The Intelligencer, Saturday, April 5, 2008
Letter to Editor
The economic meltdown in 2007 and 2008, due in part to sub-prime mortgages and the economic concomitants of the U.S.A.'s 'war on terror', raises an issue the 'chattering classes' should have seen coming. Something like 75 per cent of the money circulating in western economies is `debt money', i.e., money sanctioned by reserve ratio legislations allowing banks to leverage deposits into loans at a nominal rate of 5 to l.
In this context, the principal utility of government-issued currency involves small retail and commercial transactions and the activities of criminals.
What has not been noticed is that this state of affairs constitutes a perilous circumstance for millions whose lives depend upon debt-leveraged manufacturing and consuming. In a world struggling with pollution, resource depletion and envy-driven terrorism, the wealthy enjoy unprecedented power and face unprecedented peril. The source of their growing proportion of wealth (in 2006, two per cent owned more than 50 per cent of the world's assets) includes fiscal engines transferring equity from lower and middle class populations. One such device is debt servicing costs – a perpetual mortgage upon the activities of `remaindered populations'.
The dependence of economies upon debt-money has another implication. Such economies are under constant scrutiny and threat because debt-money can be extinguished in a heartbeat. The reason this is important to think about is that the wealthy of the world face an unprecedented crisis. Environmental and resource-depletion issues threaten their well-being in ways never before experienced. The rest of us should not doubt that they understand something Robert Malthus pointed out in 1798. A growing population, especially one with growing expectations, is unsustainable in a finite world.
The increasingly widespread realization is that even a few more decades of business as usual means the end of life as we know it – and not just for the chattering classes. There is no safe place in this prospect. Global warming portents alone are so bleak that the very idea of wealth is on the verge of becoming oxymoronic.
Fortunately for the 10 per cent who now own virtually everything, governments are well positioned to diminish the volume of money in circulation, pleading the force majeure of global realpolitik. All that is required is a necessary adjustment' to reserve ratios and credit-based economies will shrink into recession and depression. Once this process starts, lending institutions will spontaneously tighten eligibility requirements, further accelerating ‘difficulties’. At the same time, interest rates will drop, ostensibly to “stimulate or sustain economic activities”. This measure will quietly transfer more of the burden of government expenditures from investment to earned income, i.e., from the wealthy to the rest of us.
In short, the rich will continue to prosper in this scenario, although they may not become richer. (Once you own everything, there's not much more to be done.) The advantage to them is that the rest of us will fall back far more quickly than we would have otherwise. Just two of the existing 'fiscal harvesters' - compounding investments and percentage driven income adjustments - would have achieved the same end, but time is of the essence, and time is running out.
As this prospect emerges, we already see police and military forces being expanded to `fight terrorism'. Such expenditures are economic depressants in their own right, and therefore significant contributors to the `greening of the planet'. More importantly, armies and surveillance systems will have increasing work to do securing property rights as populations settle into the 10 per cent rich/90 per cent poor New World Order.
Unfortunately for the rest of us, this is the only `Save the Planet' plan that has a snowball's chance of working. The reason is that this is the only plan that does not rely upon you and I acting thoughtfully.
The only other 'operational asset' this plan needs is for the wealthy to do globally what they have been doing domestically - organizing populations to serve their own purposes.
We know from experience how good they are at giving us the business. This is, after all, how we came to live in cities, to educate ourselves in ways that make us hapless and dependent, and then to work and consume ourselves into a stupor.
Of course, we can be herded through the next door and into the darkness beyond. Our new Commons is even now being prepared, one where our habits of thought and esthetic sensibilities will find a congenial home. There are already garbage dumps on the dark side of every city. Millions of people have already made the journey from villages and farms to these new stomping grounds. They await our arrival with bated breath, flying toilets at the ready.
Vernon Molloy – Stirling