Fractional Reserve Banking As Economic Parasitism a Scientific, Mathematical, & Historical Expose,´ Critique, and Manifesto

Fractional Reserve Banking as Economic Parasitism A Scientific, Mathematical, & Historical Expose,´ Critique, and Manifesto

Vladimir Z. Nuri [email protected]

Abstract as in the way money system mechanics is intricately woven into major plotlines of complex and influential This paper looks at the history of money and its mod- popular fiction works such as Rand’s Atlas Shrugged ern form from a scientific and mathematical point of [52] or Stephenson’s Cryptonomicon [61]. Extrapo- view. The approach here is to emphasize simplicity. lated, it even becomes a “social energy system” theme A straightforward model and algebraic formula for a in more futuristic or outlandish forms such as emerg- large economy analogous to the ideal gas law of ther- ing from the popular science fiction movie The Ma- modynamics is proposed. It may be something like a trix. new F = ma rule of the emerging econophysics field. Possibly the full leverage of focused worldwide sci- Some implications of the equation are outlined, de- entific inquiry and attention has yet to be applied rived, and proved. The phenomena of counterfeiting, to economics. Some evidence that the science is inflation and deflation are analyzed for interrelations. still in its infancy are that new fields of “economic Analogies of the economy to an ecosystem or energy physics” or “econophysics,” “computational finance,” system are advanced. The fundamental legitimacy also dubbed “phynance,” have been proposed only of “expansion of the money supply” in particular is recently. [4, 19, 18] Physicists are applying statisti- re-examined and challenged. From the hypotheses cal and computational modelling techniques to come a major (admittedly radical) conclusion is that the up with creative, ad hoc, or highly realistic theories modern international “fractional reserve banking sys- of money flow in e.g. large economies or stock mar- tem” is actually equivalent to legalized economic par- kets. [20] Despite the overused cliché,objective scien- asitism by private bankers. This is the case because, tific commentators sensitive to these kinds of shifts contrary to conventional wisdom, the proceeds of in- and trends could easily identify all the signs of an flation are not actually spendable by the state. Also apparent Kuhnian “paradigm shift” [38] in progress. possible are forms of “economic warfare” based on So the blaring headlines read, “Physicists try to the principles. Alternative systems are proposed to break economists’ monopoly on financial theory” [4] remediate this catastrophic flaw. and “Physicists attempt to scale the ivory towers of finance.” [19] 1 introduction One major factor in the shift is increased computational power due to the so-far-uninterrupted real- “An invasion of armies can be resisted, but ization of Moore’s law over about four decades at the not an idea whose time has come.” close of the 20th century, i.e. exponential growth (in —Victor Hugo gates per chip or many other similar measurements). This awesome and accessible power has elevated the The dynamics of money is an extremely complicated computer to the status of a new scientific instrument, subject. It’s a foremost preoccupation of humans, roughly analogous to the invention of the microscope

1 or telescope, which has rapidly transformed conven- As usual with a paradigm shift, the perspective tional scientific perspectives on laws of both nature flip-flops. How can the economy possibly not be and societies. thought of as an ecosystem? In Farmer’s work, dif- Complexity is the buzzword across multiple disci- ferent traders’ strategies are fluctuating adaptations plines, even as previously segregrated disciplines are analogous to evolutionary niches occupied by various married [12, 66] (e.g. in the case here, physics, fi- organisms. The Lotka-Volterra equations originally nance, biology, thermodynamics, etc.). It is likely key introduced to explain oscillations in populations with insights have not yet been totally realized, remaining predator-prey relationships map readily into describ- potential lying undeveloped. For example, virtually ing capital (money) gains associated with the com- all economic theory of the 20th century was devel- petitive speculative strategies utilized by inter- and oped largely without extensive computational exper- independent traders. iments, modelling, simulations, and empirical analy- The analysis presented here will be heavily depen- sis, so central to the new style of inquiry via the pre- dent in places on the economy-as-ecosystem concept miere, even transcendental instrument(s) of science— and mostly take it as unequivocally justified and vir- the computer and the algorithm. [13, 5] tually proven, even though it is not a common per- The new breed of econophysicists are very open- spective among mainstream economists, and the un- minded in their metaphors, borrowing seemingly al- derlying research agenda is clearly only beginning. most indiscriminately (leaving them open to one of Nevertheless, building on it, an important additional the major but predictable criticisms). A particular theme proposed and explored here is that of economic new meme receiving heavy attention and advance- parasitism. ment is the metaphor of the economy as an ecosystem. Along these lines, another paradigm shift is go- Such a view seems obvious in retrospect of various re- ing on in the field of parasitology. Researchers are search delineating the parallels, but it was unfamiliar, only recently beginning to appreciate the full implica- novel, and even somewhat radical when first exhaus- tions of parasites in and on ecosystems, via similarly tively and definitively proposed by e.g. Rothschild in boundary-crossing interdisciplinary scientific collab- the seminal and foresightful book Bionomics: Econ- orations, all forcing a serious re-evaluation of the omy as Ecosystem. [55] It was not clear initially if “big picture.” [70] In fact the study of biology is in the idea was just another shallow fad not so much many ways the study of parasites; by one estimate, on with scientific merit but to be mostly appropriated planet earth parasites outnumber ‘freeliving’ species by those seeking to justify ulterior political or social four to one! agendas. [7] New realizations are manifesting around the ubiq- However, subsequent quantitative research, now a uitous and crucial role(s) that parasites play in full decade after Rothschild’s manifesto, has pushed ecosystems. In many ecosystems parasites are far the metaphor into reality and significantly strength- from inconsequential, insignificant, or innocuous ened the case for its validity and correctness. As stowaways, but in actuality, despite their relative a Wall Street Journal reviewer wrote, used as the physical and scientific invisibility, drive entire ecosys- front-cover blurb for the book, “Revolutionary. . . a tems. Parasites have been a domininant force, and fascinating and highly creative alternative to the way maybe even the dominant force in the evolution of conventional economics views the world.” The early life! [70] So. . . given their forefront role, what is the tour de force analysis by Farmer, “Market force, ecol- presumable link to economics? ogy, and evolution” [20] invokes and reapplies the The third major theme pursued here in natural important Lotka-Volterra differential equations orig- conjunction with bionomics and parasitism is a large inally proposed for modelling population dynamics scale economy seen as an energy system. While again to a stock market system (see Farmer’s work for an this concept may seem obvious, the full understand- excellent survey of the economy-as-ecosystem meme ing stemming from this perspective appears not yet thread in the scientific literature). available. There is a strong parallel between eco-

2 nomics equations and e.g. thermodynamics or elec- receipt money This is also called “fully backed tronics formulas that does not seem to have been commodity money” in [50]. A goldsmith or explored systematically by researchers so far. More- banker issues paper receipts or certificates al- over, if the economy is an energy system, then vari- ways redeemable for an exact quantity of pre- ous laws governing it can be analyzed and regulated cious metal and the receipts may be traded in- based on solid engineering principles, and the mys- dependently. tery of economic dynamics should be minimized in e.g. the same way engineers understand the construc- fractional money Money that is backed by a com- tion of buildings based on applying Newton’s law. modity only at a fraction of the face value. Also So far econophysicists have tended to focus on called “fractionally backed commodity money” the dynamics of markets. However it is possibly in- in [50]. Also called “bank money” or “book evitable that they will soon arrive at a reconsidera- credit” in [17]. For purposes here, the exact fraction of the classic questions of economics, one of the tion is considered to be fixed in perpetuity. chief ones being the question of the optimal policy for fiat money Money that is declared “legal tender” expansion or contraction of the money supply. Hope- by a government with no commodity backing. fully new scientific light can be shed on this age-old Or for purposes here, arbitrary manipulation question and definitive rather than speculative an- rather than fixed commitment to any fraction swers are within reach. This paper has been written of backing. with that main goal in mind. paper money For purposes here, money made out 2 brief history of money of paper. Depending on backing it could be either receipt, fractional, or fiat money. Many au- adult: Our government borrows money ev- thors use it as a synonym for fractional or fiat ery year. money to contrast it with commodity money. child: Where does the money come from? electronic money For purposes here, money as re- How can we always be in debt and not duced to an abstract accounting process in- have to pay it off? volving ‘blips,’ no longer requiring a physical adult: We’re in debt to ourselves. medium for transfer. Also called “digital cash” child: That doesn’t make any sense! or “cybercash.” Depending on backing it could be either receipt, fractional, or fiat money. adult: It’s based on fractional reserve banking. Banks do not have to have all the As e.g. Griffin [32] and Rothbard [54] explain, re- money that they lend. ceipt money was often turned into fractional money child: I still don’t understand. by bankers. They found they could temporarily loan adult: You’ll understand it when you get out additional pseudo-certificates exceeding their col- older. lected inventory of gold and collect interest on these loans. Rothbard notes that this practice was ruled le- Paper money was not used by Europeans until the gal by courts in some historical cases. Griffin asserts middle ages, partly on the discovery of its success- this practice invariably leads to an inherently unsta- ful use in China by Marco Polo in the 13th century. ble money system and periodic runs on banks, with The Greeks and Romans used coins. Some standard many historical examples to make his case. Griffin terminology is useful: (see e.g. [32] or [50]) also asserts that fiat money always leads to hyper- commodity money Money that is made out of a inflation and worthless currency. These views will commodity e.g. typically a precious metal, ei- be carefully reappraised here with slightly different ther gold or silver, i.e. coins. conclusions.

3 Immediately upon any inquiry into money, the top- The third case above, privately-owned money ex- ics of debasement and counterfeiting arise. Someone pansion, is not so sharply delineated in the eco- can take a gold coin, clip or shave it down, and pass nomics literature or popular treatments and is typ- on that coin, or create entirely fake coins with no gold ically mixed up with the other two cases. This is a content. Complicating the picture is that the govern- catastrophic error as will be considered below. For ment itself may adopt debasement of the currency as reference, call this the cui bono caveat emptor error an official state policy! Many authors have blurred (Latin, “who benefits—let the buyer beware”). these cases. So a strict definition of these different The above account hides further detail and mixes forms of debasement is required. terminology based on the modern perspective. From the historical standpoint, a nation can have two kinds counterfeiting The criminal practice of debasing of banking or money systems: the currency or creating fraudulent money. publicly-owned money expansion At the knowl- centralized banking A universal, standardized, of- edge and consent of citizens, the government de- ficial government currency is controlled and is- bases the currency as a matter of policy for a sued by a central bank. revenue stream other than taxation, spent on legitimate government services. noncentralized banking Different banks may is- privately-owned money expansion The situa- sue their own receipt money as currency, also tion mentioned above where private bankers called “banknotes.” The different banknotes cir- transform receipt money into fractional money, culate simultaneously in the overall economy. and the practice is regarded as legal by the government. Revenue is counted as ‘profit’ by Most nations worldwide now have their own cen- private bankers. tral banks based on complex historical economic and political events. American history involves eras of Counterfeiting is equivalent to theft. The criminal alternation between centralized and noncentralized obtains tangible assets as booty at the collective rob- banking systems, now currently centralized. In the bery of all who use the currency. However it is not an U.S. the central bank is known as the Federal Reserve overt theft in which victim is readily aware of, as, say, and was established in 1913. Note that the central when their car is stolen and missing. Embezzlement bank may either publicly-owned or privately-owned. is more accurate, presuming it is eventually detected! Despite its name and management protocols the U.S. As is widely understood by economists and the Federal Reserve is privately owned. The assumption general public, both counterfeiting and publicly- that a central bank is always publicly-owned is the owned expansion lead to, or more accurately, cause same cui bono caveat emptor error. widespread inflation of prices and, if uncontrolled, destabilization of the integrity of the overall money system. Often governments have had draconian laws against counterfeiting practices as equivalent to acts seigniorage of sabotage, treason, or war. Sometimes wars were “By this means government may secretly actually waged partly via the very effective technique and unobserved, confiscate the wealth of the of one country counterfeiting another’s currency and people, and not one man in a million will de- ‘buying’ (in actuality confiscating) resources with it. tect the theft.” In this sense it is a camouflaged seizure of assets, or, —John Maynard Keynes economic warfare. Whereas pillaging is sometimes the goal of warfare, counterfeiting permits an invisible pillaging with no arms or army required! In economics literature, the word seigniorage is typ-

4 ically used as a synonym for money expansion. the latter case can be considered in a sense a “double shortfall” (a shortfall of demand or buyers agreeing seigniorage: revenue or a profit taken from to loans). the minting of coins, usually the difference A further key distinction must be made on money between the value of the bullion used and expansion. A bank may lend funds either to individ- the face value of the coin. uals or the government. In the former case typically the “noncentral” bank lends funds deposited by other In a fractional money system the mechanism is dif- individuals. In the latter case, typically the govern- ferent (not associated with minting coins) but with ment borrows money from the nation’s central bank the same effect. which controls issuance of the nation’s currency, that Here a very careful distinction must be made. The is, when the bank buys government bonds. In either following are separate and distinct but are sometimes case, if the bank has assets on deposit equivalent to confused by neophytes or unclear in some accounts. the borrowed funds, it’s “straight borrowing.” If only The terminology is somewhat arbitrary (remarkably, a fraction of the loan is backed by assets, it’s “expan- there does not seem to be a standard terminology sion borrowing.” This latter case is called fractional devised by other commentators). reserve banking (or, lending, borrowing). The fraction of deposits-to-loans a bank is required to hold is straight borrowing A government borrows money called the reserve requirement. via issuing bills or bonds at a discount on face Hence money expansion can be localized to a given value, promising to repay the purchaser the face bank’s own banknotes in the noncentral system, or value at some specified date in the future. The affecting the entire nation’s currency in the case of interest rate is the difference between the face a central bank. In the cui bono caveat emptor error, value and the purchase price. most economics literature does not apply or blurs the expansion borrowing The government may also concept of the central bank owning assets to back the ‘borrow’ via money expansion, either publicly- government loans, not using the idea of a “reserve owned or privately-owned. Even though in this requirement” relative to it. case the standard overt procedure of “selling a The above establishes an important direct corre- bond” seems identical to the prior case of gov- spondence between commodity or receipt money to ernment borrowing, the underlying mechanisms straight borrowing, and fractional or fiat money to and effects of the transaction are fundamentally expansion borrowing. Moreover the two types may different. be practiced by either noncentral banks or a central bank. The banks may further be either publicly- Note that both cases involve a “shortfall of funds” owned or privately-owned. An even more precise but the first case does not constitute seigniorage, distinction requires more sophistication than this whereas the second does. If a government’s expen- overview and will be pursued further below. ditures exceed revenue (government revenue is gen- In economics literature and popular accounts, the erally taxes) then it can make up some difference via following two cases are also not always carefully dis- borrowing such that additional funds become avail- tinguished. Current prices in an economy may shift able via a free-market loan by bondholders. Demand under two separate and distinct key factors: of these bonds is mainly tied to the interest rate of- supply and demand Demand for a particular fered by the government; higher interest rates spur good or service may fluctuate due to chang- higher demand. However, even after the “auction of ing economic conditions. This is the “invisible debt,” the additional available borrowed funds may hand” of Adam Smith’s theory. The value or still be inadequate to fully cover a budget deficit. demand of the underlying assets has changed. In which case another last resort, other than raising bond interest rates, is money expansion. Hence money manipulation In a fractional money sys-

5 tem, money units can be shifted or modified Carlyle lambasted supply-and-demand ideology as based on money expansion. The value or de- “the dismal science” in the first reference ever. [41] In mand of the underlying assets is not changed. modern form the preoccupations of “the dismal science” are over money expansion and inflation but the This paper will focus on the latter case and reserve root issues are timeless. After centuries of commen- the word inflation exclusively for it. (To add to the tary and reaction, it seems an utterly poorly under- confusion, many authors refer to the latter case as stood, mysterious, intractable, and at times incom- the supply and demand of money.) The distinction is prehensible subject. How should money expansion be also roughly between extrinsic and intrinsic factors, regulated? New theories arise regularly. For example respectively. the major trend of monetarism advanced chiefly by The economist Keynes helped analyze the process Friedman came about in the second half of the 20th of publicly-owned money expansion and considered century in response to dissatisfaction with existing the ensuing inflation as a pernicious “hidden tax” government policies regulating money expansion. on the masses. However, many monetary reformists This lack of consensus seems tremendously ques- have proposed publicly-owned money expansion as a tionable and unsettling given that the health of entire very useful means of taxation superior to alternatives, world economies is at stake. Routine money expan- presuming it is limited and erected at full knowledge sion has become the modus operandi of virtually all and political consent of citizens (see e.g. [27]). Via major and minor governments worldwide. Regard- such a system: ing different policies on its regulation, no school of The state can obtain spendable revenue that re- thought seems to have tangible proof of its supremacy quires no vast, complex, and cumbersome ac- of interpretation and guidance. Here maybe econo- counting system in e.g. the way the income tax physics research can eventually untangle the tangled does. mess of conflicting and contradictory approaches. The following is a rudimentary “first cut” in this di- It also is an extremely uniform taxation system; rection representing in parts a radical departure from representing a percent of every dollar in circu- conventional dogma. lation, in contrast to every reported dollar, or every dollar in only particular types of transactions. Conventional taxes on the other hand 3 mathematical analysis have uneven effects which are notoriously difficult to anticipate by a legislature. “Better cut my pizza into four slices, I’m not hungry enough to eat six.” Tax evasion is essentially impossible under —Yogi Berra publicly-owned money expansion! What is needed to cut through the legacy of am- money policy biguous verbiage and claims on money expansion and “All the perplexities, confusion and distress inflation phenomena is a correct, preferrably simple in America arise, not from defects in their model. Extremely complex models of money expan- Constitution or Confederation, not from sion effects on the economy have been proposed re- want of honor or virtue, so much as from the cently with the help of computational simulations, downright ignorance of the nature of coin, and researchers will presumably continue to pursue credit and circulation.” these directions to yield new insights. [6, 35] As the —John Adams models reflect, the interplay between taxation, production, and expansion is surely tremendously intri- In 1849, in a racist screed championing the righteous- cate. However, while these are admirable analyses, ness of slavery over free market economics, Thomas complicated models are only necessary if simple mod-

6 els do not give correct or accurate results for the pur- v is volume measured in length3 poses or questions at hand. The approach here will be to take perhaps the sim- T is temperature, plest possible model(s) imaginable, with the fewest R is a conversion constant overall “moving parts,” and derive straightforward conclusions. These models are offered as plausible n is the number of particles (atoms or molecules) but falsifiable hypotheses to serve as a base for further research rather than a definitive or final anal- The product p v has units force length, i.e. energy, ysis. They’re mainly a vehicle for introducing some also analogous to· heat and work in· thermodynamics, key metaphors and analogies to guide intuitive think- measured in units of joules. ing on the subject. (Also, in the following presenta- The correspondence is established and metaphor tion, the prose will fully explain the meaning of the revealed when eq. 1 is written in the form mathematical equations, leaving the latter optional 1/P MV = Y . The analogies are: for nontechnical readers.) · Economics’ basic equation for “money demand” is the “equation of exchange” outlined by Irving Fisher 1/P p ⇔ in his 1911 treatise, The Purchasing Power of Money: MV v [50, 17] ⇔ Y T ⇔ MV = PY (1) The above seems to constitute something of a where very important “bridge theorem” between economics and statistical physics (specifically thermodynamics). M is the stock of money From this parallel many new insights are immediately available. The mass economy can be seen as V is the velocity of money something like a given volume of gas under pressure. For example, if the volume is increased, the pressure P is the price level per area decreases, assuming constant temperature; Y is the level of real output in the economy, e.g. analogously, if the money stock is increased, prices the GDP, Gross Domestic Product. increase (being inversely proportional to pressure), assuming constant GDP. The velocity is typically assumed constant by the In thermodynamics a process involving no heat “standard behavioral proposition;” it may also be transfer between the system and environment is taken as a measurement of individuals’ preference for termed adiabatic. For ideal gases, a related process saving vs. spending. occurs at constant temperature, called isothermal. No monetary authorities appear to have ever re- The thermodynamic equation for the special case of marked on the striking correspondence between this constant temperature is known as Boyle’s law: formula and the ideal gas law from thermodynamics, which holds for gases at low density. The equations p1v1 = p2v2 (3) that follow are mainly adapted from [65]: Quite probably, economic transactions between individuals are the parallel to atomic collisions in the pv = nRT (2) ideal gas. This hypothesis and direction are very where recently being pursued by pioneering econophysicist Doyne Farmer: “[our] results suggest that some ba- p is pressure measured in dimensional units of sic properties of markets can be explained by a the- force/length2 (i.e. force/area) ory much like statistical mechanics, in which each

7 trade imparts an impact to prices, much like a molecular collision.” [21] This concept also has strong par- v1 p2 = p1 (4) allels to fascinating new research by econophysi- v1 + x cists Bouchard and Mézardinto economic models of The new “pressure per dollar” is a fraction of the old Pareto’s law of wealth distribution related to temper- pressure, and a greater “volume of dollars” is required atures in directed polymers. [11, 8] to obtain the same level of money-energy. This is the Another link can be found in the extremely im- simplest scientific and mathematical explanation of portant Black-Scholes equation for derivatives (op- the fundamental phenomenon of inflation. tions) pricing which was actually initially adapted from a heat transfer formula from mechanical engi- intuitive analogies neering. In it, price differentials become analogous to heat variations. An overall stock market behaves as a This new framework and vocabulary is not merely heat diffusion system. It seems likely that stock mar- a superficial restatement but a very important new ket results directly correlate with general economic insight into money expansion and an answer to the transactions, although this link has apparently not question, what exactly is money? A nice analogy yet been systematically explored. from introductory engineering emerges here. In en- On the local, microscopic level, the collisions and gineering the concepts of weight vs. mass, which ini- transactions are random and statistically distributed. tially seem synonymous and are sometimes casually On the macroscopic level, a simple global property interchanged, are carefully distinguished. emerges as one of the best scientific examples of the Mass is a fundamental unit and property of mat- “law of averages” realized. This will surely be a ter. Weight, measured in units of force, is an amount very fruitful line of inquiry for future econophysics of mass relative to a given gravitation, i.e. mass research. times gravity (acceleration), typically presumed to be Apparently then, prices are an instantaneous mea- Earth’s. Analogously, “underlying value” or money- surement of money-energy denominated in units of energy is a fundamental property of economic trans- current pressure, which economists sometimes refer actions, whereas price is a quantity of money-energy to as “underlying value” vs. “nominal value.” The measured relative to a given volume or pressure (pres- product p v, pressure times volume, gives a quantity sure times volume). The same mass has different of money-energy.· Boyle’s law states that under “con- weights on different planets just as the same money- stant temperature” (constant GDP), money-energy energy has different prices within different volumes is conserved under changes in the money stock; this or relative to different pressures. In economics and might be called the law of conservation of money- popular literature, lacking strict terminology, confu- energy. sion easily arises as writers often use the single term ‘money,’ or others, to connote the two distinct mean- In thermodynamics the direct analogue was ings depending on context. demonstrated by Joule in a classic two-chamber air On the other hand, remarkably, much literature transfer experiment, which shows the internal energy anticipates the thermodynamical equivalences estab- of an ideal gas is a function of temperature only (i.e. lished here without actually taking the slight extra not pressure and volume), written step of articulating them directly or formally (i.e. mathematically). For perhaps centuries, many com- u = f(T ) mentators have talked about the volume of money, the pressure of a deal, or the heating up of an econ- Now suppose that the money stock, v1, (denom- omy. inated in e.g. units of dollars) is increased by an Another analogy is extremely helpful. Imagine a amount v2 = v1 + x. Then p1v1 = p2 (v1 + x), company stock trading on an exchange, with some or, (assuming constant GDP) · quantity of shares publicly owned. The founders

8 decide to issue additional stock. As is well known how much? this “secondary offering” dilutes the share price. One Remarkably, the above straightforward formula for could say that the supply and demand of the stock the simplest case, eq. 4, is again immediately appli- changed, but this is not a change in supply and de- cable. x can be taken as simply the number of coun- mand that is related to market effects or change in terfeited dollars spent into circulation; v1 is the total underlying value of the company. It’s a simple varia- number of dollars in circulation. The formula gives tion on money manipulation as defined in the previ- the final value of all dollars assuming the counterfeit ous section. dollars continue to circulate without detection, such Eq. 4 is immediately applicable and gives the new as with debased coinage. The counterfeiter obtains price per share after some adjustment period, assum- money-energy by debasing the value of all dollars in ing no other factors. v1 is the initial number of shares, the system. x is the number of new shares, p1 is the original price (If all the counterfeit dollars are detected and those per share, and p2 is the final price per share. The holding the dollars must forfeit their loss then no exact dynamics and timing of the transition would money expansion occurs. But typically taxpayers require further empirical study and is an excellent must make up for counterfeiting losses via a “write- econophysics research topic. This also suggests that off” which may be equivalent to money expansion. stock markets could be a very nice model for expan- The formula correctly gives the instantaneous theo- sionary bank lending and government monetary ad- retical loss.) justment (i.e., a microcosm of the fractional reserve However, a very complicated question also imme- system). diately arises that cuts to the heart of this model. Cui bono? The issuers of the new stock shares then How much money-energy was actually obtained by own a greater share of the company even after the the counterfeiter? The counterfeiter spent x dollars, price depreciation of their previous shares. All other but was the money-energy obtained based on initial shareholders have lost real value in their holdings at pressure pi, or final pressure pf ? For insight, an an- the abstract redenomination. Caveat emptor! swer can be related to the ideal gas metaphor. Boyle’s Now obviously this analogy extends further. Evi- law refers to the state of the gas at two separate dently a nation’s currency actually represents shares times, such that it has reached an equilibrium in both of the economy of that country (the GDP) and money states. Suppose that a significant volume change is expansion is exactly analogous to issuing new shares. made in a very short time. Boyle’s law may not nec- But how are additional shares allocated? Cui bono? essarily apply to all intermediate states. Who owns them? Caveat emptor! Suppose that the counterfeiter spends the fake dollars slowly. Then each subsequent dollar will have counterfeiting vs. seigniorage a decreasing pressure associated with it, pi > p2 > p3 > . . . > pf . Apparently in the “best case sce- “The process by which banks create money nario” the counterfeiter obtains x pi money-energy · is so simple that the mind is repelled.” if the money is spent rapidly with no further trans- —John Kenneth Galbraith actions, and as an asymptotic worst case with slow ongoing transactions, x pf . The actual precise quan- These algebraic formulas often taught in high-school- tity is also exactly the “invisible· tax” levied uniformly level physics may seem trivial. But they are a basic, over all currency holders. The difference between the useful, rarely applied tool for analyzing some simple pn is related to how large the economy is and how economic situations. For example, in the previous quickly monetary perturbations spread throughout section it was asserted that counterfeiters embezzle it (another crucial and compelling econophysics re- at the expense of all currency holders of an economy. search question). For later comment, call this phe- This seems intuitively obvious, yet what are the un- nomenon the decay rate. derlying mechanics? Exactly what is embezzled, and Fig. 1 shows three hypothetical scenarios for a pres-

9 is exactly equivalent to the seigniorage discount (and depending on currency issue rates). r is clearly di- p1 linear pa exponential pb rectly analogous to a publicly-owned central bank re- logistic p c serve ratio. v1 is the reserves, the entire national economy. The ‘revenue’ x accruing from the money expansion can be spent on government services. Con-

pressure ceivably, here x could represent the entire government budget. Again, diﬀerent levels of money-energy are obtainable depending on the decay rate (analyzed in p2 more detail below). The quantity of extracted dollars x ‘levied’ by the state can also be expressed in terms of the seigniorage t1 time t2 discount rate r and the original money stock v1:

Figure 1: Three hypothetical scenarios pa(t), pb(t), 1 x = 1 v1 (8) pc(t) for decay in pressure p1 p2 from volume ex- → r − pansion during the time period t1 t2, i.e. depreciation in asset value due to inflation→ from money This naive model has special meaning for x > v1, or correspondingly r < 1 ; those ranges imply a ‘levy’ expansion via a gas thermodynamics model. 2 greater than the entire economy. The equation shows the ‘tax’ is minimal as r 1 (from below), maximal 1 → sure decay rate. The graph was generated for the as r and infinite as r 0 (from above). → 2 → scaled range [0..1] with t1 = p2 = 0 and t2 = p1 = 1 So one is left with the perplexing question, how is via the following formulas: publicly-owned money expansion different from counterfeiting? Obviously, with e.g. coin debasement the underlying mechanism is identical. The inescapable pa(t) = 1 t 1− conclusion: the only difference is that in the latter pb(t) = e6t (5) 1 case, the funds are spendable by the state and serve pc(t) = 1 1 1+ 12t 6 − e − as an official pseudo-taxation system, i.e. as exam- These formulas represent path functions for pres- ined and partially endorsed in the prior section. The sure change over time between the two intermediate other key difference between counterfeiting and taxation comes down to citizen knowledge and consent. states. pc(t) is based on the S-shaped logistic curve used in many physical fields, such as for chemical The simple overview of this publicly-owned expan- mixing or measuring population dynamics in biology. sion system is that the government issues x additional Their shapes are adjustable by varying the constants shares of “stock” (dollars) of the GDP and uses the and they’re readily adapted to the general case using ‘revenue’ to buy government services, paid for by in- the substitution flation.

t0 t1 privately-owned money expansion p(t0) = p2 + f − (p1 p2) (6) t2 t1 · − − “Thus, our national circulating medium is Next, what about publicly-owned money expan- now at the mercy of loan transactions of sion? Again, remarkably, in the simple analysis, the banks, which lend, not money, but promises formulas are exactly the same. The ratio to supply money they do not possess.” —Irving Fisher p2 r = , r < 1 (7) Finally, consider the strange worldwide case of p1

10 privately-owned money expansion. Here a private taxpayers is bank is allowed to debase its receipt money based on fractional reserves, i.e. loan out more money than E1 = xp1 + xp2 (9) it has in reserves, either to a government or citizens. The idea of money expansion as equivalent to a frac- If the economy measured by v1 is extremely large relative to x, then p1 p2 and the bottom line is tional reserve system is not an explicit observation ≈ of modern economics, but it’s transparently identi- approximately 2x dollars cost for x dollars worth of cal. Again, the above formula for depreciated value government services! This bizarre and irrational ‘sys- is still applicable except that the borrower must pay tem’ is known as “monetizing government debt.” Un- back the loan. der it, where privately-owned money expansion cov- With straight borrowing, a lender provides imme- ers government budget deficit(s), the taxpayers effec- diate money-energy in return for the money-energy tively ‘repay’ the value of the pseudo-loan twice, first returned plus a fee at a future time. (That fee, “in- through inflation, a second time through taxation! terest,” may therefore be regarded as the price or The total energy extracted by the private bank can be taken as x p2, which from eq. 8 can be expressed market rate of instantaneous money-energy per re- · payment time; the complex subject of interest is pur- in terms of total money stock and the central bank sued below.) But by the money-energy conservation reserve ratio: principle, no money-energy is provided by the lender 1 via privately-owned money expansion—this holds re- E2 = 1 v1p2 (10) r gardless of changes in GDP. The ‘illusory’ money- − energy that is spent by the borrower is accumulated But since p2 = r p1, · via the depreciated value of the lender’s fractional money—inflation. Ergo, ‘pseudo-lending.’ E2 = (1 r)v1p1 (11) In short, in this situation all money holders’ as- − This extraordinary equation shows that via the sys- sets denominated in terms of the fractional money tem, the pseudo-bank extracts the proportion 1 r depreciate relative to the bank’s assets. If the bank’s quantity of money-energy from the original economy− fractional money is universally standardized as with E = v p , leaving only r remaining! a central bank, then for simplicity the groups “money i 1 1 Even· more shocking, in the modern privately- holders,” “taxpayers,” and “citizens” can be taken to owned money expansion system, the lending bank all overlap and be roughly interchangeable. is essentially allowed to count the ‘loan’ as an as- Mathematically, this means approximately that if set, immediately, not being required to wait until the a government borrows x dollars into circulation via end of the repayment period of the pseudo-loan to privately-owned money expansion (x is the shortfall do so. In this case the pseudo-lender then essen- after straight borrowing), all dollars depreciate at the tially immediately extracts x p money-energy from ratio v /(v + x) during and after the government 1 1 1 the overall economy (i.e. via ·the device of a central spending. However, in contrast to publicly-owned ex- banking system) at the initiation of the pseudo-loan pansion where there are no further obligations, with of zero money-energy, and the taxpayers more accu- privately-owned expansion the government and its rately obtain x p worth of government services (at taxpayers are additionally required to ‘repay’ the bor- 2 2x p energy cost).· In this case the money-energy rowed quantity of x dollars to the private pseudo- 2 extracted· by the private bank is lender(s). In one plausible scenario the government spends 1 the money quickly and obtains money-energy at E3 = 1 v1p1 (12) r − the undeflated pressure p1, and taxpayers repay the 1 pseudo-loan later at the deflated pressure p2 (inflated Note that if r < 2 then x > v1 and E3 exceeds the volume v2). Therefore total money-energy cost to entire initial energy of the economy—this represents

11 net indebtedness by all money holders to the private attempt to model money that circulates outside the bank! Evidently, economics is in fact the science banking system, such as would occur with one bank of heat transfer of money-energy; E > 0 represents issuing fractional money in much a larger economy. wealth or assets, E < 0 represents indebtedness. In this new scenario there is an amount of “nonbank” The entire prior analysis proceeded without ref- cash, say v0, in addition to the bank reserves v1, and erence to the concept of interest. Evidently inter- v0 v1. A ratio can be defined to give the amount est relative to private-based money expansion is sim- of bank vs. nonbank cash in the economy: ply inapplicable, because regardless what interest fee v is charged, even zero interest, the pseudo-lender has s = 1 (13) v + v levied a real charge for a pseudo-service of no real 0 1 value. s can also be taken as the savings rate. From this, Usury is defined as “the act or practice of lend- s ing money at an exorbitant or illegal rate of inter- v1 = v0 (14) 1 s est.” Similarly, practices identified as predatory lend- − ing have been outlawed in various jurisdictions. But This time the bank reserve ratio is logically defined this situation does not qualify as usury or predatory as lending; it’s fundamentally different and far more v insidious because no money-energy is actually pro- r = 1 (15) v + x vided. So the analysis and conclusions stand gen- 1 erally independent of considerations on interest—it’s which implies irrelevant. 1 A slight variation is the possibility of a hybrid sys- x = v1 1 (16) tem in which the money expansion is both publicly- r − and privately-owned at some ratio; this appears to In this scenario, instead devaluation is based on this be the case with the U.S. Federal Reserve. How- formula: ever exactly the same conclusion applies, i.e. that any amount of privately-owned expansion is illegitimate. (v0 + v1)p1 = (v0 + v1 + x)p2 (17) In short, the government can finance its operations Using the higher estimate for money-energy obtained outside of taxation via borrowing, or money expan- by the bank, x p1, and eq. 16, sion. However privately-owned expansion reduces to · an illegitimate combination (“borrowed expansion”?) 1 E4 = v1 1 p1 (18) with disastrous ramifications. Cui bono caveat emp- r − tor. Substituting in the equation for v1, eq. 14, good vs. bad money s 1 E4 = v0 1 p1 (19) 1 s r − In standard economics and banking r is also called the − reserve requirement, and the inverse 1/r is known as That gives the energy extracted as a fraction of the the money multiplier. [17, 50] In examples a typical original nonbank cash economy v0 p1. Or equiva- · rate is given as r = 0.1. [32] gives a banker’s rule- lently of-thumb ratio of 4:1 circulated (debased) receipts 1 vs. deposits corresponding to r = 0.2. These are ex- E4 = s(v0 + v1) 1 p1 (20) tremely low and in the previous (primitive) model fall r − 1 into the range r < 2 that results in net indebtedness This equation bears a remarkable resemblance to of all money holders to the bank. the prior full economy money-energy transfer quan- However, the previous generalized formulas do not tity E3 (eq. 12). It shows that for a bank holding the

12 fraction s of the entire economy in reserves, the en- in multiple contexts, and its thermodynamical cor- ergy extracted from the total initial economy, given respondence is not so obvious. However, some rela- by (v0 + v1) p1, varies according to the ratio tion to savings rate does seem plausible. Thermo- · dynamics does have equations for molecular veloci- 1 ties derived from statistical mechanics that it may be r2 = s 1 (21) r − related to—altogether, another key item for future econophysics analysis. For this equation, r2 < 1 even for small r if s is small. A more sophisticated analysis might take into ac- That is, in contrast to eq. 12, total money-energy count that the bank offers some fraction of the ex- extracted is now proportional to s or the proportion tracted revenue as interest to depositors. In that sce- of money deposited in the bank relative to the entire nario some depositors will lose or gain total money- economy. Still, for small r and s, the ‘leverage’ is energy based on their ratio of nonbank money to bank high and E4 entails the entire economy. More exactly, deposits. r2 1 if s r/(1 r) (or r s/(1 + s)). For r = 0.2 this≥ is at s≥= 0.25;− for r = 0≥.1 this is at s 0.11. ≈ This all appears to be one possible mathematical growth, interest, temperature, etc. representation of Gresham’s law, which states “bad “Anyone who believes exponential growth money drives out the good.” In other words, if one can go on forever in a finite world is either bank circulates debased receipts into the economy, a madman or an economist.” all money depreciates based on eq. 17 and energy ex- —Kenneth Boulding, economist tracted from the overall economy is based on the savings rate and fractional reserve ratio of the individ- The prior model very carefully and deliberately ual bank. The equation appears to show that money avoided the issue of growth in the overall economy holders may defend against mass money depreciation for simplified analysis. For completeness an expand- by minimizing their savings! ing economy will now be considered. Let Ti = pivi Moreover, eq. 20 seems to shed new light on represent the perfect gas law term nRT from eq. 2 Fisher’s equation of exchange, eq. 1. Recall from the at different states. Then Ti is simply proportional to earlier discussion that the thermodynamical v was GDP, and chosen as analogous to the Fisherian term V M where p v p v V is velocity and M is the stock of money. It· appears 1 1 = 2 2 (23) T T to be possible that velocity of money V and savings 1 2 rate s are being mixed up in the classical theory, ı.e. Let the economy grow by the rate rT > 1 so that possibly T2 = rT T1. Then ·

rT p1v1 = p2v2 (24) s (v0 + v1) V M (22) · ⇔ · For constant volume, e.g. no expansion in money From this, if savings rate decreases, money circulates stock, more in the nonbank economy v0 than is stored in the bank reserves v , apparently decreasing the ve- 1 p = r p (25) locity. The classic quantity of velocity may actually 2 T 1 be measuring nonbank money circulation relative to i.e. an increase in pressure p2 per dollar. But since a fractional reserve bank. Maybe nonbank money prices are proportional to 1/p this implies a decrease velocity increases as the bank extracts more money- in any price in the economy, i.e. overall price deﬂa- energy from higher savings. tion. This is a somewhat counterintuitive result by V is a somewhat mysterious quantity in classical conventional wisdom: growth of the GDP results in economics, sometimes assumed constant or not, used deﬂation if money stock is held constant.

13 A major goal of modern monetary expansion poli- environmental degradation (e.g. global warning, pol- cies is price stability, in which in theory the money lution, deforestation, etc.), at the dawn of the 21st stock is expanded to the degree of keeping prices century the rationalization is increasingly taking on ‘stable’ or constant. From eq. 24 this occurs when the signs of mass psychological delusions of grandeur. rT v1/v2 = 1 or when a quantity x of new dollars (v2 = v1 + x) are ‘created’ such that: mattress myth & other legends

p1 1 v1 + x A pivotal observation is crucial here. By the money- = = 1 (26) p2 rT v1 energy conservation principle, after a temperature in- which, solving for x, occurs simply for crease, the money-energy that accrues to money holders due to price deflation with constant money stock from eq. 25 is exactly equivalent to that represented x = v1(rT 1) (27) − by the x dollars of eq. 27! That is, no money expan- Spending and circulating x new dollars will stabi- sion system is inherently necessary to distribute risk- lize prices, but the key question is, who owns those free interest gains! It’s built into “invisible hand” dollars? They may be either publicly-owned or supply-and-demand pressures on prices. It’s a simple privately-owned. Cui bono caveat emptor. The is- consequence of the law of scarcity, or, scientifically sue of ownership ties into the question of how the speaking, an emergent property of the system. economy enlarged. Presumably it is due to the in- This finding directly contradicts the supposedly en- creased work, productivity, or efficiency of all money lightened modern view of “putting money into the holders. Therefore, fairly, all money holders should bank where it can earn interest instead of hiding gain. it under a mattress.” If money stock is kept con- This is one embodiment of the principle of inter- stant, all money holders effectively gain interest with- est. If an economy grows then all money holders can out keeping their money in banks based on increased gain that increased energy without risk or work. It is purchasing power from a global economic tempera- possible to gain money in an economy without work ture increase. It’s also compatible with the use of via other means such as speculation, but it inherently commodity currency such as gold. The only-banks- involves a risk-reward tradeoff. By the money-energy can-do-it view is simply false mythology. The finding conservation principle, the only risk-free revenue pos- also conflicts with the legend of deflation as synony- sible from an economy is via an increased GDP. Be- mous with economic catastrophe. cause of boom and bust cycles, even that is subject A direct corollary to the above is that if GDP to fluctuation. is increasing and prices are stable (and any inter- It is possible to have interest systems that are not est payments are lower than the GDP increase) then directly tied to growth in the economy such as the money holders are losing money-energy. By the ear- current framework, but they are necessarily equiva- lier analogy of money as stock shares, it’s analogous lent to wealth redistribution systems! to the idea of a company that has increased market Note that arguably any rational model of the econ- value but shareholders’ stock prices remain constant. omy absolutely must consider the equilibrium state as Therefore the idea of maintaining price stability per one that does not involve growth. A century-and-a- se may be a specious economic doctrine! half of the “dismal science” (or the history of modern Keynesian economic theory holds that prices and civilization) may be based on an evasion or defiance wages are “sticky,” especially downward, meaning of that principle. It is quite possible that economics is that they resist deflation. [17] This is one reason that based on a mass collective rationalization in much the an allocation mechanism for the additional money x same way that U.S. citizens subscribed to the vision may be justified. However, the problem is that such of the “manifest destiny” during the era of expansion a system is more readily manipulated to channel the to the west. Relative to serious worldwide dangers of increased money-energy of the economy toward elitist

14 machinations that unfairly exclude money holders in general. d2 But it seems plausible that deflation in prices occurs inversely to inflation in prices. It is known that wage inflation increases slower than goods inflation so that the net effect to wage earners is diminished purchasing power. The inverse would be a decrease in wages that occurs slower than the decrease in prices, linear da resulting in increased purchasing power. The final securities demand exponential db conclusion is that the constant money stock system d1 logistic dc is theoretically superior to the re-allocation method based on (a) guaranteed fairness and (b) lack of ne- r1 interest rate r2 cessity of a central administration system. A closely related concept to stickiness of prices is elasticity. [17] Prices that are inelastic have associ- Figure 2: Three hypothetical scenarios da(r), db(r), ated demand that is not affected by price changes. dc(r) for increase in government securities demand by investors d1 d2 from increasing interest rates in Elastic prices involve changes in demand at price → the range r1 r2. changes. Elasticity is also a measure of “specific price → sensitivity to general inflation.” Elasticity is crucial because it suggests that in general inflation, some pansion rate based on the interest rate selected. Total goods, e.g. luxury items, inflate in price faster than demand for (and therefore sales of) government secu- others. Luxury items tend to have higher price elas- rities must vary based on interest rate according to ticity. some relationship. The U.S. Consumer Price Index, CPI, measures the inflation of a market basket of goods purchased Fig. 2 gives three hypothetical scenarios for the in- by a “typical household.” However, by tracking only crease in government securities demand by investors a set of inelastic goods with prices that are not as over increasing interest rates. (The plot was gen- sensitive to inflation, the CPI may consistently un- erated simply using mirror-symmetric versions of derestimate true inflation rates. Such a misleading eqs. 5.) or deficient indicator would be highly preferred by This mathematical relationship is the central pivot private bank owners in a privately-owned expansion around which monetary expansion policy is balanced. system, because they would be able to extract more When the Federal Reserve “buys” government bonds, money-energy without detection by general money it involves inflationary money expansion and does not holders! conform to the supply-demand curve(s) in the figure. Government deficits could always be covered via higher interest rates (and no expansion) if the Federal “optimal” expansion policy Reserve chose that route. Obviously, referring to the rate of increase of the The conclusion from the prior (simplistic) results economy as “interest” is not the concept generally is that the optimal monetary expansion policy from used in economics. The U.S. Federal Reserve deter- the point of view of money holders is always to in- mines interest rates which are returns paid on govern- crease interest rates up to 200% to meet budget short- ment loans or bonds (“securities”) by taxpayers. The falls, i.e. no privately-owned money expansion ever, remainder of the government deficit not covered via assuming the budget outlay is not adjusted. Those sales of the securities is that which must be financed money holders will always end up paying less in total via money expansion. But this direct link means the money-energy than from privately-owned expansion. Federal Reserve has strict control over the money ex- The 200% figure seems ridiculous, but really it shows

15 the absurdity of using privately-owned money expan- For a polytropic process, also reversable, meaning sion for any so-called “financing” whatsoever! roughly that there is no frictional dissipation, p vn is A strong case can be made that if the interest constant, i.e. rate were managed and determined in this hypothet- n n ical way (the true free market embodiment), citizens p1v1 = p2v2 (29) would begin to understand the true cost of publicly- The exponent n may range anywhere from owned government expansionary borrowing instead to . n = 1 gives Boyle’s law. For n = 1, −∞ of it being invisibly disguised in inflation. The infla- ∞ 6 tion rate in a publicly-owned system probably varies p2v2 p1v1 W 2 = − (30) almost precisely according to interest rates in the hy- 1 1 n pothetical system! The inflation rate for a privately- − For n = 1 (isothermal perfect gas process), owned system is even worse. A more mathematically rigorous treatment would 2 v2 p1 W1 = p1v1 ln = p1v1 ln (31) require taking into account the “term structure of in- v1 p2 terest rates,” i.e. long-term vs. short-term rates, and The logarithmic dependency in this formula might the exact speed of the inflation and government vs. have some relation to formulas for measuring “market private spending, but similar results are to be ex- impact” from buying or selling stock investigated by pected. Whereas publicly-owned expansion has nice Farmer. [20] properties as described, privately-owned expansion is If the pressure remains constant then simply scientifically and mathematically vacuous in any variation! 2 W = p(v2 v1) (32) 1 − A constant pressure process is called isobaric. The advanced verisimilitude prior sections used this formula for work as a very rough approximation for calculating energy changes The prior models are easily criticized and should not with x = ∆v and rough estimates for p (using the be taken too seriously, particularly the limit cases. limit cases). The formulas for energy in particular are merely The overall energy of the system remains constant rough analogies. They do not have major verisimil- with a constant GDP. However, the isothermal case itude but neither are they merely ‘toy’ models— n = 1 applies only for perfect gases. n = 1 can be primitive, but not crude. What is interesting about used to model a perfect gas and nonisothermal6 con- them is how the mathematics can reflect the various ditions, or a general polytropic process. n is also the assertions (some obviously approaching hyperbole) natural measure of the pressure decay rate mentioned made by various purely prose-oriented writers on the earlier. The exact value of n would ideally be deter- extreme implications of money expansion mechanics. mined from empirical data. Maybe there is some rule There is new insight lurking in the framework; hope- such as n 1 as the economy gets larger. fully future econophysicists can use this platform to → 2 A more refined model can naturally use W1 as seize them rapidly. a measure of the total energy associated with a More sophisticated models are immediately avail- money redenomination. Note that by conservation of able from thermodynamical theory and are readily money-energy, no money-energy is expended by a re- 2 utilized. A brief sketch of natural refinements will be denomination; W1 represents the maximum money- made here. In thermodynamics the general equation energy re-allocated or seizable via money expansion for work based on pressure and volume changes is depending on ownership. For constant temperature (no energy via increased temperature), a fraction of 2 2 this energy is available to the government (providing W1 = Z p dv (28) public services financed by taxpayers), the remainder 1

16 is allocated to the private bank. A simple approach electronics analogy would be to set x = y + z where y is dollars gained by “The greatest shortcoming of the human government, and z is dollars gained by private banks. race is our inability to understand the ex- z > 0 would be defined as “unfair.” ponential function.” The above model is somewhat awkward in that the —Albert A. Bartlett, physicist energy calculation splits into two separate formula- tions depending on n = 1 or n = 1. To escape this, The science of “mechatronics” has been described 6 one alternative is a simple variation that uses a pa- as a marriage of electrical and mechanical engineer- rameter 0 m 1 to represent the continuum of ing and computer science. A remarkable correspon- ≤ ≤ pressure available at different times during the ex- dence is noted in the field whereby mathematical pansion process. Then analysis from one discipline can be mapped onto another. Holbert has compiled a convenient table sum- marizing these correspondences in [33], “Interdisci- pm = p2 + m(p1 p2) (33) − plinary electrical analogies.” Electrical, mechanical, hydralic/acoustic, and thermal sciences all have sim- So p = p for m = 1 and p = p for m = 0. The m 1 m 2 ilar laws for the basic physical entities of force, mass, money-energy associated with x dollars at different energy, etc. This paper adds a new column for eco- times in the pressure decay process becomes simply nomics. x p . Spenders obtain energy with different efficien- m So under this correspondence, one could take a cies· m > m > m depending at what point and 1 2 3 complicated dynamical system from physics requir- time in the process they spend the money. m can ing analysis by Newton’s law. The physical setup also be related to the earlier pressure decay curves of or apparatus translates to a system of mathematical eqs. 5. equations. But there is a direct correspondence be- Another improvement in fidelity would break up tween e.g. an electrical circuit that embodies exactly existing owned assets, say v1 = va + vb + vc where the same properties and leads to an identical mathe- va is assets owned by the government, vb by citizens matical analysis. The established parallel is intuitive, and taxpayers, and vc private banks. vc could be extraordinary, and somewhat uncanny. For example, further split into domestic vs. foreign ownership. The mapping mechanical to electrical: expansion has variable allocation to the government, money holders (interest), and private banks, i.e. x = force current ⇔ xa + xb + xc. velocity voltage The general model would be very careful with the friction ⇔ resistance energy analysis. Basically, additional energy out- mass/inertia ⇔ capacitance side of overt capital flow is available from either in- ⇔ creased temperature (GDP) or currency redenomina- For economics, the case for the electrical analogy tion. The analysis determines how much of this en- is made in very sophisticated detail in [2]. These ergy goes into government services, how much goes correspondences permit a systems analysis and mod- to money holders via interest or money deflation, and elling of a vast economic system, reduced to theo- how much goes to private banks. retical equations. The electrical or circuit analogy is All of these equations can be easily converted to particularly relevant in the computer age. This all differential form for extended computational simula- combines to serve as the strong underlying basis for tions: the new science of “blip mechanics” as a new engineering discipline. In electronics, power is given by P = VI where P p = f (p ) t+1 1 t is in watts, V is voltage in volts, and I is current in vt+1 = f2(vt) etc. amperes (coulombs of charge per second). The energy

17 is given by the product of power and the timespan, be thought of as the load. The capacitor accumu- VI ∆t. But for the infinitesmal time period dt, this lates charge over time. The voltage available to the can· be taken as the “instantaneous energy:” load declines exponentially over time as the capacitor charges. Recall that voltage is analogous to pressure, Edt = V I dt (34) and prices are inversely proportional to pressure. Watts are joules per second, so this equation mea- Current represents “dollar circulation.” The cur- sures joules. From the earlier equations (e.g. perfect rent and therefore instantaneous energy of the circuit falls to zero as the capacitor charges and t . The gas law eq. 2), voltage V is analogous to pressure → ∞ p and current times timespan I dt to volume. The capacitor represents the mechanism of some entity quantity I dt as volume implies that· dollars are anal- (either public or private) that removes dollars from ogous to coulombs· of charge. The system of a perfect circulation in the economy. The asymptotic limit in gas in equilibrium with an internal energy is therefore this model is a circulation deadlock or energy freeze. analogous to a circuit in equilibrium being fed by a So, this circuit gives one possible long-term dynam- voltage source, e.g. a battery. ical solution for the earlier systems with decreasing A brief example will be considered. In finance, the pressures, pi > p2 > p3 > . . . > pf , approximately compound interest formula can be given as a recur- according to the recurrence relation (or differential equation) associated with k = 1 and as t rence relation At+1 = f(At), → ∞

pt+1 (1 + r) = pt. (38) r k r kt · At+1 = 1 + At = A0 1 + (35) k k This example is simple yet important in how it where At is the capital at year t (initial capital A0), exemplifies the depiction of inflation dynamics as a r is the interest rate per year, k is the number of closed energy system and analysis via engineering compounding periods per year. But by an application principles. A key property of the science of “blip me- of l’Hôpital’srule (from elementary calculus) it can chanics,” somewhat in conflict with the conventional be shown that as k wisdom of economics, is that inflation is not an in- → ∞ explicable aspect of arbitrary mass psychology. Par- rt lim At = A0 e (36) ticularly in a large scale economy, price inflation is a k →∞ precise, mathematical measure of the macroscopic en- This is referred to as the “continuously com- ergy dynamics of a system which adheres to physical pounded interest formula,” and the longer any com- laws. pounding is in effect the closer it approaches the formula. It can also be used as an estimate of price inflation given the inflation rate. Or conversely if recursive bite ’em ad infinitum r < 0 it can measure the depreciation in value due to So, naturalists observe, a flea inflation. Has smaller fleas that on him prey; In electronics the standard RC resistor-capacitor And these have smaller still to bite ’em; circuit has similar exponential dynamics, analyzed in And so proceed ad infinitum. typical introductory references. [67] This is a circuit —Jonathan Swift with a battery with voltage V , R-ohm resistor, and C-farad capacitor all in simple series. The voltage A remarkable paradox emerges in the careful study over the resistor at time t is given by the formula of the prior mathematics, very much reminiscent of

t Schröedinger’snotorious is-it-alive-or-dead quantum − VR = V e RC (37) mechanical cat riddle (which many are not aware was The formula is giving the “inflation” that occurs phrased mathematically in his original paper). Ear- in the circuit when 1/RC = r. The resistor can lier x was defined as money loaned to the state in −

18 excess of straight borrowing, i.e. the quantity of ex- 4 commentary: blip corruption pansion borrowing. “One does not have to eat an entire apple Consider that the model can be totally reformu- to know it is rotten.” lated in a parallel way based on the earlier idea of —literary critic expansion borrowing as a “double shortfall”. Let x simply refer to the budget deficit, the difference Over centuries, many commentators and authorities between funds spent by the government and total have struggled to articulate these ideas using vocab- taxes collected. x then represents the amount of ulary that has been itself correspondingly debased! funds obtained from straight borrowing, and all the Many of their quotations will be re-examined in this mathematics is identical. Then the “reserve ratio” new light over following sections. The process of r = p2/p1 then represents the dilution of value in money expansion is typically called ‘creating money’ government services provided to taxpayers due to the and the pseudo-money pseudo-loaned by the pseudo- overhead cost of repaying government borrowing, or, bank is typically referred to as “credit.” But also in a sense, the degree that the future has been mort- within the literature, dire confusion or obfuscation gaged to the present. There seems to be lurking here reigns on the razor-sharp cui bono caveat emptor recursive bite ’em ad infinitum, noted by some other distinction set out here between publicly-owned vs. writers, e.g. [2]. privately-owned expansion. As outlined, this intellec- In fact, to take it to even further extremes, a po- tual error has potentially catastrophic consequences. litical libertarian in favor of a minimalist government The former case can be a legitimate means for collec- might take x to simply refer to all taxes. Then from tion of government revenue. The latter stands cur- that perspective the ratio r = p2/p1 represents the rently as unexposed embezzlement. The manufactur- ‘drain’ of government on ‘productive society’! (Fi- ing of abstract credit is a means for real wealth ex- nally, the anarchist argues against the validity of ‘pro- traction! ductive society’!) Banking authorities make a distinction between deposits and loans in the same way they distinguish Apparently what the mathematics is really ad- between “money” and “credit.” In the nonphysical dressing is the general theoretical concept of money fractional reserve blip-based money system, the dis- spent without consent of money holders via money tinction is invalid. Creation of credit is equivalent to system mechanics. x is the embezzlement, and r is the creation of money. Whoever has or is given the the resulting debasement. The government may not authority to create credit has the authority to extract spend funds without consent of taxpayers. Borrow- wealth from the economy by that same mechanism. ing requires the consent of future taxpayers. Private Moreover, there is no meaningful distinction between banks may not spend public funds. There dilution fractional reserve banking and money expansion. implies the consent of the public. The analogy of counterfeiting looms large as But if the government does it, why not private the mathematics reveals. In many ways the only banks? The conclusion is that at the core of the prob- difference between illegal counterfeiting and legal lem, banking and government contain two sides of one privately-owned money expansion is that gains by the phenomenon. Both contain by nature some mecha- recipient in the latter case are officially sanctioned, nisms, elements, and agendas capable of, and at times not indiscriminate, and limited based on the expan- applying, money-energy extraction without consent sion rate. Therefore, paradoxically, privately-owned of money holders via concealment within the money money expansion is basically equivalent to ‘legalized system administration (i.e. embezzlement). Further- counterfeiting,’ i.e. a surreptitious state-sanctioned more, from kindergarten wisdom, “two wrongs do not plundering of money holder wealth by private bankers! make a right.” So. . . is it alive, or is it dead? How Because it is an intrinsic oxymoron, however, the to stop it? The halting problem. counterfeiting analogy is awkward and unsatisfactory,

19 and some other metaphor seems necessary. “left out in the cold.” Perhaps the simplest explanation for this situation is that new shares of the economy are issued, but they scarcity integrity are owned by private bankers at the expense of the ownership of all other shareholders (i.e. money hold- “The price of liberty is eternal vigilance.” ers, taxpayers, citizens). Via mere money manipula- —Thomas Jefferson tion the private bankers own a greater real share of the entire economy (e.g. GDP denominated in dol- “The buck stops here.” lars). —Harry S. Truman Hence the term “money stock” takes on new meaning! The tragic absurdity of the situation has reached The terminology and mathematical vocabulary of the epic, international, worldwide proportions. All the previous sections gives a new framework for discus- complex economic theory, terminology, and mathe- sion of the different types of money. Evidently it’s a matics could simply be dropped for the following ex- continuum: planation: receipt money r = 1; the money is fully backed. The government has delegated its responsibility of ensuring public monetary integrity fractional money Fixed r < 1. The unbacked to private bankers. But the arrangement fraction 1 r may be either publicly-owned or − has devolved and degenerated to negligence privately-owned. and abdication. Those bankers have re- neged on the implicit promise of providing fiat money Unfixed r < 1; r may arbitrarily fluctuate. Or r 0. monetary integrity. Their system correctly → meticulously keeps track of ‘blip’ ownership Paper money, in contrast to commodity money, is and its transfer except, via the delegated required and a prerequisite for a fractional money ownership and administration of the blip- system, although a paper money system is not neces- system, and under the guise of specious, sarily either receipt, fractional, or fiat. Paper money distorted, and flawed economic science, the represents an abstraction away from directly trad- bankers can arbitrarily create and own new ing a scarce entity such as precious metals. This ‘blips’! divorce simplifies, but does not imply, debasement What has occurred is an unequivocal corruption in of its scarcity representation via money expansion— the integrity of the money. Money is a representation actual debasement is tied to administration. Elec- means for scarcity. Holders utilize it precisely for tronic money simply replaces paper with even more that property. Any entity that can allocate scarcity- convenient ‘blips.’ units without exerting economic work by definition What a fair and sound money system really re- has debased the scarcity-units relative to all other quires is scarcity integrity. All systems devised so far holders—the units are not scarce for the embezzler. can be debased. However, debasement is not neces- Somewhere along the line, the promise of integrity sarily an intrinsic property of any of them. Clearly, has been trashed. a fair public money system must at the very mini- The holders of the scarcity-units determine the def- mum be either publicly-owned fractional, where there inition of economic work. Legitimate government ser- is legislative control over r, or fully-backed, in which vices are included. The government is erected partly case ownership of the unbacked fraction is irrelevant to protect scarcity-unit ownership and regulate legal (there is no unbacked fraction). Fiat currency is un- and illegal scarcity-unit transfer. sound, but not in the sense that it will inevitably Privately-owned expansion is equivalent to siphon- lead to total loss of value. Loss of value occurs at ing or leeching of money-energy with dollar holders the discretion of whoever can effectively manipulate

20 r via scarcity-unit creation and ownership unilater- other booklet entitled Modern Money Mechanics by ally and clandestinely, concealed from other holders the Federal Reserve Bank of Chicago states: (i.e. without their consent). As concluded, privately-owned fractional banking In the U.S. neither paper currency nor is not a fair system because, in short, it facilitates deposits have value as commodities. Intrin- private confiscation of public property, represented sically, a dollar bill is just a piece of paper. by the public money. However, it is not necessarily Deposits are merely book entries. Coins do unsound in the sense that it is unstable or will always have some intrinsic value as metal, but gen- collapse. Collapse occurs as r 0. With negligent, erally far less than their face amount. malignant, greedy etc. administration,→ money moves What, then, makes these instruments— through the “backing continuum” from full, to frac- checks, paper money, and coins—acceptable tional, to fiat. But even private expansion owners at face value in payment of all debts and would presumably seek to avoid r = 0. Privately- for other monetary uses? Mainly, it is the owned fractional banking can be quite sound. confidence people have that they will be able Apparently, the unrecognized dichotomy of fairness to exchange such money for other financial vs. soundness lies at the heart of much economic the- assets and real goods and services whenever ory. One does not necessarily imply the other. It ap- they choose to do so. This partly is a matter pears another variation on the cui bono caveat emptor of law; currency has been designated “legal error. tender” by the government—that is, it must [32] quotes a bulletin of the Federal Reserve Bank be accepted. of St. Louis: This reflects the perception of conventional wisdom that money is backed by ‘confidence’ or ‘faith.’ In Modern monetary systems have a fiat reality the expectations over exchanging money for base—literally money by decree—with de- assets, goods and services are arguably a secondary pository institutions, acting as fiduciaries, phenomenon. The confidence refers to the general creating obligations against themselves with money holder’s expectation of an implicit promise the fiat base acting in part as reserves. The that blips will not be arbitrarily allocated—which decree appears on the currency notes: “This has been exposed here and elsewhere as a monolithic note is legal tender for all debts, public fraud and sham. [32] and private.” While no individual could refuse to accept such money for debt repayment, exchange contracts could easily be faith in blips composed to thwart its use in everyday com- “One thing to realize about our fractional merce. However, a forceful explanation as reserve banking system is that, like a child’s to why money is accepted is that the fed- game of musical chairs, as long as the music eral government requires it as payment for is playing, there are no losers.” tax liabilities. Anticipation of the need to —Andrew Gause [27] clear this debt creates a demand for the pure fiat dollar. Many understandably fail to regard “faith in blips” as something to be taken very seriously. The re- By previous interpretation, “fiat base” might as well duction of money to a total electronic abstraction be called a “baseless base.” What the above amounts and its consequences has been called “the death of to, paraphrased: “wealth is denominated in blips and money” by Kurtzman. [39] But merely denominating those blips are legally, arbitrarily manipulated at cit- scarcity-units in terms of blips does not mean that izens’, taxpayers’, and government’s expense for in- those scarcity-units are meaningless or that they will visible confiscation by faceless private bankers.” An- be arbitrarily manipulated! Blips have a total reality.

21 Blips take the physical form of the vast accounting Paraphrased, in a way that neither Eccles nor Pat- apparatus used to record, manage, and track them. man would have understood at the time: after nation- Blip value is the mathematical property of energy wide economic dislocations that eventually escalated derivable from the science of blip mechanics and not into a national congressional inquiry, almost certainly a mere psychological phenomenon. Blips are exactly ensuing as direct consequences of the corrupt blip- as real as the entire economy. system, Patman is asking Eccles if the blip-system If wealth-owners wish to preserve their own as- has integrity. Eccles replies that no, the blip-system sets against blind robbery, then they must understand has no integrity, but that it is running smoothly and the basic engineering principles of sound blip-systems exactly how it was designed to operate. New blips and ensure their blip-system has the absolute high- can be and were created arbitrarily and ownership as- est degree of integrity achievable and is free of cor- signed to the private bank, and subsequently loaned ruption—it is the imperative of citizens, taxpayers, to the government. The state is required to repay and money holders to actively create one, and not those blips. passively accept any shoddy or boobytrapped system The debt is the blip-debt owed to the private Fed- foisted on them (bootytrapped?). They must be hy- eral Reserve bank by the U.S. government, i.e. citi- pervigilant for the slightest signs of ‘leakage.’ Bugs zens, taxpayers, and money holders. Eccles has suc- in blip algorithms or implementations have the most cinctly explained the process whereby all money is ul- catastrophic consequences imaginable—blip loss. timately based on blip-debt—to private bankers. As Evidently from history this task is in many ways Senator Barry Goldwater stated: far more difficult than erecting a government— herculean, sisyphean, gordian, and pandoran (mas- Most Americans have no real understanding sive, futilely repetitive, intractable, and insidious). of the operation of the international money It seems both government and banking are defective lenders. The accounts of the Federal Re- legacy systems and their functions need to be rewrit- serve System have never been audited. It ten and consolodated into a new blip-system! operates outside the control of Congress and The following statements were made during hear- manipulates the credit of the United States. ings of the House Committee on Banking and Cur- Translation: the entire U.S. economy is denominated rency, September 30, 1941. [32] Members of the Fed- in blips, the debasement of which its government has eral Reserve Board call themselves ‘Governors.’ Ec- zero control over. By the design architecture, dic- cles was Chairman of the Federal Reserve Board at tated by first-class users, the blip system is simply not the time. accountable to second-class users. The world’s “last Congressman Patman: “How did you get remaining superpower,” with the largest stockpile of the money to buy those two billion dol- nuclear weapons, and the correspondingly most gar- lars worth of Government securities in gantuan and highest security military-industrial com- 1933?” plex of all nations worldwide, has outsourced its blip management! The blips stop somewhere else. Governor Eccles: “We created it.” Patman: “Out of what?” gold & Greenspan Eccles: “Out of the right to issue credit money.” “In truth, the gold standard is already a barbarous relic.” Patman: “And there is nothing behind it, is —John Maynard Keynes there, except our Government’s credit?” Eccles: “That is what our money system Complex treatises on gold as a money standard have is. If there were no debts in our money been written and its role in finance will only be briefly system, there wouldn’t be any money.” regarded here for completeness. For a representative

22 view on its role, an excerpt from an unreknowned Greenspan’s article is very astute and incisive, such article by current Federal Reserve chairman Alan as in how it focuses on the issue of consent by money Greenspan is highly useful. The article (or the follow- holders, but it contains the same classic cui bono ing quote from it) circulates among money reformists caveat emptor error. Greenspan assumes the “wel- and gold money advocates. Entitled “Gold and Eco- fare state” is the recipient of the revenue accruing nomic Freedom,” it was published in 1967 in the book from money expansion. The article also tends to mix Capitalism, the Unknown Ideal edited by Ayn Rand: up the fairness vs. soundness issue. [30] By the previous section, scarcity integrity is the true goal of a fair and sound monetary system. The abandonment of the gold standard Greenspan’s argument phrased in this terminology is made it possible for the welfare statists to that a gold standard implies scarcity integrity. Yet in use the banking system as a means to an the same article he describes privately-owned money unlimited expansion of credit. . . . expansion based on fractional reserves, backed by a The law of supply and demand is not gold standard, as an accepted, conventional, and le- to be conned. As the supply of money (of gitimate banking practice. But in that case there is claims) increases relative to the supply of not necessarily a way for wealth-holders to protect tangible assets in the economy, prices must themselves from confiscation via dilution either, ex- eventually rise. Thus the earnings saved cept, traditionally, government regulation! Alas, an- by the productive members of society lose other case of recursive bite ’em ad infinitum, which value in terms of goods. When the econ- gold does not inevitably halt. omy’s books are finally balanced, one finds Greenspan does make the excellent point that in that this loss in value represents the goods a free market of private fractional reserve banks, purchased by the government for welfare or r will at least be subject to competitive pressures other purposes. . . . based on best interest rates offered. Unfortunately, In the absence of the gold standard, there is nothing intrinsic about gold that ensures there is no way to protect savings from con- that bankers will not debase a receipt system— fiscation through inflation. There is no safe historically, oftentimes governments (taxpayers) have store of value. If there were, the government had to refund losses to depositors due to collapses would have to make its holding illegal, as from poor or greedy management. (A minor case was done in the case of gold. . . . The finan- could be made that gold coins circulating in the econ- cial policy of the welfare state requires that omy would serve as a check on private expansion.) there be no way for the owners of wealth to Gold money advocates, oftentimes a motley crew, protect themselves. have recently gained some traction by starting new This is the shabby secret of the welfare currency systems administered over the internet, statists’ tirades against gold. Deficit spend- as profiled recently in an entertaining account by ing is simply a scheme for the “hidden” con- Dibbell in Wired magazine entitled “In gold we trust: fiscation of wealth. Gold stands in the way from gun-wielding libertarians to radical Muslims, of this insidious process. It stands as a pro- an unlikely global cabal is plotting financial revolu- tector of property rights. tion.” [16] But they seem to not directly confront the More on young Greenspan’s brush with Rand’s phi- real key issue of how money holders ensure or are losophy of Objectivism can be found in Bradford’s guaranteed it is fully backed and not fractional. article, “Alan Greenspan: Deep Cover for Capital- Within money reform circles there is much lack of ism?” [10] Or, the Randian libertarianism view of careful distinction over the difference between the money finds expression in her novel Atlas Shrugged medium itself and the administration system, i.e. [52] in which a secluded utopian society is founded what mechanisms ensure scarcity integrity. Maybe based on a gold coin money system. they adhere to the unconscious equation that “the

23 purity of the gold is equal to the purity of the bank.” In the year before the Constitutional convention, But the former is physical and the latter is more ab- egalitarian populist Thomas Paine wrote that he was stract, and scarcity integrity is exactly the chasm sep- strongly opposed to fiat money, which he called coun- arating the two. terfeiting by the state. He specifically abhorred legal Gold or other precious metals certainly seem an ex- tender laws which force people to accept it, saying cellent base for a fully-backed currency with scarcity “the punishment of a member [of the convention] who integrity. What might ensure scarcity integrity is not should move for such a law ought to be death.” so much gold backing but regular, independent audits The provision allowing “emitting bills of credit” that certify full backing. A later section, “21st cen- contained in the prior articles of the confederacy tury blip-system,” will make proposals on alternative (used as a draft for the new constitution), proven systems based on these observations. historically disastrous, was struck down by an over- Gold advocates may disagree with the conclusion whelming margin. Voicing the sentiment of the ma- already reached above that ‘blips’ alone are a possible jority of deligates, Hamilton said, “To emit an un- and viable basis for a sound and fair monetary system funded paper as the sign of value ought not to con- with scarcity integrity. The case will be made that a tinue a formal part of the Constitution, nor ever here- blip-system may actually maximize scarcity integrity after to be employed; being, in its nature, repugnant in crucial ways that a physically-backed system can- with abuses and liable to be made the engine of im- not, by simplifying the process of auditing. position and fraud.” But his views were complex; he had also stated: 5 blips vs. nations A national debt, if it is not excessive, will be to us a national blessing. It will be a “Let me issue and control a nation’s money powerful cement to our nation. It will also and I care not who makes its laws.” create a necessity for keeping up taxation to —Mayer Amschel Rothschild a degree which, without being oppressive, will be a spur to industry. “A private central bank issuing the public currency is a greater menace to the liberties During the many political trials-by-fire of the of the people than a standing army.” fledgling nation, Jefferson shrilly sounded the alarm —Thomas Jefferson bell many times: If the American people ever allow private The striking dichotomies and convoluted gyrations banks to control the issue of their currency, that arise between political and economic power were first by inflation and then by deflation, the in full force at the founding of the U.S. and have banks and the corporations that will grow persisted strongly throughout its history. Griffin up around them will deprive the people of [32] documents very thoroughly the numerous up- all property until their children wake up heavals and crises that centered around the bank- homeless on the continent their Fathers con- ing system. The entire U.S. government revolution, quered. with the motto “no taxation without representation!” was based on defiance of the existing dual economic In 1814 Jefferson retired to Monticello and bitterly and political order. The modern equivalent might as resigned himself to defeat on the issue of the nation’s well be framed as, “no allocation without represen- currency. In a letter to John Adams he wrote: tation!” (Re, recursive bite ’em ad infinitum!) The debate is very much reflected or even epitomized in I have ever been the enemy of banks; not the archetypical schism between Hamilton and Jeffer- of those discounting for cash, but of those son and excellently analyzed in Gordon’s work. [28] foisting their own paper into circulation,

24 and thus banishing our cash. My zeal Banking was conceived in iniquity and born against those institutions was so warm and in sin. The bankers own the world. Take open at the establishment of the bank of it away from them, but leave them the the U.S. that I was derided as a Maniac by power to create money and control over that the tribe of bank-mongers, who were seek- money, and they will create that money ing to filch from the public their swindling right back again. Take this power away from and barren gains. . . . Shall we build an al- bankers and all great fortunes will disap- tar to the old paper money of the revolution, pear, and they ought to disappear, for this which ruined individuals but saved the re- then would be a happier, better world to public, and burn on that all the bank char- live in. My sons should not object; they ters present and future, and their notes with are well educated and should be willing to them? For these are to ruin both republic take their place in the business world. But and individuals. This cannot be done. The if you want to continue to be slaves to the Mania is too strong. It has seized by its banker and pay the cost of your own enslave- delusions and corruptions all the members ment, then let the bankers continue to cre- of our governments, general, special, and in- ate money and control credit. However, as dividual. long as government will legalize such things, a man is foolish not to be a banker. In the phrase contrasting “discounting for cash” vs. “foisting paper into circulation, thus banishing cash,” This is a remarkably modern view relative to the Jefferson was making the distinction between a legit- ideas espoused in this paper. Stamp has captured imate bank seigniorage fee (known to the depositor) the idea of worldwide enslavement via the money sys- and fractional reserve banking. The remainder cap- tem and contrasted it with the productive activities tures firsthand the ‘maniacal and delusional corrup- of business. tion’ of ‘filching and swindling bank-mongers’ Jeffer- The following quote circulates in money reform lit- son faced, who’d witnessed the entire revolutionary erature and is attributed to the Rothschild brothers. war. Ironically, Jefferson died leaving his mansion The few who can understand the system estate Monticello deeply in debt! [of fractional reserve banking] will be so in- President Andrew Jackson successfully managed to terested in its profits, or so dependent on extricate the government from the clutches of a pri- its favors, that there will be no opposition vate banking system run by Biddle during his term in from that class, while on the other hand, the a vicious battle, even after a monumental confronta- great body of the people mentally incapable tion with Congress and the Supreme Court, once of comprehending the tremendous advan- shouting at a group of bank supporters in a fit of tage that capital derives from the system, rage, “You are a den of vipers and thieves! I will will bear its burdens without complaint, and route you out!” Jackson declared that the second perhaps without even suspecting that the bank of the U.S. was a quarter owned by foreign in- system is inimical to their interests. vestors who reaped its profits via the era’s equivalent of privately-owned money expansion. Here the Rothschilds refer to the parasitical money- energy extracting ‘class’ on one hand and how it blips vs. civilization is woven together, and the careful balance with an uneducated public that supports the system on the Josiah Stamp, a president of the Bank of England, other hand. All the words “tremendous advantage,” once spoke candidly during an informal talk to about “burden,” and “inimical” are arguably understated 150 history, economic, and social science professors or misleading. Also note that they suggest only that in the late 1920’s at the University of Texas: [27] “perhaps” no suspicion will be aroused, implying the

25 system may still be workable if suspicion is aroused citizens, taxpayers, and moneyholders by their but it never comes to anything (e.g. the conversation voluntary consent. “Blip-masters” (controllers quoted above between Patman and Eccles in 1941). of the blips) can gain indentured servants— Robert H. Hemphill, Credit Manager of Federal slaves. Reserve Bank, Atlanta, Georgia stated: [32] parasitism vs. productivity If a parasite can de- This is a staggering thought. We are feat defense mechanisms, infiltrate, and seize ef- completely dependent on the Commercial fective control of the blip-system, it can leech Banks. Someone has to borrow every dol- real money-energy via abstract blip manipula- lar we have in circulation, cash or credit. tion. But it must be done while evading detec- If the Banks create ample synthetic money, tion of the host, either physical or theoretical. we are prosperous; if not, we starve. We are, absolutely, without a permanent money warfare vs. prosperity Jefferson direly warned system. When one gets a complete grasp that, in his opinion, in-the-flesh “standing of the picture, the tragic absurdity of our armies” lined up against the country’s borders hopeless position is almost incredible, but were less deadly than blip-system parasite in- there it is. It is the most important sub- fection. By earlier analogies, counterfeiting is ject intelligent persons can investigate and an almost unbelievably effective tool of invisible reflect upon. It is so important that our warfare via seizure of assets and control (of e.g. present civilization may collapse, unless it slaves or especially political machinery). becomes widely understood, and the defects remedied very soon. 6 the religion of capitalism Ergo, blips vs. civilization, humanity, the world, atoms! Hemphill is correct in the account except his “. . . the free-market faith stands on the insistence that the system may collapse, a claim by verge of becoming a national cult.” many other writers. Assuming the parasite is not sui- —T.C. Frank [24] cidal, the system would be carefuly maintained and “But my second response, horror, had to kept as stable as possible—no “killing the goose that do with seeing, writ large as only a confab lays golden eggs.” Also, from the point of view of of True Believers can do, technolibertarian- the parasite, the system has no defects, it is func- ism.” tioning as required. He also fails emphasize the mere —Paulina Borsook [7] borrowing of dollars is not so sinister as much as the obligatory repayment to the Commercial Banks. Capitalism as a religion may seem a dubious So some basic themes emerge from all accounts. metaphor to many, but the symptomology is present, In the real world of atoms, blip mechanics involves identifiable, and unmistakable in modern culture. various key dynamics: Critiques of capitalist ideology as verging on religion religion vs. science The public and its elected of- can be found in e.g. “The folklore of capitalism” [24] ficials may simply have blind faith in the scarcity or the chapter “Bionomics in your Daily Life” in Bor- integrity of the blip-system, both in theoretical sook’s book, Cyberselfish [7]. Any critique quickly and physical terms, or they may actually directly faces the “fish in the water problem.” Capitalism en- at least verify that it runs correctly, according to gulfs and encircles humanity’s modern intellectual en- intent, and is free of corruption. vironment in the same way water surrounds fish, presumably those of which (as the analogy goes) who’ve slavery vs. freedom Blips measure scarcity-units never experienced “fresh air” are incapable of com- which are also equivalent to time and labor by prehending the concept.

26 The same people that would scoff at the idea of If capitalism is a religion, then any suspicion re- capitalism as a religion might also scoff at the idea of garding the system’s integrity, particularly that fo- lack of true scarcity integrity in the U.S. blip-system. cusing on the specific mechanisms of its actual phys- Yet their confidence is a matter of faith. Among the ical embodiment (such as money expansion, central public, nobody has firsthand knowledge of how the banks, or fractional reserve banking) may all be re- system operates or what super-secure safeguards are garded as sacrilege, heresy, blasphemy, or a conspir- present to ensure lack of corruption. Re: Patman vs. acy theory. Definitely the idea of privately-owned Eccles, the interal dynamics of the Federal Reserve money expansion gains veers into this territory. Simi- are shrouded in secrecy even from Congress—hence, larly, by one account, ex-chief economist of the World books on the Federal Reserve with titles like Secrets Bank Joseph Stiglitz was “excommunicated [fired] of the Temple by Greider [31], Secrets of the Federal purely for expressing mild dissent from globalisa- Reserve by Mullins [49], The Secret World of Money tion World Bank-style. . . Stiglitz cannot simply be [27], The Occult Technology of Power [1], or Creature dismissed as a conspiracy nutter.” [51] Apparently from Jekyll Island by Griffin [32]. Stiglitz no longer qualified as the chief proseletyzer. It’s all reminiscent of the now-urban-legend of Capitalism as a religion finds a major expression Fort Knox that supposedly once stored all the na- in the works of Ayn Rand such as Atlas Shrugged tion’s gold reserves. As stated by Barry Goldwater [52] published in 1957, one decade prior to the essay in the earlier quote, the Federal Reserve has never by Greenspan [30] quoted previously. Rand’s philos- been independently audited. This may not seem so ophy of “Objectivism” overlaps with libertarianism disturbing—after all, many companies are never au- especially in regards to money. The idea of govern- dited by outside agencies either. Except, when one ment bureacrats as inherently a parasitical force on considers that if new blips are arbitrarily created in the productive members of society is an intense theme the electronic transaction system of the Federal Re- of her book. Unfortunately this falls into the cui serve (known as FedWire), no outside detection is bono caveat emptor trap. There is nothing inevitable possible whatsoever because there is no outside sys- about embezzlement ending with government, and tem that verifies (or even can verify) the total quan- the assumption possibly dangerously diverts atten- tity of FedWire deposits! tion. Government bureacrats could be unwitting or witting pawns in a more “insidious process” (to bor- As outlined, as is commonly mistakenly supposed, row her early disciple Greenspan’s own phrase). As the religious aspects of capitalism are not related to the saying goes, follow the money. the abstraction of blips, because a nonphysical blip- system is a totally workable foundation for a secure banking system. What involves faith is the assump- church dogma tion that it is administered without any kind of ma- “Religion is the opiate of the masses.” nipulation, or that the only kind of manipulation is —Karl Marx that in which the government uses the extra revenue for the same purposes as taxation, i.e. public services. “Don’t worry, be happy!” Another related faith is that government represen- —Bobby McFerrin tatives will ensure it has scarcity integrity; but as with the Patman-Eccles exchange, that accountabil- If capitalism were a religion, one would expect un- ity approaches a fantasy. The banking “priesthood” usual, mystical, intricate symbology, such as that uses the catchword credit as a euphemism for routine which adorns a dollar bill. Or, elaborate worship cer- and unrestrained blip creation—the exact opposite of emonies, such as a master priest routinely appearing scarcity integrity! Not coincidentally the rational jus- before Congress to utter mysterious proclamations, tification for economic scripture is not available, nor such that a mere single phrase like “irrational exuber- questioning permitted, to “laymen.” ance” could throw worldwide markets into gyrating

27 repercussions. The adjustment of key economic pa- money supply” in the mainstream media. But rameters with worldwide-rippling consequences such this is specious and misleading lacking informa- as interest rates or money expansion would seem to tion on to whom specifically the money is sup- have all the same scientific precision and consistency plied. The terminology is far more accurately as interpretation of slaughtered animal entrails. called dilution (totally analogous to secondary Martin Luther sparked the protestant reformation stock offerings) or “debasing the currency.” It’s of the Catholic church in Europe by nailing his 95 a secondary money stock offering backed by the theses to a church door in 1517. He chiefly protested entire country’s assets (underwritten and paid the sale of “indulgences” by the church, via which for by all citizens, taxpayers, and money hold- he asserted the church authorities were misleading ers). the public into believing they could buy forgiveness for their sins—that they were in fact worthless rel- deflation Deflation in the modern vocabulary is ative to that purpose. Historically, the indulgences synonymous with calamity or disaster. But were sold as a financing mechanism for additions and by the findings on temperature increase in the embellishments to the elaborately expensive and or- economy, a deflation may be a natural pro- nate Church cathedrals! Replace “indulgences” with cess whereby an increasingly efficient economy “blips” and the modern worldwide religion begins distributes the gains to all money holders—an to emerge. Are money holders being “sold” worth- “emergent” interest system requiring no central- less blips by the central banking or fractional reserve ized or bureacratic administration, or possibility banking systems? Caveat emptor ad nauseam. of ulterior manipulation. Deflation therefore can Another phenomenon of capitalism as a religion be a sign of a healthy economy with highly secure takes place in teeming business pep rallies, of which scarcity integrity! all companies Microsoft has probably most perfected price stability The doctrine of Keynesianism ad- via Steve Ballmer’s revivalist-preacher showmanship. vocated that governments spend countries out Tens of thousands of employees regularly file into a of recessions via borrowing. It was eventually stadium for a show resembling a religious celebration eclipsed by monetarism which proposes a fixed turned “mass” hypnotism. money supply rule where the money expansion In a speech at Carnegie-Mellon University on April rate should match growth in GDP. This does 10, 1980, candidate George Bush attacked incum- ensure price stability, but by the findings on bent Ronald Reagan for “a voodoo economic policy” temperature increase, money holders may lose comparable to something concocted by a “Governor wealth in a growing economy due to price stabil- Moonbeam,” a deadly-resonant epithet that ringed ity. through public debate and launched two decades of editorial derisions about “voodoo economics” that fighting inflation Inflation is conceived as a myste- continue to the present day. rious, external, and only-marginally-controllable There may be some hope that the new science of phenomenon much like the weather. But a econophysics, in its bare and fragile infancy, may nev- central bank such as the Federal Reserve and ertheless be able to hold up some candlelight in the its valiant but quixotic expansionary monetary darkness of “the dismal science.” What aspects of it policy “rain dance” are the source of infla- are really senseless superstition now masquerading as tion. [54, 26] If the expansionary monetary pol- science? icy is flawed then the end effect may be to fight In a religion, various terms have special meaning collective gains of publicly-generated wealth in- that may drift from reality via reiterated, increas- creases by diverting them to an elite few! ingly disconnected dogma, such as: free market In lassaiz-fair capitalist proponents’ money supply Expansion is called “increasing the ideology the market is guided by Adam Smith’s

28 “invisible hand” of supply and demand forces. “None are more enslaved than those who However the most important supply and demand falsely believe they are free.” mechanism, that which entails and subsumes all —Goethe others, is the scarcity integrity of the overall system. All market dynamics is built on top of that Slavery has persisted throughout recorded human structure. If the underlying “blip operating sys- history, possibly as long as or longer than money, tem” is flawed, nothing built on top of it is pos- and the modern era’s supposed obliteration of it can sibly legitimate—the possibility of a free market be regarded as something of a rare anomaly. Entire is fundamentally and intrinsically corrupted. civilizations such as those of both Rome and Greece had economic systems that were unsustainable with- growth One of the most charged and loaded terms out slaves—more accurately, slavery formed the basis of all, “growth” as equivalent to salvation is a of their systems. But one might argue that slavery presumption not necessarily fulfilled by reality. persists at the entry into the 21st century, just in a The gains may not be equally distributed. But disguised form. Modern vernacular is rife with di- the “more pressing” matter is that growth in the rect and indirect allusions to slavery. For example, overall economy is increasingly totally equiva- the trap of low-paying jobs is referred to as “wage lent to dangerously amplified earth-wide envi- slavery.” ronmental stresses verging into crises. One origin of the modern “dismal science” of eco- market rates The “free market” non sequitur is nomics is sometimes dated as beginning with Thomas epitomized in the central banks’ control over Carlyle’s 1849 denunciation of its views for the con- interest rates and money expansion which flict of market dynamics with slavery. As Levy an- would otherwise be determined by self-regulating alyzes in his essay entitled “150 Years and Stil Dis- market mechanisms such as deflation. Self- mal!”: [41] correcting mechanisms have been hijacked for bureaucratic machinations, effectively installing Carlyle makes a point of vital impor- a built-in, invisible caste system—with an elite tance: the economics of his contemporaries class euphemistically referred to by the Roth- in its idealization of market relationships schilds as “the few who can understand the sys- among equals stands in opposition to his tem, interested in its profits, or dependent on its dream of slavery’s hierarchical obedience. favors.” In a sense, the money system itself is Too often soft-pedaled by those who ad- not free. Or, tail wagging the dog, it becomes mire his attack on economics, Carlyle was the arbiter of all freedoms. the premier theorist of the idealized slave society. In opposition to the economists’ supply-and-demand model of human soci- 7 economic slavery ety, he put forward the doctrine of obedience to one’s betters. “Whoever controls the volume of money in any country is the absolute master of all in- One may recoil at Carlyle’s aged sneer as a dark cor- dustry and commerce.” ner of a past era, an aberrant monstrosity of morality —James Garfield relative to today’s enlightened view. But eerie resemblance is not so easily dismissed if one remembers the “Money is a new form of slavery, and dis- entire modern worldwide economic system is based on tinguishable from the old simply by the fact subservience to abstract ‘blips.’ that it is impersonal—that there is no hu- Therefore the concept of blips denominating tangi- man relation between master and slave.” ble wealth or property can be deceptive. Blips have —Leon N. Tolstoy also become the standard denomination for all human

29 labor. The supply-and-demand model of human soci- shipnavigation techniques) have exacerbated slavery ety has become the doctrine of obedience to blips. Or, by making it more viable, practical, manageable, or “one’s betters” has been replaced with “blip-owners.” efficient. The saying “time is money” is a reference to human labor—workers’ time is equivalent to money and can 21st century sweatshops be bought and sold like a physical commodity. In many ways the central concept of economic scarcity “If you don’t know who the sucker is, then is most apropriately applied to the finite time of all you’re it.” human lifetimes. The goal of “scarcity integrity” is —gambler’s aphorism therefore closely related to life conservation. (reiterated by Warren Buffet) More uncomfortable insight is available in the So not uncoincidentally, realistic accounts that chron- study of the etymology of the word seigniorage which icle the high-technology “revolution” inescapably fall stems from seignior, a feudal lord who held domin- into documenting “sweatshop-like” conditions, e.g. ion over his serfs. As modern economics preoccupa- White Collar Sweatshop: The Deterioration of Work tion with “seigniorage” reveals, the supposed “march and Its Rewards in Corporate America by Frasier of progress” culminating in today’s wildly rampant [25], NetSlaves: True Tales of Working the Web by technological age may not have abolished slavery, Lessard and Baldwin [40], or Coupland’s influential only streamlined, optimized, and perfected the system Microserfs [15] about actual working conditions infor implementing and managing it. If the blip-system side Microsoft. As Lessard writes, “The unlucky is corrupted it has the potential to become a state- ones—and by that I mean the four million or so work- of-the-art, technologically-based, 21st century slavery ers who labor every day in the tech business—work system. Re: Goethe’s quote, it may also have the ex- away in high-pressure, low-security positions where a traordinary property that it is largely invisible, the pink slip is a far likelier thing to see in their inboxes hidden framework not perceived by the slaves them- than a Vegas-style payout.” selves! These books sometimes can only be published In a stark historical irony, the word “Luddite” has in the vein of parody or satire even though they come to be synonymous with an anti-technological more closely approach anthropological studies, often stance: “one who opposes technical or technological a compromised dilution of the original intents of the change.” Luddites were hand-weavers and craftspeo- authors in exposing inhumane conditions. (One chap- ple who attacked the introduction of the automated ter from NetSlaves is entitled, “Robber Barons: Who loom but also by association the squalid and inhu- Needs Dynamite When We’ve Got IPO’s?”) Lessard mane working conditions in factories in the early and Baldwin’s book, initially “rejected by innumer- 1800s. (Jacquard, the inventor of the loom, was able agents and publishers, rescued from the gutter” once almost killed by a rioting mob!) The automated assert the mass media is responsible for distorting Jacquard loom served as an inspiration for Babbage’s the reality of the business (Borsook calls it “business difference engine and is therefore accurately regarded pornography” [7]): as an early conceptual origination of the computer. Hence, Luddites as merely anti-technologists is the The more I thought about the Net’s Uni- one-dimensional view and possibly a dangerous red versal Success Myth—the idea that winners herring. The original Luddite movement could just predominate in this business and losers are as well be regarded as an opposition or rebellion to the exception—the more it grated on my technological slavery. The concept of technology as own experience and the experiences of al- somehow incompatible or inconsistent with slavery most everyone I know in the technology is an unconscious prejudice verging on an insidious business. I’m a living testament to the archetype. Historically, various technological inven- fact that most Internet careers are nasty, tions (one example being improved shipbuilding or brutish, and short, and I’m not alone.

30 Life as nasty, brutish, and short is an allusion to with relevant terms emphasized: Thomas Hobbes’ observation of the human condition, made during the medieval era of mass serfdom, but . . . if you want to continue to be slaves to basically a synonymous euphemism for slavery. the banker and pay the cost of your own enslavement, then let the bankers continue to The founding of the U.S. and an entire century of create money and control credit. its government was fundamentally oriented around slavery and its official government sanctioning. Many earlier colonists of the country were penniless indentured servants who paid for the trip abroad via a kind 8 economic parasitism of temporary slavery, buying their freedom at the rate “History records that the money changers of e.g. 1 per year. (The use of the many Jefferson 7 have used every form of abuse, intrigue, de- quotes in this paper could certainly be construed as ceit, and violent means possible to maintain hypocritical, Jefferson being a slavemaster.) their control over governments by controlling money and its issuance.” The modern view clearly has a blind spot; appar- —John Adams ently slavery and economic systems have always been inextricably intertwined. And progress in both political and economic systems have come via shifting per- “The money power preys on the nation in ceptions and new realizations on the true nature of times of peace, and conspires against it slavery, the exact forms of its manifestation, and its in times of adversity. It is more despotic fundamental immorality. Arguably the key legal role than monarchy, more insolent than autoc- of government even agreed-to by extreme libertari- racy, more selfish than bureaucracy. It de- ans, protecting property, is symmetrically mirrored nounces, as public enemies, all who question by a twin: preventing slavery. The dated term “slav- its methods or throw light upon its crimes.” ery” may be replaced with the equivalent present day —Abraham Lincoln terminology, economic exploitation. Mere belief in a religion may have a relatively innocu- If the blip-system has scarcity integrity, then its ous effect on practitioners if it doesn’t demand major fairness implies the impossibility of its use for enslave- “sacrifices”—except that, as history shouts, economic ment. In a fair system, private entities cannot create policy according to superstition is inescapably disas- and own blips at the expense of the public. However, trous. Slavery, in contrast, is today regarded as a that is not the case with the fractional reserve bank- moral horror or even poison. But even these dis- ing system, with its intrinsic privately-owned expan- turbing charges may pale in capturing the accurate sion, from the mathematical results here on money- reality of a corrupt blip-system. Smith noted an “in- energy siphoning and even by the implicit or direct visible hand,” Keynes noted the “invisible tax,” and conclusions of various authorities. prior sections considered the possibility of an “invisible caste system” promoting “invisible slavery.” In- Eccles’ reply to Patman was that blips are rou- visibility can be especially treacherous. A more dia- tinely created outside of state authority. Since they bolical metaphor is required. are not owned by the state (the question which Invisibility is a common theme in the earlier de- prompted their dialogue in the first place), they must scriptions. Again, the Rothschilds noted the class of be privately-owned. Therefore, fundamentally, frac- “the few who can understand the system, interested tional reserve banking is equivalent to economic slav- in its profits, or so dependent on its favors.” Above ery. It might be renamed a “fractional freedom” sys- Adams refers to the “money changers” and Lincoln tem. Re Bank of England president Stamp’s quote refers to the “money power that conspires and preys

31 on the state.” who refused or evaded work. Zimmer [70] gives a colorful overview in his chapter “Nature’s Criminals” conspire: To plan together secretly to com- that weaves from ancient to modern times, with stops mit an illegal or wrongful act or accomplish at Darwinism and even Nazism. The idea of wealth- a legal purpose through illegal action. owners as parasites is a more recent invention. In yet another case of recursive bite ’em ad infini- In the strongest indictment possible, Jefferson re- tum, in 1898 a pamphleteer John Brown wrote a book ferred to “maniacal, delusional, corrupt, swindling called Parasitic Wealth or Money Reform: A Man- bank-mongers.” Jefferson attempted to make a care- ifesto to the People of the U.S. and to the Workers ful distinction of banks with seigniorage fees, and of the World, charging that three-quarters of the na- those practicing fractional reserve banking via “foist- tion’s money was concentrated in the hands of three ing their own paper into circulation, and thus ban- percent of the peopulation, that the rich sucked the ishing our cash.” Greenspan referred to money de- wealth of the nation away, and that their protected basement as “an insidious process.” industries flourished at the people’s expense: [70] What these accounts all have in common is an attempt to distinguish legitimate from illegitimate With the refinement of innate cruelty, these banking practices, and the contents of this paper are parasites eat their way into the living sub- designed to nail down that dichotomy even further stance of their unwilling but helpless host, via mathematical precision. But they also are re- avoiding all the vital parts to prolong the ferring to a sort of “hidden alien force” that tran- agony of a lingering death. scends the existing conceptual boundaries of government and banking. They warn of it as an almost indescribably dan- bionomics gerous phenomenon, almost an entity. Earlier this “I believe that I have given only the first was referred to as the “mechanisms, elements, and rough outlines of a province of a great terra agendas capable of, and at times applying, money- incognita which lies unexplored before us energy extraction without consent of money holders and the exploration of which promises a re- via concealment within the money system admin- turn such as we can at present scarcely ap- istration” that may reside in either government or preciate.” banking institutions. (To borrow Eisenhower’s neol- —Johann Streenstrup on parasites (1845) ogism on the “military-industrial complex,” call it the “government-banking complex.”) Along these lines, Rothschild’s seminal and definitive Bionomics [55] privately-owned expansion was also concluded to be (published in 1990) has a short chapter “Parasitism a leeching. and Exploitation” with the following: These accounts all converge to describing parasitism. Hence, insight from biology on parasites be- Discerning “right” from “wrong” in eco- comes relevant and applicable. nomics is a matter of distinguishing mutu- parasite: An organism that grows, feeds, alistic from parasitic relationships. The his- and is sheltered on or in a different organism tory of civilization chronicles the gradual while contributing nothing to the survival of erection of a system of laws banning par- its host. asitic economic behavior. . . . Slavery, the most obscene form of economic parasitism, The idea of parasitism in economics or society is has been virtually eradicated. millenias old (an alternate meaning of “parasite” is Hosts are victims. No victim ever “a professional dinner guest” that dates to the Greek chooses to be robbed, enslaved, or denied era!) but was historically typically applied to people basic human rights. Economic parasites use

32 secrecy, deception, brute force, and legal au- made, (and like Goethe’s observation on slavery) par- thority as their “hooks.” By latching onto asitism is the most insidious form of slavery. their unwilling hosts, they are able to extort The standard form of worldwide “fractional reserve profits that no mutually voluntary relation- banking” is synonymous with privately-owned money ship would provide. expansion. It is not generally regarded as harmful; . . . to the extent that parasitic behavior in fact it is seen as intrinsic to the institution of is curtailed, society benefits. A healthy cap- banking. But by the prior mathematical findings, italist economy is a community of interde- it inequitably leeches money-energy from all citizens, pendent mutualists. taxpayers, and money holders. Therefore, fundamen- To create an environment where cooper- tally, fractional reserve banking is equivalent to eco- ation flourishes, the elimination of exploita- nomic parasitism. tion in all its forms should be the chief ob- From the prior analysis, one immediate question is, jective of a society’s economic laws. But how could a privately-owned expansion system possi- keeping antiparasite laws in step with a bly have been erected? As [32, 49] and many others rapidly evolving economy isn’t simple. Iden- have accused, the Federal Reserve was erected sur- tifying the economy’s true parasites and reptiously, clandestinely, and possibly even via sub- writing laws that destroy their hooks re- terfuge(s). Griffin refers to the Federal Reserve as quires a bionomics perspective. The Creature from Jekyll Island, where the scheme of its founding was hatched in collusion and strict One survey of the idea of parasitism relative to secrecy in 1910 among the world’s most powerful economics can be found in Levy’s essay, “The se- bankers of the time. cret history of the dismal science: parasite economics The “creature” is a parasite. Jefferson’s “tribe and market exchange.” [42] However, it advances the of bank-mongers,” Adam’s “moneychangers,” Lin- common idea of nonworking people (such as welfare coln’s “money power,” Garfield’s “absolute master recipients) as parasites, the typical association for the of all industry and commerce,” Rothschilds’ “class idea in this context, also a major theme of Rand’s fic- of few who can understand the system, dependent tion. [52] But this seems an inaccurate view, because on its favors,” Greenspan’s “welfare state,” Griffin’s it fails to capture the key element of invisibility of “creature”—they are all simply describing the para- the parasite. In biology, parasites must evade the de- site attaching to the host organism, the government- fenses or detection of its host. The analogy is that banking complex, while evading its normal defense the parasite blends in to the normal surroundings, mechanisms, such as open legislative hearings, public such as a faceless bureacrat within an institution— review and debate, expert scrutiny, etc. or specious theories in standard economic dogma. A For purposes here, the hypothetical entity will be synonym for corruption then becomes infection. called “the money parasite.” Jefferson warned in his Lincoln warned of the money power “preying on time that “it has seized by its delusions and corrup- the nation,” very close to the parasitism conception. tions all the members of our governments, general, But arguably a key distinction between predator-prey special, and individual.” Does it still survive? relationships and parasitism is the invisibility of the If the parasite exists it would not be surprising parasite. The predator openly kills its prey, but the from the biological perspective. As noted in the in- parasite covertly sucks the energy of its living host for troduction, by some estimates parasites outnumber indefinite time. The parasite must be invisible to the freeliving species by four-to-one. Biology is, there- host to accomplish this. Invisibility is a prerequisite fore, largely the study of parasites. Economics at its to sustaining the ongoing parasitism. heart is a life energy system with extremely strong Hence, it naturally makes sense to define invisi- parallels to biology. It is quite plausible that bio- ble slavery as human parasitism. Then arguably the nomics must also, therefore, largely be the study of converse case to Rothschild’s assertion above can be parasitism. Such a view is of course completely un-

33 conventional and disturbing, to say the least. copies and build molecular scalpels. The parasite adds sticky molecules to the surface of the platelet bloodstreams that cause it to cling to blood vessel walls and drop out of the body’s circulation (recall the earlier charge- “It’s a little like the Middle Ages. When storing capacitor electrical analogy). They clump up the patient died they would say “well, we in capillaries in the brain, liver, and other organs. stopped the bloodletting too soon, he still In this way they evade detection of the spleen which had a little blood in him.” serves as a slaughterhouse for old or damaged red —Joseph Stiglitz blood cells. World Bank ex-chief economist Trypanosoma brucei is the parasite that causes sleeping sickness, another extremely deadly human The prologue to Zimmer’s outstanding and colorful parasite that kills about 3 million per year. Try- recent overview of new paradigm shifts in parasitol- panosomes are the drill-bit-shaped, self-contained ogy, Parasite Rex: Inside the Bizarre World of Na- cells of the parasite that swim alongside regular blood ture’s Most Dangerous Creatures [70] (published year cells. During replication they occasionally change 2000) is entitled “A vein is a river.” Virtually all bio- their coat proteins to conceal their existence from logical parasites tend to live partially or wholly in the the immune system. The immune system recognizes bloodstreams of their hosts. It can be used as a trans- their characteristic shape and attacks, but by then a portation system to other final target sites, but very small contingent of trypanosomes have changed into commonly the blood itself is used as the parasite’s the new unrecognizable form and multiply furiously. primary or sole food source. So the earlier engineer- The human hosts’ immune system then becomes ing analogies of economics as an energy system map chronically overstimulated, attacking their own body onto the biological parallel of it as a bloodstream. until the victims die. The trypanosomes carefully In a bloodstream, blood platelets transport oxygen go through the sequence of new coat proteins from to all cells, which require and use it to burn chemical a large reservoir in a carefully predetermined order, fuel and produce energy. So it can be viewed as an en- because using any prior ones would be immediately ergy component. Similarly in an economy, dollars are recognized and be thwarted based on the immune the energy source for citizens—both are called circu- system’s memory. Via this mechanism, infection can lation systems. The natural nexus for a government- be stretched out for months or even years! banking complex parasite is in the money system. Plasmodium has a similar approach. The hooks And the natural place to look for clues to its dynam- jutting from the surface of the blood platelets risk ics is among the tactics of real parasites. getting the attention of the immune system. There Malaria, caused by the plasmodium parasite, is one are over a hundred latch variations, each with a of the most deadly human parasites, and still kills an unique shape. The parasite occasionally switches estimated 2.7 million humans per year. Plasmodium latch designs randomly. The technique is actually enters the human bloodstream through a mosquito equivalent to that used by polymorphic computer bite and lives in the red blood cells. The parasite viruses that can alter their own code into equivalent can clamp onto and wanders blood vessel walls with but unrecognizable forms. hooks (recall Rothschild’s terminology) that act like Trypanosoma and plasmodium analogies will be tank treads, also used to latch onto platelets for in- considered in the following sections. Meanwhile, an- vasion. It blasts through a platelet, fully enters, and other striking metaphor presents itself relative to the platelet’s resilient meshwork seals tightly shut be- “economy as a bloodstream.” The application of par- hind it, all in fifteen seconds. The parasite then eats asitical leeches to patients to remove “bad blood” as away at the hemoglobin within the cell. a medical treatment persisted throughout the middle Plasmodium raises the metabolic rate of its host ages, and is now regarded as a shockingly harmful blood cell three hundred fifty times to make new or even deadly practice without any redeeming legit-

34 imacy whatsoever. equivalent of an immune system are the safeguards That is, a practice supposedly with therapeutic within the government-banking complex such as laws, properties, fully endorsed by theory and authority, investigators, regulators, hearings, etc. with precisely the opposite effect was promulgated As part of the bait-and-switch strategy of para- for centuries by some of the most knowledgeable and sites, the immune system can be driven into wild well-intentioned people of the times whose occupa- oscillations, i.e. repeated waves of attack. In fact tion was promoting health—physicians. this oscillatory behavior was one of the first clues Is fractional reserve banking economics’ modern into the underlying bait-and-switch mechanisms of day form of bloodletting? Does the Federal Reserve trypanosoma brucei. “fight inflation,” “prevent deflation,” and achieve In 1909 Ronald Ross plotted trypanosome counts “price stability” in the “free market” by “increasing over the period of infection for a patient. The “re- the money supply”? markable graph” showed a clear rhythm: for a few days the trypanosomes would skyrocket, multiplying baitswitching & frog boiling by as much as fifteen-fold. Then, just as suddenly, they would drop back down to barely detectable num- “Through no fault of his, it all came to bers. The cycle would take a week or so and coincide naught. . . . Almost as fast as it issued from with the patient’s fevers. In other words, not a sin- the Mint, the new coinage went into the gle assault, but sequential, periodic waves of flaring melting pots of the goldsmiths.” outbreaks. —Richard Westfall The money parasite parallel is not obvious, but on Newton’s Royal Mint term one remarkable possibility can be proposed. Clas- sical economists believed in the fundamental self- “Experience has prevent that the simplest regulatory nature of the economy. In modern par- method of securing a silent weapon and lance, the mass economy functions as a unified bio- gaining control of the public is to keep the nomical organism. By the earlier findings here, defla- public undisciplined and ignorant of the ba- tion can be a natural and beneficial redistribution of sic system principles on the one hand, while increased GDP or efficiency. Deflation doesn’t imply keeping them confused, disorganized, and “price stability” but it may imply beneficial money- distracted with matters of no real impor- energy redistribution. Similarly, possibly price fluc- tance on the other hand.” tuations are symptoms or consequences of parasitical —Silent Weapons for Quiet Wars [2] influence, or possibly even mechanisms for fighting money parasitism! Recall Adams’ warning that the money parasite The basic conclusion is that economic dislocations “uses every form of abuse, intrigue, deceit, and vio- and notorious boom bust cycles that have occurred lent means possible to maintain its control.” This is so frequently in history may be “money parasite a chillingly accurate description that is precisely mir- and immune system related”—directly analogous to rored with biological parasites, almost to the point the wild oscillations in parasite populations and im- that Adams seems to have anticipated modern dis- mune system response. This view is generally sup- coveries in the field of parasitology! ported and confirmed by Griffin’s careful historical So the sinister basic strategies of parasites such as re-examination. [32] plasmodium and trypanosoma brunei involve certain Griffin summarizes the strategy of the Jekyll Is- key themes. The technique of bait-and-switch is pre- land colluders who founded the Federal Reserve, the dominant, also similar to the tactic of utilizing de- world’s richest bankers of the time: “to convince coys. A parasite can be invisible if it can distract Congress and the public that the establishment of or divert the “attention” of the host’s immune sys- a banking cartel was, somehow, a measure to pro- tem. Relative to the money parasite, the sociological tect the public.” The plan was one of baitswitching,

35 distraction, diversion, even deception: [32] that a frog, when thrown in a pan of boiling water, will immediately jump out. However, if placed in 1. Do not call it a cartel nor even a central a pan of cool water, the frog will tolerate a gradu- bank. ally increasing temperature—even to the point that 2. Make it look like a government agency. it is eventually boiled to death. Institutional integrity of the government-banking complex can be similarly 3. Establish regional branches to create gradually corroded—like a sort of Chinese water tor- the appearance of decentralization, not ture that slowly drives it to insanity. dominated by Wall Street banks. 4. Begin with a conservative structure immune system inﬁltration including sound banking principles knowing that the provisions can be qui- “. . . were it left to me to decide whether we etly altered or removed in subsequent should have a government without newspa- years. pers, or newspapers without a government, 5. Use the anger caused by recent pan- I should not hesitate a moment to prefer the ics and bank failures to create popular latter.” demand for monetary reform. —Thomas Jeﬀerson

6. Offer the Jekyll Island plan as though The concept of the free press espoused by Jef- it were in response ot that need. ferson and enshrined in the Constitution was as a 7. Employ university professors to give supra-organizational force that could serve as a check the plan the appearance of academic on government and other social organizations—i.e. a approval. kind of social immune system. 8. Speak out against the plan to convince Instead of evasion of defenses, some of the most the public that Wall Street bankers do grisly parasites hijack or destroy the body’s own im- not want it. mune system. In several related species, leishmania can cause sores in the mild form (leishmania ma- What Griffin is describing is a stealth invasion jor), or in the more virulent and deadly forms, kill by the money parasite into the government-banking its human host within a year (leishmania donovani), complex host body, based on subtle sabotage of its or chew away the soft tissue of the head until the social defense mechanisms, via diversion, distraction, victim is faceless (leishmania brasiliensis). It infects and deception. The integrity of legitimate banking macrophages, the immune system cells that normally and government institutions is debased exactly in destroy parasites by engulfing and slowly digesting parallel to the money itself! The quasi-government, them. As Zimmer writes: [70] quasi-bank netherworld duality serves as a subterfuge to evade the established checks and balances within Leishmania doesn’t have to muscle its either system! way into its host macrophage the way plasmodium pushes into red blood cells. It’s red herring: Something that draws atten- more like an enemy spy that knocks on the tion away from the subject under notice or door of the headquarters and asks to be ar- discussion. [From the use of red herring by rested. fugitive criminals to distract hunting dogs The macrophage swallows up the para- from their scent.] site in a bubble that sinks into its interior. Normally, this would become a death cham- Griffin is also describing another horrific tactic that ber for a parasite. The macrophage would might be referred to as “frog boiling.” The story is fuse that bubble with another one filled

36 with molecular scalpels, which it would use originate with parasites although a parasite source to dismantle leishmania. But somehow— has been proposed and investigated in the past, see scientists still don’t know how—leishmania e.g. [43].) stops the bubbles from fusing. Its own bub- The cancer metaphor is strongly in line with the ble, now safe from attack, becomes a com- earlier analogy of the economy or money system as fortable home where the parasite can thrive. also a life conservation system. McMurty has honed the analogy carefully in his book, The Cancer Stage Another parasite, the blood fluke, can somehow of Capitalism and its Cure. [46] “As on the cellular cloak itself with a coat partially made out of the level, the cancer advances by not being recognized by host’s own blood cells by means that scientists are surrounding life communities.” McMurtry advances still only hypothesizing. “It may be that when the the metaphor of “world media as immune system” flukes pass by red blood cells or are attacked by white and suggests it has been hijacked and sabotaged. As blood cells, they can tear out some of their host’s he writes: molecules and attach them to their own surfaces. Thus, to the eyes of the immune system, the para- The essential problem of any life- sites are nothing but red shadows in a red river.” threatening cancer is that the host body’s The tactic of evasion is replaced by infiltration. immune system does not effectively recog- Recall Griffin’s account above that the Jekyll Island nise or respond to the cancer’s challenge plotters sought to “employ university professors to and advance. This failure of our social give the plan the appearance of academic approval,” immune system to recognise and respond or to “offer the plan as though it were in response to to the cancerous form of capitalism is popular demand and the need of monetary reform.” understandable once we realise that the As with bloodletting, the parasite masquerades as the surveillance and communication organs cure. of host social bodies across the world, So along these lines, a systematic study of seignior- as they now function, are incapable of age sponsored by the Federal Reserve such as [6] recognising the nature and patterns of might have questionable impartiality. the disease. That is, capitalist-organised Another direct possiblity is skewed metrics for media and information systems select for measuring crucial economic indicators such as infla- dissemination only messages compatible tion (CPI, Consumer Price Index) or unemployment with the capitalist organisation of social levels. Historically there are many examples of polit- bodies. ical tinkering that have consistently weakened their sensitivity in detecting deteriorating economic condi- mind control & zombiefication tions. These indicators are critical measurements for scientific study and in determining government eco- “They control their hosts, becoming in ef- nomic policy, especially in identifying any deleterious fect their new brain, and turning them into effects! new creatures. It is as if the host itself is Or, another analogy in the case of the money par- simply a puppet, and the parasite is the asite is that social warning and defense mechanisms hand inside. ” such as Jefferson’s free press could be compromised —Carl Zimmer [70] or dismantled in a worldwide blitzkrieg of rampant money growth. This is exactly the assertion of John Adams warned of the money parasite’s “use of ev- McMurtry, Professor of philosophy at the University ery means possible to maintain its control” including of Guelph who has documented the case for interna- deception and violence. Host control in parasitology tional capitalism as entering a “cancer stage.” (In has undergone a revolution in thinking. It was pre- medical science, cancer is not currently thought to viously considered rare and few cases were known.

37 However, parasitologists are turning up new aston- As Zimmer explains, “there they do some parasitic ishing cases of the parasite controlling its host via voodoo on their hosts.” At night, the ant climbs and altering host behavior to serve the parasite. clamps down to the top of grass blades, unmoving, In many situations this control is very subtle and where it is devoured by a cow or another grazer eat- difficult to detect, particularly because it may be ing the grass. That completes the cycle. Yet the measurable only in the natural habitat of the host, fluke lets the ant loosen its grip on the grass at dawn not within an artificial laboratory environment. Of- if the ant hasn’t been eaten, because both the ant ten the precise mechanisms are unknown and in sev- and fluke would die from baking in the heat of direct eral cases actively under investigation by parasitolo- sunlight! So instead “the ant scurries back down to gists. It’s prime terra incognita territory to borrow the ground and spends the day acting like a regular parasitologist Streenstrup’s quote. insect again”—but repeats the “eat me” ritual the The sacculina barnacle parasitizes crabs. Once in- next night. fected the crab no longer moults and grows, which Plasmodium, the malaria parasite, alters the be- would funnel energy away from the parasite. The havior of mosquitos to go from nonhungry to hungry crab also loses the ability to regrow claws and mate. depending on its vulnerability and readiness. A sick As Zimmer writes, “the crab begins to change into a mosquito is twice more likely to drink the blood of new creature, one that exists to serve the parasite.” two people in a single night. Carrying more blood to Female crabs actually groom the parasite larvae as if more hosts, it becomes a far more effective vector for they were their own eggs, launching them as heavy spreading malaria. clouds in exactly the way their eggs are dispelled. Several parasites manipulate host behavior so that The infected male crabs even adopt this characteris- the host becomes more likely to be eaten by the tically female behavior with the same effect! next host in the chain. The extraordinary toxo- An Amazonian spore can infect ground-dwelling plasma gondii parasite infects billions of humans but ants which normally never climb plants. It alters is thought to be benign in the human host, although their behavior such that they become “insane” and there is new evidence linking it with schizophrenia. begin to climb plants. The ant dies at the top of the Part of t. gondii’s lifecycle is lived in rats. It al- plant where the spore can grow and break outside the ters rat behavior via mechanisms that are not yet ant carcass and launch itself airborne, falling to the mapped. Rats normally exhibit fear of new environ- ground to infect other ants. ments, “neophobia,” and avoid areas with cat smells. A fly fungus accomplishes a similar feat, except The infected rats are not neophobic and do not avoid that it causes flies to clamp down on high objects cat smells, and may possibly even seek them out (but with precise timing. The infected fly maneuvers into are generally otherwise indistinguishable). In effect a spore launching pad position only at sunset, when they become “rodent kamakazes,” more likely to be the air is cool and dewy enough for the spores to eaten by cats. The cat is t. gondii’s next host in its quickly develop on another fly, and only when other own “food chain.” These subtle behavioral modifi- flies are moving down toward the ground as infection cations were only discovered as recently as the late targets. 1990s. Dicrocoelium dendriticum, the lancet fluke, infests T. gondii has also been shown within the mid- cows and other grazers as an adult, which spread the 1990s to alter human behavior. Men become less eggs in their manure. There snails swallow the eggs, willing to submit to the moral standards of a commu- which hatch in the intestines. The flukes reproduce nity, less worried about being punished for breaking in the snail, which are expelled by the snail in balls society’s rules, and more distrustful of other people. of slime. Ants eat the slime balls which may also These changes presumably occur when t. gondii en- contain hundreds of flukes. The flukes moves through ters and manipulates their neurons. Researchers have the ant and eventually split up and move to the ant’s so far casually or laughingly dismissed the idea that mandible nerves, the abdomen, and the brain. these behavioral changes have any significance in the

38 human host, but so far neither is there any evidence “The productivity paradox is an artifact of to the contrary—it’s a gaping open question. superficial thinking.” What analogies can be drawn to the money para- —Michael Rothschild [56] site? The newer model of parasite evolution articu- The Patman-Eccles exchange takes on the sur- lated by Zimmer is that they can be exquisitely so- real quality of a snake-charmer hypnotism session. phisticated and evolutionarily adapted, from millenia The smoke-and-mirrors, sleight-of-hand magic act is of intimate co-evolution with their hosts, with the “hard to swallow.” Or, alternately, the audience has surgically-precise behavioral modifications as excel- been swallowed psychologically into the maw of the lent, possibly foremost examples. If the money par- parasite. As magicians say, “now you see it, now asite persists, it is reasonable to suspect that it has you don’t!” Or, “A magician never reveals his se- similar sophistication. The idea of “parasite psychol- crets.” The dialogue accurately reduces the U.S. gov- ogy” seems bizarre but its an inescapable and now- ernment’s financing mechanism and its accountability firmly-established direction of the research: some to a disgraceful parlor trick. parasites alter host behavior by altering their brains. Joseph Stiglitz is the ex-chief economist for the Zimmer accurately refers to altered hosts as “zom- World Bank and International Monetary Fund (IMF) bies.” and shared the Nobel Prize for Economics in 2001. There are some immediate parallels, others pre- After disillusionment over the effects of its policies, sumably waiting to be mapped out in any new science in 2001 he went public with scathing criticisms that of economic parasitology. Jefferson seemed to talk reverberated through the world media. He described about a similar “zombiefication” associated with the a four-step process by which a developing country is “strong Mania of the tribe of bank-mongers, seized by ravaged by the influx of capital aided and abetted by its delusions and corruptions.” In a sense, “kamakaze the IMF. He described the process as “squeezing the bankers.” last drop of blood out of them.” Stiglitz resigned over However, the more relevant analogy seems to be his ideological differences. [62] to economic theory, which serves as the “brain” be- This case depicts an epic break in the status quo of hind money expansion principles. The possibility economists. The IMF and World Bank can be com- must be faced that existing economic doctrine has pared to an international financial rescue agency— been influenced, distorted, or even corrupted by the much like an economic “doctor.” Stiglitz is asserting money parasite—conceivably at least as insidious as its prescription is always for bloodletting via leeches. all the prior examples! There is some circumstantial In a word, parasitism. evidence. It could be dismissed for its sketchiness, Moreover, he rejected the ideological underpin- but on the other hand, increasingly parasitology in- nings of the policies as corrupt. In other words, evitably must work from shadowy clues gleaned from there was no legitimate economic science behind the fieldwork. Not all answers are matters of looking up practices, or whatever existing economic justification reference books. used was a sham. As reporter and interviewer Palast writes in [51]:

Stiglitz has two concerns about the IMF/World Bank plans. First, he says, be- smoke & mirrors, sleight of hand cause the plans are devised in secrecy and driven by an absolutist ideology, never open “. . . you can see the computer age every- for discourse or dissent, they “undermine where these days except in the productivity democracy.” Secondly, they don’t work. statistics.” Ultimately, what drove him to put his —Robert Solow [60] job on the line was the failure of the banks

39 and the U.S. Treasury to change course by definition, a money parasite could siphon off pro- when confronted with the crises, failures, ductivity gains and make any improved advantages and suffering perpetrated by their four-step invisible to economists—and the public at large! monetarist mambo. Keynes: “economics’ Einstein” Stiglitz does not seem to realize the deadly accu- racy of his own metaphor. A parasite is not so in- “In the long run, we are all dead.” terested in the health of its host. “Crises, failure, —John Maynard Keynes and suffering perpetrated” are the modus operandi of any parasite and a money parasite would presum- Keynes has been called the “Einstein of economics” ably be no different. As considered earlier, secrecy is but some physicists might consider it a slur. Sciences the mechanism promoting invisibility of the parasite. with lack of rigor and the strict, uncompromising “re- “Absolutist ideology never open for discourse or ality check” of experimental testing have been said to dissent” certainly seems incompatible with the con- have “physics envy,” and the “dismal science” may cept of a legitimate economic science, familiarity with qualify among all with flying colors. which presumably was Stiglitz’ original qualification Economics as epitomized in Keynesianism appears for the job. Arguably, it does not even qualify as to fail spectacularly the Popperian criteria of sci- religion. Overall, it appears that Stiglitz no longer entific falsifiability—which some economists almost served as a suitable victim for parasitic mind control seem to take pride in. Even supporters of Keynes and was discarded. acknowledge his contradictory and inconsistent pro- Stiglitz notes the same phenomenon of twisted eco- nouncements. Economist and disciple Paul Samuel- nomic language. He likens “free trade” by the rules of son wrote the following non sequitur of Keynes’ mas- the World Trade Organization and the World Bank terwork, The General Theory of Employment, Inter- to the Opium Wars—“That too was about ‘opening est, and Money, published in 1936: markets.’ ” It is a badly written book, poorly or- Other examples of “dissension within the ranks” ganized. . . it is arrogant, bad tempered, of economists are easily spotted. Friedman is one of polemical. . . it abounds in mare’s nests the most vocal and influential economists who has and confusions: involuntary unemployment, focused on and been critical of monetary expansion wage units, the equality of savings and in- policies. [26] He’s also attempted to convey to the vestments, the timing of the multiplier, in- public the intrinsic relationship between monetary teractions of marginal efficiency upon the expansion and inflation. His approach can be seen as rate of interest and many others. . . flashes a strong rejection of Keynesianism that dominated of insight and intuition intersperse tedious monetary policy in the first half the the 20th cen- algebra. An awkward definition suddenly tury. Strangely, bulletproof principles for governing gives way to unforgettable cadenza. When mass world economies via an “economic science” still it is finally mastered, we find its analysis to seem open to constant debate, revision, and reversal. be obvious and at the same time new. In The parasitism hypothesis could explain other short, it is a work of genius. troubling anomalies noted by economists, foremost among them Nobelist Robert Solow’s “productivity Keynesianism at its core is a rejection of the clas- paradox.” [60] How is it that the entire information sical economic doctrine of lassaiz-fair and a self- revolution of the late 20th century cannot yet be regulating economy. It makes a distinction between quantified in economic statistics? Apparently eco- the “real GDP” and the “natural level” of the GDP, nomics has its own form of “dark matter.” Produc- proposing a divergence that may occur via e.g. sav- tivity is generally defined as goods produced per hour ings levels, unemployment, “price stickiness,” etc. of work by laborers. It’s conceivable that, basically The general slippery idea is that government and

40 citizens may be required to increase consumption that increases the stress, activity, and pace of the (spending) to fully deploy the economy, even to the host. The Red Queen runs faster and faster to stay extent of deficit borrowing (i.e. money expansion). in the same place. A hyperkinetic culture as now This ideology could be seen as a psychological ra- universally perceived by all (noted early on by e.g. tionale for a parasitical economy. Why is it precisely Toffler’s Future Shock, 1970, or recently in Gleick’s focused on the implicit concept of an “unnatural” and Faster: The Acceleration of Just About Everything, subpar (below-optimal) GDP that requires unilateral 1999) is therefore a conceivable symptom of a money intervention? Possibly because savings represent en- parasite! ergy storage by the “cells” of the host organism(s). A red-queen dilemma in an economy could have The urging is to release that energy, to minimize the “sweatshop” conditions (noted earlier) as one symp- storage of it, presumably so that it is more readily tom. The red-queen acceleration also relates to the available for money parasitism. “frog boiling” phenomenon. If workers from an ear- Perhaps most revealingly, Keynes opposed a strict lier culture were transplanted into the present cul- gold standard, calling it a “barbarous relic.” He was ture, it might be psychologically intolerable ala Tof- instrumental in negotiating the worldwide Bretton- fler’s “future shock.” Again, recall the mass eco- Woods agreement that abandoned it and erected nomic energy is measured in temperature. If the the International Monetary Fund and World Bank “temperature” is slowly increased (as an effect of the in 1944. The gold standard was also the strongest money parasite), the “water” is slowly brought to a historical impediment to money expansion. As “boil” without notice. The increased life-threatening Greenspan wrote, “In the absence of the gold stan- scarcity resulting from gradual money expansion is a dard, there is no way to protect savings from con- close analogue. fiscation through inflation. There is no safe store of A tightly-coupled red-queen feedback loop seri- value.” ously complicates the problem of considering or un- A money-parasitic doctrine would be preoccupied derstanding a parasite-free system, especially relative to the point of obsession with the idea that GDP to growth. For example, it may not be clear if an or- or host energy is below an optimal level and must ganism is growing at a “normal” rate or grows faster be increased—via artificial stimulation. Recall the in response to the parasite. Or, the parasite may be plasmodium parasite that increases the metabolism growing but the host does not. of its host cell three hundred fifty times, hijacking it Some species grow faster as a defense mechanism for its own malevolent “agenda” or “ends.” In other to the parasite infection, in other situations the ram- words, growth at all costs—exactly the same modus pant growth is provoked by the parasite to increase operandi as McMurtry’s “cancerous capitalism.” its energy reserve, so abnormal growth is sometimes a Keynesianism may be the corrupted ideology of symptom. Generally growth is often in some way ab- veiled monetary parasitism in theory or practice. normal under infection, either stunted or accelerated. Maybe a future “Einstein of econophysics” will be If there’s a money parasite present, what’s “normal” more interested in economics as a rigorous and hu- economic growth? mane science and engineering discipline rather than This is the same dilemma encountered earlier in as a political buzz-saw power-tool. the streamlining of technology that can be more conducive to slavery systems. Growth may disguise the growth & red-queen dilemmas presence of a parasite. The vast and awesome technological achievements of the 20th century take on an Recall the key money parameter of velocity. Par- entirely new light if one considers they can be mech- asitologists have in many cases isolated “red-queen anisms for optimizing parasitism efficiency! dilemmas” in biology. Named after a passage from Another remarkable possibility relative to growth Lewis Carroll’s Alice in Wonderland, the parasite and can be considered, as hinted in the electronics ca- its host are locked in a tight evolutionary embrace pacitor analogy. The capacitor simply keeps stor-

41 ing energy as the instantaneous energy of the circuit metastasis is confirmed when money cap- “grinds to a halt.” A parasite can conceivably extract ital lacks any commitment to any life- more energy from the system than is even required organisation on the planet, but is free to for its own survival. Or, it may jeopardize its own move with increasing volume and velocity survival by “accidentally” or “mistakenly” extract- in and out of—but not to sustain—social ing more than the host organism can bear without and environmental life-hosts. On the con- dying! trary, ever more social resources and pro- The dynamic and rapid adjustment of interest rates tection are being diverted to assist the cap- by the Federal Reserve as frequently as several times italist cancer to multiply. a year might therefore have parasitic implications. It could be a mechanism for maximizing energy extrac- As outlined, fractional reserve banking and money tion while adjusting to uneven growth spurts in the expansion are the two key banking mechanisms for host. It could be seen as a way to carefully finetune regulating—or manipulating—volume and velocity of the level of energy extraction from the host organism money. McMurtry’s immune system analogy also ap- while avoiding too-dangerous lethality! plies paramountly to economic science, which abso- The bogus terminology of economics has already lutely must be able to discriminate flawed, destruc- been noted, in phrases and words such as “money tive, or parasitical economic principles from healthy supply,” “deflation,” “price stability,” “fighting infla- ones (both theoretical and applied) if a cancerous in- tion,” “free market,” “growth,” and “market rates.” vasion is to be repelled. That framework arguably What is particularly striking is how all these terms does not currently exist. Economists must act as have been skewed in exactly the false directions that “white blood cells” as much as investigators, regu- would serve a philosophy of parasitic money expan- lators, reporters, etc. perhaps even more crucially so! sion. With the precision of Orwellian doublespeak, McMurty regards public institutions as societies’ the meanings twist harm into benefit like physicians’ vital organs. The “metastasizing” process is iden- leeches! tical to mass multiplication by a parasite violently rampaging through its host or destroying defense sys- cancer stage of capitalism tems:

“The current financial stripping of Globally, protective systems are now being economies and environments across the dismantled at every level. The pattern is world exhibits, in fact, all the hallmark now so universal and aggressive that even characteristics of a carcinogenic invasion.” the language of its agents no longer dis- —Joseph McMurtry [46] guises its destructive intent—“drastic cut- backs,” “axing social programs,” “slashing “The cancer stage of capitalism is not a public services,” and so on. And society’s metaphor. It is a rigorous description of protective systems are openly being “cut,” where we are.” “slashed,” and “axed” to “reassure lenders —Susan George and investors”–that circuit of money invest- McMurtry [46] does not outline all the mechanisms ment and profit that is no longer linked to for the capitalist cancer, partly implying that they the production or circulation of useful goods are yet all to be recognized, but he refers specifically and services. to the “increasing volume and velocity of money that does not sustain life-hosts:” The “circuit of money investment and profit no longer linked to production or circulation of useful The comparison with a carcinogen is starkly goods or services” may again be compared with the evident. A cancer pattern of disease and electrical capacitor analogy and closely parallels the

42 dictionary deﬁnition of parasitism. McMurtry conve- “If you’ve lost a parasite, you have lost niently nails down the precise analogy to the follow- something in the fabric of the ecosystem.” ing points: —Daniel Brooks

Long-term, systematic and irreversible de- The interpretation of the morality of a parasite is a struction of global life-organisation emerged fundamentally subjective distinction. Are parasites for the first time during the current ad- evil? Given that parasites are so prevalent, or con- vanced stage of capitalism. If we consider versely and more accurately, that freeliving organ- the defining principles of cancer and the isms are in the minority, it could be argued that par- eventual destruction of a life-host, it is diffi- asitism is in fact the ‘natural’ order in biology, and cult to avoid seeing that a cancer pattern is correspondingly in bionomics. This argument may increasingly invading and spreading across have some validity, with various significant qualifica- the planet. In other words, there is: tions. The virulence of a parasite is the measure of how deadly it is to its host. Some parasites are relatively an uncontrolled and unregulated re- harmless while others are heinously lethal. As Zim- production and multiplication of an mer states, agent in the host body that: is not committed to any function of A parasite lives in a delicate competi- the host body; increasingly appropri- tion with its host for the host’s own flesh ates nutriments from the host body in and blood. Any energy that the host uses its growth and reproduction; itself could go instead to the growing parasite. Yet, a parasite would be foolish to is not effectively recognised by the im- cut off the energy to a vital organ like the mune system; brain, since the host would no longer be able possesses the ability to transfer or to find any food at all. So the parasite cuts metastasise its assaultive growth to off the less essential things. sites across the host body; The harshness with which a parasite treats its host—what biologists call progressively infiltrates and invades virulence—contains a trade-off. On one the host body until it obstructs, dam- hand, the parasite wants to make use of as ages, or destroys successive organs of much of its host as possible, but on the other its life-system; and hand, it wants its host to stay alive. The eventually destroys the life-host in the balancing point between these conflicts is absence of an effective immune-system the optimal virulence for a parasite. And recognition and response. quite often, that optimal virulence is quite vicious. virulence This is the “killing the goose that lays golden eggs” constraint. In short, is the parasite suicidal? If a “There is more than one way to look back money parasite exists, there is evidence it is quite at the dawn of humanity. You can go to virulent. Adams insisted it was quite capable of vio- Ethiopia and sift the dust for stone tools lence. McMurtry makes the plausible case that it is at and scoured bones, but you can also go to least as virulent as cancer. Mass global environmen- the National Parasite Collection, find the tal destruction as attributed to the money parasite, right jar, and stare at a fellow traveller.” as McMurtry does, is a case for very deadly virulence. —Carl Zimmer [70] Stiglitz came to a similar conclusion.

43 However, virulence may lie in the eye of the be- attempt to save “too much” relative to circulating holder, and may be too much a one-dimensional con- money in some situations, or routinely succumb to cept. In this area there is a very new and tenta- various extreme irrationalities. The parasitical si- tive hypothesis in parasitology advanced by Daniel phoning could be unfair, but a possible “last resort” Brooks and others. The idea is that parasites may to a frozen or stalemated economy. This was one be crucial links in promoting evolution or that their of the cornerstones of Keynes’ original theory (born presence may dampen wild population oscillations of in situations of crisis unemployment) codified in the other species, serving as a balancing mechanism. For parameter of “marginal propensity to consume.” example, suppose sheep overgraze on land and be- An even more outlandish possibility is suggested gin to multiply. The parasite has more targets and by some perspectives such as [2]. The idea is that might spread faster, culling the herd and prevent- human populations inherently become unstable and ing overgrazing, consequently having major ecologi- reach crisis proportions in density, such that a para- cal implications such as preventing grassland turning sitism mechanism actually prevents dangerous insta- into desert. bility and wars. But that twisted line of thinking Or, by preying only on weaker animals, the para- on the other hand seems to embody a “self-fulfilling sites preserve the health of overall species by prevent- prophecy.” Wars are arguably likely a symptom or ing them from breeding. There is also evidence that consequence of money parasitism. The link between carnivores and parasites sometimes work in tandem. money manipulation and wars is very deep and com- Wolves that chase and eat sick, weak, and wheezing plex, and supported by Griffin’s account [32] and mooses are actually the next host-link in the chain many others. for the parasite infecting the moose. A parasite may Generally, any ideas about a parasite adding sta- also cut down on the competitive edge of a species bility to the overall system should be regarded very so it can’t drive out a competitor, making it possible warily. They may be just new masked versions of for the two species to live side by side. the same parasitic philosophy, new “wolves in sheep’s As very recently discovered, birds in California salt clothing.” marshes are thirty times more likely to eat infected At the close of his book, Zimmer makes the case killifish than uninfected ones, because of a parasite’s that all humans are a parasitical species on the earth behavior modification to the fish that makes them organism. The earth has a sort of “metabolism” that easier to spot and catch. This reveals the parasite ex- shuttles carbon, oxygen, nitrogen, etc. around the erts a very significant, previously unrealized effect on world. The rain cycle moving through streams and its ecology. Any judgement of those parasites as use- rivers can be regarded as a giant circulatory system. less or harmful might be disputed by the birds. Entire The earth is a superorganism. Humans exploit it ecosystems have invisible dynamics due to parasites exactly the way a parasite exploits its host. that are only beginning to be uncovered. Under the fairness of full disclosure, it must be There’s no shame in being a parasite. We admitted that the money parasite could conceivably join a venerable guild that has been on this promote stability among highly unstable alternatives. planet since its infancy and has become the One immediate conjecture is that the government- most successful form of life on the planet. banking complex is naturally likely to overinflate the But we are clumsy in the parasitic way of currency if it has no limits, possibly to the point of life. . . . If we want to succeed as parasites, total collapse. This occurred in post-WWI German we have to learn from the masters. hyperinflation, leading to national ruin. A money parasite could actually serve the role of extracting McMurtry comes to a similar conclusion. He pro- money-energy, but only within limits, and thus pre- poses that a worldwide revolution is required to erad- venting the tendency toward total wanton collapse. icate the capitalist cancer—i.e. yet another paradigm Another possibility is that individuals may really shift. “This could be a transformation of the world’s

44 now-failing political and economic systems which approached and understood as not merely a physi- nothing short of a global cancer could effectively cal phenomenon. Its existence is partly or perhaps bring about.” [46] Then Hamilton’s quote about gov- even solely based on nonphysical properties relating ernment debt as a “powerful cement to our nation” to psychology. Its a link in the exploitation process. and a “spur to industry” takes on a new meaning. McMurtry makes the case that the population as an immune system is not tuned to recognize the host psychological complicity money parasite. That is certainly a major part of the equation. But one can ask, “why is it not tuned?” “A great many people think they are think- A full examination of money parasitism must fully, ing when they are merely rearranging their candidly, and realistically take into account all fac- prejudices.” tors. While the parasitism itself is an unpleasant and —William James macabre subject, host complicity is simply the “other side of the coin.” The word “victim” as applied to a “We have met the enemy, and he is us.” host may be too much a one-dimensional concept. —Pogo, by Walt Kelly, Earth Day 1970 A money parasite could be considered to simply The Rothschilds as quoted in money reform literature be the outward manifestation of degenerative host can now be revisited for striking new meaning: conditions. Parasites typically prey on the weak and sick and are simply fought off in healthy hosts. The few who can understand the system Ancient history has a simple parallel and model. [of fractional reserve banking] will be so in- The Roman Empire was built and dependent on an terested in its profits, or so dependent on ancient imperialistic colonization process that im- its favors, that there will be no opposition ported a steady stream of slaves from newly con- from that class, while on the other hand, the quered territories. This was the basis of their econ- great body of the people mentally incapable omy. Arguably, parasitism was the official state pol- of comprehending the tremendous advan- icy. tage that capital derives from the system, One of the formulas for its government that served will bear its burdens without complaint, and for centuries was the “bread and circuses” combi- perhaps without even suspecting that the nation. The rulers discovered the simple recipe for system is inimical to their interests. minimizing occurences of the periodic riots of the dis- enfranchised. The masses were pacified with some This quote is simply a veiled reference to the host- free food and entertained with bloody gladatorial parasite relationship. The “few who can understand events. The modern equivalent seems to have meta- the system, so dependent on its favors” comprise the morphosed into something like “Twinkies and TV.” parasite. The “great body of the people mentally in- Extended considerations of host psychological dis- capable of comprehending who bear its burden with- eases conducive to the money parasite can be found out complaint or suspicion” are the vast masses with in [2] or [1]. A short representative summary: a failed or compromised social immune system. The “burden” is exactly the money-energy extracted by greed vs. honesty The tactful Rothschilds did not the parasite from its host. “The great body of peo- explicitly mention greed, but its implicit in the ple” takes on new meaning—something like “succu- class “dependent on the favors.” Honest individ- lent host.” uals would reject the so-called “bargain.” Greed The quote reveals more, however. It’s suggesting is the foremost disease of money. that the money parasite feeds not only on the money- energy but also on the psychological weaknesses of the profligacy vs. conservation Or “irresponsibility populace. This is an absolutely crucial element in the vs. responsibility” relative to money spending dynamic of the host-parasite coupling. It must be tendencies. Government indebtedness is just the

45 macrocosmic mirror of individual debts on the 9 economic warfare microcosmic level. “I believe that banking institutions are more apathy vs. concern If the public is apathetic to- dangerous to our liberties than standing ward its institutions, they will deteriorate. How armies. Already they have raised up a much does the public care about its own gov- monied aristocracy that has set the government or banking system vs. extracting gains ernment at defiance. The issuing power from either? [of money] should be taken away from the banks and restored to the people to whom ignorance vs. education As Adams warned, the it properly belongs.” public must understand basic money and bank- —Thomas Jefferson ing concepts to be able to fight off parasitical infections. “The first casualty when war comes is truth.” dependency vs. autonomy Entire nations can be —Hiram Johnson composed of dependents and their “enablers.” “Give me a place to stand, and I will move passivity vs. action If the public “gives away its the world.” power,” i.e. delegates its authority and takes a —Archimedes, on the nature of leverage passive role, a parasite may arise to take the active one. To the modern ear Jefferson’s shrill warnings on banks sound like exaggerated hyperbole, especially reactive vs. proactive As Griffin [32] has docu- the idea they are “more dangerous to our liberties mented, the public can be manipulated via crises than standing armies.” Hence the term “economic and a false “problem-reaction-solution” cycle. warfare” may seem unfamiliar to the point of sound- ing like an oxymoron. It’s a foreign or even alien idea delusion vs. rationality The public must under- (much like money parasitism) but its reality is sup- stand “there is no such thing as a free lunch” ported by some of the most rare and circumstantial or they will become one for the parasite. evidence. Under a different light, the Jeffersonian quotations are as uncannily perceptive and future- credulity vs. oversight As Ronald Reagan re- anticipating as Adams’. marked on his philosophy over a nuclear arms Earlier it was observed that governments have treaty with the Soviet Union, “trust, but verify.” historically regarded counterfeiting as a treasonous crime. Counterfeiting has the ability to destroy the distraction vs. vigilance “Eternal vigilance is the economic integrity and vitality of an entire nation. It price of freedom.” Mass sporting events and in- can be used as a mechanism of state sabotage, and ternet pornography are probably in the first cat- it is even regarded as an act of war if advanced by egory. one country on another. Widespread counterfeiting, lawlessness, and anarchy are sometimes the historical groupthink vs. leadership Some derisively refer progression of collapsing empires. to the public as “the unwashed masses,” “cat- As M.A. Rothschild asserted, “Let me issue and tle,” or “sheeple.” control a nation’s money and I care not who makes its laws.” By all the previous verbiage, the difference cowardice vs. courage It is possible that some between counterfeiting and money issuance can be have glimpsed the parasite firsthand but lacked a very subtle matter—“razor-sharp.” For purposes the nerve to confront or challenge it. here, loosely define “economic warfare” as “state-

46 sponsored counterfeiting used as a means of seizure of mote it. assets and establishing control over another country.” The analogy applies on international levels. Dif- The metaphor of “invisible slavery” was applied ferent nations have currencies that are backed by earlier to economic parasitism. Economic warfare their reserves. Nations become analogous to indi- likewise can have the very treacherous property of vidual banks in a larger world economy. Currency invisibility. If a nation’s currency is being counter- exchange rates are a measure of the leverage of one feited without detection, or assets seized and control currency against another. If a nation expands the lost via an equivalent process, it seems equivalent to circulation of its own fractionally-backed money out- a means of waging invisible warfare. side its borders, it’s totally analogous to banks that The theoretical possibility of economic warfare is increase circulation of their debased money, and one hinted in the earlier mathematics. Gresham’s law, nation can seize assets of another based on money “bad money chases out the good,” fundamentally is manipulation. about the economic leverage that can be applied via Now, note the basic parallel between a collapse of reserves of capital. Just as in physics when huge a bank due to a run, and mass failure or default of masses can be moved via carefully constructed pul- loans made by the bank. Suppose corrupt private ley systems that increase “mechanical advantage,” it bank C lends mass funds to an accomplice D. D de- seems totally analogous that mass economic disloca- faults, but with kickbacks to C. Government bails out tions can be effected by the transfer of capital. By the “failed” loans of bank C. the formulas, a bank that issues debased currency These are extremely crucial, initially counterintu- via fractional reserves that circulates into the larger itive situations to observe. Bank failures, bailouts, economy is exerting leverage against that economy loans, or aid can be disguised weaponry for wag- by extracting energy from it. ing economic warfare against the governments of Now, suppose that two private banks A and B either foreign or domestic countries. Moreover, are competing to extract money-energy from a given government-funded bank bailouts may have the un- economy. Suppose that the owners of bank A manage intended effect of feeding the money parasite! These to clandestinely incite a run on the reserves of bank B are the money system analogues of infiltration of the by its depositors, such as by spreading rumors of col- government-banking complex’s immune system. lapse. Bank B fails, and its assets then may come Hence large-scale currency machinations especially under control of bank A. If undetected, bank A ap- during “crisis situations,” such as “currency swaps” pears to have successfully waged “economic warfare” tied with foreign money devaluations by the Federal against bank B. It successfully attacked and seized Reserve, can be seen as weapons for waging mass “economic territory.” worldwide economic warfare—invisible annexation of The attack is not necessarily limited to collapses. foreign assets. Bank B may not totally fail due to the run, but be sig- Similarly, in 1970 the IMF created a new monetary nificantly weakened from decline in its reserves from unit called the SDR, or “Special Drawing Right.” As withdrawals. The economic leverage of bank A is Griffin quotes Dennis Turner: [32] still commensurately increased. In a sense, bank B’s money has been undermined from an economic oscil- SDRs are turned into loans to Third-World lation. nations by the creation of checking accounts Substitute “nation A,B” for “bank A,B,” “national in the commercial or central banks of the currencies” for “bank deposits,” and this gives the member nations in the name of the debtor theoretical background of a worldwide economic war- governments. These bank accounts are cre- fare technique. Moreover, if the losses are made up ated out of thin air. The IMF creates dol- by taxpayers, it becomes essentially state-financed! lars, francs, pounds, or other hard currency Bailouts may fail dangerously to address the core and gives them to a Third-World dictator, disease and maybe even unintentionally mask or pro- with inflation resulting in the country where

47 the currency originated. . . . Inflation is narrowly-known document purports to be a training caused in the industrialized nations while manual for the science of “quiet wars” waged against wealth is transferred from the general pub- the populace. It includes amazing scientific and lic to the debtor country. And the debtor mathematical descriptions very similar to the prior doesn’t repay. sections. It has much material relating to “debili- tated host psychology,” using the depiction adopted Turner is simply describing the process of frac- here. tional reserve banking as a tool for money parasitism The document has never been published anywhere not on an intra-national but on the international except in very obscure locations and on the internet. scale by the IMF. By definition, inter-national money The scientific community seems to be unaware of it parasitism wages economic warfare. or ignoring it. It’s circulated in small circles for at Economics makes the distinction of GDP, Gross least a decade; the author is unknown. Any serious Domestic Product, vs. GNP, or Gross National Prod- researcher looking into economic slavery, parasitism, uct. [17] GDP can be defined alternatively, roughly, or warfare must absolutely be familiar with the man- as the percent of GNP that is owned by the na- ual. But since its legitimacy and authenticity are tion’s own citizens. That is, in a sense, the ratio so easily questioned by the literal-minded, it cannot r = GDP/GNP represents a fractional reserve sys- serve as any form of definite evidence. Other avenues tem of the entire country, with the fraction 1 r rep- − must be pursued to make the case for economic war- resenting foreign ownership of the country’s assets. fare. If a money parasite is “foreign” to the country, then One excellent recent item along these lines is the the part 1 r represents degree of parasitic control − incendiary article, “IMF’s four steps to damnation” of the host country. A debtor nation status can be by reporter Gregory Palast. [51] During an IMF con- a sign of nationwide infection and subjugation by a ference in Washington in 2001 he interviewed ex- foreign money parasite. chief World Bank economist Joseph Stiglitz who was But equivalently, such a situation can be regarded fired over his ideological differences. Stiglitz openly as a domestic invasion and subjugation by an invisible charges the lending program is really one accomplish- foreign army—the virtual definition of attack by a ing economic subjugation not unlike colonialism, only parasite from the host’s perspective. that it is implemented economically rather than mil- itarily. Stiglitz reduced the IMF modus operandi rel- “four steps to damnation” ative to developing nations, described by more religious capitalist doublespeak: “In essence, these countries end up buying back their own money, but at incredibly privatization State industries are sold off after the high rates. And this is just the beginning countries shave billions off of the prices of elec- of the IMF’s involvement.” tricity and water companies with “commissions” —Gregory Palast [51] (kickbacks) going to the country’s politicians. “Is globalization about the eradication of market liberalization Stiglitz refers to this as the world poverty, or is it a mutant variety of “hot money” cycle. Cash comes in for real es- colonialism, remote controlled and digitally tate and currency speculation and then “flees at operated?” the first whiff of trouble.” The nation’s reserves —Arundhati Roy that back the currency are drained sometimes in days. The IMF demands the nations raise inter- Possibly the most extraordinary single damning item est rates to the astronomical ranges 30-80%. of circumstantial evidence for the existence of an organized economic warfare program is the document market-based pricing The nation is required by called Silent Weapons for Quiet Wars. [2] This very IMF to raise prices on the staples of food, water,

48 and cooking gas. This has a disproportionately of the game. The steps he describes seem probably a heavy cost on the poor. glimpse at the mechanisms by which the money parasite can infect entire national economies. social unrest Also called “the IMF riot.” Step A pattern indeed emerges. The above clearly de- “three and a half” occurs at this point as the scribes the overt thrashing ensuing from a covert pro- IMF “squeezes the last drop of blood out of cess whereby banking and governmental systems are them, turning up the heat until the whole caul- systematically leveraged against each other to debase dron blows up” when food and fuel subsidies for the integrity of each. This would be the core strat- the poor are eliminated (Indonesian riots, 1998; egy exactly expected of a money parasite attacking Bolivia, 2000; Eucador, 2001). Secret IMF plans the government-banking complex! Extensive delin- coldly anticipate the likely “social unrest.” eations of this “leverage polarity” in which “both free trade Free trade by the rules of the World sides are played against the middle,” can be found Trade Organization and the World Bank, anal- in Silent Weapons for Quiet Wars [2] and The Oc- ogous to the Opium Wars. Trade barriers are cult Technology of Power [1]. knocked down in foreign countries but with fi- More analysis of the IMF and World Bank can nancial blockades in return. be found in Michael Rowbotham’s book, The Grip of Death: a Study of Modern Money, Debt Slavery, The consistently re-occurring riot stage noted by and Destructive Economics. [57] Another angle can Stiglitz is evidence of the link between money par- be found in ex-CitiBank CEO Walter Wriston’s 1992 asitism, violence, and destruction. In overt wars, work, The Twilight of Sovereignty: How the Infor- armies engage in bloody confrontations on a battle- mation Revolution Is Transforming Our World. [69] field. In covert economic warfare, a riot may be seen sovereignty 1. Supremacy of authority or as a symptom of or reaction to the invisible invasion. rule: sovereignty over a territory. 2. Royal It’s also arguably analogous to a futile mobilization rank, authority, or power. 3. Complete in- of the immune system. dependence and self-government. 4. A ter- Much of the science of warfare centers around max- ritory existing as an independent state. imizing the element of surprise. It is to be assumed that if some renegade groups have discovered effective means of waging economic warfare that they would high crimes & treason take extreme measures to attain the strictest secrecy. If a covert plan of economic warfare has been waged, When asked by reporter Sandeep Kashik, “You claim it may have international rather than mere national to know the dirty inner secrets of the IMF. How is implications as various commentators have charged. that possible?” Palast replied: Counterfeiting on a national level is a treasonous crime against that nation. However, it seems reason- I’ve had large numbers of secret hidden doc- able to classify international scale economic warfare uments slipped to me. The IMF really is its as a “crime against humanity.” Accusations on this own secret world government; all of these level have been made by U.S. Senators on several oc- reports are stamped “for official use only” casions. and “restricted distribution.” They know if Senator James Traficant entered a vocal (not le- the details of what they’re doing gets out, gal) indictment against international agencies and there’d be people in the streets. the Federal Reserve in the Congressional record in 1993 referring to undeclared economic war and eco- Palast writes, “A pattern emerges. There are lots nomic slavery: [64] of losers but the clear winners seem to be the west- ern banks and U.S. Treasury.” Stiglitz nor Palast do Federal Reserve Notes (FRNs) are un- not appear to realize the significance or magnitude signed checks written on a closed account.

49 FRNs are an inflatable paper system de- sion, McFadden gaves ample historical information signed to create debt through inflation (de- that mirrors Griffin’s account [32]. McFadden as- valuation of currency). When ever there is serted the foreign bankers used the system to fi- an increase of the supply of a money substi- nance and foment entire wars. He insinuates a covert tute in the economy without a correspond- agenda to create “a superstate controlled by interna- ing increase in the gold and silver backing, tional bankers, and international industrialists acting inflation occurs. . . . The Federal Reserve together to enslave the world for their own pleasure.” Bank who controls the supply and move- “I do not like to see vivisections performed on human ment of FRNs has everybody fooled. They beings.” have access to an unlimited supply of FRNs, McFadden has a thorough listing of crimes and in- paying only for the printing costs of what dividuals he charges. “I charge them, jointly and they need. severally, with the crime of having treasonable con- The receivers of the United States spired and acted against the peace and security of Bankruptcy are the International Bankers, the U.S. and with having treasonable conspired to via the United Nations, the World Bank and destroy constitutional Government in the U.S.” the International Monetary Fund. . . . This McFadden was Chairman of the House Banking is an undeclared economic war, bankruptcy, and Currency Committee for a ten year period and and economic slavery of the most corrupt survived two apparent assassination attempts. By order! some accounts, McFadden died in “suspicious circum- stances” in 1936. An extremely extensive accusation of about thir- If “international bankers” have indeed extracted teen thousand words was entered into Congressional vast fortunes from the U.S. and other countries glob- record by Representative Louis T. McFadden in 1934: ally, one might guess they have erected vast hidden [45] economic empires. Such financial empires certainly Mr. Chairman, we have in this Coun- exist and are documented and acknowledged, but ob- try one of the most corrupt institutions the viously not as any ongoing international parasite sys- world has ever known. I refer to the Fed- tem. [14, 22] eral Reserve Board and the Federal Reserve Any attempt to identify and disengage any sup- Banks, hereinafter called the Fed. The Fed posed existing parasite system must face and contend has cheated the Government of these United with the vast historical battlefield littered with prior States and the people of the United States apparently failed attempts. out of enough money to pay the Nation’s debt. The depredations and iniquities of the Fed has cost enough money to pay the Na- 10 21st century blip-system tional debt several times over. This evil institution has impoverished “In theory, there’s no difference between and ruined the people of these United theory and practice, but in practice there States, has bankrupted itself, and has prac- is.” tically bankrupted our Government. It has —Anonymous done this through the defects of the law under which it operates, through the mal- It would be facile and absurd to propose any defini- administration of that law by the Fed and tive solutions for the complex socio-econo-politico through the corrupt practices of the mon- problem of money parasitism documented here, given eyed vultures who control it. the vacuum of systematic worldwide research. The natural immediate proposal to make would simply be Speaking at the height of the U.S. Great Depres- that the scientific community “officially” recognize it

50 and come to grips with it in a way that banking and are fully handled and covered via application of the political authorities have spectacularly failed to con- agreed penalties. This replaces the system whereby front. A major part of the problem, possibly the core depositors do not explicitly select or agree to specific part, is public awareness. withdrawal conditions. There is certainly intense stigma associated with One nice possibility for minimizing parasitism hid- this subject; in many ways human money parasitism den in state budget systems would be the following. is the ultimate taboo of society and civilization. Any The entire government budget distribution system undermining of belief structures on being “on top of could be broadcast on web pages. Individual citizens the food chain” is unequivocally shocking. It could or even automated “crawling” software could follow be an immense challenge merely to achieve the status all budgets and sub-budgets by moving through hy- of a legitimate scientific inquiry. A “hall of mirrors” perlinked web pages in a way that accounts for every effect seems to come into play and even the possibil- single dollar spent. These pages could be updated ity of parasitism already infecting the existing scien- with instantaneous information on state revenue and tific establishment is conceivable. [6, 23] Consistently, expenditures. Such a system for meticulous account- parasitism appears to transcend all boundaries. ability will of course be opposed by the vast military- The parasite problem is quite inherently multidis- industrial complex which now has tens of billions of ciplinary. Just as the government-banking complex dollars in “black budget” items. seems to have been deficient in its defense mecha- A simple system that might significantly decrease nisms, a narrow and specialized inquiry cannot possi- the possibility of economic warfare is one in which bly hope to succeed. In many ways, cooperation is the use of different currencies is closely tied to national antithesis of, and antidote to, the parasitism. Sim- citizenship. So for example it would not be legal for ilarly, the significant new breakthroughs in biologi- large amounts of dollars to circulate outside of the cal parasitology have been hard-won from interdisici- U.S. This would not necessarily decrease converta- plinary collaborations and insight and might serve as bility of currencies. Such an idea is obviously highly a model. antithetical to the existing worldwide monetary sys- One serious difficulty plaguing progress is the dif- tem now in place. ficulty in drawing the lines between the “free mar- There is some remote possibility and flicker- ket” and “government intervention” with many un- ing indication that new emerging digital currencies intuitive side-effects. Allowing banks to compete to could scale “parasite free.” [9, 16] However it seems offer different currencies and interest rates seems like money parasitism could be an incredibly tenacious a reasonable lassaiz-fair idea, except that if any fail phenomenon that will continue to carry into “cy- due to either ineptitude or corruption the deposi- berspace.” The argument could even be made that tors demand government bailouts, possibly effectively the numerous attempts at digital currencies have resulting in state-sponsored pathologies. Moreover, been failing due to money-parasitical factors. multiple currencies are a serious impediment to fluid One remarkable idea for a blip-system is one with commerce and arguably one of the very first problems a totally fixed number of blips. It seems counter- a basic money system must address. intuitive, but such a system is inherently feasible As for fractional reserve banking, one possibility and practical and possibly highly parasite-resistant. is a system that comes close to “full reserves,” al- The blip-system owners, or currency authority, issues ready advocated by some economists. A system can blips based on any arbitrary but agreed-on criteria to be devised where people agree to penalties for early the money holders, such as work or tangible assets. withdrawal of funds, and the bank offers a range of This can be done all at once, or gradually. different timed deposit accounts. The bank can count The system ideally has some way for individual those possible penalties and loan default rates to cre- holders to check (electronically) that there are no ate a system whereby all money holders are essen- more blips in circulation than officially allowed (i.e. tially consenting to any loan arrangements. Any runs a built-in auditing system) and might also support

51 anonymity. Note that an electronic system has the community-based. [29, 37] That is certainly a strong tremendous advantage that it might be audited elec- possibility, but again they may be illegal by invasive tronically by all holders whereas a commodity-backed state laws that require reporting both gifts and barter currency cannot be! transactions and subjecting both to taxation. A par- Phrased in this form, the idea becomes very similar asitical money system fundamentally has three major to the problem of preventing double spending found requirements that are arguably now already fully in- in cryptographic security systems for digital currency, stalled worldwide: (a) any money must be exclusively such as those pioneered by David Chaum. [68] It’s in the form of the state-authorized currency, (b) all also roughly identical to a system known as LETS economic transactions are subject to taxation, and (Local Exchange Transaction System) pioneered by (c) loss of government control over the central bank. Michael Linton. [37] Ultimately, the issue largely comes down to The concept may seem counterintuitive, but one whether individuals have the right to make economic can observe the close parallel of its widespread func- transactions between themselves free of state surveil- tioning in the form of hundreds of thousands of com- lance or interference. U.S. and international laws and pany stocks on worldwide stock markets! In fact one legal administration currently do not appear to sup- tantalizing possibility is an increased merger between port such a right. Coincidentally this is precisely the currency systems and stock markets such that they same question surrounding the legitimacy of any tax- become less distinguishable. Depending on imple- ation. Again, the issue is closely related to the cir- mentation, such a system could be either highly par- cumstances surrounding the founding of the U.S. and asitic or non-parasitic. “no taxation without representation.” In the new terminology, the U.S. Declaration of Independence toward full integrity phrase that “Science is a long history of learning how Governments are instituted among Men, de- not to fool ourselves.” riving their just powers from the consent of —Richard Feynman the governed. “Never doubt that a small group of thought- comes close to a tautology: ful committed citizens can change the world; money holders define, determine, and regu- indeed it’s the only thing that ever has.” late what constitutes parasitism in the sys- —Margaret Mead tem via its administrative mechanisms. An extraordinary problem with money parasitism In any case, a new realization of fractional reserve is that arguably, laws against “money laundering” banking as a kind of fractional integrity or vitality could conceivably be construed as parasitism enforce- system must enter the mass consciousness, along with ment mechanisms. So increasingly draconian mea- the full understanding that the modern economic and sures to track all privately circulating currency are political systems based on it are therefore deeply installed, such as in the U.S. by the secret agency and intrinsically flawed—to borrow the informal yet known as FinCen, as profiled in Wired magazine by highly descriptive phrase, rotten at the core. Kimery in 1993, “Big brother wants to look in your All the associated doublespeak must be discredited bank account.” [36] Similarly, The European Parlia- and cleared away for any meaningful or widespread ment investigated the use of the NSA’s (U.S. Na- changes to occur. Humanity finds itself entering the tional Security Agency) worldwide “Echelon” elec- 21st century with a medieval money system. Maybe tronic surveillance system against charges of eco- some of its intense energy directed toward technolog- nomic espionage. [3] ical innovation can be channeled toward a state-of- Some innovators are proposing and erecting the-art money system upgrade—maybe money is the new money systems that are locally-oriented and ultimate technological tool of humanity!

52 Note that some social mechanisms that might seem 11 further research to fight off parasitism could in fact be useless or even excellent decoys for the parasite. For example, if “I seem to have been only like a boy play- many people engage in even peaceful demonstrations ing on the seashore, and diverting myself at world economic summits, what is accomplished rel- in now and then finding a smoother pebble ative to captalistic or money reform? The activists or a prettier shell than ordinary, whilst the may be fooling themselves into thinking they made great ocean of truth lay all undiscovered be- progress by whether they “made the evening news.” fore me.” They might instead more productively find myriad —Isaac Newton ways of reducing “host psychological complicity” considered above. How about organizing conferences in- This section collects all the references to items for stead of demonstrations? There does not seem to future research from the prior text and adds some exist a single major conference in the world for an additional proposals, raising and outlining the many issue as uncontroversial as “money reform.” key questions. Re: the “leverage polarity” encountered above as a fulcrum for economic warfare, it’s as if the money 1. The general agenda of applying econophysics re- parasite’s food source is a form of money-energy that search to fully analyze money expansion in a way transcends both banking and government. It encom- that classical economics has somewhat avoided is passes both economic and political power and crosses a premiere and extremely critical pursuit. Vast the boundary of each. Surely any effective counter- worldwide computational resources are now ap- measures or new defense system must carefully study plied to e.g. global warming simulations and and fully embrace that same polarity. econophysics research arguably has similar cru- Previous inoculation attempts have fallen short, cial priority (the two problems are intrinsically such as with the founders of the U.S. and its Con- intertwined). A model with high theoretical and stitution, or say Marx’s critique of capitalism, not actual verisimilitude (utilizing some of the prior for lack of valor or diligence but only because of the mathematical ideas) seems within reach. Sim- awesome “nature of the beast.” The money parasite ulations are a very natural and promising ap- in its various forms has probably co-evolved with hu- proach. mans for millenia, arguably even since the origin of 2. Given some fit of the model, the value of n for exchange. the expansion process is unknown and could pre- It’s conceivable this all hints at a new, previously sumably be determined from careful study and unrecognized form of energy—say, “monergy”—that datamining of economic records. How does n might be tamed with the full force of scientific and en- scale for different size economies? However, due gineering discipline applied to it. Econophysics shows to Federal Reserve secrecy, some key parameters some promise along these lines, but a new revolution- may not be available, such as the precise amount ary realm of science and engineering might be born the money stock has been expanded. Two key that merges politics and economics. questions: over the timespan of the Federal Re- Correspondingly the government-banking complex serve, how much money-energy has been illegit- could merge and evolve into a new institutional sys- imately extracted, and how much of that moved tem that corrects the present flaws in exactly the outside the country to foreign ‘investors’? same way (e.g.) the well-intentioned, creative, and vi- sionary founders of the U.S. attempted in their time. 3. Similarly, the decay rate of pressure and demand That is, remove the identified bugs uncovered in the of government bonds relative to interest rates field from the legacy system via re-engineering and can be studied via historical data. These may re-release. “Government-banking complex OS v. 2.0” both follow nonlinear formulas that are only ap- ... beta ... virus checked proximated by the simpler approximations. A

53 key question is how much complexity is required [32, 14, 22] yet is still arguably underexplored for diﬀerent resolutions of insight. by experts.

4. The nature of velocity of money is murky and 9. The establishment of small, localized, and iso- may be tied into thermodynamical expressions lated testbeds of real economic systems to study for average molecular velocities derived from sta- money dynamics laws empirically could be an tistical mechanics. Analogously, money paths absolutely key component in moving economic may follow in some sense “brownian motion” science into a philosophy of strict experimental over the graphs of holders. Also the link to integrity. savings rate is very promising. What are other mathematical estimations of Gresham’s law? 10. Modelling social class divisions based on wealth What is the exact leverage possible by an in- disparity such as through Pareto’s law is closely dividual bank in a larger economy? When do in- related to the ideas of this paper, especially dividuals lose more from inﬂation and taxation the “temperature of a physical substance” anal- than they gain from interest? ogy. [11, 8]

5. Based on strong theoretical understanding and 11. Can new econophysics principles shed light on insight, what are new systems that have fair- the historical record of bank dynamics, past dis- ness and soundness (scarcity integrity) as funda- locations such as booms, busts, even wars? Grif- mental design principles, and avoid recursive bite fin’s [32] is an outstanding new perspective and ’em ad infinitum, cui bono caveat emptor, etc.? re-examination. Presumably cryptographic design principles will play a role. What is a rational and optimal sys- 12. How secure from tampering or corruption is the tem? administration of the Federal Reserve and its computer and communication systems, e.g. Fed- 6. The money expansion process probably is similar Wire? to stock depreciation on the issuance of second rounds and some insight could be gained from 13. The subject of “capitalism as a religion” is a wor- study of these cases. However this line of inquiry thy sociological or sociopolitical inquiry. Psycho- quickly runs into the complication of differenti- logical aspects of money-energy parasitism are ating intrinsic vs. extrinsic factors. A general also open for investigation. theory relating stock market dynamics to more global money systems seems plausible. 14. Is CPI calculation flawed based on the conven- 7. More research on making more detailed and rig- tional system from underestimation and the elas- orous (ideally via mathematical modelling) all ticity problem? What are mathematical models the metaphors advanced in this paper seems rea- of elasticity across diverse sets of goods? sonable: economy-as-ecosystem, economic slavery, parasitism, warfare, electrical capacitance, 15. To what degree is Solow’s “productivity para- cancerous capitalism, etc. dox” explained by the “parasitism hypothesis”?

8. Silent Weapons for Quiet Wars [2] alone demands the attention and further investigation of 12 frequently asked questions the scientiﬁc community, particular relative to the question of covert worldwide warfare. The “Imagination is more important than historical link between money manipulation and knowledge.” wars is available in many references such as —Einstein

54 “Never attribute to malice what can ade- revenues. Borrowing represents a depar- quately be described by stupidity.” ture from an equilibrium state. Money —American proverb expansion is an even further removed disequilibrium. It’s all just variations on An attempt is made here to anticipate some questions the same theme of parasitism. that might frequently occur on the contents of this Q. Won’t the system collapse without con- paper and provide a brief summary. tinued growth? A. The question is similar to the prior Q. Isn’t fractional reserve banking the only one. Growth is a non-equilibrium state. way to do it? A sane economics must be based on an A. No, there are alternatives. The idea that equilibrium. Collapse as a result of con- it is, is probably based on a centuries- tinued growth is the more accurate sce- old philosophy and practice of money nario. Growth can also disguise a money parasitism—a kind of dark-ages “leech parasite, or be a symptom of one. bloodletting” that persists into the 21st century. Q. What’s wrong with interest? A. Interest, defined as “risk-free gain(s),” Q. Isn’t a full-reserve system impossible be- is only possible via growth (or accelera- cause then nobody could borrow money? tion) in the economy, which itself is sub- A. The concept of timed-deposit accounts ject to boom-bust cycles. An interest where depositors agree to penalties for distribution system could also be seen as early withdrawal is compatible with a an ineffective defense mechanism against full-reserve system with borrowing. parasitism—it might even be a symptom Q. Doesn’t the Fed “fight” inflation? of it. A. Inflation can never be prevented by “ex- Q. Doesn’t the government just print panding the money supply” because that money whenever it needs it? is the cause of it. A. That’s the cliché. The Federal Re- Q. Isn’t deflation to be avoided? serve and U.S. Treasury relationship is A. The mathematical findings here contra- very convoluted, but basically “printing dict that. Deflation can be a means for money” can be an accurate or mislead- widespread and equitable distribution of ing picture depending on the context. the public gains of an economy. Histori- The key question is “who gains?” cally, “demonizing deflation” may have Q. Aren’t business cycles related to hu- been one means of infection by para- man irrationality & fundamentally in- sitism. escapable? Q. Isn’t “price stability” an important goal? A. It is possible the boom-bust cycle is in- A. By the same line of thinking, it can be escapable in any system, but it is also a means of preventing equitable distri- possible that it isn’t, or at least has been bution of public gains. Also, price fluc- historically exacerbated (amplified) by a tuation can be seen as a self-regulating money parasite. mechanism. Q. Isn’t there not enough gold in the world Q. Isn’t it true the government must borrow for modern economies? money? A. The question involves a lack of under- A. Governments can and should function standing of the nature of scarcity. Prices without borrowing in addition to tax would naturally adjust to the amount

55 available if it were used as a standard. lem of each mistakenly thinking that the Q. Wouldn’t it be a waste to use gold as a other “has it covered,” a blind-spot ex- standard when it could be going to some- ploitable by a parasite. If regulators thing more productive? don’t know what to look for, it just re- A. Again the question implies a lack of un- sults in “close calls” and “near misses.” derstanding about the nature of scarcity. Q. Is the Federal Reserve a nexus for a real The stored gold not going to other uses money parasite? is a perfect visual depiction of the fun- A. Possibly. A central banking system is damental nature of money as a “store of the natural habitat of a money parasite. value” and the definition of “reserve.” A worldwide system such as the IMF Q. So there should be a gold standard? or World Bank would be an especially A. It’s one but not the only possibility; un- “juicy host.” If the world had a bank, fortunately any system can be debased, the World Bank would be it. as gold was routinely in the past. The Q. How could it be isolated if it exists? focus needs to be on the administration A. Determined investigation, maybe a real system. “audit.” Note that published records Q. Is there really an organized national or do not necessarily accurately depict hid- international “money parasite”? den dynamics. Also, in any serious in- A. The case for a nationally unorganized vestigation, the possibility must be con- one, i.e. on the level of a metaphor or fronted that some participants may be as an “emergent phenomenon,” is cer- “tainted.” tainly reasonable to conclude. As for Q. That sounds like a witchhunt! “organized”—unknown. Proposed here A. More like a parasite hunt. Remember, as a hypothesis but left as an open ques- the immune system itself can be compro- tion. There is ample circumstantial ev- mised in a parasitic invasion, in the more idence but nothing definitive or conclu- insidious cases. But it could even be fun, sive. “Need more data.” like a game, like hunting for easter eggs. Q. How solid are all the mathematical for- Q. But that still sounds like McCarthyism! mulas in this paper? A. Yes, or maybe McCarthyism was a para- A. Not all of it is to be taken totally seri- site decoy. Public hearings are flamboy- ously. It’s laid down immediately asking ant but not necessarily a very effective for revision. The underlying theoretical strategy. conception of energy dynamics is likely very solid. Q. [snicker] So then what’s “a very effective strategy?” Q. Doesn’t this entire paper fly in the face A. Andy Grove, ex-CEO of Intel and pre- of vast swathes of existing economic the- miere 20th century surfer of Moore’s ory? Law and the technological age, wrote A. Yes. In fact in places it’s quite disre- a book called Only the Paranoid Sur- spectful. vive. Seriously, maybe a truly effec- Q. Why hasn’t anyone in banking or gov- tive strategy is yet to be invented. A ernment described or confronted money parasite at the scale of national or in- parasitism before? ternational economies in the 21st cen- A. Many have, in different forms, as doc- tury must necessarily have developed ex- umented here. But it’s also a prob- traordinarily, verging on incomprehensi-

56 bly sophisticated mechanisms for ensur- ery or warfare system, why can’t I see it? ing its own survival. But Zimmer’s work A. Maybe because it’s invisible. And reveals, that is in fact exactly the level note that scientific advancement (the that real biological parasites have rou- “paradigm shift” cliché) is fundamen- tinely attained through millenia of co- tally about making the invisible visible evolution with their hosts. as e.g. in the case of Pasteur, or the past Q. It’s still all just a conspiracy theory. and modern parasitologists. A. As Lincoln, front-line expert on slav- Q. Can econophysics really replace “the dis- ery and liberation, warned ominously, mal science” of economics? “the money power conspires.” History A. Hopefully. It’s an entirely different abounds with real conspiracies, and to paradigm with fundamentally different paraphrase Santayana, those who do not tools, outlooks, and strategies. Its all learn from them are doomed to repeat a truly vast terra incognita waiting for them. (On the other hand, it has also another Einstein, so to speak. been said “history is written by the as- sassins. . . ”) Anyway, a thorough inves- Q. How could entire banks be corrupt? tigation does not imply belief in a con- A. There are historical examples of this spiracy. Money holders have the right even on a large scale such as the BCCI and imperative to enforce the integrity collapse, Bank of Credit and Commerce of their system. It’s their money. International in the early 1990s; regulators reported that mass funds simply Q. The overall paper flips in an almost “disappeared.” All scenarios must be bipolar way between money parasitism considered for a healthy immune system. in its theoretical vs. real forms, abound- ing with multitudes of nebulous ab- Q. How much money has been lost to the stractions, mathematical fantasies, out- parasitism? landish and disconnected references, A. In one sense, nothing, because it has flimsy innuendoes, foggy and tenuous in- not been detected or considered a loss. ferences, nonsequiturs, shrill polemics, In another sense, possibly astronomical awkward mixed metaphors, unproven amounts over many generations, con- speculations, unwarranted and wild ex- ceivably enough to enslave entire na- trapolations, frivolous quotations, bor- tions. derline purple prose, and gratuitous, thinly-veiled accusations. Q. Can a single paper really make any dif- Q. Yes. So? ference? A. Maybe. If it is read, understood, and A. . . . The slurs on the public citizenry at disseminated. Martin Luther’s did. the end are tasteless, insulting, mean- spirited, out-of-line, outrageous and in- Q. Who will solve these problems? tolerable. A. Concerned citizens, if they exist. A. ok. Q. But will they be solved? Q. The text has too much italics, and ex- A. Maybe. Probably, especially in the long- clamation points should never be used term as public consciousness is raised. in a scientific paper! There are occasional “tipping point” or A. ok! “critical mass” phenomena along these Q. . . . If there’s a worldwide economic slav- lines.

57 13 comments on references as additional perspectives for consideration, pieces for a sociological or anthropological study. [2] and The following comments are offered in addition to [1] are classic pieces from this genre. Unlike main- prior notes to other researchers interested in navi- stream accounts, these articulate and explore the gating some of the references cited. The literature covert means by which money and political power pertaining to the subject of money, economics, and can be intertwined and leveraged against each other. fractional reserve banking is vast. The selection be- In [23] the economist Flaherty has taken pains to de- low represents only one possible set with its own id- bunk the conspiracy theories on his web page, focus- iosyncracies. ing particularly on [34]. Easily an entire paper could be written analyzing Mullins’ work [49] is another classic from the con- Silent Weapons for Quiet Wars: Operations Research spiracy literature, has much historical detail appar- Technical Manual. [2] The scientific community ap- ently based on copious research and highly accurate, parently has been totally silent on or unaware of this but is seriously marred by the lack of citations and a document, but the contents clearly deserve serious bibliography. [27] is similar, also having much histor- analysis as to their possible authenticity. There are ical information but weak organization and no bibli- two main versions circulating, one of which has no di- ography. agrams or equations (in e.g. Cooper’s collection), the Rothschild’s Bionomics [55] is the first com- other has many diagrams and complex formulas such prehensive treatment of the economy-as-ecosystem as partial differential equations, electronic schemat- paradigm, a very innovative and seminal book at ics etc. (in e.g. web site version cited) that strongly its introduction; the ideas have been very influential. conflict with any view of it as some kind of amateur The Bionomics Institute and web site has active and prank or parody. ongoing publications and conferences. In many ways it is the most important single refer- Borsook [7] has an irreverent and facetious chap- ence among this collection apropos to this paper’s ter on bionomics as a social movement, “Bionomics own analysis. It contains a scientific sophistica- in Your Daily Life,” documenting the various con- tion arguably at least two decades or more ahead ferences in the 1990s and personalities behind their of its time at its published date (1979), but also organization. It also delineates the major politi- the most sinister and diabolical undercurrent con- cal agendas behind bionomics, mainly libertarian- ceivable. There is a very strong case to be made ism. Borsook focuses on a brand of libertarianism it is exactly what it purports to be, i.e. a leaked top finetuned by Silicon Valley hackers, verging into a secret manual, handbook, and manifesto for insiders philosophy of “anarcho-capitalism.” Her work serves documenting the history and mechanics of economic as a fair, skeptical critique and warning on extrem- parasitism and warfare, razor-honed to a deadly sci- ist views and hidden ulterior agendas on e.g. digital ence. cash. At 608 pages, Griffin’s tour de force [32] is one Bhattacharya’s work [6] is a recent complex and ad- of the most ambitious and thorough treatises on the mirable analysis with computational simulation of a subject of the Federal Reserve and the history of money expansion model that includes diverse factors money and fractional banking. Griffin focuses mainly such as production, taxation, etc. by a Federal Re- on U.S. history and historical figures during and since serve sponsored economist. It also has an extensive the revolutionary war, with meticulous analysis and bibliography of conventional economists’ views on many historical quotations, with special attention to money expansion, i.e. “conventional wisdom” largely U.S. war engagements. It’s also one of the most com- contradicted by this paper’s findings and assertions. prehensive bibliographies on the subject available. It can be reviewed while keeping in mind the poten- Much literature on the Federal Reserve falls into tial conflict-of-interest issues noted earlier. the genre of “conspiracy theories.” The approach The accumulated edifice of 20th century economics taken in this paper is to include these sources simply theory is extremely formidable, and summary and

58 overview references such as [17, 50, 58] are very help- of electronic money at the end of the 20th century, ful in condensing decades of diverse materials. How- the latter emphasizing its disruptive effects on gov- ever they should be recognized as not substituting for ernments. [57] takes the case further and argues the definitive treatises and textbooks from the field. case for worldwide “debt slavery” via international Doyne Farmer in many ways embodies the new lending institutions (IMF, World Bank). breed of econophysicists and is the forerunner. [18, 19, [29] and [37] are particularly helpful in proposing 20] He was key in helping bring about the scientific alternative currency systems. paradigm shift in recognizing chaos, complexity, and [70] is a very lucidly written yet highly scientific nonlinear dynamics long before it was a fashionable account of the recent revolution in biological para- point of view—in fact, the agenda was initially very sitology, based on many first-hand interviews of re- unsupported, risky, criticized, and even ridiculed; see searchers. [66]. The economists that come closest to articulating Thanks to V.S. for many helpful materials and discussions. the same ideas of this paper are Friedman [26] and Rothbard [53]. Both writers are internationally ac- References claimed. Rothbard is sponsored by the Ludwig Von Mises Institute with many similar writings and is one [1] Anonymous. 1978. The Occult Technology of of the few economists in the entire world to argue di- Power. A Albionic Research. rectly against the central banking system in the form of the Federal Reserve. [54] This reference also con- [2] Anonymous. 1979. Silent Weapons for Quiet tains an analysis of American history based on the Wars: Operations Research Technical Manual. machinations of private banking dynasties. Available in e.g. Cooper, W. 1991. Behold a Pale [64] and [45] are remarkable, astonishing, incendi- Horse. Light Technology Publications. Also at ary denunciations, indictments, and condemnations e.g. http://land.netonecom.net/tlp/ref/sw4qw/ of the Federal Reserve entered into Congressional index.shtml record by representatives McFadden and Traficant, totally obscure, unknown, or forgotten among the [3] Asser, M. 2000. Echelon: Big Brother general public. Without a Cause? BBC News, July [31] is about the best documentation of the internal 6, 2000. http://news.bbc.co.uk/hi/english/ operation of the secretive Federal Reserve available world/europe/newsid_820000/820758.stm to the public. [63] is a very accessable abbreviated [4] Baker, O. 1999. Schroedinger’s cash register: summary on the function of the Federal Reserve. physicists try to break economists’ monopoly [22] is a comprehensive account of history based on financial theory. Science News, Vol. 156, on the interpenetration of banking and key historical No. 22, November 27, 1999, p. 344. http://www. events such as world wars, a crucial link not typically sciencenews.org/sn_arc99/11_27_99/bob1.htm explored by historians. [14] is a similar retrospective. [46] is one of the few available references that pro- [5] Berlinksi, D. 2000. The Advent of the Algorithm: poses a similar analogy explored in this paper, the The 300-Year Journey from an Idea to the Com- “cancer stage of capitalism.” puter. San Diego: Harcourt Inc. [59] is a 413 page treatise on economics targeted at the layman. It’s got excellent history on the inter- [6] Bhattacharya, J. & Haslag, J.H. 1998. penetration between politics and economics, focusing Seigniorage in a neoclassical economy: some on the 20th century, as well as a basic introduction computational results. Dallas Federal Re- to the Federal Reserve system. serve Economic Research Working Papers. [39] and [69] were published at about the same http://www.dallasfed.org/htm/pubs/abstracts/ time and look at the extreme international fluidity erpapers/99_1.html

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