Be angry at bankers, be angrier at economists | Ann Pettifor | Comment is free | guardian.co.uk
Is The LIBOR Scandal A Milly Dowler Moment For The Banks? – Alex Marsh – Dale & Co.
Coppola Comment: That Barclays LIBOR-fixing matter……
The Scam Wall Street Learned From the Mafia | Politics News | Rolling Stone
The grand dream of the euro turns into a nightmare – The Globe and Mail
ANON:
There is a ongoing problem I find with a lot of economists. They confuse correlation with cause. Because we have a correlation of firemen with fires, we cannot say the the firemen caused the fires. And so it is with the correlation between Germany’s current wealth (and China’s) and the Ireland’s and PIGS in general’s demise. The cause is wrongly construed by our host and many of the economists and I think it is unhelpful and misleading and it creates conflict and we start slagging off Germany calvinistic attitudes versus the fickle nature of the Paddies etc. All is about creating conflict.
Let’s be very clear – unless we identify the cause, asking Germany or China or whoever to fix it is plain stupid and amounts to racial incitment.
Another correlative mishap is our political mismanagement and this crisis. Wrong again. That is not the fundamental cause. The more we bang on about our crappy institutions the more we are heading off to nowhere land.
Our host says “Economics is not about morality lessons, but about trade and commerce.”. Actually I disagree vehemently. It is about the management of scarce resources in a finite world – where trade and commerce is but one set of tools for same. Right now, it seems the only metric in use by economists is financial and which is about as attached to reality (which is really about people’s real lives) as Startrek is to spudpicking.
The root cause of our problems lies in natural tendency of unregulated financial systems to form oligarchies – who basically only see reality as a number on a bank account. These guys do not care if a few billion live on the breadline or basically die off and they issue a tool which drive that distorts demand to a point that you wind up paying interest in perpetuity with the capital staying firmly in their grasp.
Any discussions which has us slagging off our institutions, our neighbour nations etc has these goups laughing their heads off cos they know we are creating a another money making opportunity – look at Spain right now.
Unless we discuss this natural tendency of unregulated financial systems to form oligarchies we are screwed – all of us. Stop taking about the modern opiate of the people – soccer. It’s a game for numbing the minds of audiences – that’s all that is going on.
REPLY
Fair points and I don’t mean to incoite anything bar discussion. Regarding money there are those, you are one, Ie suspect that regard money as a “common good” and therefore it has to be protected by rules treaties etc. Most Germans feel this way. And there are people, like me, who see money, its deployment and manipulation as a “tool” to lever the economy onto some other level.
Its a philosophical difference and runs very deep.
All the best
I sympathise with the idea of money as a lever. But once it becomes a casecade of levers and nothing else, we have an unstable situation that is all too lucrative and concentrating of wins to a very few “in the know” group. The incentivised structure of finance encourages instability becasue that is where the biggest bucks lie. What is more, it is self protecting by way of the influence and power of money and perpetuates itself to be reborn from one bust to the next.
For me, there a point to boom and bust from a financiers viewpoint. A boom is there specifically to cause a bust to sweat out more assets to the centralist few – the thing is that this centralist few are not in the business of any genuine investment in humanity (unless it is to buy a few nice paintings for a few million as additions to a private collection). Speculate to accumulate – not to reinvest but to speculate more – that is the game.
I have read you enough to know that that’s not entirely your philosophy either. Nah…do not see the philosophical difference yet.
REPLY
consumed and can be used over and over. therefore there is no requirement to increase or decrease the money supply. There is a reqirement NOT to.
Any adjustments or levers pulled will create imbalances that create malinvestment, booms and busts.
In the wrong hands these booms and busts can be created to the benefit of the lever puller.
There is no place in a thriving economy for interference by any person oor government.
central banks are the tool used by the power elites to control the economy and create the civil strife. Then can authoritarian government be obtained and political control solidified.
With commodity money it is virtually impossible to manipulate the economy thus.
Close the central banks
Impliment commodity money
Eliminate fractional reserve banking.
Anon:
When you think about it every Government, every business and every household all have bank accounts and all our money is in the banks, apart from the little bit of cash in the economy which currently stands at around 3% of the total of all out bank balances.
And yet, the same Governments, same businesses and same households are all in debt to the banks. The entire money supply is already in the banks and yet, we still owe the entire money supply to the banks. How could this be?
The reason for this is that banks create money, in the form of accounting entries, through lending and in doing so they create a matching debt to every euro they create. This is obviously the root cause of the debt crisis.
Reducing our debts is not a solution either since when processing a loan repayment banks cancel the money out of existence along with the debt.
This is the essence of how our economy runs and it’s a terrible way to attempt to run an economy.
At the moment Germans are confident enough to organise loans from their banks and in doing so they are confident to create new euros. However this is an unsustainable system and one which cannot go on for much longer, even in Germany.
One solution to the debt crisis involves allowing each country’s Central Bank to create bank-account money for their Governments as well as cash. This money would crucially be debt-free as source.
Economy Rigging 1 