In his recent essay, "Economic Dis-Equilibrium: Can You Have Your House and Spend It Too?" published in Edge.org (9/24/08), technology historian George Dyson (son of renowned mathematician and theoretical physicist Freeman Dyson) reveals a root cause of the impending implosion of our global financial system:
"The unlimited replication of information is generally a public good. The problem starts, as the current crisis demonstrates, when unregulated replication is applied to money itself. Highly complex computer-generated financial instruments (known as derivatives) are being produced, not from natural factors of production or other goods, but purely from other financial instruments."What we see today is how something good and useful can be corrupted into something very harmful. All it takes is for hubris and greed to replace moral purpose and sound principle, not to mention a basis in reality.
The undisciplined securitization of debt, and the hyper-proliferation of derivatives born out of complex financial algorithms devised by Wall Street's best minds, have taken the rational management of risk and turned it into a gambling spree. As we know, gambling can become another form of addiction — so now we have ended up with gambling on gambling on gambling.
Louis Kelso, father of binary economics, predicted the present mess as the consequences of a system of monopoly capitalism enslaved to past savings, which mistakes financial symbols for real goods and services, channels money and credit for production to the haves and money and credit for consumption to have-nots, and keeps government in rising debt with future generations footing the bill. Kelso also provided the way out. (See "A New Look at Prices and Money: The Kelsonian Binary Model for Achieving Rapid Growth Without Inflation," by Norman G. Kurland.)
Rather than "eliminating" money and the banking system, as some are calling for, we need to return to the original purpose for which these things were created. These are "social inventions" that are part of the "common good" to which every individual human being is entitled to have access. The problem is that power and access to social goods have become so concentrated that the "good" has been misused for the benefit of a few. Our money and credit systems have become debauched.
The plummeting (and rebounding) stock market is not what really worries me. It's when the real productive economy that feeds, shelters and clothes us, grinds to a halt for lack of sound money and credit.
We should be wary of throwing out the baby with the bath water, ere we wreak even greater havoc upon ourselves. Hopefully the Just Third Way message will be heard, that money must represent something real, that it is a promise that is meant to be kept, and, if created and used properly, is a social good that can turn powerless have-nots into economically liberated haves.
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