Commentary on Secret History #19

We must have an overproduction of elites right now, surely in the Neoconfederacy: oil, munitions, and now the enablers of the death merchants (targeting, recon, satnav) developing independence (SV). I see a possible division among the Yankees between publicly-traded corporations and private equity like that upstart BlackRock preparing to strip the Sceptered Isle.

𝘛𝘩𝘦 𝘈𝘳𝘵 𝘰𝘧 𝘞𝘢𝘳 is BS?? Welp, the ones who love it seem bound by peculiarly formal Cavalier rules (like John Carter of Mars). But wait, only Universal States assassinate their most successful generals. Gotta contemplate this some more.

Humans ritualize and ceremonialize everything to the point of uselessness.

And then with Sargon the institutional dominoes fall (upriver). Hey, I didn't know King David was really a mercenary! What a pity the Levant is such a pesthole. Milk and honey my arse. It's why I dabbled in the thesis of thaumaturgy's prevalence during the time of Jesus.

Judaism is more a culture than an ethnic group now. Whuffo? No formal soviet of technicians in today's state but shadowy and consultative. In ancient times Jews were literate. Open debate made them fact-based administrative geniuses, in this and all subsequent empires, including our own. The Book of Esther might only be a novel, but like fiction generally it's a lie that tells the truth.

I don't think Ezra or Nehemiah were conscious Persian agents sowing discord for the emperor. They seem more like unwitting and rancorous ressentients acting out their group psychology. (You can't be human without a group psychology.) It's a controversial thesis.

44: Ruh-roh, is Professor Jiang paying his debt to  Xi with proper-gander? Discuss first thing in the morning. Le sigh. All that Starbuck's coffee squandered for 46 years while neglecting an opportunity to reform Western civilization!

Reflect and learn and grow as a people. Y'all.

I hope the IDF + the technocracy encoded as a "shadow sovereignty", always present but never formally enthroned, rebels against the religious fanatics.

Medo-Persia was a Universal State. Anglo-America is flirting with becoming a Universal State under Christian Zionism. I have no small personal hostility toward Xn Zionism, so there's my bias. And it elected Trump with a view to making him our emperor, so y'all need to be biased, too, simply for the sake of countervailing power (the way unions useta be). Reactionaries are the opposite of reformers, and boy we need reform.

Interesting prediction about Israel's ultimate goal. Can it succeed? Or can Anglo-America reform first and stop the madness?

Our own court Jews, the contemporary analogues of the ones who helped to frame the current Grotio-Westphalian system, continue offering good advice. Not Israelis, just Jews. 𝘗𝘰𝘳 𝘦𝘫𝘦𝘮𝘱𝘭𝘪 -

A “Minsky moment” is a sudden financial collapse triggered by excessive debt and speculative risk-taking, named after economist Hyman Minsky. It marks the tipping point when long periods of optimism and borrowing abruptly give way to panic, asset sell-offs, and market instability.

Term coined in 1998 by Paul McCulley of PIMCO referencing the 1997 Asian financial crisis. Named after Hyman Minsky (1919–1996), an American economist who developed the Financial Instability Hypothesis, arguing that stability itself breeds instability in capitalist systems.

A Minsky moment is the sudden collapse of asset values after a prolonged period of speculative growth fueled by debt. It represents the explosive juncture where optimism flips into crisis, often leading to liquidity shortages and forced deleveraging.

The Three Phases Leading to Collapse (Minsky’s Credit Cycle):

1. Hedge Finance: Borrowers can pay both principal and interest. Risk is low.

2. Speculative Finance: Borrowers can pay interest but not principal, relying on asset appreciation.

3. Ponzi Finance: Borrowers cannot cover either principal or interest, depending entirely on rising asset values.

Once asset prices stop rising, the Ponzi phase collapses, triggering the Minsky moment.

Mechanism of Collapse:

1. Long prosperity reduces perceived risk.

2. Investors borrow more, often leveraging speculative assets.

3. A small decline in asset prices makes debt repayment impossible.

4. Lenders call in loans, forcing mass sell-offs.

5. Liquidity evaporates, amplifying the downturn into a full-blown crash.

Historical Examples:

1. 1997 Asian Financial Crisis → The term was first applied here.

2. 2008 Global Financial Crisis → Widely cited as a classic Minsky moment, when subprime mortgage speculation collapsed.

3. Russian Financial Crisis (1998) → Another early case where the phrase gained traction.

Broader Significance:

1. Minsky argued that financial markets are inherently unstable, not because of external shocks but due to their own internal dynamics.

2. His work highlights the danger of deregulation and unchecked speculative finance, emphasizing the need for policy interventions to prevent systemic collapse.

3. The concept has since been applied beyond economics, describing cycles of overconfidence and collapse in other domains.

In short, a Minsky moment is the dramatic “crash point” of a debt-fueled boom, when optimism turns to panic and the system’s fragility is exposed.

Functional finance was formulated by economist Abba P. Lerner in the 1940s. He introduced the concept in his 1943 article “Functional Finance and the Federal Debt”, arguing that government fiscal policy should be judged by its economic outcomes—such as employment, growth, and inflation—rather than by arbitrary rules about balanced budgets or debt levels.

Background:

1. Founder: Abba P. Lerner (1903–1982), a Russian-born, British-raised economist who later worked in the United States.

2. Historical Context: Developed during World War II, when governments were experimenting with large-scale deficit spending to sustain wartime economies.

3. Influence: Lerner was a follower of John Maynard Keynes, but he went further by systematizing fiscal policy into explicit rules.

Core Principles:

1. Government spending should maintain full employment and economic stability. If unemployment is high, the government should increase spending or cut taxes. If inflation is rising, the government should reduce spending or raise taxes.

2. Debt and deficits are not inherently problematic. The government should borrow or repay debt to control interest rates and investment levels. Balancing the budget is not the priority—economic prosperity is.

3. Money is a tool of the state. The government can print money if necessary to achieve its goals. Taxes are not primarily for revenue but to regulate demand and inflation.

Legacy and Modern Relevance:

1. Lerner’s theory challenged the idea of “sound finance,” which emphasized balanced budgets and limited debt.

2. His ideas influenced later heterodox schools, including Modern Monetary Theory (MMT), which echoes many of Lerner’s principles.

3. Functional finance remains a touchstone in debates about fiscal policy, especially during crises like the 2008 financial crash and the COVID-19 pandemic, when governments used massive deficit spending to stabilize economies.

To put it simply, Abba Lerner created functional finance as a pragmatic, outcome-driven approach to fiscal policy, prioritizing economic health over budget orthodoxy.

Debt deflation was first described by economist Irving Fisher in the early 1930s, following the Wall Street Crash of 1929 and the Great Depression.

Irving Fisher (1867–1947) was one of America’s most influential economists. He is best known for his work on interest rates, inflation, and monetary theory.

1. Historical context: After the 1929 stock market crash, Fisher—who himself lost millions—sought to explain why the downturn spiraled into the catastrophic Great Depression. (I ought to include him as a character in novel.)

2. Debt-Deflation Theory: In his 1933 paper “The Debt-Deflation Theory of Great Depressions”, Fisher argued that economic collapses were not just ordinary recessions but were amplified by the interaction of debt and falling prices. Fisher described a chain reaction that occurs when over-indebtedness meets deflation (which in his era was rooted in the gold standard).

3. Debt liquidation → borrowers sell assets to repay loans.

4. Distress selling → asset prices fall further.

5. Falling prices → the real burden of debt rises (since debts are fixed in nominal terms).

6. Bankruptcies → businesses and households collapse under the weight of debt.

7. Reduced output & employment → economic activity contracts sharply.

8. Loss of confidence & hoarding → circulation of money slows.

9. Interest rate distortions → nominal rates fall, but real rates rise, worsening the crisis.

This vicious cycle explained why the Great Depression was so deep and prolonged.

Fisher’s theory was largely ignored at the time, overshadowed by Keynesian economics. It was rediscovered in the 1970s and 1980s by economists like Hyman Minsky and Charles Kindleberger, who saw its relevance to modern financial crises. Ben Bernanke, former Federal Reserve Chair, cited Fisher’s debt-deflation theory as crucial for understanding the 2008 financial crisis.

Jewish thinkers have had a remarkable influence on modern intellectual and cultural life, particularly in economics, philosophy, science, and the arts. In economics the examples are:

1. Irving Fisher (debt deflation) was not Jewish, but his ideas were later taken up and expanded by Jewish economists like Hyman Minsky (financial instability hypothesis).

2. Abba Lerner (functional finance) was Jewish, and his work laid foundations for modern fiscal theory.

3. Paul Samuelson, another Jewish economist, was the first American to win the (fake) Nobel Prize in Economics and helped formalize Keynesian economics.

4. Milton Friedman, also Jewish, reshaped monetary theory and policy in the 20th century.

From economics (Samuelson, Friedman, Lerner, Minsky) to cultural theory (Arendt, Adorno), Jewish thinkers have consistently contributed frameworks that reshape how civilizations understand themselves.

Both Milton Friedman and Paul Samuelson were towering figures, but they occupied very different ideological positions—and “reactionary” is a fair critique:

Milton Friedman:

1. Chicago School leader: Friedman championed free markets, monetarism, and minimal government intervention.

2. Reactionary elements: His push against Keynesian fiscal activism and his insistence that inflation was “always and everywhere a monetary phenomenon” positioned him as a counterforce to progressive economic planning.

3. Legacy: His ideas fueled deregulation, privatization, and austerity policies in the late 20th century—often criticized as reactionary because they rolled back welfare-state expansion.

Paul Samuelson:

1. Keynesian formalizer: Samuelson systematized Keynesian economics into neoclassical synthesis, making it mainstream.

2. Reactionary elements: While he was more progressive than Friedman, Samuelson’s “synthesis” ultimately constrained Keynes’s radical potential, embedding fiscal activism within a conservative framework of equilibrium models.

3. Legacy: His textbook trained generations of economists, but critics argue it domesticated Keynes into a technocratic, less transformative doctrine. In other words, ossified by anthropogenic institutional entropy.

Why “Reactionary” Fits:

1. Both men reinforced existing structures rather than opening radical new pathways.

2. Friedman reacted against Keynesianism, pulling economics back toward laissez-faire orthodoxy.

3. Samuelson reacted against Keynes’s revolutionary edge, smoothing it into a palatable mainstream model.

In macrohistorical terms, they are guardians of orthodoxy, stabilizers who resisted rupture, unlike Lerner or Minsky who dramatized instability and renewal.

What went wrong?

Thomas Babington Macaulay was a Whig politician and historian who strongly supported the Reform Bill of 1832, which expanded the electorate to include the middle class. He consistently advocated for religious liberty and enfranchisement of marginalized groups, including Jews and Catholics. Macaulay argued that reform was necessary to conserve Britain’s institutions: “Reform, that you may preserve”. This shows his belief that reform was not radical rupture but a stabilizing measure. The Anglo-American Establishment ("them libs") adopted this cultural strategy. But instead of genuine structural change to address systemic problems, that ol' devil anthropogenic institutional entropy caught up to it and reduced it to a policy of superficial adjustments or tactical maneuvers that since the New Deal avoid deeper transformations, often preserving elite control. They want to enfranchise new classes to expand democracy, seeing reform as a way to heal what Macauley labeled "great distempers" and reconcile social orders. Their fatal mistake as a formerly creative minority was their capitulation to the previously New-Deal-demoted institution of finance, permitting it to resume its former dominance of the economy as a whole. It's almost a mythic inversion.