In our complex world and at this difficult time, we often confront problems that lie in territory that defies the imagination of many of us. Global finance can be just such a realm. Even when we break it down into the simplest terms, the vast majority of people completely tune out. We cannot all be macro-economic geniuses, right? I'm here to say, not exactly. We certainly cannot all be hornswaggled and misled by a cadre of folks who claim this discreet subject matter their indisputable territory and who expect us to trust implicitly the knowledge base that they claim to be privy to. It all boils down to choices. We must learn what they are and how they affect us. We also have to understand enough about the subject to not be taken in by those who seek to benefit from playing the odds at our expense while amassing fortune or status amongst wheeler dealers in this esoteric realm. Rest assured, it is much easier to understand than it sounds. Economics, both micro and macro, delineate two forces in the marketplace, supply and demand. Supply is the availability of certain things, demand is the desire for them. Supply is how much you have of a certain thing, demand is more about how much others feel that they lack or desire what you have.
Since Greece is in the news lately, let us consider for a moment a Mediterranean culture, Island culture, people and places that throughout history have been raided, ransacked and overrun with traveling merchants and hordes on their way to somewhere else. Just the increased money spent on fuel to hop from place to place along the many miles of coastline costs an inordinate amount. If the fishing is good and the fruit trees supply most of the food needs of those living there, why should they desire a debt burden to allow them all of the modern conveniences? I have friends who loved Greece because for a few dollars per day, they had fresh fruit several times each day, could drink a beer or two and they also found ample places to sleep along the shore at night. Unlike the rigorous climate in northern Europe, the people that my friend met were laid back and I don't like the term lazy, but less motivated perhaps. Like the Southern tier of states in the US, expecting someone to bolt out of bed at the crack of dawn to exert themselves all day in hot and humid conditions would just be unreasonable. Perhaps it is not so much laziness as perspective.
Trying to impose our standards anywhere else on the globe is both frivolous and short sighted. Many nations have been saddled with debt because the powers that be have determined that it is the best way to "help" in the process of "nation building". What it really assures is the animosity that comes from paying way too much for way too little. Think for a moment about the average American home, it may cost 100k, with taxes, interest and a thirty year fixed mortgage, that home will cost the average American 2 1/2 times what it was priced at by the time it is paid off. The only ones who come out ahead on a deal like that are the lenders. Say I do pay off my home and put it back on the market, having paid the 2 1/2 times the value, do you think the new owner cares how much I paid? No! They only see what it is "worth" to them. Similarly, when we look to international finance and programs whose loans are floated by the World Bank and IMF, or perhaps the EU, the overriding interest is in the interest. Those loaning the money don't really have need for all that they have, that is why they are able to loan so much. The rationale is not that it is good for the recipient of those dollars to have the money, but to spend it and then (this is a big leap of faith) be better off in the future so that they will be able to generate the cash flow to pay off the debt with interest.
I have always loved the catch phrase, the cost of money. This simple twist of language puts the burden on the least able to afford the cost, and makes them beholden to those who don't need the money in the first place. The wealthiest have shackled the poorest and the middle class with ever increasing debt. the instruments of which are legal documents that put one person into the service of another as effectively as slavery ever did. What is operating here and everywhere that interest is charged for the use of money today that the "customer" lacks, is greed and usury plain and simple. Why am I going to pay over $250,000 for a house that is valued around 100k? Because that is just the way it is done. Wells Fargo Bank has been assured that the vast majority of their funds will be returned in the first dozen years and that the remaining, nearly two decades, payments that I make to them will be pure profit. This is the approach that monied interests have taken for most of our modern times. How much more lucrative it has become when instead of loaning thousands, they can lend billions.
The calls for austerity that we are hearing from the right, from technocrats and from world leaders today completely overlook the most important part of history. When we were in world wide economic downturns in the past, it was increased government spending that paved the way to recovery. The sacrifice of those who could afford it made possible the sharing of resources with those who were finding desperate times and who would have been poor candidates for extending credit because they had no prospects for paying back any money that might have been loaned to them. We are now allowing people who know far too much about their own interests to tell us what is good for us and the time has come to look carefully at the reasons they give for tightening the leash on those who accepted easy credit when the sky was literally the limit. Like a family overextended across half a dozen credit cards, making minimum payments will only assure a lasting debt burden that will eventually absorb more and more of their energy. Cutting services and operations budgets can work for an individual or family unit, to free up money to pay down debt, but for whole countries, or governments generally it is the exact opposite of what is needed to overcome hard times. People need to see the results and the need for hard work and building capacity for a better life, right where they live, not in parts of the world that stand to gain only through siphoning off profits from around the globe.
We are facing a trying time to be sure, but the path clear of this mess lies not in paying down pour debt, not in running an ever tighter ship and certainly not in dictating to others what their financial perspective, obligations and status will be, but rather working with people to find ways to succeed within their own parameters. We need to find ways to stop exporting the "values" of capitalism, the greed and deception, competitiveness and philosophy of lack that has added fuel to the raging fires of consumerism around the planet. We need to stop turning every square inch of the planet into a wholly owned subsidiary of corporate interests in other parts of the world and re-learn what makes the planet liveable is unique adaptations to local conditions. These are almost never found by multinational corporate interests and giant lending institutions muddling about in other countries, but by local people determining what they need to do and going about the process of getting to the bottom of what is important for them. I truly hope that in the very near future, we are able to reign in the unwelcome power that is associated with large corporate and monied interests, get straight on what they do well and what they have no business doing and come to a greater realization of the need for sustainability and unique approaches to development. Certainly, bigger dams will never make our lives better and we have seen that more lanes of traffic never shorten commutes. Making the planet more liveable and more sustainable go hand in hand, it is for us to decide what we need most and decisions like these are far too important to leave up to those who already own the lion's share of the power and who have the deepest pockets.
Since Greece is in the news lately, let us consider for a moment a Mediterranean culture, Island culture, people and places that throughout history have been raided, ransacked and overrun with traveling merchants and hordes on their way to somewhere else. Just the increased money spent on fuel to hop from place to place along the many miles of coastline costs an inordinate amount. If the fishing is good and the fruit trees supply most of the food needs of those living there, why should they desire a debt burden to allow them all of the modern conveniences? I have friends who loved Greece because for a few dollars per day, they had fresh fruit several times each day, could drink a beer or two and they also found ample places to sleep along the shore at night. Unlike the rigorous climate in northern Europe, the people that my friend met were laid back and I don't like the term lazy, but less motivated perhaps. Like the Southern tier of states in the US, expecting someone to bolt out of bed at the crack of dawn to exert themselves all day in hot and humid conditions would just be unreasonable. Perhaps it is not so much laziness as perspective.
Trying to impose our standards anywhere else on the globe is both frivolous and short sighted. Many nations have been saddled with debt because the powers that be have determined that it is the best way to "help" in the process of "nation building". What it really assures is the animosity that comes from paying way too much for way too little. Think for a moment about the average American home, it may cost 100k, with taxes, interest and a thirty year fixed mortgage, that home will cost the average American 2 1/2 times what it was priced at by the time it is paid off. The only ones who come out ahead on a deal like that are the lenders. Say I do pay off my home and put it back on the market, having paid the 2 1/2 times the value, do you think the new owner cares how much I paid? No! They only see what it is "worth" to them. Similarly, when we look to international finance and programs whose loans are floated by the World Bank and IMF, or perhaps the EU, the overriding interest is in the interest. Those loaning the money don't really have need for all that they have, that is why they are able to loan so much. The rationale is not that it is good for the recipient of those dollars to have the money, but to spend it and then (this is a big leap of faith) be better off in the future so that they will be able to generate the cash flow to pay off the debt with interest.
I have always loved the catch phrase, the cost of money. This simple twist of language puts the burden on the least able to afford the cost, and makes them beholden to those who don't need the money in the first place. The wealthiest have shackled the poorest and the middle class with ever increasing debt. the instruments of which are legal documents that put one person into the service of another as effectively as slavery ever did. What is operating here and everywhere that interest is charged for the use of money today that the "customer" lacks, is greed and usury plain and simple. Why am I going to pay over $250,000 for a house that is valued around 100k? Because that is just the way it is done. Wells Fargo Bank has been assured that the vast majority of their funds will be returned in the first dozen years and that the remaining, nearly two decades, payments that I make to them will be pure profit. This is the approach that monied interests have taken for most of our modern times. How much more lucrative it has become when instead of loaning thousands, they can lend billions.
The calls for austerity that we are hearing from the right, from technocrats and from world leaders today completely overlook the most important part of history. When we were in world wide economic downturns in the past, it was increased government spending that paved the way to recovery. The sacrifice of those who could afford it made possible the sharing of resources with those who were finding desperate times and who would have been poor candidates for extending credit because they had no prospects for paying back any money that might have been loaned to them. We are now allowing people who know far too much about their own interests to tell us what is good for us and the time has come to look carefully at the reasons they give for tightening the leash on those who accepted easy credit when the sky was literally the limit. Like a family overextended across half a dozen credit cards, making minimum payments will only assure a lasting debt burden that will eventually absorb more and more of their energy. Cutting services and operations budgets can work for an individual or family unit, to free up money to pay down debt, but for whole countries, or governments generally it is the exact opposite of what is needed to overcome hard times. People need to see the results and the need for hard work and building capacity for a better life, right where they live, not in parts of the world that stand to gain only through siphoning off profits from around the globe.
We are facing a trying time to be sure, but the path clear of this mess lies not in paying down pour debt, not in running an ever tighter ship and certainly not in dictating to others what their financial perspective, obligations and status will be, but rather working with people to find ways to succeed within their own parameters. We need to find ways to stop exporting the "values" of capitalism, the greed and deception, competitiveness and philosophy of lack that has added fuel to the raging fires of consumerism around the planet. We need to stop turning every square inch of the planet into a wholly owned subsidiary of corporate interests in other parts of the world and re-learn what makes the planet liveable is unique adaptations to local conditions. These are almost never found by multinational corporate interests and giant lending institutions muddling about in other countries, but by local people determining what they need to do and going about the process of getting to the bottom of what is important for them. I truly hope that in the very near future, we are able to reign in the unwelcome power that is associated with large corporate and monied interests, get straight on what they do well and what they have no business doing and come to a greater realization of the need for sustainability and unique approaches to development. Certainly, bigger dams will never make our lives better and we have seen that more lanes of traffic never shorten commutes. Making the planet more liveable and more sustainable go hand in hand, it is for us to decide what we need most and decisions like these are far too important to leave up to those who already own the lion's share of the power and who have the deepest pockets.
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