Definition of Economy: (n) (pre-1393 B.C.E) from the Greek oekonomia, from oekonomos – meaning manager or steward Barnhart Concise Dictionary of Etymology Harper- Collins (pub.)
The funny thing about Congress is the number of allegedly intelligent, educated and reasonable people accumulated in one room at any particular time.
But for all of the extended levels of education our legislators claim, they’re still some of the dumbest people on the planet. I point out the irony of the fact they can’t quote (for the most part) the definition just given by a layman (me). (If you don’t believe it, ask a “Lege” (legislator) where the word originated. It’ll prove enlightening and troubling.)
Economics, as practiced on the world level at this time, is based on this ignorance.
Originally, an economy (personal or governmental) was based on a value placed on a material or some form of goods used in barter (trading one thing for another of similar value). Ultimately man appreciated and/or treasured certain materials more than others. Gold, as an example, was given a specific value making materials dependent on the ratio of goods offered for the weight of the gold necessary to barter. In antiquity one ounce of gold could be the equal of a small basket of wheat. The weight and size of the vessel holding the wheat became standardized and for that time, that basket equaled one (1) ounce of gold. Wheat sales then followed this pattern.
It worked for millennia. Then a guy named John Maynard Keynes (as well as others) came up with this theory that no real standard was necessary because monetary dealings were based on the circular flow of money (remember that term). Your spending goes towards some other person’s earnings. When those earnings are spent that person is supporting some other person’s earnings. As long as this continues it’s supposed to support the function of countries’ economies. This is basic Socialism. But, as Margaret Thatcher said, “The problem with Socialism is sooner or later you run out of other people’s money.”
Keynes theory is no more than that: a theory. It pits one wage earner against another in the sense that one worker must earn and produce an income and economic growth through the spending of his resources. This in turn supports the next guy hired who does the same for the next guy after him and the next guy ad infinitum-ad nauseum. But with the advent of Welfare (Subsidized Economics for social programs), the workforce diminishes while governmental spending increases. The “money pool” starts to dry up as participants step out of line to support the next guy.
This form of economic theory was best understood recently by a Hedge Fund operative – Bernie Madoff. His business was what’s called a “Ponzi Scheme”. Each subsequent investor supplies the dividends paid to the prior investor. All works well until the program plateaus and there are no more investors. (Check Social Security’s operative theory and see what you think.)
The major difference was that Keynes saw the government as an entity unto itself. There was no concept of government being representative of the people. The government could act to “prime the pump” so to speak, and decide the direction of the economy by the printing of more or less money when necessary.
Unfortunately, this is through the usage of “Scrip” (paper money) given a governmentally defined value. As it has no value beyond what the government claims, it has a “yo-yo” effect on the market. As the money carries the value stated by the issuing country, it only has the value stated by the accepting and/or competitive economy. A Dollar’s value; a Yuan (Chinese), Deutsch Mark (Germany), Pound Sterling (England) etc., can drive the value of the others up or down on the world market. International trade; goods produced against those sold across national borders has an effect.
In other words, because there’s no real substance backing up the value of a monetary system, there’s no real control exerted other than the theoretical ones offered by the people mentioned at the top of the column.
So; where’s the real stewardship of this most important matter of human endeavor? It’s in the hands of people not even knowing where the words they use come from.
Thanks for listening.