Times were; economies functioned to produce goods and avail services to those who were willing to buy and pay for them. Therefore the process of buying and paying, for all intent & purposes, was one and the same and money served as a means of exchange, besides being a store of value. If people didn’t have money to buy stuff, they just refrained from the acquisition process altogether, until they can secure the required amount to pay for the desired purchase.This in a nutshell is what prevailed throughout the millenia, until the concept of credit came into the economic picture.
Credit was first utilized by those who commanded influence and power, like individual sovereigns and their states. Initially it facilitated a whole lot of activities connected to the desires of sovereigns, like wars, etc. Later on creative and productive activities were included in the fold. Through time, however, the whole conept of credit was hijacked by technocratic rent seekers in the state/market structures and ended up as a way/means of getting something for nothing. Everytime the real economy produces wealth, it is the originators of credit that appropriate the lion share of the benefits. This is the reason why financial institutions continue to flourish while real economies suffer. But sooner than later, the threshold will be reached beyond which this lopsided arrangement cannot be sutained. We believe the world economy has now entered this critical phase.
Today credit is more common than the common cold and it has managed to infect the whole global economic existence. Without credit or more precisely without its highly augumented version, the world economy, at least as we know it, can hardly exist today! Frankly speaking, the modern credit system has distorted the world’s ‘real economy’ severly. Before the credit concept took off for real, consumers knew exactly what they can afford and producers could also anticipate, to a large extent, the purchasing power of the collective consumers (including the state) at any given point in time. There was no way for consumption binge as well as galore of unwanted products to come into being, literally from economic nowheres! In short, there was no credit (money created out of thin air) to facilitate unsustainable and phony economic activities.
What is currently threatening the world economy, first and formost, is the disastrous consequence of unbridled credit expansion.This masive credit, advanced to all and sundry, has morphed into un-payable debts of staggering proportions! This situation is abyssmal and contiues to propel us towards the apocalypse! If truth be told, there is just not enough money in the whole wide world to pay for all the debts (states, corporations and households) accumulated in the recent past! The global leaders, or more precisely the politicos think the problem will just go away if it is wished hard. Or in the parlance of the talking, not the thinking heads; ‘if there is only the political will.’ But we ask our characteristic stupid question; what is this animal called, ‘political will?’ By and large, we believe, ‘political will’ is a code phrase that implies the beast (human mass) must pay up for the excesses of the 1%. Public sacrifice for private gain, to use the parlance of the critically minded.
If there was a genuine concern about the dire situation we find ourselves in, why not nationalize/rein in the culprits that erected the whole virile edifice? Anyone seriously interested in world affairs know it is the global financial institutions that are behind the whole mess. One might recall we had proposed such measures in our previous editorials. Now the Germans (Merkel) are essentially saying the same thing. At least we should give them credit, if anything at least for listening to our free advice. But the avowed politicos whose world view or religion is framed by election games don’t think such a bold and determined measure is an expression of ‘political will.’ What hogwash!
As far as the powerful global politicos and their advisors are concerned, it is massive economic stimulants via outfits associated with entreched interests that will save the day. But we beg to differ! See the articles on pg 2 and pg 50. For the last five years, massive intervention/stimulus (the US gov’t alone through all sorts of auxillaries pumped about thirty trillion dollars into the system) were utilized, (quantitaive easing I, and then II and now QE III is in the offing) without much to show for. The cry of the connected today is essentially for more of the same. Such measures can only buy time, but will not resolve the underlying cronic problems, (if anything they will make them worse) still the wailing continues.”Repeating the same thing and expecting a different result is idiocy.” Albert Einstein. Good Day!