Andre heard an interview on the radio the other day between the host and a
retired Christian banker named Leo Andringa. Here are some excerpts:
".., over the past twenty years, international trade in money has increased
not four times, but ONE HUNDRED times! ...Billions of euros, dollars, yen and
other units of currency flip from one side of the world to the other instantly
each day. People also think up and try out more and more financial instruments
in the trade of both stocks and goods, such as stock options, swaps, futures
and other so-called derivatives. ...These developments in international
currency speculation have gradually led to the remarkable situation that the
volume of international trade in money and money products is now, as mentioned,
ONE HUNDRED TIMES GREATER than the total volume of international trade in goods
and services. Money is therefore not merely the flip side of the goods and
services coin. IT HAS BECOME AN INDEPENDENT GOOD OR PRODUCT IN ITS OWN RIGHT.
..."
"What people buy and what people sell, in other words what people VALUE, can
never be contained by any intellectual formula." (LILA, p 225)
dmb says:
Yes, I've heard the same thing from regular economists.
Isn't it interesting how this situation parallels the larger philosophical
problem that Pirsig sets his sights upon. When reason dominates and
abstractions rule, we value symbols more than the actualities they represent.
The fact that this extends to economics seems to show that we are consistent in
our foolishness.
In recent years we've all heard about bubbles bursting. The tech bubble, the
dot com bubble, and more recently the housing bubble. This are
industry-specific versions of this broader, global discrepancy between the
money in circulation and the actual assets on the ground. And these bubbles
have been intentionally created, usually by Greenspan at the Fed. It used to be
that the Federal Reserve Bank could speed up a slowing economy by lowering
interest rates, but they tinkered so often that they lowered it down to nothing
and there was no more room to go any lower. So, as they dreamed up increasingly
desperate ways to keep the economy from sputtering out these bubbles were
manufactured. And of course the bad thing about bubbles is that there's no
there there. It's a fragile, unstable form that contains nada. The housing
bubble is directly related to the creation of a new financial instrument
wherein mortgage contracts are bundled into huge packages and sold to investors
all ove
r the world. When that became the central aim, the banks got very, very sloppy
about the actual value and quality of the mortgage contracts. They were loaning
the price of a house to people with no job, no income and no assets.
Paul Krugman explained this in editorials and articles and warned of its danger
6 or 7 years ago. I'd bet he wasn't the only one who saw it coming.
It seems that infrastructure spending is a more realistic way to stimulate the
economy. No only does it produce a lot of paychecks during construction, when
you're done the nation has a real, tangible asset. That's real wealth. Stuff
you can use, like roads, bridges and more imaginative conveniences. Everybody
can see that the energy and transportation sectors are on the verge of a major
transformation and there's really no choice about if we're going to have to
switch. Oil is finite. Period. Let's get crackin' before it gets rough. And
since tanks and jets don't run without lakes of fuel, it will get rough.
Nations will fight to keep their defense infrastructure viable, no matter what
other interests or power arrangements they may have.
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