From Babel to Baltic Avenue

                Wiley Coyote would today make a fine professor of economics.  W.C. understood quite well that it is possible to walk on air – until you look down.

                This is the virtual world of economics in which we live. It is a system of exchange based on smoke and mirrors, words, opinions, breaking news and high speed computers trading on the crest of every wave.  It is a system in which the mere possibility that a country with .17% of the world’s population might abandon one form of virtual money (the euro) for another (the drachma) sends the “value” of North American companies plummeting or skyrocketing.

                The word “value” in the previous sentence is in quotations because the only thing that changes about these companies during these brief, dramatic rises and falls is their virtual value in virtual markets. Exxon doesn’t sell any more or less oil; Walmart doesn’t sell any more or less Chinese plastic during these brief ups and downs, but if the “downs” prevail, wage slaves across the land might see the “value” of 10 years or more of 401K contributions vanish into thin air.

                That’s the beauty of virtual money. As easily as it vanishes from one location, it can reappear in another. Between 2007 and 2010, the Federal Reserve secretly conjured over $16 trillion from thin air and gave it to the largest banks in the world. It was arguably the largest transfer of wealth in human history.

                Some people (banks, presidents and Congressmen) view the actions of the Fed as a necessary measure to stabilize the world economy.  Some of us view it as theft. A good example of this latter point of view can be gained by including the virtual board game, Monopoly, played by over 750 million people around the world, in our discussion. Suppose the banker simply handed out monopoly money to a select few players when they needed to pay a bill or make a purchase.  The price of everything from Boardwalk to Baltic Avenue would go up as the players flush with cash bid up the prices. The players not included in the “stimulus” would soon find it hard to purchase anything at all and some would go bankrupt very quickly. Before long, most of the board would be owned by the players with the most play-money.

                In the virtual world of economics, this is precisely what has happened over time. Witness the remarkable transfer of wealth to a very small percentage of the population over the last two decades.  There is a reason for this transfer, and it is not because 1% of the population worked harder or smarter than the rest.  This transfer occurred because the “banker” in our virtual game is cheating.

                Unfortunately, this is not a game for anyone who must buy gas to drive to work so that they can earn money to buy groceries to feed the kids before they buy more gas to drive to work. It is not a game for the unemployed. It is not a game for the elderly beginning to discover that what remains of their life savings buys much less than it did last year or the year before.

                As I scanned the headlines this morning, headlines provided by the 6 major corporations who own what we see and hear in media, I witnessed a remarkable discordance of opinion. I have never been to Greece, but I feel like I now know much more about the tiny nation than I ever cared to know.  The euro survives, but cash is evaporating. Storm clouds are gathering, but the Dow could skyrocket before the end of the year, if the world doesn’t end in December.  I believe I can begin to understand the message behind the biblical story of the Tower of Babel.

                It is easy to switch it all off. A single click on the computer; a press of a button on the remote and the sun still shines, the earth still spins its way through the heavens and the birds still sing. The corn in my garden needs hoeing, and the world is peaceful and green again in our beloved mountain home. It would be very easy to leave it all switched off, but an ostrich with his head in the sand will soon find that he can’t afford to keep his little plot of sand. Sadly, the noise, the drama, the irritating, nauseating incessant flow of opinion – is our medium of exchange.  Once we had gold as a measure of value. Now we have glitter and gloom. If we sincerely want to change things, there would be a good place to start.