As the international financial houses rock once again, this time due to the failure of the US Government to act to prop up the system, shares plummet and banks turn one on another and, understandably, people are worried about the future. However, a lot of the problem is due to a failure of perception. In the end money is not a resource in itself but is a token for goods and services to be redeemed later. Our financial wizards have found too many ways of acquiring money without paying for it with real resources. It is perhaps not a coincidence that, as financial recession began to bite, we had already consumed all the resources our planet can produce this year. The critical day was 23rd September. So we are now eating the planet as reported by the New Economics Foundation. It’s not just the banks’ customers who have been living beyond their means. The credit crunch is sending cracks right back to its source.
“New Economics” has been around for some time and its proponents have long warned us about the dangers ofÂ de-couplingÂ finance from the real productive economy. Cloisters ran a series of articles by Margaret Legum, in 2006, which explains the problems well. You can catch up with them in our archive by following these links:Â What is âNewâ Economics?,Â Bringing Capital Down to Earth, New Taxes, Creating New Money Debt Free, Passing Revenues Through Government, and The Global Dimension. Margaret Legum also published a book on the subject calledÂ It doe$nât have to be Â£ikeÂ Thi$, published by Wild Goose Publications, 2003.
If we are to weather this current financial storm, we would do well to learn the lessons and only spend money which is backed by real resources. The message of New Economics and the shakiness of the old economics should remind us to pay for the world’s resources that we use with money that we have earned.