Pyramid Comment

This journal takes an alternative view on current affairs and other subjects. The approach is likely to be contentious and is arguably speculative. The content of any article is also a reminder of the status of those affairs at that date. All comments have been disabled. Any and all unsolicited or unauthorised links are absolutely disavowed.

Monday, September 17, 2007

Keynesian Monetary Theory

Economic Theory

"...radical idea that governments should spend money
they don't have may have saved capitalism."

A truly bizarre concept. Unless no thought is given to the concept of interest, loans and inflation. The cyclical mechanism that perpetuates growth. Investors require a financial return that enables growth to 'create' money. It's a ludicrous system. Everything costs more because of the growth and the consequential inflation so nobody actually becomes better off. The illusion (or rather delusion) is that they do.

Wealth Creation

The joining of the two concepts of economic theory and wealth creation produces an interesting paradox. The start of the decline was very possibly right at the outset. It was part of The Plan. Global economic strategy has been based on the "original" Keynesian ideology for a long, long time.

Individuals play one credit card against another. Paying off one loan by extending another. Little conceptual difference between a building society (bank) doing this as a business and the private arrangement. A borrower. Northern Rock (the business) was borrowing money from banking institutions to then be able to offer private mortgage loans to individuals. The borrower pays Northern Rock a higher interest rate than it pays the original lender.

Bank Inter-lending
Glossary of Statistical Terms