• The Razor’s Edge

    by  • August 14, 2010 • Everything Else • 3 Comments

    In Europe, we fought two senseless wars. World Wars, we called them, started over nothing but childish games of gain and loss. Whatever dreams of wealth and power were imagined to come from those conflicts were as nothing compared to the real gains that would have been made had the money, time and talent gone into the laboratories, schools and factories.

    Now we have a slightly different problem: everybody has lent money to everybody else, at fierce interest, and now there is not enough money for all to be paid back. This has the name “crisis” not because it takes the bread off the shelves but because the rich cannot own a little slice of every life, and expect to get their share. The state worries not on their behalf, but on principle.

    But let me tell you where we started. In the age of Ford, the poor starved, and we did nothing. In the age of SUVs, the poor starved, and we did nothing. In the age of the Internet, the poor starved, and we did nothing. This so-called crisis is a crisis because it is happening to us, and not to our designated punching bags in the developing world who watch their children die with one eye, and coca cola advertisements with the other.

    Is it not true that this terrible thing we are afraid of now has been elsewhere eating into the human race for our entire lives, and because it was other people, we did not act? Why, then, when it is us who face the end of the money, would we expect others to act on our behalf?

    Poverty. The result of the banking crisis may well be poverty. But it is not the first poverty to exist in the world. Think about it.

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    Vinay Gupta is a consultant on disaster relief and risk management.


    3 Responses to The Razor’s Edge

    1. August 14, 2010 at 10:37 am

      What actually IS interest? I mean like where does it come from. Why does having money automatically entitle you to having more? What would be the opposite of interest? Money could decay proportional to its density. But by the laws of conservation of stuff it would have to end up somewhere. Think of it more like money having a positive charge. It takes ever more effort to contain a large concentration of similar charged money particles. And as the money particles get repelled from the large concentrations they naturally flow to areas of the least concentration.

    2. August 16, 2010 at 9:53 am

      “What actually IS interest?”

      Interest is how much it costs to rent money – that’s all. Same as a cost for renting powertools, you pay to borrow something productive for a time. That’s why its price, in theory, should also be set by supply and demand. But at base, that’s all it is.

      One might then want to ask: well, shouldn’t we have a powertool collective where we can borrow tools for free? I’m agnostic on that: the powertool collective has to pay for itself somehow, so perhaps a small rent is a reasonable approach. Works for credit unions – and at least that approach stops the money being morphed through some financial hall of mirrors into a million different co-existent forms.

    3. Chris Naden
      December 10, 2011 at 9:22 am

      Or alternatively:

      “What is interest?”

      The most successful single confidence trick every played. Literally; ever hear of a ‘collapse in market confidence’ or ‘consumer confidence’? Arbitrage -> price without value -> mythical wealth.

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