What is Going Wrong in the Economy?
The balance of power and wealth, to start with.
It is a fact that globally, the rich and poor populations diverge in number and wealth. Predator capitalism is the main reason for the increasing gap between rich and poor. Capitalism is based on the concentration of capital for big projects, a good idea as such.
The issue starts when the projects are not projects anymore but just finance. The project of money is just more money, not more value. Money has developed a proper dynamic, erasing the purpose of serving the economy in that process. Banks have centralized the wealth and serve the purpose of money, not the purpose of a developing economy. Governance and finance have merged. Governments are tightly interwoven with these leaders of the economy. Everything is driven by speculation, especially the money itself.
Cryptocurrencies have only exacerbated speculation with ultra-volatility, making them useless for the large economy. Central Bank cryptocurrencies are pegged by the national currency, and will not change anything in the game, they are just a more convenient and better controllable way to move money, applying the same sovereignty principles.
Currencies are subject to “quantity ease” which is a way to call printing of money without counter value, not backed by increasing economy or commodities, like gold. Central Bank crypto coins will not escape the rule.
The consequences are bubbles, a nicer way to call excessive speculation instead of Ponzi Schemes. Ponzi Schemes remain what they are and will not develop the general economy, but work in the pockets of the few.
- Speculation vs. Investment
Investment and capitalism were a product of the 16th century in the Netherlands, where people put money together to build high-tech ships. That is roughly 500 years of history. In the 18th century, the steam engine brought capitalism to a new level.
But these were investments in projects, not in money. Money became an object of speculation in the late 19th century, driven by another new technology, the Ticker machine, and all the new electrical communication channels. It is roughly 130 years since finance started to get wild and disconnected from the World of entrepreneurs. Governments have deregulated the financial business since the 1980s (Nixon, Reagan, Thatcher, etc.), disconnected from the gold, and allowed nested products (derivatives). That led to the 2008 financial crisis, also known as the Lehman crisis. The next one when? We already waiting for it.
- The Future of Finance
We all know that things have not changed since, but gone worse. Crazy public debt levels and inconsiderate printing of quantities of currencies around the world. Nobody doubts about the inevitable outcome, not if, just when. People will suffer, not all of us, but the many.
