**A CATALOGUE OF ERRORS, AND AN AVALANCHE IN BANKING** From April 18th, 2009 1 –

**A CATALOGUE OF ERRORS, AND AN AVALANCHE IN BANKING**

From April 18th, 2009

1 – PHILOSOPHICAL ERRORS

Knowledge of property and its use does NOT SCALE. The reason we have property is so that we can break the world into comprehensible and known components that we can use to cooperate with each other by exchange and therefore specialize and increase production. This is the most important principle: Knowledge of property cannot scale and the stability of any price, including any collateral, is an illusion. There is no numeric or formulative substitute for personal human knowledge of economic activity. None. Period, end of story.

2 – FINANCIAL ERRORS

Risk is not measurable AT SCALE, because we cannot measure the unknown, nor can we predict large corrections. In other words, risks cannot be summed if they make use of prices.

Priced collateral is not meaningful in a world of credit money, which at every moment invalidates any price.

We should seek to maximize opportunities at lowest cost, not maximize interest at minimum risk.

Banking is a knowledge problem, not a mathematical problem. Personal knowledge of property is required for forecasting its future value. This is because the categories that determine cause and effect change constantly.

We need to “definancialize”1 savings and retirement, because there are no means of forecasting such things over time, and any assumption of perpetual growth is a fantasy.

3 – EDUCATIONAL ERRORS

Our education system seeks to treat finance, economics, and sociology as disciplines open to quantitative analysis in order to establish rules, rather than the virtue of collected history and wisdom, and a record of the quantitative analysis and expressed rules as a history that is constantly open to interpretation.

Our education system seeks to teach people formulae which are invalid so that they can avoid collecting accumulated wisdom, rather than seeking to endow them with accumulated wisdom and the analytical tools to interpret currently collected data for comparison to accumulated wisdom. Educators make this mistake in order to simplify the job of TESTING students, who, if subjected to tests of accumulated wisdom rather than technical expression, would fare far worse, and consume much more of the educator’s time.

Our education system seeks to confer on social science the same argumentative weight as physical science, confusing the fact that in physical science we discover something that exists already. In social science we manufacture the future, and there is nothing to be discovered, only created.

4 – POLITICAL ERRORS

Our political system seeks to replace governance by means of religious conformity with governance by economic efficiency so as to justif the accumulation of power in order to advance the interests of groups, and to do so when economic efficiency is impossible to determine and risk is impossible to measure. It does this instead of increasing the rate of production and a seizing and exploiting every possible opportunity for every individual independent of his class or group membership, which would allow all groups to benefit by the success of other groups by the use of credit, rather than for some groups to profit at the expense of others by privatizing wins and socializing losses.

Our political system seeks to pit groups against each other by the use of laws, and allows politicians to hold themselves unaccountable for production by the use of taxes (which are a penalty for productivity), and to tax people according to income so that they can keep them servants of the state, rather than facilitating group cooperation by the use of credit, holding themselves accountable by funding the state by the collection of interest, and taxing citizens by their balance sheets so that they can become independent of the state.

Some classes in society use banking, credit, and interest to socialize losses and privatize wins, using fiat and credit money that is paid for by all, but rewards that are collected by few. This does decrease prices for all. But it also creates class warfare.