Comments on: Real economy 2: Truth is we’re treading water

By: Vol

Vol — Thu, 01 Jan 1970 10:00:00 +0000

The financial crisis and other boom/bust/bubble issues are about money supply. We should therefore be thinking critically and deeply about our chosen mechanism of money supply.

This seems so obvious as to be both an elephant in the room and an emperor with no clothes.

Our chosen money supply mechanism is interest-bearing debt, issued by a combination of private and central banks. Money is created and supplied to the economy as interest-bearing debt/credit. Conditions of recession and speculative bubbles are driven by inadequate or excessive money supply, over which the only control we currently exert is in setting central bank interest rates ... a very indirect adjustment mechanism with massive collateral economic damage.

The question should not be ‘How can we now re-establish our usual, sustained growth in interest-bearing credit and debt?’ (which is our only current way to generate sufficient money supply).

The question really should be: ‘Are we yet convinced that our choice of money supply mechanism is perhaps not giving us the results we need?’

Interest-bearing debt as a money supply mechanism has been tried for long enough. It favours the rich, feeds a speculative finance market, disenfranchises the poor, and mandates destructive levels of competition.

Where are the research organisations and public commentators who are prepared to ask these questions of our economic and financial elite?

By: Heathdon Asks

Heathdon Asks — Thu, 01 Jan 1970 10:00:00 +0000

Would the country be better served if, instead of refunding campaign donations to the big end of town, the government stored its cash like the banks are doing and then use it for infrrastructure projects when the recession hits?

By: Ev

Ev — Thu, 01 Jan 1970 10:00:00 +0000

Thanks Possum. Graphs are excellent.

By: ScottMac

ScottMac — Thu, 01 Jan 1970 10:00:00 +0000

As I am reading this the stockmarket has fallen to 3500. Ah for the god old days when it was 6000.

There goes my super.

Treading water my arse.

By: ScottyMac

ScottyMac — Thu, 01 Jan 1970 10:00:00 +0000

Nice graphs though.

By: ScottyMac

ScottyMac — Thu, 01 Jan 1970 10:00:00 +0000

Vol, well said. Most of us have been conned by a system which can be read like a book by the advantaged. The less educated and younger citizens are sure they can hear “who’s your daddy!” from over their shoulder. Sad really. Lucky I changed everything to cash ages ago.