Why Tightening Our Belts Will Make Things Worse
I've seen it suggested that we will have to "tighten our belts," "borrow and spend less" and "accept lower wages" in order to get out of the recession.
Actually that is sure-fire guaranteed to make the recession deeper and longer.
When such inanities come from our governments and politicians, who SURELY must understand their own money system, one wonders what game they are really playing.
Why? Our economy is NOT running on money.
It is running on DEBT.
It LOOKS like money and governments and other criminal operations CALL it money but it is NOT money in its true sense any more than "fool's gold" is real gold just because it looks a bit like it and someone says it is.
It isn't.
We are currently using a counterfeit that performs very poorly as a means of exchange: witness the economic chaos in which we and our forefathers have been obliged to live for the sole reason that some spivs are running the biggest scam in history.
Our means of exchange is created by banks out of thin air and gets into circulation when the newly created pounds or dollars are loaned to you, me, business or government.
Let us look at what will happen if we "tighten our belts" or "accept lower wages" or knock off all that borrowing.
Now, we know that "money" in our system is created by lending, Someone MUST take on a debt in order for money to exist.
Next question: how is it distributed? How does it get into the hands of the consumer? It is distributed and gets into the hands of the consumer through the payment of wages, salaries, commissions and so forth.
The consumer then spends the money buying industry's goods.
If the consumer does not spend the money to buy industry's goods, industry finds itself short of money and its ability to pay wages constricts.
In other words the employer becomes less able to distribute money to the consumer through the payment of salaries and wages.
On other words, the money shortage in the economy will intensify.
Money becomes even MORE scarce and the recession, which is merely a shortage of money, deepens.
And if we stop borrowing? If we stop borrowing we constrict the amount of money being created and injected into the economy.
The money stock shrinks.
The recession gets deeper.
Interestingly, in a debt-based economy such as ours, one thing we (consumers, government, business) MUST do is borrow.
If we don't borrow, there is no money in circulation and thus no economy! Yet we are treated as if the current economic mess is our fault because of all our irresponsible borrowing.
In other words we are made wrong for doing something we cannot avoid because some swine rigged things that way without our knowledge or consent.
Our means of exchange LOOKS like money and is CALLED money but it does not quite behave like money.
Measures that would be sensible if we were dealing with real money, such as not borrowing, "living within our means," our governments trying to balance their books and so forth don't work out the way we expect.
Thus when the banks announced we were borrowing too much and tightened up on credit very few expected them to thereby crash the economy and throw it into a recession.
Similarly our apparently logical endeavour to balance our books and dispense with borrowing will simply deepen the recession.
The government meanwhile tries to rack up even more debt and borrow-and-spend its way out of recession because that is all it CAN do while it persists with the idiotic debt economy and leaves the money creation racket in the hands of private-profit corporations.
And THAT merely sets us up for even more trouble in the future.
By way of an analogy, what will happen if you put kerosene in your car instead of gasoline? The car won't run, will it? It will cough, splutter and die.
No matter how many times you CALL the fuel in your car gasoline, the fact does not change that it IS NOT gasoline.
It may resemble gasoline but it isn't gasoline.
Until we start putting the right fuel in the economy it won't run right even if we find ourselves by some miracle with someone at the wheel who knows how to drive! While we continue to use the mechanism of borrowing to create and inject into circulation our means of exchange, debt levels are going to continue to rise and MUST rise.
If they don't, we will have recession and money scarcity.
There is no way round this.
If we want to straighten things out, we are going to have to confront this sooner or later.
Preferably sooner.
Why suffer longer than we have to?
Actually that is sure-fire guaranteed to make the recession deeper and longer.
When such inanities come from our governments and politicians, who SURELY must understand their own money system, one wonders what game they are really playing.
Why? Our economy is NOT running on money.
It is running on DEBT.
It LOOKS like money and governments and other criminal operations CALL it money but it is NOT money in its true sense any more than "fool's gold" is real gold just because it looks a bit like it and someone says it is.
It isn't.
We are currently using a counterfeit that performs very poorly as a means of exchange: witness the economic chaos in which we and our forefathers have been obliged to live for the sole reason that some spivs are running the biggest scam in history.
Our means of exchange is created by banks out of thin air and gets into circulation when the newly created pounds or dollars are loaned to you, me, business or government.
Let us look at what will happen if we "tighten our belts" or "accept lower wages" or knock off all that borrowing.
Now, we know that "money" in our system is created by lending, Someone MUST take on a debt in order for money to exist.
Next question: how is it distributed? How does it get into the hands of the consumer? It is distributed and gets into the hands of the consumer through the payment of wages, salaries, commissions and so forth.
The consumer then spends the money buying industry's goods.
If the consumer does not spend the money to buy industry's goods, industry finds itself short of money and its ability to pay wages constricts.
In other words the employer becomes less able to distribute money to the consumer through the payment of salaries and wages.
On other words, the money shortage in the economy will intensify.
Money becomes even MORE scarce and the recession, which is merely a shortage of money, deepens.
And if we stop borrowing? If we stop borrowing we constrict the amount of money being created and injected into the economy.
The money stock shrinks.
The recession gets deeper.
Interestingly, in a debt-based economy such as ours, one thing we (consumers, government, business) MUST do is borrow.
If we don't borrow, there is no money in circulation and thus no economy! Yet we are treated as if the current economic mess is our fault because of all our irresponsible borrowing.
In other words we are made wrong for doing something we cannot avoid because some swine rigged things that way without our knowledge or consent.
Our means of exchange LOOKS like money and is CALLED money but it does not quite behave like money.
Measures that would be sensible if we were dealing with real money, such as not borrowing, "living within our means," our governments trying to balance their books and so forth don't work out the way we expect.
Thus when the banks announced we were borrowing too much and tightened up on credit very few expected them to thereby crash the economy and throw it into a recession.
Similarly our apparently logical endeavour to balance our books and dispense with borrowing will simply deepen the recession.
The government meanwhile tries to rack up even more debt and borrow-and-spend its way out of recession because that is all it CAN do while it persists with the idiotic debt economy and leaves the money creation racket in the hands of private-profit corporations.
And THAT merely sets us up for even more trouble in the future.
By way of an analogy, what will happen if you put kerosene in your car instead of gasoline? The car won't run, will it? It will cough, splutter and die.
No matter how many times you CALL the fuel in your car gasoline, the fact does not change that it IS NOT gasoline.
It may resemble gasoline but it isn't gasoline.
Until we start putting the right fuel in the economy it won't run right even if we find ourselves by some miracle with someone at the wheel who knows how to drive! While we continue to use the mechanism of borrowing to create and inject into circulation our means of exchange, debt levels are going to continue to rise and MUST rise.
If they don't, we will have recession and money scarcity.
There is no way round this.
If we want to straighten things out, we are going to have to confront this sooner or later.
Preferably sooner.
Why suffer longer than we have to?