I call it the “fictional economy.” We allow banks to create money by loaning it, more or less out of thin computer digits. But if money is created by loaning it, where does the interest that we pay the bank come from? In reality, there is never enough “money” in the system to pay back the interest. If we all paid back our loans tomorrow (impossible with interest) “money” would disappear.
(I highly recommend Paul Grignon’s “Money as Debt” series. http://www.moneyasdebt.net/ )
The whole money system is a house of cards. Fictional economy.
So now, in 2012, a couple of years out from the big collapse of 2008, over 9 million home foreclosures, student debt is insane, and all around the world we’re hearing about the “crisis” and “austerity measures” (meaning massive cuts from state funding) that are somehow necessary because a few major banks gambled on housing bets.
What’s wrong with this picture? The major developed nations have not been overrun by war. We’re not suffering from catastrophic famine, plague or other country wide major disasters. The crops are growing, people are still pretty healthy and we haven’t run out of oil, yet.
So what’s the crisis? What, in the real, three dimensional world is forcing us to close schools, cut back on necessary government programs, and put people out of their homes? Accounting digits in bank computers.
I spoke with a friend who hangs out in rarefied circles, including some bankers – and he told me that most of them know the system is broken and is moving toward collapse, but everyone is holding out to get what they can out of it before then cards fall. The reason that they evict people who default on their mortgages, even though they lose money when they have to re-possess and re-sell is that they believe that people need to fear the consequences of not paying, or the system will really collapse.
In other words, the system is based on fear. Even though these guys KNOW the system is a house of cards, and on the verge of collapse, they’re not willing to work with people who have been devastated by the cascading problems of the housing bubble – job loss, default, people not having the money to spend – problems WHICH by the way, THEY created, because they’re holding on to what they’ve got until the fall.
That should be criminal. In different times, these bankers would have ended up with their heads on the end of a pike, while the people worked out the mess without their “expertise.” Now we have Occupy Wall Street and it’s many iterations and love ‘em or hate ‘em or think the camp out protest is a silly idea, you have to give ‘em credit for taking the problem to the source.
We know where the heart of the problem is, but we’re not so sure about how to fix it.
While we’re working on the bigger system wide stuff, we’re getting schooled in the day to day. We’re “downshifting” because we’ve learned we don’t need a lifetime of debt for unessential stuff and things. It’s mostly landfill fodder anyway. Those of us with access to patches of land are growing more of our own food. We’re trading real stuff and services for real stuff and services and doing what we can to avoid needing the digits.
THAT should scare the living shit out of the bankers, because if we stop using money, they have no power over us.