22 July 2016

Jesus Opium – Prelude to the Opium Wars




The Imperial Cruise by James Bradley, 2009, Excerpts

Bengal in northern India had long produced opium, for centuries used across Asia as a medicinal and social drug. England controlled a vast swath of prime opium-growing country, stretching five hundred miles across Bengal, and the British Empire invested enormous sums in state-of-the-art opium farming and productive systems. More than two thousand British opium agents oversaw the efforts of one million registered Indian opium farmers. The Bengal-to-China opium business became the world’s most valuable single commodity trade of the nineteenth century, opium accounted for 15 to 20 percent of the British Empire’s revenue. Western banks, shipping companies, and insurance companies sprouted to serve this enormously profitable trade.

Realizing the harm to their people, the Chinese government banned opium’s sale and use in China. White Christian opium smugglers could not legally sell the banned drug on Chinese soil, so they installed floating wooden warehouses in the Pearl River Delta, where they sold their booty to Chinese criminals who rowed out under the cover of darkness. It was Christians who smuggled the poisonous drug into China, so the Chinese called it “Jesus Opium”.

Between 1814 and 1850, the Jesus-opium trade sucked out 11 percent of China’s money supply. China lost more silver in thirty years than had flowed into the country in the 125 years leading up to the opium trade. As the Chinese money supply contracted, silver became unnaturally scarce, peasants had trouble paying their taxes, counterfeiting rose, waves of inflations and deflation whipsawed the economy, and unrest grew.

The Chinese government dispatched a royal representative to Canton in 1839 to stop the Foreign Devil drug trade. Buckingham Palace shook at the news. Queen Victoria was just twenty years old at this point, on the British throne less than two years, but when the Chinese threatened to cut her largest single source of income, she understood the dire financial consequences, the drug trade provided easy money, silver, that most sustained her empire. Victoria dispatched her industrialized navy to enforce Britain’s ability to push an illegal drug. What followed were the two Opium Wars – one from 1839 to 1842, the other from 1856 to 1860. What Victoria spent on these military operations against China was paltry compared to her take of profits from the illegal Jesus-opium trade.




18 July 2016

Stereotypes


Public Opinion by Walter Lippmann, 1921, Excerpts

In the great confusion of the outer world, we tend to pick out what our culture has already stereotyped for us by our culture. Whatever we recognize as familiar we tend to visualize with the aid of images already in our mind. We notice a trait which marks a well-known type, and fill in the rest of the picture by means of the stereotypes we carry about in our heads. Consequently the stereotype not only saves time in a busy life and is a defense of our position in society, but tends to preserve us from all the bewildering effect of trying to see the world steadily and see it whole. It is the guarantee of our self-respect; it is the projection upon the world of our own sense of our own value, our own position and our own rights.

The stereotypes are highly charged with the feelings that are attached to them. Stereotypes are loaded with preference, suffused with affection or dislike, attached to fears, lusts, strong wishes, pride, and hope. They are the fortress of our tradition, and behind its defenses we can continue to feel ourselves safe in the position we occupy. Any disturbance of the stereotypes seems like an attack upon the foundations of the universe.

What matters is the character of the stereotypes, and the gullibility with which we employ them. Uncritically held, the stereotype censors out much that needs to be taken into account. It is only when we are in the habit of recognizing our opinions as a partial experience seen through our stereotypes that we become truly tolerant of an opponent. What will become accepted as true, as realistic, as good, as evil, as desirable, is not eternally fixed.




13 July 2016

Money and Interest




Interest is the applied mathematical concept for all financial computations from simple interest loans to leveraged buyouts to pyramid/ponzi schemes. Only the interest rate and compounding period vary, not the mathematical concept.

Interest (Random House Dictionary)
A sum paid or charged for the use of money or for borrowing money expressed as a percentage of money borrowed to be paid over a given period, usually one year.

Described mathematically, compounding interest creates an exponential growth curve, which starts out level and eventually curves infinitely straight up. As long as the compounding period and interest rate are greater than zero, the resultant curve is always exponential in shape given enough time. Applying an exponential growth concept upon anything has the expectation that the anything will grow forever at an ever-increasing rate. Nothing physical can grow perpetually at an exponential rate. Collapse is inevitable.

Interest can be, and has been, applied to many forms of money. The form of money that has prolonged growth attributes, such as gold, most facilitates the application of interest. However, in the long run, not even gold and the other precious metals could satisfy the growth demands; hence the emergence of fiat money. Legal Tender, representing nothing physical, has far fewer constraints to prolonged, compounded growth.

Interest derived income - the growth portion of money - includes dividends, coupons, and capital gains. Owners, Lenders and Investors are the beneficiaries of interest income and capital gains on debt and investments. Owners, Lenders and Investors differ only by priority claims on cash flow. Owners, Lenders, and Investors eventually want their money back, plus more. The ‘plus more’ portion is the implied expectation for money to grow. Faced with the threat of seizure, foreclosure, and job security, Debtors are motivated to make that growth happen to its extreme.

The growth of money can be prolonged by using a lower interest rate and a longer compounding period. But whatever the interest rate, there is still the inevitable limit to exponential growth, and when that limit is finally reached, order turns to chaos. A monetary system supported by debt and its handmaiden interest must forever be increasing. Let it cease to grow, and it must collapse.

The Politics by Aristotle, Translated by Thomas Alan Sinclair
Very much disliked also is the practice of charging interest; and the dislike is fully justified, for interest is a yield arising out of money itself, not a product of that for which money was provided. Money was intended to be a means of exchange; interest represents an increase in the money itself. We speak of it as a yield, as of a crop or a litter; for each animal produces its like and interest is money produced out of money. Hence of all ways of getting wealth this is the most contrary to nature.