Poetry

~Descent

Leaves descending from the branches,

Weeping with a timeless passion,

Because of sufferings that men of ages past have all endured.

Tears descending from their faces,

Men, women, children, of all races,

For the things that men do suffer, and will always suffer for.

Rain descending from the heavens,

Beats down upon the kings and peasants,

Every man alike will feel the sufferings all men endure.
~

About this poem. I believe it is man's place in this world to suffer. Don't mistake me; I am quite the optimist. But facts exist aside from what I feel about the future. No one can or ought to deny that the world is very evil and very cruel.

I don't think a human can live and not suffer, even if his suffering is limited to personal angst. Do not doubt the ferocity of personal angst, of the type that occurs when one asks what is his purpose on life, or what it will come to when he dies. Here, the king suffers along with the peasant. The one may starve, but will be nourished in eternity. The unrest of the other, however, has implications in a world that transcends our own.

Nonetheless, at some level, all humans suffer. This poem merely states that. It has always been; it is; as long as humans live on earth it shall always be.

~ Not Forgotten

Facing forward, looking back,

Time travels but one way,

My heart is locked up in the past,

In a not forgotten day.

Given to a longing gaze,

Blind to that in front of me,

My soul belongs to previous days,

'Twill be so for eternity.

And now I lay me down to sleep,

I pull the covers over my face,

My rest is shallow, my sorrow deep,

Because of not forgotten days.
~

Many of us live in regrets and constraints of the past. They can haunt. Let them go. Let yourself belong to the present, ready for the future, free from the past.

No prison is as cruel as the one forged of imaginary bars, rooted in foundations which no longer exist.

Interest rates, Inflation, and the Fed

The relationship between the Federal Reserve System, interest rates, and inflation is a complicated matter. The actual economics involved is rather simple; the systems and policies, however, are absolutely convoluted. If you can understand this system, you'll basically be at the cream of the crop as far as understanding economics goes.

There are a series of steps to getting interest rates and inflation. You have to be familiar with a few things first.

1: Money Supply and its Modification.

In the United States, we have fiat money. It is redeemable for nothing; it simply exists by decree. That means the government can change the total supply of money by printing it or burning it.

Of course, that's too literal. Our banking system is almost entirely electronic, so money "supplies" can be increased our decreased by artificially increasing the money in an account on the Federal Reserve's computers.

When the government wants to increase or decrease the money supply, it uses Open Market Operations. The Federal Open Market Committee (a department of the Federal Reserve System) buys and sells securities. If it buys them, it prints new money to buy them, which puts fresh new cash in circulation. If it sells them, it takes the money it earns from the sale, and destroys it (e.g., it sells $1000 dollars of securities, then destroys the $1000 it earns). This is what most people think of when they think of inflation: the printing press.

Securities are complicated. If you want, I'll send you another message explaining them, or you could Google them.

2: Reserve Requirements.

What happens when a bank is out of reserve funds? It's clients want their deposits, and there is a bank run. So, the Federal Government requires that banks keep a certain portion of all the money they loan out in reserve at the Federal Reserve. This percentage is typically 10%. If a bank loans out 1 million dollars, it must keep one hundred thousand dollars in reserve at the Federal Reserve.

3: The Federal Funds Rate.

What if a bank doesn't have enough money to meet its reserve requirements? It has to borrow the extra cash from a bank that has more than enough. Bank A is $1000 short of its reserve requirement, so it borrows $1000 from bank B.

That's one option. The other I'll discuss in a minute.

Those two banks privately negotiate the interest rate of the loan. The government doesn't "tell them" what to charge. But, like anything, this interest rate is affected by supply of and the demand for money. Therefore, the supply of money affects what this interest rate will be.

The "federal funds rate" is the average interest rate that banks charge each other for these loans. You take all the loans of such a type which happen, and average the interest rates out over a two-week time period to get the federal funds rate.

4: The Discount Rate

The discount rate is the interest rate that the Federal Reserve that itself charges banks to borrow money to meet their reserve requirements. This rate is usually about 1 percentage point higher than the federal funds rate. This way, banks are able to borrow money to meet their most urgent needs in an absolute emergency, but the interest is a little higher so they generally avoid it. The Fed is a lender of last resort. This provides a security blanket, in case of disruptions in normal affairs which may prevent banks from even loaning to each other, if they are all short of funds.

5: The Federal Funds 'Target' Rate.

This is the "interest rate" you always hear about.

It isn't a rate the government "creates"; rather, it is their "goal" for what the federal funds rate "should" be. They set a range within which they want the interest rate to fall. Right now, that goal is 0-0.25% percent (the government is trying desperately to stimulate economic activity. A word on that in a minute).

The Federal Open Market Committee manipulates the money supply in order to manipulate the actual federal funds rate, in order to make it closer to the target rate.

This is basic supply and demand. An interest rate is the price of money. When the supply of money is increased, the interest rate goes down. When supply is diminished, the interest rate goes up. That's how the open market committee manipulates the federal funds rate without "forcing" it to be a certain rate.

6: Effects on Lending.

This is where cause and effect plays a big role. When a bank has cash, it can either store that cash in the reserve, or loan it out for profit. If the federal funds rate is low, then the bank will lend out lots of money, because it can cheaply borrow all the money needed to meet its reserve requirement. This lowers the interest rates that banks charge consumers and businesses; it makes them more willing to lend money.

When the federal funds rate is expensive, then banks will keep more cash in the reserves by lending less money, because borrowing reserve cash from other banks becomes too expensive. This discourages lending to consumers and businesses.

The discount rate is actually set by the federal reserve, and it plays a similar role, but only in emergencies like bank runs. Because banks can normally secure lower rates from other sources, they disregard the discount rate. When they cannot secure cheaper loans in crises, the discount rate matters.

7: Why Lending Matters.

Lending matters because (according to the economic model the Federal Reserve buys into) it stimulates economic activity. The more money gets loaned out, the more people buy, the more stuff gets built, etc. The more economic activity there is, the higher prices will be. If everyone goes out and starts buying houses, the price of houses will go up, REGARDLESS of the money supply. More on that in a minute.

8: A Word on Inflation.

Inflation simply means that prices are rising. This can be caused by two things:

a) An increase in the money supply. People have more money, so they spend more. To deal with the increased demand, entrepreneurs raise prices. That maximizes their profit and prevents the supply from running out.

b) A general increase in aggregate demand. When, for some reason, the population in general starts to spend much more money much more quickly, prices will rise to deal with the increase in demand.

However, many economists argue that at the root, all inflation is due to changes in the money supply. Milton Friedman famously said that "Inflation is always and everywhere a monetary phenomenon." There is an entire branch of economic thought, monetarism, which is focused on monetary policy.

9: Summary

The Federal Open Market Committee (which is part of the Federal Reserve) creates or destroys money by buying or selling securities, in order to affect the money supply. That IN ITSELF causes inflation.

It manipulates the money supply in order to affect the federal funds rate, which affects how much banks lend.

By affecting how much banks lend, the Federal Reserve affects the economy by either stifling or boosting economic activity.

The amount of economic activity is the more significant element of inflation. It makes prices rise by boosting aggregate demand.

10: You, my friend are now very highly educated about monetary policy.

11: End the fed.

To Forget, or not to Forget

"We will not forget 9/11."

Have you heard it? I have. It's patriotic. It's a sure sign that whoever says it is a good-hearted, patriotic American who mourns the lives lost on that terrible day and hates the evil-doers who attacked us.

But I've been thinking. Should we actually forget 9/11? Before you start throwing things at me, imagine this: if you were a murderously violent maniac, and you had just successfully killed thousands of Americans, what could you possibly want more than having a massive national occasion in memory of your success every single year?

Timothy McVeigh would love it, if on every April 19, the whole country became silent to remember his attack. But thankfully, we don't do him that service. Perhaps we should consider not doing Osama bin Laden the same.

Now, there has to be a balance here, because victims should always be mourned and respected. What I suggest is that we come up with a way to honor the victims of 9/11 with unintentionally glorifying the attackers and their success. Do displaying images of burning buildings honorably commemorate the victims? I think not. Does talking about terrorists, the war on terror, or ground zero commemorate them? No. Talking about them commemorates them. Talking about their families commemorates them. Not their killers, not their deaths.

There are a host of things we can really hold high when commemorating this occasion, without providing affirmation to our attackers. Honor the firefighters. Honor the survivors. Say, "Yes, we were attacked on this day, and so we want to let all the families of the victims know that we will never forget your loss. We want to thank you for your courage. We want to thank the brave men and women who sacrificed themselves for others."

All without a single one of these: "Let us never forget the day we were attacked... when they struck us... when the buildings collapsed... when thousands died." All this without a single image of a burning tower, or smoke-filled New York City.

It's just a thought. We could give a lot less grace to our enemies if we stopped bragging about their own victory for them. Maybe we should forget 9/11.

Capitalism: for Saints and Sinners

"Socialism would work, if only men were perfect."

Is that so? From each according to his ability, to each according to his need. That type of society would definitely require a very nearly perfect group of people in order to function. But could it thrive? Would it even function?

It has been thoroughly propounded that capitalism works with even the vilest of people. If you are greedy, you must provide value to your customers to become rich. The richest men ever, regardless of their intentions, revolutionized modern living. But it is said that if men were perfect, we wouldn't need a greed-driven system.

Here's where we should stop for a moment and look at what an economy is. It is a system of allocating resources, including human labor, technology, oil, bricks, and money itself. An economy is "good" if it successfully allocates resources to necessary goals, goals which provide for human wants and needs.

Furthermore, the participants' good intentions have nothing to do with how successful that distribution is.

"Oh fellow brother, for the good of humanity, should I build houses or factories?"

"I couldn't say. No, literally, I've lost my voice and the well-intentioned folk at the pharmaceutical company didn't produce enough medicine this month."

I've already mentioned how prices are a form of communication. If you eliminate prices, it doesn't matter how good the people are. They won't know what to make, how much, what to do, or what materials to use. The economy is just too complicated. Only capitalism provides mechanisms whereby economic agents are informed about the scarcity and cost of various options, in contrast with the genuine needs of society at large.

They say the road to that uncomfortable place is paved with good intentions. That road is epitomized by socialism. Its glorious intentions lead us along a road to misallocation of resources, shortages, over-production, recession, and depression.

Socialism would not function even if people were perfect. It would only make our suffering and demise as a civilization a little nicer, because we would all love and care for one another with what little resources and lifespans we would have left.

The Grandest Paradox

We all know the classical argument from the mind, as a proof of God. Materials (physical substances) cannot produce consciousness, only a God with a mind could have. I find it compelling on scientific grounds, but I've taken it further.

Let us assume that material substances alone could, by some poorly understood neurological process, produce consciousness. It does appear that scientists are moving in this direction. Of late, they are becoming more intimately familiar with the processes related to consciousness, which certainly does have a very strong material basis. "Activity in this lobe is correlated with consciousness, spikes in electric output from this area is simultaneous with this chemical over here... " etc. So let's assume that our minds are mere physical constructions.

I introduce to the grandest paradox you will ever behold. What happens when materialism ("everything is a physical substance"), determinism ("natural laws determine all events, and there is only one possible outcome"), and the mind join hands? The world as we know it shatters. It absolutely shatters.

Physical substances are deterministic. We all know the classical argument against free will by determinism. So how can we expect that deterministic substance to produce true ideas? This isn't mere skepticism, it is scientifically reinforced proof of absurdity.

Example: you have a computer, which is capable of deriving logical conclusions. Input "2 times 7", get "14" as an output. Well, not quite... because this computer starts out not knowing anything. YOU are the programmer.

You program it randomly, with processing structures that exist for no reason, without meaning, without purpose. You plug in an input, the electric signals spurt through the processing system instantaneously, and you get a deterministic outcome. Due to the laws of nature, that output is the only possible thing that could have happened.

You plug in "4 times 12" and get 35. That's what the program led to. The program was random. As long as it comes from random origins, the program will always be random.

If your mind is materialistic and deterministic, it is random. Nothing is produces can be true. Furthermore, if the idea that "some statements are false, and some statements are true" is a mental concept, then it is not warranted. It is just a random, abstract, unwarranted illusion. You say that 3 + 4 = 7. But, that thought is merely a pre-determined event caused by particles and forces interacting. That thought is absurd.

Skepticism says that it is possible that our knowledge is illusory. I say that, given materialism and determinism, it is absolutely certain that nothing is true, nothing is false, and everything is absurd.

That is of course a paradox, because I have used empirical knowledge and logic to arrive at the conclusion which destroys those two justifications. But the paradox is compelling.

But what if the mind is not simply a material? What if our thoughts are not deterministic? What if the programmer of our minds is a creative intellect?

Is it so irrational to believe in God that we must accept such an absurd paradox?

P.S. - Many thanks to the friend with whom I've carried on many a discussion and debate about this and similar topics, Jon Siskey.