Source: http://www.ufblog.net/crypto-current-051/
Timestamp: 2019-04-19 01:07:57+00:00

Document:
§5.5 — Conceptual conversion of A-money into C-money has been an automatic outcome of modern financial history. It can formally, but only artificially, be disentangled from the development of banking procedures and institutions. The credit (or reputation) of the financial institution supplants the positive asset value of money, as it replaces the monetary commodity with authorized notes. This financial reconstruction of exchange introduces an element of non-simultaneity. A moment of indebtedness is inserted into the synchronous swap, a period – however fleeting and notional – in which payment is owed. Even a simple purchase can be formally elaborated in this fashion. Payment need only be preceded by a ghostly double – a liability – arising in the non-instantaneous space of commercial reciprocity. A pseudo-consecutive schema insinuates credit into exchange. It is only on the basis of a systematic social hallucination of a decidedly metaphysical type, however, that it can be considered always, necessarily, to have been there.
§5.51 — Credit money, then, presupposes a suppression of simultaneity. We are returned to generalized spacetime, although now on the other side. If arithmetic is the formalization of time, in accordance with the Kantian understanding, simultaneity translates to zero. It is the temporal determination of space (or the pure form of non-separation in time). Events occur simultaneously when no time separates them. Under such circumstances, the credit relation is impossible. The critique of monetary financialization is thus bound to the philosophical – and even, by strong analogy, cosmo-physical – problem of simultaneity. If the very notion of the same time, in its global application, is judged irredeemably delusory, then the financial model of transaction is vindicated, as a universal truth. Relativity and fundamentalist credit finance share a metaphysics, in which the absolute occurrence of instantaneous transactions is de-realized, and subordinated in principle to qualification, or mediation. “Simultaneity is a convention,” Poincaré insisted. The subsequent relativistic revolution in physics has trained readers to invest this statement with a maximum of intrinsic skepticism, as if it amounted to the claim that simultaneity could not – in principle – ever be actually realized, unless as a standing social illusion. The inversion is then total. Since it is the function of (positive) money to restore simultaneity, the very possibility of any such non-credit currency is in this way dismissed. Hard money contradicts generalized financial relativity, and that has become our common sense. A return of hard money, as anything beyond a relic, can only be manifested as an alien invasion.
§5.52 — Transcendental aesthetic is exhausted by the blockchain. In restoring absolute time (pure succession), Bitcoin recovers simultaneity at the same time. The term blockchain already tacitly says as much. The block is a chunked unit of simultaneity, just as the chain is an order of succession. Each is reciprocally determined by the other, despite their real difference. Critically, a block is validated as a whole, at once. It contains no internal temporal articulation. Each block is all space, in the temporal sense, or non-decomposable duration. It is a true moment, or a ‘now’, even when sedimented (chained) into the past. Transactional simultaneity is thus realized. As we have seen, this is the negative of financialization, and its actual condition of impossibility. The credit relation has no reality on the blockchain, even though all of its associated signs can be recomposed there.
§5.53 — Profound historical tendencies ensure that this point will be misunderstood, even as it stubbornly – and with at least equal necessity – re-asserts itself. Bitcoins are not credits. Furthermore, and still more controversially, none of the items of economically-significant information embedded within the blockchain are, or could be, credits, unless from a perspective, which is also to say an apparatus, that transcends the blockchain. The temporality of the ‘block’ ensures this. Nothing unsettled survives the automatic editing process. Only positive signs persist.
§5.531 — Consider a simple safety deposit box. It physically and institutionally protects anything placed inside it. ‘Intrinsically’ precious items (collectibles) are the neatest examples – gold or silver coins, jewels, antiques, or works of art. As with the blockchain, however, complex semiotic objects – such as contracts of any kind – can also be safely deposited. The critical question now arises. Does this mean that such a secure storage facility protects promises to pay?
§5.54 — When attempting to grasp what, through Bitcoin, money ceases to be, the relationship between credit money and fiat currency merits particular attention. This relation is certainly not simply analytical, despite the intimate historical connection between monetary financialization and politicization. Over the course of recent centuries, the problem of trust – as dramatized by episodic banking crises – has functioned as a relay. As previously noted, the spontaneous evolution of paper money (from warehouse receipts) profoundly exacerbates the double spending problem. Considered as the most economically intimate field of media development, it subsumes forgery into printing, on a path that leads to electronic digitization. Within the modern history of money, however, this semiotic main-current is a side-stream. Deliberate fraudulence, involving cynical fake-money production, has not been the principal trust problem generated by financialization. Credit creation, through fractional reserve banking, has been vastly more consequential as an engine of trust catastrophe, precisely because it separates the question of trust from suspicion of criminality, and thus from the sphere of traditional law-enforcement mechanisms. A banking crisis is not – unless contingently, or under the aspect of polemical extravagance – a crime. More generally, those socio-cultural forces disposed to consider inflationism in all of its aspects as essentially criminal have been so thoroughly defeated that their objections have lost all engagement with effective mechanisms of legal enforcement.
§5.55 — To recapitulate the discussion from Chapter Three (§3.06), when fractional reserve banking turns bad, it is exhibited as a double – and in fact multiple – lending problem. Any bank deposit can be loaned out multiple times, with the proportions of potential bank credit to assumed liability decided by the reserve ratio. (A reserve ratio set to cover 10% of loans outstanding permits a ten-fold credit multiplication effect, prior to inter-bank lending.) Under conditions of general financial confidence, this facility is welcomed as a business opportunity for banking institutions, as a quantitative relaxation of credit restrictions for borrowers, and as a general adrenalization of the wider economy through increased liquidity. Historically, the resulting incentive structure brought banks, borrowers, and governments into alignment, in the direction of financialization (or compressed reserve ratios). The attractions of money creation are so self-evident they obliterate the counter-factual case. How could the financial alchemy of fractional reserve lending, with its seemingly magical multiplication of profits, borrowing opportunities, and commercial stimulation, conceivably have been resisted? And once it had ceased to be resisted, what could possibly have gone wrong?
§5.56 — On the opposite side of the ledger, multiplication of credit money through fractional reserves was balanced by the unplanned invention of a new type of credit risk. Local default was now potentially amplified to the level of the global bank run. The credit multiplier, when toppled into reverse, became an engine of financial catastrophe. Quantity has a quality all its own. Systematic banking crisis posed an existential threat to political regimes. The risk involved, therefore, tended – as a matter of sheer magnitude – to escape narrow economic categories. Confidence sets out on its long journey into becoming an explicitly-recognized macroeconomic variable. At a certain threshold, sheer aggregation of private actions transitions into a public event. Banking crisis comes as close to capturing the fulcrum of political-economic interchange as any conceptually-isolable event can. The deep tendency of modernity to encapsulate the empirical plays out into economic institutions.
§5.57 — Political recognition that a banking crisis cannot be permitted to happen finds its institutional manifestation in a central bank. A central bank is the authoritative model of a trusted financial institution. Trust conservation is its principle responsibility. In one direction, it guarantees the credibility of government paper. In the other, as ‘lender of last resort’ and provider of deposit insurance it delegates trust to subsidiary banks, in exchange for submission to regulatory oversight. The buck stops here, metaphorically applied to the desk of America’s Commander-in-Chief, is more appropriately conceived as a functional definition of the central bank. While embedded, in principle, within administrative and judicial hierarchies supporting super-ordinate authorities, in practice the central bank’s concentration of competence (and information) immunizes it against further transcendence. It is, in effect, a final court of appeal, or last ditch. In the sphere of economic trust, which is also that of modern economic virtual catastrophes, anything the central bank cannot stop, cannot and will not be stopped. The peculiar status of the central banker appears, to skeptical observers, near-Messianic. This is an impression that reaches far beyond trivial coincidence. In the end, which it incarnates, financial trust – ‘confidence’ – is the central bank’s sole specialism. All of its functions converge upon this, as upon a compact telos. Implicitly, savers trust their local bank because they trust the central bank, and they trust the central bank despite their distrust of the national government. Notably, it is a structural component of modern political ecology that governments expect their national central banks to be trusted more than they are trusted themselves. They in fact come to depend upon this, as the first convincing modern substitute for divine sanction. Government deference to the central bank serves as a credogenic ritual. Through the pseudo-transcendence of the central bank, administrative politics is able to gesticulate beyond itself, to a superior source of credibility. Practical metaphysics is thereby exemplified.
§5.571 — Central banks do not (of course) monopolize the status of the trusted third party, but they provide its most concentrated and perhaps also most self-conscious example. The function of transcendence in socio-economic systems has no superior illustration. The central bank is a part of the financial process that is at the same time deemed above and outside the process. Integral to its identity and operation is the presumption that it transcends the constraints and incentives generally characterizing the financial sphere. Central bank profitability, for instance, is remarkably discreet. The public profile of the institution is incompatible with a commanding drive to make money. Something like radical altruism is tacitly insinuated, as if in pre-emptive repudiation of Public Choice cynicism. Reciprocally, resource limitations on central bank discretion are strategically de-emphasized. While not positively pretending to infinitude, or an unlimited capability for monetary intervention, some rough functional facsimile of such is not strenuously discouraged. Because the central bank is effectively a final institution, those wastes of potential financial catastrophe lying beyond its scope can only be populated by dragons, and are therefore rendered in certain respects unthinkable. The end of the world is re-articulated. There is a theatrical and ceremonial dimension to all of this, which has not gone unnoticed, or unmentioned. Central bankers are – in the strictest possible sense – modern magicians.
§5.572 — Every central bank is an amphibian, or a Janus-faced being. Operational pseudo-transcendence requires this. The central bank mediates between the public and private aspects of the economy – and even defines the distinction between the two – drawing upon the institutional axiom that aggregate confidence in private commerce is a legitimate, and inevitable, target of public policy concern. Trust, in its distributed economic manifestation, is taken as the object of a mass social technology. The great macroeconomic conception occurs, pre-programming much of what then follows. The critical point is the recognition that money issuance is a policy tool, precisely insofar as it is a channel of public communications. It is no longer that money merely bears a message, in the manner of a minted coin adorned with various politically significant inscriptions. A Federal Reserve note still carries such signs, but their seriousness is entirely eroded. Money-making, as such, is now the message. Aggregate liquidity management is no sooner adopted as an administrative responsibility than it flattens upon its own public enunciations. Signal and substance are one. A teleological transition occurs here, that might easily be missed. ‘Public’ (i.e. state) revenue maximization, an obvious goal from at least one perspective, yet one that has been evidently instrumental in regards to the obscure practicalities of historical installation, is absorbed into a more complex structure of purposes. It becomes the opportunity for a public demonstration – for publicity. Hence the distinctive emphasis placed upon the central bank statement, an address not only about, but to the market, spectacularly totalized from above. This is already to say that irrespective of its intentions, or self-comprehension, the central bank inherits responsibilities that are strictly magical. Vivid ‘materialization’ of the impossible – i.e. of free risk relief – is its central obligation. It is not only illusionism that is at work here, then, but medicine, or therapy, in accordance with the archaic role of the witch-doctor. The public utterances of the central bank are a mass psychological talking cure, but inverted from an exercise of attention into an incantation, and thus a spell, or placebo. We hear in these words the technical ideal of the confidence trick, in its super-legal and pseudo-metaphysical configuration. Practical efficacy is tacit. Like credit money itself, the truth of the central bank statement is created – ab nihilo – in being believed. The reality is ideally exhausted by the phenomenon. It is what it is thought to be, and no more. Confidence, in the end, has no ulterior derivation. It is miraculous. Half a millennium of demystification has led to this, clearing the stage for business-suited new magicians. The performance is underway. A tranquillized collective economic sphere is to be conjured into existence. As it entered its advanced maturity, The Great Moderation named it well. The Great Moderator – Mighty Macro – is a more valuable name still, for the One at the End who Looks Both Ways to Make Peace. That’s the Magician-God in the Bitcoin cross-hairs.
§5.573 — On the empirical plane, a trusted third party functions as an intermediary between a pair of agents. It is the mutual relation to a common intermediary that formally determines the agents concerned as peers. Virtual lines of evasion (route-arounds) cross the plane, linking the mediated agents in innumerable alternative ways. When plotted upon this flat expanse, the trusted third party appears as an interception – something like a successful hunt, an act of capture, or captivation. On the plane, every overseer is exposed as avoidable, if not in actuality avoided. There is always another way. Excessive impositions prove repulsive. Every moment of mediation has therefore to strike a bargain. No hint of the universal is found here. It is not upon the plane, but upon the pseudo-distinct, pseudo-orthogonal, and pseudo-metaphysical axis transecting it that the exorbitant authority of the overseer is ‘for the first time’ expressed. The horizon of supervision extends into the infinite. If not explicit in its claims to omniscience, omnipotence, and omnibenevolence, it makes no effort to dispel such theological encrustations. An implicit invocation of God-like powers follows from the conspicuous assumption of God-like responsibilities. In wherever the buck stops we trust. The aura of infinitude is essential. No limit can be drawn. Whatever lay beyond the outer boundary of central banking power would be the lair of crisis, by definition. A formal delimitation of the supreme third-party powers is indistinguishable from a program for financial catastrophe. Agreeing not to go there closely coincides with the new social contract, drafted in the 1930s. Critique of authority henceforth meant Great Depression. To the titles of Macro can then be added: The Unscrutinized Scrutinizer. That which sees all should not be excessively challenged by inspection. This is how asymmetry has been put to public work. Apparently exempted from immanence, the overseer is fed by the impression of exceptional rules, and sublime incentives. It seems to hover above the fray, as if released from mere empirical difference into a superior milieu. Amphibious by essence, it is at once an efficient, individualized, economic agent among others and simultaneously nothing at all of the kind. The effect works best when no one looks too closely.
 A ‘standing social illusion’ or “consensual hallucination” – to draw upon William Gibson’s anticipatory description of Cyberspace – can, under certain very definite circumstances, attain robust virtual reality in the epoch of the Internet. It can, in other words, be effectively installed. Any residual associations with mere mass delusion, of a kind vulnerable to destructive reality testing, then become systematically misleading, as the index of a misapplied empiricism. The protocol is not an error awaiting correction, but rather a structure of transcendental subjectivity. Its relation to objects is not representational, but productive. The fatal emergence of time as synthetic being, in particular, manifests the techno-historical restoration of transcendental philosophy. The order of things has to be produced. In this vein it has to be argued that the artificiality of time is – finally – time’s most time-like quality. Its nature is to be unnatural, at least in the sense that it eludes all prospect of objectification. Only thus does it secure itself against the geometrical reduction that would collapse it into space. Of course, if not obviously, nature itself does this first. To repeat what can never be repeated sufficiently, Φύσις κρύπτεσθαι φιλεῖ (“Nature inclines to crypto.”).
 The blockchain is thus something like an anti-structure, occupied only by positive terms.
 Conceived in Marxian terms, this history seems to tell of the death of the liberal economic order through its own excesses. Such a narrative is very far from straightforwardly misconceived. The very idea of a liberal regime suggests extreme paradox, precisely because it corresponds to an exemplary coordination problem. The overall order presupposes a suppression of defection which it is itself seemingly unable to guarantee. The ‘itself’ here – as in all cases of spontaneous order – is the crux of the conundrum. The system of competition itself, or as such, has no obvious allies. Many, if not all, of Marx’s classic capital contradictions are rooted in this dilemma (and thus describe a variety of fundamental liberal coordination problems, socio-historically expressed at varying degrees of elaboration). ‘The market’ – to thus name society’s most fundamental spontaneous institution – is susceptible to the ravages of an agent-principal problem without comparison. The attempt to operationalize the state as the relevant agent in this situation, tasked with responsibility for managing general commercial conditions, broadly coincides with the tragedy of modernity, as distilled into ‘neoliberalism’. Public Choice theory arose as its more-or-less explicit rejoinder.
 There is no one who can be sued for the destruction of the US Dollar (by more than 95% of its value) over the course of the 20th Century, for instance. Still more extreme – hyperinflationary – depredations enjoy sovereign immunity against legal redress. To decry this situation as itself manifestly criminal is merely to court intensified marginalization. Such has been the libertarian road.
 The armchair mode of estimation is, of course, wholly pedagogical, or dramatic, and insofar as it suggests harmonious concordance of contemporary financial norms with timeless human intuition, it is positively misleading. From the perspective of trans-historical anthropology, the only natural money is metallic. It was necessary for bank-money to build a new financial ‘common sense’ for itself. The success of this project has been so remarkable that it is has eclipsed acknowledgment of its radical historical contingency. It nevertheless has to be recalled that the adoption of this monetary regime has been late and rare (even singular). … The reconfiguration of money through institutional credit creation found its concrete historical ratchet not in the parlors of policy deliberation, but on the battlefield. In other words, it effectively financed the geopolitical occasions for its own entrenchment. To a considerable extent, British military history since the beginning of the 18th Century has been its testing ground (a claim that is smoothly extendable back to the independence struggle of the Dutch Republic from the end of the 16th Century). By providing the logistical sinews for the rise of Anglophone global power, modern credit finance created the real conditions for its teleological self-validation. It organized payment for the world order in which it would be at home. The circuit of auto-production, in all its groundlessness, is evident at every scale. We return, then, to the process of nihilism and its machinery. Occidental religious crisis and modern economic history are aspects of one thing. The erosion of transcendent foundation provides the time gradient of both.
 According to Wikiquote, the common attribution of this phrase to Josef Stalin is unreliable. If we still hear an echo of the materialist dialectic within it, the allusion is not altogether confining.
 The contribution of John Law’s Mississippi Bubble to the collapse of Europe’s Ancien Régime has to count as the supreme example of inverse political risk (i.e. risk to a political order from economic calamity).
 The lucid administrative identification of systematic financial hazard as an object coincides with the exact moment at which classical liberalism dies in principle. Such identification cannot be made without a corresponding delimitation of private commercial prudence, within boundaries too constrictive for the persistence of an autonomous economic sphere. The independent economy cannot be trusted. It requires a trust supplement, incarnated in some para-political institution. Trust is recognized as the highest economic ‘commanding height’ and nationalized. This is, unmistakably, a process of domestication. The state (and its parastatals) no longer solicits trust, but rather claims to produce, manage, and dispense it. This provides one thread for the argument, formalized most rigorously by Murray Rothbard, that central banking is essentially incompatible with a libertarian social order. The usurpation of trust is a centralization of contractual confidence, and a conversion into an implicitly political relation. The Statist Left, in its analysis of monetary property as politics, merely discovers the Easter egg that central banking hides. The super-abundance of the central bank’s de facto power relative to its de jure authority is a predictable staple of conspiracy theorizing. The United States Federal Reserve System is an especially target-rich environment in this respect. It is an institution that might have been designed for the stimulation of occultism. The pursuit of public purposes through private institutions reliably does this. At the most basic level of analysis, the Fed is simply not well hidden. It cannot but show its work. The deliberate conversion of distributed commercial-industrial capability into concentrated national power happens comparatively recently, and in public. It is almost impossible to miss the Siren call of the imperial project, which cements the problem of trust into geopolitics. As a pseudo-transcendental being, the central bank simulates the intrinsic obscurity that is the signature of the thing-in-itself. Supposedly located beyond the ravages of crime and politics, it invokes a higher realm. Between an object of reverence, and one of paranoid anxiety, the distinction is slight. The dominating, common element is a strategic impression of abnormality. The central banker, properly understood, is a figure more at home in horror fiction than social history.
 The formula ‘lender of last resort’ was originally minted (in 1797) to define the financial-institutional role of the Bank of England. Its first appearance is found in Sir Francis Baring’s Observations on the Establishment of the Bank of England, published that year. Its wide circulation, however, owes more to the later usage by The Economist editor Walter Bagehot, in his book Lombard Street (1873), which explicitly ties the therapeutic power of the general guarantor to its currency issuance authority. Some non-trivial measure of Victorian economic-moral continence can be seen in Bagehot’s insistence that the exceptional relief from risk offered by the central bank should be tightly bound to explicit penalties (just as the preservation of incentives within the poor relief system required an overt punitive element). Strategic laxity requires a compensatory super-addition of discipline. This is not an equation post-Victorian society has been able to sustain. Varieties of relief disorder become, instead, the normal condition. The asymmetric “Greenspan put” – which protects investors against losses without any reciprocal constraint upon gains – exemplifies the syndrome.
 Alan Greenspan provides an especially dramatic example of central banking as public performance. No one has more clearly articulated the explicit duty of the central bank to make its decisions ineffable. As he famously remarked: “I guess I should warn you, if I turn out to be particularly clear, you’ve probably misunderstood what I’ve said.” Ironically, the critical invocation of abstraction is entirely undisguised. It is not confidence in anything particular that the central bank is properly concerned with, but rather pure confidence, as manifested in monetary intensity, or liquidity. Concrete policy presentation is thus conceived as a new species of idolatry, to be jealously avoided. When John McCain later joked that in the event of Greenspan’s death he would prop up his corpse in dark glasses and hope that nobody noticed, the same magic theater was being referenced. Between the appearance of financial authority and its reality lies no difference that matters. Trust is practically aligned with the paradox of a supernatural phenomenon – of the ‘phenomenon’ in its colloquial rather than philosophical sense. One sees only that what one sees could not possibly be enough. A ‘leap of faith’ is therefore modeled, from the other side. To be catapulted into credence is the desired effect. That is the entire point of the show, and everyone knows it. The audience is to be healed of its skepticism, in something like the Reformed Christianity revivalist style. Belief is the essence. Expressed within the suitable Protestant idiom, financial salvation is earned by faith alone. That Macro has come to sound like a Stephen King plot is only by shallow estimation a coincidence.
 The systematic taxonomy of magical effects remains an under-developed and controversial subject. No general consensus exists as to whether a full categorization is possible, still less is there any agreement as to its final architecture. The most disciplined attempts to complete such a project, however, tend to concur on the prominence of production and vanishing as elementary magical effects. Creation (ex nihilo) and annihilation are the theo-cosmic archetypes. Stage magic dramatizes ontological modality. Monetary conjuration complies neatly with this scheme. In the era of financialization, credit expansion and contraction attest to an absolute process of money production, ‘backed’ by nothing beyond itself. At the limit, money demonstrates radical insubordination relative to the question of being. With all material constraint on minting lifted, monetary production submits only to magical will. In this context, Bitcoin looks like a spell cast during a magical war. Its restriction upon money creation is characterized by unprecedented severity, from one regard. From another, however, the entire crypto-currency is an ex nihilo creation, bringing a virtual BTC 21,000,000 into existence spontaneously, out of nothing. Money creation switches phase. It is no longer amplification, but sheer innovation. Reciprocally, an updated model for monetary annihilation can be expected, no longer based on credit contraction, but rather on crypto-currency extinction events. Proliferation and culling of new currencies begins to increasingly regulate the money supply. Cryptic sorcery contests financial magic.
 It is the sacred calling of skepticism to doubt the existence of things whose reality inheres in nothing beyond their being believed – but not to the point of dogmatism.
 “Only a god could save us,” Heidegger remarked in a 1966 Der Spiegel interview. The mature world credit-financial order was not the primary context for these words, but it might aptly have been. An overseer who is definitely less than a god is nothing. Where deity is slow to unambiguously manifest, ceremonial magic is required to make up the difference.
 Is not the illusion of vision among our most consistent themes here? The Federal Reserve Note includes the picture of an eye. It is not meant even to be noticed. To feel oneself perceived suffices for childish comfort. Claims to see rarely tolerate close examination. Intense scrutiny ruins the effect. This is now what we are seeing.
Thanks for both — will check them out.

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