The Burning Blade
Fireaxe Newsletter - edition 12.1
December 6, 2008
"I made a mistake in presuming that the self-interests of
organizations, specifically banks and others, were such
as that they were best capable of protecting their own
shareholders and their equity in the firms."
"So the problem here is something which looked to be a
very solid edifice, and, indeed, a critical pillar to market
competition and free markets, did break down. And I think
that, as I said, shocked me. I still do not fully understand
why it happened and, obviously, to the extent that I figure
out where it happened and why, I will change my views.
If the facts change, I will change."
- Alan Greenspan, testifying before
congress, taking that first critical step
towards the realization that his ideology
was based on bullshit.
Fireaxe Newsletter - edition 12.1
December 6, 2008
"I made a mistake in presuming that the self-interests of
December 6, 2008
"I made a mistake in presuming that the self-interests of
Trillions and trillions more. Nearly nine trillion dollars have gone into propping up a hopelessly dysfunctional system, and yet the financial jockeys of the world continue to flog their economic horses in the belief that the exhausted stallions will miraculously spring back to life and gallop to victory. Yes, a little more stimulation is all that we need. Never mind the fact that we've been stimulating our economies almost non-stop for the last thirty years or so and that the imbalances from all those short term solutions have built up into a massive long term problem, and still the ones holding the reigns persist. It reminds me of those videos you can find on the internet that show a group of police officers using their Tasers to subdue some poor victim. I suppose that most of the time those things work as expected and the Tasered suspects give up, but sometimes the victim does not go quietly and in fact becomes more and more agitated with each successive jolt. And so it goes, on and on, another shock, another scream, with the officers believing that eventually their actions are going to have the desired effect. After all, it works most of the time, so why not try it again? But instead it just becomes torture, torture plain and simple, and the true victim of the whole ordeal is the people's faith in the system.
The dollar is no longer based on a gold standard, it used to be, but in 1971 President Nixon removed the link so that he could continue to run large deficits to pay for the Vietnam War without having to give up the rest of the country's gold reserves. Within five years all the other major currencies followed suit, enabling the governments of the world, along with their central banks, to manufacture as much money as they wanted, just like Zimbabwe. But unlike the currency of that troubled African country, the dollar hasn't been a victim of hyperinflation, at least not yet, but it does take twenty times the number of dollars to buy the same amount of gold today than it did in 1971 and so the dollar is not a reliable long term store of value. The reason for this is that whenever more dollars are printed, the value of every dollar in circulation goes down, acting like a flat tax on every dollar holder everywhere. When the government creates more dollars, everybody pays for it. Over the decades, those in charge of such "fiat" currencies, money backed by nothing, have done a whole lot of printing, both of paper money and the purely electronic versions, and today they are doing a whole lot more of it. Trillions worth.
But the fact that they can create as much money as they want gives the people in charge of the global financial system an infinite amount of liquidity that they can throw at any problem. They can print up trillions, tens of trillions, even quadrillions of dollars, euros, or yen if they need them. So it seems as if they should be able to fix any financial problem that comes along. So what if Fannie Mae and Freddie Mac are a six trillion dollar liability, the U.S. Treasury can print up that much money easily. So what if the credit default swaps market is a fifty trillion dollar accident waiting to happen, the Fed can match that amount and more if it has to. Without a gold standard to limit the amount of money which can be created it appears that we can avoid the missteps that triggered the vicious deflation of the Great Depression. Just run the presses and we can conjure up enough money to recapitalize the banks, bail out any and all essential institutions, and quickly go back to business as usual. After all, that's how it's worked for the last thirty years so why should this time be any different?
Because the problems in our global economy are about more than just money. As I wrote about in the Burning Blade 11.5, in order to have a thriving economy it is critical that the distribution of wealth is not skewed too far towards either equality or inequality. Going too far in either direction makes it progressively more difficult for anyone to get richer which demotivates the population and inhibits growth. The mechanism of credit is one way to solve this problem since it redistributes wealth on a temporary basis, allowing people to access the capital that they need to improve themselves in some way. This in turn results in an increase to the total productivity of the economy and is the best use of credit. People can borrow to start or improve their businesses, make sure their children got a good education, and so forth, rather than buying luxury items like plasma TVs and SUVs. And when debt is turned into productivity gains, everybody wins. The number of defaults are low, the people loaning the money collect interest, the people who improved themselves jump up to a higher standard of living, and the rest of the people can enjoy the fruits of a larger, more productive economy. Thus, credit is good, but only up to a point.
The interest on loans, along with the return on the investment of capital, which are two sides of the same coin, should not exceed the total productivity gains in the economy, otherwise individuals and companies will, on the whole, take in less profit than they are paying out in debt service. When this happens the redistribution of wealth only goes in one direction, towards those who are loaning the money and away from everyone else. Now, it is acceptable for this to happen for short periods of time, such as after a natural disaster or something where a large infusion of capital is required to create or rebuild the base for a productive economic system. The reason for this is that when the economy is again operating at full speed it can pay back those loans and still be profitable. But if debt service continues to siphon all of the growth in the economy and then some, the distribution of wealth will grow more an more unequal and the economy will invariably end up descending into a debt spiral.
In a debt spiral, the lenders get richer and the borrowers get poorer and the longer it goes on the worse things get. But the economy can still appear to be strong if the lenders keep lending more and more money, allowing bankrupt individuals and unprofitable businesses to keep spending as if they were still solvent. Normally, regulations restrict the amount of lending, forcing an ugly end to any debt spiral which usually come after a bubble has burst, but over the decades the lending market has been deregulated, allowing bursting bubbles to be papered over with new bubbles and allowing debt to flourish almost without limit. When debt becomes too prevalent borrowers end up needing to borrowing money just to pay the debt service on their currently outstanding loans, meaning that they will be in an even worse situation in the future. And when the whole economy becomes dependent on ever expanding credit, it's an accident waiting to happen. But as long as there are loans to be had, everything will appear to be just fine, and in fact, it might appear that the economy is thriving.
A debt spiral comes to an end in one of two ways, either when the lender stops loaning money to the borrower, or the borrower cannot borrow enough to pay the interest on their debts and goes bankrupt. When either of these situations happens to an individual the situation is manageable. When they happen on a larger scale, such as with an entire nation, there is a risk of a total collapse of the entire system. But it doesn't happen overnight. A collapse begins with the most vulnerable part of the economy failing. In our case it was sub-prime lending. At first the amounts seem small and so a bailout is usually the decided course of action, but all that does is shift the burden to another part of the system. In the case of government bailouts, like the kind that are going on now, the debts are transferred from the banks to the government, which in effect spreads trillions of dollars of debt over millions of taxpayers rather than being concentrated in a few failed institutions. The immediate problem is solved, but the total amount of debt remains the same, and the system continues to be caught in a debt spiral. As time moves forward more parts of the economy fail and each time the path of least resistance is to bail out the latest victim in the hopes that the bailout will be the last and that everything will go back to normal again, but since the overall debt burden is not reduced and borrowing is still necessary to keep the dysfunctional economy going there can be no move back towards normalcy. If allowed to continue on this course, the amounts of the bailouts grows progressively larger and at some point ends up going asymptotic, meaning that an infinite amount of money will be required to bail out the economy, at which point the financial system implodes. Money becomes worthless.
At that point a new currency must be introduced, but as simple as that sounds it is fraught with difficulty. The first problem is how to distribute the new currency among the people. Do you trade old dollars one to one for new dollars? Do you erase people's debts? How do you prevent corruption from distributing the wealth in an unfair way? And what is fair anyway? These are not easy questions, but certainly the reduction of debts to levels which do not bleed dry the productivity gains of an economy is a necessary criteria to create a stable and sustainable system. But debt erasure alone does not solve the underlying problem, which is that the economy has maladapted in such a way that it requires a continuous and growing supply of credit. Without larger and larger loans the economy will collapse, and so getting rid of the old loans simply damages the financial sector and makes it less able, and willing, to supply the loans that will be needed in the future. Furthermore, a maladapted economy can't be changed overnight. In any economy, a large amount of capital has been invested to build up the industries which are currently profitable and industries which were no longer profitable were allowed to fail and were sold off. And over that period millions of people have switched jobs, been retrained, bought and sold houses, started families, and made a number of significant changes to adjust to life in the debt-based dysfunctional economy. A similar amount of change is needed to bring the economy back to being more stable, and that requires a similar amount of time and capital. The trouble is that those who have the money, and due to a skewed distribution of wealth they are few in number, will expect a return on their investment when rebuilding the economy, and that only fuels the debt spiral.
Thus the problem is three-fold. One is the buildup of a large inequality in the distribution of wealth. Two is the accumulation of so much debt that it stifles economic growth. And three is the distortion of the economy into a system that is not viable without a growing supply of credit. Any solution to the current crisis needs to address these three problems in order to move us towards a sustainable economy. The best solution is one which involves taking advantage of market forces and allows equilibrium to be reached in a natural way rather than being forced externally, however, in a dysfunctional economic system, market forces do not always pull the economy towards a sustainable equilibrium and thus some amount of intervention is necessary to push the economy into a state where market forces can take over and correct for any and all imbalances.
So, given this analysis, one can evaluate the chances of success of the current economic stimulus plans. First of all, by recapitalizing the banks, the current system is simply maintained, which allows more debt to build up, further distorts the economy towards debt dependency, and makes the distribution of wealth more unequal. Likewise, by transferring debts from the banks to the government there is no reduction in the debt load, it only allows banks to extend more credit which exacerbates the existing problems while putting every taxpayer on the hook rather than just the lenders and borrowers. These solutions are only short term and only make the problem much bigger in the future. Bailouts only work if the problem is relatively isolated and, as it is becoming more and more obvious, the entire global economy has been distorted by excessive credit and thus the solution is not quick and easy. Obama, unfortunately, appears to be offering only more of the same: borrowing, or printing money, in large quantities to bail out the banks, the state governments, and to kick off massive public works projects like FDR did in the thirties. Having the government borrow makes the problem worse although keeping people employed and creating jobs does prevent a total collapse of the economy. But as FDR discovered, public works projects do not necessarily get the economy going again since they require heavy- handed government intervention to make them work. This prevents the free market from stabilizing the economy and can result in a distorted system which is dependent on government intervention. I personally think public works projects are a good idea since the U.S. has been ignoring its infrastructure for decades and it needs to be rebuilt, but those projects will pull resources away from other business ventures and thus won't stimulate the economy back into being healthy in and of themselves.
Obama's plan to shift the tax burden, although only slightly, will have some effect in redistributing the wealth, but it will be minor and will probably not offset the shift towards greater inequality due to the mountain of outstanding debt. Sadly I see nothing in Obama's plan that would arrest the current slide, and as the pain grows worse our leaders will be left with a choice: to stop the printing presses and let deflation take its toll, or let them run full throttle and push us towards a hyperinflationary holocaust. As much as that sounds like an excluded middle fallacy, the middle ground in such a choice has never been reached when similar crises have beset economies. And when dealing with fiat currencies, the tendency is usually towards runaway inflation.
There is an advantage to inflation in that it reduces the amount of debt, provided that the inflation spreads evenly throughout the economy and reaches struggling borrowers. Debtors are rescued but savers and those on fixed incomes suffer greatly, so it is not an ideal solution. It has been tried, and I don't doubt that it will be tried again, even though the $150 billion dollar stimulus package which the U.S. government distributed to taxpayers with low and medium incomes this summer didn't do much to stimulate the economy. One problem was that the amounts were too small. To really help people out, and many people are very deep in debt, any effective stimulus would need to be on the order of a trillion dollars or more, and even then most of the money would end up going straight into the repayment of debts and thus exacerbate the unequal distribution of wealth. Inflation as a way to wipe out debts needs to be done in a big way to offset the toll that debt service is taking on people, but even then the economy is still maladapted and will require more borrowing. That, on top of inflation robbing people of their savings and impoverishing people on fixed incomes, will do more to damage to the economy than it helps. Also, although seeing banks and large corporations fail is emotionally satisfying to the masses, it does nothing to redistribute wealth. The wealth of the owners of those firms is safe from any bankruptcy court, and the owners themselves will soon find equally lucrative jobs elsewhere. Furthermore, wealth is about more than money, it is also about the ownership of commodities, controlling the means of production, and providing essential services that people need. Inflation does not affect the distribution of that kind of wealth and often makes those things even more valuable. The bottom line is that there are no easy solutions and anyone who tells you otherwise is blowing smoke.
As to what will happen, I believe that global hyperinflation is the path of least resistance and is therefore inevitable. Throughout history experiments in fiat currencies have always ended badly, usually in a hyperinflationary spiral which ends in the currency being worth less than the paper it is printed on. Yes, harsh deflation, which results when an economic system built on a gold standard collapses, can seriously damage an economy, but it is a more survivable event since the lower and middle classes can generally preserve at least some of their wealth through physically held cash and accounts in banks which don't fail. Hyperinflation wipes the slate clean for debtors and savers alike, which destabilizes the economy, the government, and even the very fabric of society. Faith in the system collapses utterly, and after hyperinflationary episodes in France in the 1790s and Germany in the 1920s, the result was a dictator rising to power and a world in flames. I don't want to see my country, or any country for that matter, follow down that road, but as we have seen over the last few months, every injection of liquidity into the system has fixed things for a short while, but not for long. The system has required larger doses of what was once a large amount of money and in the future it will require larger doses still. A billion dollars is still a lot of money, right? And as time moves forwards the numbers will get larger but the effect will always be the same: temporary relief with another crisis soon to follow. But the odd part about the current crisis is that even with all the liquidity that has been added to the financial system, very little of it has trickled down to the rest of the economy, with prices remaining relatively stable. This makes me wonder if something which could be dubbed "hyperstagflation" is our fate, where the cost of living doesn't change in the normal economy and millions of job losses results in a major downturn, but the financial sector overheats and then completely self- destructs. But I think that when the deleveraging of the markets finally runs its course, perhaps being marked by the bursting of the bond market bubble, that inflation will simply explode and we will be in for a rough ride. All that I can say is, buckle up and hold on tight. We aren't anywhere near the bottom yet.
It's been a rough year for Fireaxe, and although my economic situation is fine, my health has still not allowed me to go back to the studio and crank away at all the projects that I have lined up. Every now and then I have a day where I am bursting with energy, which gives me confidence that I will one day be back to full strength, but for now I must bide my time and lay the groundwork for the future. Cancer could not kill me. A hundred billion parasites cannot keep me down. And if I have anything to say about it Fireaxe will rise again and be better than ever. But not all victories are won with a single brilliant stroke. Sometimes it requires a slow, methodical, and unspectacular approach to defeat the enemy. Yeah, that kind of thing doesn't sell well, but that doesn't mean that it doesn't work.
A big ‘Hello’ to anyone receiving the Burning Blade for the first time. This is the Fireaxe newsletter.
Welcome to the Fireaxe economic bulletin! I apologize for writing about economics in so many newsletters, but given that Fireaxe is all about ideologies, and that economic theories are fine examples of modern ideologies, and that Capitalism is teetering on the brink of disaster, the current global situation gives me a chance to see how well the Fireaxe theory is holding up and whether or not it allows me to predict the course of major events in the future.
One thing that jumped out at me during the last two months was when Alan Greenspan went before congress and testified that he acknowledged the presence of a flaw in his financial ideology. Yes, seeing the words "flaw" and "ideology" in the same sentence put a big smile on my face. And while quotes from that testimony received a lot of press, the full exchange between Senator Waxman and Alan Greenspan regarding the flaw is particularly enlightening:
Chairman WAXMAN. Dr. Greenspan, I am going to interrupt you. The question I had for you is you had an ideology. You had a belief that free, competitive--and this is shown--your statement, "I do have an ideology. My judgment is that free, competitive markets are by far the unrivaled way to organize economies. We have tried regulation, none meaningfully worked." That was your quote. You have the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others. Now, our whole economy is paying its price. You feel that your ideology pushed you to make decisions that you wish you had not made?
Mr. GREENSPAN. Well, remember, though, whether or not ideology is, is a conceptual framework with the way people deal with reality. Everyone has one. You have to. To exist you need an ideology. The question is, whether it exists is accurate or not. What I am saying to you is, yes, I found a f1aw, I don't know how significant or permanent it is, but I have been very distressed by that fact. But if I may, may I just finish an answer to the question--
Chairman WAXMAN. You found a flaw?
Mr. GREENSPAN I found a flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.
Chairman WAXMAN. In other words, you found that your view of the world, your ideology, was not right, it was not working.
Mr. GREENSPAN. Precisely. That's precisely the reason I was shocked, because I had been going for forty years or more with very considerable evidence that it was working exceptionally well.
First of all, it isn't surprising to see Greenspan trying to defend his ideology by trying to claim that everyone has one. This is similar to the method that some religious believers use when arguing with atheists and its purpose is to obscure the nonsensical nature of using faith as a proxy for proof. The basic approach is to claim that everyone's inner model of how the world works is based upon uncertainties which are similar to beliefs, and thus everyone follows what could be described as their own personal religion or ideology. Often the believer will refer to such an inner model as a "worldview", a "perceptual system", or a "conceptual framework" as Greenspan did in an attempt to blur the distinction between faith and proof, in the process rendering the words religion and ideology meaningless. The argument that then follows is that since everyone has a conceptual framework and since we are all imperfect humans, that all frameworks are therefore imperfect. This opens the door to the idea that anything that anyone believes is doubtful at best and thus who can say what is right and what is wrong? This argument reduces both atheism and religion down to being mere opinions, and suggests that any claims by atheists that their arguments are based on proof or logic just shows that the atheist has "faith" in science. Of course, completely missing from this argument is the idea that some "beliefs" may be a lot more concrete than others and that non-falsifiable beliefs are pure intellectual folly, but believers usually counter that there are parts of the universe where logic and proof simply don't apply, after which the debate generally lapses into solipsistic nonsense.
But unlike religious debates, Greenspan cites the importance of evidence rather than claiming that there are some realms where the concept of proof is no better than faith. He claims that the evidence supported his ideology for forty years and thus he had no reason to believe that it was wrong despite the fact that others disagreed with him. This is where he uses the "ideology dodge" and it is unfortunate that Waxman and Greenspan didn't get into a deeper discussion of the matter concerning ideologies. The evidence that Greenspan cites only supported his beliefs because he was looking at it through his rather narrow ideological prism. In reality, economic indicators which troubled a number of economists from many other schools of thought were showing that great dangers were brewing. However, had Waxman pressed Greenspan on this point he probably would have answered his critics by saying that everyone looks at the evidence through their own ideological prism and that no one's conclusion about the dangers is better than anyone else's.
This is a good stonewalling technique and can be used by those in power to brush aside criticisms of their policies as well as suggestions that another course of action be taken. If all policies can be reduced to being of equal merit, and when arguing something as flexible as economics it is easy to point out the flaws in any proposed system or course of action whether or not those flaws exist, then the final decision can always be to go with the plan that the person in power has proposed or stick with the one which he is overseeing. This stonewalling technique will work regardless of what kind of results are being produced. If things are going well you have a strong case for continuing along the same path and you can say that there is no reason to do anything differently. And if things are going badly you can say that your approach is still the best and that doing anything else would make things even worse. It is only when the wheels come off completely that those in power are forced to admit their own mistakes and can be made to do something different.
Greenspan continues to resist accepting any blame for the current crisis, but his testimony was noteworthy in that he finally admitted that there was a flaw in his ideology. This is no small admission. A true believer never has to admit that his ideology is false since he can always distort any evidence to fit his conception of the world, such as what Alan had done in a number of interviews since the start of the current collapse. But Greenspan has lost his faith and the moment that he admitted it was a very deeply symbolic one indeed. It was the equivalent of the Pope announcing that he'd discovered a flaw in church doctrine and that until it was resolved there was no way of telling who was going to get into heaven and who was going to hell.
So what was his ideology? Greenspan followed a version of Ayn Rand's Objectivist philosophy which she outlined in a series of essays entitled "The Virtue of Selfishness". Rand's theories turned traditional morality on its head, championing the notion of selfishness and spurning the ideal of altruism. On the surface this idea is a non- starter. If everyone was selfish then our society would collapse into anarchy as everyone would try to satisfy their own needs at the expense of everyone else's. However, Rand adds an important caveat to her virtue of selfishness and declares that "self interest rightly understood" will eliminate the problems that would arise if everyone mindlessly pursued their own personal goals. The "rightly understood" part essentially means that a selfish but thinking person would avoid doing things for short term gain that would come at the expense of survival in the long term. For instance, rational people understand that using violence to get what you want will eventually lead to violent retribution and thus they will seek more peaceful ways of getting what they need. Also, Rand's philosophy does not exclude the idea of people working together if it results in everyone's mutual benefit. In fact, Rand declares that "the rational interests of man do not clash" and thus if everyone pursues what is best for them, using reason to guide them and not making decisions based on desires or whims, then they will come together and create a system that realizes their collective goals. Thus in the Objectivist's view there is no need for regulation, morality, altruism, and any external force, save for the defense of individual rights by the state if necessary, since the simple fact that people working together for the mutual benefit of all will produce greater gains than if everyone worked separately as individuals. Also, Objectivists hold that if everyone acted rationally and in their own self interest, that the most efficient cooperative system will arise naturally, and that trying to impose a system or structure only serves to make people less efficient.
From this perspective the push for deregulation and the brushing aside of moralistic accusations of greed and avarice which has occurred over the last few decades makes perfect sense. As Gordon Gecko said in the movie Wall Street, "Greed is good" and he delivered a very powerful and persuasive Objectivist argument in support of that notion. There are serious problems with the ideology however, not the least of which is that if people act in their own self interest, but do not act rationally, they will inevitably take a self-destructive course. In this way, Objectivism falls victim to the same problem that Rand finds in other moral systems whose apologists blame any problems in their systems on the moral failures of their believers. Instead of immorality causing the breakdown of the system as is the case with religion, irrationality is the cause of the breakdown in Objectivism. And it is irrationality that plagued the system that Greenspan created as Chairman of the Federal Reserve: the CEOs and the stockholders did not act rationally and as a result acted in ways that brought about their downfall as well as the collapse of the global financial system.
Another problem is that even under ideal circumstances, where everyone in an objectivist society is acting as rationally as possible, the complexity of modern society is so vast that it is impossible for anyone to tell whether or not what they are doing is something that is beneficial to their society in the medium to long term, and so people are left to guess. If someone cannot perceive the negative effects of their own actions they will be prone to make mistakes and they will likely err on the side of what benefits them the most in the short term. This is another problem that befell our modern financial system. New investment products such as derivatives, credit default swaps, and structured investment vehicles became so complicated that no one truly understood them, and since many of them were not being regulated the opacity of the market prevented anyone from figuring just how vulnerable anyone or anything was in the event of a market crash. And while a more altruistic person would likely stop short of indulging their selfish needs when faced with the opportunity to profit greatly with little apparent risk, Rand accurately points out that ideologies have consistently failed to enforce their moral codes on their followers and all eventually succumb to corruption.
But perhaps the most serious problem with Objectivist philosophy is the idea that rational thinkers will always favor long term interests over short term ones. A person who rightly understands that something like over-fishing can permanently destroy a source of food will choose to not have fish for every one of their meals, even though that person may like fish better than any other meat. This makes perfect sense. But as I have pointed out in The Burning Blade edition 10.5, due to intense competition, strategies for the long term survival of ideologies are not adequate for survival in the short term, and thus the most advantageous long term survival strategies will not survive to realize those long term benefits. It is this dilemma which turns corruption and "irrational" behavior into successful survival strategies. Consequently, this ensures that no system will be able to survive in the long term since all will sacrifice conservative strategies to focus on the here and now.
Take, for example, a marathon. The ideal strategy is to run at the fastest pace that you can maintain over the entire course of the race. While you can go faster if you sprint, you know that you can't sprint the entire distance and that if you sprint and then rest and then sprint again that you will end up wearing yourself out long before you reach the finish line. So everyone chooses a fast but sustainable pace and the winner is the one who is just a little bit faster than everyone else. For such a race a long term strategy is best.
Now, let's change the rules of the marathon a little bit and say that at every mile marker there is only enough water to supply half of the runners with what they need to keep going. The limited supply of water is analogous to the limited supply of resources available for the growth of an ideology. Now, instead of running the race at a steady, marathon pace and trying to finish the race in the fastest time possible, the pressure is on to make it across every mile marker in time to get your share of the water since you know that you can't finish without drinking. Naturally the pace will be much higher as the need for water overrides the need to finish in your best time and now sprinting becomes more important as the race for the line at each mile marker become more and more competitive. With these rules anyone who tries to go at a steady, sustainable pace would get eliminated early and the best marathon runners would find themselves forced to abandon the approach that they had trained for and resort to having to keep ahead of the herd no matter what the pace was. Everyone would be running faster than they would want to go, dipping into their reserves early, and doing whatever they had to in order to get to the precious and limited supply of water before it was gone. And what is more is that no one would finish the race in their best time. In fact, it would not be surprising to see the winner staggering across the line, barely able to continue, or to see competitors stopped along the course, desperately trying to recover from the extreme efforts that they needed to undertake in order to obtain what they needed to fuel their next effort. Sure, it would be an exciting race to watch, maybe, but not any fun to run.
I feel that this is a good analogy for ideological competition in the real world and explains why long term strategies are not viable under highly competitive conditions. But to make things even more accurate I would remove the finish line altogether, making the race go on forever, and add that whenever a runner drops out of the race, they are replaced by a fresh runner, which is analogous to ideological collapse and rebirth. Now when the race is run you will not only see people running in inefficient, short-sighted ways, but you will see frequent turnover in who is leading the race as the best of the fresher runners beat out the best of the ones who've been running for longer periods of time. What a rat race. In any event, even though the runners are running in a way that eventually dooms them, can it still be said that they are not behaving rationally?
Which brings us back to the flaw in Greenspan's ideology. Alan believed that the people who ran corporations would act with rational self interest, not taking on the kinds of risks they did indeed overindulge in, since he thought that they would avoid doing things that would lead to the collapse of the system. He figured that the Masters of the Universe would turn down larger short term profits, which might end up turning into losses, in exchange for smaller long term profits, thus ensuring the survivability of their firms as well as the system from which they benefited so greatly. But if you take the "under-funded marathon" analogy above and apply it to the business world you can see that in the highly competitive world of modern Capitalism, corporations are forced to sacrifice long term stability in exchange for survival in the short term. Without regulation to prevent the riskier and riskier financing practices that were building up over the years the top firms were left with the choice of either shunning risky investments and losing a lot of their market share, or embracing something that many of them knew was a bad idea. It didn't matter how rational they were, the game was geared to reward those who sacrificed the future for the present, and now that we've arrived in the future, we are stuck with the fallout from decades of similar short-sighted decisions.
Furthermore, the deregulation and loose monetary policies that Greenspan both advocated and enabled were critical in allowing the corruption of his Objectivist ideology. However, that corruption gave it an advantage over other systems, allowing it to survive and conquer. Freed from the constraints placed upon it by the more moral, in a financial sense if not ideological as well, thinkers of the past, the Capitalist system surged far ahead of any rival, conjuring massive amounts of wealth that dwarfed the attempts of any other system to challenge it. Rival systems have been all but wiped off of the face or the earth. Capitalism has won.
But the victories of Capitalism aren't limited to the greater ideology itself. Over the decades the corruption of Objectivism enabled its originator, the United States, to maintain its status as the one true superpower, its financial might forcing Europe to unite in order to compete with it and forcing Asia to accept trillions in dollars and IOUs in return for shipload after shipload of the finest goods in the world. That will be seen as quite a steal if inflation or hyperinflation comes to pass since those holding dollars will not be able to get the same amount of goods back as they gave to earn those dollars in the first place. Also, one cannot forget that such financial hegemony allowed the United States to exercise its military might, launching expensive wars in other lands while allowing for tax cuts at home. And even now, as the global financial system collapses, the rest of the world still comes to the aid of the United States since the stability of the system rests upon the almighty dollar. If the dollar goes down, everyone goes down.
Yes the rational objectivist thinkers became irrational looters and parasites in the end, but had the United States adopted a more financially conservative and more modest stance over the last thirty years it would not have reached such heights and would probably be far less powerful than it is today. Perhaps the U.S. would not even exist as we know it. So it seems that "irrational" is not as ineffective a trait as Objectivists would lead us to believe. It appears to have its benefits, although long term survival is not one of them.
The Fireaxe theory appears to be vindicated by current events as Capitalism stumbles and falls. Using it, and assuming that this is the death of the god known as Capitalism, I will predict that there will be a lot of ideological mutation in the years ahead and we will be beset by dozens of competing philosophies all trying to get us to embrace them so that they can rise to power. Also, growth will lag as a global recession takes hold and without growth to satisfy the aggressive nature of ideologies and relieve individuals of their sense of inadequacy we will see vicious and perhaps violent internal struggles between burgeoning rival ideologies as well as people falling into depression and despair. People will flock to religion, politics, and any other ideologically driven organizations in order to replace what they lost with the death of Capitalism, which provided meaning and structure to their lives. Revolutions may happen, political turmoil will be a certainty, and the specter of war looms on the horizon. And, as always, we are food for the gods.
I. Basics - well established theories
- 1. Emergent systems - that complex systems can arise from the interactions of simple things
- 2. Natural selection - that organisms mutate, proliferate, and compete, with the "losers" becoming extinct
- 3. Behavioral science - that neurological systems, at their core, function according to the rules of conditioning
- 4. Entropy - that within a closed system, entropy always increases, which limits the amount of transformation that can occur
- 1. That consciousness is an emergent system: a complex system arising in the human mind from the interaction of simple neurons.
- 2. That civilizations are emergent systems arising from the physical interactions of humans whether conscious or not.
- 3. That ideologies are emergent systems arising from the psychological interactions of conscious humans
- 4. That emergent systems follow the laws of natural selection in much the same way that organisms do
- 5. That the universe is, by definition, a closed system
III. Contentions regarding consciousness
- 1. That consciousness is a survival advantage
- 2. That being a member of an ideology is a survival advantage
- 3. That making its members conscious is a necessary part of an ideology's survival
- 4. That consciousness is created by instilling within a person a permanent sense of inadequacy - in essence a state of constant fear
- 5. That the deeper the sense of inadequacy, the stronger the person is motivated - generally to serve their ideology
IV. Contentions regarding ideological struggle
- 1. That ideologies fight for survival using many methods including, but not limited to, war and enslavement
- 2. That aggression is a survival advantage
- 3. That survival in the short term outweighs survival in the long term prompting ideologies to pursue shortsighted and sometimes suicidal strategies
- 4. That aggressive ideologies make members of rival ideologies feel afraid and inadequate which in response become more aggressive, thus creating a vicious circle
- 5. That aggressive ideologies must continue to grow or face internal strife as their aggressive members will feed on each other to satisfy their needs
- 6. That internal struggle results in ideological mutation
V. Contentions regarding the future
- 1. That internal strife is inevitable since the laws of entropy imply that continuous growth is not sustainable
- 2. That the abstract bases for ideologies transcend mortality and thus suicidal aggression is not restrained by fear of death
- 3. That technological progress has made the destruction of the world through ideological warfare possible and will continue to make it easier to effect
- 4. That ideological mutation will eventually result in the creation of a suicidal ideology which will destroy the human race in the attempt to save it
Ordering Fireaxe CD's is an informal process as I am selling them personally out of my apartment. Simply mail me a letter which contains the following:
- 1. The names of the CDs that you want to buy.
- 2. The address where you want the CDs sent.
- 3. Cash, a check, or a money order for the total cost.
Or if you want to do PayPal, just send me the answers to 1 and 2 above in an e-mail and I'll tell you where to send the money.
Here is a price list. The first number is the cost for U.S. based customers, the second is for outside the U.S. The prices include shipping and handling.
Eternal Devotion to the Dark Goddess: $6 / $9
Food for the Gods: $12 / $14 (SOLD OUT)
Victory or Death: $5 / $7
Lovecraftian Nightmares: $5 / $7 (SOLD OUT)
A Dream of Death: $3 / $5 (SOLD OUT)
Send everything to:
1301 Medical Center Dr. #415
Chula Vista, CA, 91911 USA
If you review CDs on a website or in a magazine, any one of the single CDs (Not "Food for the Gods") is free of charge in exchange for the review. In this case all I need is a request by e-mail. Please send me the URL of your review site or copy of your magazine with the review in it when it is done. If you want to exchange CDs, tapes, or stuff of equivalent value, make these requests via e-mail and we'll arrange a trade.
The CDs come with a booklet filled with awesome art, a letter about the project, and some information about the CD which can also be found on the Fireaxe site.
Lastly, if you want to print and distribute Fireaxe CDs I can send you an additional CD which contains tiff files for all the booklets, tray cards, and labels for each project. The tiff disk is free so just say the word.
In 2009, Fireaxe will take a step back and work on a couple of projects from the past. First of all, "Food for the Gods" has sold out and will be re-mastered before a second printing run is made. Also, it may also be re-mixed for even better sound quality depending on time constraints. Secondly, the first Fireaxe CD, "A Dream of Death" will be getting a complete overhaul before it is re-released. Everything will be re-recorded using much more modern equipment and with everything that I've learned over the last ten years going into it to make it better than ever. Also, since it was recorded at a time when CDs had a 74 minute limit instead of the current eighty, I will add six more minutes of music to the work in which I will explore a number of musical themes and make the CD that much better. So it looks like a year of sequels for Fireaxe. I'll probably leave the names the same but I've been kicking around a few new ideas for the CDs, such as "Food for the Gods - Regurgitated", "Desert for the Gods", and "A Dream of Undeath", "The Morning After Death", or "I'm Dreaming of a White Strait-Jacket - a Fireaxe Christmas in Hell".
My goal is to deliver music to whoever wants to hear it in whatever way is necessary. Whatever the market demands, I will supply, but I do want to avoid the mass marketing channel. Exposure is fine, but in the modern business, the substance of the music must be altered to match the demands of the marketplace. This would totally defeat the purpose of why I write music in the first place. I write music because it is a way to express my emotions. What I both think and feel goes into the songs. That is the power, Fireaxe is the channel, and any diversion diminishes the emotive effect. Thus I try to avoid such diversions. That is how art should be.
Currently Fireaxe is not for profit. I sell the single CDs for $5 or $6, $12 for "Food for the Gods" since it is three CDs, which covers the production and mailing costs. For CDs sent out of the country, I'll have to charge an extra $2 per disk to cover the additional mailing cost. If you write reviews or put samples on your website I'll give you a CD for free. Since I am not making any money with the current recordings, you are free to make duplicates of them to distribute as long as you obey the following guidelines:Brian Voth - Creator of Fireaxe
The gist of it is that you can do just about anything with the music as long as you don't profit from it and that I get some sort of credit for having written it. I'm open to any methods of distributing my music, such as compilation tapes or CDs, radio play, or recording label distribution. However, you will need my direct permission to do so or some kind of legal agreement.
- 1. You can only sell the duplications for the price of the medium or less, plus any delivery cost. You are not allowed to make any profit with the music.
- 2. You should tell me how many copies you gave out and who got them so I can keep track. Also, if they have an e-mail address I'd like that as well so I can add them to the mailing list.
- 3. You are likewise free to adorn any webpages or duplications with the gifs and jpgs on my website as long as you include an obvious link back to my website. This includes putting Fireaxe song samples on your site as well.
- 4. You are free to play any Fireaxe songs (in unaltered form) provided you are an unsigned band without a marketting tie-in. You are not allowed to record those songs onto anything that you will sell.
- 5. Do not fall in love with the Dark Goddess. I mean, seriously. She's the goddess of death after all. It's not a good idea. Furthermore, do not have sexual fantasies involving the Dark Goddess. She does not have a womb and thus lacks the entrance to that particular organ. Also, attempting to use other entrances will likely result in castration. Again, it's not a good idea.
- 6. You are vehemently discouraged from doing anything depicted in the CD "Eternal Devotion to the Dark Goddess" such as: torturing someone, lying for corporate profit, rationalizing greed, beating, raping, and murdering your girlfriend, destroying the lives of those who've wronged you and their families, corrupting the government, trying to kill yourself with pleasure, kidnapping and ransoming people, committing atrocities, cutting someone's face to pieces, destroying half the world as revenge, and especially stating that any of these things are okay because "God is on your side." Please, think before you act.
- 7. You are food for the gods.
- 8. You are required to crank the song "Hounds of Tindalos" as loud as you can as often as you can. It's your only defense against THEM. Be warned, they come through angles. Note that the CD is round. Are your speaker cabinets square?
- 9. Cthulhu, the Necronomicon, Hastur the Unspeakable, and all other mythos creatures are purely the inventions of Lovecraft and other fiction authors. None of it is real, at least that's what I'm going to say in court if you try to sue me for destruction of your property, house, city, or soul as a result of listening to the "Lovecraftian Nightmares" CD too much.
- 10. You are free to play "The Rack" in school or church or any other institution bent on crushing your will and turning you into a mindless zombie slave of the corporate dominated world. Try not to develop a bad attitude about it.
- 11. You are not free to commit suicide while listening to any Fireaxe song. I'm sorry, I'll have to prosecute. On a serious note, if you are thinking about doing it, please e-mail or call me if you have no one else to talk to. When I was in my teens the album "The Wall" by Pink Floyd used to really get to me. Just hearing songs like "Comfortably Numb", and "Hey You" would get me pretty depressed and mildly suicidal. I'm just trying to say that I've been there. If my music is having that effect on you, please get in touch. You aren't alone.
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