[GJM] Michael Hudson and binary economics

[Rodney Shakespeare]

Dear All,
I notice that in the correspondence below there is a reference to a new book from Michael Hudson and binary economics.

For about a year Michael Hudson made intemperate and  malicious attacks on binary economics the more intemperate and the more malicious because he had not only got things completely wrong but could not be bothered to read the main binary book (by Ashford & Shakespeare) which was in his possession.  He eventually admitted (but only in private correspondence) that he was wrong, however, I am far from confident that he will not revert to his usual practice of unsubstantiated and vituperative attacks on binary economics in his new book.  

It is noticeable that attacks on binary economics are increasing and that is because it is making good headway. For example I have just returned from teaching binary economics at Trisakti University, Indonesia and the number of universities will be extended and The Modern Universal Paradigm will be published in a week or so and The Universal Paradigm and Islamic World-System  at the end of this month.

In the meantime a clear account of binary economics (against which Michael's book can be measured) will be found at www.binaryeconomics.net.

List members may also care to ask exactly what it is that Michael himself wants to propose.  Is he still a Georgist (but he quarrelled with the Georgists) or is he a Social Crediter (but Stephen Zarlenga quarrelled with Michael's fiefdom -- the gang of 8). 

Indeed, is Michael one of those who attacks and quarrels with everybody else but, because of intellectual muddle,  does not dare put forward a coherent view of his own?

We shall see.


Rodney Shakespeare.




----- Original Message ----- 
From: "Steve Consilvio" <steve at behappyandfree.com>
To: "AMI" <ami at taconic.net>
Cc: "list, Federal-Debts" <federal-debts at topica.com>; "List,Discussion Forum for Global Justice Movement" <Discussion at globaljusticemovement.net>; "List,Cyberspace Society" <cyber-soc at topica.com>; "List, Debt" <Debt at topica.com>
Sent: Thursday, July 19, 2007 6:52 AM
Subject: Re: [GJM] Announcement: American Monetary Institute conference


Dear Stephen,

Thank you for providing the link to your recent presentation to the  
Greens.  I have been wanting to get a better understanding of your  
ideas, and that was a good review.

I hope you won't mind some constructive criticism.  I'm just going to  
list them off from my notes, so they may seem a little choppy and  
blunt, but they are meant kindly.

1. The changes you recommend do not expect any changes in the  
behaviors of individuals.  Most reforms forget what Gandhi taught us:  
for change to take place, it must occur at the individual level  
first.  The marketplace of buying and selling for profit (in contrast  
to a marketplace of trading evenly) continues unabated.

2. Fiat money by the government is the same as fiat money by a bank.   
Changing who issues the money doesn't really change anything.

3. The lack of transparency in the government is equally  
problematical as the lack of transparency in banking.

4. It doesn't matter where you put the money, a thief will try to  
steal it wherever it is.  The same is true of corruption from the  
inside.  The bank is a lot smaller than the government.

5. Inflation is the "re-numbering" of goods.  We see this at the gas  
pump regularly.  Nothing in your reforms address the way people do  
business.  (Binary Economics at least makes an attempt.)

6. Inflation is caused by profit, not by manufacturing goods.  A good  
exists regardless of the value applied to it, and the same is true of  
labor.  If we cannot afford to fix our infrastructure it is because  
we have assigned values to things so that we cannot afford them.   
Even the rich pay high prices.

7. Your dismissal of Marx was startling, and Aristotle believed that  
slavery was part of the natural order of mankind.  I would be careful  
about quoting Aristotle as some sage regarding money.  Most people  
want a peaceful and equitable society, but they are not willing to  
give up their own advantages to do so.  (See #1)

8. Too much of your presentation is spent demonizing or worshiping  
certain thinkers, rather than taking their ideas and analyzing them  
within the context of their times.  You grossly misunderstand Robert  
Morris, who is really the lynchpin of American history.

9. There was nothing glorious about the American Revolution.  It was  
a result of the economic practices of the time, just as Iraq is  
today, and the battles between Sparta and Athens were then.  It is  
the inability to trade fairly that is at the root of the problem,  
money is just an abstraction of the transaction.  Money invites in a  
third party, it doesn't matter who coins the money (private bank or  
government,) the fiat money complicates the transaction, even though  
it is supposed to make it go more smoothly.

10.  The Great Depression was not good for anybody.  The Fed is the  
First National Bank.  Painting the house and rearranging the  
furniture doesn't mean much.  The shifting from state to federal  
banking is also minor in the big picture.  Decentralized bumbling  
decisions are not qualitatively different than centralized bumbling  
decisions.  The Fed bumbled into The Great Depression, bumbled out,  
and is still bumbling today, but they did not create the intellectual  
agreement we call money. That has been around for thousands of years.

11.  Wampum may have been a better way of creating an exchange  
species.  If everybody could coin their own money, maybe a free  
market could actually work.  Then the decision to accept the wampum  
or not would be based on the personal relationships of the people  
involved, rather than the weight of law and "legal tender."  It would  
render both the bank and the government moot.

12. Short-selling the Mark before WWII is similar to what America is  
doing to Iran today.  Chances are a similar attempt at ill-gotten  
wealth was behind WWI as well.  As long as there are national  
currencies, war will probably continue.  Your reforms simply don't  
have the reach that you hope they will.

13. The coining of money is not nearly as important as how we use the  
money.

14. The belief in a central bank was tied directly to the belief that  
it would make war easier to finance.  Not surprisingly, it has made  
it easier for the central government to conduct war.  The Founding  
Fascists (Paine, Jefferson and Franklin among them) got their wish.   
You underestimate the role of fear and pride in your economic  
history.  Money is like a cancer in our imagination.

15. You use fear as a justification for your ideas.  The threat of  
nuclear annihilation is combined with the idea that only a central  
government can coin money or build a levy.  The levy was built so it  
would make the land more profitable.  We are arrogant in thinking we  
can control nature, and we are not helpless if we don't have a head  
moron to genuflect to. (The global warming brigade shares the same  
arrogance- now liberals stand on street corners saying that the sky  
is falling.  Pollution is not the same as global warming.) Fear  
arrives in many many layers; the inflation and concentration of  
wealth (which are mathematical phenomenons, not a conspiracy) lead  
people to search for blame, rather than for answers.  Blaming the  
rich is an empty idea; there is more going on than just luck or  
ambition.  Economics is a mathematical science.

There are, of course, a lot of things about your presentation that I  
found intriguing.  There is a lot more that I would like to know  
about some issues.  It is obviously a very condensed version of the  
material your book covers.  I'd really like to know more about  
fractional reserves and what you meant by Sparta "finding out."  It  
is important to understand how the Fed thinks so we can teach them  
how wrong they are.

In closing, you can be a lot more radical in your thinking.  Don't  
stop testing your own ideas while studying the ideas of others.   
There was a time when I blamed everything on Robert Morris, but now I  
see him as he truly was, and his tragic story is a good metaphor for  
everything we have experienced since.  Good intentions don't always  
lead to good results.  I am not a victim, I am also part of the  
problem, as we all are.  Keep testing.

peace,
steve consilvio
www.behappyandfree.com

peace,
steve

On Jul 18, 2007, at 8:55 PM, AMI wrote:

> Dear Curtis and All,
> Thanks for your email Curtis. I'm answering so that the various  
> people on the list you copied to do not assume that I or the  
> American Monetary Institute supports what you call "Binary  
> Economics." We don't. Michael Hudsons new book discussing this will  
> be interesting to you.
> Sincerely,
> Stephen Zarlenga
> Director, American Monetary Institute
> P.S. You and your friends can see what the AMI does propose by  
> checking out my recent July 12th one and a quarter hour talk at the  
> Green Party's National Convention, by going to http:// 
> www.monetary.org/greenpartytalk.html
>
>
> W. Curtiss Priest wrote:
>
>> [reader:  see "Fraud, Farce and Foreclosures" below]
>>
>> Dear Steve,
>>
>> Stephen Zarlenga is, at the least, a positive force.
>>
>> Yes, those who work for the government are much too
>> comfortable.  A college friend retired at age 55 from
>> the GAO, wealthy and well pensioned.
>>
>> Yes, few at MIT, etc., understand.  But, do read
>> Kindleberger, who, prematurely I sense, saw the plague
>> of cycles.
>>
>> A solution?  Pay the proceeds of productivity gains back
>> to the workers.  (see "Binary Economics," "Social Credit")
>>
>> So, a good role for government.  Do that transfer.
>>
>> Regards,
>>
>> Curtiss
>>
>> Steve Consilvio wrote:
>>
>>> Dear financially-concerned,
>>>
>>> Consider attending the 3rd annual AMI Monetary Reform Conference
>>> in Chicago at Roosevelt Unversity, Sept. 27-30:
>>>
>>> http://www.monetary.org/2007conference.html
>>>
>>> AMI, headed by Stephen Zarlenga, is a needed voice amidst
>>> the ignorance and confusion about money.
>>>
>>> Regards,
>>>
>>> Curtiss
>>> Editor, CITS Capital & Debt Watch
>>>
>>> Hi Curtiss,
>>>
>>> From what I can tell, Stephen Zarlenga is also ignorant and confused
>>> about money.  He does, however, approach it with an open-mind and a
>>> critical eye that is lacking in too many corners.  Most people just
>>> want to accumulate wealth, not understand it.
>>>
>>> What follows is a brief essay I wrote recently.  Getting it  
>>> published
>>> is practically impossible, given what it says.  But I think you  
>>> might
>>> agree that the biggest problem with money is the concept of money.
>>> MIT, by the way, along with Harvard and Yale, are one the biggest  
>>> and
>>> original sources of the problem in modern times.
>>>
>>> There is a huge gap between compassion and virtue that needs to be
>>> addressed.  You are in the belly of the dragon.  :-)
>>>
>>> peace,
>>> steve consilvio
>>> auburn, ma
>>> 774-272-1430
>>> www.behappyandfree.com
>>>
>>> Fraud, Farce and Foreclosures
>>> by Steve Consilvio
>>>
>>> It should not be to hard to get everyone to agree that the State
>>> creates winners and losers.  Bill Gates is the richest man in the
>>> world primarily because of sales to the government. “We the People,”
>>> pay taxes, and that money, in huge sums, goes to the coffers of
>>> Microsoft.  This is similarly true of Haliburton, Bechtel,  
>>> builders of
>>> schools, suppliers, the teacher unions and state workers.  As a
>>> entreprenuer, I am supposed to think this is great.  There are  
>>> lots of
>>> government contracts available, and I have the opportunity to get  
>>> rich
>>> by impoverishing my neighbor.  As a citizen, however, I am a  
>>> victim of
>>> the same system from which I feed.  Thomas Paine described this same
>>> exact situation 230 years ago when he wrote:
>>>
>>> “Society in every state is a blessing, but government even in its  
>>> best
>>> state is but a necessary evil in its worst state an intolerable one;
>>> for when we suffer, or are exposed to the same miseries by a
>>> government, which we might expect in a country without  
>>> government, our
>>> calamities is heightened by reflecting that we furnish the means by
>>> which we suffer! Government, like dress, is the badge of lost
>>> innocence; the palaces of kings are built on the ruins of the bowers
>>> of paradise.”
>>>
>>> It is true that history repeats itself, and now we have come full
>>> circle, again.
>>>
>>> The Sunday Telegram (Worcester, MA) of June 24 had a front page
>>> regarding the investment returns of state employees, and the front
>>> page of the Business section was about the loss of the American  
>>> Dream
>>> and the rising rates of foreclosures.  My goal is to show you how
>>> these two events are historically and mathematically related, and  
>>> why
>>> planes fly into banks.  The events of 9/11, the ultra-cost of  
>>> paranoid
>>> security, and the impossible situation for young people who are  
>>> being
>>> preyed upon by lenders, universities, mortgage companies,  
>>> corporations
>>> and even their own parents is creating a marketplace that is not
>>> sustainable.  Unlike colonial times, however, there is no King to
>>> blame.  The only people we can blame is ourselves.
>>>
>>> The simplest way to understand the problem is that the central bank
>>> both creates a national currency and devalues the currency by the  
>>> way
>>> it manages it.  Since taxes are to be paid in the same currency, the
>>> perpetual burden of inflation is placed on the working people.  All
>>> the efficiency in the world fails, and eventually the best and only
>>> job available is to work for the government, either directly or
>>> indirectly.  Numbers have become so overwhelmingly important that we
>>> manufacture goods just to throw them away.
>>>
>>> The government swells as the people get progressively poorer,  
>>> creating
>>> two distinct classes of people and two types of buildings.  We have
>>> buildings to hold large groups, but not for people to live in.
>>> Government workers have pensions, health insurance, and cost of  
>>> living
>>> increases, while the working people are ever burdened with paying  
>>> for
>>> these benefits.  The working people lose their houses while  
>>> government
>>> workers and suppliers plan early retirement and purchase a second
>>> home.  The government eventually becomes an advocate for idle
>>> gluttony, supporting infrastructure improvements for golf courses,
>>> ball parks, dinner and art districts.  Taking care of the rich  
>>> becomes
>>> the only industry available, which eventually leads to men like  
>>> Donald
>>> Trump building luxury condominiums and casinos.  The private sector
>>> becomes corrupted by the public sector.
>>>
>>> Inflation, however, provides no escape, even for the rich.  Their  
>>> high
>>> lifestyle comes with a high overhead, and it is as impossible to
>>> maintain a rich lifestyle as it is a poor one.  Inflation eats
>>> everyone alive, rich and poor, but the burden falls  
>>> disproportionately
>>> on the poorest.
>>>
>>> Fraud makes the situation worse, but that is just the rich stealing
>>> from the rich.  It is the expectations behind the fraud that is a
>>> farce.  People want to believe that 2+2=5 when they invest  
>>> (boom), and
>>> are surprised to discover that 5=2+2 as well (bust.)  Math has no
>>> mercy, and the formula in your favor also works against you.  
>>> Whatever
>>> gain is made must come at someone else’s expense, and eventually it
>>> will be made at your or your children’s expense.
>>>
>>> Profit is a system of cost-shifting, not a system of trade.  It  
>>> is our
>>> failure to trade that creates a situation where planes fly into the
>>> misnamed “trade” building.  Even the United Nations is built around
>>> the concept of profit, intellectual property and the bias of rich
>>> nations. It represents a political farce layered upon a mathematical
>>> farce, the same as for national and state governments.
>>>
>>> The gap between the rich and the poor is not a mystery; the system
>>> itself creates both the consolidation of wealth as well as the
>>> inflation.  Both results are hard-wired into the currency system and
>>> the situation has reappeared here because the US Constitution
>>> recreated the same financial attributes as the previous  
>>> constitutional
>>> monarch.  The perpetual budget crisis is a world-wide and historical
>>> phenomenon because money has always been understood, coined, and  
>>> used
>>> in the same predatory way for profit, rather than for trade.
>>>
>>> Fraud is telling a lie. A farce is believing a lie, thinking it is
>>> true.  There is no one person to blame, we are all participants  
>>> in the
>>> farce.  The faith in profit is the same as the faith in a King as
>>> superior to all men was previously.  Profit, taxes and inflation are
>>> all intimately linked.  Each one drives the other.
>>>
>>> Our problems do require intellectual rigor and moral courage to
>>> solve.  Fortunately, history also repeats itself in a positive  
>>> regard,
>>> too.  We can have a renaissance; the choice is ours.   We must  
>>> simply
>>> combine our compassion with the correct strategy.
>>>
>>> Many are living in Hell right now, and there is a good chance that
>>> many of us will be going to Hell, too, and taking our children with
>>> us, as we teach and engage in profit-taking, capital gains, interest
>>> and usury.  The children both pay for and repeat the sins of their
>>> fathers.  Funny how that works, eh?  The apple doesn’t fall far from
>>> the tree.  The first lie ever told was to eat the apple, the second
>>> lie ever told was to sell them for profit.
>>>
>>> As Isaiah wrote, “If you are willing and obedient, you will eat the
>>> best from the land, but if you resist and rebel, you will be  
>>> devoured
>>> by the sword.”
>>>
>>> Once a problem is properly diagnosed it is easy to fix.
>>> Unfortunately, our new Governor, like leaders and entrepreneurs  
>>> before
>>> him, has not made any choices that indicates he understands the
>>> problem.
>>>
>>
>>
>


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