ECONOMIC LUNACY

(Some thoughts on the International Economic System)

by

JOHN ROBERTS

Where should one begin a discourse on the subject of International Economics? This is a particularly difficult question, particularly for one who has no knowledge, other than that of the layman, for whom the subject is a world of its own, remote from the ordinary cares of the family man.

One does not need to be a “Micawber” to understand the basics of economic principles: that one has an annual income and expenditure, both of which should balance themselves at the end of the day, or the end of the financial year. Governments, generally work, on this basically simple system, of spending what funds are raised via taxation of various kinds, ostensibly for the public benefit. Likewise, the individual; he who is in secure and full-time employment, knows how much he has to spend and spends accordingly, unless he is a fool.

In the 18th Century, with the development of international trade upon a large scale, there came into its sphere, the financial speculator. Insurance underwriters began to cover the risk for merchants, charging a substantial premium for the privilege. In the United Kingdom, Cotton and Wool merchants organized themselves in Trade-Exchanges, where they could meet to conduct business between themselves. The practice of usury had, hitherto, been confined to the Jews, who were banned from practising it within their own racial-religious group. The Christian Church frowned upon usury as a form of theft. The principal prevailed amongst merchants, that money had to be put to work to produce income, primarily by trading, agriculture and manufacture.

With the growth of Public Companies, the gambling instincts of speculators were given free reign. Through the 19th-Century, Stock Exchanges grew increasingly influential and large Brokering Houses became wealthy and powerful. Eventually, the lust for gambling led to the development of "Futures Markets", wherein gamblers could speculate on the potential rise and fall of commodity and mineral prices.

I do not pretend to know anything concerning the inner workings of these institutions. One does not have to have an expert knowledge of these places, to understand that the system which has thus prevailed for many years, has been the source of the enrichment or impoverishment of thousands of individuals.

The threat of losing a substantial part of their accumulated capital does not deter people from "investing" in speculative ventures. It is part and parcel of the "gambling instinct" that compels the greedy and the weak to operate in these markets. With careful study, people learn to invest in whatever stocks appear to be sound or likely to rise in the near future. There are, of course, secure as well as insecure and hugely speculative stocks. Fortunes are made and lost on such ventures.

What about the result of all this activity on the ordinary man in the street? Public Companies depend for their very existence upon the maintenance of sound ratings in the Stock-Exchange Listings. It is not merely a question of profit and loss, although these are obvious factors. In the crash of l929, many, heretofore, sound businesses went to the wall, often as a result of bank failure, rather than loss of trade.

A fall in stocks means the writing-off of millions of dollars for large concerns and a rise in value results in an increase in the nominal value of the company's assets. All this "paper" activity has no bearing whatever on the actual state of business: it is the result of the continuous gambling in stocks and shares, which is the sole activity of those engaged in speculation in the Stock and Futures exchanges. However, should there be a wholesale "loss of confidence" in a branch of trade, or within the trading activity of a particular nation, the result can be, and often is, a disastrous collapse of a whole national economy, accompanied by the closure of industries and businesses and the wholesale loss of thousands of jobs. People who thought they were in a secure job for life, suddenly find themselves in the dole queue, if there is one. Such a general collapse has affected many Asian nations in recent months, causing hardship to millions of working-class individuals.

After a flurry of speculation, when certain stocks or even stocks, generally, rise in a grand inflationary spiral, there is often a contrary reaction. Wise speculators understand when it is time to discard their stocks and reap the harvest of profit that comes their way. The foolish, who hang-on, in the hope of further gains, are left with valueless paper, for which, only a few weeks ago they paid good money. Oh! how sad for those poor losers!

We have witnessed the above scenario on several occasions, from the original "South Sea Bubble", of the late 18th Century, right through the l9th and 20th Centuries. The crash of l929 was the occasion of a general recession throughout the United States, which caused great loss of employment and subsequent hardship amongst the working classes. This recession further increased the hardship of the unemployed workers in Europe, who had been struggling to survive the aftermath of the First World War.

The existence of Commodities and Metals Futures Markets provide another example of the relentless lust for gain amongst the privileged middle-classes. These are gambling institutions, pure and simple, and create great distress amongst those countries affected by their operations. In many countries of the "Third World", it is well known that International Monetary organisations like the so-called, "World-Bank", controlled and directed by the United States, impose conditions regarding the grant of loans, which provide that commodity crops such as Cotton or Coffee must be grown, in place of staple food crops which only feed the peasants. The result is increasing hardship for South American peasants, compelled by their landlords to produce crops that are of no direct benefit to the poor.

We have witnessed, recently, examples of currency speculation on the grand scale, which has resulted in profits calculated in the "billions" of dollars for the unscrupulous individuals engaged in this trade. The subsequent "profit-taking" resulting in a fall in the value of currency and resultant national hardship. (This actually happened a year or so ago in the case of the Pound Sterling). The successful participants in these schemes are lauded, internationally, for their foresight and business acumen, in thus robbing a nation of its productive capacity. In fact, they are thieves and should be prosecuted for international fraud.

It has to be remembered, that none of this activity is productive of anything other than profit. No funds are set to work to create produce or to promote industry. Cash is merely shifted, no doubt by electronic means, from one account to another. The resultant profit is simply the result of the electronic manipulation of funds.

When one considers that, throughout the World, there are literally hundreds of thousands of persons employed in maintaining and promoting stock exchanges, of one form or another and all, generally, making a very good living in the process, it does not take one long to realize that there are many parasites, living off the backs of the productive labouring classes of humankind.

At the other end of the chain, is the livelihood of millions of ordinary men and women, whose happiness and security depend, not upon the production of high quality goods but the upon the vagaries of the stock-market. These are the people who are actually creating the goods and providing the services which are the staple of human existence. They are the pawns in the game of speculation played by the world's financial manipulators. Their security and happiness depend upon the maintenance of stable trading conditions. Such stability can only be brought about by an end to this continuous sea-saw in stock valuations, occasioned by deliberate manipulation of the listings.

When Adolf Hitler came to power in Germany in l932, one of his first acts was the closure of the stock exchange. He was well aware of the threat this establishment would be to his plans for a re-organization of German industry. It was a wise move. It removed, for a while, the hazard of the speculative investor in the world of German commerce.

There is no possibility of such an action taking place within the Western World today. The United States is the economic (as well as the military) master of the world and has the lesser nations of the West under its influence. The game of "acquire and dispose" will continue far into the future, until after, perhaps, a succession of "Wall-Street Crashes", the economic moguls will, perhaps, devise a more equitable and just system of regulating the activities of the Stock-broker. In the meantime, the share-buying "Sucker" will continue to be the victim of more perceptive and well-informed speculators. The workers of the Third-world will continue to live at the mercy of the well-heeled aristocrats of Wall-Street.

I might add that my wife and I possess no stocks or shares of any kind: hence I am free to express my thoughts on this subject. What little cash we possess is deposited, at minimal interest, with one of the local banks.

What can be done to regulate the situation? The prompt closure of the "Futures' Markets" would be a step in the right direction. Some bright boy might come up with an alternative system to rid the world of the blight of speculative investment. Individual Governments might be induced to close Stock Exhanges and institute a scheme for the assessment and regulation of business assets on a purely non-speculative and local basis. Until this pernicious system is destroyed, there will be no stability in the international business world. One cannot prophecy when such a change may occur but, sooner or later, the present evil must be removed. One obvious difficulty in the face of future reform must be the entrenched commercial might of, what are now, "International Trading Cartels", such as the Coca-Cola Company: purveyors of drug-laced drinks to millions of children. Originally this beverage contained cocaine but now merely stimulates our kids with caffeine.

That the present system is "stark-staring mad!" must be clear to even the dullest mind. There has got to be a better way of handling the control and development of business, than by leaving it in the hands of the gambler and speculator. These people, however clever they may appear, have no interest in the public weal: no other motive other than that of personal enrichment. How about encouraging the growth of some real public spirit? It is time the thieves were ejected from the seat of power: there are too many of them active at the present time, for the well being of the community as a whole. They will have to go!

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Perhaps the most inequitable and unjust system of evaluating relative financial monetary values, is that which presently prevails throughout the world - led and directed by such United States institutions as that referred-to as "Moody's". This is a purely arbitrary mode of assessing the value of the resources and business capacity of nations from the point of view of the international trader.

Here, in Australia, there are boundless mineral resources, including gold, silver, lead, zinc, nickel, bauxite, iron-ore, (you name it) in huge deposits. In addition, the country produces vast supplies of wheat, rice, cotton and wool, not to mention such luxuries as exotic foods and fisheries of a diverse nature. In short, the country is a source of great wealth, much of it, in the hands of foreigners and off-shore speculators.

One would imagine, if the rules mentioned above are applied equitably and honestly, that the Australian Dollar (originally equal to ten-shillings Sterling or two US Dollars at the pre-war rate of five-shillings to the Dollar) would be amongst the strongest currencies in the world. However, what do we see? The Aus. Dollar is worth about 65 cents US (variable) and 40 pence Sterling approx. at the present time. It is well known that the United Kingdom has nothing to offer in the way of primary resources, at least, nothing capable of creating an export trade, other than manufactures. Yet the Pound Sterling is worth far more on the international monetary scale than the Australian Dollar.

Any Australian who visits the United Kingdom quickly discovers that his Pound Sterling will buy in England less than his Australian Dollar will buy back home in Australia, even though it has cost him two and a half Australian Dollars. He begins to wonder where the value of his humble Aus-Dollar has disappeared to. The answer is that it has been swallowed up by the international swindle of the monetary exchange system.

The simple and incontrovertible truth is that the Australian Dollar is artificially maintained at a low level, in order to enable its primary materials to be purchased at a ridiculously low international price. This suits those Australian companies (owned, as many of them undoubtedly are, by international capitalist organizations) which make quick and easy profits from the massive and uncontrolled exploitation of Australia's primary resources. The policy of successive Australian Governments has been to sell off the country's inherent mineral wealth as quickly as possible, without regard to the future needs of posterity. The motive is present expediency and greed.

There is an utter disregard of environmental factors in this mad race to rob the country of its resources, be they mineral wealth or timber. Lip service only is made to the evident need to conserve, not to dissipate resources. The forests are still being raped everywhere, in spite of the vigorous and well-merited activities of forest conservationists. The term "Forestry Commission", here in Australia, does not mean, as one would imagine, the body established for the preservation and protection of the forest environment but means, in fact, that body established for the exploitation and "management" of the timber resources of the country. Such wholesale robbery continues with the connivance of Australian Politicians, who represent the vested interests of their constituents, to the detriment of the people as a whole.

This pattern of world wide international control of monetary values and natural resources, by the United States, is, no doubt, applied to the disadvantage of Third-World countries right across the globe.

What, then, is to be done about this problem? A future Australian Government might decide that the Australian Dollar has to be given its proper place in the International monetary system and fix the exchange rate at an equitable level. If other disadvantaged nations did likewise, it would upset the present cosy system, whereby the wealthy and powerful nations continue to enrich themselves at the expense of the weaker. However, it is not likely to happen in the foreseeable future. Conservatism is rampant at the present time and justice and equity are dirty words.

We certainly live in a sick and sorry world: a world continuing the slide towards disaster, both militarily, economically and ecologically. It is to be hoped that somewhere in the field of economic expertise there is some bright mind which can devise a practical alternative to the confusion which presently prevails in the international business world: an alternative which will iron out the wrinkles in the fabric of human activity.

If something is not done, future generations will witness increasing polarity in social and business relationships right across the face of the Earth. They will see the growth of totalitarian systems, far more dangerous to the happiness and well being of society than those of the Twentieth-Century. We are already witnessing the emergence of the United States as a supreme World Power, both militarily and economically. The demonstrated instability of this organism is frightening, in the realization that the future direction of the entire world largely depends upon the degree of wisdom (or folly) exercised by the United States in its present and future management of international affairs. Sad to say, its past history bodes not well for the happiness of mankind. But I have already spoken my thoughts on that topic in a previous essay. (War and Weaponry).

Throughout these essays, it may appear that, at times, I have been a prophet of doom. However, in spite of these remarks, I still retain a faith in the essential goodness of humankind. In spite of greed, ignorance and vice, the majority of thinking people, world-wide, are aware of the faults of society and anxious to do something to remedy the situation. Mankind is, after all, moving forward from yesterday and today: towards tomorrow. If the material prosperity, not the deadly militarism, of the Twentieth Century is to be preserved and universally promoted, then there has to be drastic change in the present system. So much is clear. We have a long, long way to go! Sydney, Australia. 18th February l999

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