"News that's not known, or not known enough."
Helen & Harry Highwater's cranky weblog of news and opinion.
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"News that's not known, or not known enough." Helen & Harry Highwater's cranky weblog of news and opinion. |
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Infusion of blood substitute won't save the US economy by Herb Ruhs, MD Tuesday, July 29, 2008 PERMANENT LINK Re Implosion of the American financial system by Mary Ann M. Mary Ann M. writes, "It is as if the financial system is a patient with a cut jugular vein spurting blood across the room and the Bush Regime has the patient hooked up to an IV with a needle the size of a firehose — instead of applying a tourniquet and attempting to halt the bleeding, they're
An important understanding is that the fluid being metaphorically pumped into the system is not the same as the blood that is being drawn out. What is being pumped in, metaphorically, is a blood substitute. Whereas the real metaphorical blood that is being lost is actual value, money that represents actual work accomplished and goods produced. What is being metaphorically pumped back in is just salt water, just money derived from the ability of the banks to print as much funny money as they want based on promises that subsequent generations of US citizens will, at some point, pay off this debit with money generated by actual value. The consequence of this metaphorical blood substitute infusion is that the patient, the economy, becomes weaker and weaker and less capable of producing real wealth. So we are in the early stages of economic demise. Emergency measures, the printing of funny money based on unpayable debts assigned to yet unborn debtors have only a temporizing effect. They buy only a few more hours of life. The actual economy is moribund and death, in the form of bankruptcy and repudiation of debt, is predictable. What is being pumped in to the economy to "save it" is analogous to a doctor using a blood substitute to save the life of a bleeding patient. Physicians pump salt solution into a person to restore blood pressure lost due to actual blood loss. This blood substitute, in the case of the bleeding patient, is meant only as a temporary measure. It is understood that a healthy body makes plenty of blood on its own to satisfy the need for permanent replacement. With severe hemorrhage it may indeed be necessary to pump in actual blood as a last ditch effort. Actual blood infusion is utilized only when death would be immanent and is often unsuccessful in saving life if the underlying health of the patient is already compromised. Every time homeowners (that is what we euphemistically call people who live in houses that are actually owned by a bank or other financial institution) availed themselves of credit against rising house prices to borrow money to use for consumption (as opposed to using the money to invest in actual income generating goods) it was a little more blood drawn from the body of the economy and wasted. Every time someone used their credit card for ongoing expenses with the thought that some time in the future they could pay off this debt without any real prospect of being able to do so, a little more blood was drawn. The money borrowed, and then spent on consumption, is like the infusion of salt water to replace the real blood. The actual situation is that the US is being systematically looted by our unregulated financial sector. Actual valuable resources, land, water, productive capacity (such as it is) are then available to foreign buyers who pay fire sale prices for US assets because the money they are spending, foreign currencies, have retained their value relative to US dollars by virtue of the actual health of these economies that have controlled their production of money. Of course, political control by the wealthy is the rule in all Western (or westernized) industrial economies, and such control leaves all these economies susceptible to the same disease that the US is currently dying from. Greed. The financial elite always have a vested interest in expanding debt at the expense of actual value in the economy. The institution of marginal lending, the ability of banks to create the money they lend out of thin air, pretty much guarantees that, over time, currency is devalued. If the amount they are allowed to fictitiously create is less than the actual value produced by an expanding economy, then this tricky game can continue pretty much indefinitely. But the necessity for unending growth to shore up this bankers dreamworld is, as we have learned, a fantasy. Environmental limits to growth and the cost of ever more complex physical and social arrangements will always lead an economically expansionary system to collapse. This has happened over and over again in world history. The only difference is that, this time, the whole world's economic system is involved and the damage is proving difficult to isolate and threatens a world wide economic collapse. The natural and healthy way for an economy to create more money is for the government to judiciously provide currency consistent with the actual productive growth of that economy. When private institutions are allowed to create money the die is cast for eventual insolvency. It is in the interest of privately organized banking to drive the customer ever further into debt. There is no force to oppose this tendency when the power to create money is in private hands. The right to create money is what our leaders are actually talking about when they euphemistically talk about a "free market." The "free market," understood in this light, is unconstitutional as the Constitution wisely reserves for the government treasury the right to create currency and is therefore a prima face case of illegality. Unfortunately, "free markets" of this type are all dead end death machines for economies, and now, at the culmination of this historical process, death machines for the environment, and likely death machines for our own, and countless other species, as the process of promoting unlimited growth for the benefit of bankers has poisoned the earth. Herb Ruhs, MD  |
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