Understanding Economics

Posted: 14/02/2012 in Finance

Now I don’t understand economics enough but I would claim that no-one actually does – or maybe very few. I suggest that people observe what happens to money through the way the world’s money works and then extrapolate some kinds of laws that they call economics or market forces. On other words there is no control, or rather what people do effectively is the control as what they do becomes the market forces that shape the “laws” of economics.

Suppose that this is correct in some way, what are its implications? The 1% works for the benefit of the 1% to accumulate as much profit as possible in any way that it can, the greater the amount of money they have the more control they have and the more the “laws” of economics favour the 1%. Unless we apply a different way of using money, say for example for the benefit of people in general, then the laws of economics will continue to favour the 1%, and deregulation will increase the benefit accruing to the 1% as that means less control to create the laws of economics.

“Laws of economics” are used to say that certain things cannot be done, but the laws don’t say that because the way things are done create the “laws”. In effect what is happening with legal monetary laws is that these judicial laws (ie laws enforced by courts and police) are used to shape the “laws of economics” into laws that benefit the 1%. Examples of this are laws that interfere with community currency and barter yet if we use community currency and barter we create new economic laws because such laws are not judicial but come from the way things are done. One might argue that community currency and barter avoid taxation, but there is no taxation on trading in derivatives and futures. To accept one rather than the other is regulating in favour of a particular approach ie benefitting the 1%.

To examine economics in the light of the way things are done as opposed to deferring to laws that only experts understand means that we can begin to reclaim control of economics. What about sustainable economics or sufficiency economics? We can establish that the way to do economics is sustainably or sufficiently, we can choose to do that. The fact is we don’t, we let the 1% define the way economics is done and as a result they benefit. It is not laws of economics that define how it happens but we who must decide by choosing – sustainably.

In this examination of economics I want to look at two disturbing ways in which the 1% are using economics. At the moment the way money has been used by the 1% is creating a recession. I say creating a recession because the money is there for governments and people to buy what they need, but the money is not in their hands it is in the hands of the 1%. How did it get there? The recession was created by a crisis of confidence after the public became aware of the disreputable ways in which money was being used. At the moment it is being argued whether these disreputable ways broke judicial laws, as the 1% control the system they are not going to make themselves accountable. But to try to rebuild confidence the 1% have agreed that some money will be given back to householders who have been foreclosed. Below is clip from Democracy Now Feb 10 in which Obama announces a $26 billion dollar payout by the banks. What does this do? Firstly it gives the appearance that the banks are accountable to government and that government cares. Secondly by accepting this settlement it is unlikely that the banks will have to pay further. As they are the cause of the crisis in which so many people have suffered globally it is a small price to pay.

But on further examination it appears that the banks will not be paying 25 billion directly to the people. I don’t understand all that is being said in the clip but it seems that the banks are paying themselves to write off some of the debts, and that the banks are then trying to find ways that the people still pay mortgages. The banks are losing their mortgage income because of the foreclosures, so by reducing the amount of mortgage repayments they are at least getting some income. And what about all the people who have lost their homes by foreclosure they are paying 750,000 $1500 -$2000 each, not much compensation. So this is PR and not genuine recompense. It is just part of the way things are done to benefit the 1%. Watch the clip:-

I now want to discuss my concerns over the bailout monies. In the US and the UK huge amounts of money have been printed to bailout the economy, and the same throughout Iceland, Ireland, Spain and Greece to protect the euro – the last bailouts for the euro came from the US. I claim that this will eventually lead to increased prices and if the 1% have their way with austerity measures we will have less money to pay those prices.

Let us consider a common sense approach to the value of money. Suppose we have a very small economy of £5000. Through the way things are done in that economy, by trading goods articles are given a particular price that people pay. These prices are not fixed by statute but by the way things are done. Suppose nothing else changes but suddenly that economy now has £7000. What happens to that extra money? Now initially it might disappear into bank balances, but after a while it will re-emerge into the £5000 economy. With more money being available prices will rise simply because they can, and because there are no laws that keep the prices fixed. This principle is what is going to happen in our wider economies once the additional bailout monies start to circulate. Prices will rise, we will have to pay for the bailouts through increased prices. Yet the 1% are applying austerity tactics so that we will have less to pay those prices with. So whilst the government-puppets give the 1% bailouts that they pay themselves as bonuses we don’t see an immediate impact but over time we will see those moneys entering the economy not to us personally, in our pay packets or whatever, but as increased prices that austerity measures will make it harder for us to pay. And who gets the profits from the increased prices? The 1%.

There is only one alternative to this exploitation, change the way things are done. Change the currency and the way we trade goods so that it is out of the hands of the 1%.

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