Friday, June 8, 2018


It seems as though there have been 3000 posts, but in fact this will be number 300. So to commemorate this milestone, I did a little extra searching ... and found a few worthy gems.

I managed to find something that is perhaps the most stimulating read of the last several years. Though the author died in 2015, his view on derivatives captures the essence of Roacheforque's core premise about the dollar derivative, our derivative exchange rate complex, global financial markets, and the essence of our abstract derivative world.

The article posted above delves oddly into the subject of modern dance for several paragraphs (the author was both a Socialist, and a dancer, so there's a dose of subjectivity here and there) but otherwise, the "view of the world" that it offers is so astoundingly close to the view of this blog, that it is profoundly affirming to see such thoughts expressed so eloquently.

Here is a para-quoted teaser:
A key to thinking (through) this process is its abstraction. Particular, concrete labors become abstract labor; particular commodities extruded from their factories all embody some quantity of that labor, the ultimate determinant of their exchange value ... This other abstraction is the derivative, via which each of the component flows in commodification can be subdivided, valued, combined and sold again and again in the form of a financial instrument. On top of the quantitative abstraction of the energetics of production is a quantitative abstraction of the information about all of the possible future states of that system. Each of which can be separately priced and sold.
Martin understands how financialization creates a derived abstraction of the real world and everything in it. As money (our measure of wealth and power) is the prime force which motivates and drives the majority of human activity across the planet, financial markets are a prime driver of "real world" affairs.

Martin recognizes that our money, our markets and our world have much more to do with the infinite world of possibilities than the physical world of the "here and now". As such, derivatives literally create our perception of the here and now, which defines reality.

Tracing back to the money which fuels this governance over our perceptions, we can reason that the creators of money have a power over reality which far oversteps the boundaries of their purview. And yet, all is perception, driven by illusion, where money creates our reality through a quadrillion dollar matrix of possibilities that shape it.

If people don't see a problem with this construct, so be it. But Roacheforque contends that people do not see the construct at all. Martin does, but perhaps the book will need to be read to flesh that out fully. The article, as a teaser, is stimulating.


Pepe Escobar never disappoints, and his recent article at the Hedge is another broadly affirming treatment of observations that are a backdrop to this first core view, namely, that there is a global response to our derivative reality and the unipolar (dollar derivative) power center behind it. 300 posts ago, this concept was hardly visible, but as we have followed it for years, we now see the fruits of the planted seed.
Western elites cannot but worry when central banks in China, Russia, India and Turkey actively increase their physical gold stash; when Moscow and Beijing discuss launching a gold-backed currency system to replace the US dollar; when the IMF warns that the debt burden of the global economy has reached $237 trillion; when the Bank for International Settlements (BIS) warns that, on top of that there is also an ungraspable $750 trillion in additional debt outstanding in derivatives.
It is interesting to see the BIS citing a derivative complex of $750 trillion (if they have indeed) whereas US call reports indicate a slight decline in US systemic bank numbers since 2008. That number is considerably higher than estimates of years past, though it doesn't account for non OTC numbers which probably account for the remainder of a quadrillion in notional USD.

But what does this massive concentration of perceived value truly accomplish? Is it "protecting the debt" as explained by Another, or does it actually provide substance to illusion by virtue of human expectations and perceptions? When we look at the continuously eroding quality of indebted, "progressive economy" civilizations, do we not see a world where the physical is decaying and the derivative (virtual) is "recovering"?

Is the wealth made by betting on layers upon layers of infinite possibilities pertaining to a single underlying reality truly wealth earned? Is it wealth at all? Or does it simply "fractionalize" reality while paying a full measure of derived wealth on derived outcomes? In the end, will derivative wealth collapse along with its denominator?

The banking class offers up derivative financialization as protection against a future of undesired possibilities - but instead, it "prices" everything in its own terms - defining all values of our world, our reality in the here and now. The reality it has created? One in which (by no strange coincidence) there is unprecedented wealth inequality, infrastructure collapse in it's sponsoring "advanced" economies, and a moral crisis of epic proportions.

By contrast, it's "competing reality" is one of equity partnerships, unprecedented real world infrastructure development and economic activity which has created new middle class wealth in participating nations, and a world in which key proponents are "enhancing collective autonomy and influence". Yes, it's just a fancy way of describing a multi-polar world. But more importantly (and especially true of Russia, historically and traditionally) an appreciation for the diversity of world history, its nations, cultures and traditions - and sovereignty at many levels.

By contrast, we have the unipolar order, which appears to prefer migration, race blending, culture blending, history revision and a homogenized under-class of manageable debt slaves within a global feudal (Hunger Games style) plantation. Take the progressive (democracy, Soros style) view of Africa for example. You will no doubt uncover the view (if you read between the lines) that "the country has never been able to civilize itself", so the cure for it's problems is that it's populations migrate to progressive economies where they can be blended in and "cared for" by the welfare statists.

Such ideas are indicative of the neocolonialist attitude that it is better to feed a man than to teach him to fish. For when you feed a man you become "the hand that gives". Always above "the hand that takes". Conversely, when we look at Asia's interests in Africa, they are much more productive and dignified than Dollar Faction (AADF) interventionism.

This is not to say that China is the world's great hope for a return to Western values. They are in fact the most outspoken advocates of derivative financialization in the SCO. But their partnership with Russia is a counter balance to their dollar dependency. Let us just say that, your grandchildren will never live to see a world governed and defined by "a quadrillion notional in Yuan". But their grandchildren may. And if so, the relationship of yuan to gold will be a huge factor in that definition.


  1. Well, well look how that tariff war quickly escalated. Surprise, surprise.

    1. It really does seem as though the plan to "kill the dollar" is in play, as reported to Kyle Bass. But can the monster truly die, or perhaps just be cooled down a bit?

    2. Hahaha good quote indeed, I've enjoyed watching that talk a lot.
      This proves one thing, countries regardless of 'leadership' have only interests and objectives, especially in increasingly multi polar world.

      I wrote it before and I'll write it again, watch for US to ally with Russia. I'm very surprised that they haven't done that already, as its in both strategic interest.

      Russia and China for all the pump is only tactical.

    3. Aengrod,

      I have come to think that the Russia-China relationship is *strategic*. They must stick together or die alone one after the other. Don't know if you've read this analysis:

    4. Anonymous, sir, equation is simple. Go with US = chance to remain independent.
      Go with China = vassal state.

      IMHO, the only way Russians would go with China, is if US, does something really stupid, and I honestly don't think such thing will happen.

  2. I would love to see it. Years ago when Larouche was in his prime, he predicted much of what has come to pass. But even to invoke his name was to be committed to the loonie bin. Alas, beware the acolytes of Mackinder, and of course Wolfowitz, a thorn by any other name.

    1. Haha, it is exactly Mackinder who'd agree with US - Russia alliance should he be still alive.

      Ponder this, Russian geopolitical doctrine of prominence is to destabilise its neighbours, if it has enough strength to do so. Does alliance with China and inclusion in OBOR help to sustain such doctrine, or not?

      Russians are simply constantly raising the bid.

      One last thing of note, ever noticed how the easiest way into Chinese territory (lowest concentration of A2/AD systems is border with Russia? Yeah ;-)

    2. I think we must consider the above in terms of the chess pieces - the colors of each player. Many possible combinations of alliances yield different results, as do betrayals. In the end, self interest is the motive, even iff alliance is at the surface.

    3. 'Unexpected' Trump and Putin meeting. ;-) surprise, surprise.