TRANCHE 2

I figure we humans are well past a rough functional equivalent to 1925 (prewar parity for sterling) relative to the world depression of the teens of 2000. The 1985 Plaza Accords marked the full functional equivalent to the 1925 prewar parity (as to what was imposed on Japan, East and Southeast Asia). And I believe Keynes' predictions in 1925 (Economic Consequences of Sterling Parity) are fully again realizing themselves today. The only problem with the notion that multilateral institutions can indefinitely ease national economic adjustments in the prevailing free “floating world” exchange rate non-system monetary system is that economic factors are not the only controlling functions on monetary system behavior. Not only was the German mark challenging British sterling on the continent in the years immediately prior to WWI, but the whole Newtonian worldview construct was under massive German attack in the same period. And the colonial partitioning of Africa signified the British imperium had entered endgame, an imperium without which the gold standard could not properly function -- Britain providing the long- and short-term capital required to facilitate national economic adjustments globally, the role now performed by U.S.-dominated multilateral institutions. Europe committed suicide in 1914 not primarily due to economic factors. The U.S., too, will commit suicide not primarily due to economic factors.

The massive capital flight movements and intense speculative attacks on the weaker currencies characteristic of the interwar floating exchange rate monetary chaos of the early-20s was the environment within which attempts at gold standard restoration were made. More non-economic factors: the U.S. was unable to take over the mandate of Britain after WWI, not because she lacked the economic wherewithal, but because she was too immature, acted irresponsibly. This U.S. behavioral pattern has not changed. Just as the international investments of Wall Street in the 20s were wildly speculative, so have they recently been. This contrasts very unfavorably with the British international banking establishment in the period 1875 to 1914. For instance, when the mark challenged sterling on the continent prior to WWI, Britain did not do to the mark what America did to the yen with the sting operation called the Plaza Accords (the effects of which not only slew Japan, Inc., but trickled down to become the 1997 East Asian currency crisis). Throughout the whole gold standard period, the British were willing to accept a sluggish domestic economy and high unemployment in order to modulate the balance-of-payments deficit incumbent upon their role in establishing and maintaining the gold standard. The U.S., to this day, exhibits no behavior in any significant way parallel to this. It did not even have the integrity required to properly service the gold-exchange mechanism of Bretton Woods. Yet, the whole plea regarding efficacy of the multilaterals to keep the free float functional relies on the assumption of American maturity and responsible action.

What I am after is not a middle road between relatively closed Keynesian “national capitalism” and fully open free-trade globalization -- both of which require heavy doses of government control to sustain themselves over the long term: national governments relative to “national capitalism” and multilaterals regarding globalized free trade -- but a superposition of the two. This is not impossible (hence my emphasis on quantum approaches and m-valued logics) and it does not require reinstituting a commodity-based currency system. The creation of any new international currency system on a top-down basis will simply embody the prevailing regime of inequities in the “agreed upon” sum of mechanisms for regulating international economic relations -- even if there were available a mature, responsible actor in the dominant role. This is so because instituting any such system inevitably will involve jockeying of nation-states on basis of their prevailing monetary, trade, payments, inflationary-deflationary, and budgetary circumstances -- as was the case in the interwar years -- thus overcoming all attempts to introduce new principles. The Cold War was more about the international monetary tangle than about communism -- the “national capitalism” of Keynes' 1933 Yale Review article, “National Self Sufficiency”, being viewed by many as but a step toward what would become an inevitable socialist state -- and that is why globalization did not come fully into its own until collapse of the Soviet Union. FDR's New Deal orientation allowed White and Keynes at the end of WWII to partially institutionalize a middle road between “national capitalism” and global free trade, i.e., the gold-exchange mechanism of Bretton Woods, which Nixon in his UnAmerican Activities Committee hatred for the likes of White was able to use the Vietnam War to bring to an end. Most of Western Europe in the first years after WWII adopted “national capitalism” type monetary orientations, which the U.S. used the Marshall Plan to partially overcome. Full free trade success came only with the end of the Cold War. We are now rediscovering what the British so well understood during the gold standard free trade period: free trade -- commodity-reference regulated or not -- inevitably involves domestic sacrifices not overcome by internationalization of comparative advantage. The British tolerated consequences of this; the Americans have not, and will not.

I believe the domestic sacrifices inevitably accompanying internationalization of comparative advantage can be overcome through a quantum-economic superposition of Keynesian “national capitalism” upon a global free trade monetary regime (through use of nested m-logically-valued exchange units). If reasonable levels of inequity are to be embodied in a new global monetary system that is a superposition of “national capitalism” and global free trade, that system must be created from the local toward the global -- which means it will not be created in the first instance by nation-states or their representatives.

Was it the IMF that made Bretton Woods a monetary system, as the bulk of commentary suggests? Hardly. It was the gold-exchange mechanism tied to the dollar at a fixed price for gold that gave semblance of a system, just as it was the gold standard tied to sterling that gave semblance of a system in the 19th century free trade era. IMF remedial monetary medicine, economic policing, tranches of quota with conditionality, Compensatory Financing Facility, Buffer Stock Financing Facility, Witteveen Facility, Extended Facility, Oil Facility, and so on are not part of the semblance of a system; they are windows on a hospital ward. Special Drawing Rights -- the right to borrow reserve asset to purchase national exchange currencies -- and De Larosière’s proposed Substitution Account -- an account wherewith to convert, essentially, petrodollars to Special Drawing Rights -- were, however, potentially part of the semblance of a system.

Is the combination of Fed Funds and the Eurodollar markets the functional equivalent of Keynes’ International Clearing Union, as some have maintained? As long as the reserve currency involved is one of the national exchange currencies, this cannot be so. The U.S. dollar is not and never can be Keynes’ Bancor or White’s Unitas. No matter how much it appears that these two economists were merely trying to create a superFed on the American model, the fact that they each imagined a transnational currency in the presence of national currencies belies this appearance. Within the United States of America under the Federal Reserve system the various state governments do not issue their own currencies. There is no parallel between the dollar and Bancor or Unitas. Keynes’ or White’s transnational reserve currency would have functioned in the international economic system in a manner completely different from the national currencies exchanged in market interactions. But the functions of Bancor or Unitas were never worked out because the notion of an International Reserve Bank or International Clearing Union was dropped early in the Bretton Woods process. I maintain that if Bancor or Unitas had been allowed a natural evolution-through-use, eventually, it would have become an m-logically-valued reserve unit. Later, m-logically-valued exchange units would have been implemented.

Recent attempts to resurrect or expand Special Drawing Rights (SDRs) indicates that some people have taken a major step in the direction of m-logically-valued exchange units. When, in 1967, the IMF accepted the proposed SDRs (first implemented in 1969), in doing so it simultaneously accepted creation of a supplemental reserve asset that did not threaten the international role of the dollar (or, at that time, the Bretton Woods gold-exchange mechanism). If, however, a new reserve asset were now to be considered in relation to the 1964 French-proposed Composite Reserve Unit (CRU) -- this proposal having kicked off the '64 to '68 period of pressure for international monetary reform -- SDRs could be seen to involve use of a primitive version of m-logically-valued monetary units. CRUs would be made up of the major currencies, issued by the IMF, and held as reserves by central banks.

Now, in order to explain this further, I must stop using existing monetary terminology. Use of the terms “system” and “order” in monetary history is very largely a misnomer, as the meaning of these terms as they are used outside economics has no intersection with their use inside economics. At no time in history has a monetary system been more than a set of partially-related, imposed conventions continuously modified on an ad hoc basis. The rules of an authentic system can change, but if the system is to remain a system, the rule changes must proceed on the basis of meta-rules. This has not been the case in monetary history.

The systemic meta-attributes of a CRU, from the perspective of system qua system, is: “system-composite”. The systems purpose for establishing a “composite” in monetary units is to establish an operator that functions on the basis of the relative relations prevalent in the system. System-composite represents the ”relative-state” of the system. As the relative-state of the system changes, operations of the system-composite reflect these changes in a cascade of effects which move throughout the system rectifying the accumulated pattern of stress.

In order for a reserve unit to function more capably as a relative-state operator, the reserve unit must become more authentically a system-composite. The reserve unit must have a functional relation to (be a mathematical function of) the corpus of exchange units it is a system-composite for. The more this is the case, the more the reserve unit can be a relative-state operator, and the more efficiently can its operations cascade stress-rectifying effects. By conventional quantum analogy, the system-composite is defined as a probability amplitude. A fuller comprehension of system-composite requires use of m-valued logics interpreted in relation to identity transparency: the prevailing regime of relative-state is the degree to which the parts function as if they were not distinct entities. An m-logically-valued CRU would self-select, according to the prevailing relative-state of the involved economies, the degree of identity transparency required to optimally minimize conflict between “internal necessities” of national economies and the requirements of international liquidity.

The degree to which self-selection of the properties of the CRU actually can minimize this inherent conflict is a function of the degree to which it actually represents the relative-state of its component national currencies. Absent multiple national currencies, there is no possibility of relative-state operations of a system-composite reserve unit.

One can step down in scale level and speak similarly of the relation of a national currency to nested provincial and local currencies. Without provincial and local currencies, the national currency can only be a very incompetent contributor to the system-composite reserve unit -- because such a national currency does not authentically carry in its monetary operations system-composite information (i.e., relative to its nested subsystems). I would like to emphasize that the apparent irreconcilability of national economic “internal necessities” with the demands of international liquidity is a result of there being no nested stack of authentic system-composites by which mediation of the irreconcilables could occur. Such mediation is dependent upon the presence of nested m-logically-valued exchange units and composite reserve units.

So there are two basic reasons for advocating implementation of m-logically-valued exchange units and composite reserve units from the bottom up. (1) Without a properly formed “bottom”, there is no authentic system-composite, and therefore no possibility of actual relative-state operations which would be capable of high levels of competency in systemic stress rectification. (2) Authentic international monetary order is incompatible with the Birnbaum-Krause-Nixonomics monetary brinksmanship which has been the basis of U.S. foreign policy since August of 1971. The free float provides a means for the U.S. to export the deficits and inflation incumbent upon unfettered pursuit of its self-aggrandizing global agenda. The Plaza Accords was the perfect example of that: America exported to Japan; Japan exported to the rest of convertible East and Southeast Asia. There is no significant possibility the U.S. will voluntarily abandon this circumstance. Hence, no real chance of negotiating monetary reform from the top down.

Yes, that is a good issue to raise. There does appear to be some connection between what George Soros calls market reflexivity and what I am calling -- by adapting quantum concepts of self-organization to monetary theory -- the relative-state of a reserve asset like the Composite Reserve Unit once associated by the French with Special Drawing Rights. Reflexivity is, essentially, the economic correlate of the n-body problem in physics. Human prescience, human nescience, and human moral fallibility, according to Soros’ concept, feed forward and feed backward, conditioning and multiply-conditioning market behavior in self-reinforcing fashion, both on the upswing and downswing of economic cycles, such that equilibrium prices are never met and markets are never cleared -- contrary to mainstream theory of laissez-faire markets. Soros suggests that moral suasion, appropriate legal frameworks, and satisfactorily empowered regulatory agencies, national and multilateral, can remove or substantially reduce market reflexivity, thus allowing market equilibrium conditions to emerge and stabilize. According to his own description, Soros’ initial insight into market reflexivity came in context of considering the logical paradoxes associated with self-referential statements. He regarded such statements as an indication of inherent human nescience concerning the functioning of systems -- which is sort of like Heisenberg’s indeterminacy or Gödel’s undecidability and is an issue of importance in the quantum theory of measurement. But there is another way to look at self-reference, a notion that over the past 30 years has played a significant role in attempts to unify quantum and relativity physics. Self-referential statements and processes may be interpreted as involving a breakdown in the traditional Western notion of identity -- as does quantum relative-state. Soros seems to regard reflexivity primarily as a negative factor, the effects of which need to be overcome, if order is to prevail. This is largely because market reflexivity is viewed in terms of information availability to market actors and time evolution of variables like price. Quantum relative-state, however, steps out of time evolution and notions of information exchange in such a way that the concept of equilibrium (derived in economics by analogy with thermodynamics) becomes indefinable. Relative-state could be considered reflexivity to the m^th degree -- to the degree, that is, that self-identity undergoes a critical phase transition such that part and whole in systems can no longer be absolutely distinguished one from the other. Such relative-state of a system is holographic in nature, and the involved transparency in identity -- i.e., the fact that part and whole cannot be absolutely distinguished -- can be viewed as the fundamental impetus to spontaneous order, as, that is, the “magic hand”. In this conception, the “magic hand” is not self-interest, but self-transparency. If this is, indeed, the case, then “carriers” of reflexivity -- normally regarded as “externalities” -- can be tagged and these tags can be stacked on a currency base as a system-composite operative within the market mechanism and employed as part of a self-regulatory system. It is in this manner that I see m-logically-valued reserve and exchange units as system-composites in relation to market reflexivity.

Thank you for again bringing this to my attention. I am well aware of the fact that many people who might otherwise be interested in the notion of m-logically-valued monetary units as e-money, not to mention my scientific ideas, are put off by the way I incorporate “unacceptable” political, social, and even sexual “bias” into the discourse, thus making it unnecessarily inflammatory. I also, you might have added, clearly make little attempt to follow the norms of “acceptable” discursive prose and simplicity of explanation.

Why do you think I do that? Because I am stupid? Because I am emotional? Because I am naive? Because I have no political savvy? Because I don’t understand what I am talking about? Because I simply can’t write well?

The reason is because the ideas I write about are double-edged swords -- as are all technical ideas in whatever field. Properly applied, they would have great benefit; fractured, and exploited in relation to old paradigms, they would be extremely destructive. So I do not want these ideas to be easily assimilated. If they are not to be properly applied, then I prefer they not be applied at all. I am not trying to make a successful career. I have never had a career, never saw the value of one, am too old to care about such matters at this point in this life. Whenever I identify a new class of persons I do not wish to access these ideas, I do everything I can to alienate their interest.

Let me tell a little story as to why I have this insufferable don’meanothin’ attitude. As a precocious pre-adolescent child of an American Air Force officer living in rural mid-50s Japan, I had a teenaged ama who was like a second mother to me. We were extremely close. At the same time, I saw many examples of the pornography produced for the American G.I. and was aware from overheard discussions and laughter that MacArthur’s first draft of the 1945 surrender terms to the Japanese had specified the number of maids each officer was to receive by rank. The Japanese were so outraged by the brazenness of this pandering military procurement that the second draft was absent that clause. I later saw several accounts of this in histories of the period (see, for instance: William Craig, The Fall of Japan, N.Y.: Dial Press, 1967).

While in Viet Nam during the war, I was aware of the economic coercion used by America to set up its prostitution network in Viet Nam and the R&R centers. I was also aware that this was done not so much to make money -- the primary motivation of the French colons with their huge casino houses of ill repute -- as to create history’s most elaborate S-M environment, skirting edges of snuff-film-type stuff: the term “double veteran” (meaning one who kills the person raped) did not become stock slang of the war without due process and efficient cause.

Now, I have no moral opposition to non-violent, non-child pornography or the world’s oldest profession -- which I regard as something like steroid shots in autoimmune disease -- and I am aware that there would be no rape, no prostitution, no pornography if identity transparency were not suppressed in order to facilitate role stratification through a base in dominance over woman, so that institutionalized religious hierarchies and the state may rise, and keep rising, but, nonetheless, I see no essential difference between how America in Viet Nam raised its prostitution network and how Japan forcefully recruited its “comfort women”. When, in many, many cases, looking backward in wages rather than forward, as the locals are wont to do, the equivalent of a lifetime’s salary is offered for a trick, this is application of force as surely as is use of a gun. It is clearly understood by all involved that if the person offering the money does not use a gun to force compliance of the pretty face, someone else known to the pretty face will -- as the girl, of course, could not possibly hope to keep the money to herself.

The same principle applies when comparing instant, close-quarters holocausts like Hitler’s in World War Two and America’s in Cambodia with slow-motion, time-lapse, nonlocal holocausts spread over decades and decades and implemented by economic forcing. Dead is dead, regardless of the instrumentality of the kill, the grid-length, the time-step. The men who cause the holocaust by premeditatively creating the circumstances within which holocaust is inevitable are more guilty than the direct perpetrators who are merely easily replaceable cogs in machinery of the kill -- regardless of the legalities involved, as the men who caused the holocaust, more likely than not, were trained in and wrote the law.

Having witnessed, deeply registered, and contemplated such things since childhood, I do not simply put ideas out without making every effort to insure that they are properly used and to minimize the likelihood of their being abused for destructive purposes. The likelihood of misuse is so high that any authentic act of creation -- which can only proceed from moral strain -- must in this day, in this age, contemplate concealment.

I am sorry, sir, to have tarnished the attributions of your claimed identity construct by using the term “double veteran” and explaining its meaning. But you must realize that there is a whole lexicon of such words: “gooks”, for instance, having its origins in the American colonial occupation of the P.I. and moving into general usage during the Korean war (see, for example, John Sack, From Here to Shimbashi, N.Y.: Harpers, 1955). It did not originate with my generation during the Vietnam war period. I do not have childhood memories of this particular term from life around military bases as a kid during the mid-50s in Japan. As the waterboy for the base football team, I traveled in the back of a six-by to probably 50 percent of the American bases in Japan, strung out from Kyushu to Hokkaido. What I do remember is the depreciatory racist term "Tonks", which was in common usage by the American pilots who flew cargo planes form Ashiya AFB, Kyushu, Japan, to Hanoi, where the insignia where changed to French before the planes continued on to resupply Dien Bien Phu. "Tonks" was short for Tonkinese, and the usage was absolutely a racial slur. There is nothing America is doing today it hasn’t done before and the language reflects the behavior. The phrase “snatch n’ snuff stuff ” was colloquial amongst graduates of the Hatchet Forces and advisors to the Roadrunners and PRUs associated with the Phoenix Program and its precursors. Indeed, forced recruitment for “snatch n’ snuff stuff ” became notorious in the years after the Vietnam war -- amongst certain circles. Such colloquialisms do not come into usage without a reason.

Yes, I agree, it is much more complicated than that; it is not merely a matter of reflexivity as Soros maintains; it is also a matter of non-reflexive inherent immeasureability (which I earlier compared to making measurements on a Koch curve). The degree to which reflexivity is a cause of monetary indeterminacy as compared to other causes should be systematically investigated. Balance-of-payments accounting is significantly a matter of measuring immeasureables, counting uncountables, and not only because the acts of measuring and counting, and the expectation values of measurement and count outcome change the measure of immeasureables, the count of uncountables. As Fred Block says: “… in short, there is no ‘objective’ technique for analyzing a country’s international payments position” [The Origins of International Economic Disorder, Berkeley: UC Press, 1977, p. 140]. This is also the case with regard to assessing a country’s reserves -- balance of payments needs and developments in total reserves being the two legitimate concerns for use of Special Drawing Rights under the Rio Agreement of September, 1967. As Fritz Machlup says: “…the strength of the reserve position cannot be unambiguously measured: reserves may bear different relations to different relevant magnitudes (such as national income, value of imports, domestic money supply, liquid foreign liabilities)” [Remaking the International Monetary System, Baltimore: Johns Hopkins Press, 1968, p. 20].

The state to “bear different relations to different relevant magnitudes” is one aspect, and one utility, of what I mean by an m-logically-valued monetary unit. Not only as regards reserves does m-valuedness come into economic play: for example, purchasing power disparities between rural and urban sectors (a distinction itself which cannot be unambiguously drawn -- given that fractal Koch-curve-type boundaries are not being used in governance, nor even considered relative to fractured-border culture-crisis zones like the Balkans) of a given national economy have m-valued properties, which, if explicitly recognized and put into economic play via m-logically-valued exchange units could overcome the tax structure cross-sectional disequilibria plaguing developing countries -- not to mention the enormous array of global North-South disparities giving rise to the current accelerating cycle of violence.

It is because of such quantal “hidden variables” as inherent immeasureability, reflexivity, and “different relations to different relevant magnitudes” that the IMF must in any system employed retain, say, the right to resort to the prerogative of “directing drawings”. This sort of extra-systemic, invasive, therapeutic intervention -- subject to all the foibles of human fallibility and corruption -- is not required due to some inherent property of monetary systems qua systems, but because the quantal properties are not explicit and factored into the process conventions such that they facilitate self-organizational competency. Such facilitation is what m-logically-valued monetary units can provide.

Okay, it must be granted that Sorosian reflexivity could be a rather large component in the monetary indeterminacy occasioning management of both trend liquidity and crisis liquidity -- though one would suspect the reflexivity component to be larger in the case of crisis liquidity (which is not what Special Drawing Rights were designed to address). The international economy is a dynamic process: any determined instantaneous value or position is, therefore, in large measure an abstraction (agreed to on a pragmatic basis). The abstracted absolute value (size) of a reserve position is far less important than its state of change; indeed, expectations as regards future state of change most directly determine policy initiatives in relation to, say, an apparent growing balance-of-payments deficit.

Policy initiative in response to a given state of change, mathematically speaking, is at least a double exponential function (a higher power of the power of the function), in that expectation from a given state is indeterminant and policy initiative from a given expectation is, likewise, indeterminant. To treat these vertically stacked indeterminacies (ostensively stacked in the logic employed by the policy maker) as horizontally-coupled probability arrays is to regard the international economy anthropomorphically, not as a dynamic process, and is to unrealistically serialize human cognition. One, therefore, for instance, regards the tendency to overshoot at both ends of an economic cycle as a negative result of human factors limitations, not as an inherent property of dynamical processes. This anthropomorphic assessment, in turn, affects the whole strategic orientation toward structure and convention in macroeconomic management. Whereas, in many natural processes -- atmospheric, oceanographic, chemical -- divergence and imbalance, driven by self-reinforcing feedback loops, it is important to recognize, are essential features of autocatalysis and self-regulation. Anyone interested in economic development, especially sustainable development, should be interested in the mechanics of autocatalysis. Self-reference is an essential aspect of autocatalysis, and any decision process in a systemic context cannot be sufficiently isolated as to free itself from the self-referential properties of that context.

Establishing the sets of inequalities characteristic of monetary indeterminacy relative to given classes of economic measures would, therefore, appear to be a pressing problem. No less pressing is evaluation of the differing functions of reflexivity under different possible process conventions in different market and monetary structures. Stacked exponentiation in functional analysis is a more informed approach to representing self-reference than are horizontally-coupled probability arrays -- indeed, designation of indeterminacy as stochastic, statistical, probablistic is itself anthropomorphic and largely motivated by the attempt to deny existence of self-reference. There are two ways to approach this domain of consideration: study [1] functions of the identified dynamics; and [2] dynamic logics of the structures of identity.

Reflexivity, treated as self-reinforcing feedback loops leading to imbalance, overshooting, divergence, is viewed through the time-series lens of information exchange between discrete (i.e., spatially separated) entities in a dynamical process. Reflexivity, treated as logic of the self-referential structure of systemic identity, is viewed within the enfolded stack of logics characterizing relative-state of composite entities structured holographically. (See the General Process paper for related reflections.) These reflexivities are the same reflexivity, two sides of the coin. The same thing is viewed from two different perspectives: existential in the former, ontological in the latter. Adopt a classical Newtonian time and space perspective and characterization of reflexivity will be of the first type. Adopt a quantum-relativistic perspective and -- unmolested by ideological commitments -- characterization of reflexivity will be of the second type.

Using the first type, one can analyze the functions of exchange dynamics in markets, and the states of change of those dynamic functions: velocity, acceleration, time rate of change of acceleration in monetary through-put, for example. Cycles as waves, wave dynamics: one take only on reflexivity in process. But this take is not enough to fully comprehend, therefore not enough to adequately manage, and certainly not enough to create the process conventions and operational structures prerequisite to high levels of systemic self-regulatory competency.

Using the second type, one can analyze not only the logic of decision process, but the “unlogic” of process decisions -- be any particular decision a decision to act or to procrastinate. Expectations in relation to change states of a variable, such as reserve position, are not formulated solely on a 2-to-the-nth-power basis. The 2 refers to true or false: traditional 2-valued Aristotelian-Baconian syllogistic logic, which regards self-referential statements as fallacies. This type of logic may be valid for the decisions of an absolutely distinct decision maker, but it is not an accurate characterization of systemic decision process in the international economy regarded as a dynamic process qua process. As interesting as frozen individual decisions might be, in the dynamic process which is the international economy, the individual decision is largely an abstraction. The reality is to be found in logical traffic analysis on macroscopic decision processes. No “individual” decision can be sufficiently separated from other “individual” decisions such that the propositions involved are free of self-reference. To thus separate is to create a decision abstraction, an idealized decision which has no intimate connection with the real world. Expectations in relation to change states of a variable are formulated holo-systemically on an m-to-the-nth-power basis (see the M-Valuation paper for further discussion). The m refers to the number of other “individual” decision factors or values simultaneously incorporated into the given logical proposition concerning, say, the change state of a variable like reserve position. The larger the value of m, the more holographically integrated is formulation of the proposition (i.e., the greater the number of frozen, abstract, idealized “individual” decisions reflected in the proposition).

The degree to which human persons are capable of becoming holographically integrated decision makers surely depends upon many factors. Systemic self-regulation in the global economy is dependent upon finding and establishing logical operators capable of executing m-valued propositions. One class of such operators is m-logically-valued monetary units. When the French, in 1964, first proposed Composite Reserve Units (CRUs), based on “crossed deposits in gold”, they wished these to be allocated in proportion to gold reserves. When such allocation was rejected, they lost interest in the idea. This is unfortunate and perhaps reflects the fact that CRUs are also sometimes called Collective Reserve Units. Conflating composite and collective indicates a lack of understanding, and perhaps the French did not fully comprehend what they had proposed. In a collection, the entities collected remain distinct members of the collection; in a composite, the entities collected are fused into a whole. In a holographic composite, the entities fused as parts into a whole each contain all the information of that whole: such a whole is not greater than the sum of its parts, it is equal to each of its parts: a particular species of self-reference. The only way an authentic CRU could be implemented is on a currency base of logical operators capable of executing m-valued propositions.

The two best criticisms of m-logically-valued monetary units I’ve heard are: (1) the processing costs of converting between multiple currencies and using multiple values stacked on currency bases would simply be too great to justify; (2) there is no precedent in monetary history for a system that works and one that would work would never be accepted. The first criticism applies only to exchange units, not official monetary reserves and borrowing facilities. As regards exchange units, this is a cost-benefit issue that needs to be systematically evaluated. The processing costs would be initially high, but would diminish with distribution and development of the required technology. The macroeconomic, sustainable development, and larger social and cultural benefits would also be high and would increase as the extent and period of application increased. The second criticism is extremely well taken and constitutes one argument for why implementation must begin locally and proceed to the provincial, national, and global scales.

No, in espousing m-logically-valued monetary units, I am not advocating expanded allocations of Special Drawing Rights -- especially allocations based on IMF quotas. What (not who) is the primary beneficiary of SDR allocations on basis of IMF quotas? American foreign policy! On this allocative basis, America gets hundreds of times the SDRs as does an impoverished nation. If the impoverished nation is encouraged by reception of SDRs to extend its balance-of-payments deficit in size and/or duration -- SDRs thereby paying “rent and utilities” via imports -- this same effect transpires relative to America, magnified hundreds of times, only in the American case there is increased capacity to export the inflation and deficits incumbent upon massive government warfare spending financed, in essence, by foreign borrowing. The IMF and its facilities are a major part of the reason why the U.S. is able, year after year, to run its extraordinary balance-of-payments deficit -- free floating exchange rates being another major part. M-logically-valued monetary units -- be they fiduciary reserves issued by international fiat, be they asset-backed, commodity-backed, or fiat currencies, private or public -- will not solve the present international monetary tangle. Nothing will solve it. The prevailing international monetary system comes out of the barrel of a gun. And m-logically-valued monetary units will not prevent what is going to happen to the human species and the planet from happening. What is going to happen will happen because the institutionalization of the Cartesian-Newtonian worldview is one-hundred years dead, killed by quantum-relativity physics, and because two-thousand-three-hundred years old 2-valued Aristotelian-Baconian logic is also one-hundred years dead. These are epochal transitions fully in historical motion, which, due to recalcitrant blocking and longing for the past, have already involved two world wars. In such historical transitions, grievances are not causes, and holocausts are the outplay of grievances while circumstances permit. Virtually nothing of the previous order will survive these two historical transitions coupled in beat frequency. M-logically-valued monetary units are part of what will rise from the ashes of an outmoded institutionalization. People are either trying to save the dead existing institutions via reform, trying to prevent what will happen from happening via moral upbraiding, trying to find the best place to hide, scrambling to get what they can get while the getting is still good, are mentally and emotionally transfixed or, in a complete state of nescience and collective unconscious compulsion, are sprinting for the edge of the cliff. Clearly, no one is willing to act strategically on basis of a realistic assessment of the present historical conjuncture. The longer this behavioral pattern continues, the greater will be the destruction, and the rising from the ashes will be all that much longer in coming.

What can I say? Of course the prevailing international monetary system comes out of the barrel of a gun. The barrel of the gun is “dollar hegemony”. Had there been no gun, there would have been an international reserve currency like Keynes’ “Bancor” or White’s “Unitas”. Not only did the prevailing system come out of the gun’s barrel, it’s continued functioning is dependent on the gun being used. Why? Because dollar hegemony is the single ordering principle remaining to the system. It was only the gold-exchange mechanism of Bretton Woods that died in August of 1971; dollar dependency has continued. Functionality of dollar dependency is dependent on confidence in the dollar. This confidence is based on a “liability-financed” balance of payments deficit. Not a serious confidence builder -- one that needs a little “military assistance”.

White and Keynes basically just took over the gold-exchange standard as worked out at the 1922 Genoa Conference and implemented from 1925 to 1931 (the period of interwar pound sterling gold convertibility). Gold-exchange standard (exchanging the few gold-convertible currencies) rather than gold standard (all currencies convertible) was instituted post-WWI because (mainly) inflation had reduced the value of gold relative to commodities such that there was not enough monetary gold in the world to function as the sole category of reserves for balance-of-payments adjustments. White, under pressure from above (Keynes finally agreeing), put this gold-exchange standard together with dollar dependency of all other currencies, mediated by a mystical cabalistic number: the dollar’s value was set at 0.888671 grams of gold. Even though Keynes was against and White was for re-creating the gold standard with its fixed exchange rates, both were adamantly opposed to the chaos of free-floating currency exchange rates as had prevailed in the 1930s. So they embraced the notion of each currency having a “par value” relative to 0.888671 grams of gold, with a 2 percent fluctuation band and strict restrictive rules governing alteration of par value. This was the beginning of pegging currencies to the dollar. The central bank of each country had to use its reserves to buy and sell in the currency markets to maintain the peg of its currency within the 2 percent band.

The pegging system meant that there had to be a lot of international liquidity (sufficient reserves for each country to adequately defend its band and meet the requirements of balance-of-payments adjustment). And since central banks could exchange dollars for gold, Ft. Knox had to have enough of it on hand to meet such demands. The IMF pool of gold and currencies was established to assist in meeting the demands of international liquidity. These demands, however, were far more than could be met without the U.S. stepping into the breach and providing the required liquidity. This was done with the Marshall Plan, with loans and grants, with imports, with the New York capital market, with overseas military spending -- all of which led to a growing U.S. balance-of-payments deficit. As it turned out, similar to the situation after WWI, inflation created a circumstance where there wasn’t enough monetary gold to keep the gold-exchange standard functional. Guns and butter during the Vietnam war era led to inflation and those central banks earlier willing to hold dollar reserves increasingly began demanding gold in exchange. Around the time of the 1968 Tet offensive, Ft. Knox seriously began to deplete. In August of 1971, the dollar was separated from gold and the gold-exchange mechanism of Bretton Woods was sundered.

Dollar hegemony continued, however, in that the dollar remained the primary reserve currency, and, though many currencies were moved to floating exchange rates, others remained pegged to the dollar. Having lost a war and suffered considerable economic damage in the process, being under growing pressure from competitors like Japan and Germany, the yen and mark taking on new significance as global currencies, after a period of post-Vietnam syndrome and a few fits and starts, a major effort was undertaken to restructure the American and global economies. Paul Volcker took over the Federal Reserve, raised the interest rates and kept them there, and “supply-side” economics became the leitmotif of the period. The unions were broken; privatization of public sector production was extolled; welfare was attacked with increasing success. Reaganomics blossomed. U.S. military spending at home and abroad spiraled to the highest levels since WWII, but inflation, nonetheless, was eventually brought under control by Volcher’s program, thereby jump-starting the New York financial markets. Inspiration was taken from the gold standard era of globalization under the British in the period 1870-1913, only in new, more elaborate forms: labor-intensive aspects of production were moved out of the country to cheap-labor economies; millions and millions of cheap laborers were imported for the lower end of the growing U.S. service sector; downsizing and out-sourcing became prevalent; employee benefit packages were slashed. The 80s shift to a new era of globalization became a billowing boom in the 90s as high-tech breakthroughs in computing and communications pushed higher and higher productivity levels and allowed American companies to become the managers of local managers spread out over the whole planet. Leveraged buyouts and mega-mergers transformed the corporate landscape and the stock market soared. Shareholder value was king. The new globalization was based upon agglomeration of corporate structures, delocalization of capital, and disaggregation of the means of production.

The only trouble was: the transformative “supply side” initiative was financed by the biggest Keynesian off-the-domestic-budget “demand side” deficit spending in history. The U.S. had become an addict, an addict who couldn’t give up “dollar hegemony” and liability-financed balance-of-payments deficits. In putting the Japanese in their place, America had adopted Kaname Akamatsu’s “Flying Geese” strategy (“A Theory of Unbalanced Growth in the World Economy”, Weltwirtschaftliches Archiv, 86:2, 1961) of exporting substantial portions of its manufacturing base, the risk being that in due course the local managers will slough off their remote managers. And in out-sourcing, American corporations had created their own keiretsu cronies. In globalizing as a means to retain control and pre-eminence, America had had to stare into a black hole: it could not continue its current account deficit without risking loss of confidence in the dollar, but if it were to close the deficit there would be a lack of international liquidity (given the fact of dollar hegemony). If America was to continue to pursue her global agenda, she would just have to tough it out with the Gipper. And tough it out she did. To the tune of, in 2001, some 400-plus billion dollars -- or approximately 4 percent of the GDP -- of liability-financed balance-of-payments deficit. This requires capital inflows of more than 1 billion dollars per day. In following the Gipper into dollar-denominated globalization, the U.S. made herself totally dependent on the vagaries of international finance capital flows, over which she has only nominal control. Some say that before this deficit reaches 6 percent of the GDP there will be a crisis of confidence in the dollar, interest rates will be raised, and a recession will set in as a consequence. But such a soft landing is quite implausible, as dollar hegemony is the only remaining ordering principle of the Bretton Woods system. When it goes, the landing won’t be soft.

How can I say that supply-side Reaganomics was financed by exorbitant Keynesian deficit spending? Let me quote the Brookings Institute economist Marina Whitman (“Leadership Without Hegemony,” Foreign Policy, 20, Fall, 1975, p. 140):

Other countries, in turn, were willing to accord the United States certain special privileges (primarily that of printing international money) as a concomitant of the special responsibilities we took for the economic stability and military security of the non-Communist world.

Obviously, in Whitman’s view, dollar hegemony is not necessarily leadership hegemony. But what does the term “liability-financed” mean in modifying the term “balance-of-payments deficit”? It means, as Whitman indicates, “printing international money”! Supply-side Reaganomics was financed by printing trillions of dollars of fiat money which the U.S. spent abroad for military activities, oil, structural impediments initiatives, and on and on. Much of that money came back on deposit, initially drawn in by Volcker’s high interest rates. This financial scheme was the bedrock of the “new economy”. Who are the creditors of the U.S.? Who holds in their hands confidence in the U.S. dollar? Saddam, Gaddafi, the Saudi princes, the Japanese whose economy was slain by the Plaza Accords, among others. The Saudis alone recently had some 600 billion dollars on deposit in U.S. banks -- enough to cover one-and-a-half years of U.S. balance-of-payments adjustments. The U.S. is in the same position today relative to its creditors as the Germans were in the 1930s relative to their creditors. The more America is economically weakened, the more must confidence in her international fiat money be militarily assisted. If confidence in the fiducial dollar collapses, this will not take place in a world at peace.

Thank you for sending me a copy of Tokyo University Professor Akira Suehiro’s paper, “Who Manages and Who Damages Thai Economy? -- The Four Core Agencies and Dr. Puey’s Networks” (unfortunately without publication information). His account of the evolution of Thai financial agencies is fascinating, particularly as I had no previous exposure to this body of information.

In thinking about content of the paper, however, I find myself contemplating not so much the details of the story presented, as the broad brush strokes. The specific item in Suehiro’s account that got me thinking about assumptions he brings to analysis of the details is the fact that he uses the term “Plaza code”, whereas the normal English phrase is “Plaza Accords” or “Plaza Agreements”. I can’t get away from the suspicion that choice of the English word “code” reveals something significant about the whole interpretation, particularly so as his account of the fall of the “four core agencies” framework starts with the Thai response to the monetary effects of the Plaza “code” on the Thai economy.

Suehiro says the 1985 Plaza code “adjusted the Japanese yen” and that this led to a rush of Japanese and other East Asian firms into Thailand, leading to the Thai economic and stock booms. He provides no contextual discussion of the effects of the Plaza code on the Japanese economy, which is a significant omission given that the bubble economy burst there well before the baht was devalued.

There are other parts of the story that he leaves out. The four core agencies framework emerged in force, according to his account, in the early 1960s. This was the time of explosive growth in U.S. commitment to the Vietnam War -- and the period when major U.S. decisions were taken as to how the U.S. would finance that war and what procurement policies were to be followed. Those financial decisions were largely responsible for ending the Bretton Woods gold-exchange mechanism. Soon after Nixon came into office, he separated the dollar from gold, thus ending the Bretton Woods gold-exchange mechanism and adding a dimension to U.S. foreign policy based on the new floating currency regime which made things like the Plaza Accords possible. I was in Washington, D.C. at the time the dollar was separated from gold, and the matter-of-fact manner in which this was done -- no real sense of a traumatic transition having been made under duress -- was such that I thereafter always suspected that at some point one of the unspoken U.S. objectives of the Vietnam War had become to end the Bretton Woods monetary system.

Several months ago, in the library, I noticed a copy of two volumes of the Morgenthau Diaries. As these volumes are very lengthy, running to over 1600 pages, I just registered their presence for future reference and let them sit on the shelf. Henry Morgenthau was Secretary of the Treasury from the beginning of 1934 to July of 1945. These two volumes of the diaries in very significant measure have to do with China and they were published in 1965 (when financial decisions were being taken concerning the Vietnam War) by the Senate Judiciary Committee’s Subcommittee to Investigate the Administration of the Internal Security Act. They have a lot to say about Harry Dexter White, who was Keynes’ counterpart at the July, 1944 conference wherein the Bretton Woods Agreement was reached. After reading Suehiro’s paper, I went to the library and checked out the two volumes of the Morgenthau Diaries.

The following comes from the preface (p. IV):

The subcommittee’s staff has given special attention to the activities of Mr. Harry Dexter White having to do with the money of wartime China. Partly because of these activities, the Chinese dollar dropped from 60 to the American dollar to 4,000. Many observers believe that China’s monetary disarray was a major cause of General Chiang Kai-shek’s downfall and the Communists’ triumph. The policy of the executive branch and the Congress was to support Chiang. White not only nullified this policy; in effect, he reversed it… White ultimately was revealed as a Communist agent.

This was meat and potatoes of the youthful Nixon, as he participated in activities of the House UnAmerican Activities Committee. So one can imagine the relish with which he ended White’s Bretton Woods gold-exchange mechanism.

Under MacArthur, Japan was given preferential access to the means of secondary industrial production and a special role in development of Southeast Asia as a bulwark against Communism. Her economy benefited greatly from U.S. procurement policies during both the Korean and Vietnam wars. During the Vietnam war era, her auto industry especially benefited. The U.S. was willing to tolerate ever increasing trade deficit with Japan’s export-led economy throughout the Cold War because of security concerns.

According to the standard interpretation, the Plaza Accords signaled the end of U.S. willingness to absorb the Japanese trade surplus. But to say that the Plaza code “adjusted the Japanese yen”, as Suehiro does, is a rather strange way to characterize the devaluation of the dollar involved. Following this “adjustment”, the export-led Japanese economy slowed and interest rates were rapidly lowered 5 times, from 5 percent to 2.5 percent. The Japanese bubble built rapidly, but the trade deficit did not rectify. The U.S., having learned from this, it is said, then went after ”non-tariff barriers”: structural impediments initiative, and so on. Eventually, the World Bank even developed a policy focus on cultural barriers to trade. And still the U.S. trade deficit did not rectify.

Contrast this standard trade surplus explanation of the Plaza Accords’ devalued dollar with the following from Kevin Kearns, President of the U.S. Business and Industry Council, (“All-time Record Trade Deficit Threatens U.S. Economic Security”, Trade Alert, March 28, 2001):

The final U.S. trade deficit figures for the year 2000 were announced today. They reached a stunning all time high of $369.69 billion… But the real news is that these numbers are not news at all. No one seems to care…

This not caring makes one wonder what the real motivation for devaluation of the dollar was in the Plaza Accords. Suehiro’s use of the term “code” instead of “accords” suggests a tacit recognition of intent, while his phrase “adjusted the Japanese yen” suggests that this tacit recognition has remained tacit, and hasn’t been thought through.

It is interesting to note in this regard that the Cold War hadn’t officially ended by 1985.

Compare Suehiro’s phrase with content of the Asia Times editorial on June 20, 2000, “Takeshita dies: Another non-end to an era”:

…Takeshita… has two main political achievements to his credit: as Finance Minister in 1985 he participated in the G5 (now G7) deliberations that led to the Plaza Accords for massive yen revaluation against the dollar… The Plaza Accords ushered in a period of easy money and asset inflation now known as the bubble economy period…

It seems a bit of a misnomer to regard a Japanese Finance Minister’s complicity in a sting operation on Japan, Inc. as a “political achievement”. Since the Japanese did not do so well themselves in dealing with the carrot-and-stick aspects of the results of this “political achievement” within their own economy, and exported its consequences to the area MacArthur’s program designated as their special mandate in the large-scale postwar security arrangement, it seems a bit unfair on the part of Suehiro to lay the blame for the consequences -- this Japanese exportation of the very same carrot-and-stick had -- upon the Thai economy largely at the feet of Minister Pramuan Saphawasu.

I don’t advocate that the Bretton Woods gold-exchange mechanism be reinvented. What I feel is required is that a new monetary system be created on the basis of contemporary knowledge of the dynamics of self-organizing processes. That knowledge is primarily resident in quantum physics. And this is why I have been trying to think about monetary systems from the perspectives of quantum physics. Adequate evidence has accumulated at this point to suggest that the U.S. is unlikely to take the lead on this.

I was hoping that Suehiro would weave a bit of the history of Thai monetary policy into his explication, but, alas, he did not. Nonetheless, I found the paper fascinating and thought provoking.

No significant risk because not cumulative, you say? Hmmm. It seems to me that as long as there was a gold-exchange mechanism, U.S. balance-of-payments deficits -- “libability-financed”, i.e., financed simply by printing dollars and spewing them into international markets to buy what was needed for pursuit of U.S. national interests -- were cumulative, cumulative because all the dollars printed, circulating outside the U.S. or held as reserves by central banks, were supported directly or indirectly by potential calls on U.S. gold stocks. Such calls did not start in significant measure until around 1958, when the so-called “dollar shortage” ended and U.S. balance-of-payments deficits began sharply to climb (becoming a “dollar glut” through increased printing). Not likely directly due to Sputnik and the fluctuating wages of the containment policy, this turning point was probably a result of the crossing of cusps in several curves: the inflation curve governing the second half of the 20th century; the curve representing the march of postwar recovery; the curve depicting quantity of non-domestic dollars printed. Recovering nations perceived themselves as potentially losing money by holding dollars in an inflationary environment; they, therefore, made increasing calls on gold the U.S. was obligated to hold at a fixed price by virtue of that aspect of the Bretton Woods Agreement the U.S. had adamantly insisted upon (Keynes was opposed to resurrecting the gold standard and White was for re-establishing it). Calls on gold were hedges, bets that the U.S. would be unable to maintain the mystical cabalistic proportion 0.888671 :: 1 in face of the global inflationary spiral caused in significant measure by its own unfettered printing of U.S. dollars in order to pursue its global agenda without constraint. So, the obligations of each succeeding year's U.S. balance-of-payments deficit accumulated from the end of WWII until August of 1971, when the U.S., in part because of the guns-and-butter way it financed the Vietnam war, could no longer meet its obligations and separated the dollar from gold, thus defaulting on the dollar value -- of all non-domestic dollars in reserve and in circulation, globally -- lost to global inflation in the postwar era. This was an enormous default, in that one of the functions of money is to serve as a “store of value”.

Now, I will agree that after this default U.S. balance-of-payments deficits were not cumulative in the same sense they were prior to default. Prior to default, deficit accumulation was formalized in relation to a fixed value of gold and the right to make calls on that gold. After the default, deficit accumulation remained, but that accumulation now had remaining -- given that the U.S. dollar had by default become a pure fiat currency, fiducially sustained -- only its informal attributes, those attributes of confidence in a store of value that are less than tangible: expectations that the U.S. dollar will hold its value against global inflation better than other possible reserve assets and vehicle currencies. An enormous number of intangibles are built into these expectations concerning all the U.S. dollars that have been printed and pumped into the world's economy. U.S. balance-of-payments deficits in the early-50s ran about one-and-a-half billion dollars each year. They were up to around 4 billion dollars by 1960. This year, 2002, that deficit will be around 500 billion dollars -- unadjusted for global inflation, which is the exact point at issue.

As a large percentage of the fiat U.S. dollars printed for global circulation is related to America's pursuit of its global monoculture agenda, dollar confidence is held hostage to success of this American pursuit. Thus, there is enormous pressure on America to constantly remind the world of its agenda and how well that agenda is fairing -- by acts of demonstration, by positive economic indicators, by constant media hype, by successful wars, and so on: dollar confidence depends upon such reminding. When dollar confidence is solely based on informal processes, and no other form of backing, and the dollar thus based is a hegemonic reserve currency dollar in a free-floating global economy undergoing forced integration, there is a built-in habituation response. Ever increasing need for confidence-building demonstrations requires evermore unfettered printing of fiat money to fund these larger and larger demonstrations; while the evermore unfettered printing of fiat money more and more undermines the dollar confidence requiring confidence building. This is like the tiger chasing its own tail, though in this case, rather than turning into butter, he turns into guns: indeed, guns chase butter; butter chases guns. When economic components of dollar confidence falter, demonstrations must be made relative to the non-economic components. The larger the deficit, the more need there has been for non-economic confidence building activities. Dollar confidence was at its peak at initiation of implementation of the Bretton Woods Agreement immediately after WWII and has been waning ever since, as the postwar history of U.S. balance-of-payments deficits indicate. All the U.S. dollars printed through the years due to liability-financed U.S. balance-of-payments deficits (printing over and above domestic requirements, that is) stand ready to make their calls on confidence by withdrawing themselves from deposit, if the American global monoculture agenda is seen to falter. Were there to be such a faltering, the magnitude of involved default on implied store of value would be unprecedented. Dollar short and gold long would be the mantra of the day, as just like in both world wars convertibility likely would rapidly cease.

Come on! quite the opposite. “Liability-financing” unbound. The yearly U.S. balance-of-payments deficit was up to around 30 billion dollars in 1971 when the Bretton Woods gold-exchange mechanism was repealed by Nixon in order to bring about a devaluation of the dollar. Did this end the U.S. ability to freely print the dollar as a vehicle currency to cover its non-domestic dollar liabilities? No. Liability-financing (printing dollars) of the U.S. balance-of-payments deficit is permitted by virtue of the fact of dollar hegemony, the circumstance that the dollar has been the principle international reserve asset since WWII. Ending of gold-for-dollar convertibility removed the only real constraint there was on the U.S. ability to freely print dollars. You think the Nixon administration did not understand this? Thirty years later, the U.S. balance-of-payments deficit is approaching half a trillion dollars per year. It is not by domestic-budget deficit spending that the U.S. has funded action on its evermore prescriptive global agenda; it has borrowed the required money from those toward whom that agenda is directed. And it has no intention of paying off the loan!

The Special Drawing Right can never become the principle international reserve asset for two reasons:

1. The U.S. would have to stop freely printing vehicle currency (non-domestic dollars) to cover its balance-of-payments deficits, which would severely restrict its ability to pursue its global agenda;

2. Consolidation of the overhang of dollar liabilities through direct conversion or an IMF substitution account would involve forgiving the liability-financed (printing of non-domestic dollars) balance-of-payments deficits accumulated by the U.S. since WWII.

Just as the Bretton Woods Agreement (much scaled back from the functional monetary order both Keynes and White originally imagined) could not be achieved independent of the upheaval of a great depression and two world wars, so these two reasons will prevent agreement on a new order independent of upheaval on a similar scale (and even then the imagined new order will be scaled back into non-functionality, as was that of Keynes and White). A monetary house of cards must rapidly be built up from below before the upheaval occurs. Moreover, building the new order from the bottom up with m-logically-valued weighted-basket currencies is the only way to get a viscous free float that is not subject to volatilities. Multiple values stacked on a currency base of multiple nestings means viscosity, the required drag on volatility. Other than m-logically-valued monetary units, there has not appeared a single new fundamental idea in the field.

Economists believe they have proved that the usefulness of money is inversely proportional to the number of circulating currencies: U = 1/n. This U = 1/n, notice, is a linear equation. The linearity of the equation dictates that, without variation, the smaller the number of currencies the greater the usefulness of money. There being no nonlinear variation in the linear progression of this functional relation, the highest level of usefulness must be achieved when only one currency is circulating. Usefulness diminishes when any factor defining usefulness is in a state of less than optimum efficiency. The list of factors defining usefulness is derived from the list of functions money is seen to perform. The notion of usefulness, therefore, is derivative of the notion of efficiency.

We can see from this that the relation between usefulness of money and number of currencies is the same as that between meaning and the number of values permitted to a given proposition in logic. According to Bertrand Russell -- in his book On Logical Atomism, written at virtually the same time as the quantum of action was first defined by Max Planck -- as the number of logical values permitted to a proposition increases, the meaning that can be conveyed by that proposition decreases. This is purely a linear relationship, a relationship free of nonlinearities. Therefore, the greatest meaning can be carried by single-valued propositions: the statement must be either true or false, not simultaneously both true and false, and no shades of grey. So, usefulness of money to fulfill its functions and usefulness of logical propositions to convey meaning seem to abide by the same basic rule.

Money is said to be defined by the fundamental functions it performs. These functions are said to be three in number, all other functions attributable to money being derivable from these three: medium of exchange, unit of account, store of value. Functions such as standard of value, measure of value, standard of deferred payment can be derived from the three fundamental functions of money. And the factors defining usefulness of money, likewise, all derive from the three fundamental functions money performs, such that, for instance, if the “common denominator” function of money, its ability to minimize the amount of information required for transaction, its status as a numeraire, is diminished by requirement that multiple price quotations be made due to there being multiple currencies circulating, then usefulness of money as a unit of account diminishes. If currencies have to be exchanged one for another, the purchasing power of money may fluctuate, meaning that it may lose its stability, thus reducing usefulness of its capacity to store value and facilitate exchange of goods and services. All such factors, due to the existence of multiple currencies, increase transaction costs and thereby diminish usefulness of money. Economists say that it is for this reason that use of multiple currencies has diminished as economies have evolved. They argue that our economies have now evolved to the point that national economies have only one circulating currency, administered by the national government, and that any other currencies that might appear within national borders are “pseudo currencies” because they represent a historical throwback and reduce the usefulness of money. It has for a considerable period been argued by some economists that the next stage in evolution of our economies will be achieved when multiple national currencies are finally reduced down to one world currency (see, for example, Willett, T. D. and Tower, E., “Currency Areas and Exchange Rate Flexibility“, Weltwirtschaftliches Archiv, 105:1, 1970, p. 49). Other economists, however, argue that the case for supra-national currency integration is not so clear-cut, that the benefits of integration may be outweighed by the costs thereof (see, for instance, Kindleberger, C. P., “The Benefits of International Money”, Journal of International Economics, 2:4, 1972, p. 442).

The idea that the costs of integrating to a single world currency may outweigh the benefits sullies the pristine linearity of the single-logically-valued proposition that usefulness of money is inversely proportional to number of currencies in circulation. Under some circumstances, then, the relation appears to exhibit a certain nonlinearity. These circumstances, it turns out, become apparent when the notion of efficiency, upon which the notion of usefulness of money is based, is more closely appraised. Apparently, so long as one looks at microeconomics alone -- that aspect of economics having to do primarily with resource allocation processes -- the relation between usefulness and number of currencies remains linear. When, however, one looks at macroeconomics -- that aspect of economics having to do with level of resource employment and stability of prices -- the linearity of the relation becomes uncertain. This uncertainty, though, it is maintained, does not extend so far as to have consequences for sub-national monetary processes. The microeconomic benefits of a single currency are largely subsumable to decreased transaction costs, an improvement in microeconomic efficiency; while lack of national currency barriers may reduce levels of resource employment, reduce product diversification, and cause inflation within national economies, a reduction in national macroeconomic efficiency. Though the global economy as a whole may macro-economically benefit from a single world currency, the national costs of this global benefit may outweigh the global benefit. What this means is that a relation which is globally linear may simultaneously be nationally nonlinear -- and that the global benefit of global linearity may only in the limit of infinite extension in linear time become equally distributed nationally. In the lifetime of nations, that is, the global benefit of one world currency will not accrue to most national economies, while the national costs will quickly accrue to those same national economies. The question is: Why does this property of a mathematical function apply only to the supra-national scale level and not also to, say, the supra-local scale level?

This mathematical property does not apply only to one scale level, as the principle of self-similarity in cascades through multiscale dynamical systems teaches us. And the fundamental reason why this is the case in economics is that economic efficiency in usefulness of money is multivalued, not single-valued: efficiency is a “multivariate” quantity, as will be found clearly stated in many textbooks and articles. Multivariant in mathematics, in the theory of functions, means not single-valued. Moreover, there are more monetary scale levels in the global economy than are formally codified by presence of distinct circulating currencies: the same national currency within the same national borders has different purchasing power in different localities, rural and urban. This is because the value measured by currency circulating in urban areas is different from the value measured by the currency circulating in rural areas: the exact same work, for instance, is valued differently in each case, and by no means is balanced by cost-of-living and standard-of-living differentials (if so, there would not be such huge economically-forced in-migration to the cities). Urban money and rural money in the same currency is not the same money because the unit of account is not single-valued, but multivalued. The denominator is not common. The numeraire employed is a weighted die, a house die, not a fair die.

This unfair die is an expression of the same principle as the nesting of national nonlinearities within the globally linear: in the lifetime of individuals and nations, there is no equalization possibility. And this uneven playing field is built into the nature of money as defined in liberal economics and its Newtonian econometric equations (stochastic relations being deteriorated-Newtonian, not post-Newtonian, as quantum-relativity theory, to which statistical mechanics inevitably led, has barely made a dent in the carapace of liberal economic theory). It is within the market micro-environment that “money is local”. What happens in the market micro-environment in regards to action directives impinging upon micro-actors may be in the realm of microeconomics or macroeconomics, but this circumstance does not negate the fact that there are microscales and macroscales in economic systems and cascades through those multiple scales. When I am told by economists, even Noble laureate economists, that what I have to say is filled with a lot of jargon, but I do not use the words with their proper meanings, there is little I can say by way of reply other than to note that it is not my responsibility to see that they read Adolf Lowe, that they familiarize themselves with the extreme fashion their school has wed its thought to 300-year-old ideas never updated. I cannot be responsible for their disdain for the Frankfurt School over long-dead political issues, causing them to neglect, for instance, content of Lowe's book On Economic Knowledge (N.Y.: M. E. Sharp, 1977), which brilliantly analyzes the debt of liberal economic theory to Newton's Laws of Motion.

Walk the logical ladder back its rungs of syllogistic accommodation. The notion of economic efficiency trundles back to factors defining usefulness, to usefulness itself, to the functions of money. The functions of money noted above were: medium of exchange, unit of account, store of value, standard of value, measure of value, standard of deferred payment. “Store” refers to time. “Medium” refers to space. “Measure”, “standard”, “unit” each refer to decomposition of what is designated “value”. In the history of economics, there has been controversy over what constitutes economic value. But whatever the theory of value debated, there has been no debate over the value of value. Value is value and only value; it is not value and not-value simultaneously. So it is not surprising that the rule governing the usefulness of money is of the same form as the rule governing meaningfulness of logical propositions. Both rules relate to value: the one involving money, related to economic value; the one involving meaning of statements, related to logical value. And in both cases value is value and not simultaneously not-value. Though one must wonder at the significance of this correspondence, must wonder as to whether the notion of economic value is derivative of the notion of logical value, and whether the rule governing the usefulness of money is derivative of the rule governing the meaningfulness of logical propositions. One must wonder, moreover, as to whether there was a meaningful coincidence in the fact that Russell made his argument about single-valued logic being the most meaningful logic at the very birth of quantum theory which in the two subsequent decades replaced the single-valued variables in Newton's Laws of Motion with the multivalued variables of Schrödinger's wave-function. Indeed, Russell was not so much arguing for single-valuedness as arguing against the multivaluedness Cantor had implicitly introduced into number theory with transfinite sets. And Cantorian sets have a great deal to do with self-similar cascades through nestings, nestings like local (i.e., “national” in context of the prior discussion) nonlinearities being nested inside global linearity, which, when it occurs, more or less reveals the presence of quantum properties in the system.

Another function of money is to facilitate resource allocation, but this function is a function that is never listed as one of the three fundamental functions of money. Allocation relates to space, and, thus, is usually regarded as derivative of the medium-of-exchange function. The fact that money reduces the amount of information required to make a transaction -- over, say, what would be required to complete an act of bartering two disparate pieces of complex technology -- is not treated as fundamental, but rather as derivative of the unit-of-account function. But are these two functions actually derivative in the way suggested, and are both independent of the store-of-value function? And if not, could this non-derivative, non-independent status draw into question the single-valuedness of economic value -- thus throwing light on how rural money and urban money in the same currency are not necessarily the same money?

Resource allocation does not transpire when money stands still. When money moves, allocation of scarce resources transpires. Money qua money does not facilitate allocation; movement (of money) allocates: microeconomics as Newton's Laws of Motion. Money can move faster or slower; allocation can take place with greater or lesser efficiency. “Faster or slower” refers to a state that has not only to do with space; it also has to do with time, with the store-of-value function of money. “Movement” in the store-of-value function, itself, however, is not translation in space, but a matter of growth and contraction. Growth of capital, or at least expectation thereof, is more macroeconomic than microeconomic: level of resource employment, stability of prices. But “faster or slower” can move faster or slower, faster or slower moving faster or slower can move faster or slower: acceleration/deceleration and time rate of change of acceleration/deceleration. These movements of movement in the medium-of-exchange function of money are local (i.e., “national” in context of the prior discussion) nonlinearities within the globally linear. Looking at the functions of velocity, acceleration, and time rate of change of acceleration in multiscale dynamical systems in general, one sees that a velocity (i.e., the presence of movement over time) establishes the unit of account (i.e., the quantum of action) and maps its intrasystemic translation; acceleration maps intersystemic movement between subsystems, systems, and suprasystems (i.e., maps self-similar cascades); and time rate of change of acceleration maps movement between internal and external sources and sinks (i.e., between “externalities” and internalities).

What is moving? Money, a signifier of economic value, is moving. Is economic value under movement that same economic value under movement of movement? Under movement of movement of movement? Does the value of value change when it is in different states of movement: velocity, acceleration, time rate of change of acceleration? Does the defining die of money become differently weighted when subjected to different states of motion? If post-Newtonian physics has taught us anything, it is that the answer to this question must be an emphatic yes. Economic theories of efficiency and usefulness of money -- microeconomic and macroeconomic -- have not strayed far from Newton's Laws of Motion, with their single-valued variables. Russell's notion of logical value as most meaningful when single-valued (which has underpinned the prevailing notion of the value of economic value in defining usefulness of money) is a necessary consequence of his conception of information as applied to the supposed singular nature of the identity of number. He evaluated the meaningfulness of a multivalued proposition using the single-valued logic he was accustomed to, not the appropriate order of m-valued logic he was unfamiliar with. To address issues involved in the question of self-sameness in cardinality and ordinality of numbers would take us too far a field, but the involved idea of information is immediately germane. The information unit, a bit, has been defined according to the single-valued logic Russell was accustomed to use, not according to the m-valued logic he was unfamiliar with. The same can be said for the notion of economic information employed in liberal market economics, in conformance with its attachment to Newton's Laws of Motion with their single-valued variables.

The information money saves by comparison to barter is not economic information; it is descriptive and comparative information regarding the objects bartered. The information not saved by money compared to barter is economic information -- or potential economic information, if it ever moves. This not-saved economic information is the information common to monetary exchange and barter exchange. Information is economic information to the extent that it has microeconomic or macroeconomic effects as it moves in space or time. If it stands still or it does not grow or contract, it is not economic information. There is a difference between information about an economy (economic data) and information in an economy. Information about an economy can serve as an action directive in the market micro-environment, and this is where Sorosian reflexivities come into play, but this reflexive information is not information moving in an economy as a system qua system; such intrasystemic and intersystemic movement only transpires when the action directive is acted upon by the actual act of moving money. If reflexive information (information about an economy) is to be treated as information in that economy, this must be done in terms of the third-order motion (time rate of change of acceleration) related to external and internal sources and sinks, that highly nonlinear order of the motion of the motion of motion having to do with movement between “externalities” and internalities. Reflexive information, thus, would be one type of third-order information, exponentiated information, information cubed.

In a monetized economy, the factors of production are allocated by capital movements. Those factors may be organized into productive articulation on basis of the principles of engineering and thermodynamics, but this is not their economic ordering, which is a result of their being signified as economic value marked by money in movement. Limiting our discussion here to microeconomics, it is correct to say that a moving economic exchange unit, accelerating and decelerating, undergoing variation in time rate of change of acceleration, is economic information, not information about an economy (economic data). In a monetized economy, by contrast to a barter economy, all economic information in the economy can be expressed in terms of the motions of exchange units, including, for instance, the disposition of the factors of production. In a barter economy, the factors of production, themselves, are the factors of production: their identity is singular; they are the same as themselves, themselves and only themselves. This is not the case in a monetized economy. The factors of production are abstracted out of themselves in course of being monetized, in course of being subjected to the common-denominator function of money. The factors of production in and of themselves become, formally, externalities to their economic ordering through the movement of the money that signifies them. All the laws of engineering and thermodynamics governing the operation of the factors of production are not the subject of economics; these laws are regarded external to liberal market economics. The abstracting out by monetization of the factors of production changes the identity of those factors. Those factors are now monetary exchange units in motion, in motion of motion, and so on. What, in barter, was locally linear, in monetization becomes locally nonlinear. And when a nonlinear motion moves relative to its own motion, it becomes an order of nonlinearity. Each of these movements toward greater and greater nonlinearity involve the stacking of values (exponentiation) onto the selfsame identity of the factor of production as it was in a barter economy.

Nobel laureate physicist Ilya Prigogine says that anything deterministic can be treated as probabilistic. In doing so, the deterministic is taken farther and farther from the equilibrium state. Complexity theorists say that anything probabilistic can be treated as deterministic. In doing so, the probabilistic is taken farther and farther into the nonlinear. It is equally accurate to say that anything nonlinear can be treated as multivariate, as m-valued. Rural money is not city money in the same currency because rural money is closer to the factors of production in their “raw” state and city money is more involved with the motions of money in its “cooked” state. Exchange units that are m-logically-valued will be able to distinguish the “raw” from the “cooked”, signify the gradations of these states, and thereby be capable of better organizing economic order and the relationship of that order to the engineering and thermodynamics principles governing operation of the factors of production, i.e., their environmental impact.

Theories of optimum currency areas are, indeed, highly relevant to implementation of m-logically-valued monetary units. The problem is that existing theories, so far as I know, are asymmetrically focused exclusively upon establishing criteria for monetary integration, not directed to the task of actually evaluating optimum currency areas across the full spectrum of scale levels, local to global. There is no macroeconomics of sets and subsets of provincial and local economies. Scale levels below the nation-state are summarily dismissed, as was done by Yoshihide Ishiyama (“Theory of Optimum Currency Areas: A Survey”, IMF Staff Papers, XXII:2, July 1975, pp. 344-83):

Theoretically defined, optimum currency areas may not necessarily correspond to national frontiers. Since economic nonhomogeneity exists within a single nation and since there are both large and small nations in the world, monetary independence and a flexible exchange rate for every economic region within a country, or even for every country, may not lead to desirable consequences. A separate currency for each individual would make no sense at all, because such an arrangement would reduce the world to barter. In view of this doubt about appropriateness of flexible exchange rates for all of the existing national currencies, the question arises: What is the appropriate domain of a currency area?

This is substantially the introductory paragraph to his 39-page paper. At no point in the remainder of the text are scale levels smaller than the nation-state discussed; nor is the nature of “frontiers” analyzed -- fixed or changing, porous or non-porous, fractal or not. Indeed, the scale-level of the nation-state, itself, is not even authentically considered, in that the discussion is focused only upon arriving at criteria for evaluating likelihood for success of given cases of supra-national monetary integration. No consideration at all is given to the possible need for monetary disaggregation, what its benefits and drawbacks might be. Rejecting the notion of nested monetary scale levels by the autecological reductio ad absurdum of establishing an equality between individual and barter is itself absurd. Making the point, however, that no complex system in nature exists on a single scale level, of whatever level, local to global, opens to the rejoinder that economics is the science of a manmade system and is, therefore, not subject to laws of nature, and, furthermore, should not, therefore, be evaluated by analogy to natural systems. Validity of this rejoinder, however, is dependent upon demonstration that the science of economics has been stripped of all reliance upon principles developed by analogy to Newtonian physics. As far as I know, no such demonstration has been made or even attempted.

Early discussions of optimum currency areas, those of Robert Mundell (“A Theory of Optimum Currency Areas”, American Economic Review, 51, September 1961, pp. 657-65), Ronald McKinnon (“Optimum Currency Areas”, American Economic Review, September 1963, pp. 717-25), and Peter Kenen (“The Theory of Optimum Currency Areas: An Eclectic View”, in Monetary Problems of the International Economy, Robert Mundell and Alexander Swoboda, editors, U. of Chicago Press, 1969) -- reviewed by Ishiyama -- purport to consider the question in general, but in adopting as optimality criteria only the standard objectives of economic policy, e.g., full employment, price stability, balance of payments equilibrium, which have been objects of policy formulation predominantly at the national and supra-national levels, they unduly prejudice their analyses toward the national and supra-national levels. Issues such as how to interface urban and regional planning guidelines with market-determined incentives and sanctions, for instance, do not enter their realms of consideration. Therefore, any role local currencies might play relative to that interface are not considered a factor in determining optimum currency areas. Later treatments, such as that of Tamin Bayoumi (“A Formal Model of Optimum Currency Areas”, IMF Staff Papers, 41:4, December 1994, pp. 537-54), for all intents and purposes explicitly regard the nation-state as the minimum-scale component of analysis.

Nor is the nature of frontiers an issue that can be ignored in any authentic theory of optimum currency areas. A concrete historical example of the relevance of this consideration occurred on sub-nation-state scale levels regarding the economics of insurgency warfare in Vietnam. The Government of Vietnam's (GVN) geographical boundaries for province, district, village, and hamlet remained substantially unchanged throughout the war. The Viet Cong's (VC) geographical boundaries for the same areas, however, varied on a virtually constant basis as part of their bureaucratic response to a changing combat environment. This ongoing creation of fluctuations in boundaries was partially motivated by economic considerations and had economic consequences in terms of VC taxation, prices of local goods, and VC procurement. Taxes were mostly collected as commodities or corvée labor equivalent. The involved commodities were, therefore, the currencies of the underground VC economy. The availability of such "currencies" varied from area to area as partitioned by the VC underground bureaucracy and managed by the Finance and Economy Section of the echelon People's Revolutionary Party Committee. Changed boundaries meant changes in the local tax base, local “liquidity”, local wages and prices, and so on. The VC were constantly modulating their optimum currency areas so as to maximize tax receipts and procurement in a constantly changing and highly stressed economic environment. The VC boundaries were porous, had band-pass filter capability, and had fractal characteristics, in so far as features of boundary changes were coupled with a wide array of bureaucratic variables such that several types of fractal entrapment ensued. In many ways, the macroeconomics of sets and subsets of the VC provincial and local economies was superior to that of the GVN economy of the piastre -- given the extreme circumstances faced by the two contending superimposed economies occupying the same physical space and time. Constantly fluctuating boundaries may seem totally chaotic and wholly unworkable, but the above example belies that intuitive assessment, and illustrates operation of a commodity-basket currency where numeraire, the unit-of-account attribute of money, and medium of exchange are radically separated in a manner similar to that proposed by Professors Leland Yeager and Robert Greenfield (as related by Warren Coats, Jr., “The SDR as a Means of Payment“, IMF Staff Papers, 29:3, September 1982, p. 422). The Viet Cong established the unit of account based on a basket of goods -- paddy and fish sauce among them -- but issued no money. All private transactions in VC-controlled areas were denominated in the unit they established, even if the piastre was used as a medium of exchange (in the VC-controlled area the GVN piastre functioned like a private currency, almost like the MPC [Military Payment Currency issued by the U.S. Government to its troops] functioned off base in the piastre economy of the GVN). If this is not exactly what transpired, the system the VC employed certainly approximated to it. The separation of the publicly-given numeraire from the private medium of exchange makes possible functionality of ongoing boundary fluctuations in response to changing natural, demographic, social, political, and economic variables within a given optimum currency area, be that area national or supra-national. These innovations by the Southern VC, essential to winning the war, were, of course, not continued by the Northern-cadre-dominated Party in unified Vietnam -- much to Vietnam's economic and political loss.

But the focus of prevailing theories of optimum currency areas on supra-national monetary integration does not prevent them from being of utility in computer simulation of the implementation of m-logically-valued monetary units. The scale-level focus in subsystem-system-supersystem hierarchy can be shifted, for instance, from supra-national to supra-local. Considerations involved in integration of multiple local vehicle currencies via a supra-local provincial weighted-basket reserve currency, for instance, would in all likelihood involve many of the same considerations as supra-national integration. Mundel settled upon measure of the mobility of factors of production as the premiere criterion for establishing an optimum currency area after assessing the costs of valuation and money changing, price rigidities, and the like. McKinnon felt that any optimum currency area must be relatively closed to the outside economy because of the destabilizing effects on internal prices and real wages of undue openness. He, therefore, looked at measures of openness to external trade as the premiere criterion for determination of optimum currency area. Kenen focused upon product diversification and argued that the more diversified the area the less subject to disturbances under currency union. This work -- and the work of others, such as Bayoumi (cited above), who provides a mathematical model, and George Tavlas (“The New Theory of Optimum Currency Areas”, The World Economy, 16, November 1993, pp. 663-85), who considers many variables, even political preferences amongst participants and time-factor issues like adjustment speeds -- has considerable relevance to assessing advantages and problematics likely to be associated with any sub-nation-state scale level application of m-logically-valued monetary units. However, research that actually evaluates optimum currency areas across the full spectrum of scale levels, local to global, would be greatly appreciated.

I would like to say something about the issue you raised concerning the meaning of m-logical-values higher than two. Clearly, there are at least three levels of abstraction upon which one can address the questions involved:

1. An interpretation of a finite set of orders of logical-value determined by the finite set of relevant applications and its calculus;

2. An interpretation of a denumerable transfinite set of orders of logical value determined by the Russellian-“type” of the collection of relevant applications and its calculus;

3. An interpretation of transfinite sets of orders of logical-value of cardinality greater than aleph-null determined by (I would venture to guess) the collection of zeros and infinities defining the class of relevant applications and its calculus.

These three categories are nested [1] into [2], [2] into [3], and each such category is an interpretation composed of a collection of interpretations. A single interpretation of a single order of logical-value (e.g., Boolean algebra) is a member of [1].

Now, as regards the issue of archetypes and the nature of number, my FEELING is that the very old Cabalistic precept “every number is infinite” is, indeed, valid. My understanding of this is involved with the supposition that [3] is nested into [1], such that re-entry and self-reference are essential properties of number as APPERCIEVED in the most general case. [3] into [1] means that there are not a non-denumerably infinite number of non-denumerable infinities; further, that there are not a denumerably infinite number of non-denumerable infinities; that, in fact, there is some finite set of non-denumerable infinities. All the traditional literature -- from many cultures -- suggests that, historically, the consensus FEELING among human beings has been that this finite set of non-denumerable infinities is some subset of natural numbers.

The FEELING to which I refer is of the very essence of the nature of number. Such feeling is not affect; it is not feeling-tone in the Jungian sense; it is pure-feeling in the Kandinsky sense: feeling stripped of all affect, all concrete reference, all content. The origin of the human experience of number is in pure FEELING, not in counting or measurement (which is a rather imperial Romanesque interpretation). Historians of mathematics have back-created an account of the rise of mathematics by selective inclusion and application of the conventions of binary logic to determining what must have happened in order for modern mathematics to have evolved “logically” over time. (I would add that it is impossible that anyone still staring at shadows on Plato's cave could adequately translate Plato, translate him without reducing his notions to familiar notions. The same principle applies to translation of Eastern texts. For instance, the Agama Shastra is undoubtedly a treatise in higher pure mathematics involving discussion of transfinite point sets, lattice logics, higher dimensional spaces, transcendental functions, but only Sir John Woodroffe, in The World As Power [Madras: Ganesh, 1974] seems to have recognized this by noting that words like “tanmantra", “bindu”, “guna”, “paramanu” each have several levels of meaning, from quite concrete to very abstract -- and this recognition on Woodroffe's part was clearly due to the fact that he actually experienced some of the states of consciousness mathematically modeled in the Shastra. It must be remembered that modern written mathematical notation is a mental crutch and absence of such notation does not mean absence of mathematics. Inner Musculpt was at one time in human history a normative faculty.) Before the breakdown of the bicameral mind, before the rise of ego-sphere-based conscious awareness, however, human apperception was rooted in feeling, dream-time, animistic identity transparency -- and the logics employed to order cognition were not of the binary order of value. That this was so has recently received strong support from the demonstration that Aymara, the ancient language of the Andes, is based upon a 3-valued logic. (See: http://www.aymara.org/ and in particular the chapter entitled: “The Trivalent Logic of Aymara” which you get to by clicking on “bibliography” and then on “Logical and Linguistic Problems…”)

The apperception of identity transparency is not in what is today specified mathematically-designated space and time or spacetime; it is in feeling space, the space of pure feeling without content or concrete reference. The feeling space is the reference space for apperception of identity transparency. This space is not a space of co-ordinates; it is not a function space or a configuration space. It is a logic space. All the relations defining the space, and definable in the space, are logic-type relations-- and the foundation of the involved logics is identity, not truth-value.

The bicameral mind ordered cognition in the realms of feeling, where the intimation of number comes from the FEELING of the immensity of the immensity of the immensities, not from counting objects in the surrounding physical environment, which, for the animistic consciousness, by virtue of identity transparency and the involved generative empathy, are not wholly resolvable into distinct countable entities. Each order of the immensity encountered in dreamtime (or whatever the name given to the release of consciousness into direct immersion in pure feeling -- though “dreamtime” is particularly appropriate, as the class of all logical operators, as distinct from the logic space operated upon, to my understanding, are temporal operators) had its unique feeling-tone. These tones of pure feeling flooded the being with characteristic inner sounds heard in auditory space and colors seen in visual space (the geometries of these eidetic auditory and color-field spaces not being the geometry of contemporary ponderable space). Each of these orders of immensity was a nascent number apperceived as a feeling-sound-color, as a gestalt given in synaesthetic whole, wherein perception is not distinguished from proprioception (i.e., inside-outside are/is non-orientable). Number as pure being-in-itself swallowed experience as self-being. The first numbers to enter human awareness were the non-denumerable transfinites, and these -- upon breakdown of the bicameral mind -- became the archetypes-in-themselves of the collective unconscious (what are commonly regarded as archetypes, as seen in myths, dreams, fairytales, et cetera, being images or concretizations of the archetypes-in-themselves).

[1], [2], and [3], above, are the “gunas” of Indic thought, given contemporary expression. Mankind first experienced [3], then [2], then [1]. [1] could only be experienced once the bicameral mind had fully broken down, for only then was a binary logic possible. Aymara, being based on a 3-valued logic, was late in this “evolution”. Later still, came human awareness of finite, self-identical numbers: before emergence of binary logic, these simply were not appercievable, experiential, or definable. [1] is associated with (according to Indic thought) classes of sense particulars; and [2], with classes of generals of sense particulars; and [3], with classes of generals of generals. Following breakdown of the bicameral mind, human ego-sphere-based cognition evolved [3] to [2] to [1]. Recent evidence of several neural network wipeouts, losses of neuronal plasticity, and repeated perineural myelinations during pre-adolescent enculturation lends an “ontogeny replicates phylogeny” dimension to the argument that [3] to [2] to [1] involves progressive loss of neural capacity to encode for higher orders of logical-value. Removing this “kundabuffer” and re-facilitating higher-logically-valued neural function likely involves fundamental changes in the quantum properties of neurons (possibly involving semiconductant to superconductant transitions in intra-neuronal and perineural DNA).

I would, therefore, say that, clearly, the meaning of m-logical-values greater than two is intimately involved with the ultimate nature of number. We can imagine many concrete interpretations in terms of specific applications (m-logically-valued monetary units, for instance, with the logical-values stacked on the monetary-value of the currency base representing sustainable development indicators, such that their n-body-type interactions can simultaneously be processed by the “magic hand” of the market, after the manner of Maxwell's “sorting demon”), but this does not give us much insight into the fundamental questions.

A closer approach, perhaps, is made in looking at the m-valued aspect of Schrödinger's wave function -- as was done in our 1980 paper entitled “Some Preliminary Considerations toward Development of a Mathematical Model of the Autogenic Brain Discharge as Spontaneous Localization in Quantum Measurement”. There, we say the following:

Let us consider the supersystem-system-subsystem structure [46-48], which constitutes the hierarchical organizational framework of a macroscopic biological process, to be governed by quantum principles. Thus, we would have a macroquantum system which can be represented by a state function. All of the whole integers values of the state function represent interaction quanta (e.g., temperature perturbations) arising within the superposed supersystem-system-subsystem framework. And the description of the total configuration of such quanta, each represented by a given eigenvalue having real and imaginary components, is a deterministic description of the result of all possible interactions of an element of the hierarchy with its embedding supersystems and embedded subsystems. Likewise, the complex nonlinear interaction, both within and outside the embedded domain, is represented by superposed eigenfunctions having real and imaginary components.

In our view of a macroquantum system, a given fundamental frequency established for an element of the hierarchy represents a state of interaction between this macroquantum domain structure [46] and a given level of its embedding hierarchy. The multiple values of the state function are not interpreted as representing a probabilistic wave function, but, rather, as representing the interactivity derived from a fundamental frequency. This, in turn, deterministically governs functional integration of specific single-valued processes constituting the supersystem-system-subsystem hierarchy -- which is to say that the microphysical structure of the organism functions as a multivalued referencing frequency domain [49-53] for the hierarchically organized information exchange process. The single-valued information that is exchanged between macroquantum domain structures on the molecular, macromolecular, and cellular levels (i.e., through stereochemical metabolic, hormonal, hematopoietic, lymphatic, muscular, neuronal, and immunological mechanisms) is referenced to the multivalued frequency domain. The quantum structure of the organism thus serves a functional integrative role, and, so to speak, keeps a running multivalued, composite accounting of all single-valued information exchanges on other scale levels.

The associated Schödinger equation would, therefore, be reinterpreted within such a context…

And we go on from there, but the essential point relevant to the present discussion is that single-valued information exchange through space over time is the post-bicameral mind's way of representing to itself the simultaneous time-and-ponderable-space-independent identity-transparency experienced by the bicameral mind before its breakdown. In this context, the m-logical-values greater than two in a given proposition would have meanings related to orders of elaboration of the relative-state of the bicameral identity-transparency of what is post-bicamerally regarded as interaction between objects separated in space and time. Bicamerally appercieved in feeling space; post-bicamerally perceived in “mathematically-designated space and time” (F.S.C. Northrop's term as used in The Meeting of East and West). Orders of elaboration of identity-transparency are collective states, collective occasions of experience. M-logical-values greater than two are, it would appear, essential to propositions describing such states and occasions.

I have thought some about this issue on the more abstract level of consideration apropos of non-self-identical numbers, numbers that do not equal themselves (that is [3] nested into [1], Escher-like, via re-entry and self-reference), but I feel that real progress in this regard cannot be made without the medium and mathematical notation I refer to as Musculpt, which would directly represent number bicamerally as (pure) feeling-sound-color (color-field or sculptural shape).

My personal dilemma and life-long, life-dominating obstruction is that I, early on and repeatedly, experienced being swallowed by the FEELING of numinosity associated with large numbers, but have never, and certainly never will, be able to create the medium required to explore -- relative to modern thought -- implications of this being swallowed by being-in-itself. All my personal psychodramas relate to this in one way or another -- including the man-woman level of the transference. Indeed, as Ouspensky or Nicoll might have said, this is the bottom-line on my “chief feature”. Unfortunately, most of what I have to say on this subject is experienced by others a white noise.

No U.S. official mentions the real American motivation for advocating dollarization of small foreign economies: it gives even greater license to the U.S. to freely print unbacked greenbacks for purchase of whatever it wishes abroad in pursuit of its global agenda, a behavior unique among all nations.

I don’t know how much you know about ANNs. Artificial Neural Network (ANN) programs are based on learning algorithms and are heavily data dependent (in the present case, the data will be “fuzzy” in nature). You push the data through the initial learning algorithms and reject the outputs you don't like. The algorithms change weights on coupled variables and self-modify accordingly. More data is pushed through the algorithmically-defined parallel vector fields constituting the nets and they evolve in this fashion. So, you don't create a comprehensive computer model and test it, but grow the model through use and a learning process that establishes more and more correlations. My imagination as to how this would apply to nested m-logically-valued exchange units (the national currency would be a “basket currency”, with nested provincial and local currencies being the elements of the “basket”) is something like this: the value of the currency base is economic value, while the values stacked on this base and tagged to sustainable development indicators are logical-values. To make a purchase or in receiving salary and wages there must be an electronic match as to both the economic value and the logical-values of the currency. Such currencies would be e-currencies. A combination of the stacked logical composite with the nested basket would yield viscosity, dampening market volatility caused, for instance, by hot money flows. The ANN learning algorithms would change the weights on the stacked logical-values as the sustainable development indicator data is pumped through the model. Instead of monetary controls, there would be increasingly real-time modulation of framework viscosity. The monetary exchange market would remain a “free market” constrained only by framework viscosity.

In creating a real-world application, choice of the indicator-tagged logical-values to be stacked on the monetary-base economic value would not be done by legislative fiat, referendum, or a voting-type electronic commons. Multiple-scenarios strategic urban and regional planning would be computer gamed (via internet and DVD), with all the bells and whistles, and applied beginning at the local level. Everyone in the local jurisdiction would be encouraged to play the game. All plays in the game would be data based and pushed through the model to simulate outcomes and elaborate the learning algorithms. As the game is more and more played and outcomes publicly posted, a consensus would emerge amongst the players as to which indicators to logically stack on the jurisdictional currency base relative to the multiple scenarios in play. Once the computer-gamed m-logically-valued local currency was put into real-time use, computer gaming of it would continue as one data-base input source to the learning algorithms and as the public display module which informs users of the currency as to the changing logical-value weights stacked on the currency base. Another data-base input source would be the measured real-world values of the variables defining the indicators. Readout of this information would act as subtle incentives and sanctions influencing the currency users’ market behaviors. In the early stages, the computer-gamed readout of the changing currency values (both economic and logical) would be color-field encoded; later, as the indicator stack becomes more elaborate and the human-user learning curve unfolds through use, a holographic readout would be developed.

I would point out that there is an intimate connection between classical liberal microeconomic price theory under perfect competition equilibrium and the insistence that monetary units must be single-valued. With perfect competition, all the conditions of supply and demand are known equally to all, the end of economic actors is given, markets are cleared, and there can be only one equilibrium price: there is perfect knowledge, no time lag in information dispersal, and risk is absent. There is no problematic decision maker, as his behavior becomes totally mechanistic. Entrepreneurs, if there were any, are exogenous factors. One price, therefore a single-valued monetary unit; a single-valued monetary unit, therefore one price. There is a psychological bleed-over concerning the shared identity assumption regarding monetary unit and price: identity is singular. In neo-classical theory it may be explicit that the single equilibrium price is an ideal, but the relevant econometric calculations are still made and all entrepreneurial activity reduces to strategies of efficiency optimization and risk management: the framework and the end remain given. This is largely the Anglo-American model, and hopes for global world order have long been dependent upon the notion that there is, if only ideally, but a single global price for a given factor of production: with free markets, the inevitably increasing interactivity will generate interdependency and consequent harmony.

The Austrian school, however, was more realistic -- or less propagandistic about moves away from the economic warfare of mercantilism -- and that is why, in THE MOON OF HOA BINH, the economic discourse of the characters begins with argumentation over the work of Ludwig von Mises, Oscar Lange, and Adolph Lowe. L. von Mises in Human Action (New Haven: Yale U. Press, 1949) focused economics on the imperfect character of real competition; Lange tried to socialize this oh-so-human competitive market where struggle between entrepreneurial actors is endogenous; and Lowe’s “instrumental inference” argued that the end pursued by market actors need not be singular and can be modulated. If, in the real world, market competition is imperfect, and hence a struggle, there can be no single equilibrium price -- and this absent single price cannot then be the keystone of global order, because the commodity price will not be something market actors will receive passively, as is classically assumed. No single price, therefore no necessity of a single-valued monetary unit; no necessary single-valued monetary unit, therefore no idealized single equilibrium price. Under imperfect competition, order cannot be assumed to inevitably emerge out of anarchy: it might need a little help, a little inferential push. This is what Lowe hoped to accomplish with his instrumental inference and its identification of multiple ends and the means of their modulation.

Instrumental inference can be coupled to multiple scenarios strategic corporate, regional, and urban planning. Alternative economic indicators and sustainable development indicators are indexed measures of multiple ends. The means of interfacing these teleological inferences with market mechanisms is m-logically-valued monetary units. The decision maker thus re-enters economics in the realms of economic value and the values of reciprocity -- not only as struggling entrepreneur, for he is given choice regarding inferred ends. The magic hand -- now a Maxwellian sorting demon -- of market mechanisms no longer merely allocates scarce resources, but does so variously according to choice of ends. The parallel vectors of artificial neural networks form a bridge between the multiple ends of instrumental inference, the multiple scenarios of strategic planning, the multiple economic and sustainable development indicators, and the multiple logical values stacked on the economic value of the monetary units moving through magic-handed markets.

You feel that my characterization of the 1985 Plaza Accords as a sting operation run on the Japanese is overreaching in its characterization of American intent? Well… all I can say to that is to recommend an article published in 1985 in Comparative Strategy (5:2) written by James P. O’Leary of Catholic University of America, entitled “Economic Warfare and Strategic Economics”. Certainly, I do not consider the Plaza Accords an act of economic warfare, but I do consider it an act within the framework of what O’Leary calls “strategic economics”, an act within the “strategic-economic design to promote U.S. power”. I would say the same of the late-80s Louvre Agreement where the Japanese under duress committed to easing monetary policy, thus further feeding the bubble kicked off by the Plaza Accords. To think that the U.S. does not use all its capabilities to manipulate the structure of the global economy so as to enhance its political and military power is to place awareness wholly within the propaganda world of neo-classical liberalism, and thus to ignore the actual economic realities unfolding upon the planet.

The discrete versus the continuous is a major issue in theory of monetary units for several reasons: environmentally-related externalities function in continuously graded fashion, while prevailing monetary units impose discrete properties upon market mechanisms of self-organization; the market rule framework, as explicated in the period from Adam Smith to Frederick von Hayek, is based upon, and derivative of, use of the 2-valued order of m-valued logics, this binary order imposing a prejudice for the discrete upon operation of what economist Adolph Lowe called action directives delivered to market micro-actors by the supply-demand dynamic (when I used Lowe's terminology in communications to Milton Friedman about m-logically-valued monetary units, he accused me of not understanding the words I used, which was a real belly laugh, given personal histories of the two economists and depth of Lowe's critique of the Cartesian-Newtonian dominance of prevailing consensus econometrics); the mathematics employed in prevailing consensus econometric theorizing is exclusively based upon the 2-valued order of m-valued logics, this binary order imposing a prejudice for the discrete upon characterization of market mechanisms of self-organization; temporal variables involved in economic cycles are continuous in nature, while the market mechanisms manifesting these cycles are characterized with, and modulated by, discrete rule frameworks, on-off binary logic, and discrete-Friedman information-price monetary units. The person most elaborately focused upon the discrete-versus-continuous issue was Eric Temple Bell, a president of the American Mathematical Association best known for his capsule biographies of the great mathematicians. Bell's great books, however, were his early ones devoted to the discrete versus the continuous and the influence of Platonism and Pythagorean orientations upon modern higher mathematics. For some years, via his books, Bell was my guru. His late work on esoteric issues of higher mathematics remains of considerable value, particularly his insight into Abel's work (not so much Abelian groups as Abel's accomplishments relative to non-algebraic transcendental equations and functions) and its import -- an import, in my judgment, yet to be actually assimilated. Toward the very end of von Hayek's career, he apparently made an attempt to address the issue of the discrete versus the continuous on a fundamental basis in economic theory by formulating the notion of “the time-shapes of total capital stock”. These time-shapes, as physicist Frank Tipler has pointed out (The Physics of Immortality, Anchor, 1997), are tantamount to Hugh Everett's relative-state formulation of quantum mechanics. Each time-shape of total capital stock would constitute what I would call a discrete “use universe” (one of Swedenborg's Platonic “forms of uses”). Particular sets of ideas, brought to total capital stock, partition and bound that stock on a utilitarian basis, establishing, among other things, a given technological regime -- but such binding, such partitioning, by virtue of the necessary role given to idea set, cannot be based on exclusion of externalites from market processing. If the attempt is made and sustained, collapse is insured. The brutal “new economy” demonstrates this likelihood daily: one reason Cartesian-Newtonian economics is so under threat from quantum-based technologies. Karl Popper vigorously pointed out that the appearance of new ideas is unpredictable (there can, therefore, according to Popper, be no historiographic laws, be such laws Jungian archetypes of the collective unconscious or no; belief in such non-laws -- excepting the law of linear historical development -- being characteristic of closed, totalitarian societies); he did not equally emphasize that the reservoir of possible new ideas is infinitely deep. By invoking the principle of time-shapes (which may be intimately related to archetypes), von Hayek implicitly removed economic validity of the notion of externalities. That there are an infinite number of superposed such use-universes can be intuitively grasped by contemplating -- relative to Art and Technics, to use Mumford's title and Leonardo da Vinci's focused prefiguration of D'Arcy Thompson and the all-but-forgotten pre-WWII Unified Science Movement -- the manner in which the sun synthesizes and transubstantiates the elements of the periodic table: possibilities for concatenation are unlimited. But relativity theory is obviously also involved, as “time-shape” relates to the “temporal curl” aspect of continuous spacetime curvature configuration. There is a transfinite set -- order C, Cantor's continuum hypothesis -- of spacetime curvature configurations of spacetime manifold, hence the same cardinality of time-shapes. If utilitarian partitioning of use-universe is accomplished by idea set, what, more fundamentally, accomplishes formation of limited spacetime domains (LSTDs)? Time itself. “Time leads me in time”, as the Indic saying goes. This is of utmost importance to market economics, and to evaluation of von Hayek's contribution to economic theory, because it implies a thoroughly different notion as to origins of self-organization than has prevailed in economics and, indeed, von Hayek's own prior thought on the subject, the primary subject of his career focus. Globalization, of course, is an altogether-attempt to remove residuals of economic and monetary LSTDs -- something, if actually achieved, would, despite increased advantages of comparative advantage and economies of scale, greatly reduce degree of self-organizational competency of market mechanisms (which, in the vernacular of discrete-prejudicial prevailing econometrics {(is)[are]} called “market failures”).

The “power” in the title to Sir John Woodroffe's book The World as Power (Madras, Genesh, 1974 edition of the largely pre-WWI collected articles) is “the operation of the Time-power of Kala”, to quote page 173 of Woodroffe's The Garland of Letters (1969 edition by the same publisher of additional articles written in the same period). Kala is imaginary time as topological operator on space, abstract and ponderable. The operations of time itself topologically envelope space into superposed “use universes” -- “time-shapes” being readable in the topologies assumed by the space operated upon. Conscious awareness of the existence of time is achieved through registration of space changes. The resultant “relative-state” (to use Everett's term) inherent to the superposition is the “engine” of self-organization, the origin of teleological-chaotic “attractors”. “Nada” is one Sanskrit word denoting a property of relative-state more or less recognized by contemporary physicists. “Nada,” to again quote The Garland of Letters, pages 194-5, “is… relationship or connection… [and] relation is the cause of creation…” “Adhyasa” is another Sanskrit word denoting a property of relative-state, a property not generally recognized by contemporary physicists. Quoting Woodroffe (Letters, p. 117): “Adhyasa is the attribution of the nature of one thing to another according to which something is considered to be what it is not.” If the words “considered to be” are removed from this statement, then it is an apt definition of what I use the term “identity transparency” to designate (which may have been the original meaning of the word “Adhyasa”). Animistic identity transparency violates the binary-logic law of non-contradiction and physicists, therefore, do not entertain its validity. Instead of understanding what they designate “entanglement” as indicative of the presence of animistic identity transparency, they choose to treat it as “spooky action at a distance”, as “supraluminal communication”, or as “quantum teleportation” likely through a space-warp wormhole. Such treatments allow them not to apply m-valued logics to interpretation of Schrödinger's wave equation. But, when Everett's “relative-state” is viewed through m-valued logics interpreted in terms of “identity transparency”, not truth-value, it becomes apparent that the zero-point motion-energy dictated by Heisenberg uncertainty is the actual “engine” of self-organization, not the rule-abiding behaviors von Hayek identified and described until he hit upon the notion of “the time-shapes of total capital stock”. Animistic identity transparency, as quantum relative-state, drives market self-organization, not rules. The little bit of relative-state the exchange unit as price-related information conveyor carries (information about the total state of the economy) is responsible for the low level of self-organizational competency the market possesses, a level so low it cannot organize externalities impinging upon the market. The only way quantum levels of self-organizational competency (think superfluidity, superconductivity) can be achieved by market mechanisms is if full-blown relative-state is brought into their purview by m-logically-valued monetary units tagged to “the time-shapes of total capital stock”.

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