Recently Business Insider reported that a financial crisis could emerge from coronavirus's lingering fallout1 citing recent remarks made by World Bank chief economist Carla Reinhardt to Bloomberg TV. This is a perfect example of an understatement wrapped in a lie.
In a previous speech, the World Bank's Carla Reinhardt noted that the US Federal Reserve created $3.4 trillion out of thin air while it took 40 years to create $14 trillion, indicating a disturbing acceleration of hyperinflationary money printing. Yet despite these alarm bells, panicking economists are screaming in tandem that transatlantic banks must unleash ever more hyperinflationary quantitative easing which threatens to turn our money into toilet paper while at the same time acquiescing to infinite lockdowns in response to a disease which has the fatality levels of a common flu.
The fact of the oncoming collapse itself should not be a surprise—especially when one is reminded of the $1.5 quadrillion of derivatives which have taken over a world economy but generate a mere $80 trillion/year in measurable goods and trade. These nebulous bets on insurance on bets on collateralised debts known as derivatives didn't even exist a few decades ago, and the fact is that no matter what the Federal Reserve and European Central Bank have attempted to do to stop a new rupture of this overextended casino bubble of an economy in recent months, nothing has worked. Zero to negative per cent interest rates haven't worked; opening overnight repo loans of $100 billion/night to failing banks hasn't worked; nor has $4.5 trillion of bailout unleashed since March 2020. No matter what these financial wizards try to do, things just keep getting worse. Rather than acknowledge what is actually happening, scapegoats have been selected to shift the blame away from reality to the point that the current crisis is actually being blamed on the coronavirus!
This Goes Far Beyond COVID-19
Let me just state outright that while the coronavirus may in fact be the catalyser for the oncoming financial blowout, it is the height of stupidity to believe that it is the cause, as the seeds of the crisis go deeper and originated much earlier than most people are prepared to admit.
To start getting at a more truthful diagnostic, it is useful to think of an economy in real (vs purely financial) terms— that is, simply think of the economy as a total system in which the body of humanity (all cultures, nations and families of the world) exist.
This co-existence is predicated on certain necessary powers of production of food, clothing, capital goods (hard and soft infrastructure), transportation and energy production. After raw materials are transformed into finished goods, these physical goods and services move from points A to B and are consumed. This is very much akin to the metabolism that maintains a living body.
Now, since populations tend to grow geometrically, while resources deplete arithmetically, constant demands on new creative discoveries and technological application are also needed to meet and improve upon the needs of a growing humanity. This last factor is actually the most important because it touches on the principled element that distinguishes humanity from all other forms of life in the ecosystem which Lincoln identified wonderfully in his 1859 Discoveries and Inventions speech:2
...while the coronavirus may in fact be the catalyser for the oncoming financial blowout, it is the height of stupidity to believe that it is the cause...
All creation is a mine, and every man, a miner. The whole earth, and all within it, upon it, and round about it, including himself, in his physical, moral, and intellectual nature, and his susceptibilities, are the infinitely various leads from which, man, from the first, was to dig out his destiny... Man is not the only animal who labors; but he is the only one who improves his workmanship. This improvement, he effects by Discoveries, and Inventions.
In a 2016 speech by President Xi Jinping3, the principles of Lincoln's understanding were laid out by the Chinese statesman who said:
We must consider innovation as the primary driving force of growth and the core in this whole undertaking, and human resources as the primary source to support development. We should promote innovation in theory, systems, science and technology, and culture, and make innovation the dominant theme in the work of the Party, and government, and everyday activity in society... In the 16th century, human society entered an unprecedented period of active innovation. Achievements in scientific innovation over the past five centuries have exceeded the sum total of several previous millennia... Each and every scientific and industrial revolution has profoundly changed the outlook and pattern of world development... Since the second Industrial Revolution, the US has maintained global hegemony because it has always been the leader and the largest beneficiary of scientific and industrial progress.
What Lincoln and Xi said 150 years apart are not mere hypotheses, but elementary facts of life which even the most ardent money-worshipper cannot get around.
Of course, money is a perfectly useful tool to facilitate trade and get around the awkward problem of lugging bartered goods around on your back all day, but it really is just that: a supporting element to a physical process of maintenance and improvement of transgenerational existence. When fools allow themselves to lose sight of that fact and elevate money to the status of a cause of all value (simply because everyone wants it), then we find ourselves far outside the sphere of reality and in the Alice in Wonderland world of Alan Greenspan's fantasy world where up is down, good is evil, and humans are little more than vicious monkeys.
So, with that in mind, let's take this concept and look back upon today's crisis.
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