A Comprehensive Treatise on Mantra-Sastra
Monday, May 7, 2007
A Bija-Akshara is a seed-letter. It is a very powerful Mantra. Every Devata has his or her own Bija-Akshara. The greatest of all Bija-Aksharas is OM or Pranava, for it is the symbol of the Para-Brahman or the Paramatman Himself. OM contains within itself all the other Bija-Aksharas. OM is the general source or the common seed from which all the particular sounds or secondary seeds proceed. The letters of the alphabet are only emanations from OM which is the root of all sounds and letters. There is no Mantra superior to or greater than OM. OM, as it pronounced ordinarily, is an outward gross form of the real subtle inaudible state of sound which is called the Amatra or the immeasurable fourth transcendental state. As the various Devatas are the aspects or forms of the One Supreme Being, so the various Bija-Aksharas or Bija-Mantras are so many aspects or forms of the Supreme Bija or Mantra, viz., OM. Even the letters 'A', 'U' and 'M' do not really give the transcendental or original state of sound. Even this triliteral sound is only an expression or manifestation of the highest primal Dhvani or vibration. The transcendental sound of OM is heard only by Yogins and not by the ordinary ear. In the correct pronunciation of OM the sound proceeds from the navel, with a deep and harmonious vibration, and gradually manifests itself by stages at the upper part of the nostrils where the Anusvara or the Chandrabindu is sounded.
Generally a Bija-Mantra consists of a single letter. Sometimes it constitutes several syllables. For example, the Bija-Mantra 'Kam' has a single letter with the Anusvara or the Chandrabindu which forms termination of all Bija-Mantras. In the Chandrabindu, Nada and Bindu are blended together. Some Bija-Mantras are made up of compound letters, such as the Mantra 'Hreem'. The Bija-Mantras have a significant inner meaning and often do not convey any meaning on their face. Their meaning is subtle, mystic. The form of the Bija-Mantra is the form of the Devata signified by it.
The Bijas of the five Mahabhutas or great elements, i.e., of the Devatas or the presiding intelligences of the elements, viz., Ether, Air, Fire, Water and Earth, are respectively Ham, Yam, Ram, Vam and Lam. The meanings of a few Bija-Mantras are given here, to serve as examples.
OM
OM consists of three letters: 'A', 'U' and 'M'. It signifies the three periods of time, the three states of consciousness, the entire existence. 'A' is the waking state or Virat and Visva. 'U' is the dreaming state of Hiranyagarbha and Taijasa. 'M' is the sleeping state or Isvara and Prajna. Study the Mandukyopanishad in detail in order to understand the meaning of OM.
HAUM
In this Mantra, Ha is Siva. Au is Sadasiva. The Nada and Bindu mean that which dispels sorrow. With this Mantra Lord Siva should be worshipped.
DUM
Here Da means Durga. U means to protect. Nada means the mother of the universe. Bindu signifies action (worship or prayer). This is the Mantra of Durga.
KREEM
With this Mantra Kalika should be worshipped. Ka is Kali. Ra is Brahman. Ee is Mahamaya. Nada is the mother of the universe. Bindu is the dispeller of sorrow.
HREEM
This is the Mantra of Mahamaya or Bhuvanesvari. Ha means Siva. Ra is Prakriti. Ee means Mahamaya. Nada is the mother of the universe. Bindu means the dispeller of sorrow.
SHREEM
This is the Mantra of Mahalakshmi. Sa is Mahalakshmi. Ra means wealth. Ee means satisfaction or contentment. Nada is Apara or the manifested Brahman or Isvara. Bindu means the dispeller of sorrow.
AIM
This is the Bija-Mantra of Sarasvati. Ai means Sarasvati. Bindu means the dispeller of sorrow.
KLEEM
This is the Kamabija. Ka means the Lord of desire (Kamadeva). Ka may also mean Krishna. La means Indra. Ee means contentment or satisfaction. Nada and Bindu mean that which brings happiness and sorrow.
HOOM
In this Mantra, Ha is Siva. U is Bhairava. Nada is the Supreme. Bindu means the dispeller of sorrow. This is the threefold Bija of Varma of armour (coat of mail).
GAM
This is the Ganesha-Bija. Ga means Ganesha. Bindu means the dispeller of sorrow.
GLAUM
This also is a Mantra of Ganesha. Ga means Ganesha. La means that which pervades. Au means lustre or brilliance. Bindu means the dispeller of sorrow.
KSHRAUM
This is the Bija of Narasimha. Ksha is Narasimha. Ra is Brahma. Au means with teeth pointing upwards. Bindu means the dispeller of sorrow.
There are, like these, many other Bija-Mantras which signify various Devatas. 'Vyaam' is the Bija of Vyasa-Mantra, 'Brim' of Brihaspati-Mantra and 'Raam' of Rama-Mantra.
SRI VIDYA
Sri-Vidya is the great Mantra of Tripurasundari or Bhuvanesvari or Mahamaya. It is also called the Panchadasi or the Panchadasakshari, for it is formed of fifteen letters. In its developed form it consists of sixteen letters and is called Shodasi or the Shodasakshari. The aspirant should directly get initiation of this Mantra from a Guru, and should not start reading it for himself or doing Japa of it, of his own accord. This is a very powerful Mantra and, when it is not properly repeated, it may harm the Upasaka. So it is imperative that it should be got directly from a Guru who has got Siddhi of this Mantra.
The general rule is that this Mantra (Sri-Vidya) should be repeated after one's passing through certain stages of self-purification through other Mantras. In the beginning a Purascharana of Ganesa-Mantra should be done. Then Purascharanas of Gayatri-Mantra, Maha-Mrityunjaya-Mantra and Durga-Mantra (Vaidika or Tantrika) have to be done. After this the Panchadasakshari and the Shodasakshari have to be taken up for Japa.
The Bija-Mantras and the Sri-Vidya should not be repeated by those who are not well acquainted with them. Only those who have a very good knowledge of the Sanskrit language and who have been directly initiated by a Guru (who has Mantra-Siddhi) can take up the Japa of Bija-Mantras and the Sri-Vidya. Others should not approach these Mantras and should do only their own Ishta-Mantras which are easy to pronounce and remember.
Mantra-Meditation (Swami Vishnudevananda)
I hereby state and fully affirm that any Bija mantras or alleged Bija mantras used by the various organizations have been in public domain for centuries. They are commonly known in India and parts of the west. They can be located in books which I and other authors have published and can be found in almost any free library.They are not the trade secrets of any particular organization. Many of the Bija Mantras are listed in my book, " Meditation and Mantras ". My Guru, H.H. Swami Sivananda of Rishikesh, listed these mantras in his work, "Japa Yoga" in the section on Bija Mantras.
The effortless, passive repetition of these mantras is not unique to the practice of the defendants programs,and is common in all meditative practices.Here I guote points 8 and 9 from the 14 points of meditation outlined in Chapter2 of my book, "Meditation and Mantras":
8. Allow the mind to wander at first. It will jump around, but will eventually become concentrated, along with the concentration of prana.
9. Do not force the mind to be still. This will set into motion additional brain waves, hindering meditation.If the mind persists in wandering, simply disassociate from it, and watch it as though you were watching a movie.It will gradually slow down.
If an individual who is unqualified or unprepared to begin meditation uses a bija mantra, negative physiological or psychological effects can occur.
The Yoga sutras of Patanjali and the practice of the formulas which result in siddhis are common practices taught throughout India. Many translations of the Yoga Sutras can be found in many libraries throughout the world. The Raja Yoga sutras have also been introduced to my students through my book "Meditation and Mantras" as taught by my own Guru, Swami Sivananda. Further the goal of Yoga is not the obtainment of siddhis, and these powers are not to be sought as an end in themselves. Patanjali himself warns in chapter 3 of the Raja Yoga Sutras:
(37.) From that comes intuitional hearing, thought, sight taste and smell.
38. Te samadhau upasarga vyutthane siddhayah:These are obstacles to the state of samadhi, though they are considered powers to the mind which is worldly.
Patanjali makes it clear that the siddhis described above are but temptations and distractions from the superconscious state. They only appear attractive to those who are steeped in worldliness, egoism and the desire for power. Seeking these powers can bring many physiological and psychological problems to the individuals concerned.
Translations of the Rig Veda - Mandalas 1 thru 10 and translations of the Jaimini Sutras are not the private, unique secret information of any particular organization, but rather are part of the scripural heritage of India and are commonly known and publicly used.
The information regarding the mantras, techniques and scriptural books listed above are most definitely not a copywritable unique body of knowledge , nor are they the trade secrets of the defendants various organizations. Rather they are an integral part of the rich cultural and scriptural heritage which belongs to India.
[30. June 1986] [Signed Swami Vishnudevananda]
[Om Namo Narayanaya...Om-Peace-Om Santi]
(P.S. The part about the siddhis only for completeness. A true godseeker avoids these forces as Sri aurobindo said too).
http://homepages.compuserve.de/tar294/sast.htm
posted by VICKY @ 10:03 AM, ,
Yantra and Mantra
“It was a total miracle that within a week I was struck by 'lightning'
and, at the same time as hearing a mysterious, repetitive koan, a light golden
triangle was deposited in my body. This was the beginning of a series of
intense, internal experiences, all of which involved the appearance of coloured,
geometric forms. At the moment that thunder and lightning struck me down, like a
spiralling tornado sucking me into its centre, I experienced, as an observer, 'I
am that'.”
This was the result of the teachings of my first yoga teacher. He was a
versatile person who occasionally informed us of the spiritual paths other than
those connected with yoga, sometimes speaking about Zen Meditation or on other
occasions about Christianity or Transcendental Meditation. He presented
techniques from these doctrines that we could practise ourselves. I became very
attracted to the mysterious 'koan' ritual, related to Japanese Zen Buddhism,
choosing one from the many examples he gave us. Using it as a mantra during my
daily yoga practice, I repeated it continually with each asana, whilst holding
my attention on the movement of the breath. The result was impressive, yet it
was only later on that I learnt what I had really experienced.
Yantra
Only
when I came into contact with the teachings and books of Swami Satyananda in
India, in 1983, were the forms and patterns at last given a name: they were
yantras. I had experienced yantras. In fact I was yantra.
The word yantra has two roots: tra emanating from trayati, meaning
liberation, to make free, to awaken; yan, meaning instrument, something you use
in order to make something happen. Therefore, a yantra is an instrument, a key
to open up particular parts of the mind, to extend our consciousness, to make us
aware of our godliness, to make us aware of 'I am that'.
There are different kinds of yantras:
- The architechtronic yantra. Ever since prehistoric times, holy
relics, temples, churches and houses of God have been constructed according to
a yantric ground plan, with the aim of creating an energetic field wherein
visitors could calm problematic thoughts and emotions, enabling them to be
exposed to cosmic energy, in other words, godly energy. Facing towards the
east, where the sun rises, is the general rule. It is interesting to study the
maps and wind directions of temples and churches: where is the entrance, where
is the altar? An Indian medicine wheel, stone circles, the birth yantra and
the labyrinth all belong to this category. - The astrological yantra. This is intended for use with the planets,
in order to obtain knowledge about the forces that affect us. In India, nine
of the planets in the horoscope are used in order to discover what the most
auspicious and inauspicious circumstances are, for example, the best choice
for a marriage partner, the best day for a commercial transaction, which day a
journey should be avoided, etc. - The numerical yantra. This is often worn on the person as a
talisman, or lies on the place of pooja (the house altar). This yantra
contains lucky numbers or letter combinations for the person concerned.
The
yantra as instrument for meditation. This is constructed from a square with
portals forming the foundation. On the inside are circles, triangles, lotus
petals and squares, which are in themselves yantras. The yantra is created from
subtle elemental sounds, mantra, which create both name and form, bringing name
and form to life. Each yantra has a mantra, a sound that expands thought, man(as),
and liberates, tra(yati). The repetition of a mantra liberates all thoughts,
such as 'when, why, how is that possible', etc. and allows the revelation of the
highest spirit. There are countless mantras. There are godly mantras and there
are malicious mantras which unleash calamity. The effect depends on the
spiritual development of the practitioner.
Mantra yoga is a branch of yoga that gives instruction in the knowledge of
mantra. Everyone is able to repeat a mantra for themselves. This is called japa.
The singing of mantra in a group is much stronger and is called kirtan. The
practising of asana and pranayama with mudras and bandhas helps to create the
right state to repeat a mantra and to open us up to a higher consciousness, to
our higher nature.
The copying and colouring in of existing yantras is a way to create order in
our lives and to change our way of thinking, our emotions and our personality
which manifests in our relationship to the outside world. There is no chaos in
creation; usually we are the ones who make chaos. Working with yantras can open
our eyes to what lies hidden in our under- and un-consciousness. The
under-consciousness manifests itself through images and emotions, such as those
in dreams.
If we feel attracted to yantra and/or mantra it is advisable to become aware
of the regulations given to us by the wise men and rishis. It is said that it is
sensible to look for a guru, someone who has travelled through the infinite,
unmapped area of the higher consciousness, who knows the pitfalls and diversions
and who is able to show us the safe path, by giving us a personal mantra. Rather
than giving us a complex accompanying yantra, the guru usually prescribes a holy
symbol, the ishta devata, to direct the attention to while practising japa.
Shortly afterwards the symbol and the mantra form a protection for us in our
life. Everything that we need will come to us.
A few years ago, in Varanasi, I visited an exhibition dedicated to the work
of a Swiss artist. She became infatuated with India during the 1920s, deciding
to go there to live, work, write poems, paint and above all to do sculpture. She
travelled everywhere in India and Nepal, making sketches and drawings wherever
she went; upon her return to Varanasi her inspirations were converted into
sculptures. Whilst visiting the Elephanta grottoes, in Mumbai, she was overcome
by something very strange. Standing in front of a beautiful statue of Lord
Shiva, she witnessed the appearance of stars and rays of light. Using pencil and
paper, she drew what had been revealed to her: it was the form of the Shiva
Yantra. From that moment on she regarded all the holy images in another light
and discovered the pattern of the yantras. After this experience, she produced
exclusively statues of Indian gods, goddesses and yantras.
Godly
energies are manifested in anthropomorphic statues of gods and goddesses; their
characteristics, qualities and strengths depicted in the number of arms, heads,
eyes and in other attributes which they carry in the hands, or in the gesture
made by the hands (mudra). The essences of all these strengths are combined in
abstract form in a yantra.
Above all, those who are of sober character and have an interest in
mathematics are attracted to yantras. For most westerners the sweet or
bloodthirsty sword and skull carrying characters are incomprehensible. I grew up
with holy statues of the Roman Catholic tradition and view the tradition of the
statues in India as an enrichment. Through meditation, trataka on the images,
the study of the attributes that they carry and through the repetition of
mantras changes in our consciousness can take place – and I speak now from my
own experience – which normally, despite whatever therapy we follow, would take
ten lives or more to occur.
Mantra
Every mantra has a yantra and a related divinity. Knowledge of Indian
astrology (Jyotish), along with the planetary forces which exercise a negative
karmic influence upon us, is necessary in order to find the correct mantra and
yantra for us at a particular moment in time. A guru sees with the blink of an
eye the 'now' of the student. He or she knows immediately which mantra is needed
in order to process and transform past karma in the best way possible. Upon
request, the student will receive an initiation into mantra.
A mantra is a word, its effect is minimal, but when mantra initiation takes
place, the guru places a holy blessing on the mantra. This makes all the
difference. During mantra initiation, the guru brings the mantra to life and the
psychological transformation of the student commences. Afterwards it is up to
the student what he or she does with this grace.
Working with yantras is a way to unfold deeper and higher levels of
consciousness. Let us begin at the beginning: the drawing and colouring in of a
basic yantra. This is a square, possibly with portals, on which trataka can be
done. It is practical to have a sheet of white, square paper on which you can
attach a coloured folder. Make a small, black dot in the middle of the coloured
folder, on which you can direct your attention during the meditation exercise.
The square symbolizes earth and embodies all our instinctive motives and
emotions, our problems, our karma. It is our earthly arena. The problem with a
square is that it is difficult to stir into action. An earthquake must take
place in order to get it turning.
When we practise yoga we enter a process which changes our consciousness,
from being directed towards the outside world, intellect, materialism (the
western world), and this allows the square to turn on its axle. As a result our
attention becomes directed towards the inner world, wisdom and the everlasting
(the eastern world).
For example, in the Bagala-mukhi yantra the two squares go through a process
of unfolding the chakras and come to rest inside the circle of the godly lotus.
A great deal needs to happen before one gets to this stage. When someone has
succeeded in realizing this yantra within themselves, their life changes one
hundred percent.
From this basic square, the earthly arena, the forces begin to turn like the
sails of a windmill and tranquillity can be found in the heart of the lotus. The
earthly square is still present, nobody can see from the outside that the person
has changed: the same name, the same face, the same pair of glasses etc., yet
the person's life has experienced a radical revolution.
Yantras are in vogue at the moment. They are symbols of godly, cosmic forces.
They can affect us like thunder and lightning. In the western world, we have the
tendency to overindulge ourselves, jumping into things at the deep end and, as a
result, we see that yantras are sometimes misused. If I see a yantra hanging on
a toilet wall, I ask myself if this is misplaced. If somebody hangs a series of
yantras in their bedroom, I ask myself if this is wise.
Yantras belong in the place where pooja is practised – the temple in the
house, the place where yoga and meditation are practised. There is always a
curtain hanging in front of the Buddhist tangkas, which is opened during
meditation then drawn again afterwards.
My personal choice of yantra for this period in time is the Shiva Yantra,
along with its mantra Om Nama Shivaya. I consider Shiva to be the patron saint
of yoga practitioners. Shiva represents the highest godly consciousness that we
are able to attain. Also dedicated to Shiva are the Maha Mrityunjaya Yantra, and
its mantra, used for healing in the broadest sense of the word.
Sri Yantra is the highest yantra, accompanied by its mantra for Tripura
Sundari, the holy trinity, Durga, Lakshmi and Saraswati, also known as kundalini,
Shakti, the creative aspect of Shiva. In Sri Yantra, the symbol of sahasrara
chakra – also known as Sri Chakra – is unity created between Shiva and Shakti,
connected with each other in eternal yoga. The mantra that accompanies Sri
Yantra is Saundarya Lahari, the beautiful, poetic mantra of Adi Shankaracharya.
I would like to end this collection of thoughts about yantra by quoting the
twenty-fifth verse of Saundarya Lahari:
Trayanam devanam triguna janitanamapi shive
bhavet puja puja tava charanayorya virachita
Tatha hi tvatpadodvahanamanipithasya nikate
sthita hyete shashvanmukulitakarottamsamukutah
O exalted one, the praise that rises to your feet
becomes like the reverence for the three gods
which are born from the three qualities,
because they will remain infinitely close to your foot-stool,
with bowed heads and folded hands.
www.yogamag.net/archives/2002/2mar02/yanman.shtml
posted by VICKY @ 9:58 AM, ,
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posted by VICKY @ 9:46 AM, ,
the Role of Mantra, Tantra and Yantra
by Jayaram V
Be it a complicated form of vedic ritual such a yajna or some simple form of worship performed ordinarily in millions of Hindu households everyday, the process of worship in Hinduism invariably involves the use of three basic techniques, namely the mantra, the tantra and the yantra.
Symbolically, they represent the three basic spiritual paths of Hinduism, made hugely popular by the teachings of Sri Vasudeva Krishna in the famous Bhagavad gita. The mantra symbolically represents the use of Jnanamarg, the path of knowledge, the tantra of Bhaktimarg, the path of devotion, and the yantra of Karmasanyasmarg or the path of detached action. Unless these three are present in some form or combination, the worship is incomplete.
The Use of Mantra
A mantra is an invocation, containing a sacred syllable or set of syllables. When a mantra is uttered with specific rhythm, with sincerity of devotion and purity of thought and action, and with phonetic and grammatical accuracy, in a manner prescribed by the scriptural injunctions of the Vedas or some authoritative scripture, it is believed to invoke a particular deity and compel the deity to assist the invoker to achieve a desired end. It is interesting to note that according to Hindu beliefs, if a mantra is pronounced correctly the deity to whom it is addressed has no choice but to respond to the invoker automatically and help him.
When a complicated ritual such as a soma sacrifice or some other yajna is performed, not one but many deities are invoked simultaneously by groups of priests chanting various mantras. Their chanting creates the necessary vibrations in the atmosphere to awaken the deities and facilitates their descent to the place of worship.
The sound that is generated by the chanting of the mantras is very important, but is is not the only requirement for the yajna to be successful. The remaining requirements are the appropriate use of tantra and yantra, which will be explained later.
It is believed that hidden in each mantra is the energy of a particular deity which remains normally latent, but becomes active the moment the mantra is pronounced accurately in the manner prescribed by the shastras. The divinity awakens only if the vibrations generated by the chanting matches with its basic frequency. Besides this, as we have already noted, the appropriate use of tantra and yantra must fit in the overall purpose of the worship and remain in harmony with the expectations of the divinity to whom they are directed.
The Use of Tantra
Tantra is the systematic use of the body and the mind as the physical instruments of divine realization. The body and the mind constitute the lower self and together they aim to indulge in the desire oriented actions of the lower self to perpetuate the interplay of the triple gunas, namely, sattva, rajas and tamas.
Primarily, they are the chief instruments of the divine Prakriti, otherwise called Maya, and they play their dutiful roles quite efficiently and effectively and succeed mostly in keeping the soul chained to the earth and go through the ordeal of births and deaths by the inexorable law of karma.
Tantra aims to liberate and transform these two so as to make them the true instruments of the hidden self. It aims to bring them in tune with the aspirations of the hidden self and make them Its partners in progress. Hindu scriptures declare unequivocally that transformation of the body and the mind is the most difficult part of ones spiritual journey and that most of our difficulties on the path come because of our inability to deal with this problem successfully. Tantra is therefore a very important and integral part of Hindu spiritualism and equally maintains its place in the ritual part of the religion.
Tantra is not for Tantrics only
There is a misconception among many that tantra is used by Tantrics only through the medium of sex and other objectionable means. This is not true. Tantra is used in every aspect of Hindu worship. What we see in Tantricism is an extreme form of tantra where the body and the mind are allowed to express themselves freely under the supervision of an enlightened master to come to terms with them and achieve complete mastery over them. But tantra in its milder and normal forms can be seen in action in everyday life. For example the Yoga of Patanjali, is a kind of tantra only, where we aim to achieve bodily control through certain physical postures and mind control techniques.
The simple use of tantra in an ordinary householder's regular worship include the use of certain bodily postures like prostrating before the deity, the lotus position, the folding of hands in front of the deity, purification of the body through fasting and bathing, concentration of the mind on the image, breathing practices, thought control through inner detachment, detachment of the body and the mind through devotion and so on. In pure devotional forms of worship, the body and the mind are offered to God as an act of supreme sacrifice and inner detachment, thereby allowing the divine forces to descend and do their work of inner purification and transformation.
In a complicated vedic ritual also we can see the use of tantra more or less in a similar manner. A vedic ritual bears no fruit if the body and mind of the performer are not geared to participate in the ritual with the required degree of purity and sincerity. All the chanting of the mantras comes to naught and the divinity or the divinities would remain inactive if these two are not in harmony with the objective of the entire ritual. A Hotr priest or an Adhvaryu priest have to maintain utmost purity and observe certain discipline before performing the rituals.
The Use of Yantra
Yantra is the use of certain external objects, symbols or some mechanical means to worship the divine. The act of folding of hands in front of the deity is but a kind of yantra only. The manner in which a fireplace is built for the performance of some vedic sacrifice, the method in which the place is prepared and the materials (sambhra) are assembled, the manner in which the oblations are poured into the fire, the way the priests sit around the altar, and in fact the very act of chanting of the mantras with mechanical precision form part of yantric worship only.
The very design of the temple as an outer symbol of the existence of the Divine on the material plane, the act of visiting the temple, circling around the temple, entering the temple, the lighting of the lamps in front of the divine, the decorations and the ornamentation so characteristic of hindu temples and places of worship, the manner in which the images are built and installed, the lighting of the lamps, the offerings, the method of worship, the partaking of prasad, and in short any practice that is mechanical, symbolic and ritualistic to a degree, form part of this approach only.
Hindu Worship, a Means to Evolution
Thus we can see that the Hindu way of worship is not a mere superstitious ritual, but a complicated form of divine worship in which higher universal forces are invoked to assist man in his spiritual and material progress. A science as well as an art, it aims not just to achieve some specific end but through the process of integration of the body, the mind and the spirit, the very evolution of man into a higher being.
www.hinduwebsite.com/secretsofworship.asp
posted by VICKY @ 9:35 AM, ,
Greenspan's Black Magic
As we gird our loins for the next FOMC rate setting meeting next week, the old ‘will they: won't they?’ is beginning anew, with everyone long of the market, or short of a job, clamouring for Sir Al and the other Knights-Errant (as in mistaken, of course) to rescue the flagging economy by cutting another quarter point off the Funds rate and boosting the money supply.
But, if they gallantly acceded to these demands, would this cut finally do some good? There is no reason to assume so.
Suppose we felt our parlour game of Monopoly was proceeding a little too slowly for our tastes, so we ran to our colour photocopier and printed off another $3,028 in notes, increasing the standard set’s ‘base money’ by 20%.
Now, this will clearly change the outcome of the game, since some players will be more indebted, or less cash rich, than others when the new money hits, while the fortunate few will get it ahead of the others, while the smart cookies will realize its likely consequences before the rest.
In other words, the new money may serve to transfer ownership, to alter relative prices, and to rearrange the balance sheets of the players, but it will patently not alter the number of rentable properties, or increase the stock of houses or hotels available to be built upon them – in other words, the money cannot increase the wealth at stake.
Ultimately, it will not boost the income achievable beyond a preset maximum either, since no more than one hotel can be built on any given property under the rules (in other words the capital stock is not infinitely expandable at whim), though it may well artificially depress the yield as participants bid higher to acquire these assets from one another (though not in the effective ‘privatization’ which the initial purchase entails).
So, if it’s bound to fail in the game of Monopoly, what makes anyone think this ploy will work for the Fed – even assuming that lower short term rates will actually lead to an increase in money creation, something which is far from a given?
In fact, the only thing another ease can help do is to alleviate the constraint to income and the threat to creditworthiness imposed by the interest burden being borne by debtors – largely through indirectly rolling up this ongoing obligation into principal, since somebody, somewhere must owe the increase under our present debt money system.
And do you know who that ultimately benefits?
The lenders. Not the debtors, the lenders.
This is because the deadbeat company and the cash-strapped consumer alike can better hope to put off the day of reckoning, through reducing the income drain via refinancing – often at the cost of accepting higher interest rate risk by funding short and usually at the expense of increasing the size of the debt itself.
These shaky borrowers are also more open to being carried by their banks past the due term of any existing loans, since they now seem ‘safe’ prospects for being rolled forward, with a lesser risk of them falling into the non-current category.
Thus, the bankers – while congratulating themselves on their prudent and sensitive approach to the cycle – can seek to avoid the painful necessity of having to make higher provisions, or even, perish the thought, the write-downs, which are so disruptive of both banks’ present earnings hopes and future expansion plans.
If the economy improves, of course, that is just fine and dandy, for the banks will have every chance of having acquired a larger overall body of claims on the wealth producers (remember that business of transferring ownership?), less a little real adjustment for any incidental inflation, perhaps.
But, what is not generally realized is that the banks’ own actions can be detrimental to the chances of this recovery occurring and this danger is the more magnified, the greater was the scale of the initial malinvestment of capital in the boom.
This is because the banks’ proclivity to exploit artificially low, imposed interest rates, in order to avoid facing up to the harsh realities of the needed liquidation and restructuring, is helping keep all this mass of poorly-used capital frozen in place, to no-one’s overall benefit – not even, should this process proceed too far, their own.
In this, they are also hindering the necessary, market-based readjustment of prices – and so the redirection of scarce resources – by allowing those who produce relatively little of value to continue to compete for goods and services on equal terms with those who do add worth, and so they are favouring capital destroyers over the capital builders.
Worse, in this cycle, the banks are focusing most of their efforts of credit expansion either on outright consumption on the part of individuals, or on that most sterile of ‘investments’, that unwieldy, high-maintenance consumer durable, otherwise called a ‘home’.
No matter how many times the mainstream mindlessly intones the mantra that the ‘60% of GDP’ cart comes before the horse, consumption without production is a finite exercise in exhaustion, a rake’s progress to ruin.
So, enjoy the next Fed cut if they deliver it next week, and hail Sir Alan when he rides by in his mortgaged panoply on his borrowed destrier.
Just bear in mind, it might not have been a dragon at which he just tilted, but merely a windmill.
by Sean Corrigan
posted by VICKY @ 9:32 AM, ,