Contributed by petem
“Society and civilisation as known in the 1960’s and 1970’s was now completely lost for all time. Inflation had brought about the destruction of economies of all the countries of the world. Even the communist bloc could not stand up to the rising prices and drop in the value of currency as greed and ambition slowly destroyed the unity which world peace had secured. With the destructions of an economy in any country, then the banking system also died so that the movement of money was frozen. Money itself could no longer buy goods and so on until the people, who had not starved to death began to barter for food”.
Excuse the poor grammar and structure please. This was the opening to a short story I wrote around 1977. I went on to develop a post apocalypse world where oil was the key bartering currency and was controlled by those who had the skills to maintain the crude pipeline flows, refining, and distribution. No need for managers, boards or shareholders, just skills.
Sound familiar? Mad Max the 1979 movie? Close? No cigar though. All this proves is that I, like many others I am sure, recognised the above scenario from what was happening at the time. The clever people were, of course those who came up with the Mad Max synopsis and convinced backers to fund the film. They succeeded because they made a profit from it.
So what was happening back then? The Cold war was in full swing with the 1973 oil embargo and inflation, during 1975 peaked at 26.9%. (I remember only too well working in a sales office taking phone calls from customers who wanted to buy stuff and adding 25% to the prices they’d paid just a month previously, now that is genuinely scary. That was in 1980 when inflation peaked at a more reasonable 21.9%).
So with all these things going on in the background we all got on with our lives and managed. Just like we always do. Maybe you remember those times too?
And now look where we are. That nice Mr Heath got us into the Common Market with the promise it would make us all better off and Britain a better place to be. Mrs Thatcher came along and sorted everybody out. Pity about the manufacturing base although our union friends may also have had a wee hand in that too. Scottish oil came along and the benefits were spent on… well nothing useful for the long term. Black Wednesday and the ERM. On that fateful day, I got on a plane in London at lunchtime with interest rates about 10%. By the time I got to Edinburgh the rate was up to 15% although it settled back to 12% later.
Let’s face it, we certainly knew how to create complete shambles of record breaking proportions and blow loads of tax payers money in those days. Does that sound familiar?
But like all things, records are there to be broken. Not content with the much worse 2008 crash we are now approaching a crash of significant record-breaking proportions, which may well make Mad Max look like a reality, which we just can’t aspire to.
There has to be an answer to this. I don’t see anyone one tackling the underlying issues, which need to be addressed. I don’t see anyone coming up with a solution, which will avert another crash. I do see a growing danger that we’ll end up with a world record mess, which will devastate the economies of Europe, the USA and Australia at least. Ouch.
I have another question, which I’d like answered. Who, apart from George Soros, has all the money lost during all of these crashes and adjustments, (insert suitable euphemism to personal taste here) etc.? I know it isn’t me nor anyone I know. It must have gone somewhere? Colossal amounts. Mountains of cash. It just couldn’t just disappear.
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17 comments:
My hackles go up every time I hear that name Soros, the MSM love him and always quote him in these troubled times he cost the taxpayers of this country billions during that ERM debacle. To me he is the enforcer of someone very powerfull behind the scene.
One often gets the overwhelming and dreadful dark fear that the human population is hell-bent on rushing towards self-destruction.
Perhaps Malthus was right all along; but we just haven’t found an efficient means by which to fulfil his theories, preferring to stumble blindly from one catastrophe to the next.
Hi pete
I think most of the cash is actually held as bonds. A country like China will buy bonds from countries which allow the country to put cash into their economy through public sector wage packets, payments for defence contractors, railway companies etc.
Actual hard cash is also kept but is only a small percentage of overall holdings. China for example has approximately $1.4tr in cash but holds a lot of US debt as bonds. The US has about $15tr in debt and the Eurozone about the same. The UK has about $4tr of that debt.
The interest rates on these bonds vary depending on how bankrupt a country is. Greece for example was paying about 20% interest to bondholders before being bailed out. It now pays about 6% although no one wants Greek debt ( bonds) at any price. This is why it has to be fully funded by other eurozone countries.
The UK is still paying about 3% on it's bond IOU's but this will rise as the truth about our insolvency becomes more apparent. It's going to be 'interesting' to see how the plan by France and Germany to start a fiscal 'partnership' amongst eurozone countries affects the UK. We might pay in bailout money via the IMF etc yet see our own economy tank as the eurozone becomes 'stronger'. I say stronger but this will be short lived. It can't outrun the eventual outcome of rising debt killing it off for good.
Subrosa, could you please put the author's name at the top of the article? Or use a symbol to show it is a guest post.
Since you can be fairly garrulous yourself, it took me a couple of paragraphs to twig the writer of this piece wasn't you.
Yes. Mr Soros doesn't appeal to me much either Jacobite. He's invested heavily in green causes and coal and oil. Spread betting? All perfectly legal. Morally? Maybe not so much.
The likeliest outcome is a constant slow fall over a very long time. Who really wants to rock the boat JRB? We are mostly pretty comfortable although we moan.
let's see what comes out of the blue tho. You never know.
Thanks RMcG. Lots of people got rich on the upside and the tax payer seems to have become impoverished as a consequence.
The fluidity of currency, money what have you is pretty interesting. It doesn't seem to be finite. It's created and then passed around in ever diminishing circles.
I saw an article which said the Chinese had greatly reduced their exposure to USA debt. Interesting times indeed but I'd settle for mre boring personally.
Hamish, your wish is my command. Apologies. I have no intention of misleading anyone.
In fact I will alter the post now and put the accolade to the beginning. Hope you're happy with that.
Thanks for the gracious response SR and prompt action.
It seems to me that the preceding generation just makes it a little worse for the next one, not intentionally right enough (although in some cases, as in Soros then yes.) It's a kind of shortsightedness people have, a gentle 'manuana' attitude/it'll all turn out fine.
I read a book called Enough by a guy called John Naish, an interesting read dealing with the notion of more isn't necessarily better. He talked about buying a digital camera, it's a microcosm of whats going on on a wider scale I think. You stand in the shop and look at camera that takes pictures and has a zoom but look, that other one does sepia (umm) stuff and this one makes toast... It's never enough, generally people always seem to want more.
Maybe at school and in culture generally we could teach the idea of 'enough', obviously in schools it would need to fit in with all the sex education and homosexual promotion ;-) but I'm sure they'll have time.
Saying all that, I don't want to be the one being shouted at by Tina Turner in the thunderdome either.
Pa broon, it's my opinion that my generation will be the last, for some time, who aren't overpowered by consumerism. The next few generations will take longer to learn that want differs greatly from need. It could be that my generation innocently encouraged our children to aspire to more and for some this was interpreted in a materialistic way.
Jings, I would have thought you'd be elated by Tina Turner shouting at you. :)
"Mountains of cash. It just couldn’t just disappear. "
Did it ever really exist? I haven't seen it except for the low value pocket sized units. Otherwise all I have seen is numbers on a page.
Interesting comments Pa Broon and Subrosa. Desirable or not it's amazing that people come up with stuff that other people want to buy. Continually. I totally agree that the stuff we buy has far more then we really ever need.
Of course it's something of a conundrum. People buy what they want with the money they earn, even if that goes to credit cards etc. How do you stop that? My parents had to contend with very limited hire purchase which greatly restricted what they could afford to buy.
New model needed for our new economy me thinks. maybe restrictions again?
Indeed Woodsy. It exists in enough if a form for it to be spent and for interest to be made on it. Smoke and mirrors.
Petem, a couple of my friends have cut up their credit cards in the past couple of years. They say debit is how they want to pay.
I like the protection a credit card gives as I sometimes buy online. That's my excuse for not cutting mine up.
Just reading the comments and one thing is clear, the cash you all are wondering where it went, It went the same place as the value of the sub-prime loans.It never existed except as numbers on a piece of paper. It is all reliant on the value placed on a piece of property, and depends on who controls the placing of that value, and important, will anyone pay that value. But cash and value are not the same thing. Cash depends on debt somewhere, and if the "value" of the debt,its worth if you like, is decreased by general agreement, then certain of the cash value just disappears.A change of sentiment could see the value increase and there is money for nothing. Smoke and mirrors eh. The time it hurts is if YOU have signed for the debt to buy the artifact, YOU have fixed a cash value on the DEBT, with your signature,and YOU are responsible for the cash value of that debt, not the artifact you bought with the debt, whose value can still go up or down.
Buy an article with a loan of £1000 and you owe £1000. Try to sell it next day and all you are offered is £500. You are down £500 if you sell. But if you wait , don't panic sell like the stock markets seem to be doing, in a few days some one may offer £1500, sell then, dont realise your losses. Remember, don't realise your losses by selling for less than you paid unless you absolutly have to.
Probably as clear as mud, but think about it and you will see what is going on. To those of you that already know all this and more, my apologies for boring you.
Thanks again Apogee. It's very complicated which was also the basis of the financial products the banks invented. Complication based on a flawed theory similar to the Emperors new clothes which created a ponzi scheme. I'm sure a lot of people made a lot of real money from it and a lot of people lost the roof over their heads.
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