The Argentina-zation of the Western World?
I recently watched a two-part, 15 minute clip about the current global financial meltdown and how it’s similar to what happened in Argentina. I know little of the Argentine history but Adrian Salbuchi (the gent in the video clip) claims to be an Argentinian and also claims that he’s lived through three such meltdowns in his nation.
The basic thesis is that “financial” capitalism has usurped the place of the “real” capitalism. I really like the idea. Finance has conquered economics I believe is a phrase he used. What is the “financial” capitalism? According to Adrian Salbuchi it’s what occurs when people who don’t produce or add value to the system take over. They ingrain themselves and make it so that the system can’t function without them. The problem is that they don’t add value which means they will eternally be a drain. If the equation becomes unbalanced enough they will absorb more than the system can sustain and the entire thing becomes unstable.
So what’s a “real” economy? It’s the one that naturally exists when one person produces and another wishes to have said item and a trade between them ensues to the satisfaction of both sides. A “real” economy doesn’t have room for a third person to come between these two individuals and demand that they both pay him so he can physically take the item from one and give it to another.
Salbuchi neatly summed up, in four points, what the flaw with the “financial” capitalism is:
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1. Planned monetary insufficiency. This is what happens when legal tender is issued at a pace slower than banks are producing money. In other words the fractional reserve system deployed in a way to always benefit a certain group.
2. The private banking system having the power to do #1. All that this entails is massive of course but issue at the centre is how these organizations are given the power and permission to do this.
3. Easy credit.
4. Privatizing profit and socializing losses. (Remind you of the quote: “Corporation: An ingenious device for obtaining profit without individual responsibility.”)
The problems listed above, claims Salbuchi, are all the larger because most in the Western world don’t see them. Argentina had three such meltdowns in his lifetime and so he claims to be able to see the cycles and the reasons for them. Westerners on the other hand have never seen an entire cycle, perhaps the oldest have, those that can remember the Great Depression.
It’s a worthwhile watch and I recommend it to anyone who has an interest and 15 minutes to spare.