Wednesday, June 30, 2010

On G8, G20, deficit and debt: 'Money is not real'

Jonathan Schwartz: Much of the world's elite understand exactly what they're doing:... use the economic catastrophe they themselves created as a pretext to kill the welfare state they've despised for 65 years.

James Galbraith, interviewed by Ezra Klein: We should be focusing on real problems and not fake ones... The idea that funding difficulties are driven by deficits is an argument backed by a very powerful metaphor, but not much in the way of fact, theory or current experience.

Digby: 'Money' is more real to our ruling class than are human beings.

National debts are treated today as if they were unforgiving gods with the power to control, alter and if necessary destroy a country. This financial trap is usually presented as if it were peculiar to our time, as well as being a profound comment on the profligate habits of the population...

9. A nation cannot make debts sustainable by cutting costs. Cuts may produce marginal savings, but savings are not cash flow...

11. Civilizations which become obsessed by sustaining unsustainable debt-loads have forgotten the basic nature of money. Money is not real. It is a conscious agreement on measuring abstract value. Unhealthy societies often become mesmerized by money and treat it as if it were something concrete. The effect is to destroy the currency's practical value.

12. An obsession with such false realities and with debt repayment indicates a linear, narrow managerial approach to economics. The management of an economy is the profession of finance-department technocrats, economists and bankers. Their approach is quite naturally one of continuity. This is a means of denying failure.

To treat money or debt as a contractual matter -- therefore open to non-payment or to renegotiation -- would mean treating the managerial profession as of secondary importance... What sensible people might see as originality or practicality, financial experts see as a threat to their professional self-pride...

Money is first a matter of imagination and second of fixed agreements on the willing suspension of disbelief. In other words, it is possible to approach the debt problem in quite different ways... What is difficult for a single country in contemporary circumstances is easy for a group, particularly if that group speak for the developed world. See: ETHICS.