I'm not so sure. I think the piece that you and I are missing, now that we have a visual, is the piece to tell us where that money comes from. I know just enough about economics to know that money is created by other money. The government is shoring up businesses with money that exists because the government says it exists, or will exist by the time they pay it. It's all an exercise in fantasy-world generation, where the world they're creating is one that has this trillion bucks in it. The world didn't have that money until the American government decided to plop it into the financial industry.
You read in the paper that world markets have lost 20% of their value, or some such, since September. But what does that actually mean? Did 20% of the food that was growing suddenly stop growing? Did 20% of the machinery that was being used suddenly stop working? The fact is, that wealth was paper wealth to begin with (or computer wealth.) It had whatever value the bankers and money-market people said it had, because it didn't represent anything concrete.
Now of course, sooner or later it gets tied into something that feels concrete - like a mortgage on a brick-and-mortar house, or a new car coming off the line at GM. Still, those things are worth what the market says they're worth, no more and no less - so the ability to pay for them is determined by the same folks who are telling us that 20% of the world's wealth has disappeared in the last six months.
We're not being given the visuals to represent what's really going on, in part because there are no visuals. It's like the cheshire cat - "When I use a word, it means exactly what I mean it to mean - neither more nor less." Part of the way to solve the crisis may be to actually link money to concrete wealth again. I don't know. But I do know I'm not willing to let myself be drawn into how scary it is without a better understanding of exactly what it means.
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Date: 2009-03-12 12:32 pm (UTC)You read in the paper that world markets have lost 20% of their value, or some such, since September. But what does that actually mean? Did 20% of the food that was growing suddenly stop growing? Did 20% of the machinery that was being used suddenly stop working? The fact is, that wealth was paper wealth to begin with (or computer wealth.) It had whatever value the bankers and money-market people said it had, because it didn't represent anything concrete.
Now of course, sooner or later it gets tied into something that feels concrete - like a mortgage on a brick-and-mortar house, or a new car coming off the line at GM. Still, those things are worth what the market says they're worth, no more and no less - so the ability to pay for them is determined by the same folks who are telling us that 20% of the world's wealth has disappeared in the last six months.
We're not being given the visuals to represent what's really going on, in part because there are no visuals. It's like the cheshire cat - "When I use a word, it means exactly what I mean it to mean - neither more nor less." Part of the way to solve the crisis may be to actually link money to concrete wealth again. I don't know. But I do know I'm not willing to let myself be drawn into how scary it is without a better understanding of exactly what it means.