SRF Heavy Industries

If you’re wondering why I’m quiet…

So… I’m about a third of the way done with an analysis pass to make sure I didn’t leave any humongous gaps where there is supposed to be story. I’m also cataloging characters and themes and timelines and such to make sure any attempt at linear presentation will be even.

When I’m done with adding or removing material, probably in just a few days, I’ll see about handing this off to a professional copy editor for cleanup.

And then we’ll see what’s next.

[*]

This one time I was at a university in Italy, in a room that was called — and I’m translating here, but only barely — the Visualization Lab. In Italian it sounded like it could be the name of a famous opera, but my grasp of Italian is purely through a minor dalliance with Latin and everything in Italian sounds like it could be the name of an opera. “The dented door.” “The McDonald’s on the corner.” “My hairy left elbow.” “Visualization” has three Zs in it in Italian. It’s overdone. Uncalled for. We couldn’t get away with that in the US.

The interior of the lab was sick with the same illness. There were metal workbenches with large-screened computers assembled on them, and that was okay, but there was also a huge leather sofa and a couple of overstuffed armchairs facing an enormous flatscreen display — an in-house theater system with seven speakers and full surround-sound setup.

What I thought about all this must have been visible on my face. The woman I was here to see rolled her eyes at it and said, “This is all Thomas Dolby’s fault.”

I cleared my throat. “I understand he developed a –“

She cut me off. “No. I mean personally. He came by, wanting a favor. Signal processing for something he went on to patent. Then he came back and did this. This sofa I think was in someplace he lived.” She took a seat on it, claiming a corner. “Probably he and his astrophysicist girlfriend enjoyed it themselves a number of times.” She patted a spot on it nearby. “Here is where I do some of my best work.”

I gave her my best “I’m on to you” look. “You’re unbelievable.” But I took a seat in easy arm’s reach. She liked to grab nearby arms for emphasis sometimes, and if you sat too far away she just looked lost and petulant.

In a corner of the room another woman’s voice piped up. “Si dovrebbe crederle.” I thought she had been asleep, but she was just facing a blank wall wearing 3D goggles and headphones.

“See? Gi says you should believe me.” She laughed and pulled a keyboard and trackball off a coffee table. The giant screen turned on briefly with some sort of pulsing disco lightshow patterns and then quickly turned into a computer display. I saw a cursor briefly and some menus popped up and an opening screen for some sort of application opening up, then more choices to open an environment of mathematical equations and constraints. My collaborator gave me a running under-the-breath commentary to help me keep up.

“I’m turning off much of the rendering because we’d like to see the results today, while we wait, even. So. Boring white space, smudgy black lines for the graphs. And so. This is the path of our phenomenon’s centroid. A portion of it.” She turned to look at me. “Before I continue, I should ask you: Are you a big fan of causality?”

Her face said she was serious. Over in the corner, in plain view, Gi turned up the volume to whatever it was she was listening to and slouched back in her chair. I couldn’t tell whether it was some sort of commentary on our conversation or just an attempt to drown us out for her own purposes.

“I have a strong preference for the concept of causal associations, but I am, after all, a scientist. Show me a rigorous convincing argument for a different model and I’ll consider it.”

“I can never tell when you’re joking,” she said. “So I assume either you’re joking all the time or you never ever joke, or somehow manage to do both at once. A superposition of eigenstates that never resolves.”

I shrugged. “It’s a knack. I like to keep my options open, so that if I offend someone, I can always claim that I’d been joking afterward.”

“For someone who likes causality, you like to keep your fingers in the past so you can change it to give you a more pleasant present and future. But here is my actual point.”

The black arc went away and was replaced by some sort of three-dimensional spiky thing. I was kind of reminded of the crown shape you get when you take high-speed pictures of a drop of water splashing into a pool of more water, only it was spherical.

“The software takes the data and plots it, and then analyzes the fit with respect to all kinds of different curves. You can make suggestions and it can use those as a starting point, or you can let it run wild. Part of the charm of how it works is to separate the noise of the points into several interacting equations. Signal processing. Fourier analysis. It has equations it already knows about from its previous uses — the path of Earth through the heavens, including revolution and rotation and neutation and wobbles induced by other gravity sources, continually corrected. Twice we have had earthquakes in the past two years that have changed the length of Earth’s daily rotation, which, if we had allowed the software to flex enough, it could have predicted for us.

“This beautiful shape,” she continued, “only appears as a simultaneous plot holding the surface of the Earth fixed over, to be complete, a period of more than a thousand years. Much of the detail appears within a five year period, at least half of which is covered by the date collected from the noise from your apparati, but there are holes in the data that strongly suggest extrapolation in this manner.”

“Umm, that’s a huge amount of extrapolation from the data we’ve collected,” I cautioned.

“Not as much as you might think,” she countered. “We’ve assumed a kind of symmetry, which doubles the data, yes, but the actual addition is less than five percent.”

She did some more tapping to bring up a different model, which she animated. “Here we have a sphere of liquid, or something liquid-like, I should say, being impacted by a much smaller sphere of the same traveling at high speed. Note the entry and exit. And how it responds prior to impact as the incoming mass approaches and how afterward it just looks like ripples. It is perfectly symmetrical with respect to time. This is an idealized case of our model.”

“What is it?” I asked.

“When we got the match, I had to look it up and make some phonecalls. To Switzerland, and to Chicago. It is a splash of bosonic matter, previously entangled. One of the proposed models for a macroscopic mass of strange matter, the up-down-strange quark liquid. No baryons, no fermions.”

I looked at her. She shrugged.

“The non-idealized version. Your extrapolation. The distortions are…?” I asked.

She grabbed hold of my forearm with both of her smaller hands. “The mass of the sun. The mass of the earth. Gravitational attraction. Assuming a temporal view, the incoming arc is what we’ve been following. The departing arc or splash, or whatever…. That heads straight for the sun.”

“What’s the point of symmetry? When?” I asked.

She gave my arm a squeeze. “Twenty-two hours, thirty-eight minutes. Give or take about fifteen minutes.”

[*]

I know it’s fairly easy for single people to be a bit bitter on Valentine’s Day. In fact, I lean in that direction myself, and I don’t mind admitting it. If you’ve ever been someone else’s special someone, this day throws the absence, either generally or specifically, into sharp relief. And that’s insensitive to nearly the point of being unforgivable.

And it’s ass-backwards.

If you go back to the story that’s rumored to be at the root of the day (well, as it is now, after all that bit about flogging all the young women of the town with bloody strips of raw goat hide), it’s not about being appreciated at all. It’s not about what love for someone else turns you into, what your own love, in your own head and your own heart, makes you do. The new thing that you become because of the love you have for someone else.

That really doesn’t require the involvement of anyone else. At least, not actively.

What *someone else’s* love makes you do is probably a lot closer to guilt. When you think about it. Guilt. Fear of disfavor, or rejection, or being thought of as inadequate, or of failing the test. And screw all of that. If that’s what someone else’s love does to you, then maybe they should keep it. Or maybe you should fix your own head so you can receive it in the right spirit. Or maybe your own love can overwhelm all of that so there isn’t any chance, much less fear, of failure.

Even so, it’s not about your special someone, or being someone else’s special someone. It’s all about you becoming the thing that your love turns you into, the heroics that you can perform that are usually just out of reach, which, lets face it, are just as likely to fail as succeed. It’s about love forcing you to make the attempt even though you’re unlikely to come through it unscathed. It’s about ignoring the consequences to yourself.

And maybe that sort of thing isn’t for everybody. At least maybe not every year. Maybe you need to have someone inspire that in you. But if *that’s* what’s missing, maybe that’s not such a tragedy. Love can make you do some really scary things.

[*]

It’s 2011 already. Do you know where your inner child is?

Space on milk cartons is filling up fast.

[*]

How can it feel so incredibly cold and distant when you hold it in your hand?

It starts with the moon. It’s the size of a fingernail at arm’s reach, so you pluck it. The heft is much reduced by the distance. There, in the center of your hand, two hundred and thirty thousand miles away, it weighs a hundredth of an ounce.

The bright side and the dark side are nearly undetectably warmer and colder than skin temperature, respectively. It could even be your imagination. It looks rough, but it feels so smooth that it seems it should be shiny.

You hang it back in the sky where it belongs and trace the skin of the hollow of your palm with the back of a nail from your other hand, erasing the memory of the featherweight touch.

The sun, in the other hand, is about the same size but weighs more than an ounce and a half. It is warm liked being licked by a sunbeam. Whereas the moon was a marble, the sun is soft and fuzzy. Somewhat tacky, like cotton candy. It tingles a little, too, as you touch it with a finger and draw back.

The rest of the sky feels like mist and fog and, somewhat bizarrely, air, not the nothingness of vacuum. Waving a hand through the void, trailing fingers through protonic eddies that carry the heat away like a cooling breeze, now and again you feel the sharp faint prick of a distant star. The nearest galaxy slips through your fingers like faint smoke.

But deep space has a texture. You can feel it, even from here.

[*]

Here’s my not-too-lengthy, not-too-technical pamphlet on what’s busted with money and the credit economy. It’s hardly a manifesto, but maybe there ought to be one at some point.

I mean, everyone knows things are busted. But everyone thinks in terms of “it’s too complicated to understand…” and “but it works well enough, doesn’t it?” and that confuses me to no end. If things don’t work, what you do is 1) take a good long look at what’s going on, and 2) figure out why things are the way they are. The obvious next step, 3) try to think of a better way to do things, is the tricky part, but the more people who make it through the first two steps, the more brains you can throw at number three.

The truth is, the basics of the economy aren’t too complicated to understand for anyone, especially if you start with “how to trade what you have too much of for what you need” and work your way up from there. As far as “it works well enough, doesn’t it,” all you have to do is see who the system seems to be working for and who it’s letting down to know it’s time to start fixing things.

Here are my notes, broken into digestible chunks.

Intro:  What’s the Score
Part 1: Worthless Money
Part 2: Building on Foam
Part 3: The Measure of a Man
Part 4: Money Spigot, Money Sink
Part 5: Corrective Measures

Where do we go from here?

[*]

So here are the issues with money:

From starting out as a convenient promisory note for goods you didn’t feel like carrying around in the marketplace, cash tokens have evolved in the public consciousness as something with actual intrinsic value. This is a mistake. In small amounts it’s worth goods and services, but hoarding it in large amounts just makes the machine creaky and makes whatever authority issues it have to print more. A more ideal version of money would be itself immune to the pressures of supply and demand. Hell, maybe money you haven’t spent in 72 hours should become worthless, and if you want to have a savings, you should buy something of lasting value with it. That would stop the hoarding.

Instead, the consumer economy tends to invest “disposable income” in disposable goods — a constant stream of clothes that go out of style or fall apart or electronics that work for maybe a year or two before they break or need upgrading or, perhaps more usefully, investments in “personal upgrades”: travel, enriching experiences, experiential entertainment, hobbies that amount to training in a craft or a trade. In any case, money is exchanged for deserved life experiences or lifestyle maintenance or upgrades after the necessities are covered — but there is no connection between money and decaying or consumed products. There should be enough cash in the system to represent the actual value of goods and services that are available to change hands, and there should be deliberate action to make sure that the right amounts are in the right hands at the right time. Ideally.

Because the system we have right now has evolved accidentally, emerging from social practices out of the materials at hand with no directing hands except for those who had every expectation of collecting all available wealth into their own hands, with only each other’s direct competition as a system of checks and balances. Oh, and the occasional bloody revolution.

The foam-based interest-and-credit economy is a symptom of evolution in an unstable and unsupportable direction — as well as a symptom of guiding hands that don’t have the best interest of the economy as a whole at heart. This is the root of the money-sink/money-spigot system, aggravated by, let’s face it, the not-necessarily-fair-or-just game-winning scenario of being able to retire from worthwhile labor merely because you’ve hoarded enough essential trade lubricant to generate an income from interest and dividends, which only happens when your hoarded fake wealth has passed some sort of critical mass/density/Schwarchild-radius phase-change threshold…. Did you follow that?

Imagine trying to explain that scenario to an alien intelligence from another world. That’s my usual measure of how busted things are: how long it would take to explain to someone not from Earth and/or whether they would ever actually buy that I wasn’t making it all up.

Anyway, the only justice in the aforementioned game-winning scenario is the myth that it’s an achievement available to anyone. And that’s simply not true. Some people start their run on the game with a sizable wad handed to them at birth or by huge payoff of some gamble or insurance policy or inheritance. Some people in the game-winning scenario make it a point to restrict opportunities to family and friends and people who are already in their networks, and take every available action to ensure that the club remains exclusive.

Perhaps it isn’t even conscious. The confusion of deserving with having fat stacks of cash creates a gradient field that pushes against those with no money and attracts those who already have plenty to those money-sink/money spigot singularities, especially since it’s the agents of those singularities who decide — or create the artificial measures which aid the decision-making process — who is deserving of newly created fake-money-but-soon-to-be-real-money investment funds.

Like for any system where there is a measure that is only loosely connected to the property it is intended to gauge, it becomes far simpler to “game the system” and run up the score than it is to actually increase the property in question. For example, if a company notes a correlation between calls made per day by a sales team and an increase in income from sold products, then they may institute a policy of rewarding or punishing agents based on the number of calls made per day. It’s too easy a measure to take and too unlinked from the bottom line, however. Agents who are behind on sales calls can call numbers at random. Agents who find cold calls onerous can call friends and family or perhaps make a habit of calling voicemail for people they know are away from their desks. And suddenly you’re rewarding your laziest, shirkingest workers while your best producers languish and worry about being fired.

Any measure can be gamed — and will be — but if no attempt is ever made to correct the situation, the measure simply turns into a score for the game. The problem with money being the false measure of deserving is that there are people who aren’t even allowed to play that game trying to buy groceries with their paltry, dwindling score.

I propose we work to find a better measure of deserving than the one your typical loan officer uses — one that is unconnected to the accident of birth and/or relation, one not subject to artificial scarcity or hoarding, and one that can compete in the free market with money as a measure of someone’s worth (since the worldwide abolition of money is unlikely in the extreme).

[*]

So once you hoard enough wealth respect worthiness money, your (I’ll say it again — intrinsically worthless) cash goes through yet another phase change. But let’s set up the scenario with an example using standard checking accounts:

Let’s say about half — give or take twenty percent depending on the economic weather — of the US working population has checking accounts that, in typical hand-to-mouth fashion, are damned near emptied every month. The average daily balance is a few hundred dollars, and, in order to recompense themselves for the chore of holding such paltry amounts of cash, the bank takes maybe ten bucks per month, maybe more, from these struggling folks, not counting any $30-$40 wads per infraction for overdraft fees should the accounts ever touch bottom. Call it $75 to $150 per year per account charged to the enormous ranks of the not-exactly-wealthy.

But once your account passes some magic minimum balance, you are allowed to request that you earn interest on your balance — because by now you’ve discovered that the bank takes the total amount of all the money on hand, from accounts with $50 in them all the way up to accounts with hundreds of thousands of dollars in them, and loans that money out to other people who, if all goes according to plan, pay more money back than they were loaned. Interest on your checking account balance is no more than you are due, just a tiny slice of the pie, seeing as the bank couldn’t make money without having your money to loan out….

To be honest, there’s nothing about that minimum balance that makes you special. A thousand accounts with a $50 balance gives the bank as much lending ability as ten people with $5000 on account, and it really is just a matter of “screw the poor people — this will encourage them to find a way to give us more money to loan out”. But the upshot is that a standard bank makes plenty of money by taking small amounts from large groups of poor people. By the bottom line on the spreadsheets, it’s a good way to do business. It’s a stable population just by dint of being so large. Wealthy people come and go, are harder to manipulate, and aren’t so used to just taking it when they get screwed.

So cross that magic threshold and you get to start pulling away from the ranks of the chumps.

But … that’s only the start of the phase change I mentioned.

There are a zillion ways to gravitationally attract more money with the mass of the money you’ve already amassed, much of which basically amounts to gambling. Well, scratch that weaselly “basically amounts to” phrase. Is gambling. Make bets by taking out insurance policies on, well, eventualities. But one of the more more magical ways is to actually become a bank.

Say I have $100 and I loan it to you. According to our agreement, you bring it back to me with an extra $10. Now I have $110 to loan out… but that’s not exactly how the math works for real banks. That’s only how it works for loan sharks. Once you make the magical transition to being a bank, you can loan out far more than that $100, as long as you keep that $100 in reserve just in case something bad happens to a bunch of your lenders simultaneously. And if you loan out too much, you will need to increase your reserves until the money comes back. But you can borrow from other banks without much trouble, because your credit is good. You’re a bank after all…. You’re a money spigot and a money sink.

You write checks for more money than you have, basically creating a divot, a hole, a well that needs money to fill it in. And then people take the fake money you give them, buy materials, improve the materials with labor, sell products for enough money to stay in operation, and then pay the money you magically created back to you.

You don’t have to be a systems analyst like me to spot the feedback loop here. It should make the hair stand up on the back of your neck, if you can spot it.

Be that as it may, as a bank, it’s your job to only dole out the magic fake soon-to-be-real money to the deserving — i.e., those with the highest likelihood of actually paying it back. Which means probably not chumps.

And that’s the critical part of balancing money creation with money destruction so that the money supply doesn’t increase to the point of uncontrollable inflation, which makes everyone’s money worth less, or deflation, which, while good on the surface, is a symptom of there not being enough money to allow for goods and services to flow. Also, it means collateral for loans becomes eventually worth less and less, meaning that more and more people will default and not pay back their loans — which is what just happened with the mortgage market…

…which just goes to give a little evidence for how busted things are for people to ascribe value to something that can so easily be created or destroyed to the point that they hoard it — and reward people for hoarding it by stacking on a little extra now and then — until hoarding something worthless becomes a substitute for a worthwhile occupation.

And then you can use the interest-income from that hoarded fake wealth to sway legislators into thinking it’s an industry when it’s pretty much the opposite for every shade of meaning of the word, and that it should be protected.

[*]

Cost, price, worth, value, equity … The more you look at words like that, the more they smudge and blend into one another, and the more they dissolve into other social concepts of how we treat one another. There are subtle differences in meaning that only come out when you treat them as words in financial expert jargon, where context is everything. But the importance of those words doesn’t really come out until you take a step back and look at those words in the way that ordinary people use them every day.

You run a sandwich shop. A guy comes in the door and asks you for a sandwich. Does he, at this point, deserve a sandwich?

Well. That’s a matter of basic philosophy. You don’t know that he’s done anything wrong for which slow starvation should be a suitable punishment. You don’t recognize him as family or as a member of any other group to which you owe uncompromising support. To hand over a sandwich or not hand over a sandwich? All other things being equal, if you just happen to have a spare sandwich you don’t need, you should just be able to give it to him, right?

Except if you just give away sandwiches instead of sell them, you wouldn’t have a business. Eventually you would have no money and you wouldn’t be able to buy more materials to make sandwiches, or even feed yourself. You’d have maybe a hundred, maybe a thousand, people ethically if not morally owe you a sandwich, but that’s about it. Once you run out of bread.

Oh, but it’s all okay. He’s waving a $5 bill. You build him a sandwich and you take the fiver, a convenient substitute for this whole huge philosophical headache. By virtue of possessing a $5 bill that he will give you, he deserves at least $5 worth of sandwich. The second he hands it over. In the meanwhile, you build him a sandwich on credit, influenced by the potential of future money and hope he will bless the transaction with that $5. And he does. Whew.

For the labor and sacrifice of materials to build that sandwich, you deserve $5.

Really?

He earned that $5 doing God-knows-what which may or may not have actually made your world a better place. Maybe he spends his days keeping garbage from piling up on the neighborhood sidewalks. Maybe he found the money blowing around like a leaf. Maybe he spends his days designing sandwich-making machinery which will eventually make your method of earning a living obsolete — not necessarily a bad thing, but certainly disturbing. Maybe he earned that $5 from a contract for killing your mother.

But hey, $5 is $5, and, by extension, a sandwich — in the short-hand language of deserve and equity and price and value and cost.

But not really, as I stated in Part One. A $5 bill is a token that, by its motion, allows $5-worth of goods or services to change hands. It has no intrinsic worth. Tomorrow it will be used to move a sack of flour. The next day a gallon or two of gasoline. Until it evaporates back into government hands via taxes or falls into a hoard, where it will be used to gravitationally attract more money or sit around until it is stolen/confiscated/devalued/donated or put to whatever other non-purchasing use that is available to “rich-people money“. Probably loaned out at interest.

Money has nothing to do with deserve. It just saves us the trouble of having to think about it.

[*]

In the mysterious realm of financial assets, cash is referred to as liquidity. It flows, presumably, better than a truck full of pigs and stays relatively level in value over time, whereas, for example, said truckload of pigs brings with it an implication of fluctuating costs, like the need for transport and specialized storage, the total costs of cleaning up after them and feeding for the rest of their expected lifespans, the costs of slaughter and processing and packaging and further storage and further shipping and distribution… The value of the pigs varies wildly depending on the portion of their lifespan during which you are responsible for them.

For some people a truckload of pigs has a negative value even. I personally would consider paying money to have a truckload of pigs removed from my inventory if I could not find a buyer fairly quickly. But, if you completely ignore what I said in the last couple of paragraphs of part one, you can presume $5 means just about the same thing to just about everybody.

As strange as money is, there’s another state of matter in financial physics, and that’s credit. If a truckload of pigs is solid and money is liquid, then credit is … not a gas, per se. It’s more like … foam. It’s constrained by (remember: intrinsically valueless) cash, but it’s largely empty in and of itself. It’s the promise of cash later, and the broken part is that it seems to have a higher value than cash now. Overall.

It doesn’t seem like that at first, but it’s true. Here’s the basics so you can decide for yourself.

Say you have a pound of bacon and I have $5 and we’re prepared to trade one for the other. But maybe I’d rather hold onto that $5 for now for whatever reason, and I offer to pay you $6 next month. If that deal looks attractive at all to both parties, it’s because to me a future $6 is worth less than $5 now, but to you it’s worth more.

It seems to even out, right? And it would if that’s where it all ended. But remember (again) from part one, cash has no intrinsic value. It’s only artificially scarce. Earners are given it in exchange for labor, manufacturers are given it in exchange for products, but products are consumable and degrade in value over time and labor is in continual supply. Like grass in the lawn, there will always be more to mow tomorrow. It’s amazing that we try to make cash represent both. But when we throw in hoarding, the fact that the government is forced to print more when too much is hoarded, and transactions on credit, it gets to be too much to bear.

But where it gets to be particularly unbelievable is the feedback loops that credit can cause. Back to our example.

You want that $6 next month instead of $5 now because at the end of the year, $5 is $5 and $6 is $6. Provided I actually pay up, anyway. And when you need to make expensive improvements to your bacon-production process, you can either wait until you have all the cash on hand, or you can borrow that money and pay a larger amount back later.

Here’s the feedback loop: You can borrow more money now, or at least pay back a smidge less money later, if you can show that you expect to have more money by the time the payment is due. A better chance of being able to make your payments means a lower interest rate. Or a slightly larger loan with larger payments.

But the bank you borrow from also borrows money from time to time, and they count the promise of your future payments as future income for paying back their own loans, so the more you operate on credit, the larger amounts they can borrow for gambling and investing….

…and it’s all based on me actually being able to pay you $6 next month for a pound of bacon I’ll have probably eaten in a single sitting by this afternoon.

All of this foam is an awesome substitute for actual wealth, but like the Ponzi/Madoff scam it actually is, it only works in a growing economy, and the overall success of it really is firmly linked to the rate of economic growth. If there’s ever any kind of crisis, like a crop failure, or a plague, or a war, or earthquakes or bad weather or what have you, that diverts away enough of those cash payments at the very bottom, then the whole thing collapses like the head on a beer when someone sticks a finger in it.

If you don’t drink beer, I’m not sure I can come up with a suitable metaphor for you. But you can believe me when I say that finally coming to understand stuff like this is one of the reasons I drink beer.

[*]