If you were paying attention, you might notice that global financial markets are currently in a phase of accelerated melting. Apparently, the world has reached diminishing returns to make things. There is simply too much of everything, be it oil wells, container ships, skyscrapers, cars or houses.

For this reason, the world is struck by the diminishing returns of borrowed money to build and sell more things, because things we build are not selling. And because it does not sell, the price of things already produced continues to decline, thereby decreasing their value as security for loans, which only worsens the problems.

One solution that has been proposed is to convert our manufacturing economy to a service economy. For example, instead of producing gadgets, everybody could offer massages to others. This works great in theory. The massage industry is not generating an ever-increasing stock of massages that must also get rid. But there are a few snags with this plan. The first problem is that too few people have enough savings to spend on massages, then we should massage the credit. Another problem is that, unlike an object, a massage is not a marketable asset, and it does not help you pay back the money you had to borrow to pay you. Finally, a massage, once you have received it, is not worth much. You can not sell it at auction, and you can not use it as collateral to secure a loan.

These are big problems, and proposed solution is to create good-paying jobs that put money in people's pockets, money that they can then spend on massages. This solution works best by investing in productivity improvements: send people to school, investing in high technology and so on. This is an intuitively obvious idea: the productive workers are easier to use than unproductive workers because the stuff they manufacture ultimately cost less and people can buy more. They want to buy more questionable, especially if there already has more than enough and that no side of money. Yet the theory makes sense.

But this theory is not working that well: no matter how much money we put into the automated assembly lines, robots, based virtualization Internet or otherwise, the number of unemployed is not decreasing at all. And it's even worse with driverless cars. In theory, it's great if the conductor does not have to drive so she can spend time massaging his passengers. But no matter how much money we will spend on driverless cars, the number of drivers without jobs, or massage therapists unemployed will not fall.

But even if we give up trying to stimulate demand with job creation and we just let everyone starve, we can still see our hopes on rich people. There are people who are as rich as whole countries! Certainly, they can spend and consume in the name of all and create a boom in the economy. But it turns out it is very difficult for one person to consume as much as an entire country. For that to happen, the rich should pay people to consume in its place. But if other people can spend the money as much as you, then it is useless to want to be richer than everyone else, and all that hard for scamming people and play on the stock market would prove to have been vain.

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But here's a solution that is so incredibly simple and elegant that someone should have thought of already. Alas, take note: I am the first!

The Blivet

The solution is: sell everything and be long on Blivets [buy betting on the long term, NdT]. The Blivets are geometrically impossible objects: they can be drawn, but, by their nature, they can not be manufactured. This solves a major problem in the futures markets, which is that people can actually take delivery of the goods at the end of the contract [although this is very rare, read below, NdT]. This means that goods which are the subject of speculation, must actually exist. And that means that some people have the audacity to call the real economy must exist. How rubbish!

For example, the gold futures market trades at 300 times more gold than it is physically. This means that if only 0.3% of futures contracts should result in actual physical deliveries coffers would be empty and there would be nothing left to negotiate. The most horrible thing is that there are unreasonable people who take delivery of their gold: the Chinese, the Russians and various other nations with cash on hand or in US Treasury bonds payable. And they are doing it. Promote regime change and plunder the gold reserves of various countries helps a bit - Iraq, Libya and Ukraine have already been looted; Syria would have been had there not been those pesky Russians! But the end result of all this is that in case of force majeure, if someone wants to take delivery, the safes are empty.

A similar problem exists with the largest futures exchange in the world: the crude oil. Here, traders have happily enjoyed a theoretical abundance to lower the price of crude lower and lower. They could drive it as low as $ 1 per barrel, and after? The problem is that no one on earth can produce as cheap oil and therefore a day will come when someone will demand delivery of its barrels based on his contract at $ 1 a barrel, and the only answer will be the echo wild wind whistling in the dead bushes that roll through the oil fields abandoned.

You should now have guessed the moral of the story: If you have made transient the whole economy, workers / consumers and their production capacity, so go to trade products themselves ephemeral, otherwise you will take the risk of implosion of the market, deflation, deleveraging and the financial collapse followed by political collapse, commercial, social and cultural cacophony in four acts with many strident choruses and screaming in a tumultuous final. I'm not joking. I wrote a book about it.

This is where Blivets would be a great help. A Blivet is by definition a paper Blivet because a physical Blivet does not exist. If you demand the physical delivery of your Blivets, people simply laugh about you, tapping their finger on their forehead with staring eyes. It would also be crazy to require the respect of your rights under the United States Constitution, or to claim that climate change is a conspiracy.

The Blivets are composed of the purest ether, more ethereal as are bitcoins (long chains of these magical figures are obtained from the value of an algorithm, a chain of blocks, and a factor freshness). The bitcoins are as ethereal, but they must be physically removed by spending a lot of electricity in the management of large computer farms, and this causes a big problem: bitcoins are rare.

Now, some people claim that the scarcity is what gives value to things, which is clearly absurd. Watch the US dollar: the number of dollars was growing out of all proportion to the growth of the US economy, but there he was hyperinflation? Of course not ! The problem is not printing money; the problem comes from ordinary people who are given it and who do not know they should only invest in Blivets. Instead, they are economically destructive things, like buying food for their children and heat their homes in winter. This is what causes hyperinflation, not printing money! There are only two potential problems with printing money: do not print enough, and do not print fast enough.

There are still some difficulties with my proposal to blivetiser entire global economy, but they can also be solved by the force of the creativity in financial innovation.

First, there is the problem of futures market Blivets, potentially down instead of up. We do not like when markets fall; So how can we prevent this from happening? Here's an idea: to introduce the so-called Schrödinger Blivet. If you are short [ie seller within the meaning traders, NdT] on Blivets, when your contract expires, the clearing house may require you to deliver the goods. In this case, a simple rule applies. It is based on the throw of a coin, whose verdict will tell if your Blivets exist or not. This calls for those who are short on Blivets to maintain a large enough reserve, which should make them much less interested in a market collapse. For this reason, the price of Blivets can stagnate at times, but over time, it is expected to rise steadily.

Second, there is the problem of where to obtain additional capital to negotiate Blivets. You have liquidated all your other positions, you have long positions in Blivets but how is the market supposed Blivets develop? If it is not growing, then it means a lack of growth, and we do not like when there is no growth. With all other remained unused productive capacity and no wealth occurring outside the market Blivets from where will come the new capital to invest? Here's an idea: this is called self-remortgaged. Whenever you hire Blivets as collateral for a loan - you invest in Blivets, of course - the loan itself automatically becomes available to be used as collateral for another loan.

Thanks to these financial innovations, valuing Blivets should go through the roof in no time, and continue to climb. In fact, it can go so high that it may be necessary to begin to list the Blivets in scientific notation instead of the simple decimal notation. Eventually, it may even be wise to ignore the mantissa and the exponent name only. Why, after the removal of all physical constraints, the number of traded Blivets would it not free to exceed the number of atoms in the observable universe?

Problem solved ! I will take to 1082 Blivets, please!

Dmitry Orlov