johnbee

Letter to Her Majesty: Suggestion for Low-Tech Apparatus for Economic Horizon-Scanning

If we had all stuck to barter the people of this world would be relatively equal and would have advanced to a far lesser degree but the invention of money, and the money lending that followed down the ages, created the ability to take leveraged risks which benefited some and left others broke in the ever increasing seesaw of money supply. At times though, as in war only, there is massive des-truction in which real assets are really lost and need be replaced. Surviving people need work to eat and offered the chance to borrow money again can rebuild faster. Given the greedy neurosis of humans to improve their lives over a limited life span money feeds risk once more and the competitive urge. This is a constant -over successive generations - but with the greater the creation of money and savings from increasingly educated populations comes the greater need to put it somewhere and the creation of risk capital to feed this need, so creating larger and faster opportunities of which some are bubbles and some not. Many make money travelling in these bubbles rather than arriving and so fuel the flames regardless of the concept. The Banks simply take their interest and commissions either way since they have always had recourse against the borrower in law. But careless lending gives rise to careless investing and bigger bubbles and one need remember that a major silent arm of banking business is that of repossession. I would suggest that no banks should have recourse against a bad loan other than the collateral pledged, or even that borrowers should have recourse against an ill considered loan by a bank so they may behave less irresponsibly. But then who would judge? Right now the only real question is how much money has been destroyed for real? In the dot com crash not much was lost- it simply changed hands- from investors to staff and suppliers. Where is it this time? Residential buildings which are allegedly the prime cause of this crash are not destroyed; they are simply re-designated at lower values and borrowers have been pushed into negative equity so decreasing purchasing power. Investors who buy the houses will benefit in time. While banks, needing to protect the asset cover for their loans, have decreased lending to businesses and revalued their collateral downwards as an accounting measure. Government relaxation of accounting rules and printed money will feed money into their economies now until they recover and inflation will readjust the values upwards and allow for lending again, and so the boom bust cycles will repeat themselves for ever until the world ends or a new Jesus defeats the moneylenders, but as Shakespeare knew they have had their pound of flesh. Nothing changes in human nature- that is the only economic lesson to be learned.