(Week 15 - Wednesday, Nov. 19)
In yesterday's column I talked about how the Social Security Trust Fund is not a pool of money deducted from paychecks and held in trust, as is commonly assumed, and that the political recriminations over the supposed "raiding" of this fund to cover the general expenses of government are misguided in that there is no way that these funds realistically could be withheld from the general revenue flow without creating an effective need to borrow an additional sum into circulation at "interest" from the private banking system to replace the monies so sequestered. Thinking of it as a fund that is being "raided" distracts our minds away from the fact that the remedy for the "trust fund" issue is dependent on making the transformation from a "debt"-based private monetary system, to one in which our money supply is issued directly out of the U.S. Treasury.
The problem with private retirement funds, including 401k's, Keoghs, company pensions and other private-nest-egg accounts, is similar, though it manifests in a somewhat different way. Rather than being used to make up for deficits in other sectors of the Federal budget, private retirement accounts are effectively capital funds for monetary speculation in the financial markets (government accounts other than Social Security can be a mix of the two). Within the context of an economy whose money supply is borrowed at "interest" from private banks, this could hardly be otherwise.
Most people realize their nest-egg money is being "invested", and generally approve of the idea. After all, the earnings are being applied towards growing the balances of their accounts. To be sure, this is one way their money can be managed, but I would suggest that if people thought through fully the implications such an arrangement, they would see the high cost that they, and the social order in general, are paying for the widespread practice of providing for retirement accounts via private "investing" of "debt"-based money.
To understand this, we need to take a look at the basic dynamics of the free-enterprise market cycle. Goods are produced, and then they are sold in the marketplace. The cost of bringing goods to market is accounted for exactly by the wages, salaries and profits paid to those who are responsible for producing them. In the aggregate, the number of dollars paid to those responsible for producing goods (i.e. the cost of production) always matches, to the dollar, the income they take receive as they transition to the role of consumers (i.e. gross income). This is a mathematical identity, and its balance cannot be upset any more that a drop of fluid circulating in a closed system can avoid coming back to the place where it started, unless, that is, there is a leak in system.
In a market cycle within which the circulating medium is "debt"-based dollars there is indeed a leak in the system; specifically the leakage cause by the obligation to pay "interest" for the use of the currency. The way that works out is this:
Let us say that a worker gets paid $2000 for whatever value he is responsible for producing. He takes home his paycheck and pays his bills. Let suppose that he makes a mortgage payment of $600, of which $200 is applied to the retirement of the loan, and $400 is credited towards the "interest" payment.
In his role as producer, our consumer accounted for $2000 dollars worth of goods, but on the consumer side of the equation he has less than that to spend. The $200 dollars applied to the retirement of the loan is actually accounted for as purchasing power, because it is part of the sum of money he borrowed to compensate other people for building his house. For the $400 paid towards the "interest", however, he receives no goods of tangible value. This means that by the time he has spent his paycheck he will be able to purchase only $1600 dollars worth of goods, and an equivalent of $400 worth of unsold goods will pile up in some producer's inventory.
If money paid out as the cost of production does not show up fully as disposable income, goods go unsold, orders for new goods decline, workers are laid off, less goods are produced, and the market cycle goes into a spiraling contraction. The only way this tendency can be prevented is for someone to keep borrowing more money into circulation to buy up otherwise un-sellable goods.
Just as "interest" charges attached to the creation of money cause a shortfall in purchasing power, so does the subtraction of money from the income of a working person to fund a retirement account. Rather than being used to buy up goods produced in present time, purchasing power deferred until retirement is "loaned" back to workers in the economy indirectly through "investments". These will include buying up the "debt" contracts that people will increasingly be obliged to take on in their lives by the very fact that the deferring of purchasing power represented by these retirement accounts will rob the economy of the ability to complete its own market cycle, and so make such borrowing necessary.
Thus, a pernicious cycle is set up whereby income earned becomes purchasing power deferred, which is compensated for by its transformation into "money loaned". The irony is that the very funding of retirement accounts with "debt"-based money eats away at and eventually destroys the economic base that retirees will depend upon. The cumulative burden of this snowballing "debt" and speculative expectation is precisely what is causing millions of retirement accounts at present to lose much of their value, or go belly-up altogether.
None of this is to say that the material wellbeing of the elderly portion of our population cannot be provided for. On the contrary, to do so is both a moral and an economic imperative. We will be exploring ways to make it happen on a sound and consistent basis as these columns continue.
Richard Kotlarz
richkotlarz@gmail.com
The complete set of columns from this series is posted at the following websites.
http://economictree.blogspot.com/
http://www.concordresolution.org/column.htm
Wednesday, November 19, 2008
Monday, November 17, 2008
Column #82 THE SUPPOSED "RAIDING" OF THE SOCIAL SECURITY TRUST FUND
(Week 15 - Monday, Nov. 17)
The virtually universal view of pensions or retirement accounts is that they are monies that are put away in dedicated funds that are held in trust until the day they can be drawn upon when the beneficiary reaches an eligible age. This is not, in my view, an accurate description of how these accounts are presently constituted within the current monetary system, and the widespread misunderstanding about that has led to expectations that cannot possibly be fulfilled. The result is that, while we as a society have enacted social contracts designed to insure the financial wellbeing of those who have attained an advanced age, they have been formulated in such a way that millions of people who are counting on the solvency of such arrangements are in the current financial crisis seeing their value decline precipitously, or are losing them altogether.
Retirement accounts can take on many forms. Let us look first at the one we citizens of the nation hold most in common, and perhaps take most for granted; i.e. the Social Security Trust Fund.
Let us imagine a situation in which money is deducted from the wages of a worker early in his productive years and "put away" in this fund. Now fast-forward to, say, three decades later when this person retires and draws his first Social Security check. Let us suppose that he spends the first of those dollars on eggs for his morning breakfast. I would ask the question, were those eggs really purchased with dollars that were earned thirty years before? If one answered "yes", one would also have to answer the question, "Where, then, have these dollars been held for all that time?"
For some strange reason we in this "financially sophisticated" society seem to think that when retirement money is deducted from a paycheck it must be put into some vault where it is kept for safekeeping until the day that we need it. I would point out that if that were indeed the case, then the money so sequestered would constitute a net withholding of money from circulation that would have to made up for by someone "borrowing" an equivalent amount into circulation from the private banking system. To "fully fund" the Social Security Trust Fund, therefore, the social order would be obliged to take on an immense amount of new "debt" on which compounding "interest" payments would need to be made. What is more, these idle funds held in trust would themselves represent a vast quantity of money that had been borrowed into circulation, and upon which "interest" payments would need to be paid in an ongoing manner. Essentially we the people would be paying double "interest" charges for the use of the sum of money held in the trust fund. Monetarily speaking, this is a prohibitively expensive arrangement.
Nonetheless, in our political dialogue we as a society seem to lack a basic understanding of this fact. If that were not so, why then in the political arena is there an almost universal chorus of protest raised about the supposed raiding of the Social Security Trust Fund to finance general expenses of the Federal government? Do we really expect that these hundreds of billions of dollars should be left to languish in a vault unused until the workers from whose checks they were deducted retire and start to draw them out? The "interest" payment on such a sum would of itself typically offset the whole value of the fund, or more.
This professed platform plank is so contrary to the realities they are obliged to deal with in their budget-making processes that it makes me wonder what they could be thinking of when they say such things. Assuming that they are for the most part sincere, then the passion and tenacity with which they cling to this dubious idea can only be a telling example of the great disconnect between their understanding of the monetary realities they are called upon to deal with, and the economic notions that they hold. Truth be told, I don't think that our leaders are alone in this confusion, as I almost never hear anyone challenge them on this view in the public domain. On the contrary, almost invariably there comes an echoing demand from the public to "get spending under control" and stop the supposed "raid on their money".
The economic activity required to produce the first eggs of post-workforce life occurred within a few short days prior to their being consumed, and the money that financed that activity had to have come from cash flow that was concomitant with the productive process that was responsible for the material manifestation of the product itself. In other words, material wealth that is coming into existence today is financed by dollars flowing today. Whatever dollars were deducted from a worker's paycheck years ago had to have long since flowed into other economic activities. The notion that this could be otherwise within the current "debt"-based monetary system is a bookkeeping fantasy. Our failure to understand the actualities of our financial lives and deal with them in a clear and positive way is at the core of why we have become so anxious about the certainly of these so-called dedicated funds being there when we reach retirement age.
In truth the Social Security "Trust Fund" is not a trust fund. It is not money that has been put away. It is, rather, a system for the tallying of credits that determine the eligibility of each citizen for access to the money that is flowing through its operating budget in any given month after one has reached the age of eligibility. The monies that are is paid out through Social Security do not come out of a pool of capital that has been put away for that use, but are taken out of revenues flowing through government coffers in present time.
The problem with thinking of it as a fund that is being raided is that it distracts our minds away from the true nature of the threat to the national economy which underwrites this social welfare program, which in turn is the source of the perception that it is being raided it in the first place; that is, the unrelenting demands placed upon the economy in general, and government budgets in particular, by the "interest" payments required to maintain the money supply. Such misunderstanding leads to the misguided proposal to insure the purported fund's solvency into the future by opening it up for "investment" in the financial markets. The ultimate irony is that if such a proposal is carried out, it truly will become a fund that has been raided. I will continue with this analysis in the next column.
Richard Kotlarz
richkotlarz@gmail.com
The complete set of columns from this series is posted at the following websites.
http://economictree.blogspot.com/
http://www.concordresolution.org/column.htm
The virtually universal view of pensions or retirement accounts is that they are monies that are put away in dedicated funds that are held in trust until the day they can be drawn upon when the beneficiary reaches an eligible age. This is not, in my view, an accurate description of how these accounts are presently constituted within the current monetary system, and the widespread misunderstanding about that has led to expectations that cannot possibly be fulfilled. The result is that, while we as a society have enacted social contracts designed to insure the financial wellbeing of those who have attained an advanced age, they have been formulated in such a way that millions of people who are counting on the solvency of such arrangements are in the current financial crisis seeing their value decline precipitously, or are losing them altogether.
Retirement accounts can take on many forms. Let us look first at the one we citizens of the nation hold most in common, and perhaps take most for granted; i.e. the Social Security Trust Fund.
Let us imagine a situation in which money is deducted from the wages of a worker early in his productive years and "put away" in this fund. Now fast-forward to, say, three decades later when this person retires and draws his first Social Security check. Let us suppose that he spends the first of those dollars on eggs for his morning breakfast. I would ask the question, were those eggs really purchased with dollars that were earned thirty years before? If one answered "yes", one would also have to answer the question, "Where, then, have these dollars been held for all that time?"
For some strange reason we in this "financially sophisticated" society seem to think that when retirement money is deducted from a paycheck it must be put into some vault where it is kept for safekeeping until the day that we need it. I would point out that if that were indeed the case, then the money so sequestered would constitute a net withholding of money from circulation that would have to made up for by someone "borrowing" an equivalent amount into circulation from the private banking system. To "fully fund" the Social Security Trust Fund, therefore, the social order would be obliged to take on an immense amount of new "debt" on which compounding "interest" payments would need to be made. What is more, these idle funds held in trust would themselves represent a vast quantity of money that had been borrowed into circulation, and upon which "interest" payments would need to be paid in an ongoing manner. Essentially we the people would be paying double "interest" charges for the use of the sum of money held in the trust fund. Monetarily speaking, this is a prohibitively expensive arrangement.
Nonetheless, in our political dialogue we as a society seem to lack a basic understanding of this fact. If that were not so, why then in the political arena is there an almost universal chorus of protest raised about the supposed raiding of the Social Security Trust Fund to finance general expenses of the Federal government? Do we really expect that these hundreds of billions of dollars should be left to languish in a vault unused until the workers from whose checks they were deducted retire and start to draw them out? The "interest" payment on such a sum would of itself typically offset the whole value of the fund, or more.
This professed platform plank is so contrary to the realities they are obliged to deal with in their budget-making processes that it makes me wonder what they could be thinking of when they say such things. Assuming that they are for the most part sincere, then the passion and tenacity with which they cling to this dubious idea can only be a telling example of the great disconnect between their understanding of the monetary realities they are called upon to deal with, and the economic notions that they hold. Truth be told, I don't think that our leaders are alone in this confusion, as I almost never hear anyone challenge them on this view in the public domain. On the contrary, almost invariably there comes an echoing demand from the public to "get spending under control" and stop the supposed "raid on their money".
The economic activity required to produce the first eggs of post-workforce life occurred within a few short days prior to their being consumed, and the money that financed that activity had to have come from cash flow that was concomitant with the productive process that was responsible for the material manifestation of the product itself. In other words, material wealth that is coming into existence today is financed by dollars flowing today. Whatever dollars were deducted from a worker's paycheck years ago had to have long since flowed into other economic activities. The notion that this could be otherwise within the current "debt"-based monetary system is a bookkeeping fantasy. Our failure to understand the actualities of our financial lives and deal with them in a clear and positive way is at the core of why we have become so anxious about the certainly of these so-called dedicated funds being there when we reach retirement age.
In truth the Social Security "Trust Fund" is not a trust fund. It is not money that has been put away. It is, rather, a system for the tallying of credits that determine the eligibility of each citizen for access to the money that is flowing through its operating budget in any given month after one has reached the age of eligibility. The monies that are is paid out through Social Security do not come out of a pool of capital that has been put away for that use, but are taken out of revenues flowing through government coffers in present time.
The problem with thinking of it as a fund that is being raided is that it distracts our minds away from the true nature of the threat to the national economy which underwrites this social welfare program, which in turn is the source of the perception that it is being raided it in the first place; that is, the unrelenting demands placed upon the economy in general, and government budgets in particular, by the "interest" payments required to maintain the money supply. Such misunderstanding leads to the misguided proposal to insure the purported fund's solvency into the future by opening it up for "investment" in the financial markets. The ultimate irony is that if such a proposal is carried out, it truly will become a fund that has been raided. I will continue with this analysis in the next column.
Richard Kotlarz
richkotlarz@gmail.com
The complete set of columns from this series is posted at the following websites.
http://economictree.blogspot.com/
http://www.concordresolution.org/column.htm
Friday, November 14, 2008
Column #81 THE MONETARY ASPECTS OF INSURANCE
(Week 14 - Friday, Nov. 14)
The essence of insurance agency is the formation of a pool of money into which people make a contribution, and from which they can expect to receive compensation to cover the financial cost of a potentially catastrophic loss of life, limb or property. These funds are generally managed by corporations. This means, supposedly, that such businesses have been issued a corporate charter by the society they supposedly serve to perform this specific function for the benefit of that society. As long as what transpires stays within these bounds, everything is very upfront, straightforward and transparent. The function for which the agency was formed is perfectly legitimate, and the social order that chartered it is well served.
Over time, this has been less-and-less the case. The premium payments which people make have been dedicated less to protecting them from loss, and more to forming pools of capital out of which financial speculators gamble with their money. This is done in the name of "investing" their premiums to help defray their cost, but in reality it is a withholding of policyholders money under deceptive pretenses, which is then used to buy up the increased quantity of "debt" paper that the public (including the company's clientele) is obliged to take on due to the decreased consumer buying power that is caused by the very withholding of that money.
Understood in this way, this widespread mode of doing business by the insurance industry can be seen, not only as a matter of questionable business ethics, but also as a practice with monetary implications. To put it succinctly, insurance companies have become financial purveyors on behalf of their stockholders at the expense of their policyholders and the public at large.
The question then becomes, what can be done about it? The obvious answer may seem to be more regulation, but this does not get at the root of the problem, which is that within a monetary system in which money is borrowed into circulation at "interest" from private banks, there exists a virtual financial imperative for that "money" itself to earn "interest" to cover the "interest" cost of maintaining it in circulation. It is very difficult for a person in a position of fiduciary trust to justify doing otherwise.
If regulations governing the insurance industry were put into effect which mandated that they maintain the monies collected through premiums as idle (non-invested) pools of capital, then that in itself would constitute a diminishing of the money supply which would have to be made up for with more borrowing by the nation as a whole, whether privately or through government. This is a catch-22 that executives of the insurance industry are not realistically in a position to do anything about by themselves (whether they realize the nature of their dilemma, and would be inclined to do anything about it is another matter). For the most part they are playing the game the only way they can see to play it.
The solution for the problem needs to come from society as a whole through its political process. The key is for the People to direct their government to reclaim their rightful money creation franchise from the private banking system. The initial steps in that process would be to repeal the Federal Reserve Act of 1913, purchase the outstanding stock of the Fed from the member banks who are holding it, and convert its resources and employees to the task of facilitating issuance of public money under the direction of the U.S. Treasury.
The Treasury would thereby gain the ability to maintain a quantity of currency in circulation that is calculated with precision to meet the needs of commerce for the nation. If one of those needs is to maintain an extra margin of money in circulation so that a certain amount is available to lie "un-invested" in pools of capital required to underwrite insurance policies, that is not a problem, as the increment of funds so designated can be issued at virtually no cost simply by adjusting the level of money supply.
The amount of capital needed to underwrite insurance policies is in the national aggregate considerable, even under the strictest interpretation of the requirements of the business. As such, it represents a great sum of money upon which, within the current system, someone is obliged to make "interest" payments just to keep it available for that purpose. To "invest" such funds, then, can seem to be the responsible option, the fact that this is in the larger picture monetarily self-defeating notwithstanding.
The very existence of such an "investment" opportunity attracts financial players who are not necessarily concerned about the ethics or logic of the way insurance companies do business, but are simply looking for a way to make money with money. Through the ownership of insurance company stock, they can make their demands and reap their reward. Whatever the case, insurance executives are effectively pressed into being agents for "investors" seeking a "profit" through the control of their policyholders' excess premium payments.
With the establishment of a system in which money is issued publicly, this seeming fiscal imperative (in the case of good-faith insurance agency), or opportunity (to the financial speculator) is effectively removed. This is because whatever amount of money was needed to be tied up in pools of insurance capital could be made up for quite readily by letting the level of the money supply rise as a matter of public policy.
Insurance companies could then be limited to being compensation pool managers by restrictions written into their corporate charters. As businesses, this need not be experienced as an arbitrary limitation, because it would allow them to focus on the crux of their task; or as a competitive hardship, because other companies working in the field would be obliged to observe the same boundaries. Their operations would be simplified, their costs lowered, and, I can imagine, the burdens of management greatly relieved. The net contributions through premium payments, and payouts for claim satisfaction could be tracked through a transparent public accounting. The company's customers and the public at large would be well served, and, I suggest, there would never have arisen a need for any massive "bailout". I wonder if the executives at AIG would agree.
Richard Kotlarz
richkotlarz@gmail.com
The complete set of columns from this series is posted at the following websites.
http://economictree.blogspot.com/
http://www.concordresolution.org/column.htm
The essence of insurance agency is the formation of a pool of money into which people make a contribution, and from which they can expect to receive compensation to cover the financial cost of a potentially catastrophic loss of life, limb or property. These funds are generally managed by corporations. This means, supposedly, that such businesses have been issued a corporate charter by the society they supposedly serve to perform this specific function for the benefit of that society. As long as what transpires stays within these bounds, everything is very upfront, straightforward and transparent. The function for which the agency was formed is perfectly legitimate, and the social order that chartered it is well served.
Over time, this has been less-and-less the case. The premium payments which people make have been dedicated less to protecting them from loss, and more to forming pools of capital out of which financial speculators gamble with their money. This is done in the name of "investing" their premiums to help defray their cost, but in reality it is a withholding of policyholders money under deceptive pretenses, which is then used to buy up the increased quantity of "debt" paper that the public (including the company's clientele) is obliged to take on due to the decreased consumer buying power that is caused by the very withholding of that money.
Understood in this way, this widespread mode of doing business by the insurance industry can be seen, not only as a matter of questionable business ethics, but also as a practice with monetary implications. To put it succinctly, insurance companies have become financial purveyors on behalf of their stockholders at the expense of their policyholders and the public at large.
The question then becomes, what can be done about it? The obvious answer may seem to be more regulation, but this does not get at the root of the problem, which is that within a monetary system in which money is borrowed into circulation at "interest" from private banks, there exists a virtual financial imperative for that "money" itself to earn "interest" to cover the "interest" cost of maintaining it in circulation. It is very difficult for a person in a position of fiduciary trust to justify doing otherwise.
If regulations governing the insurance industry were put into effect which mandated that they maintain the monies collected through premiums as idle (non-invested) pools of capital, then that in itself would constitute a diminishing of the money supply which would have to be made up for with more borrowing by the nation as a whole, whether privately or through government. This is a catch-22 that executives of the insurance industry are not realistically in a position to do anything about by themselves (whether they realize the nature of their dilemma, and would be inclined to do anything about it is another matter). For the most part they are playing the game the only way they can see to play it.
The solution for the problem needs to come from society as a whole through its political process. The key is for the People to direct their government to reclaim their rightful money creation franchise from the private banking system. The initial steps in that process would be to repeal the Federal Reserve Act of 1913, purchase the outstanding stock of the Fed from the member banks who are holding it, and convert its resources and employees to the task of facilitating issuance of public money under the direction of the U.S. Treasury.
The Treasury would thereby gain the ability to maintain a quantity of currency in circulation that is calculated with precision to meet the needs of commerce for the nation. If one of those needs is to maintain an extra margin of money in circulation so that a certain amount is available to lie "un-invested" in pools of capital required to underwrite insurance policies, that is not a problem, as the increment of funds so designated can be issued at virtually no cost simply by adjusting the level of money supply.
The amount of capital needed to underwrite insurance policies is in the national aggregate considerable, even under the strictest interpretation of the requirements of the business. As such, it represents a great sum of money upon which, within the current system, someone is obliged to make "interest" payments just to keep it available for that purpose. To "invest" such funds, then, can seem to be the responsible option, the fact that this is in the larger picture monetarily self-defeating notwithstanding.
The very existence of such an "investment" opportunity attracts financial players who are not necessarily concerned about the ethics or logic of the way insurance companies do business, but are simply looking for a way to make money with money. Through the ownership of insurance company stock, they can make their demands and reap their reward. Whatever the case, insurance executives are effectively pressed into being agents for "investors" seeking a "profit" through the control of their policyholders' excess premium payments.
With the establishment of a system in which money is issued publicly, this seeming fiscal imperative (in the case of good-faith insurance agency), or opportunity (to the financial speculator) is effectively removed. This is because whatever amount of money was needed to be tied up in pools of insurance capital could be made up for quite readily by letting the level of the money supply rise as a matter of public policy.
Insurance companies could then be limited to being compensation pool managers by restrictions written into their corporate charters. As businesses, this need not be experienced as an arbitrary limitation, because it would allow them to focus on the crux of their task; or as a competitive hardship, because other companies working in the field would be obliged to observe the same boundaries. Their operations would be simplified, their costs lowered, and, I can imagine, the burdens of management greatly relieved. The net contributions through premium payments, and payouts for claim satisfaction could be tracked through a transparent public accounting. The company's customers and the public at large would be well served, and, I suggest, there would never have arisen a need for any massive "bailout". I wonder if the executives at AIG would agree.
Richard Kotlarz
richkotlarz@gmail.com
The complete set of columns from this series is posted at the following websites.
http://economictree.blogspot.com/
http://www.concordresolution.org/column.htm
Wednesday, November 12, 2008
Column #80 - THE AIG "BAILOUT PACKAGE"
(Week 14 - Wednesday, Nov. 12)
The lead article in Monday's Wall Street Journal announced that the Federal government has agreed to offer AIG (American International Group), the nation's largest insurance company, a "bailout package" worth $150 billion. This raises the question, has there occurred somewhere recently massive losses of life, injury and property that have made such a financial rescue plan a necessity? Clearly there has not. If we follow this line of inquiry through to its logical conclusion, we will discover that "insurance companies" are no longer primarily insurance companies. Rather, they have become more-and-more a means to create pools of capital to be used for financial speculation.
Theoretically an insurance company is a business that has been granted a corporate charter by the society it supposedly serves to gather and manage a pool of money for the purpose of providing people with protection against catastrophic financial expenses brought on by loss of life, health or property. The idea is that each person that subscribes to the service contributes money to a common pool of funds through the payment of premiums, and those relatively few people who experience a loss are then compensated out of it. The premium rates, then, would presumably be set at such a level that the amount of money in the pool would be adequate to compensate expected claims, plus provide enough left over to cover the actual expenses of the company, and allow for a modest profit. This is all so straightforward that it hardly warrants explanation, but increasingly it is not what happens.
Instead, insurance companies use the premiums they collect to create "investment" funds, which they then use for speculation in financial markets. While it is true that they do in fact pay claims out of premiums collected, their unstated financial speculation agenda causes them to have to charge higher premiums than they would otherwise have to merely to cover claims. They justify their "investments" by saying that they are merely acting responsibly with their customer's money. After all, so the rationale goes, since there always needs to be a substantial pool of capital maintained to insure that there are adequate funds available for when their customers experience a loss, they may as well "invest" these funds so that the income they produce in the meantime can be used to defray part of the cost of the premiums. On the surface this sounds reasonable. On a deeper level it is very deceptive.
To begin with, excess funds that are bound up in such "investments" are not, relatively speaking, very "liquid". That is, they are not readily available to cover ordinary day-to-day claims made against the capital pool. Therefore, the "investment" pool is essentially extra capital that must be maintained over and above the actuarial requirements of the insurance function itself.
It could be claimed that the nature of a given company's business is such that it insures against losses that occur infrequently and on a large scale, as might be the case, for example, for one whose primary business is to cover losses incurred from natural disasters. It would make good business sense, supposedly, to earn "interest" from these idyll funds while they are lying for long periods of time at the ready, so to speak. This argument too breaks down. Such a monies may need to be paid out on short notice, and therefore the essential financial quality that is called for is liquidity. A large capital pool that is bound up in a portfolio is almost by definition not very liquid, and the necessity to make it so quickly may result in having to dump its speculative-paper contents on the market in what is essentially a fire-sale circumstance, thereby driving down the its redeemable value. That would tend to defeat the argument that the purpose of "investing" their customers' premiums is a way to defray their cost. As a hedge against this, the tendency will be again to maintain a fund that is larger than is necessary for the purposes of insurance alone.
Looking deeper into the problem, when an insurance company collects a premium, it is taking money out of the money supply for which the consumer receives no immediate value in return. Essentially the buying power it represents is held in abeyance until a claim is made and the money paid back out. To the extent that this is necessary it can be justified as a business practice. To the extent that premiums are "invested", however, it cannot.
With respect to the market cycle in the economy, the "investment" of insurance premiums has a net affect that is similar to that created when "interest" payments are made on private bank loans, whereby the payments go to "investors" who have bought the "debt" contracts by which the loans were created so that they might be the recipients of those payments. The consumer in the aggregate is shortchanged of the earned income required to pay the cost of the goods and services equivalent to what he produces. This money is effectively withheld from circulation until someone comes along who is willing to "borrow" such funds from the "investor", thereby returning it to the money supply, but now with an increased "debt" obligation attached.
The money that is paid in as premium payments to an insurance company that is excess to the amount required to cover claims, plus the actual material costs of and a reasonable profit to the company, acts in much the same way as those "interest" payments made on bank loans. These net over-payments represent a net subtraction from the money supply, which, in turn, creates a need for someone to "borrow" this money back into circulation so that the market cycle can be completed.
This practice, then, of insurance companies maintaining capital pools that are "invested" in financial instruments, supposedly for the benefit of their customers, is revealed to be a wealth transference scheme that is carried out at the expense of their customers, and of the society at large. Increasingly, the insurance industry has become a cash-cow for the speculative financial industry, and AIG is the prime example. If that is not so, then where are the actual losses in life, limb and property that the citizenry is being called upon to pay? With this AIG "bailout" package, We the People, through our government, are being asked to take on an enormous "debt" to cover the losses of financial speculators. It has absolutely nothing to do with the legitimate functions of the insurance business.
Richard Kotlarz
richkotlarz@gmail.com
The complete set of columns from this series is posted at the following websites.
http://economictree.blogspot.com/
http://www.concordresolution.org/column.htm
The lead article in Monday's Wall Street Journal announced that the Federal government has agreed to offer AIG (American International Group), the nation's largest insurance company, a "bailout package" worth $150 billion. This raises the question, has there occurred somewhere recently massive losses of life, injury and property that have made such a financial rescue plan a necessity? Clearly there has not. If we follow this line of inquiry through to its logical conclusion, we will discover that "insurance companies" are no longer primarily insurance companies. Rather, they have become more-and-more a means to create pools of capital to be used for financial speculation.
Theoretically an insurance company is a business that has been granted a corporate charter by the society it supposedly serves to gather and manage a pool of money for the purpose of providing people with protection against catastrophic financial expenses brought on by loss of life, health or property. The idea is that each person that subscribes to the service contributes money to a common pool of funds through the payment of premiums, and those relatively few people who experience a loss are then compensated out of it. The premium rates, then, would presumably be set at such a level that the amount of money in the pool would be adequate to compensate expected claims, plus provide enough left over to cover the actual expenses of the company, and allow for a modest profit. This is all so straightforward that it hardly warrants explanation, but increasingly it is not what happens.
Instead, insurance companies use the premiums they collect to create "investment" funds, which they then use for speculation in financial markets. While it is true that they do in fact pay claims out of premiums collected, their unstated financial speculation agenda causes them to have to charge higher premiums than they would otherwise have to merely to cover claims. They justify their "investments" by saying that they are merely acting responsibly with their customer's money. After all, so the rationale goes, since there always needs to be a substantial pool of capital maintained to insure that there are adequate funds available for when their customers experience a loss, they may as well "invest" these funds so that the income they produce in the meantime can be used to defray part of the cost of the premiums. On the surface this sounds reasonable. On a deeper level it is very deceptive.
To begin with, excess funds that are bound up in such "investments" are not, relatively speaking, very "liquid". That is, they are not readily available to cover ordinary day-to-day claims made against the capital pool. Therefore, the "investment" pool is essentially extra capital that must be maintained over and above the actuarial requirements of the insurance function itself.
It could be claimed that the nature of a given company's business is such that it insures against losses that occur infrequently and on a large scale, as might be the case, for example, for one whose primary business is to cover losses incurred from natural disasters. It would make good business sense, supposedly, to earn "interest" from these idyll funds while they are lying for long periods of time at the ready, so to speak. This argument too breaks down. Such a monies may need to be paid out on short notice, and therefore the essential financial quality that is called for is liquidity. A large capital pool that is bound up in a portfolio is almost by definition not very liquid, and the necessity to make it so quickly may result in having to dump its speculative-paper contents on the market in what is essentially a fire-sale circumstance, thereby driving down the its redeemable value. That would tend to defeat the argument that the purpose of "investing" their customers' premiums is a way to defray their cost. As a hedge against this, the tendency will be again to maintain a fund that is larger than is necessary for the purposes of insurance alone.
Looking deeper into the problem, when an insurance company collects a premium, it is taking money out of the money supply for which the consumer receives no immediate value in return. Essentially the buying power it represents is held in abeyance until a claim is made and the money paid back out. To the extent that this is necessary it can be justified as a business practice. To the extent that premiums are "invested", however, it cannot.
With respect to the market cycle in the economy, the "investment" of insurance premiums has a net affect that is similar to that created when "interest" payments are made on private bank loans, whereby the payments go to "investors" who have bought the "debt" contracts by which the loans were created so that they might be the recipients of those payments. The consumer in the aggregate is shortchanged of the earned income required to pay the cost of the goods and services equivalent to what he produces. This money is effectively withheld from circulation until someone comes along who is willing to "borrow" such funds from the "investor", thereby returning it to the money supply, but now with an increased "debt" obligation attached.
The money that is paid in as premium payments to an insurance company that is excess to the amount required to cover claims, plus the actual material costs of and a reasonable profit to the company, acts in much the same way as those "interest" payments made on bank loans. These net over-payments represent a net subtraction from the money supply, which, in turn, creates a need for someone to "borrow" this money back into circulation so that the market cycle can be completed.
This practice, then, of insurance companies maintaining capital pools that are "invested" in financial instruments, supposedly for the benefit of their customers, is revealed to be a wealth transference scheme that is carried out at the expense of their customers, and of the society at large. Increasingly, the insurance industry has become a cash-cow for the speculative financial industry, and AIG is the prime example. If that is not so, then where are the actual losses in life, limb and property that the citizenry is being called upon to pay? With this AIG "bailout" package, We the People, through our government, are being asked to take on an enormous "debt" to cover the losses of financial speculators. It has absolutely nothing to do with the legitimate functions of the insurance business.
Richard Kotlarz
richkotlarz@gmail.com
The complete set of columns from this series is posted at the following websites.
http://economictree.blogspot.com/
http://www.concordresolution.org/column.htm
Monday, November 10, 2008
Column #79 A NEW ROTATION
(Week 14 - Monday, Nov. 10)
Everything evolves, and so does this column. The initial concept was to put out a daily message of four to five hundred words that could be read over "morning coffee" as a daily antidote to the standard media fare. In practice I have found that these offerings tend to take on their own natural length, which turns out to be roughly twice what was originally contemplated. It has required a major exercise in discipline to keep them within even those bounds, as anything that touches upon the topic of money tends to swell in the enumeration. Truncating or dividing the topic arbitrarily tends to cut the heart out of it, and so I let whatever is wanting to be written have its way. The upshot is that I have produced twice the amount of verbiage that I intended, and keeping up that pace is not sustainable.
Most of the feedback I get indicates that while much, if not most, of the readership has kept up with the reading, they too sometimes fall behind, and the unread email mounts up. There seems to be on their part a determination to keep up, as the columns as a series represent a systematic and carefully measured development of thought. If a link is missed, something is lost.
Taking this all into account, I have decided to reduce the frequency of the installments to three per week; those coming on Monday, Wednesday and Friday. This column is the first of the new rotation. I anticipate that the length of the typical column will be approximately the same, but the less frantic pace will leave me more time to devote to producing each one, plus attending the correspondences and dialogues which the columns have been a seed for starting. I have tried to be responsive to communications that have been sent to me, but have fallen far behind in spite of strenuous efforts. I apologize for that. I look forward to catching up on my backlog and being more responsive in the future.
All this said, this effort is not about writing columns. It is about precipitating change. We are at a juncture in the life of our nation where the portent of that sentiment has never been more acute that now. The providential turn represented by the latest election has released a breadth and depth of hope into the world that, if harnessed in the right way, could provide the boost to at last overcome the opposition to permanently transformative change in the realm of money. This would be truly the culmination of a battle of the ages.
It is not mere coincidence that our new President will take office at the height of the greatest financial crisis the nation, and the world, has yet faced. Indeed, the urgency of the matter will not even wait for him to take his oath, as it is pressing down upon him even now. It is a foreboding sign that already he is being hedged about by a coterie of heavy-hitting financial advisors that will surely impress upon him the importance of going even deeper into "debt" as a way of resolving the "debt" crisis. I do not say that such voices should not be heard, but truly liberating virtues of public money need at last have their hearing.
If the promise of the moment bounces back unrequited in the unfolding of events, then the present euphoric mood will turn upon the People as it metamorphoses into the bitterness of cynicism, and our state will be at the last incalculably worse than at the first.
What is more, nothing will be changed by reading; only by acting. We Americans are doers. That is what we bring to the world. What then to do? That is for each to determine out of his or her own inspiration.
As a thought, there are practical initiatives that can be pursued in concert with others. One is the Concord Resolution, which is an effort to recreate in our time essentially what was done by the colonial government of Massachusetts in 1690; that is, to issue public money in service to the commonweal of the People, as the alternative to relying on private money, which would make of the colony a debtor to the moneylenders. This Resolution has been reworked of late to make it more focused on the transference of the money-creation franchise itself from the private banking system to the U.S. Treasury. It has also been presented in such a way as to encourage others around the nation to introduce parallel resolutions in their communities. It is our hope that this could become a movement.
It is incumbent upon me to address the matter of resources. I have, and will continue, to offer up the column, and the fruits of all other initiatives that I am engaged in, free of charge, and remain true to that commitment regardless of whatever personal sacrifices it entails. That said, the effort cannot move forward without resources. To date that burden has fallen upon a very limited circle of people who have effectively emptied themselves out to insure that the work, at least on a minimal level, continues to move forward. The level of critical work that needs to be done with respect to the monetary sphere far exceeds the resources available to perform it. It may not be too much to say that this is a tragedy of our time.
Help is needed in researching specific topics on money, and I would be willing to speak to anyone who is willing to lend a hand.
Basic material help of many kinds is sorely needed. This, of course, includes financial assistance. Funds contributed to the effort become in effect monies that are consecrated to the liberation of the whole of humanity from the ravages of a bogus "debt". This is not simply a worthy sentiment, but a spiritual principle that works through money itself. I will have more to say on that subject in future columns.
Finally I would express my appreciation for all who have taken an interest in these discourses. I have received hundreds of communications posing questions, offering critiques, or lending encouragement. I am grateful for every one. In the future it is my hope that I can be more responsive, and tighten up the time lag in the dialogue.
The time for action on the transformation of the way our society creates, issues and controls money is now. I encourage each to find their own path of commitment according to their own authentic calling. For those with ears to hear.
Thank you for your patient and considerate attention.
Richard Kotlarz
richkotlarz@gmail.com
The complete set of columns from this series is posted at the following websites.
http://economictree.blogspot.com/
http://www.concordresolution.org/column.htm
Everything evolves, and so does this column. The initial concept was to put out a daily message of four to five hundred words that could be read over "morning coffee" as a daily antidote to the standard media fare. In practice I have found that these offerings tend to take on their own natural length, which turns out to be roughly twice what was originally contemplated. It has required a major exercise in discipline to keep them within even those bounds, as anything that touches upon the topic of money tends to swell in the enumeration. Truncating or dividing the topic arbitrarily tends to cut the heart out of it, and so I let whatever is wanting to be written have its way. The upshot is that I have produced twice the amount of verbiage that I intended, and keeping up that pace is not sustainable.
Most of the feedback I get indicates that while much, if not most, of the readership has kept up with the reading, they too sometimes fall behind, and the unread email mounts up. There seems to be on their part a determination to keep up, as the columns as a series represent a systematic and carefully measured development of thought. If a link is missed, something is lost.
Taking this all into account, I have decided to reduce the frequency of the installments to three per week; those coming on Monday, Wednesday and Friday. This column is the first of the new rotation. I anticipate that the length of the typical column will be approximately the same, but the less frantic pace will leave me more time to devote to producing each one, plus attending the correspondences and dialogues which the columns have been a seed for starting. I have tried to be responsive to communications that have been sent to me, but have fallen far behind in spite of strenuous efforts. I apologize for that. I look forward to catching up on my backlog and being more responsive in the future.
All this said, this effort is not about writing columns. It is about precipitating change. We are at a juncture in the life of our nation where the portent of that sentiment has never been more acute that now. The providential turn represented by the latest election has released a breadth and depth of hope into the world that, if harnessed in the right way, could provide the boost to at last overcome the opposition to permanently transformative change in the realm of money. This would be truly the culmination of a battle of the ages.
It is not mere coincidence that our new President will take office at the height of the greatest financial crisis the nation, and the world, has yet faced. Indeed, the urgency of the matter will not even wait for him to take his oath, as it is pressing down upon him even now. It is a foreboding sign that already he is being hedged about by a coterie of heavy-hitting financial advisors that will surely impress upon him the importance of going even deeper into "debt" as a way of resolving the "debt" crisis. I do not say that such voices should not be heard, but truly liberating virtues of public money need at last have their hearing.
If the promise of the moment bounces back unrequited in the unfolding of events, then the present euphoric mood will turn upon the People as it metamorphoses into the bitterness of cynicism, and our state will be at the last incalculably worse than at the first.
What is more, nothing will be changed by reading; only by acting. We Americans are doers. That is what we bring to the world. What then to do? That is for each to determine out of his or her own inspiration.
As a thought, there are practical initiatives that can be pursued in concert with others. One is the Concord Resolution, which is an effort to recreate in our time essentially what was done by the colonial government of Massachusetts in 1690; that is, to issue public money in service to the commonweal of the People, as the alternative to relying on private money, which would make of the colony a debtor to the moneylenders. This Resolution has been reworked of late to make it more focused on the transference of the money-creation franchise itself from the private banking system to the U.S. Treasury. It has also been presented in such a way as to encourage others around the nation to introduce parallel resolutions in their communities. It is our hope that this could become a movement.
It is incumbent upon me to address the matter of resources. I have, and will continue, to offer up the column, and the fruits of all other initiatives that I am engaged in, free of charge, and remain true to that commitment regardless of whatever personal sacrifices it entails. That said, the effort cannot move forward without resources. To date that burden has fallen upon a very limited circle of people who have effectively emptied themselves out to insure that the work, at least on a minimal level, continues to move forward. The level of critical work that needs to be done with respect to the monetary sphere far exceeds the resources available to perform it. It may not be too much to say that this is a tragedy of our time.
Help is needed in researching specific topics on money, and I would be willing to speak to anyone who is willing to lend a hand.
Basic material help of many kinds is sorely needed. This, of course, includes financial assistance. Funds contributed to the effort become in effect monies that are consecrated to the liberation of the whole of humanity from the ravages of a bogus "debt". This is not simply a worthy sentiment, but a spiritual principle that works through money itself. I will have more to say on that subject in future columns.
Finally I would express my appreciation for all who have taken an interest in these discourses. I have received hundreds of communications posing questions, offering critiques, or lending encouragement. I am grateful for every one. In the future it is my hope that I can be more responsive, and tighten up the time lag in the dialogue.
The time for action on the transformation of the way our society creates, issues and controls money is now. I encourage each to find their own path of commitment according to their own authentic calling. For those with ears to hear.
Thank you for your patient and considerate attention.
Richard Kotlarz
richkotlarz@gmail.com
The complete set of columns from this series is posted at the following websites.
http://economictree.blogspot.com/
http://www.concordresolution.org/column.htm
Saturday, November 8, 2008
Column #78 REGAINING CONTROL OF OUR DESTINY
(Week 13 - Saturday, Nov. 8)
In "Religion and the Rise of Capitalism", historian R. H. Tawney observed:
"Few who consider dispassionately the facts of social history will be disposed to deny that the exploitation of the weak by the powerful, organized for purposes of economic gain, buttressed by imposing systems of law, and screened by decorous draperies of virtuous sentiment and resounding rhetoric, has been a permanent feature in the life of most communities that the world has yet seen."
It is time to arrest this tragic litany. Throughout history there have been many struggles to win the rights, protect the dignity, and insure the welfare of mankind. Unfailingly, these demands have been resisted by a reactionary establishment whose power is rooted in the economic order of their day. It at first denies, then stonewalls, then grudgingly accommodates the demands. Eventually it preempts and incorporates the changes for its own devices, as part of the "imposing systems of law" and "decorous draperies of virtuous sentiment and resounding rhetoric" with which the system props itself up.
Chattel slavery is abolished, universal suffrage is won, the rights of labor are established, a social safety net is laid out, environmental protections are enacted, and a multitude of other reforms are accomplished. A black man is elected as President of the nation (alternately a woman nearly elected Vice-President), and the euphoria of the moment transcends party lines. Our society indeed moves ahead by quantum leaps.
Still, there is something crucial we are not getting at. That is that the energy of our civilization, and in turn its social, political and economic structure, is still controlled from the top for the benefit of the few, rather than percolating up from the bottom for the welfare of the People. Indeed, it may be argued that the economic polarization is getting ever more extreme. What is more, one could make a case that we, as a species, are lurching dangerously close to self-annihilation on many fronts, from resource exhaustion, to disease pandemics, to species extinction, to loss of genetic diversity, to environmental poisoning, to nuclear holocaust, to climate change, to moral degradation, to (fill in the blank).
The reason for this, I believe, is that we have not properly recognized the bedrock importance of the nature and control of the monetary system. Money is an abstraction. It is weightless, colorless, odorless, ephemeral and intangible in every physical way; yet is seems to control everything. It is the essential energy, the life force, the prana, the chi of the system.
To draw a medical analogy, if a pathogen attacks a body, it does so through the blood, the fluids, the nerve synapses, and other processes by which it circulates energy to live and grow. If a pathological agenda attacks a socio/political/economic body, it does so through the monetary system for the same reason. This is not just another issue, but a little recognized reality that underlies all issues. We have come to an unprecedented point in history where it can no longer await its turn for attention. Humankind has reached the stage where we have the power to threaten our very existence through many avenues. We must at last gain control of our own energy processes.
Expanding the medical analogy, in a material sense a dead body may contain every element it had when it was alive, down to the most infinitesimal cell structure. What has changed is that the connection with the intangible energy that animated every fiber of its being has dropped below viability and ceased to function.
An economy is much like that. The physical part abides. The sun beams down, the rains fall, the plants grow, the infrastructure persists, and the hands, hearts and minds remain willing and able to do the work. This is equally true in times of boom and bust alike. What changes is this ephemeral abstraction which seems to control everything: the monetary system.
Money is a paradox. It is nothing, yet it is everything. We must finally transcend that paradox if the human race is to gain control of its own destiny. In doing so, we will at once transform the debate on all issues, from an impasse in which we appear to be checkmated by lack of funds, to an open-ended march to the future with all the physical and human resources we can mobilize. Money will cease to be a bludgeon that hinders or drives the social order. It will instead become a superconductor that transfers energy efficiently and equitably though it.
When we get fully into this process we will be dealing with, not just finances, but the transformation of our whole civilization. It is the economic dimension of a larger key to crack the whole mess we are in wide open. We would at last break out of the "debt-money" straightjacket, and dispel the Federal-deficit sword of Damocles. Then we will start to get a handle on our other seemingly intractable problems; social, political, ecological, agricultural, urban, rural, education, health care, or whatever. Living morality will merge with common-sense practicality as we begin to reclaim the creativity, civility and humaneness of our civilization.
For those with the vision to see this represents, not merely a solution for an economic problem, but also the opening of a new horizon; one which could light up the imagination of a whole new generation. To be sure, the audacity of the prospect is intimidating, but if we approach it with grace, determination and aplomb, it may turn out to be our nation's greatest adventure yet.
I saw in the youthful faces of those gathered in Chicago Tuesday evening a deep yearning for what might be. Let us not foreclose on their hope for the future by failing to act.
Richard Kotlarz
richkotlarz@gmail.com
The complete set of columns from this series is posted at the following websites.
http://economictree.blogspot.com/
http://www.concordresolution.org/column.htm
In "Religion and the Rise of Capitalism", historian R. H. Tawney observed:
"Few who consider dispassionately the facts of social history will be disposed to deny that the exploitation of the weak by the powerful, organized for purposes of economic gain, buttressed by imposing systems of law, and screened by decorous draperies of virtuous sentiment and resounding rhetoric, has been a permanent feature in the life of most communities that the world has yet seen."
It is time to arrest this tragic litany. Throughout history there have been many struggles to win the rights, protect the dignity, and insure the welfare of mankind. Unfailingly, these demands have been resisted by a reactionary establishment whose power is rooted in the economic order of their day. It at first denies, then stonewalls, then grudgingly accommodates the demands. Eventually it preempts and incorporates the changes for its own devices, as part of the "imposing systems of law" and "decorous draperies of virtuous sentiment and resounding rhetoric" with which the system props itself up.
Chattel slavery is abolished, universal suffrage is won, the rights of labor are established, a social safety net is laid out, environmental protections are enacted, and a multitude of other reforms are accomplished. A black man is elected as President of the nation (alternately a woman nearly elected Vice-President), and the euphoria of the moment transcends party lines. Our society indeed moves ahead by quantum leaps.
Still, there is something crucial we are not getting at. That is that the energy of our civilization, and in turn its social, political and economic structure, is still controlled from the top for the benefit of the few, rather than percolating up from the bottom for the welfare of the People. Indeed, it may be argued that the economic polarization is getting ever more extreme. What is more, one could make a case that we, as a species, are lurching dangerously close to self-annihilation on many fronts, from resource exhaustion, to disease pandemics, to species extinction, to loss of genetic diversity, to environmental poisoning, to nuclear holocaust, to climate change, to moral degradation, to (fill in the blank).
The reason for this, I believe, is that we have not properly recognized the bedrock importance of the nature and control of the monetary system. Money is an abstraction. It is weightless, colorless, odorless, ephemeral and intangible in every physical way; yet is seems to control everything. It is the essential energy, the life force, the prana, the chi of the system.
To draw a medical analogy, if a pathogen attacks a body, it does so through the blood, the fluids, the nerve synapses, and other processes by which it circulates energy to live and grow. If a pathological agenda attacks a socio/political/economic body, it does so through the monetary system for the same reason. This is not just another issue, but a little recognized reality that underlies all issues. We have come to an unprecedented point in history where it can no longer await its turn for attention. Humankind has reached the stage where we have the power to threaten our very existence through many avenues. We must at last gain control of our own energy processes.
Expanding the medical analogy, in a material sense a dead body may contain every element it had when it was alive, down to the most infinitesimal cell structure. What has changed is that the connection with the intangible energy that animated every fiber of its being has dropped below viability and ceased to function.
An economy is much like that. The physical part abides. The sun beams down, the rains fall, the plants grow, the infrastructure persists, and the hands, hearts and minds remain willing and able to do the work. This is equally true in times of boom and bust alike. What changes is this ephemeral abstraction which seems to control everything: the monetary system.
Money is a paradox. It is nothing, yet it is everything. We must finally transcend that paradox if the human race is to gain control of its own destiny. In doing so, we will at once transform the debate on all issues, from an impasse in which we appear to be checkmated by lack of funds, to an open-ended march to the future with all the physical and human resources we can mobilize. Money will cease to be a bludgeon that hinders or drives the social order. It will instead become a superconductor that transfers energy efficiently and equitably though it.
When we get fully into this process we will be dealing with, not just finances, but the transformation of our whole civilization. It is the economic dimension of a larger key to crack the whole mess we are in wide open. We would at last break out of the "debt-money" straightjacket, and dispel the Federal-deficit sword of Damocles. Then we will start to get a handle on our other seemingly intractable problems; social, political, ecological, agricultural, urban, rural, education, health care, or whatever. Living morality will merge with common-sense practicality as we begin to reclaim the creativity, civility and humaneness of our civilization.
For those with the vision to see this represents, not merely a solution for an economic problem, but also the opening of a new horizon; one which could light up the imagination of a whole new generation. To be sure, the audacity of the prospect is intimidating, but if we approach it with grace, determination and aplomb, it may turn out to be our nation's greatest adventure yet.
I saw in the youthful faces of those gathered in Chicago Tuesday evening a deep yearning for what might be. Let us not foreclose on their hope for the future by failing to act.
Richard Kotlarz
richkotlarz@gmail.com
The complete set of columns from this series is posted at the following websites.
http://economictree.blogspot.com/
http://www.concordresolution.org/column.htm
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