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Unread February 10th, 2011, 12:55 PM
James Brody James Brody is offline
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Join Date: Jun 2004
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Exclamation Winner-Take-All in our Financial Markets

Whether on Wall Street or Bose physics, Winner-take-all corresponds to Stage 3 of emergent network formation…jb

By Ted ...

"History does repeat itself. Thanks to the Fed buying our own debt we are headed toward a vastly devalued currency where a two-dollar loaf of bread could soon cost twenty dollars; or even two hundred.

"Is that crazy and impossible? If you disbelieve us please read these words describing what happened just seventy years ago. The future can be determined by reviewing its lessons from the past.

“The inflation gave Hitler endless material for slogans. Devaluation of the mark had not yet reached the grotesque extremes of the summer of 1923, but it had already led to the virtual expropriation of a larger part of the middle class. As early as the beginning of 1920, the mark had fallen to a tenth of its prewar value; two years later it was worth only a hundredth of that value and was referred to as the ‘pfenning (penny-ed.) mark. In this way the state, which since the war (WW I) had accumulated debts of 150 billion marks and saw new tolls in approaching still pending reparations negotiations, escaped its obligations. So did other debtors. Borrowers, tradesmen, and industrialists, above all, the virtually tax-free firms producing for export and paying extremely low wages profited from the inflation. They had a stake in a continuing decline in the value of the currency, and at the very least did nothing to check it. Borrowing cheap money, which with the advancing devaluation they could pay back more cheaply, they speculated brazenly against their own currency. Clever speculators made fortunes within a few months. Almost out of nothing they created vast economic empires. The sight of such expansion was all the more outrageous because these successes went hand in hand with the impoverishment and proletarianization of whole social groups, the holders of debt certificates, pensioners, and the small savers.”

“The dimly sensed connection between the fantastic careers of some capitalists and the mass impoverishment sowed a feeling among the victims of having been mocked by society. That feeling turned into a lasting bitterness. Just as lasting was the belief that the state had ceased to be an unselfish, just and honest institution. That had been the traditional picture of the state; but now it was seen to have gone into fraudulent bankruptcy by means of the inflation, thus cheating its citizens, Among the little people with the firm faith of orderliness, this realization was perhaps even more devastating than the loss of their modest (lifetime) savings. Under the succession of blows, the world in which they lived austerely, contently, and soberly vanished irrevocably. The protracted crisis sent them in search of a figure in whom they could again believe and a will they could obey. The republic could not satisfy this need: that was in fact its problem. Hitler’s success as an agitator was due only partly in his oratorical skill. More important was his attunement to the moods of neurotically agitated philistines and his sense of what they wanted from him. He himself regarded this faculty as the true secret of a great orator: ‘He will always let himself be borne along by the great masses in such a way that instinctively the very words comes to his lips that needs to speak to the hearts of his audience.’ ”
What the nation at that moment was experiencing for the first time-the succession of disenchantment, decline and declassing, together with the search for scapegoats on whom to heap the blame… (Obama now blames: Wall Street, the rich or Big Business).

“Do you see the parallels with then and now? If we do there is hope for us.
“If we do not we are doomed to repeat the mistakes of the past.”

References:

How George Soros collapsed money markets in Britain http://www.dailymail.co.uk/news/worl...-hit-euro.html
Hitler, by Joachim Fest, ISBN 978-0-15-602754-0, Chapter II: The Road to Politics, pages 148-149.
Barabási, A-L (2002) Linked: The New Science of Networks. NY: Perseus.
Bianconi, G. & Barabási, A-L (2000) Bose-Einstein condensation in complex networks. arXiv:cond-mat/0011224 v1 13 Nov 2000.
Bianconi, G (2002) Quantum statistics in complex networks. ArXiv cond-mat/0206433 v2 13 Sep 2002.
Csermely, Peter (2006) Weak Links: Stabilizers of Complex Systems from Proteins to Social Networks. NY: Springer.
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bernanke, bose condensation, hitler, inflation, obama, wall st

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