Wednesday 24 April 2013

The Flowers That Bloom In The Spring

A long day; having been marched off to take my annual identify the spring flowers test.  Yet another fail.  Ragwort, Deadly Nightshade and Poison Ivy can be managed but alas the others always escape me.  The lesson is that what people see may not be what they think it is.

Much the same might be said of the world’s money markets.  With so many, if not all, of the worlds largest currency blocks, all showing serious or even potentially catastrophic signs of weakness they are all “sell” options.

The trouble is that the currency units which remain strong enough to be a “buy” are nowhere near enough to cope.  Moreover, as small elements it does not take much of a move to send them rocketing beyond any real value.  This is not investment as we know it.

So how are the existing major currencies being propped up?  This is hellishly complex in its operation and working but essentially quite simple.  The major blocks of currency are being bought by the same people that sell them.  In a roundabout way, that is.

It involves all that “quantatitive easing”, that is creating money by imaginative use of figures by central banks, the issue of stock in the form of borrowing by governments, and the raiding of savings, public sector and other pensions funds and the rest to provide the borrowing plus allowing the money men to do their bit in pushing the dodgems about.

For Keynesians, they are reminded that his major work is called “The General Theory of Employment, Interest and Money”.  It may retain its validity if what is going on bears some relationship to reality.

But when a lot of the “employment” is essentially in non or non-productive jobs that is one problem.  When the money is out of control that is another.  But the linchpin is Interest and this is the compass by which a course is plotted. 

If the depredations to savings and other financial methods effectively destroy the function of Interest and replace it by trying to play velocity games around the financial gambling tables then the risks are very high.

All this might work for a short time with a brutal application of discipline.  But there are all the signs that it is not working and not going to.  The other ancillary problem is who the governments have trusted to make the thing work.  In the USA and the UK this is bad news.

If you employ numbers of people who are basically crooks or incapable then lots of money is going to disappear out of the system into the pockets of a few never to be seen again.  So all your policies are never going to work.

As Grannie used to say, you do not ask the chimney sweep to clean the windows and you do not ask the window cleaner to hose down the chimney.  The link below is a long read but not difficult and is by someone who has been there as a police officer hunting frauds only to have his foxes given protection. 

If these are the people who the governments entrust to be securing our futures then the prediction is quite a simple one.

There isn’t going to be a future worth living in.

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