Interest In Pareto Freezing

Continuation of control_currency musings: monopoly_of_violence, regime_chaos, fiat_money, wage_slave, control_principle cooling reflected by pareto-distribution. With some reference to physics: control_principle between layers.

The central concept in economics is valuation.

An organizational structure that allows a central valuation leads to wealth accumulation. The regimes central valuation of labor reflects its intention to control people for bureaucracy, military, policing, infrastructure, … That is how money came into existence in the first place: control_currency. Companies take the regime valuation and add their central valuation for the products and services of the company.

Debtors create money. Regime money_creation has shifted from money printing to bonds, making them bank debtors. Interest rate represent motivation, like force as gradient of change in physics. The foundational force was and is monopoly_of_violence, but it is encoded in the centralization of valuation by the interest rate imposed by banks. Interest rate is a pressure to optimize, a pressure towards technological development. Efficient extraction of energy is freezing the society into big pareto chunks: big regimes, big companies. The current technological jump, AI, means more centralized surveillance, centralized judging and decisions. Like every new force is a new existence, a new layer, having no force due to the centralization also means non-existence.

Valuation and Interest

Energy is change. In the Lagrangian T-U split

• $U(q)$ is the remote influence at the current location $q$
• resulting in an local time (local change) $T$ to be added to the geodesic (the local changes without that $U(q)$)

If the force/gradient $F = - \frac{dU}{dq} = - \frac{dH}{dq} = \dot{p}$ is not zero we have a new existence, a new layer, a new local change, a new local time.

• As comparison to AI deep networks the loss gradient is the relevant direction to follow per learning step to reach a state of less energy. For example, in input classification random activation of final neurons would be high energy, while recognizing the object would activate just one neuron and thus be minimal energy. The gradient is backpropagated to internal layers until the structure relevant for classification is fixed/memorized.
• As comparison to economy the profit gradient is the relevant direction a factory/company follows to maximize profit. Work $F\Delta q$ is the little extra money you earn making a change $\Delta q$. This can be applied to lowest layer employment, where $\Delta q$ is given by the employer, or structural, a change in the method of production of profit.

— Physics: Force as Gradient Of Change

People’s time is their energy.

As the regime’s currency by decree (fiat_money) is to control (control_currency), the valuation of the time of individuals is by the regime. Companies are extensions of the regime and use the same metric. All more local valuations are compared with this wage baseline valuation.

The need to survive is quite constant (subsistence). But the valuation of this need is not, meaning the prices of food, clothing, … do change. Regime valuation tends to miss that. Therefore it is paramount that the decisions, which profit relevant steps $\Delta q$ to take are local, especially whether structural or not.

The intelligence of a system is by mutation (creativity, producing alternatives) and selection (choosing or being chosen). This produces many paths one can take. The gradient is the direction of the largest profit. In this picture, with more alternatives, steps can be taken in more directions at the same time (components). $\Delta q$ consists of more components, and can include money investments, time investments, structural changes.

The interest compares the future to the present valuation to decide about the next steps.

$$\text{ Interest } = \frac{\text{revenue } - \text{ cost}}{\text{cost }}$$

Interest is a measure of profit or loss relative to cost. Interest as a quantification of motivation.

— Interest

The own valuation of time depends the own creativity on producing alternatives, how to use the time. So ideas like oportunity cost depend much on what you see as exclusive alternatives. A product has more components and more uses. A person meets more skills and joins more uses (formal concept jargon). It is not absolutely necessary to take the regime valuation of time for personal decisions, but the pressure is high due to the use of regime valuation (money) in all activities.

For example

• If I build a house by myself I need X hours to build the house.
• If I build a house with the wage I need Y hours of my time for the job.

If building a house is not a pleasurable activity for me (loss),

• then, if X < Y, I build the house myself, because my loss is less in this case.

If building a house is a very pleasurable activity for me (a profit),

• then, if X > Y, I build the house myself, because it is more profit for me.

Every valuation has an associated interest, positive or negative. A step consists of smaller steps with costs and profits with associated interests. So to make a decision can become complicated. This additional effort is always compared to the baseline valuation by the regime. The effort can pay off via structural improvements, or maybe just by gaining valuation power. But most accept the central valuation, because it is easier, and get locked-in against local valuation.

Banking

A central bank does the bookkeeping for the regime control_currency, defined by regime valuation of labor in order to use that labor.

The logic of economy is via valuation and interest, which applies to banks as well. But banking license is just for fiat_money. For other financial products an investment license is needed. The bank operates via interest alone, as valuation is done by the regime’s labor valuation.

Bank clients are

• Debtors take loans from banks.
• Creditors deposit money at the bank.

money_creation

Every loan is a money creation. I owe you. IOU.

money_deletion

Paying back the loan, deletes the money.

Debtors create money.

• Horizontal money creation is by private debtors.
• Vertical money creation (meaning by power) is by regime.

The bank interest on the loan is the interest in economic activity. The bank interest includes the regime interest.

Bank balance:

• Liabilities are the deposits
• Assets are the loans
• Equity = Asset - Liability

Commercial banks demand high interests on their private assets (the loans). and offer 0-interest on their private liabilities (the deposits). When competing with other banks the 0-interest on deposits should make loan interest low, too. Here the central bank steps in: The central bank offers a key interest on deposits from commecial banks. Also loans from central banks to commercial banks relate to the key interest. With 0-interest on deposits, banks could become profitable just due to the key interest from the central bank. This is why private money creation is always above key interest, and usually quite a bit above. Commercial bank assets are mostly private (55% to 70%), then regime bonds (10% to 25%) and parking at the central bank (10%).

Regime

The central bank is a money faucet by regime autority. Basically central banks and regimes are on the control layer, with different interests than for the private/commercial sector.

Regimes also create money via loans (bonds) (vertical money creation).

• While normal debtors are checked for credit-worthiness, and not necessarily get the right to create money,
• the regime can always create money.

The regime is a money faucet by its monopoly_of_violence. New bonds are the regime’s promise to tax its subjects more than spending on them, in order to pay the interest.

Why would a regime pay interest for its money creation (bonds) just like any other debtor? The regime has the monopoly_of_violence and surely has no obligation to pay interest. The regime extracts taxes here to spend it there already, completely on its own devices. The regime with its monopoly_of_violence is completely unrestricted in its decisions. This makes the regime a money faucet. It can fulfill every financial obligations. It always will be able to pay back on maturity of bond – by creating other bonds, unlimited. To use bonds, pay interest, for its money creation is a deliberate choice. Moderated wanted inflation can be achieved with money printing, so why the bonds?

• The regime acknowledges the idea that interest encodes motivation.
• The central bank has been commissioned by the regime and can be considered part of the regime. It has to keep its balance according control layer interests.
• Bonds produce moderate wanted inflation, just like money printing, just like any new money_creation.
• Moderate inflation is targeted at the commercial layer, to make the wage_slaves spend their money.
• But the moderate inflation should not jeopardize certain wealth (of the rich, of purpose-bound regime bonds like pension).
• If the wealthy spent all their money because of the regime-wanted inflation, the inflation would get out of control. Bond interests compete with other financial products to bind money.

Why the financial products in general: The regime realized that its central wage_slave valuation, when clashing with decentralized market valuation via companies, leads to wealth accumulation, which can jeopardize the regime’s control on its currency, if the accumulated money is not bound by financial products.

Valuation of labor and product in the same market (same_market_valuation), meaning sharing of profit between work mates, would be a different currency not fitting to the regime’s intention to control wage_slaves.

Extraction Efficiency

Wage_slaves are not supposed to take loans. The idea of the control_currency is to use money to keep them working, but keep them poor.

To keep them poor, it helps, though, if occasionally some become debtors to create value for themselves, because then they also need to create

• value for the bank by the bank’s interest
• value for the regime by the taxes associated with the spending of the borrowed money
• value for the inherent valuation asymmetry to produce accumulation of wealth somewhere
• value to balance inflation loss

What we get is an devaluation of labor time, meaning low income.

• For one, this makes them work a lot to survive.
• For two, they can not buy anything with the money other than the essential.

The drive to extreme misery has happened throughout history, several times. And from those instances it can be observed that it was also associated with technological jumps. Those in control have time and resources to optimize extraction. When the extraction reached a natural limit, structural changes allowed for more extraction, i.e. better use of wage_slaves.

How did it get to systematic wage_slavery beyond regime use of subjects in the first place? For Europe and America the reason was actual slavery in the Americas and the exploitation of the colonies in general. Massive raw material needed massive processing. At the time of the industrial revolution in Britain, the rich and their government took land from self-sufficient people (enclosure acts), to force them into factories, making them dependent on wages. But then more and more machines were used for mass production and the wage_slaves were not needed any more. Back than there were still escape routes, though. They could go to America and claim land.

With machines the labor shifted from simple physical work to more intelligent work, machine construction, factory planning. Electricity came. Computers came. All these needed more and more qualification and also a lot of labor to build new infrastructure. The tech people had to do overtime, because they worked for many. But they were becoming also super-super-efficient. A few could produce for millions, using the machines, basically in all industries.

What became of those not needed anymore due the super-efficiency of a few. They became cannon fodder in World Ware I and World War II. These were civilization collapses, as was the french revolution before, already.

From history we can learn:

• slow extraction produces optimization and technological jumps
• fast extraction produces collapses

This is also how biological evolution works.

• The cooling produces higher collaboration, higher organisms, to cope with the energy loss.
• But it also can produce extinction, if the environment changes to quickly.

The cooling is characterized by a pareto distribution. In the pareto distribution a population (of molecules, people, …) is distributed to chunks (organisms) of low energy. This freezing pattern is seen in many systems

• chunk-forming in freezing water
• magnetized chunks in iron (ising model)
• species body size
• empires, emperor survival in empires
• economy with no limit in company size

Organization/organism/structural_complexity/chunking is related to energy extraction, induced freezing. Human energy is the local time of individuals (compared to clock time). Wage to survive using almost full wake time is the lower wage limit. That is where most wage_slaves are kept in the big chunks called companies. With all the optimization so far, this would not be necessary. But it is wanted by those who control to get yet some more freedom. Think of what some can do already:

• Hey, let’s go to the moon.
• Hey, let’s take over control of those 90 million people there.
• Hey, let’s shake world economy a bit and collect the falling fruits
• …

Learn and control. Use your intelligence to control. Intelligence is to control. The regimes monopoly_of_violence can override that natural logic from evolution by brute force. Regimes impose their valuation by their title categorization, meaning especially “wage_slave/employee” vs “company owner”. Regimes using brains for bureaucracy is state-of-the-art since first empires, leading to writing and mathematics, and money. Since the era of systematic flat wage_slavery valuation, making up current control_currency/fiat_money, pareto-cooling, chunk sizes, have grown immensely.

The spacetime/change of a physical system is its action, which compared to our clock time becomes energy. For mind coordination, energies are often split into their own times and spaces,

• like $E = TS$ (temperature, entropy)
• like $Fs$ (force, space)
• like $PV$ (pressure, volume)
• like $\mu N$ (chemical potential, particle number)
• like $\gamma A$ (surface tension, area)
• like $Vq$ (voltage, charge)
• like $EP$ (electric field, polarization)
• like $HM$ (magnetic field, magnetization)
• like $h\nu$ (action, time), the comparison of local time with our clock t

In information theory information is defined by space: $\log(\text{count})$ or $I = - \Sigma p\log(p)$. The latter actually has indirectly time in it, via $p$, but normalized away. Physically, though, due to locality principle, information is inseparable from time. I call it spacetime or just time, and it is local, an own universe unaware of a neighboring equal ones. Counting the parallel particles is a mind thing, not physical. In information science, programs or languages have a space-time complexity trade-off. More structural or space complexity can reduce the energy consumption (time complexity). Structural complexity: Organizations/organism have little freedom for their components, low entropy.

— Physics: Structural complexity (space)