Author: VD

The Bank of England explains money creation

This is from “Money creation in the modern economy“, an article published in the Bank of England Quarterly Bulletin 2014. The bold text is in the original.

In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way is through commercial banks making loans.

Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money. The reality of how money is created today differs from the description found in some economics textbooks:

  • Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.
  • In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money ‘multiplied up’ into more loans and deposits.

Although commercial banks create money through lending, they cannot do so freely without limit. Banks are limited in how much they can lend if they are to remain profitable in a competitive banking system. Prudential regulation also acts as a constraint on banks’ activities in order to maintain the resilience of the financial system. And the households and companies who receive the money created by new lending may take actions that affect the stock of money — they could quickly ‘destroy’ money by using it to repay their existing debt, for instance.

Monetary policy acts as the ultimate limit on money creation.

The Bank of England aims to make sure the amount of money creation in the economy is consistent with low and stable inflation. In normal times, the Bank of England implements monetary policy by setting the interest rate on central bank reserves. This then influences a range of interest rates in the economy, including those on bank loans.

In exceptional circumstances, when interest rates are at their effective lower bound, money creation and spending in the economy may still be too low to be consistent with the central bank’s monetary policy objectives. One possible response is to undertake a series of asset purchases, or ‘quantitative easing’ (QE).

QE is intended to boost the amount of money in the economy directly by purchasing assets, mainly from non-bank financial companies. QE initially increases the amount of bank deposits those companies hold (in place of the assets they sell). Those companies will then wish to rebalance their portfolios of assets by buying higher-yielding assets, raising the price of those assets and stimulating spending in the economy.

This proves that Paul Krugman and the Neo-Keynesians clinging to their textbook Samuelsonian  Econ 101 have it wrong. It also shows very clearly why credit is the vital issue and why the paper-printing of the past is not going to lead to hyperinflation, but the eventual collapse of total credit market debt is going to lead to deflation.

The BoE even spells it out; “money” can be destroyed by using it to repay existing debt… or defaulting on it. By money, of course, they mean “credit money”, which is the only sort of money that matters in terms of the current global financial system.

Concerning which, Zerohedge quotes Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta:

If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon.

And, as I have repeatedly stated over the last six years, the Fed cannot print borrowers. There is no “permanent money” in this particular monetary system, which is another way to say that this is a “credit money-substitute” system. This little fact explains why Congress and the Executive Branch agencies inexplicably permit the bankers to openly flout the law; they are collectively deemed too structurally important to fail or even be held legally accountable.

Death of an anti-racist

It’s fascinating to see today’s anti-racists attempting to distance themselves from a man who was one of their own. Steve Sailer points out that the late Fred Phelps was not only a Democrat, but a hard core anti-racist and civil rights hero:

The first notable cases were related to civil rights. “I systematically brought down the Jim Crow laws of this town,” he claims. Phelps’ daughter was quoted as saying, “We took on the Jim Crow establishment, and Kansas did not take that sitting down. They used to shoot our car windows out, screaming we were n***** lovers,” and that the Phelps law firm made up one-third of the state’s federal docket of civil rights cases…. In the 1980s, Phelps received awards from the Greater Kansas City Chapter of Blacks in Government and the Bonner Springs branch of the NAACP, for his work on behalf of black clients.

And yet, strangely enough, there don’t seem to be too many lefties mourning him. Well, they do tend to devour their own.

A basic logic test

Speaking of Autumn People, here is a straightforward exercise that will test your logical capabilities: 

  1. John Scalzi declares: “I do enjoy pointing out stupidity” and “I will happily illuminate stupid things said about me to others.”
  2. The otherwise loquacious John Scalzi goes out of his way to avoid responding to the various things I have said about him to others and refrains from pointing out my blog or even mentioning my name.
  3. Therefore, the various things I have said about him [FILL-IN-THE-BLANK].

Programmer-prostitutes #icanprogramming

In the end, that’s what the result of GRLZ CAN 2 CODE and pushing more women into pseudo-programming degrees is going to be. Using their sex to sell software to real programmers. Consider the function of the “developer evangelist”:

Developer evangelists are definitely a different
breed. You have to, on the one hand, have the technical chops to be able to
code software, and on the other hand, have the ability to talk about it. I know
a lot of people that are knee deep in their technical savvy, but when it comes
to explaining it to someone who’s never used it before, they fall short. You
need someone that can not only walk the walk, but talk the talk and communicate
it to the community.

Developer evangelists should also
be forward thinking. You need visionaries who can assess the developer
community and see how you should be steering the ship. Otherwise, the developer
program might not necessarily take off. Developer evangelists need to be community
focused. This means elevating the developer community. It means being present
and going out there and working with the developer community.

As
it happens, I was an developer evangelist back in 1990, back when Apple
first popularized the concept. The formal title on my card was
“Transdimensional Evangelist” and my job was to visit the various hardware
manufacturers and computer game developers and convince them that they should be focused
on 3D-acceleration hardware, not MPEG-decompression hardware, for their
next generation of video cards and games. I was initially unsuccessful, but as I had been telling them, the superior technology won out in the end. It may be almost impossible to imagine now, but at the time, the vast majority of the industry was convinced that accelerated 2D video was the future, because 3D was flat-shaded, processor-intensive, and ugly… never mind that one could do so much more with it.

Now, unlike
most “evangelists”, I was actively involved on the strategic development
side; as it happens, I was the individual solely responsible for a chip
designed for the CAD market also having the critical features required
for the game development community; namely, accelerated Gouraud-shading
and texture mapping. I even named the chip: the 3GA. It’s not an accident that Creative Labs didn’t hold the original trademark on “3D Blaster”. However, (and this
is the relevant part), I was under no illusion that being the industry’s
first evangelist for the inevitable move from 2D to 3D made me an engineer, much
less a chip designer.

You may recall that I’ve said one
reason women are unlikely to succeed in programming per se is because
they tend to have an allergy to being held responsible for their own work.
This is mere anecdotal evidence, not conclusive proof, but consider what
sort of “technical chops” are required for this “developer” to “walk
the walk”:

I’ve had issues where my code
didn’t necessarily compile on the first try, and it’s great, because, all
of a sudden, you see them trying to figure it out with you, and it becomes an
engaging activity, as opposed to walking through a bunch of slides.

Isn’t that great? When you can’t do your job on your own but can get someone to help you figure out how to do it? And isn’t that totally unexpected and not at all anticipated by anyone who is sufficiently familiar with the female approach to technological responsibility?

This
is not to say there isn’t a place for women in technology. Nor is there
anything wrong with saleswomen actually knowing what they are talking
about; in fact, this is actually a highly desirable development. But what is
wrong is the pretense that this is not the probable outcome of a computer science degree, or that the
evangelist, (which is a function that combines marketing and strategic
sales), is even performing a production-related job at all.

And this part cracked me up:

Right now, some of the most interesting mobile app developers I know are people who started programming just two years ago. But they’re able to plug stuff together now in such a way to make something that’s cool.

Developers who aren’t Gamma programmers and didn’t study computer science engineering at university are always the most interesting, are they not? And they must be bang-up programmers to have picked it up so quickly!

The dry bones of the Autumn People

John C. Wright excavates an astonishing review of THE LORD OF THE RINGS to illustrate the malice and poverty of spirit inhibiting those who never have anything but evil to speak of that which speaks truth to the human condition.

The reason why this mocking and forgotten review should be remembered and held up to mockery in turn is because the animating spirit behind it is alive and well, if not increased in size and reach and insolence.

Ray Bradbury described this spirit, as is his wont to describe anything he describes, with the insight of a poet and the wisdom of a sage:

“For these beings, fall is the ever normal season, the only weather, there be no choice beyond. Where do they come from? The dust. Where do they go? The grave. Does blood stir their veins? No: the night wind. What ticks in their head? The worm. What speaks from their mouth? The toad. What sees from their eye? The snake. What hears with their ear? The abyss between the stars. They sift the human storm for souls, eat flesh of reason, fill tombs with sinners. They frenzy forth. In gusts they beetle-scurry, creep, thread, filter, motion, make all moons sullen, and surely cloud all clear-run waters. The spider-web hears them, trembles – breaks. Such are the autumn people. Beware of them.”
-Ray Bradbury, SOMETHING WICKED THIS WAY COMES

Elsewhere, he describes their homeland:

“That country where it is always turning late in the year. That country where the hills are fog and the rivers are mist; where noons go quickly, dusks and twilights linger, and midnights stay. That country composed in the main of cellars, sub-cellars, coal-bins, closets, attics, and pantries faced away from the sun. That country whose people are autumn people, thinking only autumn thoughts. Whose people passing at night on the empty walks sound like rain.”
-Ray Bradbury, THE OCTOBER COUNTRY

If this sound deliciously like the dreary rainscape of the microscopic yet immeasurable Hell portrayed in THE GREAT DIVORCE by C.S. Lewis, where the houses are imaginary and do not keep out the cold and wet, it is no coincidence. The two writers both had met the Autumn People from the cold lands deep in October.

They are among us today, the Autumn People, and in greater numbers, and for the most part they have dispensed with the delicacy of expression of Mr. Wilson, as with his culture and his learning. His spiritual grandchildren are among us, and turned against his learning the same scorn he turned against Tolkien’s, so they cannot express themselves as well, or, indeed, coherently.

From the point of view of an autopsy then, one wonders what is wrong with such people as Mr. Wilson? What ails the Autumn People?

The Autumn People are now the gatekeepers of SF/F and of our larger media culture. They mock and belittle all nobility, all tradition, all religion. They are intellectual parasites who have nothing to offer but nihilism and momentary animal pleasure. They disingenuously appeal to justice, a concept in which they do not actually believe, in order to attack the very foundations of civilization. They preach uncertainty with all the rock-solid belief of a divinely-appointed prophet and place their faith in a method documented to be reliably false.

Mr. Wright asks what ails the Autumn People. There are others, even more generous of spirit, who wish to cure them. As for me and my House, we think only to vanquish their soulless Insect Army and send them scuttling back under the rocks from which they crept. For if the literary world is abandoned to them, there will never be another Middle Earth, there will never be another Narnia, there will be nothing but the black ravenous goo of the Silent Oecumene.

The Autumn People admire autumnal books. The Autumn Man is a man who has collapsed into temptation. The disease has eaten into his bones so that he can no longer stand. What he wants to hear is stories that mock the standing people, that trip them up, that bring things down to his level.  Above all, the Autumn People like sly, sarcastic books, books that mock and shock, books that sneer. Sneering is the only emotion they know, aside from dull resentment and petulant hatred. The Autumn Man therefore wants to hear a story that says he is in the right when he knows he is deeply wrong. 

It sounds familiar, does it not? Sneering, snark, science fetishization, and sex in its most degraded form is the totality of today’s Pink SF/F. And notice in particular how Wright astutely draws the connection between the behavior of the reviewer and his current heirs: “the accuser does not address the evidence, which is
public, but attacks the subconscious motive, which is not only private,
it is unknown even to the person himself.”

This passive-aggression, this attempt to safely snipe from cover while avoiding direct confrontation that will permit others to adjudicate the objective facts of the matter, is the hallmark of the Autumn People, the rabbits, the insects, the Nothing Mentality. Beware of them. Stand against them. And always – always – shine the light of truth upon them. It is the one thing they truly fear.

A tale of corporate torture

Any society that believes it to be vitally important to get more employees like this in the tech industry would appear to be one that is unlikely to maintain its technological advantage over the rest of the world:

In other words, her colleagues didn’t think well of her work, she was having an inappropriate and unprofessional relationship with at least one male colleague,  her presence caused the performance of another male colleague to go downhill, (possibly through no fault of her own), she pissed off the founder’s wife, spent considerable time on a project of no possible use to the company’s bottom line, spend much of her time at the office in the bathroom crying, the founder has now been “put on leave”, as has one of the engineers, and the company has inadvertently become the focus of considerable media attention.

How good does a female coder have to be to make her employment worthwhile if all that is the potential cost?

Read about the grand saga of the persecution of Miss Horvath at Alpha Game. It’s like something out of the Black Legend of the Spanish Inquisition.

Holding their breath and turning blue

It should be obvious that women cannot and will never be as effective as men if they are going to come right out and openly declare that they will not do their jobs because they find doing so to be offensive:

Rebecca Davies, who writes the children’s books blog at Independent.co.uk, tells me that she is equally sick of receiving “books which have been commissioned solely for the purpose of ‘getting boys reading’ [and which have] all-male characters and thin, action-based plots.” What we are doing by pigeon-holing children is badly letting them down. And books, above all things, should be available to any child who is interested in them.

Happily, as the literary editor of The Independent on Sunday, there is something that I can do about this. So I promise now that the newspaper and this website will not be reviewing any book which is explicitly aimed at just girls, or just boys. Nor will The Independent’s books section. And nor will the children’s books blog at Independent.co.uk. Any Girls’ Book of Boring Princesses that crosses my desk will go straight into the recycling pile along with every Great Big Book of Snot for Boys. If you are a publisher with enough faith in your new book that you think it will appeal to all children, we’ll be very happy to hear from you. But the next Harry Potter or Katniss Everdeen will not come in glittery pink covers. So we’d thank you not to send us such books at all.

Duly noted. I wonder how long this policy will last before it quietly goes by the wayside? Probably right around the time that a massively successful book explicitly aimed at just girls, or just boys, is published. If I were managing The Independent, I would immediately fire both women for their open refusal to simply do their jobs and review the books that are submitted for review.

This is a particularly egregious case of the gatekeepers attempting to decide what is permissible to read and what is not. The ironic thing is that they probably think the Spanish Inquisition’s list of proscribed books is one of the great crimes of human history. Would you trust these people’s opinions on any book now?

The ridiculous thing is that there is nothing to prevent a boy from reading a pink sparkly book, or to prevent a girl from reading a book with a Frazetta-style painting of a young man holding a severed orc’s head on the cover.

Of course, they’re already walking back their idiotic public posturing: We’re not planning to judge books by their cover….

Sure you’re not. And if sex-specific books demean all children, don’t sex-specific changing rooms and bathrooms demean all adults?

THE STARS CAME BACK

Castalia House has been receiving an increasing number of submissions, so I didn’t think anything of it when Rolf Nelson sent me a copy of The Stars Came Back. He said that it had been self-published for several months, which wasn’t necessarily a problem, (although we tend to favor unpublished submissions), and provided a link to the Amazon site as well. I had a quick look at the book, as is my custom before deciding to which of our ten crack Readers I would send it; the First Line of Defense is fairly ruthless in their rejections of anything they believe does not fit the model. And my first thought was “what the hell is this?” This was apparently not the first time such a thought had been inspired by the book, for as it turned out, as all three Readers immediately came back to me expressing precisely the same sentiment before they’d really even started it.

One Reader threw up his hands and said he simply couldn’t deal with the script-style format. Another one read it and said that he loved the story and would recommend acceptance if it was rewritten in conventional format. The third, and I quote, said: “this story is like gold” and urged immediate acceptance as is.

Well, that’s tremendously helpful…. But it did indicate a closer look into the matter. So I went to Amazon to read through the… 55+ customer reviews? Tom Kratman’s Big Boys Don’t Cry has been selling very well and has only 31 reviews to date. Then I had the chance to read a bit more myself and the reason for the number of reviews began to make sense. Let’s just say that if Firefly still holds a warm place in your heart, you will very much enjoy Mr. Nelson’s work. Not that it is an imitation; it is not. But it hits a similar set of chords, only in a more intelligent manner.

Then it struck me: if so many people were enthusiastically reading this book despite its unusual format and a cover that tended to suggest “this book is self-published”, then we were obviously looking at a considerable story-telling talent. And at the end of the day, that is exactly what Castalia House wants in its novelists. So, I promptly called Mr. Nelson and offered him a contract, which he signed after consultation with his lawyer. As I mentioned in a previous post on Brad Torgersen’s paean to Baen, we look at Baen as an admirable model to follow and we are as interested in helping talented new authors like Mr. Nelson develop their talent as we are in publishing established authors like Mr. John C. Wright, who are already at the top of both their game and the SF genre.

Consider some of the reviews from those who have read The Stars Came Back:

  • Wow. It took about 5 pages to get used to the screenplay format. After
    that, the format really added to the mental images that the dialogue
    creates. The story is fast paced and physics used are consistent. By
    that I mean the physical laws the author imagines work the same way each
    time. That consistency definitely helps the storyline. Several of the
    other raters compare this to works by John Ringo, I would agree and
    probably add Larry Correia as well. Not only is The Stars Came Back
    enjoyable it is also thought provoking. 
  •  Without a doubt, the best read I have had in many a month – and I
    average four novels per week. I was deeply engrossed in this novel and
    was presently surprised by the content, the plot, and the editing. 
  •  The plot in this tale doesn’t just thicken, it twists through about
    seven different dimensions, but maintains a most compelling theme. In
    this imagined world, the attributes of humans that lead to the most
    success are exactly as one would hope would work in OUR world – honesty,
    independence, perseverance, reliability, morality. The protagonist
    isn’t a perfect person, and knows it, but strives to do right by those
    whose lives he touches, and to avoid having wrong done to him.
  •  I can’t say enough good things about this story. Excellent plot;
    interesting, plausible characters; great pacing and storyline
    development; and just fistfuls of nods to Star Wars, Star Trek,
    Firefly/Serenity, the Bolo series (and Hammer’s Slammers), Lovecraft
    mythos (kind of tangentially, but still there), The Forever War, and
    probably several other fictional sci-fi universes as well.
  •  The Stars Came Back is a good foray into the literary world. Lots of
    shades of Heinlein and Weber, and a dose of Firefly mixed with
    McCaffrey’s The Ship That Sang.

So, I would encourage you to pick up a copy and see for yourself why we were so enthusiastic about Mr. Nelson’s first book. It is only $3.99 for 589 pages of pure science fiction entertainment.

The curse of the Youtube song

Actually, according to Zerohedge, the number of banker suicides is now 11:

The financial world has been rattled by a rash of apparent suicides, with some of the best and brightest among the finance workers who have taken their lives since the start of the year. A majority of the eight suicides of 2014 have been very public demonstrations, which has suicide-prevention experts puzzled.

“Jumping is much less common as a method for suicide in general, so I am struck by the number that have occurred in recent months in this industry,” said Dr. Christine Moutier, chief medical officer of the American Foundation for Suicide Prevention.

Perhaps it is because they are not suicides. I was somewhat dubious about the sudden rash of banker deaths, particularly after hearing about the guy who tortured himself with a nail gun. And the 11 deaths doesn’t include Jeffrey Corzine. Bankers have stolen homes and deposits from hundreds of thousands of people and ruined thousands of lives. It seems highly improbable that all of those people are now in a perfect state of Zen equilibrium and have no interest in seeking revenge.

Same as he ever was

You may recall that I previously demonstrated that John Scalzi’s claim to have 50,000 daily readers was a 12x exaggeration of his actual daily blog readership in 2013, which was 20,600 daily pageviews and 4,085 daily readers. As it turns out, this significant exaggeration of his site traffic and his influence was nothing new.  Consider this post from July 2009, in which he arrogantly claimed that he was more influential than the three major SF publications, Analog, Asimov’s, and Fantasy & Science Fiction, combined.

Brad Torgersen: “Unless the work you’re writing is not the sort that fits any of the
Big Three, why would you allow the format and method of submission to
stop you from sending to the three markets still considered to be the
Top Dogs in short F and SF fiction?”

John Scalzi: “Because it would cost me money to buy a printer, paper and ink, the
rate they pay is shite, and I can reach more people on my Web site in a
day than any two of them can in a month.”

 In July 2009, Whatever had 300,487 monthly pageviews, or 9,613 per day. That meant he had about 1,940 daily readers. In 2009, Analog’s monthly circulation was 25,418 and Asimov’s was 16,696. It will probably not escape the mathematically literate observer’s attention that 42,114 is more than 1,940. So, five years ago, he was exaggerating his site traffic by a factor of 21.7. His absurd 2013 claims are actually less exaggerated than his previous claims.

And, of course, he was aggressively policing his potential critics even then.

Just as a general note, as I’ve told Brad to move on from this thread, directing comments to him specifically will be frustrating for him, and will not get actual responses.

Those who have recently lost respect for John Scalzi were simply not paying sufficient attention to his antics before. He’s precisely the same narcissistic con man that he’s always been, the only difference is that now he is less able to successfully control the narrative and spin a self-serving web of deceit because an increasing number of people in the SF/F world are aware of the facts and are able to see through his incessantly fraudulent activity.

As Bernie Madoff learned, eventually people figure out the con. Mr. Scalzi may not yet have come to terms with the fact that the jig is up yet, but sooner or later, he will have to do so.

“WHEN YOU SEE FRAUD, SHOUT FRAUD.”
– Nassem Talib