Monday, December 08, 2008

Federal Reserve and Monetary Policy: Made in the US of A.


This is a future as projected by current events.

The Unknown Rebel — This famous photo, taken on 5 June 1989 by photographer Jeff Widener, depicts an unknown man attempting to halt the PLA's advancing tanks near Tiananmen Square.

This event can also become a United States of America event. It does not matter if a country becomes a dictatorship from the “Socialist/Communist” or the “Nazi Ideology and Fascist Dogma” point of view. A dictatorship is a dictatorship. The US of A’s identity is becoming that of a low wage, third world country.

The way Wall Street has taken over the argument in the demised of GM, Ford and Chrysler insures the rich will get their money by robbing the poor. There is no middle class in these United States of America. Wall Street has this my-optic view of China’s role in the US of A: “They are the Calvary that would be riding to the rescue”. The US of A’s vanishing of the middle class is the result of Wall Street’s greed.

Where’s the Math???

It starts with convolution of two probability densities. (See Convolution of 2 Densities) If the peaks of the densities represent the most likely-hood of wages in a sector then the convolution shows that one wage is suppressed while the other wage is elevated. India can be an example of this result. In some sectors, there is a high turn over in the labor force. If the wage is not allowed to change, as in the case in China, then there is no benefit. I do not believe a DAMM thing China’s Communist Government says. A command economy is a command economy. The US of A’s economy is becoming a command economy.

A Rational Expectationist would say “Don’t Worry, Be Happy”!! However, I am not a Rational Expectationist. I know there is a clash of government policies and one can explain this with a Bose-Einstein type argument. Remember, Risk to Reward is a Groupoid and this has a higher order Lie algebra on to itself. This algebra allows time to be a fundamental variable. How markets change is a question of policy(ies).

If one does not understand how to make a Bose-Einstein type argument of this problem then one can start by studying Markov Chains and hidden Markov chains. Study neural nets to get a basic idea how to represent certain “physics” terms into some sort of representation to the problem at hand. Some basic knowledge of statistical mechanics would be helpful. The above path would get one to a point in which one can begin to understand the following: Statistical mechanics of complex networks Section Bose-Einstein Condensation PDF page 39.

Viva La Résistance Toward Government Bailout Without Full Accountability!!!

Viva La Revolucion!!!!

Tuesday, November 25, 2008

Federal Reserve and Monetary Policy: The Struggle for Freedom and Democracy around the Globe.

Citigroup gets a federal government bailout (Nov 24 2008). Ford, GM and Chrysler will get a federal government bailout. This country is so fragment I do not believe they will get a bailout this year unless they include some sort of UAW give-back (FAT CHANCE). I do not make policies however, I believe these companies should declare bankruptcy before the US of A government steps in and provide funds. Boeing can no longer manufacture a plane. Boeing will be the next in line for a bailout due to their outsourcing of jobs and safety.



Let’s go back to the bailout of Fannie and Freddie and speculate on what would happen if these GSE’s were to declare bankruptcy. This can still occur. One can image that Congress would have to swiftly act on any legislation to provide funds during a bankruptcy. However, equity holders would get a big fat zero for their stock. The biggest concern is the debt holders of which $1,561 billion is held by foreign investors (Sept 2008 release of Flow of Funds PDF pg 123). It could be hard to get US of A’s financial institutions to invest in mortgages. It will be very hard to get the confidence of foreign investors. Hence, all of Wall Street’s drivel about LIBOR rates gets transformed, not into lower interest, but into the carry trade and increasing inflation. The good news, with this result, would be a vigorous effort in achieving wage pressure. The bad news is housing prices will continue to decline and overshot a reasonable floor until pent-up demand breaks through.



I have doubts repealing “mark to market” will achieve financial stability. It is price fixing by the US of A government. "Mark to market" is really a virtual process. Money changing hands is the “real economy” The auction system is a virtual process which can be represented by groups with complex entries. A person, firm or government’s risk to reward policy is a virtual process. No real money changes hand, yet a behavior can be changed. This behavior change is due to a change in the time between a risk’s expiration and the reward has been fully realized. A car loan having been paid off is a good example.



The US of A government is now in the used car business. Paulson has expanded the TARP to include consumer loans (Nov 25 2008). The US of A has now leveraged the US of A tax payer by 10:1. Losses over the agreed percent get paid by the US of A tax payer. Under these circumstances it might be tempting for the US of A government to repeal “mark to market“. If this happens, the America Dream of owning your own home dies. The price of a house will be determined by the US of A government, not by the local economy. This goes beyond company towns but, smacks right into the feudal system of the Middle Ages.



The correct mechanism to fixing the US of A’s mortgage mess is to provide a process in which packaged securities can be taken apart. This will allow the “good” to be kept: the “bad” to be priced and the “ugly” to be auction. The correct mechanism to fixing the US of A’s economy is creating jobs that can pay the bills and not ones which rely on low interest rates. This mechanism will not only stop people worry about their 401Ks but, will also bring back the confidence of investors.



I bet the Neo-conservative mind set is in a tizzy. They set about creating a mechanism in which a fiscal policy is in place and it becomes the Federal Reserve’s job to steer the US of A’s economy. This mind set replaces the one in which an adminstratation micro-manages the US of A’s economy. Only to have fraud, collusion and lack of fiduciary responsibility ruin it all.



I guess this is a good time to subtitle this entry as “I WISH I HAD THE MONEY AND SHORT THE DOLLAR” part 3. The US of A’s dollar is once again weak because the Federal Reserve is “Printing” money with no counter moves by other central banks. The mentality of “Do not fight the Fed” has once again brought dollar denominated inflation back into the world. One can expect “Rice Riots” to flare and weak governments begin to fail. The “Free Market” does not like Global Instability and the US of A will once again begin the slide into a global depression.



Obama is going to become President with half of US of A’s citizens hating the other half. This was emphasized by the McCain/Palin campaign in which they pleaded to ” Real, Loyal Americans” Obama was a “Communist, Terrorist Hugger“. The right wing is now stirring up the pot and throwing in the “Tree Huggers”. If Uncle Sam is going to tell US of A car manufactures which type of cars to produce then there is no stopping Uncle Sam in setting the price of a home.



The struggle for Freedom and Democracy begins anew.




Got to love those topologic invariants.


Viva La Revolucion!!!!!

Thursday, November 06, 2008

Federal Reserve and Monetary Policy: Does President-Elect Obama have a path out of this mess?

If one looks back at history and tries to pick a moment in time in which current crisis can match with past crisis then that moment in time is mid 1930’s and things are looking bleak.

Here are 2 conflicting view points of the Great Depression; Futurecasts point of view and
New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis Harold L. Cole and Lee E. Ohanian, The Great Depression in the United States From A Neoclassical Perspective Harold L. Cole, Lee E. Ohanian

I believe Futurecasts’ analysis is much closer to the truth. If one substitutes the US of A for Germany during this period then one can gain a sense of certain inflationary events that has befallen on the US of A. Events such as the “printing” of money to keep Germany’s economy from crashing to the fleeing of investors out of Germany producing no new infrastructure/production. Last year’s decision by the Federal Reserve to lower Fed Funds target rate is an example of “printing” money. There was no consensus, by other Central Banks, which then lead to 128 days of dollar weakness. Dollar weakness lead to dollar denominated inflation. Wall Street’s advice to their investors/clients lead to massive capital leaving the country, for what Wall Street firms’ called “better returns”. Their advice is the same events that lead toward Germany’s poverty and the meteoric rise of Hitler. If one also subsitute China for the US of A and the US of A for Germany then one can look at the effects of Hawley-Smoot. China is currently in violation of its World Trade Organizations obligations of opening up its market to foreign companies. The US of A really needs the labor output of US of A factories and service companies going toward the 1 billion consumers of China.

One may cherry pick. I will, from FDR's policies prolonged Depression by 7 years, UCLA economists calculate By Meg Sullivan;
NIRA's role in prolonging the Depression has not been more closely scrutinized because the Supreme Court declared the act unconstitutional within two years of its passage.
"Historians have assumed that the policies didn't have an impact because they were too short-lived, but the proof is in the pudding," Ohanian said. "We show that they really did artificially inflate wages and prices."
Even after being deemed unconstitutional, Roosevelt's anti-competition policies persisted — albeit under a different guise, the scholars found. Ohanian and Cole painstakingly documented the extent to which the Roosevelt administration looked the other way as industries once protected by NIRA continued to engage in price-fixing practices for four more years.
The number of antitrust cases brought by the Department of Justice fell from an average of 12.5 cases per year during the 1920s to an average of 6.5 cases per year from 1935 to 1938, the scholars found. Collusion had become so widespread that one Department of Interior official complained of receiving identical bids from a protected industry (steel) on 257 different occasions between mid-1935 and mid-1936. The bids were not only identical but also 50 percent higher than foreign steel prices. Without competition, wholesale prices remained inflated, averaging 14 percent higher than they would have been without the troublesome practices, the UCLA economists calculate.


Doesn’t the above parallel certain sectors like the big major oil companies having no real competitors. Also does it not parallel the housing mess with respect toward price fixing by the likes of Fannie, Freddie, and the rating agencies like S&P and Moodys during Bush‘s first term? For a couple of financial companies that had knowledge of the housing market, they sure “missed” the effect of Fannie and Freddie’s fraud on the user cost of capital.

As one can sense, I’m not convinced by the Cole and Ohanian’s point of view. Their argument is based on an isolated US of A labor force. It can be shown that Neoclassical Theory is an economic model on a manifold and one must use a transformation between counties. In other words, there is no data as to the strength of global trade which would provide a gauge as to how much Germany‘s inflation and that country‘s destabilized nature had on wages in the US of A.

Got to love those topologic invariants.

So what is the correct path out of this mess? That depends on what President-Elect Obama opinion on the course China and Russia are taking. Questions like; does Russia’s extortion, by the use of its vast oil and natural gas reserves, pose a threat to NATO. Does Russia’s eye on some of the Ukraine’s territory, which Putin consider as Russia, destabilize Eastern Europe? Liquid natural gas can be process in the US of A and shipped to Western Europe to replace Russian natural gas. Does the US of A need a policy of containment with respect toward Russia? How much did Putin know about prior USSR dealings with Iraq? In particular, how much did Putin know about previous uranium yellow cake sells?

Is China really moving toward a Democracy and a Free Market or have they “pulled the wool” over some economist and others? Does the US of A need to emphasize to Chinese Communist Party members; Taiwan is the model of their future? Does the US of A need a policy of containment with respect toward China? Does President-Elect Obama have want it takes to remove China’s Normal Relation status and kick China out of WTO?

Viva La Revolucion!!!!!

Wednesday, October 29, 2008

Federal Reserve and Monetary Policy: The Inflationary Spike

Wall Street’s my-optic view about Libor Rates is a bunch of drivel. Once commodities traders figure out countries that subside their commodities, like China and India, has placed a floor in prices they will rush in (the trend becomes your friend) because there is no other place to put their “Carry Trade“ money. These two counties can spark another commidy boom because the percent change of their populations’ usage of commidies represents a very large change in physical commodities needed. Another reason is that there are commidies shortages in China. Example; is there is a shortage of Diesel fuel in China. This implies there will be a floor in crude. Traders will figure this out and begin another run on commidies irrespective of the demand discruction in countries like the US of A and Euro-zone.

The Federal Reserve does not mandate the use of Libor. Libor is just a financial service provided to those who do not want to deal with currency fluctuation. If Wall Street wanted a lower “Libor” rate then one of those rich Petro countries can recycle their Petro-dollars (or China can become a “Real Capitalist” country) and set up a competing service.

This global recession is going to be longer and deeper than the bunch of Fascist on Wall Street, Washington DC and the Beltway Boys think. Mark to Market is not the problem; it’s the accounting fraud that took place in the GSEs Fannie and Freddie. Their fraudulent behavior changed Lenders and Borrowers behavior.

Viva La Revolucion!!!!!

Wednesday, October 15, 2008

Federal Reserve and Monetary Policy: “Global Slavery”

The problem now with Washington DC, Wall Street and the Beltway Insiders is they are not telling us the truth. This is leading to misconceptions about the US economy and the use of mark to market. Risk to Reward is a valid topology space which has its own time evolution. Capitalist should appreciate the saying “Lenders gets the Reward while Borrowers take on the Risk”. In fact the 2007 Noble Prize for economics went to Hurwicz, Maskin and Myerson for such proof: "It takes two to trade" (Click on Scientific Link). Those Fascist on Wall Street, Washington DC and the Beltway are getting what they deserve. If the middle class has a direct link into poverty then there should be a direct link into poverty for multi-millionaires. Like I previous stated: “Class Mobility was going to be a PROBLEM”.

The “Right Wing” is mad now that Krugman won the 2008 Noble Prize in Economics (Click on Scientific Link). I will not go into the political aspics of Krugman point of view however; I will use his theory and the convolution of work forces to show that the “race to the bottom” did not increase the global wealth as measure by an increase in the wealth of the labor force.

The gist of the economy of scale when it comes to intra/inter trade is that productivity of the “system” is high such that the labor forces’ disposable income has increase to the point in which a consumer class has been created, if none exists. Or the expansion of a pre-existing labor force by return of investment capital.

India is an example in which the combination of a Democracy and the migration of the labor into urban areas has created a consumer class.

China is an example in which a command economy has ignored “free market principles” and control the labor class to meet the needs of the Communist Party or should I say their continuing hold onto power.

Homeomorphism: Let X and Y be topological spaces. A function h : X -> Y is said to be a homeomorphism if and only if the following conditions are satisfied:
  • the function h : X -> Y is both injective and subjective (so that the function h : X -> Y has a well-defined inverse h(-1) : Y -> X)
  • the function h : X -> Y and its inverse h(-1): Y -> X are both continuous.

Two topological spaces X and Y are said to be homeomorphic if there exists a homeomorphism h : X -> Y from X to Y.


Path Lifting Theorem see Course 212 Topology.
Hence the reason why I keep the property of the market manifold as a simply connected manifold. This allows a compact Lie group be the representation of economic elasticity. This also allows the use of the Universal Covering Theory to show that the base point need not be separated by a f o g = h given a parameter t (time).


The point I will like to make is that if a homeomorphism exists then the fundamental groups are not unique. In other words, if I can show disconnecting space and time is a valid homeomorphism then the base points can be collapsed into one point. Krugman’s work shows this is valid.


The Fundamental Theorem of Algebra: Let P : C -> C be a non-constant polynomial with complex coefficients. Then there exists some complex number z(0) such that P(z(0)) = 0.


From the view point of an economist, consumers’, firms’ and governments’ policicies changes the eigenvector of economic elasticity, which in turn becomes the selection rule. The N-Winding number has, in effect, changed the velocity of the local economy which can be described as a change in the local economy’s geodesic. It is also to be noted that changing the N-Winding number can be accomplished by the re-parameterizing t (time). Change the time evolution of risk to reward can accomplish the same transformation of the local economic geodesic. N-Winding number is the common homeomorphism that connects the eigenvector problem with time.


Now you know why Central Banks are committing trillion$ of $ to save the global financial system. It looks like a lot of financial Chiefs thought housing was a new wealth mechanism instead of good old fashion work by the wealth of a Nation (labor interaction with capital). It has been said the Free Market has a way of communicating problems. The Free Market is screaming right now.


A new economic policy is needed. I believe Bush should address the Nation a stress that wealth is created by the interaction of capital with labor. He should also stress there is nothing wrong with local communities taking action independently and in parallel with the actions of government. Entrepreneurs can go to the investment community for startup money. Not all entrepreneurs can go to the debt market.


The “Right Wing” will not like giving small business a healthcare subsidy, but both sectors need it. Small business needs it to survive the recession and healthcare needs it to prevent the loss of critical mass. I will not worry about the massive debt the US government is taking on because I do believe this administration has made it clear that its response is, in fact, temporary. If a very good, I mean very expensive to the nation debt, long term (2 year) package is signed into law then we can make a profit.

Viva La Revolucion Toward Fat Cat Lies!!!!

Thursday, October 02, 2008

Federal Reserve and Monetary Policy: “We Demand The Truth and Full Accountability”

I will like to point out there is another group of mortgages sold to consumers called “Alt A“. These mortgages have a notional value of around a trillion dollar$. This admiration nor Wall Street has given one iota of thought to these mortgages. The Senate wants to spend billions on pork yet “Alt A” mortgages can become just as toxic as sub-prime.

Find your backbone and stand your ground. Force this administration to account for “Alt A”.

Viva La Résistance Toward Government Bailout Without Full Accountability!!!

Viva La Revolucion Toward Fat Cat Lies!!!!

Sunday, September 28, 2008

Federal Reserve and Monetary Policy: “Go Team Go!!!!”

The subtitle is cascade failure. Oh yeh, I told you so!!!!
I think Congress and Bush should tell us the truth. This bail out package will not fix the credit market. The function of this bailout package is to keep the Over Counter Credit Market solvent. (See: http://www.occ.treas.gov/deriv/deriv.htm) There has always been a debate about there is enough capital to withstand crises in this market. I wish to note this:
Credit risk is a significant risk in bank derivatives trading activities. The notional amount of a derivative contract is a reference amount from which contractual payments will be derived, but it is generally not an amount at risk. The credit risk in a derivative contract is a function of a number of variables, such as whether counterparties exchange notional principal, the volatility of the underlying market factors (interest rate, currency, commodity, equity or corporate reference entity), the maturity and liquidity of contracts, and the creditworthiness of the counterparties.
Credit risk in derivatives differs from credit risk in loans due to the more uncertain nature of the potential credit exposure. With a funded loan, the amount at risk is the amount advanced to the borrower. The credit risk is unilateral; the bank faces the credit exposure of the borrower. However, in most derivatives transactions, such as swaps (which make up the bulk of bank derivatives contracts), the credit exposure is bilateral. Each party to the contract may (and, if the contract has a long enough tenor, probably will) have a current credit exposure to the other party at various points in time over the contract’s life. Moreover, because the credit exposure is a function of movements in market rates, banks do not know, and can only estimate, how much the value of the derivative contract might be at various points of time in the future.


The bailout package is targeted to the tier 2 capital requirement: subordinated debt. A firm can go to the financial market to replace its tier 1 capital.

You can get public support if Congress lowers expectations. This package is a business loss.

A note on the connection between monetary policy and the cost of credit. Recent events have shown the old path of short term interest rates: Monetary Policy ->> Primary Broker ->> Banks ->> Us is changed.
It is more like:
Monetary Policy ->> Primary Broker ->> Intermediate Financial Instruments ->> Us
->> Banks ->> Us
->> Other users

As one can see the “distance” between the Federal Reserve and the Real Economy is longer. The reality is the fact the market sets the value of credit. The result of this mechanism dictates a recession (business cycle) can not be stopped. The nonsense about the short term interest rates and trying to make this a V shape turn around has to be stopped.

Also, the nonsense about U$ Dollar weakness and closing the trade gap has also got to be stopped. The truth is there is a lack of confidence in the US Governments leadership. If you can show to the investment public you understand the real cause behind the housing market you can “jaw bone” the currency market toward U$ Dollar strength.

Here are some facts:
  • IRS data show that the median tax filer’s income - half earn less than the median, half earn more - fell 2% between 2000 and 2005 when adjusted for inflation, to US$30,881.
  • There is no mystery why housing prices are declining. All one has to do is to read; Income, Poverty and … for 2006 (http://www.census.gov/prod/2007pubs/p60-233.PDF) released Aug 28, 2007. Real wages dropped by 1.1%. One should expect real household income to decrease in the 2007 report. All the definitions used are given as http links in the report.
  • Let’s take a look at the user cost of capital. From Housing and the Monetary Transmission Mechanism (http://www.federalreserve.gov/pubs/feds/2007/200740/200740pap.PDF) (all terms are defined in the paper) Fraud invalidates the after tax real interest rates. This went on for years.
  • The implosions, in the sub-prime housing market, CAN NOT stay in the sub-prime mortgage market. One of the reasons given by those sub-prime loan originators was their expectation of housing price appreciation, not a decline. I believe this attitude was wide spread. In Fannie Mae’s 2004 10K PDF page 99. (http://www.ofheo.gov/media/pdf/f10k03152004.PDF) Assessing the sensitivity of the profitability of the single-family mortgage credit book of business to changes in composition and the economic environment sub-section, one will note that Fannie Mae never consider the possibility of a nation wide price decline. It should be also noted in the same section Fannie Mae stated credit risk was based on the asset value of the home, not the income of the home owner. This assumption was removed in 2005. Fannie’s Mae 2006 10K PDF page 151 (http://www.ofheo.gov/media/pdf/form10k120606.PDF) assumes a modest price decline. The housing bubble was based on fraud NOT on economic fundamentals. The mortgage meltdown started in 2005 when the “smart money” pulled out of these securities. The free market sells first and asks questions later when fraud is discover.


It is not the function of the US Government to guarantee a minimum return on investment capital (in most cases. ex student loans can be a good payoff). The notion of using private equity is a bunch of cow patties. If private equity can calculate the discounted vale of an asset they would have done so. Let’s also look at the mechanism of private equity. Private equity does not keep asset forever. They sell at a profit. In other words, the use of private equity inserted a middle man in the transaction between the US Government and the end client. This increases the cost to the US Tax payer. Private Equity wants to make a profit. They want too much. Again, this increases the cost to the US Tax payer.


If US Tax payer goes on the hook then we insist pay is reasonable. Debt must be renegotiated. On one extreme, it may be impossible for the original mortgage to be repaid. The other extreme is one in which a refinancing agreement can be reached (cheaper and easier).


Viva La Résistance Toward Government Bailout!!!


Bush and Congress must point out the fact this bailout package buys time. If you do not calm down the panic, the voter will insist on changing the global financial plumbing, a Smoot-Hartley bill. We need the global financial system to solve our healthcare problem. Jobs and wealth is created by the return of investment capital. I understand the use of the US Government’s lower borrowing cost however, in the long run, return of investment capital is creates more wealth. The use of credit risk instruments can be used to control healthcare cost. Interest rate movements are well model and can be hedge against. The global financial system is independent of the ultimate structure of our healthcare system (public vs. private). Voters will decide which method is to be used.


Known facts: One can not stop a business cycle.
One can not stop voters from going from one end of the political spectrum to the other. In this election season from right to left.


Viva La Revolucion!




Tuesday, July 29, 2008

Federal Reserve and Monetary Policy: “Get My Shoot’in Iron Elly May!!”

I saw a report (July 30) that determined the corporate welfare has locked up ~$1.5 trillion of US of A’s government guarantees. It looks like the corporate welfare will lock up ~$2 trillion by the time Congress goes on their August (2008) break. Don Bush’s policies and corporate greed is transforming the whole country into a “Ghetto“. The reverse Robin Hood effect: steal from the poor and middle class to pay the GSEs’ equity shareholders.


The subtitle to this entry is “Clinging to Religion and Guns”. Many people did not like Obama’s remark, however it is true. Don Bush’s policies have bankrupted this nation and people will have to move into the high population density regions. Force Labor Migration is what one should expect in a service economy. The only thing that cannot be exported readily is people. GE’s push on “Build, Build and Build America’s Infrastructure” is too late. The only valuable infrastructure will be along the interstate corridors. Why bother to fix up state roads and highways when the population is force to migrate into the high-density regions?


Up to a Morphism


Mathematicians use this term all the time, but what does it mean for an economist? The term is applicable to a structure-preserving map between one set of variables to another. The variables may not be related model wise, yet be relate algebraic topology wise. Let us take two unrelated issues the US of A public is faced with. The issue of private-public investment in roads and the issue of net-neutrality (Senator Stevens so call tubes for dump trucks).


Net-neutrality is a fight between the service’s business model base on $dollar value by a media broadcaster for their content. This content is sold by the service provider to their subscribers (the “OLD Media” model). The new media model is depended on the end user ability to have access to all sites. Net-neutrality means “old media” must be destroyed and morphed. Economic nomenclature would use the term creative destruction.


Communities are faced with a policy decision. The policy is a trade off between more channels represented by a communication lines to fewer channels, limited by spectrum space. Free Market competition dictates service providers must spend the capital for their own communication line (Dedicated Subscriber Line). Free Market Principles means each house should look like the image below:



Efficiency and society may wish to remove some of those lines. Society must answer the question of competition, access and growth. The explosive growth of the internet has caught some of the service providers short of capital expenditures.

Investment in roads has become an issue. A dedicated distribution system is in use by society. A few roads allow many to access to their particular “space”. The value of a road is directly related to the traffic on the road. If one takes the view that, the Free Market can predict the future, then one can conclude the road systems private companies are interested in are the regions of high population growth and the rest can be abandoned. History recorded this event as trucks vs. the railroad. The result of this event leads the railroads to abandon un-economic trunks.

Can you “see” the morphism? Can you describe the policies? Nice questions for economist to give their students.

If society decides to fear the “outside” then a government policy must allow production to be de-centralized. If society decides to become a service economy then one expects to have a boon in “ghost towns”. One should also expect an outbreak morph into a pandemic and to accept huge population loses due to “dirty bombs” and “Bio/Toxic” attacks.

If society decides to go with the “old media” model then one expects the internet to lose business. If society decides to go with “new media” then one should expect some clash with those who wish to social engineer.

I will account my personal experience on trying to start a company in Spokane, Washington. First, some background on the inept political and business leadership. (This rant does not include newly elected officials since they have not been caught with “their hand in the cookie jar”)

This one was really dumb; Petitioning for the creation of a new state in Eastern Washington.
Yep, that’s right SJM 8009 - 2005-06 is on the books.

There is an economic development organization. However, they are still attach to that treasonous organization Anti-US Chamber of Commerce and their Nazi Ideology and Fascist Dogma. Referendum Measure 67. They dictated it was All Trial Lawyers Fault.

Dysfunctional Gonzaga‘s New Venture Lab. This program was a real disappointment. They did not know how communicate. I guess picking up the phone or using e-mail was too difficult of a task. What do you expect from a bunch of students?

Dysfunctional EWU and WSU. They could not write a two-page project description outlining the experiment for Washington Technology Center grant.


I only write what I experience and my experience indicates not everybody has the same opportunities. There is a two-tier society. I live in an impoverish region of the state. The bad news is that it is the leadership of this area’s fault.

My expectation is that Spokane, Washington will become a impoverish “ghost town”. The population will become segregated into those that have the money and move and those that do not. Those that do not have the money will age. The services some areas provide, such as Jitterbug, will become un-economic in this area.

One can find a mathematical description that shows the driving forces behind the numbers. Let us start with Neoclassical Theory of Production’s return to scale using two inputs, capital and labor.

In a global environment, firms have many labor sources. This allows the use of convolution theory.




Given the same conditions, in each labor market, the firm has the same output. If the labor source has an overall lower cost, then the firm can either receive a higher profit margin and/or higher output. One can analyze the effect on society when there is a release of labor resources. Let’s face it, only one of two things can happen: either a policy is develop that picks up the labor slack and maintains society’s purchasing power or labor will have to lower their overall cost structure in order to compete. Don Bush’s policies have broken US of A’s labor monopoly. The US of A is taking the identity of the low labor cost counties’ labor force. Poverty has become entrenched. Society breaks down when poverty becomes entrenched. The poor have no loyalties to the government. Their loyalty is to those that can meet their needs. Whether that entity is a religious organization or is criminal. US of A’s society has gone chaotic. It is every man woman and child for himself or herself, this election cycle not withstanding.

The convolution theory of labor can give a hint at the economic and society’s forces involved. Assume a Hermitation matrix in the Producers Transition Matrix (if one does not like complex entries then one has to use a symmetric matrix).




With respect to society’s PTM, the constant is now one. Neoclassical Theory of Production dictates a drop of output (return to scale). There is a change of eigenvector with respect to society. In other words, the roots (eigenvalue) of the eigenvector have changed with a shift of production off shore.

One needs a “plausible” mechanism that will lower the wage structure of the labor force as an aggregate. In economics and business operations there is a field of math called dynamic programming. This is a set of procedures used to study inventory, how much capital should go into which plant, etc…

Government acts as if it is using a Monty Carlo type procedure to evaluate the value of policies.
Businesses act as if they use a Temporal Difference type procedure to evaluate the value of policies.
Example:
Given 8 episodes like the following;
1) Start in state A and go to state B with a reward of zero. Then go from state B to the termination state with a reward of zero.
2) Start in state B and go to termination state with a reward of 1.
3) Start in state B and go to termination state with a reward of 1.
4) Start in state B and go to termination state with a reward of 1.
5) Start in state B and go to termination state with a reward of 1.
6) Start in state B and go to termination state with a reward of 1.
7) Start in state B and go to termination state with a reward of 1.
8) Start in state B and go to termination state with a reward of zero.
The best value for B is 6/8 = ¾.
The best value for A is also ¾ using TD. The math ignores going from state A to B (zero reward). However, there is a 75% chance that B terminates with a reward of 1 (first episode was bad luck). Monte Carlo would have assigned a zero for the best value for A.

Two points are to be made about TD predictions.
  • TD finds an estimate that is exactly correct for the maximum likelihood model of a Markov process. The “race to the bottom” is a maximum likelihood model of a Markov process. There can be other actions a firm can make like look for new source of materials, change their process and or cut their wage structure. It is generally recognized that labor is the major cost of a firm (unless one is an airline in which case the cost of jet fuel has become the major cost). But, the fastest way to cut cost is to cut labor.
  • A TD procedure converges to the optimal reward value faster (in most cases). This point can be translated as while “Nero plays the violin, Rome burns”. In other words, a severe drop in economic activity would be a surprise to those who want to wade through all of the data and then change policy. This is the current thinking of the Bush administration. They what to wait until they can measure the effect of the stimulus checks before acting. I expect GDP to drop like a rock.

Viva La Revolucion!

Thursday, July 10, 2008

Federal Reserve and Monetary Policy: Corporate Welfare

Dr Gramm has stated the US of A is in a mental recession. Back in the old days, before Don Bush, corporations did not whine. They acted as the free market indicated they should. If corporate leaders wanted their Christmas bonuses they would raise prices and cut labor cost. Our corporate leaders act as if the US government owns them something. Fannie Mae and Freddy Mac need a US government bail out. The Free Market sells first and ask questions later when a fraud is discover.


US airlines act as if they are going to get another US government bail out. Free market principles indicate US airlines should raise ticket prices to meet the cost. Free market principles indicate there is over capacity which should be removed. Recession in the US of A means a reduction of travel which in turn means some of these corporate leaders should loss their jobs. Demand reduction of air travel mileage will eventual lead to reduced jet fuel cost. Problem solved.


What is the structural problem? GE planned to move their manufacturing floor off shore years ago. They knew their tax break would not be renewed. Mega-corporate shareholders are getting a tax break from re-patronize profits and a lower capital gain tax.



Viva La Résistance!!!



PROVE IT!!!!!!!!!!


I currently can not prove it formally but, I can show a proof exists.
Let’s take a look at economic elasticity and get an intuitive feel for this equation.



The Jacobian matrix is a representation of the metric tensor g. The metric tensor is operated on the right by some sort of column vector. The metric tensor need not be mysterious. Kinetic energy of a mass on a beam system is given by:






Let’s analyze the mass on a beam from an economist view point. One has two identical mass on a beam system, one on the moon and the other here on earth. The velocities of the system on the moon are lower than that of the earth’s system. Economist would say the earth’s system has a higher productivity than that on the moon. They are in a conservative field, their respective line integrals are zero for a closed path. The distance the mass has to travel is invariant. The metric tensor represents the physics of the system and that has not changed. An economist would come to the conclusion an augmentation is in effect for the earth’s mass on a beam system.

From an economist point of view both systems are the same object whose manifolds represent different states. Moving the frame of reference has, in effect, change the TIME evolution of the system (space and time are not connected).


It is currently believed the first isomorphic theorem is not in effect for groupoids. This due to the fundamental group having one base point and the fundamental groupoids having many base points. The following shows how one can change the base point, through the n winding number, without violating the Lie Algebra.



The path from A to C is the path the Quotient Group’s Lie Algebra would indicate (through the parameter t). Changing the n winding number, at a point, triggered a change of manifold at that point.


Recent events have shown Obama is just as stupid as that buffoon GW Bush. He will win because he is not smarter but because he is not a Republican.

If Obama wants to be a uniter, I suggest Obama stop the social engineering and concentrate on fixing the US of A‘s government. He does not need the Big money. In other words, he does not need K Street.

Viva La Revolucion!

Saturday, June 28, 2008

Federal Reserve and Monetary Policy: The Institutionalizing of Fraud by Don Bush

I will not go into the manifold’s atlas. See Manifold at Wikipedia. The inputs to Neoclassical Theory of Production’s output y = f(x1, …, xn) are the result of labor interacting with capital. Neoclassical Theory of Production boils down to Isoquant Analysis of capital and labor. There is a relationship between capital and labor. Marginal Rate of Technical Substitution is an example. In relation to the economic manifold’s atlas, capital and labor are coverings. “Y elasticity of x”;



is really an inner product of a Jacobian matrix with a
quotient of two groups, K and L. (See Groupoid at Wikpedia)



A good starting point, from an economist point of view, is to describe the “value added chain”. Picking up a rock and painting a face and body is an example of a value added chain. Capital (rock and painting supplies), are combined by Labor (you), to produce My Pet Rock. One can describe the process as the following:
Labor (you), pick up Capital (rock).
Labor (you), wash Capital (rock).
Labor (you), paint Capital (rock).
Labor (you), use Capital (transport), My Pet Rock to market.

The above process is really hard to put into math terms. If one stares at the above process long enough one can get the illusion that some sort of pattern emerges. Labor (you), saw fit to pick a rock. Time is money, so Labor (you), added value. Capital (rock), had that shape that was of value. Value was added to the Capital (rock). Value is the common element. There is a branch of math called Category Theory which can help to place an order to the My Pet Rock process. I will not go deep into Category Theory (use your favorite search engine) (See figure 1’s).





  • A category consists of a class of objects. Can be anything like A, B, etc…


  • A class of morphisms designated by anything like f, g, h, etc… usually represented by arrows.


  • Each morphism has an object as its domain and an object as its co-domain. Example f: A->B where A is the domain object of morphism f and B is the co-domain object. (fig 1a)


  • Each object, example A, has an identity morphism which has the domain A and co-domain A. (IDa fig 1b)


  • Each pair of morphisms, example f: A->B and g: B->C is a composite morphism g o f: A->C. The co-domain object of morphism f is the domain object of morphism g. Start from the right (f) and go left (g). (fig 1c)


A category has these rules:



  • Each morphism f: A->B has identity composites (f o IDa = f) and (IDb o f = f)


  • Each set of morphisms f: A->B, g: B->C and h: C->D is Associativity. (h o g) o f = h o (g o f) (fig 1d)




A simple example see fig 1e.





Check for Composition: f o h = IDb, f o g = IDb, h o f = IDa, g o f = Ida =>> OK
Check for Associativity: (h o f) o g = IDa o g = g
h o (f o g) = h o IDb = h hence h = g =>>> not OK


A good object domain for My Pet Rock process for labor’s transfer of value morphism is “labor” and the co-domain object is “labor-value”. The object domain for capital’s transfer of value morphism is “capital” and the co-domain object is “capital-value”. The perspective that “labor-value” object is a “capital” object and the reverse, “capital-value” object is a labor object is not a problem in Category Theory. Rock’s “labor” was in the form of catching your eye and you became the capital. My Pet Rock process is a composite morphism.


g:C->L and z:L->C are morphisms such that z o g = IDc and g o z = IDl
Some notes:


  • f o g = h o g does not imply g = h. It can be in some categories.


  • There is only one ID morphism. A category having two morphisms starting and terminating from the same object indicates a “conversion”. Example: converting Fahrenheit to Celsius and the reverse conversion.

One can now translate the above My Pet Rock category into math using topology. We can think of the conversion of Labor into “labor-value” as a process that takes place in a time interval t. We have a family of morphisms f(L) (or f(C)) that takes the set Labor (or Capital) into the set “labor-value” (or “capital-value) within a time interval [0, 1]. I insist the topology conform to My Pet Rock category. This requirement means the topology space is simply connected. Making change or having the same number of laborers at equal cost are examples of a economic model being simply connected. It can be shown My Pet Rock is path connected and has a Trivial Fundamental Group. My Pet Rock process conforms to a Lie group. One can pick a representation of the Lie group. (See An Elementary Introduction to Groups and Representations as an example)



Output is a real number. I would like to pick GL(n, R). General Linear Group over R is a group of n x n invertible matrices with real entries. However, GL(n, R) is not a simply connected Lie Group. There is an out from the dilemma. GL(n, R) can be decomposed into its irreducible representation U(n). U (unitary) is a group of n x n matrix with complex entries whose column vectors are orthonormal. SU(n) is a unitary group whose determinant is one. SU(n) is a simply connected Lie Group.



SU(n) --> “real world” --> GL(n, R) process is a general scheme that helps economist analyze Neoclassical Theory. Economist believes there are NO infinities in Neoclassical Theory. This belief is born out of the real world. This belief is wrong. My Pet Rock category can have infinities. The infinities are the result of fraud.



Debt, Options, Futures, the Financial Bubble and Fraud



I can change My Pet Rock category into Bush's Crushing Debt category by changing the object “capital-value” into the object “debt-value”. Society is using FICO scores. Some firms are using FICO scores for their hiring decision. People change their behavior during times of economic stress. They borrow more in hopes they can pay off that debt when times are better. They become their own boss. Etc… Society hopes anyone can be their own boss, but Don Bush has changed that. One needs a prefect credit history, come from a rich family or knows someone who is rich. The capital markets have fled toward richer lands. FICO scores have now become a poverty trap policy.



I insist Don Bush’s policies conform to the Bush's Crushing Debt category. Don Bush’s policies extenuated the Financial Bubble. The Financial Bubble is a set pf accounting, regulation and policies that are outside the normal Neoclassical Theory, yet they interact. Don Bush’s meddling in the housing market through his proxy Fannie Mae and Freddie Mac is an example of the Financial Bubble affecting real economic growth.



I pick SL(n, C). Special Linear Group over C is a group of n x n invertible matrices with complex entries with a determinant of one. SL(n, C) is a simply connected Lie Group.



Here’s a good question: If Bernanke believes inflationary expectations are contained then why the financial bubble? See Chairman Ben S. Bernanke
At the Federal Reserve Bank of Boston’s 53rd Annual Economic Conference, Chatham, Massachusetts
June 9, 2008
Outstanding Issues in the Analysis of Inflation



Bernanke believes some inflation is needed for economic growth, yet the financial bubble has exceeded the needs of “US of A’s Real Economy”. What are the financial bubble’s inflationary expectations? I say the anchor is the $50+ trillion unfunded liabilities. Economist can use SL(n, C) as their math tool.



Viva La Revolucion!

Wednesday, June 04, 2008

Federal Reserve and Monetary Policy: Farmers’ Market

The subject matter can also be described as “If I had the money, I would short the $dollar: part two”. Ben Bernanke and the rest of the Federal Reserve, has stepped into doo doo. The Federal Reserve has just trashed their reputation. I WILL NOT BE SURPRISE IF OBAMA LOOKS FOR A COMPLETE HEAD REPLACEMENT OF THE FEDERAL RESEREVE. Bernanke and the rest of the FOMC will once again be educated in what it means to be a free market.

A half of trillion $dollar US government debt is probably an under estimate. I will not be surprised if the debt ceil would have to be raise to accommodate three quarters of a trillion $dollar debt. Inflation is here due to fears the US of A’s current account deficit. Import inflation due to a weak $dollar. Monetary inflation is being transformed into poison in our food, toxic toys and, in general, products from China that are “Unsafe at Any Speed”. The US of A’s citizens will have to endure the “death of a thousand swords” due to subsidies (even our own) that will not allow demand destruction and/or increase in supplies.

The two base reasons for my negative opinion:
  1. The Federal Reserves job is to affect the elasticity of the $dollar.
  2. Bernanke and the rest of the Federal Reserve have not address the structural impediments with respect toward household debt.
The Federal Reserve’s working assumption, which is rational expectations of the finanical markets and, in general, people has been proven wrong. A “military” strategist can use their weakness to make a contrary move and make a lot of money.

Any move, made by the US government to support the $dollar, is akin to a person yelling FIRE in a packed theater.

The likely candidates would be:
  • Region banks are weaker due to a lot of debt whose basic theory is under fire. The structural problem is this debt was made while household debt was influence, either directly or indirectly, by fraud.
  • Investment banks will see a run, aka Bear Stern.


The best strategy with respect to the above would be to short or buy puts.


Gold and silver is a good buy.
Grains, cows and other food stuff are also a good buy.
I wish I own an oil field.


The best candidates for the new Federal Reserve would those who recognized the world is not a rational one. Government policies clash and this clash must be taken into account when setting monetary policy.
The $dollar will crash if the Federal Reserve lowers Fed’s Target without a new US government policy. This policy must acknowledge the decline in US citizens’ decline in income. It must also address Wall Street’s attempt to shift their risk unto the US citizens. This shift can be characterized by the following:

  • Financials want to buy mono-lines so they can maintain the fantasy that their junk debt is investment grade. Manipulation of their write downs.
  • Financials want the government to change the timing of write downs. Manipulation of their accounting.
  • Financials want the government to guarantee a minimum return via the FHA. Manipulation of risk. Its going to take years to recover from their screw-up and this plan would put the whole banking system under risk. There is already a fight for the shrinking resources of the US government and the US tax payers will be paying for the loss.
  • Financials want the Federal Reserve to buy their junk debt. Hide their screw-ups in the government.


Any attempt by the Federal Reserve to indicate that “debt does not matter” without a change in the federal bankruptcy laws and some sort plan to boost the prospect for wage inflation (that’s right, wage inflation) will be deemed as wrong. Greenspan did not create this mess however; Bernanke will be responsible from this moment in time.


Local communities might want to create a design for local script. The $dollar is going to be worthless.


I’m working on the math to show why rational expectation is not a good working assumption. I will be posting a major section in my Neoclassic… blog tentatively named “Process Driven Economics” in which I will show Neoclassic theory has a parallel transport and field theory. Field and parallel transport theories are prerequisites toward the gauge theory of Neoclassical Theory of Production.

Viva La Revolucion!

Saturday, May 10, 2008

Federal Reserve and Monetary Policy: Goldilocks and Wall Street

Prior to the credit crisis, Wall Street had the opinion the US of A was in a period of economic expansion they dubbed “Goldilocks”. Goldilocks and the Three Bears is a story of breaking and entering and the theft of another’s property. In other words, Wall Street was stealing from widows and orphans again. The housing crisis, energy crisis, healthcare crisis, Bush’s War and every other crisis are due to a broken government and Wall Street gone wild. Nobody, but me, will describes this as a Wall Street and White House scandal.

I describe the US of A’s current social, political and economic status as matching mid 1920’s and 1930’s Germany. I will analysis this resemblance and show that it is possible to use topolical invariants to describe the path society will take. I am describing a concept that some will call “Seldon’s Plan” from Isaac Asimov’s series "Foundation". See my Blog Neoclassical Theory of Production for math.

Democrats call the US of A’s current government, under G.W. Bush, as Fascist. I will use the words of Hitler to show that this is correct. From Adolf Hitler's Speech at the 1927 Nuremberg Rally. (ON NATIONAL SOCIALISM AND WORLD RELATIONS is also a good speech to reflect on current affairs)
Background: This is the partial text of Hitler's major speech to the 1927 Nuremberg party rally. Hitler outlines the Nazi claim that it provided not a political platform, but a political faith. Hitler claims of Germany: "It wants a leadership in which it can believe, nothing more."

Hitler on international power and Germany’s power:

These governments will not be able to meet their own needs with their population. Difficulties in industrial production will inevitably develop, made more serious because they will affect not only one state, but a large number of states in Europe. Increasing competition will naturally force these states to use ever sharper weapons until one day the sharpest economic weapons will give way to the sharpness of the sword; that is, when a healthy nation faces the last either-or, and despite the greatest diligence cannot withstand the competition, it will reach for the sword because the question of life is always the problem about which life turns. It is a question of power.

Hitler on immigration:

The first way to satisfy this need, the adjustment of territory to population, is the most natural, healthy and long-lasting. We must however conclude when considering this first or second way that the foundation is power, always power. Power is also a part of economic struggles. Power is the prerequisite to earth and soil. We can see that today. Even the sorrowful effort to adjust the population to the available territory by encouraging the emigration of new generations requires power, even more today as states hermetically seal themselves from the immigration of uncomfortable elements. The more economic difficulties increase, the more immigration will be seen as a burden. The so-called workers' states seal themselves off more than others as a way of building a protective wall against cheap labor. The newcomer after all must be either cheaper or better. Here too one comes to the conclusion that maintaining this way of supporting the population requires power.

(Note: the pervious passage shows the beginning of the division between Fascism and the Communism. Some on Wall Street and in Washington DC are struggling with the housing crisis. There are those who believe the markets should work this out and government interfering means we should sew the “Hammer and Sickle” on the American flag. Hitler was using immigration as a stepping stone to destroy the Communist party in Germany. This opinion is based on the conflict between the previous passage and the following.)

What is the nature of a nation's internal power? Three things are involved: First, a people has intrinsic value in its race. That is the primal value. A people that has the best blood but does not understand it, squandering it, receives no protection from its intrinsic value. And the purity of blood means nothing if the nation can be persuaded of the absurdity that its blood is worthless. Such a deepest value can be present, but not recognized. Individual people today are placed in large groups that no longer enable them to see this value. To the contrary, their program almost claims that there is no value in blood. They see race as completely insignificant.
Second, internal power depends, aside from the value of blood, on the abilities that such a nation still has. A nation cannot be called impotent as long as it is able to produce the minds that are necessary to solve the problems crying out for solution. We can measure the greatness of a people by the minds it produces. That too is a value, but only when it is recognized as a value. If a nation has the ability to produce great minds a thousand times over, but has no appreciation for the value of these minds and excludes them from its political life, these great men are of no use. It can therefore collapse, in the best case perhaps passing on its inventions and ideas to the minds of other nations, teaching these nations, but no longer is it a nation called to lead itself.
The third value hidden within a nation is the drive to self assertion. A people that has lost this has almost given up its place in the world, in which each living creature owes its existence only to the eternal striving to rise higher. If a nation today proclaims the theory that it will find happiness in lasting peace, and attempts to live according to that theory, it will one day inevitably succumb to this most basic form of cowardice. Pacifism is the clearest form of cowardice, possessing no willingness to fight for anything at all.


Hitler on terrorism:

Our party comrade says one must give the people territory. In Germany, unfortunately, we must first give the territory a people. We see before us today Marxist masses, no longer a German people.
All this would be in vain if the fundamental values were not there. The only thing we may be proud of is this: We have this value, we have our blood-building value, the best proof of which is the great men of world history over the millennia. We have this value of race and personality. We have a third value: a sense of battle. It is there, it is only buried under a pile of foreign doctrines. A large and strong party is attempting to prove the opposite, until suddenly an ordinary military band begins to play. Then the sleeper awakes from his dreams and begins to feel himself a member of a people that is on the march, and he marches along. That is how it is today. We only need to show our people the better way. They see: we are marching already! The German people will come to a knowledge of their intrinsic values when the systematic organized poisoning of their values is replaced by their systematic organized defense.
That large international world power infects a part of the people with the ideas of pacifism to weaken their resistance, and uses another part to attack.
When the German pacifist feels threatened in his practical political activity, he can suddenly become an anti-pacifist, but only against an opponent of his political thinking. He can even reach for bloody weapons. But he calls the battle for the life of the entire nation murder!
This large international power organizes its terror groups by appealing to their lower instincts, but also reduces their potential resistance through intellectual influence. The German people have split in two as a result. In a masterful way, Hitler showed how the split between thinking and action in the politically-minded German citizen or politician leads him to become a democrat, although he knows that the fate of the world is never determined by majorities. This dear German citizen knows that for 1900 years after Christ and for many thousand years before Christ's birth, the world was changed by men, but he now suddenly believes that history is made by the German National Party's Reichstag delegation, which finds the greatest wisdom in the majority principle. In so far as the political citizen has accepted this principle, he has practically given up all hope of victory. The majority, that is cowardice, is for him decisive. Inability, limited wisdom. In theory the majority decides, but in reality it is the international Jew that stands behind it.


(Note: Bush and his fellow neo-cons are calling every action that opposes their own beliefs as terrorism. Those who oppose trade are helping terrorist. Bush’s foreign policy and trade policy are one in the same.)

US of A’s immigration crisis is a window into the power struggle that is wagging in this country. Bush needs cannon fodder. The Democrats need voters and their vote. The Republican needs cheap labor. Hitler used the poor as his base and was the stepping stone toward power. Hyper-inflation hasten Hitler’s meteoric rise to power.

Bush and US of A’s mega-corporations push for the Security and Prosperity Partnership of North America has a very big crack. This crack is due to the “radicalizing of illegal immigration”. Collective barging is not what the right had in mind and being labeled as terrorist is not what the left had in mind.

This being my blog I will take the liberty of modifying this passage:

In so far as the political citizen has accepted this principle, he has practically given up all hope of victory. The majority, that is cowardice, is for him decisive. Inability, limited wisdom. In theory the majority decides, but in reality it is the international Jew that stands behind it.

To:
In so far as the political citizen has accepted this principle, he has practically given up all hope of economic victory. The majority, that is cowardice, is for him decisive. Inability, limited wisdom. In theory the majority decides, but in reality it is the trial lawyer that stands behind it.

The Republican Party is in a state of paralyzed, terror due to trial lawyers. Our inability to read and comprehend credit card contracts is all due to trail lawyers????????

Hitler and the flag:
Hitler discussed the fact that the German people today lack a national flag. One has never considered the flag of the leading group of the time to be the symbol of the nation. There is no symbol today that represents the whole people. The order to see the flag as such a symbol cannot succeed. One thing however is clear: A movement today in Germany that fights for the renewal of the people must give its own symbol to this effort, and that is why we have chosen a new flag that is the symbol of the coming new German Reich: a symbol of national strength and power joined with the purity of the blood.
Our goal is for this flag to increasingly lose its character as a party flag and grow to be the German flag of the future. We see this flag is inextricably bound to the renewal of the nation. May these colors be a witness of how the German people broke its chains of slavery and won freedom. On that day this flag will be the German national flag.
Today you see thousands behind this flag. Seven years ago there was no one. All these people marched past us today under this flag with enthusiasm and glowing eyes because they see in these colors the struggle for the freedom of our people.


Lapel Flags, made in China.


Nader’s function in the 2008 Presidential election is to be the driving force toward the middle. If one takes the view that a quarter of the population is either for a Democrat or for McCain that leaves 50% independent. Nader can win the Electoral College with 50% of the popular vote.

Viva La Revolucion!

Friday, January 18, 2008

Federal Reserve and Monetary Policy: Internet Porn Stars and YouTube Celebrities.

Now that I got your attention, I will explain the title in the context of destruction/creation of sectors. In order to understand current economic conditions one must understand topological spaces, linear vector variables and manifolds. I am going to give economist and Beltway insiders a knock out blow by pointing out how far back they are, with respect to modern math theory, by this link: Music and Mathematics. I got this from here: Music. I will show you why Kondratiev Wave (see Kondratiev Wave at Wikipedia) and the concept of Credit Bubble bursting (see Futurecast’s explanation) as the prime cause of the Great Depression are the same. I will start by explaining the economic view of this paper: Torsors Made Easy.

The Value of Money and the Velocity of Money

I live in Spokane Washington USA. I would pay ~$1 for a brand name restaurant burger. Another person from a tourist trap, in the US of A, can pay $2 - $3 for that same burger brand. GDP from two burgers from two different markets is $3 - $4. From the Torsors… viewpoint, I just added two dollar denominated transaction. GDP contains no useful information as to the mechanism of the two markets. I can subtract the two markets but I need an origin. I will use Spokane as the origin and get -$1 to -$2. This is a loss. From a business fluctuation view, I experienced a contraction. This means the dollar amount spent is a torsor and the velocity of money is a group.

The two markets are at equilibrium yet have different velocities of money. Velocity of money has a relationship to capital expenditures, which in turn are used in the production of something. Neoclassical Production Theory’s Isoquant analysis is an equivalent relationship between labor and capital. When I go to the tourist trap I have, in effect, transformed my local market’s value added chain (topological lift). A moving frame (Maurer-Cartan form) can accomplish this.

The relative GDP can use by this Cowardly, Democratic controlled Congress and G W Bush our Fascist, Semi-Dictator. If one uses US of A as the origin and China as the destination, our economy can move into an expansion phase. Everybody needs to move to China. Our government, in exile, can pass laws that will nullify the weak Yuan. China’s hyperinflation will not economically hurt our citizens with such a law. Return of invested capital can be manipulated using the US of A’s original frame of reference. Use of this frame will insure our GDP will be higher when implementing fiscal and monetary policy. Woops, those “debt doesn’t matter” economist and Wall Street will not like this plan because US of A’s land value will go to zero (no demand). The previous sentence means that housing has no intrinsic value. Bush and Wall Street’s price fixing of housing was inheritably unstable.

My previous post gives the math behind economic waves. The true cause of the Great Depression was Germany’s attempt to pay off its war debt and keep their economy from crashing by printing money. Inflation destroys capital, which must be reacted to, by global investors. Germany became too risky for investments.

US of A is in the same economic condition. Federal Reserve’s monetary inflation is being transformed into price inflation. There are no safe investments in the US of A with the exception of commodities such as gold, silver and oil (etc..). Inflation has decreased real wages and destroyed capital. Collateralizing housing, as a means to drive up debt ceilings, is history. Foreign investors want their money back.

This Cowardly, Democratic controlled Congress and G W Bush our Fascist, Semi-Dictator’s economic stimulus plan will become money flushed down the toilet without fixing our trade deficit. The free market has pointed the way. We must become Internet Porn Stars and YouTube Celebrities.