Financial Crisis 4 April 2009

Financial Crisis 4April 2009
Andre Willers

4 Apr 2009



"A trillion here , a trillion there . Pretty soon we'll be talking real money ."

Or any money at all .



Post-Monetarism .

Money's only purpose is to serve as a one-to-one counter for real wealth .

Real wealth is measured according to the criteria set out in

http://andreswhy.blogspot.com "Financial Crisis 31 Jan 2009"

Mainly

It is to satisfy the human needs , weighted according to the Maslow hierarchy .

1.Air to breathe

2.Water to drink

3.Food to eat

4.Clothes

5.Shelter

6.Weapons

7.Novelty



Deflation .

This happens when real wealth increases faster than the growth of the monetary system .



This has been of real concern just before the present crisis .

In fact , it is the present crisis .



The system hunts for stability by creating money in futures .

It creates money by discounting future earnings .

The Central Banks are not creating money fast enough to keep up with the accounting demand .



Literally billions of people are hauling themselves up by the their bootstraps . Creating enormous wealth . The number of dollars , euros , yuan , etc in circulation is not sufficient to reflect the wealth . But the governments concerned try to limit the creation of new money , under outdated theories .

The system promptly bubbles up in futures , which are inherently more unstable than a currency .



Historical examples :

There are many . I will mention two :



1.British Empire circa 1880

A gold based trading empire in an industrial revolution created wealth faster than the discovery of new gold , until the South African goldfields . This created an explosion of wealth .



2.The 1929 crash .

Post-WWI created new wealth , but the monetary system did not keep pace . A bubble in futures (stock exchange) followed . In the ensuing collapse , wealth-creation was decreased . War , in other words .

But the system enforced balance .



And for now ?

The fear is that inflation might follow the creation of trillions of dollars .

The real problem is that they are too modest .



The point is that the excesses of futures transactions reflect a real shortage of money .

The system needs and will need a continuous creation of money just to keep up with the demand in real-wealth creation .



Look at the scale . The world economy is about 100 trillion a year . Wealth creation is about 10% per year . This can be summed , even for the last 10 years this gives a demand for money of about 100 trillion dollars . The money creation systems cannot keep up .



Can you see why we are talking about post-monetarism ?

Any conceivable command-and-control mechanism cannot hold .

It will , and has , fractured .



An example :

See

http://andreswhy.blogspot.com "Negative pressure : an important update"

If this technology is patented through the Danish embassy in Second Life , future income streams are irrevocably fractured . Linden dollars will become one of the hardest currencies on the planet .



How does this affect you right now ?

If you have any exposure to hedge-funds or futures , get out now . Immediately .

As far as I can see , the funds have been given an extraordinarily wide leeway , but they still have been using short-selling to panic the sheep .

I estimate their exposure to be about 10 trillion on the positive side . This will be dumped into the Market as the new measures come into effect .



The day of the unbridled hedge-fund , like the cheap car , is over .



After that , roughly 20 trillion a year for 5 years will have to be created just to wipe out the back-log .



But in the meantime , wealth-creation will be proceeding at an exponential pace .



Money will become increasingly fractured and meaningless .

New ways of accounting will develop .

I draw your attention to Denise Schmandt-Besserat "How writing came about" (ISBN 13 978 0 292 77704 0 .

She shows conclusively that writing developed out of accounting practices over a period of 4 000 years .



Similarly , new accounting practices for fractured systems will need new descriptive terms .



And so it goes .



Andre