Capital and Techne; Deflation and Peritropy

Thesis:
All market fluctuations are 'noise', except for that which is
calculated as a lowering frequency.

Starting this Fall, this blog will try to elaborate a futuricist
"aneconomy of the other".

Over-production

This week's IMF Global Outlook Report leaves little doubt that economists have absolutely no operative understanding of what is going on around them. Forecasts have been massively revised downwards.  Still, it is difficult for anyone to ignore the rising bubble in commodity prices.  This bubble, economists speculate, must either be speculative or demand driven.  Either it must be "artificial" in the sense of being created by bastards with money buying up commodity futures, or it must be "natural" in the sense that it is driven by consumer demand, i. e. we are using so many commodities that a supply-side shortage causes prices to rise.  The fallacy of this dichotomy can be seen by looking at the housing collapse:  In this situation, demand was speculation, and speculation was demand.  People demanded "ownership" of more and more homes; the Fed printed money to give to banks to lend out for this purpose.  This demand was shifted onward to global investment vehicles.  At no point was there any firewall between demand and speculation.  

Now take commodities.

If Chinese production massively outstrips American demand, it might make very little difference what is driving commodity prices right now:  the speculation bubble will burst as a result of lowering demand.  So far in '08, the reverse has predominated in housing:  lowering demand (speculation) (and deterioration of consumer sentiment) as the result of an apparent burst of a speculative bubble (housing).  Seems more and more likely that commodities will deflate now in the other direction.  Its going to keep falling like a feather rather than a rock.  The emergent commodity bubble is just more Fed printing money with an eye to growth.  And indeed, Americans now store more commodities in their driveways, gas tanks, and bodies than at any other time in history.  Remember, the commodity bubble is literally a bubble:  round american tummies need a correction more than housing ever did!

If American demand for commodities drops off, and God-help-our-ailing-arteries it should, the next bubble will be in services, and only the non-manufacturing indexes will begin disclose what the new economy will look like.  

The Conflation, Destagflation, and Indeflation (pronounced Indy-flation) of Monumental History

Would deflation in housing cause inflation elsewhere (money toward mortgages redirected to rent/general economy), and might this (plus piddling tax rebates) balance out  the death of the HELOC/home investment spending?  If so, nothing could be worse for the Admin than a fall in oil prices.  

If the admin thinks that the death of the HELOC means a deflationary collapse basically just before an election, then it would have every reason to perform, as subtly as possible, an intervention similar to the 1933 Agricultural Adjustment Act, wherein food was destroyed in order to keep prices high, doing violence to production.    If  high oil prices, along with the lesser and temporary effects of a commodity boom, are the only things preventing a deflationary spiral, might this explain a breakdown in peace/cooperation agreements between the Al-Maliki government and the Mahdi Army on the one hand and Sunni Awakening Councils on the other, and the subsequent attacks on oil pipelines?  More sinister things have happened.  

Still, on the other hand, one cannot exclusivise the occurrence of inflation and deflation, nor can the relationship between them be strictly described as one of causality.  Take housing again as an example:  the inflation of housing happens as a function of its deflation, and vise versa.  Credit markets tighten (inflation) as prices drop (deflation); these phenomena feed each other until price drops mean that we no longer need credit to buy houses - or in any case to be housed (rent).   This might best be described as a paradox of value:  something worth an infinite amount is in fact worth nothing - it is priceless.  We might call this synergy "conflation."  And we might even call this conflation of everything with nothing, their infinite and impossible exchangeability, an aneceonomy.  This process can only be arrested by the active destruction of value through an increase in price, an inflation produced by a counter-technologically-induced privation: credit lending.  The recent housing bubble happened in just this way.  However, global political discourses are far too confused in their ideological thrusts to intentionally engineer such an arrest on a macro-economic level.  As it stands (as a sort of sarcophagus, saluting its own absence), this indeflation of a certain type of history seems to be marching ahead.

Now, if this expansion of the sphere of the priceless is continuing to accelerate under the pressures of a global technological modernity (this is very much in question as the raw materials required for production seem to dwindle), then what we can hope for int he barren climbs is the growth of the aneconomy, rather than the economy, where power, still hesitating, will will no longer believe it can restrict itself.

Jefferson on Depression: Fictitious Capital and The General Revolution of Property

Jefferson's letters to Gaillatin often offer that strange, mechanical, almost binocular, insight by which one of the world's greatest hypocrites sustained his equipollence: 

At home things are not well. The flood of paper money, as you well know, had produced an exaggeration of nominal prices and at the same time a facility of obtaining money, which not only encouraged speculations on fictitious capital, but seduced those of real capital, even in private life, to contract debts too freely. Had things continued in the same course, these might have been manageable. But the operations of the U.S. bank for the demolition of the state banks, obliged these suddenly to call in more than half of their paper, crushed all fictitious and doubtful capital, and reduced the prices of property and produce suddenly to 1/3 of what they had been. Wheat, for example, at the distance of two or three days from market, fell to and continues at from one third to half a dollar. Should it be stationary at this for a while, a very general revolution of property must take place. Something of the same character has taken place in our fiscal system.  --   Dec. 26, 1820

Interesting that Jefferson calls the outcome of deflationary trends a "general revolution", especially seeing that he would not have used the term lightly since he knew that his entire legacy would rest solely on the continuing stature of the concept of "revolution."  He reveals a bit more about the precise mechanics of such a revolution nearly twenty years earlier, in another letter to then-treasury secretary Gallatin:

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.  --  1802

Jefferson is so clearly describing the current situation, in the same terms which are used today, that it needs almost no explanation.  So absolute are the correspondences, that all we need say is that the "false capital", at our particular moment, masks housing, while threatening to extend its aura to commodities.  Again, there is a spectre of scarcity and depletion (or value) where there is plenty (the housing market is in fact overbuilt, commodities are produced in absurd excess).  Jefferson has here exceeded himself, and the whole earth on which the game of capitalism stands, by accidentally calling into question the existence of true capital. The "aura" of "false capital", which is nothing other than the anxiety of privation (an over-determination of nothingness)  and its corresponding predatory drives, threatens to create a perpetual debt which will, he thinks, accumulate property in the hands of a few bankers: a capitalist "general revolution" which will leave homeless those (genocidal maniacs) who conquered the Continent.  Fool though he may be, Jefferson was always a thinker of growth (intensive and expansive) and was never an economist, and only rarely allowed himself the luxury of openly dialectical thinking.  Is this in part because he knew that "general revolution" had even further, unforeseeable affects, beyond the apparent accumulation of all property in the hands of a few bankers?  What, for instance, happens to Jefferson's libertarian-agrarian post-slavery utopia when markets deflate to zero, or near zero?  When the bankers begin to cannibalize each other, as in the margin calls Jefferson describes in 1820 or the Carlyle collapse of last week, it is far from clear that the end product is "true capital" accumulation among "true capitalists" (see earlier post on "America's Communist Landlords").  The problem with any economic thinking (revolutionary, distopian or otherwise) is the fabulation of competent "agents" with the technical ability to perform a "general revolution of property."  This is not the way history lives.  Technicity itself lives a much more active and fearless life than any agent of capital; and so little is known of it that we can only say that it is the name of the deflation that always exhausts and infinitley exceeds the anxiety that inflates the world to "value" through the terror of its loss.

St. Patty's Day Massacre

Well, I can't say I am sure it will happen - a good pyrrhonien would never admit this publicly - but I could say that its non-occurrence has been utterly unforeseeable to me for a long time.  One could even make this visibility of the invisible a central hypothesis of Skeptinomics:  Act at the sight of the fullest Nothing.  

Now we on the left will begin to worry about the margins of the economy, the masses lucky enough to be exploited by us; it will hurt them first.  Maybe.  It will hurt us more.  We in the far west are unprepared for this type of deflationary collapse, specifically one which involves the long term inflation as one of its most difficult components.  Commodity prices are high and getting higher, and are unlikely to collapse as money flees the stock markets.  This is very different than the situation in the 1930's.  Most of us couldn't raise even a small part of our own food supply, and the government won't be knocking down farmer's doors in order to destroy excess supply.  Quite the opposite.  America and Western Europe are far more vulnerable than places that have been less infantilized by their own narcissistic sense of entitlement.  Still, because of this weakness, these places are often quick to socialize the food supply in times of crisis (remember government cheese?).

Possibly, the global financial markets are about to foreclose on the America.  If they do, they will implode the same way the banks have after foreclosing on borrowers.  The total refusal of any collectivism, the automation of auto-preservation, is revealing itself as autoimmune in a classic Derridean sense.  

The question is:  Will the trace of this lost thing called Capital, this lost capital, remind us of times we had long forgotten?  And how long forgotten will these memories be?  Back beyond feudalism, beyond the hope of socialism, to a steppe, perhaps?  Or maybe even the trees?  Perhaps to an open fundamentalism, that finds its grounding wherever and whenever it looks...

Fannie mae and fredd-I-raq: At what point will the Us Government's general insolvency force a withdrawal from Iraq and Afghanistan?

Unlike previous financial crises, which tended to be EITHER
inflationary or deflationary (the stagflation of the seventies is no
exception to this history), this one seems to show spiraling and
indeed semi-permanent trends in both directions. As such, the
traditional economic therapies such as inflating your way out of
recession, or deflating prices to preserve the value of the currency,
will not work. Likewise, under these circumstances, the notion that
all economies, under all circumstances, benefit economically from a
"good war" is exposed for lacking even the faintest to tether to
reality. While the second world war may have "helped" depressed
economies by stimulating 100% employment under a highly socialized
militarism, the wars of the current administration not only decrease
overall employment by draining funds out of more peaceful, less
expensive public sectors like health and education, but, more
importantly for the current argument, it contributes greatly to the
overall insolvency of the debt-laden federal government. There have
been a few prominent treatments of the effects of the iraq war on the
economy, but the notion that the cost of the war could ultimately
contribute to the destabilization of the banking system has largely
been over looked.
If, as seems increasingly clear, median house prices will drop to
approximately 3 times annual median income from its current level of
4, with large metropolises in the west dropping from a multiple of 10
to something like 6, banks will demand, as they in fact already are,
that government sponsored enterprises like fannie mae and freddie mac
step in, with help from the federal reserve, to back their worthless
assets with taxpayer money as the deflationary collapse progresses.
At what point, I wonder, would the treasury be forced to make the
very difficult choice between bailing-out over-privileged multi-
billionaires and funding their pursuit of imperial, neo-colonial
enterprises overseas? If loses in the property market sneak toward 5
or 7 trillion from current levels it is difficult to see how the
government could fail to step in on a quite massive scale. On the
other hand, its own debt is already so immense as to only really
exist at the most sublime level of abstraction. Likewise, the
american taxpayer is leveraged to the hilt, and in most cases won't
see a real wage increase for at least fifteen years. Fucked from
every direction, we may have long ago squandered the money necessary
to continue the wars. This, of course, will only start to become
apparent when the treasury fails to intervene at the collapse of some
major financial entity, and when federal funding to everything
outside the military complex suddenly seems to be drying up.
Military enterprises will certainly be the last to fall, but it may
not be after a general deflationary commodity collapse.

Aestheticization of Banking

"current-coupon indexes represent the average of yields for the two groups of bonds with prices just above and below face value, the ones that lenders typically package new loans into."

Perhaps those who have absolutely no understanding of this sentence have a better understanding than those who do.  As the mortgage bond market slides into chaos, ensuring the deflationary collapse to come, it is becoming increasingly clear just how florid and expansive the lives of financial "structures" had become.  Now, drained of all choloric, the lock-step poetry of their lives, vast skeletons dripping onto islands, can be explored.  History, certainly, will make something  of this.  It will probably compare it to the "Baroque."  Not wrong, and certainly appropriate in that, like most criticism of the Baroque itself, it will miss the "spiritual" simultaneity of its material with its thought, accepting subject-object distinction, concepts of viewership, etc. (deleuze's book on Leibniz is a great example of these limitations).  This at-the-same-time of its materiality and its thinking spirits through the structure at hand.  With regard to the "miniature" baroque at hand in the deflationary panic, this spirit is now on horseback at a swift gallup.

Now that the show is on the road, we'll start making another attempt to understand what is passed down to us from these carcases....