— Other Liabilities

If only Derrida could have attended the FOMC

There is nothing outside of the text […] beyond and behind what one believes can be circumscribed as Rousseau’s text, there has never been anything but writing; there have never been anything but supplements, substitutive significations which could only come forth in a chain of differential references, the “real” supervening, and being added only while taking on meaning from a trace and from an invocation of the supplement, etc. And thus to infinity, for we have read, in the text, that the absolute present, Nature, that which words like “real mother” name, have always already escaped, have never existed; that what opens meaning and language is writing as the disappearance of natural presence.

Jacques Derrida, Of Grammotology

Something is happening here

And you don’t know what it is

Do you, Mr. Jones?

Bob Dylan – Ballad of a Thin Man


The way we understand history is usually contemplated around some privileged actors and their prioritized decisions, yet sometimes unprecedented people may come up with unprecedented actions which has the power to alter the given and expected.

In 1966, Derrida’s participation in ‘The Languages of Criticism and the Sciences of Man’ conference held by John Hopkins University as a last minute substitute for Luc de Heusch was a stark example of this phenomenon.

Arguing against the idea that every structure has a center within its boundaries and other actors must proceed with their play only within these boundaries; Derrida asserted that ‘the center’; which has the same substance with the structure of and has no possible substitute for its content, element and terms; inevitably had to avoid from being structural while governing it.

This implied that ‘the center’ while being in the structure was also outside the structure. Therefore ‘the center’ was not the center anymore.

Since ‘economy’ is one of the rare fraction of sciences accepting human thought capable of making real life implications (efficient markets theory being an exception), we are faced with startling results if we apply the same principles to the current economic scene.

For the sake of solidifying our case; the mentioned case is Janet Yellen’s implications of a possible rate rise in September FOMC meeting in her of 26th August speech.

This presumption of economy is concealed in the evolution of knowledge from being a method for translation of nature to the construing of the facts. This process merges with the definition of ‘human’ moving towards an economical being and its concepts of linearly marching history and culture; which gets more embedded to the daily life with the endless repetition of stories.

Here comes a question: ‘So, if there is no center; how a speech given by some women might affect daily life of billions of people?’ With the transformation speed of knowledge ever-improving, new non-human actors and their new stories start to emerge in the story with an astonishing speed.

Economy has the power to alter human thought and daily life; this is a certainty. But we should not ignore the fact that this feedback process works in two ways. So, as we speak of the FED being at the center of this structure, it is also expected to govern this structure with the very meanings and values itself has created.

In the wake of the 2015 September meeting, markets were shocked as FED decided not to raise the benchmark interest rate. Fast-forward one year, as we’re approaching to the next meeting to be held in September: FED is again expected to reach some conclusions from the economic data (is the strong GDP data by itself enough for a rate rise?) and also will assess the possible implication of its decision to the global economy.

But again the market is at err in assuming the FED is in the center of decisive moments and its decisions have the power to restructure the market. Last September, FED made it clear that it denies this role blatantly.

With the presence of same blind faith present under similar conditions of last September (BREXIT and GOP replacing China’s market turmoil in 2015), it is possible to foresee that the unique comment written by Deutsche Bank’s analysis team in 2015 will also be valid for the forthcoming meeting.

I guess quoting the analysis itself here would be more convenient than trying to rewrite the piece:

Despite seemingly robust US data, the global economy appears too fragile and the strong USD is in the center of the crisis. The developments in EM have been negative for risk and, if conditions deteriorate further, the net result could be in a nontrivial adverse impact on DM economies. Rate hikes and further USD strength could have made things considerably worse. So, while the market waited, Fed decided not to engage.

Going into the FOMC meeting, we had to face multiple nested contingencies, from Fed reaction function, to ambiguous signals given by the economic models which largely underwent structural breaks post-2008 and eroded market’s already low confidence regarding economic forecasts. The Fed decision showed that when everything fails, common sense remains the best guide. And common sense prevailed. 

This changes everything. 

Power relations have been revealed; nothing will ever be the same. In that sense, despite seeming status quo, the FOMC was a true Event in the sense of being an encounter which retroactively creates its own causes.What we now have is another data point which outlines the contours of the Fed reaction function. 

Fed’s communication strategy, it is becoming clear, is an equivalent of what in theater context is referred to as Removing the fourth wall whereby the actors address the audience to disrupt the stage illusion — they can no longer have the illusion of being unseen. An unalterable spectator becomes an alterable observer who is able to alter. The eyes are no longer on the finish, but on the course — what audience is watching is not necessarily an inevitable self-contained narrative. The market is now observing itself from another angle as an observer of the observer of the observers.’

Différance of the story

The term Différance is coined by Jacques Derrida; to describe the incompetence of words to signify the meaning they supposed to imply. Derrida contended that signified is constantly deferred to another sign and therefore the act of signification always remains in constant motion; ever incomplete.

Since the words themselves are ineffective in carrying any sort of meaning, clarity in the sense of meaning can never be achieved; as its always deferred to the other signs and their signification probabilities.

Also, in order to keep this process flowing; one is always in need of new words and meanings. This implies the idea of perfect communication is nothing but an utopia.

We can witness presence of this act of deferment in the financial story; if we try put together successive financial events in a sentence-like order.

The exact reason of the current interest-rate increase theme stemming from 2008 crisis is deferred back to the dotcom bubble in 2000; which is deferred to Iraq war; than to the petrol crisis in 1970’s; to the Bretton Woods in 1971; which leads to other financial breaking points endlessly. Because the authenticity of the story desperately needs other stories to validate to its own meaning.

This breaking points in financial history seem inevitable to keep the flow going, but what about the FED’s interception of itself? Is it an actor just willing to play the part in the scenario, or an another observer being present in a point of space-time in which he’s been told to be?

If we choose to agree with the assumption that past decisions sum up to form a linear story; than yes, this self fulfilling prophecy transforms into a breaking point in Yellen’s august speech and FED’s september meeting.

But how an actor would be able to distinguish his acting efforts that created the movie, from the complete movie itself; which is an independent being? Would it be possible without separating his act from the story?

If the center which happens to find itself being ‘put at the center’ by the structure surrounding it, the whole idea of center becomes arbitrary and dependent to other actor’s belief just to presume its central being. Just like a movie becoming real as it meets with its audience.

As the actor watches the movie; he is refrained from the scenes of his memory engraved in his mind; and movie becomes another reality, another identity built by the whole idea of completeness.

It’ll be shown that the scenes that make up the movie are not intrinsically demanding to be in it and the movie itself is not a real identity by itself, just arbitrarily granted presence by the belief of the audience.

So, despite our belief that the story which is written by FED and the market is linear and consistent; this is simply not the case.

The parts which are believed to be governed by the center are as important as the center itself, although the center looks like it has the last word on decisive moments. Besides FED’s rate rise; financial order have deferred many more things. Derrida would have underlined this contrast; only if he attended the FOMC meeting.

This article originally appeared at dikencomtr on 08/30/2016

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