Capitalism/Financial crisis tutorial Part 8

OK, now I have to explain a really simple concept that has become very obscure, before I can take you through more details. That is to tell you that there are two types of money/wealth, and I'm going to use non business terms, so don't expect to see this in textbooks ha. There is real money and fake money. (Real wealth and fake wealth). Here is an explanation and examples and reading this, you'll immediately make the leap in your own minds to why this is a dire problem today.

Real money is when you take a physical commodity (something that is real and you can touch) and turn it from low money to high value money. The author of the concept of real money is gold. When someone picks up a rock it has little or no value, unless it has gold inside of it. The person who finds the rock with gold in it has just increased his or her ownership of real money, from the value of just some rock that has little or no value to now "inventing" by virtue of finding it a rock that has value because it has gold in it. So let's say some old time western guy who was panning for gold finds one really good piece of gold in a rock. All he invested was his "time" (back before people had paychecks) so he literally created a real money value from nothing to something. If he sells that rock to someone who then has the facilities and knowledge to extract the gold from the rock, the gold finder pockets cash that was already in existence, while turning over to the buyer of the gold rock "cash" (gold) that, as far as the economy was concerned, did not exist before (since it was useless laying in some pile or rocks or in an ore vein underground somewhere prior to being found). So the rock finder has "invented" or "added" real money to the economy through his or her finding of gold. The gold "processor" who extracts the gold and puts it into a form that can be sold on the market also adds some "real money" because the work that he or she does in assaying and purifying the gold allows it to be put into usable form, and adds to the real money wealth of the personal or national treasury.

This, by the way, is why medieval scientists tried to make gold out of other substances using what they called 'alchemy.' Everyone throughout human history has understood and agreed that the finding of gold is a real addition of real money to a person or nation's treasury. Once gold is found it is real and always usable. So that is real money.

Fake money is obtaining cash (either literally or in theory, thus cash in your hand, or a promise of cash on "paper" in the form of ledgers) that represents wealth but is not an actual promise of wealth. In other words, fake money or fake wealth is a transitory transaction involving financial concepts, but it does not add a real substance (like gold) to one's wealth.

Now, an individual, communities and countries grow in wealth, prosperity, safety and security based on their addition of real money, not fake money. For example, suppose you found a bag of gold that you could use, and your town found a bag of gold that they could use, and your country found a bag of gold that they could use. All three entities have gotten real money and added to their wealth. If you were worth $xyz before the gold was found, you are now worth $xyz+the bag of gold.

All "value added" economies run on that principle. They take something that is real and cheap and transform it into something of real tangible value. Suppose a person, like my step uncle, built a house on some land that he had, using his own hands and obtaining his own materials. He would literally have created real money because where there was a blank space previously, there is now a house that can be seen, touched, lived in or sold. That is the ultimate in "value added," where his low financial investment (buy a few tools maybe, or buy fixtures he could not make, such as plumbing) is transformed by his paycheck free labor into something of high and constant value (a home). I say it is constant value because in capitalism, an object continues to have value even if no one in the market "wants" it so long as it meets its original subsistence usage, such as a house continues to provide shelter even if no one else wants to buy it. Likewise, that bag of gold that you found continues to have value even if you only have it hidden under your mattress and are not using it to purchase anything. Real money comes from objects that have been transformed from low or no value to a real and consistent, near permanent value.

Fake money is a device to take cash from one place and put it in another place. It does not add real value to the economy. I know some will disagree with my statement, but that is because they are jumping too far ahead in this concept and equating my term "real value" with the concept of "financial activity taking place." Just because fake money makes a lot of people busy passing it around, that does not make it "real." Real money is real even if it is not being used. That bag of gold is real even if you are not doing anything with it, and the house you live in is real even if no one else would want to buy that house. Fake money depends on, like a shell game, constant movement and activity because if that activity stopped, the fake money would disappear. THAT is the crisis that the economy is in now, in a nutshell. The proportion of real money and fake money has been completely reversed in the past forty years or so. While most of the economy used to be based on "real money," the masters of the universe and robber barons (along with well meaning but gullible people) have abandoned the recognition of real money and substituted frenzied activity using fake money as the "foundation" of the economy.

Real money is generated by the three classic ways: discovering a natural resource and extracting it (such as gold), taking a low value product and turning it into high value product (such as building a house), and by jobs that perform or rely on the previous two methods (for example, manufacturing).

Fake money is "generated" (or better said, "defined") by "doing things." Thus a service based economy is "fake money" based. This is because a service is performed for money (food prepared, recreation taken, a hair cut being given, etc) but the service did not result in money or value that can be seen, touched, preserved or value enhanced. You paid someone to cook the burger or cut your hair, but all that was is a passing of cash to the service provider, rather than building or creating "real money." Manufacturing is a real money job because the workers get a paycheck AND a value added good is produced (in theory, but much of what is manufactured today is garbage of transitory use and no real value). But in theory and in reality, manufacturing jobs generate real money based personal, community and national wealth. Service jobs do not. Service jobs just keep money moving into various people's hands and do not add to prosperity. In fact, they erode prosperity because manufacturing (and infrastructure maintenance) are not taking place, since people get their paychecks via fake money.

Think about China. Where have the manufacturing jobs gone, and the "real money?" Yep.

Worse, wall street masters of the universe, colluding with the service and consumer driven and obsessed society, took "fake money" to a category you can think of as "extreme fake money" or "fake money on crack." They invented "things to do with money" that moves fake money into bizarre places for bizarre reasons, concentrating the ability of individuals to become wealthy, but depleting the "real money" economy. It started somewhat innocently with the idea of paying interest for the use of money, which is how banking got started (although the first reason banks were invented was because people needed a safe place to store their money... they were not originally looking for interest in return or loans to be given). The first stage of banking was just to get the money out of the vulnerabilities of being under granny's mattress or the cowboy who might be robbed of his gold, and into a safe place called a bank. The second stage of banking was paying interest and giving out safe loans.

But then along comes the crazy eighties, on the foundation of the insane 60's and 70's. Money "managers" wanted to make more money than just their share of interest. And so they started "inventing" "financial tools" that are supposed to "increase wealth," but actually just generated a frenzied movement of money that then concentrates itself into the hands of those who keep it moving. They noticed things like foreign exchange trading, where they could buy a currency, wait for the value of that currency to go up, and then sell that currency, pocketing the profit. That then gave birth to all sorts of insane financial "instruments" where basically the entire economy became a gambling casino, but one where the masters of the universe controlled which way the roulette wheels would spin. So they would pretend to be helping clients "wisely invest their money," but what they were doing instead was eliminating sources of real money (such as manufacturing jobs) and promoting the exclusive use of fake money through constant financial manipulations. That is the reason this country is in such a horrible, horrible, horrible financial mess.

I'll let you take a deep breath and think about it.

(I hear the Pope has just made the same comments as me :-)

Beautiful words from Pope Benedict about God

http://www.catholicnews.com/data/stories/cns/0803977.htm

"Naturally, we thank the good God who has given us this earth and this Sunday flooded with sun."

The Sunday Mass readings, he said, "remind us that the greatest things in our life are things that cannot be acquired or purchased because the most important and elementary things in our life can only be given to us: the sun and its light, the air we breathe, water, the beauty of the earth, love, friendship and life itself."

The day's Gospel reading about Jesus multiplying the loaves and fishes is a reminder that "if we have received such great things from God, we must give in turn," the pope said.

"We must transmit to others the gifts of goodness, love and friendship, but at the same time we also must give material gifts to those who need us and who we can help," he said.

After reciting the Angelus, the pope visited the cathedral and spent time blessing children, the sick and the elderly gathered in the cathedral and in its courtyard.

Four moving spiritual images by the Pope

The Holy Father explained to the youth what the power of the Holy Spirit is:

"It is the power of God's life! It is the power of the same Spirit who hovered over the waters at the dawn of creation and who, in the fullness of time, raised Jesus from the dead. It is the power which points us, and our world, towards the coming of the Kingdom of God."

and

Faith teaches us that in Jesus Christ, the incarnate Word, we come to understand the grandeur of our own humanity, the mystery of our life on this earth, and the sublime destiny which awaits us in heaven.

and

The Fathers of the Church loved to see the Scriptures as a spiritual Eden, a garden where we can walk freely with God, admiring the beauty and harmony of his saving plan as it bears fruit in our own lives, in the life of the Church and in all of history.

and

Crucified, buried and raised from the dead, given life in the Spirit and seated at the right hand of the Father, Christ has become our great high priest, eternally making intercession for us.

***
These four samples from two of Pope Benedict's sermons and talks are absolutely beautiful and foundational of important aspects of our faith in God.

I like to point out something in the fourth quote in particular. I've often reminded people that Jesus Christ is the first priest-the high priest-of the Christian faith, the priesthood which is faithfully maintained in the Catholic Church. I have also reminded people, and I'm glad to see that the popular press has started mentioning this much more-to their credit-that the Pope is The Vicar of Jesus Christ. The Pope is Jesus Christ's Vicar here on earth on his behalf. Now in this quote we are reminded of a third aspect of this relationship. Jesus Christ, first priest, "continues" to be humanity's high priest in heaven. So as the Pope is Christ's Vicar on earth, Jesus Christ continues in heaven to advocate for humanity and intercede to God in Jesus Christ's eternal role as humanity's high priest.

I think meditating about these roles and relationships make doctrine clearer for both Christians and non-Christians, who find the Trinity to be confusing and perhaps "God replacing," which it is not. (Thinking about this will probably help Catholics understand their own doctrine too!) But I am thinking with good will and friendship of our Muslim brothers and sisters, and offering another piece of the puzzle of mutual understanding. The understanding of Jesus Christ as the Son is confusing and contrary to understanding of how the Qur'an addresses that God does not need a "son." But there were accusations and misunderstandings about what being a "son" really meant, and the teachings in the Qur'an were meant to put completely to rest a kind of pagan understanding of a "son," accusations of which were made in both heretical Christian representations and among unbelievers. So while I do not want to write a long explanation in this comment, I wanted to prepare the groundwork by giving an image of our true doctrine that is much more easy to understand. Jesus Christ is the eternal high priest on behalf of all humanity, where he serves God in heaven by offering his intercessions and advocacy for humanity. As Muslims have come to understand much more clearly how the Pope is the Vicar of Jesus Christ on earth, the mirror image of the vocation is much easier to understand, that Jesus Christ continually sits at the right hand of God, who we call the Father, offering intercession for humans.

I hope this helps. Bless the Holy (earthly) Father ("Papa") Pope Benedict XVI! He has such a charism and grace of scholarly yet also accessible explanation of our Christian doctrine!

Important quotes from the Pope

http://www.smh.com.au/news/world-youth-day/pope-warns-against-the-lure-of-false-idols/2008/07/17/1216163059279.html


He spoke of his daunting flight from Rome to Sydney and the view from the plane of "the sparkle of the Mediterranean, the grandeur of the North African desert, the lushness of Asia's forestation, the vastness of the Pacific … and the majestic splendour of Australia's natural beauty, which I have been able to enjoy these last couple of days".

The 81-year-old voiced strong regret that these resources were in danger and warned Earth's natural resources were being squandered to fuel "insatiable consumption".

And though the images of his arrival were being broadcast to an international audience of more than 1billion people, he had a warning for the internet and television generation. "In our personal lives and in our communities we can encounter a hostility, something dangerous, a poison which threatens to corrode what is good, reshape who we are, and distort the purpose for which we have been created.

"Examples abound, as you yourselves know. Among the more prevalent are alcohol and drug abuse, and the exaltation of violence and sexual degradation often presented through television and the internet as entertainment."

He told the young people not to be fooled by those "who see you as just another consumer in market of undifferentiated possibilities, where choice itself becomes the good, novelty usurps beauty and subjective experience displaces truth."

The Pope railed against domestic violence and abortion, asking, "How can it be that domestic violence torments so many mothers and children? How can it be that the most wondrous and sacred human space, the womb, has become a place of unutterable violence?

"Our world has grown weary of greed, exploitation and division, of the tedium of false idols and piecemeal responses and the pain of false promises."

Excerpt from Holy Father's words on Good Friday

"Day after day we are covered by all sorts of filth, empty words, prejudices, reduced and altered knowledge; many half- or open falsehoods continuously seeps into our innermost self.

All this darkens and contaminates our soul, threatens our capacity to see what is true and good. If we welcome the words of Jesus with an attentive heart, they will turn out to truly cleanse and purify the soul, the inner man.”

Spoken at Holy Thursday Mass

Pope makes a "funny but true" statement

Pope Benedict XVI: "Yes, yes, although it is taking some time - miracles are hard to come by in Britain."

How true. I could not have said it better myself.