Is money assets?

Posted: 21/01/2012 by zandtao in Democracy, Finance

An overview of money history is clearly functional. People traded though barter, and then it became easier if money had a value that represented goods. Rather than carrying a cow to buy a pig money was sufficient. But what is money worth now?

This is such a hard question to answer when you start to examine some of the financial practices that have been carried out to control some of the problems of the recession. I say some because no controls have been put on the exploitation of the 99% by the 1%, and as governments gave billions to bankers on the ostensible understanding, based on bankers’ assurances, that there would be a trickle-down provision of jobs these same banksters pocketed the money as bonuses. If the 99% go broke they lose their homes, if the 1% go broke the government gives them tax money and the 99% still lose their homes.

In a controlled economy we would know what money meant, we would know its value. At one time there was a gold standard. This meant that your money represented a certain value in gold, this stopped as they wanted more money and there wasn’t enough gold.

Let us consider what is transacted in economy. The 1% have huge bank accounts, offshore holdings etc. What basis is there to this money? What does it represent? For example my retirement savings has come from the sale of my parents’ house and savings I have made from work. This is substantive – a house was sold and I worked long and hard hours. Now Rockefellers’ bank account will have a million times the money I have but what assets do they represent? Where does their money come from? Earnings? Sale of assets? Even sale of oil? I don’t know but I doubt it. Their money now comes from speculation via unaccountable tax havens.

Because money does not represent anything we have a global economy that is in freefall. It is held up by mirrors and bragadaccio. The recent recession was triggered by the sub-prime loans – check this comedy sketch from John Bird and John Fortune. People were lending money they hadn’t got to people who hadn’t got any money to repay. Once lent the money was packaged up in hedge funds, and speculated on the stockmarket where they bought and sold these valueless hedge funds to make a profit. Throughout there was no asset base to these transactions.

Recently Greece had financial problems because their government wanted to keep them in the Euro. Eventually the Greek leader said “let’s ask the people”, Merckel and Sarkozy jumped on him, and money appeared from the US. Now the US has a huge amount of debt so who are they borrowing from? No-one, they just print it. Money supply is just expanding without any asset base.

If a bank loan is given does the bank have the money? No the keyboard is pressed and figures get entered as a debt on someone’s account. Money is just expanding all the time. What controls it? The market is the established answer, or market mechanisms. What mechanisms are these? Non-existent. If money is needed by governments it magically appears and loan repayments are started ending in the pockets of the 1%. That’s it – market mechanisms.

So people talk about a sustainable economy. I don’t know what they mean by that. I talk about sustainable economy and I don’t know what I mean. But what I want is that money be connected to assets again, that way the house that I live in, the hours I worked, the food I eat, the clothes I wear, they have value which is connected to assets. Compare that with the buttons that the coke-sniffers push to make a profit in the Square Mile, what assets are they based on?

So the problem is not the issue of relating money to assets but the big stuff. Transnational corporations (TNC) including those in international finance. They are so huge they hide the money, and they hide the connection between money and assets. They are shady, and they use big organisation to cover up this shadiness. This is 1%-land. The 1% are destroying the meaning of money.

Can the TNC’s prove the value of their assets? Mitt Romney talks about the real world of business. It is the world in which money is paid, products are bought and sold, but where are the balance sheets? The corner shop has a balance sheet, they can show the value of their stock, the products they have sold, and the profits they have made. Their balance sheet will also include wages and others costs. You can see it.

What about a TNC? Can you see what they buy and sell? No they are too big, and in their size begins the corruption.

Here’s an economic solution. All institutions and people need to show the relationship between their money and their assets. If their money has no asset then it disappears. This would force all the billionaires to take their money out of the Cayman Islands and buy something bringing the money back into circulation. But assets are finite and there is far more money than assets so the surfeit money would just disappear. No futures. No derivatives. Just assets.

And who decides whether the money has assets – Occupy. Not the current bought-off legions who would allow the 1% to walk round them. Sila has to decide – integrity, maybe not some of Occupy. The general assembly, of course, would be completely acceptable as assessors, or any genuinely democratic body.

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