We do the work. Someone else takes the wealth.

Kelvin Mackenzie
Kelvin Mackenzie

Economics is easy

During the 2010 election campaign I heard the columnist Kelvin Mackenzie talking about economics.

Economics is very complicated,” he said. “You have to be a genius to understand economics.”

This is not true. Economics is easy to understand. Wealth comes from human beings. It’s as simple as that. It comes from human beings engaging with nature in an intelligent and productive way in order to make all of the things we want and need. It is work that makes wealth.

This is so obvious an observation that it hardly needs commenting upon. All of the classical economists understood it: Adam Smith and John Stuart Mill, as well as Karl Marx.

The reason that modern economics has become so complex is that it has attempted to obscure this simple fact behind a fog of distraction in order to hide the processes by which a very few people have become more and more obscenely wealthy, while the rest of us are being squeezed to the point of desperation.

We do the work. Someone else takes the wealth.

We’ve been living under an illusion for the last 30 years or so. The illusion goes under the collective name of “Monetarism”. It is also sometimes known as “Thatcherism” or “Neoliberalism”. In the US it went under the name “Reaganomics”.

It is the idea that the market knows best, that everything in the public sector is bad, and everything in the private sector is good, that the private sector only needs to be deregulated for it to provide wealth for everyone. Take away the fetters and wealth will expand, it says. If the rich get rich, we all get rich as a consequence.

The idea was that the rich are “wealth creators” and the wealth they generate will eventually “trickle down” to the masses.

Do you remember being told that?

Actually it turns out that none of this is true. The rich aren’t “wealth creators” at all, they are wealth extractors. The world hasn’t been becoming richer, it has been becoming poorer. The wealth hasn’t “trickled down”, it has been siphoned up. The rich have accumulated even more wealth while the poor have been shafted.

Do you ever get the feeling that we’ve been ever-so slightly conned?

Angel Gurria, the Secretary-General of the Organisation for Economic Co-operation and Development
Angel Gurria, the Secretary-General of the Organisation for Economic Co-operation and Development

Confidence

I was listening to the Secretary-General of the Organisation for Economic Co-operation and Development on the radio. He was here to meet the Chancellor of the Exchequer to discuss Britain’s economic future.

The market has confidence in Britain,” he said.

That is actually a very revealing statement. What it tells us first of all is that he thinks he knows what the market thinks. You wonder how he is privy to such information? Does the market talk? Or has the Secretary-General learned to read its collective mind?

Secondly it tells us that the market has human responses. It can have confidence in things - or not, depending on the circumstances.

Thirdly it tells us that Britain is one of the “good guys” in market terms, that is, it is doing things that the market likes; whereas other countries presumably are the “bad guys”, doing things of which the market does not approve.

The question that arises from this is what we think this thing called “the market” actually is.

It doesn’t take all that much thinking about to realise that the question itself is wrong. It’s not “what”, it is “who”.

The market is not like the weather – some natural force which shifts according to laws over which we have no control - it is a bunch of people who, through their control and manipulation of various financial levers, are able to tell us what to do. It is not a law of nature, it is the mechanism by which we are ruled.

The “confidence” we are talking about is a kind of collective pat on the back for the British government for doing as it is told.

What we are seeing is a coup d'état against our public services. Public services are being cut in order to serve the interests of the markets.

Our choice in the general election was between a government which said it would cut public services immediately, and one which promised to do so at a later date.

The choice we didn’t get was for a government which would put the interests of the public first.

Cuts

So that’s what we chose: a government intent upon making cuts. It’s cuts across the economy. Almost £2 billion in cuts immediately, and then another £8.4 billion in “reviews”. Reviews refer to cuts that haven’t happened yet, but which will happen in the future.

There are plans to cut a scheme that would extend free school dinners to primary school children, plus one that would have seen 7,000 new homes built. There are plans to cut over £1 billion from council budgets, to scrap free swimming for children and pensioners, and to cancel a hospital being built in Hartlepool, amongst other things. Cuts, cuts, cuts.

We were promised no cuts to front-line services. You can’t get more “front-line” than a hospital.

The cuts are being implemented in order pay off the deficit.

The deficit represents the difference between what we are earning as a country, and what we are paying out. We are paying out more than we are bringing in. In order to cover the difference we have to borrow. Last year we borrowed £170.8 billion. This year we are set to borrow £167.9 billion.

We do this by issuing bonds, known as gilts. These are essentially promissory notes: IOUs. In other words, we hand out a big pile of paper, and we get a big pile of paper in return.

Actually, we don’t even get paper in return. We get credit on a computer screen. They just add a few more noughts onto the end of the noughts we already owe.

Now here’s the question: who exactly do we owe all this money to? That’s when things start to get really murky. It’s not at all clear.

Mainly, it seems, we owe money to “financial institutions” in the UK. Banks, in other words. We also owe 35% of our national debt to “overseas investors”. We can assume these are banks, too, in some form. They lend money, so they must be banks.

In other words, we are cutting public services in order to service interest on debts owed to foreign banks.

Tell me: at what point did we vote to give our sovereignty away?

Franklin D. Roosevelt
Franklin D. Roosevelt

Deficits are a good thing

Meanwhile the cuts have hit home in our local area with the announcement that up to 200 council jobs are at risk as Canterbury City Council is set to lose a third of its government grant.

We all know why this is, of course. We’ve been told often enough. It’s that pesky deficit again.

The problem with this is that actually it isn’t true. In the past deficits have always been seen as a good thing.

The post war boom in Europe was funded by a deficit. The New Deal programme of Franklin D. Roosevelt, which brought America out of the Great Depression, was funded by a deficit. The Industrial Revolution was funded by a deficit.

It is deficits which fund industrial and social expansion. It is deficits which pay for public services and infrastructure and everything which makes the economic world go round.

It depends on who you owe the deficit to. Effectively a deficit is a borrowing from the future. It is borrowing on the prospects of future earning.

Traditionally deficits are funded by state owned central banks. The bank simply credits the government with the money and the government spends it into existence by funding large scale infrastructure projects: creating jobs, spending, and serving the interests of the economy as a whole.

The problem with the current deficit is that it is being funded not by a publicly owned central bank, but by borrowing from private banks. Private banks create credit in exactly the same way that central banks do: they simply write the money into an account, which is then “owed”.

The difference being that private banks charge interest, thus making the money more expensive. The future is expected to pay back more than the present borrowed.

The banks almost crashed the world economy back in 2008, having made a bunch of bad loans in pursuit of quick profits. The economy was only saved by the public sector bail out.

In other words, rather than running a deficit in order to fund public services, we are cutting public services in order to prop up a bunch of greedy private speculators.

How crazy is that?

More by this Author


Comments 55 comments

Sufidreamer profile image

Sufidreamer 6 years ago from Sparti, Greece

Agree with everything you say, Chris. I watched the UK election on the BBC, and the markets were mentioned every other sentence. What do the markets think? How are the markets reacting? I always thought that our illusion of democracy at least tried to reflect the will of the people, but it seems that I thought wrong. It reflects the will of the markets.

We are having issues with the markets in Greece - as soon as the IMF became involved, we knew that things would go downhill. Greek companies are disappearing and the multinational corporations are picking the country clean. Greece is just another target for venture capitalists to asset strip and move on, like a biblical plague of locusts. It is all very sad :(

Greece is the canary in the mineshaft - other nations are next.


CJStone profile image

CJStone 6 years ago from Whitstable, UK Author

They've been doing this kind of financial restructuring throughout the world. It was Latin America first. Then it was the former Soviet republics. Now it's moved into the heart of Europe. It is indeed a form of asset stripping. Greece is the first to go, but we will all soon follow. The Tories are following the doctrine without any need to refer to the IMF. It's a form of wealth redistribution: from the public to the banks.


Amanda Severn profile image

Amanda Severn 6 years ago from UK

Reading this Chris, makes me wonder. Did we sleep walk into this situation? Alarm bells were being sounded years before things eventually went pear shaped. I remember Mervyn King giving cautionary advice about debt levels at least three or four years before the bubble burst. A friend of mine works for one of the big banks, and he was continually urged to get people into debt. The more the better. Could the banks themselves not see that many of their customers would inevitably fail to make payments because the burden of debt was too great?

I understand what you are saying about deficits funding the present. Most businesses run like that, falling back on their overdrafts when cash flow is sticky. Surely though, you should only ever borrow what you have 100% confidence in paying back? It's a big mess with fault on all sides. The Tories are damned if they do make cuts, and damned if they don't.


CJStone profile image

CJStone 6 years ago from Whitstable, UK Author

Hi Amanda, it depends on who you owe the deficit to, as I said in the piece. When banks "lend" money, all they really do is to add your debt to their accounts and then claim that as an asset. They don't really lend you anything. They create the money out of thin air. The question is, why can't governments do this too? And the answer is that traditionally they did. All of the great economic surges were funded in this way, by governments spending money into existence. It's only lately, with the rise of monetarism, and the cult of private financing, that governments have been forced to borrow from private banks and to sell off national infrastructure to pay the interest. This is what I mean by "a coup d'etat against our public services".


Amanda Severn profile image

Amanda Severn 6 years ago from UK

Did they effectively just print the money Chris? And if so, couldn't they just conjure up some figures on a computer screen, and magic away the deficit? The whole thing is just mad. A bit like the South Seas bubble, and that business with the tulips!


CJStone profile image

CJStone 6 years ago from Whitstable, UK Author

No they didn't just print money, they created economic activity by building things. It's what the post war boom was based upon, Keynesianism. The government builds infrastructure such as roads, schools hospitals, etc, which gives people jobs, which stimulates the economy. The South Sea Bubble and the business with the tulips was private speculation of the sort which created the financial collapse in 2008. That was based on the false notion that house prices would go on rising forever. The difference is that when you've spent money on infrastructure, the infrastructure continues to exist in reality, but when you spend money on speculation nothing ever really existed in the first place. It's the "real economy" vs the "false economy".


msorensson profile image

msorensson 6 years ago

In America, they created this system over a hundred years ago, CJ. Only now are people realizing it is a system of legitimate enslavement. However,in my opinion, governments, monetary systems and religions do not enslave people, We walk into it willingly and sometimes, knowingly.


frogdropping profile image

frogdropping 6 years ago

I remember reading somewhere that all the money in circulation has never been in print, that most of what we spend is just a numerical system. It's frightening. I know Portugal is on its knees, so will likely become the next private banking colony - if it's lucky. As for the deficit, it's very apparent where I live. Many of the local government departments are losing up to 50% of their staff. Some are frontline workers. Other cuts are being made, less about people than services and so on. Where will it end?


Earth Angel profile image

Earth Angel 6 years ago

GREAT Hub Chris!! Spot-on!!

The only way to stay out of the path of loss in this economic system is 'awareness!!' And being proactive!!

Thank you for the enlightening Hub!!

Blessings to you and yours, Earth Angel!!


CJStone profile image

CJStone 6 years ago from Whitstable, UK Author

msorensson: they created the system in England about 350 years ago. The Bank of England was the first privately owned national bank. Part of the reason for the American Revolution was that the State's citizens weren't happy paying punitive interest rates to the Bank of England and wanted to set up their own bank.

frogdropping: I think that's right. Most money now is just a few blips on some computer screens. The problem is that the world as a whole owes more money than there is money in the world. According to Michael Hudson (link above) the last time the world was in this amount of debt was just before the fall of the Roman Empire. We all know what happened after that. About a thousand years of darkness.

Earth Angel: I agree, only awareness will save us, but awareness of the money system and how it operates will help. We need a new money system, one which doesn't "belong" to any one, which can't be manipulated, and which is just a means of exchange, nothing more. Money made from money is fictitious money. The only real money is money from work, money made from making and doing. Anything else acts as a parasite on the real economy.


Shadesbreath profile image

Shadesbreath 6 years ago from California

While I largely agree with you are saying, I still don't know how any of it is going to change. The people with the wealth have the power and they don't care how many people write hubs about it. They'll hand over a little wealth here and there to whomever they need to for the purpose of shoring up and trouble that might arise somewhere. It only ends when they finally push too far, push one too many middle class folks into poverty and then the revolution comes. From there, new people take power and it takes time for them to amass obscene wealth so everything is fine, unless some outside power or secreted wealth steps up and takes over and makes a slave state out of it or something. I like the point your trying to make, I just don't see how there's any stopping the inevitable cycle of power since it's pretty much been repeating itself since the first caveman with the biggest stick took the biggest piece of meat home and got all the dirty cave chicks.


CJStone profile image

CJStone 6 years ago from Whitstable, UK Author

No Shadesbreath, that's how they want us to think, to be defeated before we even take a breath. But there are cycles in history, there are decent regimes and evil ones, there are times when our humanity is allowed to fully open, and times when we are too afraid to be ourselves. This is a particularly bad time, though we don't realise it because it just happens to be the time we grew up in. There are other possibilities open to us and we have the right - no the duty! - to resist. That's part of the cycle too. If there's a cycle of power, there is also a cycle of resistance to power and the biggest man with the biggest stick is still only a man. Injustice happens. That's inevitable. What we don't allow is that an injustice becomes institutionalised, which is how it is with the money system right now. That Michael Hudson link is worth following. He's a sort of archaeologist of money. He shows that in fact in ancient societies the process of money accumulation and debt were themselves cyclical: how clean slates and debt cancellation were also part of the cycle. I'll put another more specific link in to that story.


pgrundy 6 years ago

CJ, you know I agree with all of this. It seems so bizarre to me that all these paupers left Britain over debt and came here (though we never phrase it that way--we always say it was for religious freedom or whatever, but mainly, it was debt) and in fact many of us were force-shipped here (it was called 'transportation'in the 17th and 18th centuries and was considered worse than hanging because you'd likely not live through the experience), and here we are a couple of centuries later, recreating the same horrendous harsh conditions that landed us in America in the first place. All we need now is debtor's prisons and hanging and we'll pretty much be right back there.

The U.S. has become a banana republic. It's not becoming a banana republic, it is one, like right now. Instead of United Fruit we have Goldman Sachs and Haliburton and Exxon and so forth. But you can't talk labor to people here, they're too terrified and angry. Bad combo, that. I don't know, I think it's time to break out the pitchforks frankly but I'm too old and I can't shoot, and now I have a grandson, so, yikes. Plus, there's a good chance the pitchfork wielders here will be on the other side of the fence, calling for eve more repression and more severity. It's getting ugly here too and I don't know what to do about it, though I'm less philosophically detached than Shades, I share that sense of, and so we do... what? If I knew I'd be doing it.


CWB 6 years ago

well cj, i spent a couple of years here at hp trying to spread awareness of this situation and the cycle it produces.

i have come to the conclusion that it's not necessarily lack of awareness that's the problem today. as shadesbreath says, i think we've let it go too far. i don't think there's any pulling back from the brink, as it were. in fact, i think we've already gone over the precipice. we've simply not struck the jagged rocks at the bottom yet.

there is no way for us to vote our way out of this debacle. it would seem there are actually only two possible scenarios that might result in a civil society or at least something from which such could be built.

the first would require the uniform withdrawal of hundreds of millions of people around Earth from participation in their own destruction. it would mean people in their millions simply dropping out. any beast, however vicious, however fearsome, will starve to death if it is not fed.

the second scenario, at least from an american perspective, would require the pseudo-government to be overthrown or, certainly less plausible, suddenly come to their senses.

as long as banks are privately held, as long as currency is printed, circulated and controlled by private corporations and as long as usury, in any form or amount, remains legal, the transformation of earth into a third world planet will continue apace.

the first thing that must happen is the nationalization of all banks, from the federal reserve down to the smallest local credit union. the printing, circulation and regulation of all currency must be controlled by the people through the office of their government.

simply put bbgb's. bringbackgreenbacks. we must use a fiat currency of debt-free government notes backed by nothing more than its designation as legal tender. money is not a commodity; it is an act of law, not of nature. it has no intrinsic value. money is not wealth. resources, and that includes human resources, are wealth and all resources belong to all the people.

all lobbying and all corporate influence must be completely eliminated. all corporations must exist only as nonprofit entities whose function must be proven beneficial to all. said existence must be allowed only by limited government charter and only for a predetermined time. if, after the stipulated period, a corporation cannot produce indisputable, factual data showing that its operation is contributing to the general welfare, its charter must not be renewed.

the u.s. must withdraw from the international monetary fund, the world bank, and the bank of international settlements until such time as these entities become publicly held rather than private, for-profit, operations. they may continue to exist, not for profit, but in the interest of international commerce in a purely administrative capacity.

without these fundamental changes to the way in which we perceive money and its purpose, the population of earth will inexorably be transformed into a bilateral caste system of masters and servants.

there will be no improvement but rather a steady decline in the quality of life as long as profit remains the motive for everything. mammon has become the god of choice in amerika and the kapitalist jihad is spreading the worship of money and power around the world.

the founders of america, some presidents and even politicians have warned of the coming of this day.

“The end of democracy and defeat of the American Revolution will occur when government falls into the hands of the lending institutions and moneyed incorporations.

The Bank of the United States is one of the most deadly hostilities existing against the principles and form of our Constitution. The system of banking is a blot left in all our Constitutions, which if not covered will end in their destruction. I sincerely believe that banking institutions are more dangerous than standing armies; and that the principle of spending money to be paid by posterity is but swindling futurity. “

Thomas Jefferson

“The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.”

Abraham Lincoln

"Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders."

The Honorable Louis McFadden, Chairman of the House Banking and Currency Committee in 1933


BkCreative profile image

BkCreative 6 years ago from Brooklyn, New York City

Ah, yes, and so it goes. You have explained it so easily. In the US it was called 'the trickle down effect' - let the rich have it all and some of that wealth would trickle down to the others (suckers). What works here is the free philosophy of 'divide and conquer' - while we were running around hating each other, absolutely everything was being looted and deregulated - the credit card and mortgage industry, food, pharmaceuticals, banking, airlines, car industry, there is no job protection, no pensions, our money is backed by nothing, and on and on and on.

There is this saying - if you put a frog in hot water, it will jump out - but put it in cool water and keep adding hot water it will stay in and be burned to death' - well we are the frogs here. As long as it is slow and consistent we will do nothing.

Nice to meet you by the way!


CJStone profile image

CJStone 6 years ago from Whitstable, UK Author

pgrundy, well I'm with the Greeks marching up and down and waving placards. The Argentinians did this a few years ago I think and basically forced some form of debt restructuring. I think you've lost your class consciousness in America, though the bankers and the ones who wield the power haven't lost theirs. They know what side they're on, and it ain't ours.

Hi CWB, agree with all of your conclusions. It's bring back the Greenbacks on a world scale. Awareness of the problem is the beginning of the solution. These are just some of my recent Whitstable Gazette columns gathered into a workable sequence that's all.

Nice to meet you too BkCreative. I like the frog image, but this is one frog who is beginning to croak.

BTW I keep saying, check out the Michael Hudson link above. He's the first economist to have explained economics to me in a way I can actually understand. That's a useful tool to have.


Christoph Reilly profile image

Christoph Reilly 6 years ago from St. Louis

Hi CJ. I couldn't agree more. I saw earlier today a short speech by the late, great, outspoken comedian George Carlin called, The Government Doesn't Care About YOU. Seems to be the theme of the day. If you'd care to:

http://www.youtube.com/watch?v=hYIC0eZYEtI


CJStone profile image

CJStone 6 years ago from Whitstable, UK Author

Thanks for that Christoph. I like George Carlin too.


C Rockwell 6 years ago

Awesome. The question is... when is the tide going to turn? Im 37 and paid a pension for 13 years, which in 35 years when/if I retire will likely be worth nothing. I could have used that money to buy a house. or fix up the one I eventually bought anyway. and I work in the public sector and now have a pay freeze. Im supposed to suffer market economics like the private sector, yet I've never had a free lunch, a bonus or an xmas dinner when the going was good.

Everything is on lock down or worse, voluntary redundancy, cuts on top of cuts... and the banks are announcing Billions in profits.

so again I ask, what will it take? Will it be in my lifetime? I hope so, cos things are really going to suck in 10 to 20 years...


CJStone profile image

CJStone 6 years ago from Whitstable, UK Author

Hi C Rockwell, it's the bankers who are on the free lunch. I hope things will get better in our lifetimes too, but it will take a great change, not only in society, but in the way we relate to each other too. It's sink or swim in my estimation. A great wave is sweeping in off the Atlantic.


spdarkstar profile image

spdarkstar 6 years ago from Benijofar, Alicante, Spain

Hi Cj

Why don't we just repudiate the debt, the country would not dissapear, the Argentine did it and they are still with us.

But, I sometimes think it is all a zionist conspiracy, that seems to be working.

spdarkstar


fullmarx 6 years ago

Anyone interested in the nature of money and the 'Big Lie' about need to make cuts to deal with our 'financial deficit' - ie impoverishing the people to pay off the banks - should definitely have a look at www.bendyson.com - which explains how banks create money they don't have as debt, but is also an important UK wing of a growing INTERNATIONAL MOVEMENT for monetary reform.

See also: www.bankofenglandact.co.uk (on a proposed UK reform of the banking system) www.call4reform.org and www.webofdebt.com (US site with excellent articles by Ellen Brown)and www.nationalpeoplesparty.org.uk


mquee profile image

mquee 6 years ago from Columbia, SC

This is an excellent article that I wish every working person in the world would or could read. As we are growing up, we are told that working hard will get us ahead. Hard work does not translate into job advancement or wealth for the working person.

This hub is very informative and forced me to ponder areas that I had never really thought about before. Great work.


CJStone profile image

CJStone 6 years ago from Whitstable, UK Author

spdarkstar: I'm not sure I like the term "zionist conspiracy" in relation to the banking system. It smacks a little of the "Jewish-Communist conspiracy" which used as a propaganda tool by the Nazis, though I agree with you that Argentina did repudiate its debt, something which we don't hear a lot about on the news.

fullmarx: thanks for the information about the various websites associated with monetary reform. I'll check them out and maybe put them as links into the article.

mquee: hopefully lots of working people will get to read this article, though I doubt that every one will. I thoroughly recommend Michael Hudson, whose link is above. It was through following his work that I came to understand a lot of this stuff.


culturespain 6 years ago from Spain

Well said, I think economics is made out to be far more complex than it actually is. After all, most house wives understand the basics of economics and running ahousehold. Equally, they seem to understand (far better then governments) what debt is all about. As to our (thankfully departed) recent Labour government - I doubt that they could have run a sweet shop without driving it into bankruptsy!


lxxy profile image

lxxy 6 years ago from Beneath, Between, Beyond

"The reason that modern economics has become so complex is that it has attempted to obscure this simple fact behind a fog of distraction in order to hide the processes by which a very few people have become more and more obscenely wealthy, while the rest of us are being squeezed to the point of desperation."

Oh so true--money doesn't exist, and neither does wealth.

Resources and labor to harvest them, do, however.


CJStone profile image

CJStone 6 years ago from Whitstable, UK Author

Money is a means of exchange, that's all, and should be in the public domain. But as long as it is privately controlled, and can be used as a means of making money, it will remain a form of parasitism which sucks on the life-blood of the real economy.


saddlerider1 profile image

saddlerider1 6 years ago

The rich will always keep getting richer, in hard pressed economic times like America is in now for instance, the rich will buy everything that is up for grabs while the middle class-did I just say middle-class? I meant the poor because there is no more middle-class. However the rich will buy up what the poor have had to walk away from due to unemployment and many becoming homeless.

The rich make themselves richer off the backs of the poor economic climate. They live by the motto, Those of us who have the most toys, win. Great hub and a must read by everyone.


JamaGenee profile image

JamaGenee 6 years ago from Central Oklahoma

The point of having a job in the first place is to pay for the necessities of life: food, clothing, a roof over one's head. Secondly to have a job that pays enough that after the necessities are taken care of, to use what's left to reward one's self for working hard with non-necessities like dinner and a movie, a hobby, vacations, a better home or car, etc. Except that such "non-necessities" are really as necessary to one's well-being and mental health as food and shelter.

What has happened is the Wealth HOARDERS (not creators) are a stingy, narcissistic lot. They've decided the people they employ to make the goods and perform the services they sell are NOT entitled to "non-necessities"; that they, the wealth HOARDERS, are the only ones entitled to "luxuries".

It's not rocket science to figure out that paying subsistence wages is counter-productive. Employees who make barely enough to pay for food and shelter can't buy many (or most) of the products and services Big Corporations sell. Closing a factory and sending its jobs overseas may make the almighty Bottom Line look good to bond raters, but in the long run is REALLY BAD business. If millions of past and future customers have been made too poor by such short-sighted practices to buy a product or service, the company selling it can't stay in business, right? Not in today's world.

As pointed out elsewhere, "assets" these days are nothing more than numbers on a computer screen...or a doctored P&L statement. REAL money no longer exists. It's all smoke and mirrors, a case of who's better at spreading pure BS.

Unfortunately, it's going to get MUCH worse before it gets better, because the same greedy minds who caused the financial meltdown in 2008 are engineering the "solutions".

As you said, printing money that will put people back to work (at non-subsistence wages) is the ONLY way to reduce a deficit.

I find it ironic that the Wealth Hoarders want less government and use every trick possible to avoid paying their fair share of taxes to fund it, but relied (past tense intended) on government to provide public services such as food stamps, cash assistance to the poor, free school lunches, and subsidized day care as much their underpaid employees who qualify for them. Oh, and let's not forget who the government-hating "market" went to for a bail out in 2008.

The good news being that, although it may not seem so now, those of us at the bottom of the food chain are far better equipped to survive the final meltdown than the pampered CEOs who put us on this path to disaster in the first place.


CJStone profile image

CJStone 6 years ago from Whitstable, UK Author

JamaGenee, the only way to put people back to work would be to stop allowing private corporations to issue money, and to take that power back into public hands. You're right about the Wealth Hoarders: they absolutely depend on the state,not least to bail them out when they mess up the financial system so much that it's about the bust. Trouble is the OWN the State. They own the government and there is currently no political party of any influence in ANY country that represents an alternative to their rule. So - as you say - it's going to get much worse before it gets better.

Hello Saddle Rider yes you're right, this is an engineered recession, which means that as businesses go down they get sold off cheap, and the banks are waiting to buy up the assets.


Corneilius 6 years ago

Excellent article. Absolutely spot on.

There's plenty of work to be done - good work, work that can ensure our teenagers can look forwards to becoming parents with the assurance that their children will benefit, indeed that ALL future children will benefit.

Forest gardening, permaculture, environmental remediation, trans generational trauma healing, community building, unschooling and much more - the problem is that none of this, if done appropriately, would generate profits for banks and corporations....

Naomi Kleins rivveting exploration of 'neoliberal economic policy' as a euphemism for torture and shock tactics designed to break the will of individuals and communities is well worth a read with regard to the cuts discussed above and the INTENT behind them. She reveals the callousness and abusive nature quite clearly, honestly and in some detail.

We have work to do.


Anglachelis 6 years ago

Excellent article.


amorea13 6 years ago

Totally excellent hub CJS - many thanks - I have been 'bleating on' (as so many of my colleagues say!) about this topic and so many of your conclusions for a few years now and I am so pleased (relieved) to hear your candid and eloquent explanations. Wonderful! You are so right that wealth comes from human beings - it's in our 'money-of-exchange' (blood, sweat, time,tears and talent) and the banks give us what we believe to be of equal value; THEIR 'money-of-account' as you say - money out of thin air.It has been a very devious and deviously clever manipulation of us all - time to wake up and your words will help us all do so asap. Many thanks again.


CJStone profile image

CJStone 6 years ago from Whitstable, UK Author

Agree Corneilius, we have work to do. Will check out Naomi Klein's work.

Thanks for your comment Anglachelis.

amorea13: yes I agree, time for us all to wake up from this nightmare that has been imposed on us for a number of generations. Hopefully my words will contribute a little towards that.


Springboard profile image

Springboard 6 years ago from Wisconsin

Of course Britain is not really a capitalist country...still I think the root of the problem is the top (and I'm speaking more in line with the U.S. here), not the system itself. I like your terms "wealth extractor," and "siphoning up." I am a person who believes that in theory, with the system working properly, that trickle down is exactly what you should be able to rightly expect to happen when things are good...

But I'm also very well aware that this is rarely the case, and that the pace of the "siphoning up" is gaining momentum while the rest of us down here are starting to even feel our cheeks being tugged upward...

My back cheeks by the way. The ones where I usually put my wallet.

I was fit to be tied to learn that another CEO walked away recently with a $40 million paycheck after screwing up. Of course, I'm referring to Mark Hurd, the former HP CEO. Just the fact that he got $40 million for anything floors me. That he got $40 million for nothing is another matter entirely.

I'm not saying I think we should have salary caps, or that we should redistribute wealth. I DO think, however, that we need a more even kiel. But that takes people understanding what role capitalism really is supposed to be playing. Everyone is supposed to be able to enjoy the fruits of success and the hard work. But only the top IS. You are right to point out that markets are not a separate entity, that moves and breathes of its own accord. It is PEOPLE who are the markets. Pulling and tugging on it, and influencing it. Shaping it to their short term wants and desires.

I could go on and on, but I think you catch my drift. I don't want to see capitalism go away—I believe in the system. I simply don't trust that the people who are the top making the decisions (such as how much people should be paid) are making fair ones, nor the right ones.

How you fix that when the top holds all the cards is anyone's guess.


CJStone profile image

CJStone 6 years ago from Whitstable, UK Author

Britain is a capitalist country. It is the original capitalist country. The problem is regulation. The monetarist theory is that if you leave markets to themselves, and free them of regulation, they will create more wealth. This is a fiction. All that happens when you deregulate is that the hucksters and the con-merchants move in and start hyping the market. It's like deregulating the gaming market: allowing the card-sharps to run the game. Most of the current crop of CEOs are no better than con-merchants and actually deserve to be in prison for their shady practices. This isn't capitalism, it's a con-trick.


mel22 profile image

mel22 6 years ago from ,

Interestingly , I just saw this guy Angel Gurria on youtube speaking at a davos money conference and the pic is what made me take notice and read here. I couldn't exactly tell if this guy was smart economically or not by what he said, but he was funny. They all look so knowleragble about the " collapse " after the fact. Hindsight's 20/20. I can name one ( Schiff ) who got laughed off stage for warning of the housing collapse a year in advance. Too bad they didn't listen !


wabond profile image

wabond 5 years ago from England

Before we had Monetarism we use to have Keynesian economics, this was the economics of full employment. The problem with Keynesian economics was that the gap between rich and poor become inceasingly less in the post war period of the 1950s, 60s and 70s. So the rich fixed that and introduced Monetary economics which is the economics of high unemployment and the gap between rich and poor has increased ever since.


Whitstable Views profile image

Whitstable Views 5 years ago from Whitstable, UK

And continues to increase wabond. But it's a form of insanity to want to cut yourself off from the rest of humanity in this way.


Sy 5 years ago

I think the economic world is becoming insane. There are no specialists in the field who can make a rescue program. http://www.micocrane.com


Happy Banana profile image

Happy Banana 5 years ago from Cape Town, South Africa

So so true!Your article is totally kick-ass...can I say kick ass on here? Anyway I loved because I havealways thought of some of the things you have been saying but I have never been able to put it together so that it makes sense to someone. I got to work everyday with a million and one new ideas, whereas I am getting paid by someone who ONE idea and decided to do something about it.


CJStone profile image

CJStone 5 years ago from Whitstable, UK Author

Yes you can say kick-ass Happy Banana. Glad you like the article. Spread it around if it says what you would like to say. That's my purpose here, to provide the words for things that people have thought but have never been able to put together.


CJStone profile image

CJStone 5 years ago from Whitstable, UK Author

Thanks for your comment Sy. I didn't mind the advert cos at least you were bothering to comment on the article.


flannery profile image

flannery 5 years ago from Elmhurst, PA

Mr. Stone,

I don't know anything about economics as a discipline, but I do know common sense when I read it. Of course it's people who create wealth; wealth is a human construct, and who but people can create it? How rare it is to find such an observation!

Another thing I do know is good writing, the discipline to which I've devoted my professional life. Your article is clear, concise, coherent, and interesting. Full marks.


CJStone profile image

CJStone 5 years ago from Whitstable, UK Author

Thanks ms flannery. I won't take credit for the very simple idea that work makes wealth. That's called the Labour Theory of Value and was common to all economists in the 19th century, up to, and including Karl Marx. It has since been eradicated from economic debate, and only Marxists teach it now. Thanks for your comments on my writing, however. I will take credit for that.


suzettenaples 5 years ago

Wonderful article. You explain the economic situation in very simple terms that all can understand. ( You would make a great teacher.) I'm in America and now I understand that this is going on in the U.S., too. I guess we have been sleepwalking all these years and haven't been demanding honesty from our economies, banks, governments, politicians, private sector, etc,. I have a sneaking suspicion this is all going to come to a head one day and collapse into a world depression, worse than what we are experiencing today. I believe the markets are all an illusion and someday reality will hit us smack in the face. Anyway, great hub. I wish I had studied economics in school.


CJStone profile image

CJStone 5 years ago from Whitstable, UK Author

suzettenaples, I picked most of this stuff up after 2008 when I decided I had to get a grip on these matters. Some of the links in the article are there to help other people learn some of the stuff I learnt. I recommend you follow them up. Yes, we are sleepwalking into a depression. The point about a depression is that some people do very well out of them. Businesses collapse, so they can be bought cheap. Some people end up even richer than they were before. In fact, it's better that you haven't learnt economics, as economics has been used as a way of obscuring the truth.


http://debtloan.co.za 5 years ago

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CJStone profile image

CJStone 5 years ago from Whitstable, UK Author

DebtLoan: We're talking about national deficits here of course, which is a wholly different matter than personal debt, and while I recognise this is an advert, you did at least take the time and trouble to read the piece, which means you're not a robot, so I'll let you stay. Not that people should be getting into debt, of course, and not that anyone would be reading this far down the page looking for an advert about loans. Don't even know why I'm replying to this, as you'll never read it. What a strange world this is. I must be bored.


AlexK2009 profile image

AlexK2009 3 years ago from Edinburgh, Scotland

It seems to me at the moment that the world is run by debt and corruption and that like debt, if corruption stopped instantly the world economy would crash.


wabond profile image

wabond 3 years ago from England

Great Hub! Yes, people need to know they are being conned by politicians, the media and banks. I agree modern economics is all about making the rich richer and robbing the people.


AlexK2009 profile image

AlexK2009 3 years ago from Edinburgh, Scotland

The trouble is even if people know they are being conned by the media they still believe the lies because its the only information they hear and it affects them even if they do not know it

They know the banks are conning them but what are the alternatives? Local currencies like LETS and digital currencies like Bitcoin have not taken off

And even if they know the politicians are conning them they still vote for them, usually on tribal lines. But their choice is almost always not between policies, for all partis have almost identical policies, just aimed at slightly different targets, but between a fat corrupt liar in a blue rosette, a fat corrupt liar in a red rosette, a (possibly) fat corrupt liar in a yellow rosette, and a bunch of no hopers ranging from the well meaning but gullible like the Green party, aspirants to become corrupt liars ( SWP for example ) and malignant ones like UKIP (possibly CIA funded) and the BNP ( allowed to survive because they are useful to those in power and only attack immigrants not the people who import them)

It is amazing how modern economics is about supporting the rich: I read that in the 19th century the founders of early mathematical economics went into the field in order to improve life for everyone including the poor. Especially the poor. I also think they would have run screaming from a modern economics faculty.

Sometimes I think a breakdown in civilisation would be the best thing that could happen to the world. But if that happened I think of how my son would fare and think maybe I am wrong.

At the next election I intend to vote for ANYONE but the incumbent.


wabond profile image

wabond 3 years ago from England

I think the problem is Alex, is that the labour party has sold out. We do not have a political party now, that is for the working class. But this has happened before, in the early 20th century. The Liberal party was once for the working class and sold out, so a new Labour party had to be created to represent the working class, then. So this is what is needed today. The working class need to get themselves organized again, if we are to change anything.


CJStone profile image

CJStone 3 years ago from Whitstable, UK Author

The Liberal Party never represented the working class. It was the party of business as opposed to the party of the aristocracy. There was a working class element within it called the Independent Labour Party, which later went on to help found the Labour Party. The Labour Party lost its purpose when it abolished Clause 4. What we need is a renewed Labour Party committed to the principles which guided the party in 1945.


AlexK2009 profile image

AlexK2009 3 years ago from Edinburgh, Scotland

I worked out years ago that Labour sold out, even before Gordon Browns policy of British Jobs for Indian workers

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