

A few thousand nuclear reactors have to be built across the planet. Thousands of kilometers of high speed rail track has to be laid in North America alone. Thousands more kilometers of subways and tramways. Fiber optic cables to every home. Sewage systems have to be rebuilt, water treatment plants completely redesigned, desalination plants built in the hundreds if not thousands, the electric supergrids have to be completely revamped. Tens of thousands of parenting centers have to be built. Entire cities have to be built in developing countries, and rebuilt in the USA. Undersea mining of copper and iron ores.

And just for fun, a nuclear-powered Orion spaceship, rebuilding the capital sector to use amorphous metals, 3D printers, and rebuilding companies from the ground-up on an anti-authoritarian basis.

There's no lack of meaningful, valuable things to do. There's no lack of resources with which to do them either. There's plenty of uranium lying around and with that uranium there's plenty of copper and zinc and everything else. There's plenty of potential workers going spare in useless sectors like the military, management, police and the law. They're just being wasted by a financial system that doesn't give a damn about creating meaningful wealth. It's time to change that.

1984's Oceania in 2007

I've often said that totalitarianism and authoritarianism are fully in line with the history and ideals of the USA. The reason Americans don't see this is because of certain other history and ideals of the USA. The history of propaganda and brainwashing.

The USA is an Orwellian nation so just about every single word in Americans' political vocabulary has been twisted and redefined in a way that makes the USA look better. Political words, as Americans know them, are out of line with their meanings as understood by the rest of the human species. They are useless for meaningful communication and only serve to glorify the USA.

So for instance, in the English language 'authoritarianism' means obedience to others' will. In the American language it means something quite different. It means collectivism. Thus, private property which is everywhere regarded as a deeply authoritarian and indeed totalitarian concept, doesn't raise an eyebrow in the USA. Meanwhile, collective endeavours like single-payer healthcare or mass transit or firearms regulations are regarded as "authoritarian" in the USA.

Going on, freedom (redefined as power), democracy (plutocracy), patriotism (fascism), liberty (egotism), free speech (apathy), human rights (civil rights). That last is an interesting one. As everyone should know, and a few people do know, the USA is one of a very small number of nations on this planet that refuses to even so much as recognize human rights. Americans buy into an obsolete and discredited 17th century theory of "natural" rights which none of the rest of the world believes. So-called "natural" rights are gibberish whose "justification" is a primitive State of Nature (ie, anti-civilization).

Furthermore, the American word "liberal" has no analoguous word in the English language. Everywhere else, classical liberals, neo-liberals, and just plain old liberals are right-wingers. Liberalism is an inherently right-wing ideology. As a result, American "liberalism" corresponds to no word in the real political landscape ... except for the term anti-fascism. So if Americans spoke English they would have to admit that their country has been on the brink of fascism continuously for many decades.

Another good example is the USA's being the only country hypocritical enough to use "free speech" as a code word for "end of conversation". How many times do people ritualistically say "I disagree with what you say but will defend with my life your right to say it" when they really mean "I don't give a fuck about what you say, it's never going to change my mind"?

The USA's attitude towards human rights far surpasses hypocrisy. It's a blank stare of non-recognition. Americans don't even comprehend the notion of universal human rights. And when they are told the human rights, they object that "those things aren't human rights!"

The Americans' use of NewSpeak instead of English is itself evidence of a deeply authoritarian culture. Admittedly, it's impossible to say this within NewSpeak errr American so we have to use English! So in the English language, it is fair to say that the USA is a deeply authoritarian culture and has been so since the Great Awakenings which have turned Americans into a nation of total control freaks. The current fad towards overt despotism was begun more than a century ago, not a few decades.

Magical Thinkers

The magical thinker has a complex of symptoms and deficiencies which is variously called Romanticism by David Brin, or Intuitionism, or Intuitive thinking, or Magical thinking, or when I'm feeling pejorative, monkey thinking. They are incapable of reasoning about abstractions because they have a mental handicap similar to but infinitely worse than dyslexia.

A dyslexic sufferer perceives the world as having symbols (barely above perceptions) to be jumping around and not staying still. They'll look at a page and the letters and numbers will be shifting. An extremely strong dyslexic would be incapable of learning to read.

Magical thinkers are much worse off because it isn't symbols that are jumping around but raw concepts. Just like a dyslexic can't read because the letters keep moving, so a magical thinker can't reason (assemble and disassemble ideas out of concepts) because the concepts keep moving around in their head.

Because of this they rely on pseudo-thinking, or lower-level thinking. This lower level thinking, the first three levels of Bloom's taxonomy of cognition, consists of strictly applying the concepts already in their possession. Basically, they are rearranging their prejudices and fitting concrete perceptions to already existing abstractions. Since assimilating (creating) new abstractions is as painful to the magical thinker as learning to read is to the dyslexic (except you only learn to read once) the magical thinker avoids forming new abstractions at all costs.

As a result of this, the magical thinker relies completely on a given set of 'received' abstractions. Abstractions like "nigger". Bingo, there you have racism. But also abstractions like "soul". It should interest you to read Jesse Bering's The God Fossil. Essentially, belief in souls (conservation of qualia / permanence of consciousness) is either innate or learned extremely early. It is only as a young child that most people abandon this belief.

Magical thinkers evidently can't discard such a concept because they 1) rely on it too much, or 2) can't assimilate structural identity. Structural identity by the way is the understanding that a molecule of CO2 is absolutely identical to any other molecule of CO2. Not "the same kind" but absolutely identical. Many (most? all?) magical thinkers cannot understand this concept. They believe that a molecule of CO2 has an essence that designates its identity. That it has a soul.

Other non-abstract "abstractions" which magical thinkers rely on and never learn to discard include emotions and anthropogenic thinking. You see this when religionists anthropomorphize the physical universe in a god. You also see this in eco-zealots when they anthropomorphize nature. Think of Mother Nature, Gaia, "nature will punish us", blah blah blah. You see this also in animal "rights" activists. The notion of assigning morality or rights to animals is self-contradictory gibberish because animals can't reason. That doesn't stop animal "lovers" from saying that animals are "just like us". Or hey, maybe they are. Maybe animals are just like them. Which would give us humans leave to slaughter them like cattle.

That's another problem with magical thinking. Because it is so unsophisticated, it is highly symmetric. It's based on raw associations, correlations, and not more complex asymmetric relations, causations. And the arrow of causality usually doesn't run the way the magical thinker would like it to.

Furthermore, since magical thinkers are incapable of reasoning, but sometimes capable of synthesis, it stands to reason that they would fuck up synthesis. That is, they do not comprehend synthesis. This explains why magical thinkers routinely confuse insight (a product of synthesis) with gibberish. Literal gibberish, sentences that do not have any meaning because they are either not well-formed or are self-contradictory. Generally, magical thinkers do not recognize self-contradiction because they cannot apply modus ponens. The deep magical thinkers think that contradictions are insights. For example: the Mystery of Christianity which is their "three in one" god. "mystery" is just a euphemism for gibberish.

Now consider the fact that magical thinkers confuse gibberish with insight, and that they believe in souls. Suddenly you have spirits and ghosts. If you actually reason about spirits you will realize why they are gibberish. Spirits are not actually non-corporeal because can be seen and affect matter. But they are also not corporeal because they can pass through solid objects. They're gibberish.

The interesting question is why this particular gibberish came about. The answer to this can be found in Lloyd deMause's Foundations of Psychohistory. Humanity was born deeply psychotic and hallucinatory. Hallucinations have many of the traits ascribed to spirits.

The same answer can be found in Julian Jaynes' The Origin Of Consciousness since human beings living three millenia ago constantly hallucinated gods and other divine beings. It was an efficient way for one hemisphere of the brain to communicate with the other hemisphere. And indeed, this explains the importance ascribed to numerology and incantations. Numbers and letters, symbols, are powerful Magic to primitive people. Because they fulfill the crucial function of intra-cranial communication.

Symbols, together with souls, constitutes the whole foundation of any mystical system. Think of JRR Tolkien's fondness for languages and his reliance on Spirits to describe LOTR's cosmogeny. So we see that this explanation describes a great many phenomena.

But the reason why I dragged out Jaynes and deMause is to outline a simple fact. Magical thinkers rely on thought processes and on "abstractions" which have reached us *from the dawn of time*. I do not believe the concepts involved are actually abstract, they are far too innate.

And since magical thinkers are incapable of reasoning and usually incapable of insight, since they depend on others for the few abstractions they can memorize by rote, this explains their obsession with Revelation. And since they have no ability to reason, since they are incapable of evaluating truth, since they have no access to truth, it also explains the various Relativisms. Especially intellectual relativism, where supposedly objective truth does not exist. Recognizing the existence of objective truth would require them to accept they are mentally handicapped and intellectually inferior.

Why Europeans Are Irreligious

The more different religions there are, the more power they all have. Religions thrive on conflict and they smother themselves during peacetime. This is seen from the Americans' great diversity of religions and the Europeans' habit of state religion.

And really, how could it be otherwise when a single religion will never fulfill everyone's psychological needs? Multiple religions do not cancel each other by offering "options", they cover each other's lapses, preventing anyone from leaving the religious system.

But there's more. The state religions of Western Europe have transmuted into atheist religions. In France, state Catholicism transmuted into Gaulism. Quebec underwent something similar during its Quiet Revolution. Both are a belief in the power of the state to do good and an expectation that it actually do so.

Ironically, this "naive" belief in the goodness of the state leads to more effective (beneficial) control of the state by its people than the knee-jerk suspicion and animosity that is so common in Anglo countries. People will rise to your expectations or lower themselves to them. You just have to very strongly and consistently expect good out of states.

So the European State fulfills most people's need to subsume themselves in a power hierarchy. And that's why Europeans don't need to invent religions. Because they already have a religion which fulfills their psychological and all of their material needs.