Saturday, January 3, 2015

Markets are not a natural, impersonal force like rains or earthquakes

From a recent article by the Economist on what happens to countries when they default on their debt: "As punishment for default, capital markets will either impose punitive borrowing rates or refuse to lend at all."

It is made sound as if it were a natural force, a kind of passive tense without an actor, a force majeure of impersonal justice. We must, however, remember that what is made out to be an "invisible hand of the market" is in fact a bunch of people who by arbitrary controlling the value of the main exchange currency, the US dollar, hold nearly the entire world hostage: the 55 trillion that the world owes, as if to an impersonal natural force, is not even paper. It is digits in a computer, whose value is created out of nothing by the fact of borrowing. 

When Russia has recently lost half of its currency value, nothing happened to its real, physical assets, instead an imagined value went down RELATIVE to another imagined value controlled not by some impersonal and disinterested forces, but by a number of private profiteers, seeking nothing but personal gain at the expense of the welfare of whole nations. However, because the imagined value of digital money is used to measure the value of physical assets, control of the former allows a full control of the latter. It is as if someone had the right to decide, at their will, how many grammes are in the kilogramme: today 800, tomorrow 1200, and then buy and sell gold according to those values.

No comments:

Post a Comment