"The world can't wait!" says our Prime Minister, David Cameron. But
the world most certainly can -- and will -- wait until a sufficient
balance of investors in this or that government decide that they will
cash in their investments and take gardening leave while this or that
government sorts itself out. Never mind that this or that government,
say that of Greece, might produce a chain reaction of other
governmental failures, say of the Eurozone, and then America and then
China, it will still be a case of "Pull the ladder up, Jack. I'm all
right" on the part of a minority of individuals who are more
concentrated on their own affairs than the universal scene.
However, the assets of a country are always vastly greater than its
national debts and once the governments of failed countries learn, or
are forced, to reduce their size, cost, bureaucratic corruption, and
currency inflation, then prosperity will inevitably resume, and
outside investors (if they are needed) will start to pay attention
again. The biggest deficiency of governments is, of course, currency
inflation. In crude terms, this is the printing of money whenever a
government gets into a bad fix. Without this, the other deficiencies
of government -- overlarge size, cost and bureaucratic corruption --
can't get out of hand.
One of our instinctive predispositions is an asymmetric assumption of
risk. Most of the time we assume that things will always get better.
After all, we're top species in the animal kingdom, aren't we? We've
survived so far after gaining an adequate brain about 150,000 years
ago. Unfortunately, things have only got better in the past after
finely balanced bottlenecks and catastrophes have occurred. The
advanced countries haven't had a major catastrophe for a considerable
time, however, apart from two mini-ones -- the Great Depression of
the 1930s and the Credit-Crunch of 2008/9. In both cases it's been a
case of more of the bite of the dog that's caused it to provide a
solution -- inflation. The inflation was inadvertent in the case of
the 1930s Great Depression. It came about only as a byproduct of World War 2.
This time, however, the recently accelerated currency inflation of
the world's predominant trading currencies, the dollar and the euro,
have so far not produced a solution to the Credit-Crunch. We are
heading towards an economic catastrophe, according to the leading
politicians of the major governments. But don't they realize that in
saying this they are destroying what little remains of their
credibility? If they're so clever at producing a prognosis, are they
not able to supply a diagnosis also? Yet, after sixteen G20-type
Summits trying to solve the problem of Greece in the last 18 months,
they haven't produced a glimmer of insight.
So it looks as though we'll have to have a world-wide economic
catastrophe after all -- or, hopefully, only a few days of it --
before the only solution dawns. This is to stop the money printing
habits of the last century altogether and to revert to a world
trading currency that is stable (based on gold or suchlike) and can
thus supply a basic discipline to the gross inflation of currency by
governments and the gross credit-making of their captured associates,
the banks.
Keith
Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/10/
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