In the US, the concept of sacrifice and building for a better tomorrow has been pushed aside by our live-for-today, easy credit and consumption-oriented society. As many are beginning to see, low savings rates can be a problem. In healthy, productive economies (
like China?), savings result in increased investment, additional R&D, a stronger overall economy, and an improvement in the average citizen’s standard of living.
Think of the central bank (Federal Reserve System or Fed) as the bank of banks – the gatekeeper of the US economy. The Fed’s two main goals are to help stimulate economic growth and to try (
yes, try) to keep inflation low. The Fed has a tremendous amount of power and a monopoly control over money and credit. The chairman of the Fed is more powerful (or accorded with more power?) than even the president because he (
or she) has so much control over the economy. The Fed is the key to how much money and credit is in the US economy in any given time. This is due to the fact that the US currency (
with due respect) is a fiat money – in other words, it is not backed by anything tangible, and therefore it can be created out of thin air. (
The Bretton Woods lasted until 1971. Since then, the US dollar is used as a faith-based currency – the global economies just assume that the dollar possess a certain value useful for international trade and transactions. No coinciding amount of tangible treasure, for example gold, is used to back the dollar.)
It is important to understand how the international money system works. In the 19th century, and up until 1971, gold was beneath the paper money floating around the world. You can’t create gold. You have to dig it out of the ground; it’s hard to get; and there’s not very much of it. But paper money (
fiat money) is different. Since 1971, with no gold to back up the paper, all we have is paper. That means that you can create a lot of paper and you don’t have to connect it to gold. They’ve been creating US dollars like crazy for the last 20 years (
1988 onwards) and now they’re creating them even faster. They’re not down in the Treasury Building, with a little-bitty glazier printing press, printing out bills; they’re created by electronic transaction. They can just credit a bank with money and then the bank lends out money.
The whole thing now has gotten so out of control. Too much easy credit for too long can create a false sense of wealth, as we saw in the tech and real estate bubbles.
Our whole society is in trap where it is spending more than it can afford and is transferring its assets. Foreigners end up with our money and they use the money to buy US assets, and so Americans become less and less likely to own their own property. And we’ve seen this, of course, in a very fundamental and simple way in the housing market. The average American (barely) owns half of his (
or her) house. Who owns the other half? The neighborhood bank has sold the mortgage to a financial company, which probably sold it to a hedge fund. Now it’s floating somewhere in the great wide world. It may be in the hands of the Chinese financiers or London speculators (
what speculators?!). It doesn’t seem fair to me (Bill Bonner) that these poor children coming into the world should come in with so much debt on their shoulders.
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I.O.U.S.A. - One Nation. Under Stress. In Debt. is written by Addison Wiggin and Kate Incontrera (2008: John Wiley & Sons, Inc., NY)
Pix source:http://www.bulldogblog.net/articles/wp-content/uploads/2009/02/money.jpg
Extinct languages are different than “Dead” languages because dead languages (like Latin and Sanskrit) are kept alive by scholars who study them. Extinct languages are permanently gone when the last native speaker dies. Though Aka Bo is the most recent language to disappear, it may not remain the world's last forever. It is estimated that half of the nearly six thousand languages spoken in the world will become extinct within the next 200 years."
