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matthewleitch
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Posted: Tue Feb 10th, 2009 18:09 |
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There's an economic crisis in the UK and around the world. A real economic problem is where we discover we've been living beyond our means. We've been coasting, letting Chinese workers (among others) do work for us, selling us goods at unbelievably cheap prices. We've developed lifestyles that are staggeringly inefficient at converting work and other resources into long, happy lives.
There's lots of work to do to support our (aging) population and fewer and fewer people working productively to look after everyone else. That's the underlying nature of our economic problem.
In response, the government's first move seems to have been to try to encourage people to spend more money (to 'kick start' the economy) rather than to need less. Meanwhile, companies cut their staff, which usually involves paying people to go home and do nothing until their notice period ends. That doesn't make much sense for the companies in the short term (and perhaps not in the long term either), but for the country it means that, although there's lots of work to do, more people are sent home to do nothing.
What I think is happening is that decisions are being made on the basis of models and arguments in terms of money. The trouble is, it's very hard to understand the money system and theories about how to control it are often wrong.
In contrast, it's relatively easy to understand the basic, real economics of our situation and what we need to do. We need to develop lifestyles that are more efficient at converting work and other resources into long, happy lives.
If we can think in terms of the real economic problems, without being confused by arguments about money, then perhaps we can return to the subject of money with a clearer view of what needs to be done. Then perhaps we can revise our money system so that it motivates people to do things that make sense in real economic terms too.
At the moment I don't think that's happening but I'm wondering if I'm alone in thinking that purely money-based strategies are a dangerous idea and we would have a firmer foundation by looking at the underlying situation of real resources and lifestyles. Any comments?
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simontsao
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Posted: Wed Feb 11th, 2009 03:22 |
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| The traditional approach by the Government in world recession is to increase money supply and government spending, which is the obviously move in classic economy. When we examine the term 'money', we refer to a media of exchange for value of goods and services. This is what went wrong. If we look into what has been happening in the failure of Lehman Brothers, management rip off fortunes of the Company by declaring bonus and wealthy benefits before the collapse. Salaries as we understand is the reward of services and should therefore linked with performance of the Company, and not what people anticipated as 'market price' because there may be distortions. The call for restrictions in management remuneration as part of the rescue plan in the US clearly demonstrated the fact that corporations often overpaid the management irrespective of performance. The only action they take after the shareholders' grumble was to sag the CEO but the harm had already been done. This is an issue for the distribution of wealth and the only way out was to release the wealth being retained by those few who benefit from this economic turnmoil. Speculation should be put to a stop because it makes rescue plan ineffective and that public monies had been spent to endless demand. The 'fair value' model which was once favoured by financial analysts had now been suspended because it reflected disastrous picture of what lies ahead, but is this a proper approach? As we all know, stewardship means consistency, simple and easy to understand. Now we have breached all the above by introducing new standards. What is worse is they are now even proposing a new format which is even harder to understand. We are known to be 'prudent'. When I looked up to the Accounting Standards, 'prudence' concept was not found in the new standards as a fundamental accounting concept. We lost our fortune, and we have lost ourselves.
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elderbank
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Posted: Wed Feb 18th, 2009 20:29 |
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For those who have observed that "money" is the basis for the solution to our economic problems, I respectfully request that you listen to the "final word" of the verbal interview that I have given about this slide show that I have authored, on this site. It can be listened to at: <http://www.audioacrobat.com/play/WQ0prrWs>
David C. Jones FCCA, CPFA (UK)
Last edited on Thu Feb 19th, 2009 11:17 by SuzyOrr
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sandymiss
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Posted: Mon Jul 6th, 2009 01:34 |
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Thanks for sharing this useful information. It's great.
credit auto
Last edited on Mon Jul 6th, 2009 01:34 by sandymiss
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Kalyan338
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Posted: Mon Aug 24th, 2009 11:38 |
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| Thanks the audio is really worthwhile
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Sadiq Ali
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Posted: Sun Nov 1st, 2009 13:30 |
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| Audio was really good.
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SSLK
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Posted: Sun Jan 3rd, 2010 21:19 |
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Money system is indeed the core reason of the economic crisis. In my view, it is not at all difficult to understand the contemporary money system and how it is at fault by reading the following book:
http://mises.org/books/desoto.pdf
Sound money is the key to the prevention, in the future, of the economic crisis of the sort we have witnessed. What 'sound money' is should become clear from the above book, but for a more direct reference I recommend the following book:
http://mises.org/books/whathasgovernmentdone.pdf
Sergey Lozovoy, ACCA student, PwC
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