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.
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.