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Tuesday, 10 July 2012

Financial crossbreeding and it,s Effects

Financial crossbreeding.

By August Pointneuf

Politics is that pie slice of human behaviour which can be looked at as behaviour under constraint.

Economics is another pie slice - human behaviour which can be reduced to digital markers. It cannot be regarded as independent of the broad behaviour of humans, and must conform to the behavioural rules of human activity. Because economics can be reduced to mathematics is has another role. It can be used as an instrument to understand complex societal behaviour overall.


The Euro was created in an attempt to “unify” the financial patterns of the diverse groups of Europe. That illustrated the inherent folly of the politicians in the European Union. When a single monetary unit was imposed across a wide spectrum of societies the naive fumbling the political engineers assumed that human behaviour could be permanently changed by diktat.

But they failed to understand that economics was only a small outward feature of overall human behaviour. Finances cannot be manipulated independently of that. The political fatal assumption was that the underlying behavioural variances of different groups and nations could be forced into a universalized “economic” behaviour by imposing a “universal” currency.

From the outset it was not conceptually possible that a Thessalonian goatherd could be expected to behave - socially, culturally and economically - in the fashion of a banker in Bonn. By even attempting to force this, the European Union demonstrated its political gaucherie.

It is true that human humans can be changed by external forces, but only temporally, and only by suppression. Human behaviour is far too intricate and complex to be remodeled by muscle.

It is no coincidence that when the controlling politicians of Soviet Union and the Nazis wished to show their power they used parade-ground disciplined demonstrations of military manoeuvres to express their authority. After the parade the participants, of course, reverted to their previous behaviour.

A universal currency should represent a consistent value to all its users. It should display value parity. But it is an economic truism that the value of a currency should reflect the productivity of the user group, (when compared with a “marker” currency). Said another way any currency is expected to possess”productivity parity”

Currency values are therefore secondary to (and are determined by) the behaviour of the population which issues that currency. It cannot be the other way around: A currency cannot determine the behaviour of a population.

But the nations which were persuaded to use the Euro were highly varied. They had different resource mixes, differing population ages and various levels of socialism. The per capita savings and concepts of wealth (which included the willingness to rely on promissory notes, i.e. borrowing on the premise that it expected those borrowings to be honoured) differed. Most important, productivity differed.

In the complex equation which is Europe, inequality of productivity exists. Therefore the value of the euro (expressed in terms of the interchangeable bonds) cannot reflect equal value parity. Any currency is ultimately committed to reflect the productivity of that individual national culture. Equality of productivity has never (indeed will never) happen in the European Monetary Area because of the very varied societal behavioural patterns of the nations –which are now in stressed bondage.

As a result Greeks pay a higher interest rate to lure purchases. Greek bonds, although denominated in Euro therefore cost less. The Germans, on the other hand, do not need to lure investors; instead investors clamour for their bonds because they believed that their money would be safer with the Germans then it would be with the Greeks.

Since a Greek Euro denominated bond now has less value than German Euro bond, a Greek Euro is now worth less than a German Euro.

Bizarre? Yes, but only because of the bizarre underlying fallacy that the behaviour patterns of different groups could be economically forced into synchrony.

Devaluing money from an unproductive country (i.e. causing its bonds to devalue) moves money from that country (making it more poor) to another (making it more rich).

Now that the Euro has been seen not to hold consistent value parity it can only be doomed to a relentless downward spiral of inconsistent value.

Since it will not be possible to force lasting conformity on the variety of societal groups that use the Euro, the euro must fail.


Any attempt to separate economic behaviour from the broader field of universal human behaviour is folly.

Changes in monetary value of nations put on show the underlying differences in cultural and behaviour as expressed by their diverging "economics".

Since politics and economics overlap they can offer parallel messages. The EU’s predictable failure as a monetary system now presages an equally predictable failure of its political union.

Thus where differing peoples are ordered, by political directives, to behave in “universal” fashion the same catastrophic cascades can be expected to occur politically.

The most important of these political directives, by the European Union, is that varied populations have been ordered to tolerate alien cultural distinctions and “ignore” obvious differences whether these are racial, linguistic, cultural or behavioural. People are forced - by law - to transgress the natural interface between different communities, obliging them to suppress their instinctive, protective reactions.

This social perturbation, if forced union continues, will be the same as shown in the economic model - widening divergences accelerating into an avalanche of chaos. The endpoint will be conflict and societal destruction.

This predicts that ultimately the entire European Union is politically doomed.


End note: the EMA seems never to have learned that while the Germanys were divided (and socio-economically different) the “official” exchange rate was one Ostmark to one Westmark. Reality forced the (empirical and realistic) black-market rate to six inferior Ostmark to one Westmark, Helmut Kohl lured voters in East Germany by promising – misleading to engineer his re-election - that reunification would permit a one-to-one exchange of Marks. This another political legerdemain succeeded only to have repercussions which still reverberate: West Germans continue to pay for that political chicanery.