|
BROTHER CAN YOU SPARE $700 BILLION?
 The financial markets reflect the cumulative result of millions of individual
decisions. Regarding decisions, The Buddha said that they should never be made
on the basis of greed, anger, fear or delusion. It is obvious how greed and fear
have poisoned the well, but I would like to focus on something a little deeper,
how delusion has worked in creating the present financial collapse.
Specifically, the whole scenario demonstrates the truly amazing power of mental
formations in human history. Money itself is an abstraction. At some point in
the distant past people agreed to believe that this shiny rock was worth two
cows, even though the real, utilitarian value of a cow is considerably more than
the real, utilitarian value of a shiny rock. Paper money is an even more refined
level of abstraction. This piece of paper with the queen's face, or a spooky
eye-in-the-pyramid design or whatever, is said to represent so many shiny rocks,
which are worth so many cows. Eventually, they dropped the bit about the shiny
rocks.
Having gone off the "gold standard", such currency is sometimes called "fiat
money," meaning that the value is purely by government fiat. This is not really
accurate. A dollar bill doesn't have value because the government or the central
bank says so. It has value because the people believe it does. It is faith-based
currency. It is not surprising that paper money was first used in China, a
civilization deeply affected by Buddhism and Taoism, and used to philosophical
subtlety.
Consider what is happening here; material goods and hours of labour are freely
traded for an agreed convention. Something on the material plane of reality is
being surrendered for something on the purely abstract plane of mental
formation, which is void and without substance. Maybe that eye-in-the-pyramid is
telling us something.
Fast forward to the dawn of modern capitalism in post-reformation Europe. The
"real economy" of goods and services was becoming complicated, involving more,
and more kinds of goods, some of which were being shipped literally across the
planet. To facilitate all this action on the plane of material reality, various
new kinds of mental abstraction were invented, usually represented by fancy bits
of paper. Insurance, promissory notes, bonds and company stocks all came into
being, each representing a contract between parties to fulfill certain
obligations.
The stock market, in it's original manifestation was not very far removed from
material reality. If you bought a ten percent share in the East India Company it
represented something close to ten percent of the ships and goods of the Company
and entitled you to ten percent of the profits made. The value of the stock
would, in theory, go up only if the Company acquired more ships and trade goods.
Of course mental formations, although void of substance, have a powerful energy
when millions agree to believe in them. From the earliest days of capitalism the
phenomena of "speculative bubbles" made themselves felt. As company shares
traded hands, the value become divorced from the underlying reality it was
supposed to represent. The value of a share was no longer based on how many
ships the company had, it was now based on what the buyer and seller mutually
believed it to be. If the buyer believed he could later resell it for more to
somebody else, he didn't care about the underlying value.
This is sometimes called the "Greater Fool Principle." If the value of a company
share in terms of the real goods it represents is, say one hundred dollars, a
person would be a fool to pay one hundred and fifty unless there is a greater
fool out there to whom he can sell it for two hundred. The value of the share
becomes a pure abstraction. You might as well be trading tulip bulbs. Or
"credit-default swaps."
The problem, of course, is that inevitably you run out of fools. Then the whole
bubble bursts with frightening rapidity. The whole thing would be comical if the
abstract world of imaginary numbers on bits of paper or computer disks didn't
rebound back on the real world. Many 17th century Dutch burghers had sold real
assets like land or ships to "invest" in tulip bulbs. Many, many people today
have put the earnings of their labour into the stock market or other financial
instruments that were pure bubble. Real goods thrown into an imaginary realm.
Now, after several centuries of elaboration, we are into a fantastic realm of
abstractions of abstractions. Fractional reserve banking creates money which is
based on nothing at all, not even bits of paper. And understanding the levels of
abstraction involved in derivatives is a special science. The "value" of the
derivatives out there is said to be ten or fifteen times the combined GDP of the
whole planet. Tulip bulbs.
The imaginary nature of the financial world is very clearly illustrated when you
hear, after a market downturn, that so many billion or trillion dollars of
wealth have disappeared. That "wealth" was never there in the first place. What
has disappeared is the agreed upon mass delusion that such wealth existed.
It will be interesting to see what happens next. So far the world leaders seem
to be reacting out of panic and fear. Huge sums of borrowed money are being
pumped into the bubble in a mad attempt to keep it inflated. The Stadtholder is
buying all the tulip bulbs with money borrowed from Venice.
The state, really the community as a whole, has now become the greatest fool,
the fool of last resort. The question is, what effect will all this movement of
imaginary numbers have on the real world of work, clothes, food and housing?
Real goods will probably become scarcer for most people either through higher
taxes to repay the stupendous debt load or through hyper-inflation of the
currency to eliminate the debt that way. There will be pain, material existence
will become bleaker and harder and all because of the shifting fantasies of
purely imaginary conventions.
In the various schemes to restart the big ponzi scheme, you keep hearing the
phrase, "restore investor confidence." That gives the game away; the goal right
now is to get people believing once again in the magic money tree. Eventually,
we will have to face the need to get the real economy of goods and services
working. It may have to wait until the bubble economy collapses back to it's
natural state. Then there may be a general realization that you can't get
something for nothing, no matter how inflated the imaginary numbers are.
If the collapse is as complete as it looks like being at the moment, there will
inevitably be a restructuring of the world economy. What shape will it take?
What shape should it take? I don't have the slightest idea. I've long ago
stopped believing in political utopias; this is samsara, after all, it's
supposed to be broken.
It might be worthwhile, though, to consider some basic values. Capitalism, at
least before it switched from managing production to flim-flam schemes, worked
pretty good in some respects. It did keep a very complex economy moving on a
global scale, and that is no mean feat. However, it was not so good at other
things, very important things. It has no built-in mechanism to conserve the
natural environment, and that is starting to become critical. It was never very
good at distributing goods to those who needed them most, and in recent decades
the gap between the richest and the poorest has been growing.
When thinking about an economic order, we should remember what an economy is
for; human comfort and health primarily and the satisfaction of lawful sense
pleasures secondarily. The first priority should be to make sure that every
person gets the sufficiency of a decent life, i.e. the four requisites of food,
shelter, clothing and medicine. After that, the surplus should be rewarded to
those who are most energetic and creative in producing wealth for the general
community, certainly not to those who are most clever at manipulating mental
abstractions like derivatives and futures. In other words, reward production and
creation, not speculation.
In any case, we are in for some changes, but that's always been the case.
See Also
Source:
http://bhikkhublog.blogspot.com/2008/10/brother-can-you-spare-700-billion.html
|
Search
