Value of Money

Does the value of money matter? This is the primary divide between left and right wing economics.  To the Conservative, the idea that old money becomes inflated away is an anathema.  To the Progressive minded, the idea that there is no social churn, allowing social mobility upward is worth it but still possibly hopes that does not mean inflating away wealth. Accumulated wealth is only power if not attacked by time.  Investors with large funds therefore must hedge themselves against extreme market turbulence while increasing their capital base by accumulating returns.  When the Government invests in reducing interest rates, it is effectively transforming the sovereign wealth to protect an early version of some horror monster that can leave massive footprints on wealth.  An important part of progress is not to accelerate risk beyond the ability of the state to meet it.  When there is relatively no state, as in a tax haven, then wealth is not tied to the fortunes of people.

The balance between state and the potentials of commerce that grows across borders inexorably is challenged

The Price of Gold

The price of gold was once $35/oz.  Last time I looked it was looking like it would exceed $1900/oz.  And now it is falling past $1,500/oz.

The taxing of bank accounts by Cyprus has sent a shudder down the spine of the very wealthy who believe tax shelters provide a safe haven.  However, without Government backing, their accounts are vulnerable to runs on the bank.  It was only EU intervention that saved them from a disorderly default by Cyprus.  Maybe that would have been better for the rest of the EU.

And now we see that the price of Gold is also vulnerable.  Indebted countries may have to see off their gold reserves to cover their debt and this sudden increase in supply depresses prices.  Also affects the very wealthy as only they could afford to invest in gold as a “safe” place for their liquid assets only to find that their own actions to avoid taxation now produce instability in every capital market.

Horror of horrors.  Wealth may have to be invested in business.  Building wealth for others and a fair level of taxation provide the stability that wealth needs.  Continued investment in tax shelters and avoiding mutual responsibility by favouring speculative investment over long term business building threatens wealth as well as welfare.


Social Economics

The blood supply can suffer from pressure or the lack of it. A well beating heart is the key to health and the functions of all parts of the body. The ancients bleed the system when pressure got too much risking ruptures or arrhythmia   A single point of failure is risky.  By putting pumps all over the body, and charging us for the privilege, the banks have effectively added multiple points of failure. So the system can go crazy hot or it can leak.  Offshore tax havens starve the tax payer from the benefits of prosperity.  Sometimes that selfish money finds its way back in along with bailouts to try and restart the engine.  All this extra capital sloshing around is hyper inflationary, but nobody is able to take advantage and grow as the capital leaks out.

We are giving the banks our pensions and lowering our cost of living as our numbers increase too far. The disturbing trend is that Governments stopped trying to prevent poverty.


Originally a comment in the Guardian in reply to article The Cyprus crisis is a symptom of what is rotten in the EU by Slavoj Žižek



The problem with Cameron’s argument is that a nuclear weapon is only effective if you do not use it.  Can you imagine a non-nuclear state being attacked by a nuclear state?  Can Cameron imagine giving the order if he was told that a possibly nuclear missile was headed toward Newcastle?   How would he respond?  We assume that nuclear weapons protect us from nuclear war, but it is more correct to consider that they make conventional war far more of a risk with a nuclear armed state.

A nuclear exchange we presume would come from somewhere else, but it was the USA and UK that occupied Iraq in no small part due to being able to sell the fear of their (fictional) WMD stockpile. We were more likely to use WMD than Saddam.  North Korea and Iran may well be a threat.  If Iran attacked the UK with nuclear bombs many innocents and many many Muslims would be killed so it not likely.  North Korea can not bomb the targets they keep boasting about, and then have enough to bomb the UK as well.   It is also hard to imagine what an enemy would want from a radioactive Britain.  It is the balance of our actions and theirs that is the real deterrent.
In the end progress and civilisation have overtaken barbarity but we still do not believe we can trust other human beings because they are like us.
Why even worry about a new Trident?  The older bombs still deter fairly effectively.  Why not spend the dosh intelligently so that we can protect vessels from pirates, air planes from terrorism and and our citizens from road accidents.  More lives would be saved.
And in response to a post with the usual rational argument supporting Trident as an effective deterrent when the rest of the military seems to be under equipped in the aircraft carrier department.
Respectfully, these are very well trod arguments for spending money in a way that produces nothing of any value except to scare off dictators.   There simply has to be a better way to deter potential adversaries than threatening to kill every living thing if they became too hard to beat with conventional weapons.  Strong conventional forces are also a deterrent – one that can actually be employed.  The argument should not be won by the logic of threatening to use weapons that we can not. It should be in comparison with spending those funds differently to protect ourselves successfully.

The secret of economic growth

Economic arguments polarise into Right vs Left arguments.  How about recognition that our democracy allows change and adapting to the environment is what we need to do more of.  What are we, the British public, doing to export more?

Businesses need to take note that tax-haven economies are inherently unstable and can go belly-up.  Governments at least provide ballast.  Ultimately we will do better because the EU will cause economic growth.   If we build infrastructure it will be there to grow into, if we do not, growth is no longer possible.
(published as a comment in The Telegraph here)