The World Turns

I read a quote, supposedly from Mayer Amschel Rothschild, a famous businessman: –

Permit me to issue and control the money of a nation, and I care not who makes its laws.

If that is the case, then who is controlling the world’s money?

We are, we represent the households in a ‘circular flow of income in a simple economy’.  We buy things, and pay for services, and we put money into the flow which then goes to firms/factories etc.  These use the money to pay workers, the money goes to the households again.

Circular flow of goods incomeWe control whether or not we allow ourselves to be persuaded that our wants are needs, and spend disposable income on things.  We control how well the retail, hospitality, construction, transport and tourism industries perform.  We control how well those firms and factories do.  We control how much their shares cost, and we control what products they release to a large extent (supply and demand).

The firms and factories, and the banks that finance them or finance the housing industry are all affected by our consumer confidence.  Yet they and the government they lobby with so much enthusiasm (and some might say, a little too much success) affect our lives by deciding what we should be doing; and making laws and the necessary informational materials to raise awareness, get the message across and change our spending habits.

For example, cutting down on junk food and getting our meat and veg from farmers’ markets as well as supermarkets.

All of these things, and foreign investment, affect how well we all do and what we all do; affect what we spend money on and what we don’t, which businesses do well and which collapse, which banks prosper while others are in some way nationalised.

An imbalance of supply and demand in a key area of the economy, such as housing and mortgages, can be catastrophic, as the world observed again in 2008.  It had clearly not learned all that it could from the Great Depression of the previous century.

Who has the most influence?  By describing all parts of the economy as having equal control or influence over the economy, we leave ourselves open to the assumption that each part of the economy has equal influence over those other parts as well.

They don’t.

You do not have total control over your behaviour; there are laws which control your behaviour.  You will not, in the UK, go to a coffeeshop and smoke a joint.  It is illegal, and while there has been substantial discussion and controversy regarding marijuana – especially around the idea of making money from it as an industry instead of spending so much to stop its consumption – there is also substantial rival industry pressure and inherited feeling against it in this country which means that it will remain illegal for some time to come.  You may buy hemp cream in cosmetics shops and hemp seeds in supermarkets, although no sign of a revival of hemp clothes or hemp sails or hemp paper being mass consumed yet; not on the scale it was before the turn of the 20th century.

Another reason why you do not have total control over your behaviour being manipulated is because of the firms/factories.  These people control your behaviour with marketing, targeted in times and places and with carefully thought out presentation which are designed for just that purpose.  If Apple is anything to go by, then some of them have had phenomenal success.

Who bankrolls all of this though?  Who controls if the money is available for the government to borrow to allow tax allowances to increase in order to encourage consumer spending and take first steps on the housing ladder?  Who controls if the money is available to campaign in elections, buy land, buy raw materials, start businesses, employ people?  Who controls whether or not you get that mortgage which you saved to pay the deposit on, or if you can afford that holiday or buy that car?

Banks do.

Since banks influence all of this behaviour they control how much we spend on housing, oil, cars, plane travel, etc.

They decide they have an investment in things we need and so they have large investments in housing, oil, cars, and firms/factories.

Banks may also have an investment not just in oil but also the arms industries, so that those banks with such investments could prosper from war in the Middle East and particularly from rebuilding projects.  Oil prices go up as well don’t forget, but we are the ones paying for that, not the banks.  If they fail, we bail them out; with money we borrow from their syndicates.

So what do banks need in order to do this?

Information.

An article called ‘I’m doing ‘God’s work’‘ in The Sunday Times describes how Goldman Sachs works and why it is so successful.  The reason why is because this bank monitors and analyses information on a second by second basis, and it uses near genius level academics to do this.  The information is good information; because they have their ‘retired’ CEOs in national treasuries, national banks and government advisory boards.

These people are likely to have far more influence on whether or not a firm has the money to lobby the government to change laws which affect our behaviour than you have over any of these things; and so the world turns.

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About TheImaginator

35 year old sciolist living in Tokyo. I like swing dancing, Twitter word games, writing, using Stumbleupon.com, reading, and watching movies. I write stuff on my blog occasionally.
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One Response to The World Turns

  1. Pingback: So you want a revolution? | Blog of the imaginator

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