At 10:41 20/04/02 -0400, you wrote: > >Real money? > >M No, of course it isn't.
Most of the "money" that's bouncing backwards and forwards around the world, and a very great deal of the "money" in the accounts of large companies is no more real than the debit balance on your monthly credit card statement. It's yet to be earned. But it's this that has been sustaining the financial world for the last two decades ever since the creation of credit escaped from the central banks. The problem is that it is growing all the time at a far faster rate than real economic growth. Several times faster. Sometime soon the reality curve will cross the credit curve, and then the governments' and banks' coffers will be empty and the economies of the western world will grind to a halt. Just like Japan today. And the central banks will not know what to do. Except, of course, to start all over again with a world currency that's tied down with bands of iron to real economic growth and not cloud-cuckoo land. But that will take at least 10, or 15, or 20 years for politicians to accept -- I guess. K > >-----Original Message----- >From: [EMAIL PROTECTED] >[mailto:[EMAIL PROTECTED]]On Behalf Of Keith Hudson >Sent: April 20, 2002 3:46 AM >To: [EMAIL PROTECTED] >Subject: Computers: our downfall (wasRe: Privatizing the Public: Whose >agenda? At What Cost?) > > >The discussion about computers is interesting, but what is not realised is >that one of the present-day uses of computers is going to be our downfall. > >At present, the use of computers in the field of finance is producing a >world which is as unreal as the computer games that my grandchildren play. > >Computers have allowed a world of finance to be created in which 49/50ths >of all the "money" in the world is really only created within computers, >and doesn't exist at all. When the chips are down -- and it cannot be long >delayed -- we will discover that a great deal of it has vanished. And can >never be recreated while the present financial regime exists. > >It will vanish in the developed countries of America, Europe and East Asia >in exactly the same way as most of the "money" in Japan has already >vanished. That is, almost all the Japanese banks, as well as their >government, as well as most of their major corporations, as well as many >ordinary Japanese, are broke. They are more than broke. They all have debts >that can never be repaid with the insufficient quantity of "real money" >that's available. Their banks have "assets" that have only a fraction of >the value that they are supposed to have. Japan has been treading water -- >indeed, sinking -- for the past 10 years. The rest of the world is not far >away from following suit. > >The amount of "money" that is being circulated around the world every year >is about 50 times the value of goods that are created. Ergo: most of it >isn't real money at all. It consists of future options, packaged debts, >fictionalised collateral, promises, sophisticated algorithms, hopes and >fears dressed up as expert strategies, and what-have-you. One thing is for >certain -- it isn't money. > >The use of computers has allowed the creation of credit which has now >ballooned so greatly that it only has a flimsy contact with the everyday >world of work and value creation. > >The world of the Italian Renaissance in which private banks could create >credit was pretty risky, but at the end of the day only individual bankers >and their own customers suffered. > >The world of fiat money of the last century in which governments could >create credit at will was much riskier, but at the end of the day only the >populations of individual countries suffered. > >The world of computer-created credit which has come into existence in the >last decade or two is the riskiest game of all so far. It has now captured >all the investment banks of the world and at the end of the day the whole >world will suffer. > >The Finance Ministers of the developed countries are meeting today in >America wearing their IMF/World Bank hats. You can bet your life that they >will be talking about this unreal (and growing) situation. You can bet your >life that they know that all the central banks of the world added together >can do nothing to prevent it. But you won't hear about this interesting >discussion from the press releases. They won't want to frighten the horses. > >That's enough from me this morning. My teapot is empty, and I have to walk >my dog. > >Keith Hudson > > > > > >__________________________________________________________ >Writers used to write because they had something to say; now they write in >order to discover if they have something to say. John D. Barrow >_________________________________________________ >Keith Hudson, Bath, England; e-mail: [EMAIL PROTECTED] >_________________________________________________ > > > > __________________________________________________________ �Writers used to write because they had something to say; now they write in order to discover if they have something to say.� John D. Barrow _________________________________________________ Keith Hudson, Bath, England; e-mail: [EMAIL PROTECTED] _________________________________________________
