The Trouble with Central Banks

With the “World Economic Crisis” here and on its way, there seems to be some worry about hyperinflation. This certainly could happen, but the state would have to go drastically insolvent. There is such a terror over defecit spending in Canada, I doubt we will come to be over extended in this way.

The danger that seems to me much more real is regular inflation. People seem to think “inflation is prices going up”. Well, that’s true, price inflation is prices going up. It’s caused by the deflation of the economy with respect to the money supply. If the money supply was constant (e.g. Gold standard, no fractional reserves, and state refuses to buy any new gold), then inflation would signal a reduction in available services. However, if the state does purchase gold in exchange for coinage or gold certificates, an increase in these certificates with respect to an unchanging amount of goods and services will also produce price increases (there is “more money” but it can only buy the same amount in total).

Now, since we don’t have a commodity standard (and there is no reason one has to pick gold, money could be issued as rice certificates, or sawdust cirtificates, but storage and transport makes this unreasonable), and the money supply is controlled by a central bank, inflation is the product of the central bank increasing the money supply faster than the economy grows. So, if growth is 3%, and inflation is 2%, the increase in the money supply was 5%.

The central bank increases the money supply in a fractional reserve system by lowering the overnight lending rate. This encourages banks to seek lower returns on loans, and gave us the sub-prime mortgage phenomenon in the U.S.

What this seems to mean is that the amount of money a lender can make goes down – both in real and nominal terms. In nominal terms because the interest rate has lowered, and in real terms because – and this is key – increasing the money supply with respect to size of the economy causes inflation, so the very lowering of the interest rates causes the currency to be devalued, which means the amount paid back on the loan is always less (in principle and in interest) than was taken out. In other words, the value of loans shrink (the principle) as the currency is inflated, at the same time, for the same reasons as the interet rate (which produces the interest) is lowered.

This means, the standard response to the collapse of economic bubbles – to lower the interest rate – also causes inflation, and this discourages savings.

Why would anyone want to save, when you can take out loans and invest them elsewhere to make a profit?

To go back in time, why would anyone have wanted to save in the 70s and 80s, when inflation was in the double digits? That means the principle of loans was shrinking by 10% a year!

The difficulty with values

The difficulty with values is that they are particular, or as you put it, subjective. If values are subjective then liberal democracy is basically right and the hierarchalzation of value can only be based on something like the greatest liberty to create your own hierarchy of values. This would means there is no such thing as a genuine goal, and therefore, no such thing as rigor (or rather, no ability to differentiate between the rigorous and the unrigorous).

Since its plain that we can differentiate between rigor and its absence, values must not be subjective, and cannot even be conceived of as “value” because value is inherently an “I value”. Value must be reconcieved as “good”, which is not entirely relative inter-subjectively. This is demonstrable by a simple example, such as the “good” of a sandwich wrapper is to keep the sandwich from getting all over me. This is immediately apparent because when the sandwich is gone, the wrapper appears entirely purposeless, or rather, has the purpose of being-disposed-of in the appropriate manner (i.e. recycling vs garbage, or perhaps composting).

The good or “end” of the sandwich wrapper, although it is something which appears only to the one eating the sandwich (perhaps also to those watching the eating of the sandwich), is not something “subjective”, or “user relative”, not a result of my “preferences”, but rather an inherent structural feature of the relations between sandwiches, wrappers, shirts, persons, streets and parks.

It would appear at first that the structure of the purposefulness of the sandwich wrapper could be reducible to a persons preferences (or “values”), because one could simply posit the purposefulness of the wrapper during and after the eating to be two separate preferences. But this ignores the fact that the obvious preference being fullfilled in the disposal of the wrapper is not “I like to dispose wrappers after eating”, but “I like to not litter” and “I like to not carry around useless objects”.

The last notion is key – because if you have a preference not to carry “useless” objects, to say its ‘all preferences’ becomes circular – because to explain what “useless” means you need to do it in terms of preference. So, to say “I prefer not to carry useless things” means, “I prefer not to carry those things I do not prefer”.

But plainly, the usefulness of a thing is not only a matter of preference but a property of the thing itself. The wrapper is, in itself, useless after the sandwich is eaten. To speak of it in another way is simply to give an unjustified theoretical translation for the sake of conserving our preference account of human being.

Therefore goods are granted to us in experience that are not subjective values.

Decadence, Wonder, Love

Sitting in futures, I read from a 1922 lecture course in which Heidegger discusses German decadence and decline, and the factical-life situation of the University.

Sitting in futures, I recognize my own life-situation as decadent, savoring the pleasures of a civic existence. Nuit Blanche, Coffee shops, (occaisional) dining out, many friends. Basically, there is little denying that modern hipster-student existence is a repetition/derivation of French Aristocratic decadence. Even the poor student is decadent because the distinction is not the amount of money spent but the purpose for which life is lived. “For the sake of itself”, we could say, after all, it is only in a situation where life is lived for its own sake that romantic love can appear as a legitimate option. Is my warriness towards romantic love a form of fear/fleeing from this decadence? Is a life of rigor even opposed to decadence? What constitutes the decline in decadence if it is not in opposition to a life of rigour?

But it is, if decadence is decline, it must be a loss of ends, a loss of directionality – a loss of telos. Life can be “lived for the sake of itself” in two senses, either in the sense of pleasure or affect (Deleuze – becoming as a categorical imperative towards decline/the new). Or, in the sense that life is directed towards its own factical situation, “life”! Life is not pleasure or affect or transcendental consciousness, but the situation which does not “present itself to you”, but rather presents and recedes – the categorical imperative is to become worthy for/to appropriate originally the situation.

I speak of rigor often, but what is it? Is it directing oneself at a single goal, and doing everything for its sake? That cannot be it, not only because one always has many goals but because any particular goal must be continually re evaluated in light of a new situation.

I love my neighborhood. As I walk by the cafes and bars at midnight on a monday, I love everyone inside. Not only them, but distant friends also. The cold air on my face reminds me of a French bar in Ottawa and all of a sudden I feel the wide open possibility of the future and all the warmth in it. It remains always the case that I could die at any moment (mortality, authentic being-towards-death), but precisely because of this my life already contains in a certain sense all the indefenite possibilities which may occur in the future. In this sense, my graduation, my children, my friends till old age, holidays – all the things on which one reflects back in old age are already present in a certain sense in youth. And for this reason, I can cast my mind towards them and feel close to friends not as a function of when I will next see them, but as a function which supervenes on all the possible times I will see them, for the rest of life.

(philosophical recapitulation: what it means for my life to already contain my own death, is that it also contains all my other possibilities although less definitely so.)
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Treason and the U.S. Economic Crisis

In the past, I’ve formulated this argument:

In situations where your own personal good comes, not simply into contradiction with the common good, but with the possibility of other people pursuing their own personal good, a crime has been commited. For example, it’s not a crime if I catch a fish which someone else could have caught. However, if I steal the copper from all the fishing boats to sell it for cash, this is a crime. In the first case, my catching the fish means someone else can’t catch it. In the second, me catching the copper means others never get to catch fish.

Turned over towards the economic problems, this means if I make a trade which someone else could have made, this isn’t a crime. However, if I make trades which destroy the stability of the market, which make it impossible (over time) for anyone to make trades, then this is a crime.

The problem with this argument is that it is not the responsibility for people to understand how their actions impact others way down the line, but only quite immediately. In other words, if I stab someone, I’m responsible for them being hurt, but not so much for the extent of which this stabbing impacts their likelyhood to commit future crimes. (The Nuremburg trials are of course the notible exception to this rule – agression is considered the highest crime specifically because it is deemed to include all the crimes it directly and indirectly causes).

Therefore to understand responsibility in the economic crisis, we need to understand whose responsibility it is to monitor the distant, long term effects of individuals decisions. In other words, not the individuals, but the regulators. It is exactly the responsibility of regulators to set up incentive structures which prevent individuals, making selfish decisions, from destroying the possibility of anyone making any decisions at all.

Remarks on Rilke and Metaphysics

I wanted to work on re-writing Nichomachea ethics, understanding agathon not as a pre-given plenum, but as the existential horizon whose unity and logical priority is a product of ambiguous and erotic lived existence. There was only one problem – that is exactly the project of Being and Time.

Tonight I read Rilke’s Eight Elegy to Valerie. I knew she mis grasped it because she thought it was wonderful. This was unfair, it is wonderful. But it is also terrible, it condemns us to knowing something on abstractly, only poetically, which we can only barely encounter – the Open.

“Only the animals behold the open”

If we could behold the open, we would see the world unbounded, and the birth of one flower would be eternity. What does this mean? The philosopher in me asks. But, the answer is extremely simple – eternity means aion, the boundless – sempeternitas not aeaternitas. Not “forever in time” but “outside of time”. Not measured in time. Time is a measure, as is depth, breadth, height. We set things up, they fall apart, we set them up again, we fall apart. We are always departing, always on the way. We are literally thrown – “project”, in the double sense of projecting our future possibilities and taking up our future possibilities as a structured project.

What is terrible in this poem is not the relatively simple philosophical meaning, but the realization that what we always wanted – the aion, the eternal, the arche, ousia, is not something conceptually structured – is not intelligible. Since being is not a genus, being is not a being, since being is not a being, being is not intelligible. Being is finite, and therefore intelligible, but “BEING” is eternal, unstructured, unknowable. Being “is” limit, but “is itself” open. Open must be understood radically here as “unbounded”, unstructured, unlimited. Outside of all limit. “Being” is not actual, for actuality (energia) implies bounds, implies finitude.

If being had been finite, then being would have been knowable, and being and time might have worked out. But this would have almost required being to be a secret genus. How can being be finite (qua being, not qua beings), and yet be other than being?

More radical – if temporality was not just the horizon for any possible understanding of being, but the plane on which being itself has its being, then being would be differentiated, would be finite enough to know. But temporality is only the horizon for our understanding of being. Nietzsche was right – being is perception. But being is the most extreme form of perception – unstructured. Being cannot be structured perception because in that case it would always be determinate beings. Being is perceptivity, but perceptivity (as opposed to perceptions as such) is not in time, there is no principled boundary of perceptivity. Perceptivity is in time but it is not ideationally limited by time – time does not set a limit which allows aisthesis to occur at all. Being is a transcendens, but one cannot use transcendental arguments to assert the being of being. To do so would be to apply a posteriori attributes through a method to construct a priori archai.
The animals are in the open.