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A Tale Of The Seemingly Innocuous

By Marc Gauvin (c) 19/06/20223

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There once was a family who unwittingly let in a tiny seemingly innocuous mouse like creature, that for its size and singular instance little was thought of it and soon the incident forgotten. Meanwhile the mouse frightened hid from them all.

The creature from hiding grew bigger and bigger and with stealth stole more and more of the household food, tore more and more of the linen and spoiled more and more flowers while leaving a more and more wretched odor and stains for others to clean.

The family members became irate as they bemoaned what had become of the home they once had. They formed alliances between them and demanded order be enforced on the others!

Those who cleaned and repaired the damage became intransigent to the rest and demanded servitude and privilege in exchange for keeping the order. All who made errors no matter how small and how few, were blamed for most if not all the many and bigger problems.

Conflict brew and transgressions multiplied to a head, until one morning the youngest infant playfully pulled on a protrusion from under the curtain, not knowing it was a tail! The mouse like creature now of monstrous size, let out a roaring squeak or squeaky roar and ran through and over the room for all to see. On its snout was the evidence of stolen food, on its paws that of ruined flowers and on its fur the threads of ruined linen. Quickly the oldest and wisest in the family rushed to the front door and when the giant mouse ran by, gave it a swift kick and watched it roll into the street and run off away in terror.

Since that day, the house returned to its former order and happiness and never again allowed any tiny mouse like creature to hide in their home for none to see.

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A Relevant Tale About Clueless Proselytising in a Casino Driven Society

By Marc Gauvin

"...If "A" causes problem "B", then by definition any solution "C" that does not first eliminate "A" but instead tries to coexist with "A", CAN NEVER BE a solution to "B". And if "A" no longer exists, then any solution "C" to "B" is irrelevant because "B" no longer exists."

Somehow,  a society was set up on the idea that control and access to ALL resources was to be decided by casino winnings independently of knowledge or expertise in any other domain.

The curious aspect of this society was that any resource or anything of value could be used as collateral to access casino chips in order to "get in the game" so to speak. And as anyone knows, the only way to diminish if not beat the house's edge is by amassing a boundless amount of chips or in the alternative securying a boundless source of chips in the future, e.g. by securing more resources faster than others.

As a consequence, everyone, no matter their intentions, was forced to make casino winnings their priority. This, of course, impacted the way people used resources particularly key resources like energy and food along with all the derivative products such as transportation and storage. That is, people with few chips had to trade many if not all their chips just to eat and thus obtain an inkling of hope of getting "in the game" at the casino, if not actually ever getting there. So, resources were produced to get as many chips as possible far beyond any real need, which given the unbeatable house's edge was an ever growing amount of chips. It was clear those with more chips got to decide about all and anything no matter their real knowledge about anything, and resources were being produced in tandem with the endless demand for chips by everyone rich or poor.

Among those with enough chips to be able to at least try to convince people about anything were those that found that they might be able to somehow get more chips by showing their ability to "influence" people, and this no matter what real knowledge they had about anything.

Now, most of these were so simple minded and obtuse that they would pontificate on how, within the context of this casino driven society, all key resources should be allocated and managed.  Driven by their egos and obtaining "credentials" dished out directly and indirectly on the universal "casino chip" criteria, these prosyletisers thought they could tackle the resource issues with not only not knowing how to improve their odds at the casino,  but apparently without the slightest idea of how the requirement for playing the casino brought about those resource problems in the first place.

The question is, was it because these proselytisers were clueless about the key to the whole shebang, or was it that they were testing their destiny like catfish probing for food in muddy waters? Or were they just placating their ego impulses in the hope of "gaining" "influence" for more chips for themselves?

Whatever their motives, their proselytising never helped solve anything other than to frustrate knowledge of the central importance of the chip game and how, therefore,  their proposals were utterly useless. Why? Well it is simple, if "A" causes problem "B", then by definition any solution "C" that does not first eliminate "A" but instead tries to coexist with "A", CAN NEVER BE a solution to "B". And if "A" no longer exists, then any solution "C" to "B" is irrelevant because "B" no longer exists. To assert the opposite is, well, clueless proselytising.

 

 

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Passive vs Non-passive Money - Raging Inferno Analogy

By Marc Gauvin (c) 5/09/2021

Reproduction expressly granted provided attribution and original link are given.

"While both share common knowledge, the problem of building a passive system is not the same as that of cancelling or containing the dynamics of an existing non-passive system."

You have a raging fire, you know the cause of the fire and how to put it out. You also know that the world would be better without the fire. So, do you:

1) Put out the fire or:

2) Build a model of a world without a fire amidst the fire to convince people of the virtues of a world without the menace of a raging inferno?

Remember, that while you're building the model, the fire continues to rage unabated and if you manage to build a semblance of a fire free model along side it, you still have the same problem you had at the onset of having to put out the now greater raging inferno. So, how does building a fire free model impact the fire?

What is it that prevents people from facing the raging fire head on from the onset? If all the undeniable proofs that a fire is not a good idea and how it can be put out easily, doesn't convince them to put it out, how will producing a fire free model amidst the now bigger and more daunting fire somehow convince them to put out the inferno?

What is a fire free model? Can it exist within a raging inferno or must it be created in isolation of any fire? Who can afford to create such a cocoon in which to exemplify fire free life? Will that experience be exclusive to a small number or as common place as life in the midst of a raging inferno? What does the project of building a fire free model teach us about putting out a fire, beyond preventing fire?

The truth is that if we have the knowledge to build a fire free model, we must understand fire enough to know how to put it out in the first place, right? So why would we choose to build a fire free model in the midst of a raging fire instead of directly putting out the fire? The answer is we either don't have a clue about fires or we are somehow suicidal.

The parallel between our current money system and the above raging fire analogy lies in recognising that both are unstable non-passive systems. As such and given the conditions, both share the same boundless dynamics converting what they touch into fuel for their boundless propagation, which is why both are highly contagious. Therefore, building a passive model is only possible in isolation of any non-passive system. Which means that building a passive model without first cancelling the non-passive system is a chimera, as it does nothing to address the propagation of the non-passive system.

While both share common knowledge, the problem of building a passive system is not the same as that of cancelling or containing the dynamics of an existing non-passive system.

Let's then get our priorities straight, do we want to directly deal with the raging money system and make it passive or are we going to let it continue while we unsuccessfully try to build a stable model amidst its boundless and incessant contagiousness?

The really sad thing is, that given some basic knowledge most all can learn, dealing with the raging money system is far easier than those without that knowledge can imagine and certainly far more relevant than any other action we can take. 

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Risk Without Austerity

Excerpt from "A Systems Engineering Approach to Formal Monetary and Financial Stability Without the Vagaries of “Austerity” "

By Marc Gauvin and Sergio Dominguez PhD. Eng

The instability of the system as described above (A Systems Engineering Approach to Formal Monetary and Financial Stability Without the Vagaries of “Austerity) ultimately renders debt and liability/risk unmanageable over time. This in turn leads to last ditch dire measures in the form of extreme across-the-board contraction of economic activity and diversity in the real economy. Such “austerity”, leads to serious real world consequences, that in the light of the revelation of money’s misrepresentation are wholly unnecessary and therefore cruel and unusual, constituting a powerful legal imperative to correct said misrepresentation [10] [17] [18].

Moreover, this risk is mostly associated with arbitrary financial criteria without which, the “real” economy would only bear real world material and physical risk criteria, keeping in mind that typically purely financial assets represent two thirds of the total financial risk in the economy [8]. Finally, all financial risk is ultimately founded on the misrepresentation of money in that without it, financial mathematics as we know it would be impossible and so too would most of the “financial” economy without any harm to the economy.

However, in a scenario where as explained previously, money is defined logically as SOLELY the annotation of sums of value in terms of a common (arbitrary) unit attributed to each instance of transacting goods and services, by judicious management of the different permutations of transaction types that we illustrate below, we can illustrate how such severe “austerity” measures are not only not required, but ultimately increase risk over time towards total system failure.

Transaction Type and System Balance dynamics

As explained above in a Passive BIBO stable system, “currency" units arise as mere absolute annotations of value attributed to goods and services in transactions, where the positive and negative signs applied to account entries, serve only to determine the direction of value (goods and services) transacted between parties.

That is, all parties/agents are initiated in the system with zero balance and only by participating in one or other transaction of goods and services can any balance in the system be altered in either the positive or negative direction as the case may be.

To better understand this, consider the very first transaction in such a system for a population of two agents “U" and “I":

“I” provides a horse to “U” with a mutually agreed upon value of 100 units. Since I provides the horse, I’s account goes from zero to +100 and since U receives the horse U’s account goes from zero to -100. Units do not precede the transaction but arise out of the transaction. In such a system only U has received value corresponding to the exact same measure of value relinquished by I. Clearly, the total measure of value pending reciprocation i.e. “risk” recorded in the system at this point in time is 100 units or:

Total System Risk (System Balance) = the absolute value of the sum of either all positive or all negative balances in the system.

This “risk” represents “credit” for the estimated value pending future reciprocation of goods and services and NOT for currency units as tradable objects. That system risk, remains until U reciprocates in the future with some or other good or service of equivalent value, at which point all accounts including the System Balance return to zero.

In such a system, there are only four possible permutations of transaction types as follows:

A. Positive buys from negative (reduces system balance)

B. Negative or zero buys from positive or zero (increases system balance)

C. Negative or zero buys from negative (system balance unaffected)

D. Positive buys from positive or zero (system balance unaffected)

To understand how this is the case we can contemplate the following example of a community whereby positive and negative balances are generated as a function of transacting goods and services between agents: 

Fig. 1 Transaction Dynamics

All agents begin with a zero balance. Transaction 1 of value from Jim to Mary necessarily corresponds to type B (negative or zero buys from positive or zero), as a consequence the “System Balance” (total value pending reciprocation in the System) is the absolute value transacted (30 units). Transaction 2 is type D (Positive buys from positive or zero) from John to Jim while decreasing Jim’s positive balance by 10 units it increases John’s by that same amount such that the total sum of positive balances remains unchanged and equal to the sum of negative balances in the system (Mary’s -30) The third transaction is again type B (negative or zero buys from positive or zero) from John to Julie, adding 10 units to the sums of positive and negative balances in the system, thus increasing the System Balance (total absolute value pending reciprocation) to 40 units. The fourth transaction of value is of type C from Julie to Mary both with negative balances, as a consequence and similarly to Transaction 2 (type D) the absolute value of the sums of either positive or negative balances i.e. the System Balance remains unchanged. Finally, Transaction 5 being of type A (Positive buys from negative) from Mary to Jim reduces the System balance by 20 units.

Notice that of the four types of transactions, only type B increases the net system balance or level of unreciprocated value or measured risk in the system while in all other transaction types, no risk whatsoever is added to the system. [14]

Understanding the above in a system so defined to be Passive (stable) by virtue of money being defined as ONLY a mere record of value in terms of a common arbitrary unit (e.g. $, €, ¥, ₩, etc.), avoids any need to ever paralyse or exclude any agents from the system, because as long as overextended agents are capable of generating and trading new goods and services, ALL can continue to operate with unlimited C, D and A type transactions, not only without ever increasing risk in the system but reducing risk progressively over time with any number of type A transactions as required.

When money is formally defined as solely a record of value and used accordingly, the money system is made Passive and therefore stable, only useful as a (stable) reference of value,
required for representing divisions of value of otherwise indivisible goods and services. By virtue of money acting as a stable record/measure of economic activity, it cannot precede
transactions and therefore cannot serve as leverage over economic activity. Thus, money only serves to inform control of economic activity without in any way imposing limiting
imperatives exogenous to real world activity.

Moreover of the four transaction type permutations, type A transactions (positive buys from negative) serve to defuse risk in the system by reducing the total value at risk of non reciprocation and since there is no incentive to accumulate balances, there exists no bias towards type D transactions (positive buys from positive). As a Passive stable system, the money system no longer can systemically destabilise (corrupt) the behaviour of its
components, including individual agents i.e. you and I.

Finally, although transitioning to a Passive money system from current practises, will no doubt evolve the nature of agent roles and even system topology, immediate uptake requires no penalisation nor sacrifice to any agent or entity in the system nor any cost or loss. The reason this is certain, is because the change is at the conceptual rather than the mechanical level. That is, once the conceptual change is assumed and requirements for Passivity satisfied, the same principles illustrated above will apply no matter what the initial starting balances are.

References

[1] BoE Quarterly Bulletin 2014 Q1 Money in the modern economy: an introduction By Michael McLeay, Amar Radia and Ryland Thomas of the Bank’s Monetary Analysis Directorate.(1)
[2] BoE Quarterly Bulletin 2014 Q1 Money creation in the modern economy By Michael McLeay, Amar Radia and Ryland Thomas of the Bank’s Monetary Analysis Directorate.(1)

[3] Money: Commodity or Measure Not Both (www.bibocurrency.com) 21/4/2014 rev. April 2015, Aug. 2015, rev. June 2016, rev. May 2017, rev. June 2018 M. Gauvin.
[4] von Bertalanffy, L. 1968. General System Theory: Foundations, Development, Applications. Revised ed. New York, NY, USA: George Braziller, Inc.
[5] //cnx.org/contents/nVZ6PKeG@4/BIBO-Stability-of-Discrete-Time-Systems">https://cnx.org/contents/nVZ6PKeG@4/BIBO-Stability-of-Discrete-Time-Systems
[6] http://dictionary.sensagent.com/Passivity%20(engineering)/en-en/
[7] Gunter Stein “Respect the Unstable” IEEE Control Systems Magazine ( Volume: 23, Issue: 4, Aug. 2003)

[8] A WORLD AWASH IN MONEY Capital trends through 2020 Bain and Company. 2012 fig. 1.1. page 7.
[9] Narayana R. Kocherlakota, The Technological Role of Fiat Money* Research Department Federal Reserve Bank of Minneapolis.
[10] A proposal for harmonising current disparate (scientific and legal) definitions of money towards greater decidability in the provision of Justice according to universal principles of contract law Jorge Meira Costa and Marc Gauvin, 2015

[11] Formal Stability Analysis of Common Lending Practice, 2009 M. Gauvin, S. Dominguez
[12] Stable Currency Unit Theorem (www.bibocurrency.com) 2011, M. Gauvin, S. Dominguez
[13] The Beast of Compounding You Might Not Have Noticed (www.bibocurrency.com), Jan 10th 2020, M. Gauvin

[14] Austerity Fallacy (www.bibocurrency.com) 05/2015 rev. 7/2015, rev. 10/6/2018, M. Gauvin
[15] Passive BIBO Currency Distinguishing Claims www.bibocurrency.com Passive BIBO Currency Project 2013Marc Gauvin, Sergio Dominguez.

[16] Formal Passive BIBO Currency Specification www.bibocurrency.com, Passive BIBO Currency Project 2011-2019

[17] Legal Curriculum (https://www.moneytransparency.com/legal-principles)
[18] MSTA Resolution (https://www.moneytransparency.com/msta-resolutions) January-April 2020.

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