“Know well, then, that worthy and godlike is the zeal with which you rush upon definitions. Apply yourself to it, and practice it, while yet you are a novice – all the more, because it seems useless, and is called trifling by the vulgar : for if you do not, the truth will escape you.” – Plato
Fraud by definition
By Timothy Paul Madden
The financial world is exkaboomable! We are in serious, serious trouble. Or not.
Exkaboomable (Ex-ka-boom-able) is a word that I created with the following definition:
- wholly inert, zero latent or potential energy;
- extremely energetic, highly unstable and prone to spontaneous and violent explosion.
Exkaboomable is at best a meaningless word, and potentially a very dangerous word. Exkaboomable is a generic example of what I call a counter-sense word. Counter-sense words have two or more mutually exclusive definitions.
In contrast, fairly rare word-pairs like flammable and inflammable are directly opposite in form, but have the same meaning. A counter-sense word is a single word or term chosen or asserted to mean, at the option of the decision-maker, either X or minus-X. A given counter-sense word means X – unless it doesn’t.
Counter-sense words are oscillating-contradictions that facilitate cogno-linguistic fraud upon the human species.
Counter-sense words are theoretically impossible as inherent frauds against meaning, but have still managed to saturate the language of finance. In the financial world, counter-sense words are the psycho-linguistic or cogno-linguistic equivalent of burglar’s tools, where having them is prima facie (on the face of it) evidence or contingent proof of intent to use them as such.
Much of the financial world, for example, turns on the meaning of the word principal. There is arguably no more important word in the world than principal in the financial sense. The history of each of our financial lives is written in the principal-amounts of our financial contracts and broadly-defined financial securities. And investments of principal is the very definition of a great portion of the national and international macro-financial markets that so vastly affect the micro-principal amounts that we have each to manage throughout our lives at the micro-level.
So is principal the amount actually advanced / invested by the creditor, and received by the debtor? Or is it the amount that the debtor agrees that they owe regardless of the amount actually advanced and received?
Is the amount of principal a question of objective fact?, or of the agreement of parties? Is it a noun? Or a constructive-adjective? Over $100 trillion ($100,000,000,000,000) of USD-equivalent principal debt in the world today directly depends on the answer to a question that theoretically cannot exist.
The essential form of a typical mortgage-broker loan or credit offer, for example (especially second and third mortgages), is as follows:
We will loan you $100,000 at 30% per annum provided that you agree to falsify the mortgage and promissory note to state that we loaned you $130,000 at 6%, plus an unregistered side-agreement for an unlawful and illegal kick-back of $30,000 to us.
A typical mortgage-broker loan involves at least a dozen prima facie criminal/racketeering offences. The rest of the financial-world-in-fact follows the same business-model with adjustments to the amount and degree of misrepresentation and falsification in any given case. Every nominal loan / credit fee is first and foremost a true-principal-amount and real-interest-rate misrepresentation-fee, and a GAAP-fraud / accounting-fraud-concealment-fee.
The effective roll-over period is currently about ten years. If you were to go back ten years and, based on the aggregate payments as since made, you allow the nominal creditors interest only on the actual or net advances, and not on the interest unlawfully and illegally capitalized in advance, then all the current debt exactly disappears. On top of everything else, the bankers are systemically eating or consuming their entire cake / asset-base (as additional earned interest income/bonuses) roughly once every ten years, while still having / possessing it forever going forward as interest-bearing-principal.
In the longer term we observe what the American socioeconomic philosopher Albert J. Nock referred to as a professional criminal class (e.g., lawyers, bankers, judges, politicians) that persistently (generation after generation) lives beyond its means (i.e., value-added) while the ever-increasing absolute and relative differential is covered by aggregate debt that increases at a greater rate.
Principal is also a special type (and most significant form) of counter-sense word where dictionaries normally only give one sense, while commercial practice defines the contrary. It would be very difficult to put the Whatever-the-debtor-agrees-that-they-owe sense into a dictionary because the fraud against meaning is manifest in spelling-it-out, and ever-more-so in more specialized financial dictionaries.
So virtually every financial, accounting, and ordinary English dictionary and / or regulation defines it to the effect “The actual amount invested, loaned or advanced to the debtor / borrower net of any interest, discount, premium or fees”, while virtually every financial security in the real world implicitly incorporates the fraudulent alternative / contrary meaning. Principal means the creditor’s actual and net investment, unless it doesn’t.
In this sense principal is analogous to what physicists refer to as Schroedinger’s Cat to describe quantum reality. The rational dictionary definition of the actual / net amount invested / advanced and received is the generally presumed definition whenever no one is looking – and as the bedrock of the academic and financial systems, while the wholly fraudulent agreement of parties definition applies at all other times (whenever anyone looks at, or rather behind, an actual contract / security).
The mutually-exclusive-substance of both words – principal and interest, is to distinguish one party’s consideration from the other’s obligation (logically / in-theory), unless it doesn’t (overwhelming practice).
With just one of these words you can effectively steal the Earth. In a financial world that is saturated with them, it becomes child’s-play. Under these rules, a group of competently trained chimpanzees otherwise pulling levers at random would do at least as well as the current wizards of Wall Street.
In practice the financial world has become a Twilight-Zone-version of the Biblical story of the Tower of Babel, where everyone appears to speak the same language, but the words have radically different meaning depending on the needs and identity of the decision-maker. And at the real Tower of Babel at least they all had the advantage of knowing that they were no longer speaking the same language.
- Once a prima facie case is established, the onus shifts to the accused to prove that things are not what they appear to be, or else be convicted. Under broadly-defined English law you are not “Presumed innocent until proven guilty” but rather merely “Presumed innocent until a prima facie case is established against you”. Otherwise even those accused of serious crimes could not be held in custody pending trial. ↑
- I am being conservative here and assuming zero standard deviation or average variance, and only taking into account the consumer credit market. If you include all of the broadly-defined Wall-Street-type speculation abuse the roll-over period may be as short as three years – based solely on manipulating just the word principal. ↑