James Orlin Grabbe
Encyclopedia
James Orlin Grabbe more commonly referred to as J. Orlin Grabbe, or just JOG, was an economist and prolific writer with contributions in the theory and practice of finance. He was known by his book International Financial Markets, and for mathematical models for options
and derivatives
used in international finance
and foreign exchange
.
Grabbe wrote articles and essays about personal freedom and governmental abuse, and was an editor of Internet magazines such as the Laissez Faire City Times. Born and educated in the U.S., he pursued his business interests around the world. He died from heart failure around March 15, 2008 in San José, Costa Rica
.
, and grew up on a farm in Briscoe County in the Texas panhandle
. He showed great academic prowess in his youth and in response, he was invited to participate in nationwide, specialized education in mathematics. Two of his brothers also achieved doctorates and became professors. His brother Lester was a professor of theology at the University of Hull
in England, while his brother Crockett was a professor of physics at the University of Iowa
.
In the fall of 1966, Grabbe joined an older brother at the Worldwide Church of God
's Ambassador College, based in Pasadena, California
. He graduated in 1970 and served on the teaching staff until 1973. During this time, he was the editor of the student newspaper. In his memoir, written later in his life, he described not only his own experiences and thought processes, but also the atmosphere that permeated the college, its students, and the organization as a whole.
After leaving Ambassador, Grabbe enrolled at the University of California, Berkeley
, to pursue his interests in research and science, with an emphasis in mathematics. In 1976, he received a Bachelor of Arts degree in economics. He continued his education at Harvard University
, Cambridge, Massachusetts
, where he was awarded a Ph.D. in economics in 1981.
Grabbe specialized in the study of financial derivative instruments and published important pricing models for futures
, forward contract
s and options
, especially in the foreign exchange
(FX) markets.
), working in the capacity of assistant professor in economics. Grabbe discovered that there was a lack of educational material for the emerging field of international finance
and for the increased trading in financial derivatives created by this market. In 1986, he wrote International Financial Markets, which is used worldwide as an educational and professional reference of trading in derivatives. In the 1991 second edition of his International Financial Markets, Grabbe introduced the term regulatory arbitrage in the context of eurocurrency
markets. One of Grabbe's students, Andrew Krieger, became a Bankers Trust FX trader and the author of the The Money Bazaar.
In 1985, Grabbe transformed his informal interactions and founded FX Systems Inc. with one of his students, Farid Naib. When FX Systems continued to grow, Grabbe resigned from Wharton, in order to focus on the further development of the software. FX Systems stayed at the forefront of the emerging markets for financial derivatives, acquiring financial institutions as customers.
In 1990, Grabbe sold his share of the company. Unfortunately the new owner, who was now partnered with Naib, ended up in disagreements leading to a split of the company and the formation of FNX Limited, led by Naib. Until his death, Grabbe worked as a part-time consultant with FNX Limited. Under the umbrella of FNX, Grabbe created pricing models for complex derivatives, which were used by major banks around the world. FNX Limited has since become very successful in the market.
. In May of that year, he published the second part of a two-part essay, "The End of Ordinary Money" on the Internet. The first part of this essay had been written in 1987. In July 1995, the article was printed in Liberty magazine. With the publication of a second article, "Digital Cash and the Future of Money", Orlin Grabbe had established a path towards Digital Finance.
, in an effort to discover ways to protect individuals from interference.
Some of Grabbe's investigations surrounding controversial current events, made direct contact with sources in government essential, which led to further investigations. The increasing popularity of the Internet made his articles (and essays) widely spread. Some of those published investigations are recognized today still as relevant, including his article "When Osama Bin Ladin Was Tim Osman".
Lesley Stahl
of 60 Minutes
, produced an investigative segment about misinformation on the Internet that aired on March 2, 1997. Grabbe was interviewed on the show and presented as a representation of misinformation found online. Her comments about the dangers of anyone being able to create content on the Internet, rather than relying on mass media, led to further commentary online.
In parallel, Grabbe also published philosophical essays written from a libertarian/anarchist viewpoint about personal freedom and the perceived increasing threats. This was exemplified in 1993, in a speech to the Eris Society, entitled "In Praise of Chaos".
The Laissez Faire City Times grew in prominence, with many of its articles quoted and referenced by others, some even by mainstream media and academic papers. In line with his work on Digital Finance and its dependence on cryptography, Grabbe published several articles and tutorials in the Laissez Faire City Times and on his Internet homepage. The tutorials and especially the Java Encryption Source Code have been referenced by academic institutions and scholarly papers as recommended reading.
project, which was a proposed financial trust providing private, anonymous accounts for individuals and entities within the DMT system, in order to securely store anonymous capital or to make anonymous monetary transactions.
Both DMT and the Laissez Faire Electronic Times were discontinued in 2004. At that time, the technological viability of Grabbe's proposals had been proven, not only in theory, but also in practice.
The Laissez Faire City Times and Laissez Faire Electronic Times paid writers for the right to edit and publish their articles, while each author retained the full copyright. When the publishers' sites were taken offline, in 2002 and 2004 respectively, direct access to these newspapers and all the articles ceased.Copies of some articles can still be found via search engines, or via web.archive.org, where an incomplete archive of these weekly newspapers can be found by searching for http://www.zolatimes.com, http://www.zolatimes2.com and http://freedom.orlingrabbe.com/lfetimes/lfetimes_index.htm. Many still see these newspapers as important resources for highly valuable articles of philosophical and political significance in freedom-related and especially (but not exclusively) libertarian thought.
studies on e.g. game theory in the framework of quantum mechanics, itself a mathematical model of chaos in nature.
The unpredictability of random numbers was the basis for the cryptology needed for implementing the Digital Monetary Trust, as well as the basis for his politics and philosophy. The false dichotomy between Order and Chaos, where induced fears of the horrors of total chaos is the favorite tool of those who seek power to enforce their own order on others. Grabbe's position was made very clear in his own writings, as well as in his selection of articles and images from the web. His homepage was headed by deeply symbolic declarations, such as "Opposition to tyrants is obedience to God". or the summary of his Mission Statement, "... inspecting the global underbelly: privacy, money laundering, espionage." The speech In Praise of Chaos at the Eris Society, published on his Kalliste homepage was a personal declaration of independence, where if perhaps not seeking order out of chaos, at least the search of energy from the chaos was the choice apart from being subdued into lethargic subservience by the lack of entropy in stasis.
Grabbe underlined the importance of this anarchistic independence repeatedly on his homepage, showing his closeness to Discordianism
and Church of the SubGenius
, by the headline, "What forbids us to tell the truth, laughingly?" — Horace, Satires, I.24.
Option (finance)
In finance, an option is a derivative financial instrument that specifies a contract between two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation, to engage in that transaction, while the seller incurs the...
and derivatives
Derivative (finance)
A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.Under U.S...
used in international finance
International finance
International finance is the branch of economics that studies the dynamics of exchange rates, foreign investment, global financial system, and how these affect international trade. It also studies international projects, international investments and capital flows, and trade deficits. It includes...
and foreign exchange
Foreign exchange market
The foreign exchange market is a global, worldwide decentralized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends...
.
Grabbe wrote articles and essays about personal freedom and governmental abuse, and was an editor of Internet magazines such as the Laissez Faire City Times. Born and educated in the U.S., he pursued his business interests around the world. He died from heart failure around March 15, 2008 in San José, Costa Rica
San José, Costa Rica
San José is the capital and largest city of Costa Rica. Located in the Central Valley, San José is the seat of national government, the focal point of political and economic activity, and the major transportation hub of this Central American nation.Founded in 1738 by order of Cabildo de León, San...
.
Early life
Orlin Grabbe was born October 8, 1947, in Hale County, TexasHale County, Texas
Hale County is a county located in the U.S. state of Texas. In 2000, its population was 36,602. It was organized in 1888, and is named for Lt. John C. Hale, a hero of the Battle of San Jacinto. The seat of the county is Plainview. It is home of the noted former Hale County Judge, Judge Bill...
, and grew up on a farm in Briscoe County in the Texas panhandle
Texas Panhandle
The Texas Panhandle is a region of the U.S. state of Texas consisting of the northernmost 26 counties in the state. The panhandle is a rectangular area bordered by New Mexico to the west and Oklahoma to the north and east...
. He showed great academic prowess in his youth and in response, he was invited to participate in nationwide, specialized education in mathematics. Two of his brothers also achieved doctorates and became professors. His brother Lester was a professor of theology at the University of Hull
University of Hull
The University of Hull, known informally as Hull University, is an English university, founded in 1927, located in Hull, a city in the East Riding of Yorkshire...
in England, while his brother Crockett was a professor of physics at the University of Iowa
University of Iowa
The University of Iowa is a public state-supported research university located in Iowa City, Iowa, United States. It is the oldest public university in the state. The university is organized into eleven colleges granting undergraduate, graduate, and professional degrees...
.
In the fall of 1966, Grabbe joined an older brother at the Worldwide Church of God
Worldwide Church of God
Grace Communion International , formerly the Worldwide Church of God , is an evangelical Christian denomination based in Glendora, California, United States. Since April 3, 2009, it has used the new name Grace Communion International in the US...
's Ambassador College, based in Pasadena, California
Pasadena, California
Pasadena is a city in Los Angeles County, California, United States. Although famous for hosting the annual Rose Bowl football game and Tournament of Roses Parade, Pasadena is the home to many scientific and cultural institutions, including the California Institute of Technology , the Jet...
. He graduated in 1970 and served on the teaching staff until 1973. During this time, he was the editor of the student newspaper. In his memoir, written later in his life, he described not only his own experiences and thought processes, but also the atmosphere that permeated the college, its students, and the organization as a whole.
After leaving Ambassador, Grabbe enrolled at the University of California, Berkeley
University of California, Berkeley
The University of California, Berkeley , is a teaching and research university established in 1868 and located in Berkeley, California, USA...
, to pursue his interests in research and science, with an emphasis in mathematics. In 1976, he received a Bachelor of Arts degree in economics. He continued his education at Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...
, Cambridge, Massachusetts
Cambridge, Massachusetts
Cambridge is a city in Middlesex County, Massachusetts, United States, in the Greater Boston area. It was named in honor of the University of Cambridge in England, an important center of the Puritan theology embraced by the town's founders. Cambridge is home to two of the world's most prominent...
, where he was awarded a Ph.D. in economics in 1981.
Grabbe specialized in the study of financial derivative instruments and published important pricing models for futures
Futures contract
In finance, a futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...
, forward contract
Forward contract
In finance, a forward contract or simply a forward is a non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed today. This is in contrast to a spot contract, which is an agreement to buy or sell an asset today. It costs nothing to enter a...
s and options
Option (finance)
In finance, an option is a derivative financial instrument that specifies a contract between two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation, to engage in that transaction, while the seller incurs the...
, especially in the foreign exchange
Foreign exchange market
The foreign exchange market is a global, worldwide decentralized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends...
(FX) markets.
Wharton School of Business
After graduating from Harvard, Grabbe accepted a position at the Wharton School of Business (University of PennsylvaniaUniversity of Pennsylvania
The University of Pennsylvania is a private, Ivy League university located in Philadelphia, Pennsylvania, United States. Penn is the fourth-oldest institution of higher education in the United States,Penn is the fourth-oldest using the founding dates claimed by each institution...
), working in the capacity of assistant professor in economics. Grabbe discovered that there was a lack of educational material for the emerging field of international finance
International finance
International finance is the branch of economics that studies the dynamics of exchange rates, foreign investment, global financial system, and how these affect international trade. It also studies international projects, international investments and capital flows, and trade deficits. It includes...
and for the increased trading in financial derivatives created by this market. In 1986, he wrote International Financial Markets, which is used worldwide as an educational and professional reference of trading in derivatives. In the 1991 second edition of his International Financial Markets, Grabbe introduced the term regulatory arbitrage in the context of eurocurrency
Eurocurrency
Eurocurrency is the term used to describe deposits residing in banks that are located outside the borders of the country that issues the currency the deposit is denominated in...
markets. One of Grabbe's students, Andrew Krieger, became a Bankers Trust FX trader and the author of the The Money Bazaar.
FX Systems
As assistant professor in economics at Wharton, teaching traders, MBAs, financial regulators, policy makers, and "operatives of the future", Grabbe continued to develop the mathematical models of financial derivatives.In 1985, Grabbe transformed his informal interactions and founded FX Systems Inc. with one of his students, Farid Naib. When FX Systems continued to grow, Grabbe resigned from Wharton, in order to focus on the further development of the software. FX Systems stayed at the forefront of the emerging markets for financial derivatives, acquiring financial institutions as customers.
In 1990, Grabbe sold his share of the company. Unfortunately the new owner, who was now partnered with Naib, ended up in disagreements leading to a split of the company and the formation of FNX Limited, led by Naib. Until his death, Grabbe worked as a part-time consultant with FNX Limited. Under the umbrella of FNX, Grabbe created pricing models for complex derivatives, which were used by major banks around the world. FNX Limited has since become very successful in the market.
Kalliste Inc.
Based in the neighborhood of Greenwich Village, New York, Grabbe continued his professional career as a financial market consultant. He interspersed this time and furthered his interests in cultural expression by pursuing a formal education in media. In 1993, he created the company Kalliste Inc. and produced experimental films, as well as shows of fractal computer graphics. He also produced a CD, Cuba di mi Amor, featuring the Cuban pianist, Danilo Pina.The End of Ordinary Money
In 1995, Grabbe moved to Reno, NevadaReno, Nevada
Reno is the county seat of Washoe County, Nevada, United States. The city has a population of about 220,500 and is the most populous Nevada city outside of the Las Vegas metropolitan area...
. In May of that year, he published the second part of a two-part essay, "The End of Ordinary Money" on the Internet. The first part of this essay had been written in 1987. In July 1995, the article was printed in Liberty magazine. With the publication of a second article, "Digital Cash and the Future of Money", Orlin Grabbe had established a path towards Digital Finance.
60 Minutes Investigation
Grabbe was not especially impressed by the efforts of market regulators and authorities, made apparent by the textual content in his book International Financial Markets. Grabbe reported that he received information from highly credible sources about unsavory acts made by highly placed persons in the marketplace. He stated that he was approached by official representatives seeking his assistance by covertly gathering financial information from his network of customers. Grabbe responded by gathering facts about these activities, albeit from the mindset of a researcher with an intent to reveal the activities of the market manipulators. His research led him to the serious study of cryptographyCryptography
Cryptography is the practice and study of techniques for secure communication in the presence of third parties...
, in an effort to discover ways to protect individuals from interference.
Some of Grabbe's investigations surrounding controversial current events, made direct contact with sources in government essential, which led to further investigations. The increasing popularity of the Internet made his articles (and essays) widely spread. Some of those published investigations are recognized today still as relevant, including his article "When Osama Bin Ladin Was Tim Osman".
Lesley Stahl
Lesley Stahl
Lesley Rene Stahl is an American television journalist. Since 1991, she has reported for CBS on 60 Minutes.-Personal life:...
of 60 Minutes
60 Minutes
60 Minutes is an American television news magazine, which has run on CBS since 1968. The program was created by producer Don Hewitt who set it apart by using a unique style of reporter-centered investigation....
, produced an investigative segment about misinformation on the Internet that aired on March 2, 1997. Grabbe was interviewed on the show and presented as a representation of misinformation found online. Her comments about the dangers of anyone being able to create content on the Internet, rather than relying on mass media, led to further commentary online.
In parallel, Grabbe also published philosophical essays written from a libertarian/anarchist viewpoint about personal freedom and the perceived increasing threats. This was exemplified in 1993, in a speech to the Eris Society, entitled "In Praise of Chaos".
Laissez Faire City Times
In November 1997, Orlin Grabbe was invited to edit an online weekly newspaper called the Laissez Faire City Times. The newspaper was loosely connected to the Laissez Faire City project based in Costa Rica. Grabbe relocated to Costa Rica the following year.The Laissez Faire City Times grew in prominence, with many of its articles quoted and referenced by others, some even by mainstream media and academic papers. In line with his work on Digital Finance and its dependence on cryptography, Grabbe published several articles and tutorials in the Laissez Faire City Times and on his Internet homepage. The tutorials and especially the Java Encryption Source Code have been referenced by academic institutions and scholarly papers as recommended reading.
Digital Monetary Trust
In November 1999, a series of articles in the Laissez Faire City Times presented the Digital Monetary TrustDigital Monetary Trust
Digital Monetary Trust was an anonymous internet banking system using electronic money.It consisted of a three-layered computer system. Its function was to abstract the identity of the account owner from the accounts. That is, the account holders transfer money into the DMT network, which becomes...
project, which was a proposed financial trust providing private, anonymous accounts for individuals and entities within the DMT system, in order to securely store anonymous capital or to make anonymous monetary transactions.
- That is, the DMT will be in the business of providing privacy, and doing so in a cryptographical framework which provides a more solid basis for customer anonymity than the traditional ones of (allegedly) tight-lipped bankers or (often-leaky) banking secrecy laws.
- —Orlin Grabbe
Laissez Faire Electronic Times
In January 2002, Grabbe resigned as editor of the City Times and started a new weekly online newspaper, Laissez Faire Electronic Times, sponsored by the newly operational DMT. Grabbe continued publishing the same type of essays as before, with many of the same authors. In October 2001, he separated himself from connections to the Laissez Faire City project, which ended in spring 2002. As a consequence of the closure of Laissez Faire City, its participants dispersed and services to the group of initial users of DMT were discontinued.Both DMT and the Laissez Faire Electronic Times were discontinued in 2004. At that time, the technological viability of Grabbe's proposals had been proven, not only in theory, but also in practice.
The Laissez Faire City Times and Laissez Faire Electronic Times paid writers for the right to edit and publish their articles, while each author retained the full copyright. When the publishers' sites were taken offline, in 2002 and 2004 respectively, direct access to these newspapers and all the articles ceased.Copies of some articles can still be found via search engines, or via web.archive.org, where an incomplete archive of these weekly newspapers can be found by searching for http://www.zolatimes.com, http://www.zolatimes2.com and http://freedom.orlingrabbe.com/lfetimes/lfetimes_index.htm. Many still see these newspapers as important resources for highly valuable articles of philosophical and political significance in freedom-related and especially (but not exclusively) libertarian thought.
Chaos
Throughout Grabbe's works, "chaos" remained a recurring underlying theme. The study of chaotic disorder in the form of noise in market prices, guided his works on statistically based mathematical models for option pricing. The structured disorder of fractals fascinated him deeply and led him to begin writing a series of essays about Chaos & Fractals in Financial Markets, intended to be part of a future book; a sequel to International Financial Markets. In the last years, when heart problems began to dominate his life, he wrote and published hisstudies on e.g. game theory in the framework of quantum mechanics, itself a mathematical model of chaos in nature.
The unpredictability of random numbers was the basis for the cryptology needed for implementing the Digital Monetary Trust, as well as the basis for his politics and philosophy. The false dichotomy between Order and Chaos, where induced fears of the horrors of total chaos is the favorite tool of those who seek power to enforce their own order on others. Grabbe's position was made very clear in his own writings, as well as in his selection of articles and images from the web. His homepage was headed by deeply symbolic declarations, such as "Opposition to tyrants is obedience to God". or the summary of his Mission Statement, "... inspecting the global underbelly: privacy, money laundering, espionage." The speech In Praise of Chaos at the Eris Society, published on his Kalliste homepage was a personal declaration of independence, where if perhaps not seeking order out of chaos, at least the search of energy from the chaos was the choice apart from being subdued into lethargic subservience by the lack of entropy in stasis.
Grabbe underlined the importance of this anarchistic independence repeatedly on his homepage, showing his closeness to Discordianism
Discordianism
Discordianism is a religion based on the worship of Eris , the Greco-Roman goddess of strife. It was founded circa 1958–1959 after the publication of its holy book the Principia Discordia, written by Malaclypse the Younger and Omar Khayyam Ravenhurst after a series of shared hallucinations at a...
and Church of the SubGenius
Church of the SubGenius
The Church of the SubGenius is a "parody religion" organization that satirizes religion, conspiracy theories, unidentified flying objects, and popular culture. Originally based in Dallas, Texas, the Church of the SubGenius gained prominence in the 1980s and 1990s and maintains an active presence on...
, by the headline, "What forbids us to tell the truth, laughingly?" — Horace, Satires, I.24.