Part 3: The Age of Turbulence: Plea for a New Economic Order.

Rightardia comment: Mr. Hamou seems to be advocating a privacy solution for countering the expansion of the Federal Reserve. We have sent an email to Mr. Hamou asking him to clarify his bank account proposal. None of our writers pretend to be economists so we invite comments on this article.

Mr Hamou's response: The System is a New Economic Order as opposed to a possible NWO (New World Order) with DNA as opposed to our random number.

We can monitor the transaction not make a discrimination about who you are: we differentiate 'the is' with 'the have.'

If you sell weapons we will know that this account sold weapons and we can disconnect it on the base of what illegal transaction was made.

As far as evading taxes it will be impossible (I will deal with that later).

There is a very wide difference between a DNA and a Serial number of a banknote. The difference is your freedom.

As far as government you must understand that they simply won't have an economy. They can accept ours and go by our rules (respect of privacy and individual freedom) or chose to keep their people in the Liquidity Trap and soon become irrelevant: who wants a government that can't feed its people?

by Shalom P. Hamou

Its purpose is to profit from both the inflation of the mother of all asset price bubbles brought by irrational exuberance and the crash and the deep depression that will necessarily ensue.

"That is mission impossible. Indeed, the international financial community has made numerous efforts in recent years to establish such oversight, but none prevented or ameliorated the crisis that began last summer.

Much as we might wish otherwise, policy makers cannot reliably anticipate financial or economic shocks or the consequences of economic imbalances.

Financial crises are characterised by discontinuous breaks in market pricing the timing of which by definition must be unanticipated - if people see them coming, then the markets arbitrage them away.

The clear evidence of underpricing of risk did not prod private sector risk management to tighten the reins. In retrospect, it appears that the most market-savvy managers, although conscious that they were taking extraordinary risks, succumbed to the concern that unless they continued to "get up and dance."

As ex-Citigroup CEO, Chuck Prince, memorably put it, they would irretrievably lose market share. Instead, they gambled that they could keep adding to their risky positions and still sell them out before the deluge. Most were wrong.

What do we do After the crash

It is a conspiracy to create a New Economic Order among us before they can implement their New World Order.

"People of the same trade seldom meet together, even for merriment and diversion,but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice.

But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

A regulation which obliges all those of the same trade in a particular town to enter their names and places of abode in a public register, facilitates such assemblies. It connects individuals who might never otherwise be known to one another, and gives every man of the trade a direction where to find every other man of it.

A regulation which enables those of the same trade to tax themselves in order to provide for their poor, their sick, their widows and orphans, by giving them a common interest to manage, renders such assemblies necessary."

I will jump start it after The Crash if the Number of Registered €5 is sufficient.Because the serial number of a €5 bank note does not tell anything about his owner the New Economic Order can not discriminates or limit individual freedom.

It is hence in our best common interest that we propagate these ideas as much as we can.Talk to your family, to your friends, to your business associates.

To that order I am building redundant networks. Grow the Networks!"Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation, whether moral or hedonistic or economic.

Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits—of a spontaneous urge to action rather than inaction,and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.

Enterprise only pretends to itself to be mainly actuated by the statements in its own prospectus, however candid and sincere. Only a little more than an expedition to the South Pole, is it based on an exact calculation of benefits to come.

Thus if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die;—though fears of loss may have a basis no more reasonable than hopes of profit had before."

© 1994-2009 Shalom P. Hamou & My Yield Curve.

source: http://www.mybloglog.com/buzz/members/yield-curve/

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Part 2: The Age of Turbulence: Plea for a New Economic Order

Rightardia comment: The reference to the serial number of €5 bank note appears to have the objective of making bank accounts anonymous and invisible to the government. This, of course, could lead to criminal activity such as tax evasion. In fact, the UBS banks used encryption and other security technologies to hide US$20 billion in Switzerland. 

Mr. Hamou seems to be advocating a privacy solution for countering the expansion of the Federal Reserve. We have sent an email to Mr. Hamou asking him to clarify his bank account proposal, but have not yet received a reply. None of our writers pretend to be economists so we invite comments on this article.

 
Mr Hamou's response: The System is a New Economic Order as opposed to a possible NWO (New World Order.)(with DNA as opposed to our random number.)

We can monitor the transaction not make a discrimination about who you are: we differentiate 'the is' with 'the have.'

If you sell weapons we will know that this account sold weapons and we can disconnect it on the base of what illegal transaction was made.

As far as evading taxes it will be impossible (I will deal with that later).

There is a very wide difference between a DNA and a Serial number of a banknote. The difference is your freedom.

As far as government you must understand that they simply won't have an economy. They can accept ours and go by our rules (respect of privacy and individual freedom) or chose to keep their people in the Liquidity Trap and soon become irrelevant: who wants a government that can't feed its people?

by Shalom P. Hamou

Under Bernanke rule the Federal Reserve System has been transformed in an organization that openly transcends international boundaries, executive powers, legislative powers and judiciary powers:

"I will argue here that, to the contrary, there is much that the Bank of Japan (BOJ), in cooperation with other government agencies, could do to help promote economic recovery in Japan.

Most of my arguments will not be new to the policy board and staff of the BOJ,

However, their responses, when not confused or inconsistent, have generally relied on various technical or legal objections—- objections which, I will argue, could be overcome if the will to do so existed."

The Federal Reserve has become a criminal organization with unprecedented powers. But that is the least of the dangers we are facing.

The Real Danger we Are Facing Now:

The extraordinary power the central bank is putting democracy in danger, and to my opinion that danger is much higher than what people can even envision. These dangers, history tells us, can even be a grave menace to the world security.

Ron Paul by asking to audit the Federal Reserve is making an important point. However, by limiting the scope of his demands to the issue of vested interests, he misses even more important issues that relate to freedom, democracy and even security.

If there is a conspiracy, and I am not saying there is one, I am sure that the bankers are not part of it. They are only, by maximizing their profit, the unwilling tools of people who have a much higher aim than simply accumulate money. These people, if they exist, are aiming at absolute power, which, I claim, is now within their reach.

If we do nothing now before the Crash, a new global economic system they could be imposed on us which we would accept because of our anxiety about our economic future. It is even possible that Bernanke is just a piece in that gigantic chess game and that after The Crash he will have outlived his usefulness.

If another depression or if a Great Recession occurs, no one would ever be able to recover their lost freedoms be it either by a democratic process or through revolutionary means.

If there is a conspiracy, and I am not saying there is, it can be traced to, at least the Bretton Woods agreement [July 1944 - December 1945] where international economists decided on the gold standard at a time after the Great Depression. They all knew that this was a monetary relic that was a factor in accelerating economic depressions.

"There is no escape from a 'managed' currency, whether we wish it or not. In truth, the gold standard is has been a monetary relic for a long time."

Here again Ron Paul by asking for a return to the gold standard instead of the managed credit free currency that I advocate. Although Congressman Paul has good intentions, he has made a proposition that could have unintended disastrous consequences.

I have imagined that a credit free economy could be implemented similar to the one I advocate with a simple difference: instead of indexing the accounts on a random number (The serial number of a €5 banknote) as I suggest, which preserves to the highest possible extent your privacy and your individual freedom, governments could simply index it on your DNA. Your DNA would be your account "number" but that has some serious privacy issues. It would give the government a grip on elements of your private life.

Given a sufficiently inverted yield curve, Bernanke could at any moment start The Crash: by jacking up short-term interest rates in order to, apparently, curb the inflation that arises from the inverted yield curve. He would, at will, invert the yield curve to such a degree that it could immediately trigger The Crash.

The next scheduled announcement of the Federal Open Market Committee
(FOMC) is August 12, 2009. For now the yield curve, according to my model, is not sufficiently inverted. But that could change after the FOMC meeting.

Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency.

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose."

The central banks existence can not be justified: nor on a mathematical ground, neither on constitutional grounds, and more importantly not on a moral ground.

Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back."

But apart from this contemporary mood, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood.

On all of these grounds it is important and urgent to abolish the central banks.

But the essential issue here is one of insurance, with a relatively modest premium,
against a potentially catastrophic, very low probability event.

With that, Peter, would you outline your proposals to us?" Chairman Alan Greenspan during the 1999 Meeting of the Federal Open Market Committee.?

"First, and with all due respect, Sir Chairman, my name is not Peter, but Shalom, Shalom Patrick Hamou."

That said, the only way you can still loosen the grip of the central banks would be, to my opinion, that a enough number of people use the serial number of their €5 bank note for their bank accounts before The Crash."

Because the serial number of a €5 bank note does not tell anything about his owner, the New Economic Order can not discriminate or limit individual freedom.

That would allow us to act faster than the New World Order and would give rise to another economic order, which, I have proved, would give us, prosperity, stability, equity and would respect our privacy and individual freedom."

 
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Part 1: The Age of Turbulence: Plea for a New Economic Order

Rightardia comment: This article was submitted by one of our readers, Shalom P. Hamou. He works in investment banking as a chief economist in Tel Aviv : Ramat Aviv : Israel. He is the chief economist of the Yield Curve. Since spring of 1994 he has been working on economic depressions.

Mr. Hamou has an MBA from Boston University, an Engineering Diploma from Ecole Centrale de Lyon (Ecully, France, in French) a degree of Computer Engineer from Sivan Marchevim (Tel Aviv, Israel, in Hebrew).


He has worked as a bond trader in Paris, France and as a NIP (Local) on the Paris MATIF.

This is part 1 of three part tract: "The Age of Turbulence: Plea for a New Economic Order." It explains the nature and causes of economic depressions and proposes a plausible alternative solution: The Adjusted Credit Free, Free Market Economy.

In fluid dynamics, turbulence or turbulent flow is a fluid regime characterized by chaotic, stochastic property changes. This includes low momentum diffusion, high momentum convection, and rapid variation of pressure and velocity in space and time.

Abstract:

I am going to show here that central banks have excessive powers which are coherent neither with democratic principles nor with morality. Their existence can not be justified from a mathematical point of view.

Worse, in light of the exercise of their extraordinary power by Ben Bernanke, Federal reserve chairman. I argue that the Federal reserve can pose a real threat to democracy, peace, privacy and individual freedom.

Money Supply:

In a capitalist system money is distributed when the central bank lend it to banks, which, in turn, lend it to their best customers, the wealthiest among them.

Why the central banks should loan our money to the banks is a mystery for me. The fact that it does proves that the central bank is not a public system but at the service of private vested interests.

Another mystery is the mandate of central banks, which is both to keep a low level of inflation and optimize economic output.

Any mathematician knows that it is impossible to optimize two parameters, you can optimize one under constraint of another but you can't optimize two variables at the same time. By giving the central banks an impossible mission the executive and legislative body in effect gives it the freedom of doing whatever it chooses.

Inflation is a illusory concept and that keeping it at a low level was only a way to preserve the scarcity of money and a high level of interest rates. However the mandate to keep a low level of inflation was the argument the bankers chose to justify the independence of the central bank.

Its choice to give predominance to inflation over growth, produced a much lower level of economic output than that would otherwise be possible.

The central banker although designed by the executive and/or legislative body gets a mandate. Over time the Federal Reserve has increased its independence.

In effect make the central bank a state within the state at the service of vested interest. They have succeeded in reproducing a feudal system in which the king is the chairman of the central bank, the systemic bankers are the marquis, the big corporations are the earls. Each decides arbitrarily and according to the hierarchy, who will get the money and how much money they will get. Until the Bernanke Rule that decision was made purely by setting discriminatory interest rates.

A kingdom can be a could thing with a enlightened king like Alan Greenspan, who restrained voluntarily his powers, used transparent rules for the exercise of his power, applied a policy, given the scope of his mandate, which was in the best interest of the people and succeeded in avoiding any major breakdown of the system.

Under Bernanke Rule the things have dramatically changed.

Bernanke Rule:

Bernanke has used economic breakdown as a weapon of global, systemic terrorism.

Terrorism is the systematic use of terror especially as a means of coercion. At present, there is no internationally agreed definition of terrorism. Common definitions of terrorism refer only to those acts which are intended to create fear (terror), are perpetrated for an ideological goal (as opposed to a lone attack), and deliberately target or disregard the safety of non-combatants.

Bernanke has overtaken both the American executive and the legislative bodies: by making them vote and sign the TARP, he made them the unwillingly accomplices of his crimes.

He has grown the amount of money he has distributed to high never heard about before.

Using extraordinary powers that were granted to the Federal Reserve after the Great Depression and never used since, he has included in the balance sheet of the Federal Reserve System an arbitrary amount of arbitrarily chosen assets purchased at an arbitrarily set price.

He has refused to let the people audit the Federal Reserve that Congressman Ron Paul advocates by suggesting an audit would cause the eventual breakdown of the value of the US Dollar because auditors threaten his independent power.

He is succeeding in getting the central bank a power that far exceeds its traditional mandate by creating the function of a 'systemic risk regulator.'

How and why he got extraordinary power from both the Bush and Obama administration is not something many economists understand.

The reach of Bernanke's power is not limited to the United States of America. By granting swap options to foreign central banks, options the Federal Reserve had to exercise in order to help them circumvent the collapse of their domestic banks, he has been able to increase their "systemic" dependency on the Federal Reserve System and influence their monetary policy. For example the European Central Bank (ECB), had to implement the unorthodox Bernanke Quantitative Easing policy which purchased mortgage-backed securities

Under Bernanke rule the Federal Reserve System has been transformed in an organization that openly transcends international boundaries, executive powers, legislative powers and judiciary powers:

"I will argue here that, to the contrary, there is much that the Bank of Japan, in cooperation with other government agencies, could do to help promote economic recovery in Japan.

Most of my arguments will not be new to the policy board and staff of the BOJ, which of course has discussed these questions extensively.

However, their responses, when not confused or inconsistent, have generally relied on various technical or legal objections—- objections which, I will argue, could be overcome if the will to do so existed."

source: http://blog.yield-curve.net/2009/08/tract.html

http://www.prlog.org/10165667-chairman-ben-bernanke-quantitative-easing-cant-work.html

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