Tuesday, March 10, 2009

Little Pieces Of Paper

I have been troubled by an aspect of this economic crises that seems to be overlooked. Our tool has become our master.

I'm specifically talking about money here. We have become slaves to little pieces of paper that are so useless they can't be eaten, or worn, or keep you dry, but are so valuable you would never even blow your nose with one. This is insane!

As best as I can figure out, this is what happened and why we are here. The US, once upon a time, made things that kept you warm and dry and grew food to eat. But then we realized that other people could do that cheaper, but not better. So we gave them our little pieces of paper so they would do this for us. But with others making all those things, what should we do? After all, sitting around and doing nothing wouldn't get us any more of those little pieces of paper. Then it hit us! All those people buying all that stuff made elsewhere needed little pieces of paper, so we would make that. But, you can't just print up your own copies of little pieces of paper, that would be illegal. And we can't have the government do it, We wouldn't get any profits! And besides, we all know what happened to Germany when they printed little pieces of paper. Inflation went crazy, the cost of everything went through the roof, and the economy collapsed.

But what can we do? What if we create new pieces of paper and sold them? And since nobody with any common sense would give up official little pieces of paper for ones we invent, we'll offer little pieces of paper insurance! This is fool proof! Of course this little piece of paper is worth something. I have another little piece of paper that says it is. Now go out and spend.

So we stopped making stuff and started making little pieces of paper and we were so proud of ourselves we even invented a new name for how clever we had become. We have shifted to a “Service Economy.” And the primary service we provided was lending official pieces of paper in exchange for our home made little pieces of paper and we even, for an additional $19.95, offered a completely different piece of paper telling you how good our invented paper is.

This is where it gets a little funny. Everybody started making just as much stuff as we used to and even more. All so they could have our little pieces of paper. But, once they had all that they didn't know what they should do with them all. Clearly they are too valuable to blow your nose, and they don't keep you warm, and I don't really want to buy those crappy Salad Shooters Americans seem to love. I'll buy those new little pieces of paper! They are all the rage! And so everybody was happy.


Somebody looked up one day and realized that there was far more homemade little pieces of paper than there were official pieces of paper. But that's OK because I have this other piece of paper saying everything is fine. But it wasn't. The second piece of paper was just as imaginary as the first. So suddenly everybody wanted official pieces of paper so they could pretend these homemade pieces of paper never existed. If I could dump all this worthless paper for some of that official paper then I can pretend I had no part in this Ponzi scheme. But everybody wanted to do the same thing and nobody was accepting these pieces of paper anymore and as useless as official pieces of paper are, these are even more useless. And yet they are still too valuable to use as tissue.

So this new “Service Economy” is playing tug of war with all the official pieces of paper and refusing to let any of it out of their sight. Meanwhile, the suckers in the old “Making Stuff Economy” are demanding little pieces of paper so they can make stuff. See, the financial geniuses convinced everybody that rather than save up or raise money to buy auto parts so you can build a car, they should borrow the money. After all, they'll sell the car in a matter of weeks anyway, so why sit on all that cash when you could be accepting these new homemade pieces of paper. And we will give these pieces of paper to your customers so they can buy that car without saving up either.

So the bankers printed money and speculation went through the roof, and the economy collapsed. All because of a little piece of paper.

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