Part 2 of this discussion here

Been thinking about something.

What ails the world?

The answer is simple. Exactly the same thing that makes this world go round.

MONEY.

The concept of Money- a freely trad-able, fully acceptable, completely fluid system. Been around since centuries now. It is the currency that makes the world go round.

This economics of money has proven to be quite successful. With its success, it has given rise to capitalistic markets, people and governments – the systems influencing the trade of money. These systems and its influences have been constantly expanding in scope and features.

Over a few centuries, these systems have become intertwined, complex and an entangled thread-ball – whose ends are somewhere within- but no one seems to know where.

Before I move on further  to propose a “new economics”-  it is important that I put some context by explaining the basics of modern day economics :

The money economics is based on a simple premise- Money buys you stuff. From services to goods. From personal security to future proofing your risks. It buys your kids a school education, you a health assurance and your family the necessities- a roof on head, food and clothing. If you have more money- you can get these things- and if you have more money, you can get more or higher quality things..and so on.

The more money you have, the more money you make. It gets compounded- the rich get richer. Money begets money.

This system also has an interesting phenomenon. Money never stays stagnant. The system is designed to keep the money moving. Money has to stay FLUID. If it stops rolling, it catches moss. And it stops the world with it.

Now- this system constitutes of people, governments, processes- all of these meant to play a regulatory, authoritative role. Money flow slows, Fed (Government) reduces lending rates to central banks, banks can borrow more at less cost- and then the publics get this benefit in turn. Businesses can borrow more for businesses, people can borrow more for housing..and so on. Money is made to flow- if it does not flow organically.

But in actuality, money never flows organically or systematically. It is dependent on emotions and sentiments. If people ‘feel’ bad about the future, they borrow less, spend less and save more. The rolling stone then starts to gather moss. And it brings the rest of the world to halt too.

Governments give ‘stimulus’, ease it quantitatively, reduce interest rates..nothing works. No borrowing=no lending= money sitting, losing value=stagflation, inflation. Follwed by Negative growth, recession and depression.

What is worse is, these problems are compounded by intertwined money markets, lending institutions and investment corporations. Globalization ensures that this animal is not restricted to any geography either. A worldwide recession.

Now this is not a rant about economic theory or the failure of the capitalistic mentalities. They have proven to work. But only at a certain level.

We need something else on top of clinical, theoretical, money market workings.

We need to change the world and its economics as it exists today. And I will share some thought starters in my next muse- read it here.

Image attribution: Tax Brackets