Wednesday, September 25

O Brave New Global Economy! Part 7 of "From Economic Collective to Police State" (REVISED 2:20 PM 9/26)

The Language of the New Order

The first thing about surviving the new order is to learn the basics of the lingo.  This is so you don't stick out like a sore thumb from the economic collective and get mistaken for a statistical anomaly:

1. The U.S. republic is now the economy. By the way it's gauche for an American to put "U.S." before his own economy; only demographics in other economies should do that.  To distinguish your demographic's economy from others you can refer to it as "the domestic economy."  

2. There is no more "world." There is now the global economy.  The only people who can use "world" are high caste demographics who must dumb down explanations about the new order for lower castes.  (It is out of bounds to ask why there are castes in an economic collective.) 

3. Global economic regions are no longer referred to by their geography. There are now only two regions: mature economies and emerging economies (or emerging markets if you're talking fast.)

4. There are no more countries or nations; there are economies, which in a nod to convention can keep their old national designations; e.g., Canadian economy, Mexican economy.

5.  Because there are no more nations there are no more political definitions for types of government; e.g., democratic, fascist, socialist, absolute monarchy, etc. There are financially stabilized economies and financially unstable ones.

6. It's rude to refer to a demographic as "people."

To make sure you know how to use the basic phrases, here is an example of how they can be used in actual sentences.  The following is from an official statement by U.S. Director of National Intelligence James Clapper. He was responding to published evidence that the U.S. government is using NSA surveillance to conduct "economic espionage" against other countries. James explained that the government does no such thing:

We collect this information for many important reasons: for one, it could provide the United States and our allies early warning of international financial crises which could negatively impact the global economy.  It also could provide insight into other countries' economic policy or behavior which could affect global markets.
So one of the nice things about the new order is that no matter what kind of compromising situation you're caught in you can draw yourself up to your full height and say, 'I didn't do that.  I'm doing research to help stabilize the global economy.'
Another example, taken from a profile of economist and undersecretary for international affairs at Treasury, Lael Brainard:

Brainard has since served as the principal policy adviser to Secretary Geithner on international economic matters at the Treasury Department. Treasury describes her role as advancing the Administration's agenda of strengthening U.S. leadership in the global economy to foster growth, creating economic opportunities for Americans, and addressing transnational economic challenges, including development and climate change.
If you want to learn more of the new lingo and how to use it in sentences you can plow through the Dodd-Frank Act, provided you have a team of attorneys specializing in financial regulations to translate for you.  Or you can study the transcript of Lael's recent analysis for the Council of Foreign Relations of the global and domestic economies. 

The brass tacks of the new era

For any reader who should ask whether this new lingo is the way they always talked at the IMF -- yes, and at central banks and other economically oriented institutions that have clout with governments. It's just that the IMF's traditional way of dealing with underdeveloped nations is now the way, period. The catch, as I explained in the last post, is that the IMF way is famously ruthless -- famous among underdeveloped peoples as they used to be called.

And so this March we saw the developed peoples of Cyprus staging protests when they found to their bewilderment that their bank accounts had been frozen without warning. They thought things like that are only supposed to happen to underdeveloped peoples. And we saw BBC news anchor Katty Kay demanding of economist Larry Summers that he explain whether the Cypriot Solution would be applied to Americans.  As I recounted in the August 21 post, after a fling at playing Zen Master Larry got down to brass tacks:
In a world where my spending is your income -- if every person, if every nation, tries to save more it just lowers everyone's income.
Those who read the August 21 post know Larry's reply is straight out of the Federal Reserve's playbook of reverse-engineering the 300-year old Paradox of Thrift. But if Larry's words also sound familiar to readers of dystopian fiction -- does this ring a bell?
To maintain the World State's Command Economy for the indefinite future, all citizens are conditioned from birth to value consumption with such platitudes as "ending is better than mending," "more stitches less riches", i.e., buy a new item instead of fixing the old one, because constant consumption, and near-universal employment to meet society's material demands, is the bedrock of economic and social stability for the World State.
That's from a synopsis of Aldous Huxley's Brave New World, written in 1931 and published in 1932, just as the Great Depression was hunkering down for the long haul. 

Huxley didn't see himself as a prophet, from what I read about the novel in Wikipedia; he wrote it to poke fun at H.G. Wells' rosy view of humanity's future.  I'll bet that once totalitarian dictatorships gained steam in the 1930s readers of Brave New World stopped chuckling and so did Huxley.

The totalitarian states were in great measure a panic reaction to the Great Depression. Then, as now, it all comes down to the simple fact that by any which way a government must maintain social order in the face of perceived chaos arising from financial catastrophe.

To expand on Larry's answer he was saying two things:

1.  Damnation visits those who hoard money in savings accounts instead of spending or investing it to help their economy weather a recession.

You will notice he said nothing about the laundering of ill-gotten money or about Russian oligarchs stashing loot in Cypriot banks; it could have been a bunch of Princeton professors for all he cared. Nor did he mention anything about offshore accounts or tax havens. Offshore or onshore makes no difference to Guardians of the Sacred Cow.  Sin is sin, no matter who commits it or why. And the greatest sin is harming so much as a hair on the Sacred Cow's hide, this cow being known as the Paradox of Thrift. To be precise, the cow is the belief that it's possible to perpetually stave off an economic depression by fiddling with the monetary policy to reverse-engineer the paradox.

Makes no matter that the paradox is nonsense or as it's known to attorneys and logicians a reductio ad absurdum argument.  Nor does it matter that reverse-engineering the paradox did nothing to stave off a second Great Depression, which the Fed recast as a Great Recession by shifting around a few percentage points and fiddling with statistics.  What matters is if you kill a sacred cow the world will end and then we'll all go straight to hell. 
2.  Larry was also signifying that a new global order had launched.  In the new order no distinction is made between developed and underdeveloped peoples if actions by either demographic threaten to upset the global apple cart, which economists are trying with all their might to keep from toppling again.

(That the same basic monetary policies in force prior to 2007 helped topple the apple cart in the first place and are still in force today -- don't try to confuse a Guardian of the Sacred Cow with facts.)  

Yes, Americans will be treated in the same way as the Cypriots if they have deposits in a 'bad' bank that's considered by a domestic or international regulatory agency to be Too Systemically Important to Fail or Too Globally Systemically Important to Fail. And the authorities for treating everyone the same are right there in Title II of the Dodd-Frank Act and buried somewhere in its international version, if the G20 Financial Stability Board ever gets around to writing up the manual. 

Closing Thoughts

Well, there's nothing left for me to do except give Shakespeare almost the last word in this series on the economic collective and the police state. The title of Huxley's Brave New World is a play on a hilarious scene in The Tempest: having been raised on an island isolated from Civilization Miranda cries out in joy at her first sight of it, which happens to be drunk sailors piling out of their shipwrecked vessel: 

O wonder!
How many goodly creatures are there here!
How beauteous mankind is! O brave new world,
That has such people in't.

And so we find, at the end of all the charts and graphs, that the brave new global economy is the same as the brave new global economy of the Bard's day: a bunch of rascals putting on airs


Earlier Posts in the Series

America is becoming a police state. What's the solution?

From Economic Collective to Police State: Once Americans ceded control over their financial affairs they lost control of everything else

The Guardians of the Economy make their move

From Tofu to Police State (More about economic collectivism)

Modern U.S. lawmaking and the original police state

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