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The Pyramid Economy.There is so much talk about economic downturn, recession, national debt, toxic assets, economic growth, boom and bust and market economies that one wonders if anyone has the faintest idea of what is going on.
Well here's an explanation just to make things clear.
The first thing to understand is that most of the world now runs on the fiat money system. Money has a long history and evolution. A short history goes from bartering to commodity money like conch shells and alcohol to representative money like the gold reserve to fiat money. Fiat money is money that has a value decreed only by government order. There is no intrinsic value. It is simply controlled by law.
In the USA money is printed by the Federal Reserve and it is worth noticing that the Federal Reserve is a private business. It is no more "Government" than Federal Express. In the UK it is the Bank of England which is the only business authorised to print money. It, too, is a private company.
What happened in the 2008 world economic crisis was that the economy was slowing down due to too many financial institutions making too much profit from financial deals. The American subprime mortgage crisis, the UK's credit crunch and a list of other issues. It's not that there is less money going around rather it is that the balance was tipping and causing something akin to a blood clot in a cardiac artery. A terminal heart attack was threatening. Solution - send more blood around!
Literally print more money. Well according to all the complex rules, regulations and laws there are various means by which this can be done but at the heart of it is the simple fact that more money was ordered (borrowed) from the banks.
It is probably the right thing to do. It will probably work. But like any heart attack victim there is work to be done to address the cause of the problem. The extra money in the world economic system does cause a better cash flow and helps the money go around which is what it is all about. But the cause must be fixed!
So what exactly is going on when the banks print more money and lend it to the government. The banks are private companies and are legally obliged to make a profit. They lend the money to the government and charge interest. This way they make a profit. Lets be fair: they can't do all the work of printing the money and then waiting for the government to give it back for nothing. Who will pay for the printing press and the rent on the bank buildings and the tellers' wages? More to the point: who will fund the brilliant bankers bonuses?
So the banks print money, lend it for interest, and get more back. Seems simple. At least to simple minds it may seem simple. But there is a very serious question that no one seems to address. If the banks are the only people printing the money how can they get more back? The actual answer is that they can't. This is the pyramid marketing deception.
Here's a simple example that I encountered as a child. There was a boy at school who borrowed some cigarettes from the bullies. The bullies were very kind and said that the boy could have ten cigarettes but he had to give them fifteen back at the weekend. The bullies were in league with the prefects and when the boy tried to get to the shops at the weekend to buy some cigarettes he was prevented by the prefects. So the debt increased. It took time and some give and take but eventually the boy owed the bullies over £400. In 2009 that would be about £4000. Not a sum that a 14 year old could reasonably expect to pay back. The net result was that to reduce the debt the bullies could get him to run errands, clean their shoes, give them his record player, his radio, clean their rooms and do all sorts of dirty work for them. The bullies never wanted the cigarettes back. The banks don't want the money back. They know there is not enough money out there to pay them back - they printed it!
At a local scale the economics all seem to work because the illusion of the endless sea of money is never seriously examined. The main banks lend to other banks and the other banks lend to companies and the companies lend to people and the people work to earn the money to pay the debt. They earn the money by producing things to sell to other people to get the company some money to give some of it to them to pay the loan. But it stops at the individuals. That's why over the last 50 years the debt has slowly but surely accumulated in individual debt. It is a pyramid where the people at the top accumulate huge power and control while at each stage down the line the participants are focused on making more money and at the bottom they are all fighting each other for their piece of the pie. There is a debt crisis. It is real because there is nowhere else to push the oppression. Mortgages are a key factor in all of this. The word mort-gage comes from the French "mort" meaning death and "gage" adds the sense of "a promise" or "commitment". Mortgages were the use of a house to live in until death. Just as you might imagine any primitive culture allocating living space for the duration of life. There is no need to "own" a house when you are dead. A house is useful to the living, but ownership has been driven into the equation and all modern cultures are based around individuals purchasing their living space by borrowing money to pay back over their lifetime at serious rates of interest. But this is mere detail.
The illusion presented to the punters is that because some people can get rich it is always possible for one individual to get rich. It's the same with pyramid marketing and it's the same with the mafia. But whilst the perception is at the individual level it can always be shown that with a little more effort than most you can get an advantage. That advantage, however, is only achievable at the expense of other people. The overall situation remains the same. It relies on there not being enough money to go around so that each individual will remain on the tread mill trying to get a local advantage. A kind of musical chairs.
We live with a pyramid economy and until the general perception changes we will continue to fuel it. Profit is not the answer. Wealth, on the other hand, can increase and can provide a sustainable and constantly improving environment. Wealth being the improved efficiency of work.
When people use the term "wage slave" they generally think they are talking metaphorically but the truth is that we are living in a slave economy. It is called a consumer economy but when you step back and look at it from a distance it is clear that the individuals that make up the economy are trapped on the treadmill of this pyramid of oppression.
In summary the key factors are:
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