Aristotle, in the fourth century BC, was the first person to define what money is. And what is it? It’s a store of value and a medium of exchange. The paper we use today is a medium of exchange – it got that way because governments made it illegal not to accept it – but it’s not a good store of value. And it’s rapidly and radically becoming less of a store of value.
What we use as money today is actually not money; it’s currency. Technically, that’s simply a word that indicates a government substitute for money.
Doug Casey at the Daily Reckoning.
There are more clowns in economics than in the circus. They invented an economic model that has been very popular for more than 50 years – particularly in the US and Britain........ The new theories seemed to give everyone what they most wanted. Politicians could spend even more money that didn’t belong to them. Consumers could enjoy a standard of living they couldn’t afford. And the financial industry could earn huge fees by selling debt to people who couldn’t pay it back.
Never before had so many people been so happily engaged in acts of reckless larceny and legerdemain. As time wore on, more and more people lived at someone else’s expense. Lobbying and lawyering became lucrative professions. Bucket shops and banks neared respectability. Every imperfection was a call for legislation. Every traffic accident was an opportunity for wealth redistribution. And every trend was fully leveraged.
If there was anyone still solvent in America or Britain in the 21st century, it was not the fault of the banks. They invented subprime loans and securitizations to profit from segments of the market that had theretofore been spared. By 2005 even jobless people could get themselves into debt. Then, the bankers found ways to hide debt…and ways to allow the public sector to borrow more heavily. Goldman Sachs did for Greece essentially what it had done for the subprime borrowers in the private sector – it helped them to go broke.
As long as people thought they were getting something for nothing, this economic model enjoyed wide support. But now that they are getting nothing for something, the masses are unhappy....
Taxes are going up. Services are going down. And taxpayers are being asked to pay for the banks’ losses…and pay interest on money spent years ago. Until now, they were borrowing money that would have to be repaid sometime in the future. But today is the tomorrow they didn’t worry about yesterday. So, the patsies are in revolt.....
The rioters can go home, in other words. The system will collapse on its own.
Bill Bonner on The Patsy Revolt.
We face a dilemma in that most Americans are committed to democratic governance and many Americans want elected officials to assume responsibility for matters that they cannot manage.
American politics is not broken: it is working in the dysfunctional way that it should be working, given its unwieldy size and scope. What may be breaking are naïve idealistic beliefs that politicians can use a large and intrusive government to serve "the people." And the demise of such beliefs would be a good thing.
The idea of public-spirited politicians acting through large and unlimited government is utopian.
The basic lesson here is that politics cannot be fixed.
D W MacKenzie on Politics Cannot Be Fixed.
