Money & Banking: The Root Cause of Debt, Crisis and Poverty ...?

Does the fundamental design of the banking system automatically lead to an unstable, unproductive, unfair and unsustainable economy and society ...?

If the answer to the above question is yes, then the logical next question to ask is will society take the opportunity to truly fix the problem now...? or will it resort to superficial changes and start saving up for the next bailout ...?

If the best minds in the world were to get together to design a new banking system now ... could they create something better than what we've got ...? could they create something fair (the current system throws millions into debt unnecessarily) ...? could they create something stable? (the current system triggers a recession every few years) ...? could they create something sustainable (the current system requires infinite economic growth) ...? could they create something productive (the financial crisis is throwing millions of people into unemployment) ...?

More and more people are starting to believe money & banking is the root of most of our social and economic problems.  For instance, due to outdated/flawed banking laws, Fractional Reserve Banking currently allows private banks to legally generate 'money out of thin air' from debt, and use it to drive individuals, economies and nations further into debt (and debt slavery).  Is this true? ... Can this be right ...?  Is there a better way ...?  

Well the latest Zeitgeist movie starts to address such issues, and there are many groups now also demanding change ... e.g. one such group, Positive Money, is holding a conference next month in London (entitled "Banking Shapes the World"), on the 13th and 14th November 2010. 

Increasing untapped talent and stress: A disaster waiting to happen ...?

Almost one million jobs could be lost in the UK because of government cuts in public spending, a report suggests.  The knock on effect of public sector cuts upon private sector firms is rarely mentioned or taken into account, but this report does attempt to do so.

Accountancy firm PwC said that about 500,000 of those job losses may be in the private sector due to the impact on firms supplying the public sector, with business services and construction would be among the industries hardest hit.

The impact of this is in fact already starting to be seen, with contracts not being renewed, renegotiated or withdrawn altogether (e.g. the building schools for the future programme), and the PwC report puts the total number of job losses arising from the public sector spending cuts - including the knock-on effects in the private sector - at about 943,000.

It also suggests the output of private firms may well fall by £46bn per year by 2014-15.  PwC chief economist John Hawksworth said the predicted levels of job losses would be a drag on the pace of the economic recovery "but should not derail it altogether".

The report said that in absolute terms, the areas worst hit would be the south east of England, the north west and Scotland.  But PwC added that in percentage terms, Northern Ireland would suffer most with one in every 20 jobs set to go.

A Treasury spokesman said "a decisive plan" was needed to "reduce the UK's unprecedented deficit and restore confidence in the UK economy ... and not taking action to tackle this problem would put the economic recovery at risk," they added, saying this was a view shared by many organisations including the International Monetary Fund, the World Bank and the Bank of England.

The question that's never asked (or answered) is where new jobs are going to come from for the economy to start to recover.  For a more prosperous and sustainable future, levels of untapped talent  need to reduce (not increase), and creativity needs to increase to create growth, reduce the deficit and pay back the debt ... and releasing staff without any plan of action for this could make matters worse, not better, with more people without any work and wholly dependent on the state.

The application of a simple, effective and more holistic 'economic' test (of overall 'well-being'), known as "BUTS" test, where:

B = Borrowing

U = Untapped talent

T = Trade deficit

S = Stress

rapidly highlights how well-being in the UK in the future is likely to get much worse, with any reduction in borrowing likely to be at the expense of increased taxes and reduced public services ... as well as growing levels of untapped talent (e.g. unemployment) and increasing levels of stress.

There is growing concern about unemployment, not just from a financial perspective, but from an individual point of view too, as more people lose self-confidence, belief and self-worth. People's natural ability/desire to help others, add value, and make a difference to other people's lives reduces ... reducing the overall well-being of the community, as well as the nation's economy too. There is also the risk of growing frustration & anger, particularly from younger generations, as youth unemployment rates are much higher, they have been saddled further with debt (e.g. due to tuition fees) and given little prospect of a job, house prices still being expensive to rent/buy and they are also the ones who'll have to pay most of the Government current borrowing back (through future tax rises).

Shockingly, the official figures of 2.4 million unemployed are a gross underestimate, as there are in fact over 8 million people of working age able to work but classified as 'economically inactive' ... and even this figures represents just the tip of the iceberg, as levels of untapped talent within the workplace lies at around 90%, due to outdated management practices failing to harness the talents of those in work too!  No economy will ever be successful with such shockingly poor foundations, and outdated leadership and management practices are also generating further unnecessary stress too.  

Outdated leadership and management practices (19th/20th century) primarily rely upon extrinsic motivation, self interest and personal gain ... where management primarily involves managing budgets, telling staff what to do and ensuring they meet internal/arbitrary targets ... rather than going to the front line, listening to customers actually want and supporting front-line staff in their quest to continually improve how value can be provided to customers (nb this is what 21st century leadership and management practice is all about - take a look at my book for instance) ...

The former systematically generates frustration and stress, for customers and front line staff alike. It also drives people to manipulate 'the system' in order to meet their targets & goals; deflecting people away from the real purpose of the enterprise (i.e. to create value for customers) which destroys teamwork, morale, and the future of the enterprise too. Such practices have also been shown to systematically generate between 40-90% waste in terms of both time and resources as well - i.e. traditional enterprises spend most of their time (and resources) wasting time, effort and money, for their customers ... whilst stressing them out in the process too ...

... and the traditional response to this ... "it's just the way work is" ... and "let's send everyone on a 'stress management' course - to help them to process stress" (and to also reduce the risk of being sued!) ...

The problem with the traditional management statements above is that they are both wrong - and flawed. 21st century management practices do not involve helping people to 'process stress' - they focus on systematically 'eliminating stress'! ... so there is no need for stress management courses at all ... (i.e. such courses are a 'cost of failure', and they do not reduce the risk of leaders/managers being sued either).

Enterprises applying 21st century leadership and management practices do not just transform the performance of the enterprise, they transform the lives of people - forever, and for the better. Most enterprises applying such practices quickly transform their capability (e.g. improvements of between 40-1000%) and change out of all recognition. Staff moral is positively transformed and stress is systematically reduced. People are naturally motivated to innovate, to add value and to help others. They are also more than capable of finding new ways to improve current products/services and to find new products/services that would allow even more value to be created too (given the opportunity). All they need is clear direction, as well as trustworthy leaders & managers who support them on the front line, who listen, learn, and help them to systematically improve how value is provided. Again not rocket science - just rarely practiced in traditional enterprises.

Stress, and the impact of stress, on people is heavily responsible for the 'eighth waste' in 21st century management practice ('untapped talent') - as it destroys people's desire/ability to contribute, to be creative or to think rationally (e.g. take a look at Ch. 8 of my book). It also impacts on people's overall well-being, as well as the well-being of those around them ... which impacts on communities/nations as a whole too (NB hence it's inclusion in the 'BUTS' test).

The National Institute for Health and Clinical Excellence (NICE) has said the cost of work related mental illness was £28bn - a quarter of the UK's total sick bill, and it also made clear that the stress created as a result of bad management/managers was the single biggest cause of problem. The 'economic loss' of stress goes way beyond the £28bn referred to here too ... this is literally just the tip of the iceberg, with actual figures more likely to be around 80-90% (and growing).  

Those leaders who believe stress management courses will 'protect them' from 'being sued' are I'm afraid also sadly wrong ... as 'ignorance' is 'not bliss' (or a defence - nb landmark cases are already occurring - but are mostly settled out of court to avoid publicity). The writing is on the wall now that 21st century leaders & managers have demonstrated the capability/outcomes created from applying 21st century practices ... which highlight the way forward, as well as the fundamental flaws in traditional practices ...

21st century leadership/management practice and examples will no doubt be used in evidence against those continuing to apply outdated traditional 19th/20th century practices ... and as millions of law suits start to get filed, yet more traditional private enterprises will go bankrupt ... and yet more taxpayers money will be diverted away from providing front line services (to pay for millions of out-of-court settlements) ... joining all the taxpayers money already being diverted to service Government debt, as well as the colossal (and unfunded) civil service pension liability ...

A 'Double Dip" is on the way I'm afraid ... and a 'triple dip', and a 'quadruple dip', may well follow too I'm afraid ... unless current leaders/managers change course quickly ... as it's also the adoption of 21st Century leadership/management practices that will harness and unleash the untapped potential within our society, and systematically uncover the plethora of world-class solutions people around the globe are looking for and more than willing to pay a premium for ...

A 'political response' which goes ahead and slashes millions of jobs, without any clear understanding or robust plan to harness untapped talent/potential to systematically provide the future product/services the world needs, is in fact not a 'solution' at all, but a short-sighted and flawed act, which will have a huge, negative and corrosive impact on individual/community well-being ... and will not provide any robust foundation for reducing borrowing (or reversing the massive trade-deficit) in any sustainable way either.  It is a systematic change the UK now requires, not a political one.

Fact or Fiction ... ?

Here's one movie mainstream media are not going to air ... but the internet will ... truth or conspiracy theories .... you decide

It's a long movie (2:00:00) as it covers a number of areas, with Part 3 being the main one to watch (1:16:00), and for those without time to watch it through, but would like a few snippets, Part 3 of the movie presents a shotgun tour through the subjects of Central Banking, War Pretexts, Banking Panics, the Military Industrial Complex, Media Culture and ultimately the mental neurosis and deadly addiction known as “Power.” The central theme is how society is often misled when it comes to certain pivotal historical events, what those events serve in function, along with how the overall social conditioning patterns we see today function to create values and perspectives which support and perpetuate the static, established order/power structure, as opposed to fluid social change and productive evolution for the betterment of the society as a whole ... and it goes on to make the following points ...

"... the people in power do not want you to think too much ... that is why the country and the world has become proliferated with entertainment, mass media, television shows, amusement parks, drugs, alcohol and every kind of entertainment to keep the human mind entertained ... so you don't get in the way of 'important people' by doing too much 'thinking' ... you had better wake up and understand that there are people guiding your life and you don't even know it ..." (1:44:30-1:47:00)

"... the last thing the power establishment wants is a conscious, informed public capable of critical thinking, this is why a continuously fraudulent zeitgeist output via religion, the mass media and the educational system it is in their interest to keep you distracted in a niave bubble and they are doing a damn good job of it ..."  (1:47:00-1:50:00)

Peter Joseph, the Director of the film, concludes by stating that the most important singular statement of the film’s narration, which defines the purpose of "Zeitgeist: The Movie" itself, is: 

“The social manipulation of society through the generation of fear and division has completely inhibited the culture. Religion, patriotism, race, wealth, class and every other form of arbitrary separatist identification and thus conceit has served to create a controlled population utterly malleable in the hands of the few. Divide and conquer is the motto ... and as long as people continue to see themselves as separate from everything else they lend themselves to being completely en-slaved.” 

How 'Good' is Britain?

Quoting Aristotle, and following on from my last post, the following question is now partially answered ...

Aristotle said ...  "The trade of the petty usurer is hated with most reason: it makes a profit from currency itself, instead of making it from the process which currency was meant to serve. Their common characteristic is obviously their sordid avarice*"

And this week Robert Peston, one of the few in the BBC bold enough to question what is going on, this week highlighted the "Valueless Banking Boom", following figures released by the Bank of International Settlement, which show global foreign exchange turnover rose 20% to $4trn per day on average (yes, that's each single day) in April 2010 compared with April 2007.

"A sum equivalent to the entire output of the global economy is traded around once a fortnight on currency markets ... and what's more, London's portion of this business has increased even faster, by 25%, so UK based banks' share of forex business is a market-leading 37%.

As for over-the-counter interest rate derivatives (transactions that are largely bets on the direction of interest rates), these rose 24% globally to $2.1 trn ... and Britain's share of these trades was a striking 46%, up from 44% in 2007.

Many might well dispute that the great banking meltdown of 2008 happened because of this explosive growth in financial trading - but the trading certainly didn't prevent the crash.  It is clear that bankers are being allowed to continue to gamble unabated, without the fundamental problem being addressed (i.e. bankers' gambling being separated completely from ordinary citizens' savings).

And there is a massive disconnect between a global economy that has less than doubled in size over 12 years and - on the other hand - OTC derivative transactions that have increased eight fold while foreign exchange transactions have almost trebled in value. What's more, as I've pointed out before, the global economy was growing quite as fast in the 1960s when much of this financial business barely existed.  

So those (like me) who can't see the point of all these financial trades may have a point - unless, that is, you believe the enrichment of financial traders and hedge fund managers is a social good in itself.

Which is why, some would say, it's slightly odd that when no less an authority than the chairman of the Financial Services Authority, Lord Turner, questions the social utility of much activity in financial markets, and also suggests that it might be no bad thing to levy a tiny Tobin tax on all this frenetic trading in electrons, well it's curious that the chancellor of the exchequer (who could use a bob or two) doesn't lick his chops and demand a bit of that."

Well it's clear that immorality/corruption runs deep, and at present with whatever 'colour' of Government is in Power (n.b. ironically the last Government arguably lead the way to this path of immorality - 'led' by politicians who hid behind supposed religious beliefs), and none of them are going to challenge anything that serves their own vested interests ... even when it's clearly at the expense of everyone elses'. 

From a society (and moral point) of view, separating gambling from traditional banking is a 'no-brainer', but current leaders continue to choose not to do this.  From a society and moral point of view, restricting (and taxing) trading/gambling, and investing resources into activities that add real value (the reason for currency) is also paramount, but current leaders choose not to do this either.  Clearly the hidden hand of 'power' exerts major influence on those seen to be in 'power' (e.g. Politicians) and only truly honorable, respectful, courageous and strong 'leaders' will resist this and do what is right ... and the current set of Politicians are rapidly proving they have none of these qualities (particularly the first, and arguably the most important, two).

My previous reference to the article below explains/expands on this point ...

"Introducing tighter regulations for bankers or politicians does not raise their level of maturity, morality or their ethics, it just limits what they can get away with. No, it is the type of people, the Ethnocentrics themselves, that have to go. Worldcentric people by definition and by their nature would not have abused the old regulations, let alone need new ones. Anyone below Worldcentric on the “chart” should not be selected or elected into positions of leadership in politics or big corporations, not just banks. Fewer people would fit the bill and that would limit our choice, and so it should.

The second of the two issues was the failure of commentators to seriously question the capitalist economic system that has proved to be so fragile and unjust. It has brought wealth to half the world while the rest starve; it thrives on excess consumption and the inevitable emissions, and it seriously retards the evolutionary development of individuals and cultures. Bankers and politicians alike strive to prop up the old failing system which they abused, because they know no better.

However there is also a groundswell of more conscious or ‘worldcentric’ people who will no longer tolerate the old order and they will become ever more vociferous until the ethnocentric majority of politicians are discredited, ousted and replaced. Some commentators will reread if not resurrect Karl Marx, but the way is forward not backwards. A new economic order is essential, one that puts people and planet before profit".

To answer the question we need to go back to Aristotle ... noting we are recognised as the nation leading the way in profiteering from currency, instead of making it from the process which currency was meant to serve. 

The immorality of such action is clear, and those who conspire to allow this to happen are not 'Good People' and need to be challenged ... and it will take 'Good People' to join together to do this**

... so "How Good is Britain?" ... well the evidence suggests not good I'm afraid ... and in the future ... well we shall see (i.e. will "Good" people do nothing, and be complicit in evil). 

And as I also referred to in my last post, Aristotle referred to the 'Evil of Ignorance' ... IMHO Apathy (i.e. Type 2 Ignoromics***) can be referred to as 'evil' (as it is both complicit with and an accessory to evil), but Ignorance (Type 1 Ignoromics***) is arguably less so (as it is neither complicit with nor an accessory to).

* Avarice - Extreme greed for wealth or material gain.

** 'For evil to flourish, all it needs is for good men to do nothing' [Edmund Burke 1729 - 1797]

*** Ignoromics = People are either effectively ignorant of the situation (Type 1 - Ignorance) or not prepared to take responsibility to make sure it changes for the better (Type 2 - Apathy).

Aristotle: The 'evil of ignorance'

For some time the wise and learned have reflected on the use, and misuse of power, and the purpose and values within our society ...

For instance here's just a few of the things Aristotle had to say ...

"Democracy is when the indigent, and not the men of property, are the rulers"

"In a democracy the poor will have more power than the rich, because there are more of them, and the will of the majority is supreme"

"The trade of the petty usurer is hated with most reason: it makes a profit from currency itself, instead of making it from the process which currency was meant to serve. Their common characteristic is obviously their sordid avarice*"

"Poverty is the parent of revolution and crime"

"No notice is taken of a little evil, but when it increases it strikes the eye"

"It is the mark of an educated mind to be able to entertain a thought without accepting it"

"All persons ought to endeavor to follow what is right, and not what is established"

"The only good is knowledge and the only evil is ignorance"

"You will never do anything in this world without courage. It is the greatest quality of the mind next to honor"

Insights (and challenges) arguably just as, if not more, relevant today ... which capture in simple words the type of Poweromics we still face today, as well as the "evil of ignorance" (or more specifically Ignoromics**) that allows it to continue.

* Avarice - Extreme greed for wealth or material gain.

** Ignoromics - People who are either effectively ignorant of the situation (e.g. the overall environment) or not prepared to take responsibility to make sure it changes for the better.