Yuan it Says Gracie

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Page 1 of 9 January 2016 © Copyright StockTakers, All Rights Reserved. Copying Prohibited.
The author does not provide investment advice. In order to use reproduce or convey the material herein,
in any way, written agreement must be obtained from the author or its agent Architypes Inc.
StockTakers Limited is an Alberta corporation providing information on “likeables” equities.
StockTakers Limited encourages your seeking tax law advisor for capital gains tax dispositions.
Man Bites Man! Yuan It, says Gracie?
Having opened the door to jubilee in respect of Greece’ debts in some kind of conversion of
Christine Lagarde, the IMF has announced China has earned the rightful place as an Special
Drawing Rights (SDR) currency for panics to resort for shelter when the fan looms closer fanning
the flames. Well, gold has not worked as an ‘intrinsic value’ having fallen further 10% in recent
years, so where is an international trader to go as currency for dealing. But then as you and I knew
and J. P. Say long ago said, no money can retain value for long as all things are trade instruments,
each bearing their own transaction costs.
With the world of fund managers seemingly China stock market fixated, the point is being missed
that the world real economies are going well, compared with the gossip mongered financial markets
trying to squeeze their income for nebulous value they add. In the real world GDP is rising faster
than the population. The biggest miscall of the market gossips driving volatility by gazing only at
their navels and Ouija boards is that world gross production still exceeds world population growth
by a factor of 3. The real world production by its real business measure is doing well. The
manufacturing shops of Bangladesh, China, India, Vietnam and Indonesia are still turning out
goods being bought by the rest of the world at a faster rate than the population is growing and
forming new households. The fund managers moving our cache around do not know, aren’t seeing.
High value added production of Chinese (Vietnam, Indian and Indonesian etcetera, are not far
behind) workshops to the world still exceeds the population growth of high income nations buying
high value consumer goods by a factor of 13. Chinese domestic consumption from its household
formations is its own internal problem, while households’ formation buying durable goods in the
rest of the developing world is still rising.
These factors are driven by technology and money rents paid to leading Euro-American
corporations. The Euro-American consumers’ appetites expressed as their GDPs are still rising at
more than quintuple their rate of population growth. Durable goods needed to supply forming new
households in Europe for war refugees rebuilding lives will stimulate welcoming economies.
The five thousand year rivalry of tribal fiefs in their plundering for middle east spoils regardless of
religious spurs1
will spoil over oil decline as fuel is overtaken by innovating entrepreneurship. The
finest individuals of those fractious intrigues have escaped servility to seek their individual agency
among the developed economies giving refuge for their energy and range. They are actively
"for the value of money is also perishable." Jean-Baptiste Say , 1803
What investors expect of financial products is a way to secure their hard earned savings while
growing their wealth. The circularity of ‘investment talk’ is what Alice gets at the Tea Party.
“Take some more tea,” the March Hare said to Alice very earnestly.
“I’ve had nothing yet,” Alice replied in an offended tone: “so I ca’n’t take more.”
“You mean you ca’n’t take less,” said the Hatter: “it’s very easy to take more than nothing.”
Pretty much, they have taken it all before you arrived. “Alice, meet Dr. Artful Dodger.”

“
rebuilding their lives spoiled by conflict among those playing zero-sum games in search of spoils
they can obtain by fear pillage plunder and rape. These ‘bad dogs’ of societies are on the loose and
who let them out is serious business, all of ours, business. Ultimately we only can rely on rule of
law to resolve2
, though guns are going to be necessary to get the bellicose into court and be
accounted for their crimes. But they too will rely on a lot of implausible denials of why they have
purple thumbs while standing over our plumb pies saying how clever they are, instead of from
voting in fair and free elections.
These innovators given agency (like Steve Jobs father who had himself escaped tyranny in Syria3
)
are the fundamentals driving international trade and macroeconomics the gossips are blind from
seeing. However as one pundit said, politics is all local, so is conventional vision of economics,
plagued by not seeing the larger view. Volatility will settle as these notions make their corrective
impact and market gossips find some other sky falling to scream at each other about. As one cynical
pundit said, “No crisis, no trades, no fees.” As another pundit reminded, “Stay Calm and Carry
On.” Because we know the stock price is still above the Risk Price worth of our holdings, we know
where we are and we can option short as the world of gossip turns. We need to, “Stick to our
knitting,” particular as it is, and climb back out of the gossip-bomb crater the gossips have sent.
Sure, the financial industry is sinecured for assembling our savings into investment vehicles though
they have no proof for justice. Those are the savings as we all earned from our usual business
endeavours where we willingly participate as trading connections within the company of people we
work with day to day to earn our incomes. We work for each other. We consign our saved wealth to
the financial industry wizards, as we hope in that trust we have given, they with their claimed
expertise can find for us an income greater than the rate of inflation. That our hard won savings and
wealth are not eroded, or simply lost down a rabbit hole under a cloud of excuse because they did
not know they had no clothes as emperors of finance. Buck naked, they have no proof of expertise.
As an industry claiming expertise, they cannot prove either expertise for obtaining earnings above
inflation gained even from what amounts to their Wild Ass Guesses. There is no real basis for the
law anointed professional role they hold handling our, premiums in insurance, cache for pensions or
interest from bonds. They do behave like greedy piggies at the trough gobbling first and foremost
what they can conceal under their poor results. What else do they do than gamble with our cache?
What is of further interest with the raising of Reminbi to a SDRs currency (like dollars and Euros
with Special Drawing Rights to defend their currency trading value in international payments when
exchange traders go wild, and tear like magpies), is that it recognizes that need for China to resist
the ravages FX trading can wreck. It also allows that trade fed to fever-up confusion.
In the early days of television innovation there was a lot of entertainment talent trying to find a way
to gain from selling soap through the new communication medium brought with commercial
breaks. The classic comedies of George Burns and Gracie Allen have given us many witticisms that
have endured. Gracie Allen might well have made an intriguing and witty presidential nominee.
George: Interesting stuff. The taxes..

“
Gracie: Right. I know how the government can save a fortune. Do away with the
mint.
George: Do away with the mint?
Gracie: Sure. Why don’t...
George: Just do away with it?
Gracie: Yes.
George: Yes?
Gracie: Why print money? Why not buy ready-made?
George: That’s an idea ...
Gracie: We can buy from China. I hear their money is very cheap.
In that routine from 1940, with George Burns her straight-man, Gracie Allen sure set a precedent
many have followed. Some even have succeeded in running for office with such sharp witted
schemes, though the current crop of candidates seem shadows from a different planet. So much of
her skewering commentary with George Burns is still timely today as we usher in the role China
has earned polluting for our profit. As an SDR currency these new seas have tempests of their own.
Carry trade in bonds has an unusual large
spread emerging these days - such as held
sway in the 90s - as central banks’ policy
continues to diverge as the US economy
expands as others retrench. Thus setting up
much the same situation4
that lead to Barings
Bank demise5
due to its foreign exchange
arbitrage manager in Singapore, Nick Lesson,
who on the side made a string of losing martingale bets for years on
derivatives with Osaka bond market trades. Getting it right as currencies
swing and sway is delicate while betting against the tide, ask Canute.
Third oldest of surviving merchant banks, at least until then, Barings Bank
had arisen from Bremen out of their Thirty Years War escape from Spanish invasion of the
Protestant Low Countries disruption of Antwerp wool trade with England; and, hemp, linen, silver
and gold (of Rammelsberg mines) coming through Bremen. Rising from the Staal Yard traders in
London they had at the time among their clients our Queen Elizabeth, and, even one Barings family
descendant, Lady Diana Spencer, married her son, whose child now stands next in line to the throne.
Barings had had a storied run having organized financings for: Britain’s Napoleonic War front,
United States’ Louisiana Purchase (in which subsequent land speculation Andrew Jackson had
foundered and gained his vengeance to destroy US reserve banking for a century6
(later when serving
as President)), Erie Canal construction (opening in 1817 the Ohio to Minnesota US mid-west to
world trade), and, 1881-1885 Canadian Pacific Railroad that unified Canada (through its generous
‘bonifications’ to politicians and their wives in exchange for land tract grants and trading rights) and
which now promises to takeover NS railways. Among the immigrant oppressed German
(mercenaries recently out of a job paying income after Napoleon was ushered off the stage), and Irish

“
‘navvies’ (familiar with tunneling, trenches and laying rails) immigrants seeking their income were
many imported Chinese seeking the opportunity for a new life earning their income by doing the
even direly more dangerous and foul jobs.
The Reminbi/Yuan Ұ can serve as another means for traders to harbour, as gold continues on its
loosening value as place holder for those gamboling between trading, markets and currencies.
Shanghai is knocking, though there is heavy weather in Beijing as they take-on reduction of coal
reliance and householding of vacant new cities standing ready for their new consumer economy.
The Risen Dragon economy has done so by exploiting heavy polluting industrial technology the
western major companies gladly exported to ally with subject citizen low labour costs to stock the
shopping malls of the world. The West gained by their export of its own polluting technologies to
escape growing legislation for environmental responsibilities to society, and China gained by
stipulating technology transfer. But that exercise is based in the loss of three things; human rights,
the common good, and rule of laws on which liberal democracy depends, and also an institution not
unique to the West, capitalism. The common good is our subject here as it sits at the base of
capitalism. The trading connections of the firm seek to create and feed from a common good in the
added value they nurture in the firm and bring to market. Capitalism is a creation of liberal
democracy as much as common good, rule of laws, end of slavery, universal education, universal
suffrage, corporate persons, human rights, and environmental laws are the children of its progress.
Capitalism is all about constructing the means to add value through enterprise. Among those
involved - joining in as each are able whether as partners, shareholders, bond holders, working
capital banker, ‘goodwill’ equity holders both within and external to the company - all are ‘trading
connections’ supporting the capitalized venture by extending ‘credit float’ to its process. Capitalism
requires them all for their interest crediting float value to the success of the venture. Each of these
connections providing credit float are dealing for their share of the added value being created by the
firm’s business process. That gestaltung is by design. The many parts and partners in the firm that
comprise the ‘trading connections’ are committed to the firm’s view of its means by its process of
creating more value than each of their stakes put forward to help the firm realize effective and
desirable outputs for sale. They have staked their interest in the venture’s success.
Adam Smith distrusted those disinterested. He was suspect those who are agents of stakeholders
without their own skin in the capital stake might subvert the value added goodies, created by the
trading connections, to their reaping. Smith, 250 years ago feared short term focused decision a
moral hazard of managers running the company as their avatar. The modern C-suite in fifty years
has run from 20 fold in 19657
to over 3318
times the median salary in their companies9
(even as
high as 1,957 times) transferring inordinate share of corporate value added. Market value has not
risen 50+% in five years but CEO salaries of firms has10
as patronized boards fail to govern.
Libertarians depend on ethics codified into rules of law to ensure responsible trading that limits
your swing to miss the end of my nose. Rule of custom as we put into laws is the only way we have
found to keep the field near level and fair. You do have to respect with whom you are talking and
listen to them in order to communicate that equitable trades are possible for trading connections to

“
build a business relationship for both parties to gain. That basic ethics is necessary, is essential core
of what Adam Smith profoundly put forward as the Invisible Hand allegory. Our human rights are
what enable entrepreneurial trade in free markets, require that merchantilist and protectionist tariffs
on subject not injure effective opportunity on the fair grounds of the level field. Free Trade is not
free-for-all brawl with bats plundering the other guys’ purses. That is a lesson that MBAs at school
and after seem to miss but ethics remains as current need in Protagoras agora as it is today.
When business plans rely on exploiting by skirting the rules of laws and the commonality of the
level field becomes just straw-man we subvert real costs to externalities by such scheme. We may
do so by misadventure also, such as by the many experiments that gave us modern industrial
processes. When we knowingly do so we have planned to plunder without regard to respect the
stake of others in what we exploit. We revert to connivances of scoff-laws stealing patents, earnings
and/or air, earth and water. Poisoning our milk, plastic sippy cups, or air we breathe from
sulphurous drywall is the consequent externality of managers’ fungibility not doing the job.
Then also there is the public as ultimate fall-guy, as unsecured creditor picking up the costs of
company or corporate failures. That is the ultimate externality no business plan takes unless by
managers running the process to grift. At GE Immelt is cleaning-up the mess left by Welch, as that
is picking up as you should for yourself, as your company. Cleaning up Bhopal, Exxon Valdez or
arsenic at Yellowknife is on the public purse. That is not responsible business planning, offloading
externalities for profit is not what we the planet can support. We now have several current
presidential candidates who have left their own messes for the public liability to bear.
Raiding the common good is convenienced opportunity when laws are weak and implausible denial
is made relevant instead of remote. The issue of the ‘common’ has always been an issue central to
law formation, from founding of English law in, Charter of Liberties, by Henry II’s Judiciar11
Tractatus, to Magna Carta, Charter of Rights, highland clearances, Corn Laws (abuses contributing
to Irish Famine), tenant equity12
and (Joint Stock) Companies Act of (1844) 186213
. Who proclaims
their rights to abuse the ‘common’ remain, though we have dispensed with noblesse oblige the
Normans advised but so often ill-used. We play the level field of custom in law or we war.
The creation of some common good is a notion central to liberal democracy as are rule of law and
human rights that makes it and its boy capitalism get to work. Three birds shot with one stone but
you cannot find any of them in the Beijing, Shenzhen, or Shanghai smog, or Tibetan plain dust
storms. With our western technology transfers China entreated in exchange for access to its subject
population of cheap labour was also exported the notion of exploiting their common good, weak
laws and human rights they were willing to forego to get the seed-bed of modern economies.
China now is working on creating infrastructure for new households creation within its borders for
raising a consumer economy but that is its internal work in progress. They have built a seed-bed of
facilities and resources now capable of innovation where patent theft does not succeed. Their work
of supplying consumer goods to the world continues to the smaller but still growing western
economies who though a seventh of the world are consuming 54% of world GDP or 13 times the
rate of their own population growth as their GDP infers while sustaining that GDP at a pace four

“
times their population growth. The wizardry of selling more soap remains the ‘art’ of western
economies14
selling each other laundry, as all the latest toys.
The emerging economies as they convert to liberal democracy and its carpetbag of human rights,
common good and rule of laws will energize more trade down the line but still now and going
forward the western economies’ corporations and nations are the engines absorbing what the rest of
the world produces. The developed world is still driving innovation, in alternative energy,
environmental electronics and eusocial industries as we also finance to discern the mysteries of
particle physics and dark energy in collaboration with all nations able to participate bringing some
added skills to the table15
through crowd computing. Eusociality made us fitter for survival16
.
The emerging and developing economies and nations are following with the developed and are and
will bring useful new insights for further innovation from their shop floors. The corrective going on
in markets right now has most to do with us, the ‘common’, absorbing the largesse expended by
TARP and other measures spread on the financial industry to salve the losses the financial industry
devised to strip liquidity instead of create liquidity from the wealth entrusted them by us all. TARP
was put forward and sold as measure to retain liquidity in their system, as was the aim also of
Quantitative Eating all of which the industry promptly turned to removing liquidity from multiples
of 80 and 40 back to 26, shoring their reserves and swelling their spreads to capture greater profits
on the backs of the real economy as we all struggled to lift their load and repair their mess by
growing the real economy. Defense of our own remaining tattered assets is the only reason.
Small wisdom of the trading community is exposed in just the two paragraphs on ethics in 130 page
text for CFAs hedge fund training, “if you are smart enough you do not have to cheat.” The reality
of the problem17
is the tools the industry uses are not smart, just dumb and/or brutal thuggery.
LIBOR and drug money laundering18
were grift the industry long used to increase C-suite salaries
and bonuses at the cost of shareholders stakeholders and society. They do not know smarter. They
do not know what Risk Price is or how it is defined within the business process of firms balance
sheets expose. We see the start and finish of a coin like as a bullet but need mathematics to trace it.
Convention has no models using partial differential equations on manifolds of three variables or
higher, mathematics developed after Newton. Markets are not mechanical. They have no models
that can fly to the moon or circumnavigate our globe applied to the real economy and its primary
driver the valiant idea behind a firm that gets expressed in the balance sheet cipher of cash flowing
through as directed flow of credit used in all its forms by its business process. Risk Price is of such
model of firms’ balance sheets and record of how markets behave respecting it.
What ‘faint and fuzzy’ view19
does convention confirm about any firm’s worth? What is the
formula for goodwill’s number used to inform placing a bet of our cache in any venture capitalized
leveraged buyout bonds rating? They rely on market price and project that through the pin-hole of
their expectations on a discounted future to understand the value of absolutely nothing. That
‘nothing’ was the projection of fund managers ‘pricing-in’ the market 106 weeks ago which is near
where stock markets are trading today. Conventions blew another bubble getting it wrong.

“
The prop of stock prices fed on the Quantitative Eating diet plan was ending and did end 70 weeks
ago, bringing the Great Rotation20
as money left hedge funds, and pension funds retrenched to
bonds returning less than inflation. The Medieval Diet aims for taming the excesses of the largest
banks beginning as a new ‘fat tail’ in three years will thin available pools of liquidity and raise
corporate bond rates as banks are required by 2022 to hold readily tradable securities for bail-in
preparedness. Or, they step back out of retail to merchant bank financing balance sheets they cannot
read effectively. On that wake-up call money will not rest easy on bonds for long eroding income.
So, gentlemen, get ready to start your discount engines to realize more negative returns21
on the
Great Rotation converting back. Managers churning bubbles will refloat appetite for the equities
market as the real world economy keeps plodding out of the crater, buying faster than it is
populating, whether in China and the emerging markets, or more so in the first rank economies.
China needs the added liquidity SDRs status will give them defending their trade with the financial
markets of the world. That new status also further exposes us to the carry trade in bonds and abuses
therein the financial opportunists trading in currencies may hope to devise. When they cannot
arbitrage what tools do they have, than to toss your nickels given them, to make an income, for
themselves at least and always first. That is as good as their conventions can obtain, coin-tossing22
.
Knowing where you are, having a milestone to guide your way23
, is what having the Risk Price for
any stock allows the investor. Like having a place to stand was Archimedes strong point, knowing,
is the fundamentally important point of Risk Price. One knows something relevant and actually
reasoned and reasonable about the worth of the stock one is holding or may buy in one’s investment
portfolio instead of something projected as shadows on the cave wall by convention24
. That is all
sales-pitch cymbals and noise signifying absolutely nothing. Do not put your cache in coin-tossing.
We like Capital Safety and Liquidity because we have proven our risk averse method works,
consistently obtaining both low risk and AlphaSmartTM
high gain. Our Risk Price is what
investors must know to defend their capital. Market behaviour prefers the “likeables” trading above
Risk Price and bids up their price. Our method is proven. Because we can, you can25
.
In our Modal Geometry26
theory of the firm we make only two assumptions, clearly as follows:
1. there is a balance sheet of the firm (that the rule of law governs its information is possibly
weak assumption but at an accuracy to at least the modest degree accountants are prepared
to be responsible for); and,
2. the firm will vigorously negotiate, “what it owns” (in order to stay in business “what is
owed to it” with “what it owes” and vice versa, to make the best of what it has, that is in its
trading connections).
The Modal Geometry theory of the firm has unfolded by rigourous observation of corporate ledgers
relation to balance sheets as business process27
adds value with its trading connections. That is
aided with logic, epistemology, and some powerful mathematics. You have proof in our ABC-ZTM
Solo50K-
BlackSwanTradingTM
TaxCharityTM
and BookBuilderTM
public portfolios results.
Because we can, we do.

“
Our reasons for having any equity in our portfolios are clear, concise and consistent. The equities
we hold are “likeables” showing clear tendency to gain 67% of the time. We do not make stock
prices but can reasonably respond to stock price tendencies, by our knowing the price of risk, the
downside, and buying and holding accordingly. That is new fundamentals from theory we have put
into policy obtaining 26% IRR average in the long term.
Know What You Have. Have What You Know
Our view is risk averse. Of course we require a fee for doing that. Mail or call us for our help.
Hans Goetze,
Architypes Inc and StockTakers Limited
Head Office
76 Midridge Close SE
Calgary, AB
T2X 1G1
7 Balsam Avenue
Toronto, ON
M4E 3B3
351 Chemin Boulanger
Sutton, PQ
J0E 2K0
450 538-1270
1
http://www.slideshare.net/HansGoetze/urukagina-economics
2
The propriety of property ownership was shielded from random self-serving whim and plunder going back to Ranulph de Glanville
first written codex of English law, Tractatus, 1180. In advance of later first written code of English law. We put away long swords
for trial by combat still extant in Norman law to settle such thereafter. Prior to Chief Judiciar, Ranulph (himself Norman, and
descendant of baron fighting along with William I at Hastings), was the sheriff appointed by Henry II to defend the moneylender,
Aaron of Lincoln, from attacks of mortgagors in his jurisdiction of York. Ranulph’s experience providing protection of the Crown
established by Henry I who brought to England the Jewish moneylenders in order to break the strangle of bishops as moniers who,
functioned as bankers; threatened land taxes by mortmain contracts; and, charged effective interest of 60-75% through vifgage
(though deeming that as not usury). Ranulph’s experience with Saxon law of testimony, witness, charter and evidence heard and
judged by peers in courts (Dings) was the model of Charter of Liberties the Saxon barons compelled on Henry I’s ascending the
throne, 1100, had founded the model used also for’ pieds de poudre’ courts traders and merchants had established for justice
outside Ecclesiastic courts. Ranulph was vice regal when Henry was out of England but following Henry’s death and unfavoured by
Richard I, Ranulph died on crusade at Acre, while riots induced by mortgagor nobles seeking to pillage and seize their mortgage
contracts massacred the Jews of York. The rule of law has often been troubled by those who intend offence.
3
http://www.macworld.co.uk/feature/apple/who-is-steve-jobs-syrian-immigrant-father-abdul-fattah-jandali-banksy-3624958/
4
http://www.economist.com/news/finance-and-economics/21678813-monetary-policy-could-drive-currency-volatility-what-
carry?cid1=cust/noenew/n/n/n/20151123n/owned/n/n/nwl/n/n/n/email
5
http://www.thebubblebubble.com/barings-collapse/
6
http://www.slideshare.net/HansGoetze/medieval-diet
7
http://www.epi.org/publication/ceo-pay-continues-to-rise/
8
http://www.forbes.com/sites/kathryndill/2014/04/15/report-ceos-earn-331-times-as-much-as-average-workers-774-times-as-
much-as-minimum-wage-earners/
9
http://www.businessinsider.com/companies-where-ceo-earns-over-500-times-what-employees-make-2015-8
10
http://www.npr.org/2015/08/28/435245281/comparing-the-top-boss-pay-to-yours http://www.npr.org/sections/thetwo-
way/2014/05/27/316336449/median-ceo-pay-tops-10-million-for-the-first-time
11
https://en.wikipedia.org/wiki/Ranulf_de_Glanvill His descendent and my dear friend in discussing the meaning of architecture
and how we design buildings over cask strength single malts http://systemic-design.net/remembering-ranulph-glanville/
12
https://en.wikipedia.org/wiki/Landlord_and_Tenant_%28Ireland%29_Act_1870

“
13
http://www.theguardian.com/books/2003/nov/08/history.highereducation John Micklethwait and Adrian Wooldridge, The
Company: A Short History of a Revolutionary Idea, 2003 http://www.goodreads.com/book/show/210022.The_Company
14
http://www.slideshare.net/HansGoetze/its-the-arts
15
http://www.slideshare.net/HansGoetze/getting-our-mastodon
16
http://www.slideshare.net/HansGoetze/getting-our-mastodon
17
http://www.slideshare.net/HansGoetze/judge-by-company-they-keep
18
http://www.slideshare.net/HansGoetze/what-use-is-gold
19
http://www.e-m-h.org/Bernstein1999.pdf
20
http://riskwerk.com/2016/01/07/bn-the-great-rotation-twenty-hot-canadians/
21
http://www.marketwatch.com/story/this-is-how-much-the-average-american-investor-made-last-year-2016-01-
08?link=MW_latest_news
22
http://www.slideshare.net/HansGoetze/running-markets-without-walras-and-schumpeter
23
http://www.slideshare.net/HansGoetze/orienteering-among-magpies
24
http://www.slideshare.net/HansGoetze/four-horses-of-portfolio-apocollapse
25
http://www.slideshare.net/HansGoetze/the-grail-and-the-goat-portfolios
26
“The Modal Geometry of the Firm and the Balance Sheet Worth of the Trading Connections”, 2006,
27
http://riskwerk.com/2014/03/15/pi-the-process/

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