Serban V.C. ENACHE — Welcome to my tiny shady spot of a realm
I’m a 27 year old fiction writer interested in economics, history, metaphysics, science, technology, comedy, and politics. My medieval fantasy series Of Hate And Laughter has come at last. This universe of mine is one of infernal majesty. http://serbanvcenache.blogspot.fr/
Born on March 25, 1989, in Bucharest/Romania. Single parent child. I blame my mother for the long-ass name. Licensed in journalism. Creator of the Of Hate And Laughter series. This universe is one of infernal majesty; it’s my heart and soul. If it matters to anyone, my sun sign is Aries, moon sign is Scorpio, mars sign is Gemini. I don’t believe in astrology, by the way ^_^. My interests are: MMT (modern monetary theory), politics, history, literature, tv-shows, movies, games, music (from epic soundtracks to gothic metal), and I enjoy walking the green and concrete. I’m a deficit owl and social progressive. I’m also pretty good at drawing. My favorite author is Garth Marenghi (look him up). My favorite comedian is George Carlin. My favorite sitcom is NewsRadio. My favorite actor is Phil Hartman. http://www.amazon.com/gp/product/B016QAHT60/
Articles and Opinions on the Theme of Modern Macroeconomics
How to Leave the Euro
A more or less Practical Guide
by Serban V.C. Enache
1) The Government spends and taxes in its own free floating fiat currency. It no longer accepts euros (or any other currency) in payment of Government (central and local) fines, fees, taxes, imposts etc.
2) The Government sector (aka the Treasury and the Central Bank) establishes a desired conversion rate between the new currency and the euro. For example, the Central Bank offers to sell 1 unit of new currency for 1 euro at a slight premium, say 0.5 or 1 percent.
3) No compulsory conversion of euro contracts into new currency contracts. It is enough to establish a level of demand for the new currency (giving it extrinsic value) through sound tax policy and adjust supply of said currency to the desired price.
4) Levying a short but drastic bank holiday to prevent bank runs on euro liquidity during the switch phase from euro to new currency. The holiday should start on Friday after business hours to make use of the following two day weekend. It would be a ‘black fast’ holiday, in which electronic transactions would be suspended and ATMs unplugged.
5) Temporarily (or permanently) reducing the capital requirement for banks to avoid or minimize the threat of insolvency. This improves their equity position and allows them to borrow more liquidity should they need it. Asset side regulations for banks ought to begin immediately after the switch to the new currency is done.
6) Scrapping regressive taxes in favor of taxing economic rent. Eliminating taxes on (basic) consumption, on labor, and man-made things (buildings and other improvements to the land) and putting in place taxes which have negative deadweight (which add efficiency to the economy) like the land-value tax and the vacancy tax (applicable to both bare land and vacant accommodation). This type of taxation prevents asset price speculation, it keeps the value of property stable, increases incomes and profits in real terms, it reduces inflationary pressures, and idleness is discouraged / penalized.
7) The Government will have to run appropriate budget deficits in order to supply the non-government sector with net financial assets denominated in the new currency.
8) The Government, through a public agency or through the Central Bank, will provide full deposit insurance, but only to deposits denominated in the new currency. Deposits in foreign currency will not be guaranteed by the State.
‘Black Fast’ and Capital Controls
Withdrawals could be allowed after they can be treated as foreign currency debited against new currency deposits according to the prevailing exchange rate. Some commentators have stressed the need for tougher capital controls, like banning domestic firms and households from purchasing foreign assets, or holding bank accounts outside their own country. Such drastic actions would be unnecessary and would likely do more ill than good. Substantial capital flight would occur in just a few days anyway. Ergo, if the banks were closed for this period and electronic transactions and cash withdrawals were blocked, the most damaging aspect of capital flight (liquidity crisis for the banks) could be averted.
Plans of dropping the euro should be kept secret for as long as possible — and capital controls should be lifted quickly after the switch to the new currency has materialized. Note: by capital flight I mean massive unidirectional flow of funds from the country in question to the external sector over a short period of time. Naturally, there’s a big risk that word of Exit will get out ahead of time. In life there are no ideal situations, only opportunities, and we each try to capitalize on them to the best of our ability.
Banks Going Bust
If a bank’s net worth (equity / capital) falls below the legal minimum, it has to go into bankruptcy reorganization. Should the Government take it over, it has the option of selling the bank as an operating business, or selling off its assets. Both of these scenarios can lead to large losses for shareholders. If losses are high enough, depositors will take a hit too. Losing a quarter in value during a liquidation is not unheard of. Deposits denominated in the new currency should be fully guaranteed by the State, but deposits in euros will be at risk, just like before.
Potential Currency Depreciation
This happened in Argentina in 2002 and in Iceland in 2008. It goes up fast, then comes back down equally fast, as the two graphs below indicate.
The key factors are two: the amount of idle or unused production capacity, plus the quality of the anti-trust laws and the level at which they’re enforced. The latter element protects against cartels forming in the economy and imposing high prices on consumers. The Euro-Zone Periphery states have substantial spare capacity. To contain the risk of a wage price spiral, inflation indexation schemes (which tie wages and pensions to prices) should be curtailed. Inflation indexing was prevalent in Brazil and Argentina during their episodes of hyperinflation from decades ago.
If everything is done right, there shouldn’t be a drastic lack in demand for the new currency. Still, if companies have loans outstanding in euros, they may need to convert some of their profits from the new currency into euros to service these debts. If their income falls in real terms, they will incur losses.
If firms get their inputs from the domestic economy, they’ll be able to purchase them in the new currency. If these inputs come from abroad (imports), it will cost them more if indeed the new currency does depreciate when introduced. Higher costs for firms will be passed down to consumers.
Sovereign Debt Redenomination and Restructuring
That country which leaves the Euro-Zone should convert its public debt in the new currency and negotiate haircuts as well. This prevents the Government debt to GDP ratio from going up (see Argentina in 2002, and Russia in 1998). Government debt to GDP going up isn’t bad in and of itself, so long as it serves public purpose. Fattening rent-seekers with interest, however, falls outside this purpose. Note: by Government debt I mean all the money that the Government spent in existence — in whatever form that money takes — that has not yet been used to pay taxes. The European Central Bank and Financial Stability Facility should follow the (long established) precedent for official creditors to accept an equivalent level of debt reduction to the private sector. Note: the above mentioned European institutions are pretty much euphemisms for German political elites chiefly, and French political elites lastly.
Private Sector Debt
How to tackle this issue? According to one’s philosophy, there’s the free market approach and the dirigist approach. Each have their merits and drawbacks depending on context.
The free market approach means the Government simply allows creditors and debtors to negotiate debt restructuring while maintaining an equitable distance between the two parties involved. Each company’s situation is different. Many firms can stand to lose from a devaluation of the new currency, but others would stand to profit due to the size of their assets and revenues denominated in foreign currency (euros especially).
Still, the courts might not be able to handle a period of systemic bankruptcies; they may become congested with cases, leading to prolonged litigation. Some companies and creditors might have an interest in delaying a settlement, wishing to hold out for a better deal — thus running counter to the public purpose (a speedy and fair resolution). Slow progress in corporate debt restructuring may impact sovereign debt restructuring. This is where the dirigist (government intervention) method comes in. The Government may approach Euro-Zone banks to convert loans made to the Exit country’s firms from euros to the new currency. Thus, recapitalization happens fast and their exposure (aka risk) is lessened.
The Implications of Monetary Sovereignty
That Government, spending and taxing in its own free floating fiat currency, has maximum space to conduct whatever fiscal policy and monetary policy it chooses. It can operate with negative equity indefinitely without risk of bankruptcy; and it can run the maximum fiscal deficit within the bounds of political and inflationary limits (technological and real resource constraints).
Serban V.C. Enache is a Romanian journalist and indie author. Though interested in history, politics, and economics, his true passion is for medieval fantasy fiction. https://www.amazon.com/Serban-Valentin-Constantin-Enache/e/B00N2SJD6O/ He can be reached over Twitter. https://twitter.com/SerbanVCEnache
A FLOCK OF BLACK CROWS OVER THE PLAIN
Morning crow, sorrow!
UN VOL DE CORBEAUX NOIRS SUR LA PLAINE
Corbeau du matin, chagrin!
A small short story that tells one day in the life of three black brother crows or maybe ravens or maybe blackbird, who knows, crows they are called but they have other names that are funny in a way? Magnus, Korvern and Septimius. And what’s more for us they go Cra! Cra! Cra! But in fact they seem to be able to communicate and to speak and think and have ideas about everything in the world, about humans and about dogs, and some other things of the sort.
Strangely enough they have their own theory about the world and how it does not go, even about its economy as if they had been fervent students in some university. Definitely these three black crow remind me of Shakespeare and his three weird sisters, though here we have three weird brothers. And then their hatred for the local stray cat brings to my mind an old film, Fritz the Cat, a long tailed cat who had great problems with black crows in another city that may have been New York. So they become like some plotters trainspotting in the air, some underground homeless and forlorn scavengers in our society living on rejects, trash and garbage?
At times they find a juicy dead body they can eat as if it were Christmas or Thanksgiving delicatessen or Easter Passover goodies or Ramadan evening nourishment. I suppose they satisfy their visionary hunger with the two globes of the eyes of the corpse, and yet they do not go further to some other parts that are juicy and rich in a body, alive or not, like the liver, the pancreas, if they can get to them, though they will never be able to break the shell of the egg of the brain, the cranium, the skull.
It is true they don’t need to eat human brain to be clever because they are naturally, and more than humans, because they know they have to respect nature, to clean it up of its garbage, though they could be thousands and they would not be able to come to the end of human trash, both the trash they drop everywhere or the trash they pull around them in the shape of dogs or cats, and even a third type which is humans themselves who are the governing trashy kings of this planet they don’t even deserve.
It is somewhat funny and somewhat strange, bizarre, surprising, and maybe too short since they sleep at night, well, so you say man, because birds always sleep with one eye tight open and the other wide shut since cats are nocturnal animals too, not to speak of bats and other night time predators. But birds have a very great sense of hierarchy; I was watching just this afternoon and yesterday the birds who come to my yard to take advantage of the bird-feeders Lucretia garnishes with all kinds of goodies. There is a band of blackbirds, males and females, five or six, maybe more and among them one macho male. When the black birds are there all the other little birds of half a dozen types have to literally fight to get to the food. The black birds are a perfect band of SS officers keeping their spoils of war. And this afternoon only the macho male was there and no one else could get close to the grains, seeds, peanuts, or whatever. He was pacing the yard and the snow with the authority of a Trump signing executive orders banning everyone from his own little White House lawn and rose garden.
Who said nature was just, peaceful, equalitarian, gentle, sweet? Ah! Ah! It is some kind of an inferno and humans are nearly just slightly more civilized than that, well maybe, perhaps, for sure but not quite sure.
So be careful the Men In Black are coming and you better be ready to be extra-terrestrialized if you don’t like the color. I know one President and one Prime Minister who have to be extra-terrestrialized as an urgent emergency and sent to intensive care in some NHS hospital (though that one could come to France and as a European citizen she could get some free treatment in some luxurious Paris hospital like La Salpetriere built by Louis XIV), or some community hospital for the homeless in New York (for the other member of the pair that should be married urgently too before being moved to these medical reclusive retreats). But I will not tell names. I am not a rat, a cat maybe, a crow why not, but Serban made me smile with his birdlike human realism, and there sure are a lot of human beings in the street or in the bureaucratic offices we have forgotten to bury last time the hearse went by down in the street.
Welcome to and into the phenomenal and absolutely perverse and mesmerizing mental world of the deranged universe in some tamed version of which we are living, willy nilly, more nilly than willy, and enjoying every single minute spent in it. Sharpen your attention and concentrate your vision because there is no way for you to get through these pages, these strange territories, these unwelcoming imperial lands if you miss one single sentence because the network of this writing does not authorize one single loop to give way. That’s what makes this novel difficult to the reader: there is no way we can speed up the reading, skip a page, or even a sentence. The language is both absolutely functional (nothing lost on vain and useless descriptions) and so dense you cannot play around with the punctuation or the adverbs. Every single word is meaningful and none is superfluous decoration.
So if you are ready to go into that forest of a corrugated imagination you might be rewarded with some good moments of pleasure if not bliss. I do not intend to tell you the story but to give you some tools to guide you — or rather pull you — through the brambles around the castle and maybe enable you to reach the bed of the Sleeping Beauty who is in fact no princess at all but maybe the true heart of humanity.
The first thing you must understand is that this territory that does not have a map is composed of various contradictory if not antagonistic pieces. You have the Empire itself composed of five territories: the Northlands, the Westlands, the Southlands, the Eastlands and the Streamlands. Each section is itself complex because they are feudal territories, which means they are more or less controlled by one noble house but they are composed of a network of smaller feudal houses and families all connected by some fealty oath to be pronounced on one’s knees in front of the superior lord. But these oaths do not seem to be based on much honor and have much strength since they are systematically betrayed and broken by practically everyone.
This world is dominated by a few houses or families represented by some banners or emblems. The Northlands are controlled by The Sodomis house in Weiyenor, represented by a ram with fiery hooves. The Westlands are controlled by the Blackways house, the black Knights of Rogfort and are represented by a warhorse. The Southlands do not seem to be really controlled by anyone because they are various houses all pulling and pushing in different directions, traitors by definition. The Eastlands are controlled but the Verwick House in Findar’s Keep and are represented by a dolphin. The Streamlands are represented by the Mandon house at Rivermark for nearly the whole novel but this family looses this privilege at the end. They are represented by a hawk. Some other families are crucial, especially either by their cruelty or by their treacherous nature. Tobias Findley represented by a dog-headed serpent at Stoneweed is an epitome of violence and barbarity. The House Bellworth is represented by a grey griffin. The House of Reed is represented by a blazing star grass. The House of Wolfgar is represented by a sanguineous sword. The House of Merrick is represented by three stars and a Crescent Moon. Those seem to be the main houses, apart from the Imperial house, the Mero family. If I have made mistakes do not hesitate to tell me and even vindicate my incompetence. You will discover all by yourselves the Tychos family, Lords of Ironmoat.
The novel, or saga, starts some five years or so after the civil war and the death of the tyrant Zygar Ferus Mero. The elder son, Amarius Seronius Mero, was made emperor for a short while but he was accused by his younger brother, Hagyian Rovines Mero, of embezzling, excessive power, etc, and was arrested declared guilty and banished into exile. When the action starts the elder brother is living in Harpool, an outside territory that is built on the existence and trade of slaves. The younger brother is the acting emperor but he has lost contact with his people and is completely out of touch, ready to fall like some over-ripe if not rotten fruit. We have to add that the civil war was against the tyrant we have mentioned, father of the emperor and his exiled brother, but with what is called the Inquisition on their side. After the victory Amarius Seronius Mero got rid of the Inquisition but kept the two clerical orders, the Patriarchy and the Matriarchy. The last element to know at the beginning is the existence of a distant territory beyond a vast sand desert occupied by some free savages that seem to be living like some Northern American Indians before the arrival of Christopher Columbus. The desert is the territory occupied by some “wyverns” that are enormous worms or snakes living underground in the sand, voracious and attacking anything alive. The allusion to Dune’s sandworms is not even hidden. It is obvious and the savages who are red-skinned and called Aharo are very close to Dune’s Fremen. The term “wyvern” could be understood as teh Celtic wyver but that would be a mistake/. The wyver that might be connected to the root of “viper” is not per se a serpent in Celtic culture. It is represented in many Romanesque art of the 10th-12th centuries under Celtic influence as a man’s head with an invasive moustache pushing long extensions down on both sides and meeting with two flows of water descending out from the mouth. This wyver represents underground water circulation and magnetism on which the Celtic occupation of a territory was founded. This territorial vision was recuperated by and integrated in Christianity in early feudalism in Europe after the fall of the Roman Empire.
This would already be complex enough if this world were not divided along clear-cut religious lines. The Empire is against slavery and abides by the religion of the Three, the triune religion or faith based on three divine bodies, the Father Sun and the Twin Moon Mothers. This explains the two clerical orders and their basic hostility if not open rivalry. The second religion was that of the Tyrant emperor of the old days: the religion of the Gods of Blood which was based on human and animal sacrifices, probably some cannibalism and definitely some vampirism, drinking the blood of the sacrificed animals or humans. The third religion is that of Harpool that states a social vision implying a small dominant elite governs the world and the vast majority of slaves who (or maybe which) have only one mission, function and end: to obey and do whatever hard tasks they are ordered to perform. It is clear that some of these tasks are prostitution clearly stated for girls bought very young and sold later to the matrons of some shady houses as soon as they have experienced their first bloody blossoming. You may consider some linguistic formulations as hinting at the same fate for boys, but it is more discreet, less obvious. Then you have the people who have no territories and are what is called sellswords, that is to say mercenaries who sell themselves, and their swords, for temporary military service to the various factions of the empire. They believe in one god, the Sky itself, and that life is nothing but suffering, their god being a god of fire that advocates struggle, courage, battle and honor till death comes since death will be the end of suffering. No reincarnation, no rebirth. Just death. You have to consider the religion of the Aharos which is different because it merges together myths, legends, history into some mythological whole that respects the freedom of people, nature, sustainability and has a great knowledge of plants and other natural means to heal and improve life.
Add to this cocktail the intrigue and plotting of the clerical orders in the empire to create some fear of witchcraft, the belief that a few negative hostile spirits, demonic of course, can take possession of people in order to conquer and control the human world. Superstition and rumors are their tools and weapons in a time when there is no real daily mass communication.
So enter this world and enjoy it. But do not skip one line if you really want to follow and take notes if possible. Kindle is good for that. I enjoyed the trip, recognized many influences or models, acknowledged the distortions of these models into some new logic or essence, but this volumes will leave quite a few unfinished and incomplete businesses behind: so be sure you can get into the second volume. Maybe not straight away but soon.
The author is very young. So prepare yourself to see his name over the next few or many years. He sure has plenty of potential monstrous characters and maybe ethical perspectives here and there among the drastic frightening and even sickening chasms he opens under every single one of our steps in this strange land of his. If you survive you might have a good chance of being a happy psychotic PTSS beneficiary.
Dr. Jacques COULARDEAU