15 Aralık 2009 Salı

PARA PARADOKSU (MONEY PARADOX)


Monetary Phenomena: "TYRANNY OF THE STATUS QUO"

"The purely monetary connection between ruler and subject demonstrated the absence of any other relationship. The continuous depreciation of currency by rulers was an appropriate technique within such a relationship; for these methods, which give all the benefits to one side and the entire loss to the other. This has been traced to the fiscal policy of rulers who use the royal prerogative of coinage as a means of taxation without concern for the consequences of devaluation"- Georg Simmel, from Philosophy of Money.

The progressive deterioration in the value of money through history is not an accident, and has had behind it two great driving forces- the impecuniousity of governments and the superior political influance of the debtor class. The power of taxation by currency depreciation in one which has been inherent in the state. The creation of legal tender has been and is a government's ultimate reserve and no state or government is likely to degree its own downfall, so long as this instrument still lies at hand unused- J.M.Keynes, quotation is from page 12 of Keynes's 1923 book, "Tract on Monetary Reform".

Since biblical times, governments have not managed money efficiently. Genesis 47:15 says, "So when the money failed in the land of Egypt and in the land of Canaan, all the Egyptians came to Joseph and said, 'Give us bread, for why should we die in your presence? For the money has failed.'"

Chain Reaction:
“It happens that a liquidity crisis in a unit fractional reserve banking system is precisely the
kind of event that trigger- and often has triggered- a chain reaction. And economic collapse
often has the character of a cumulative process. Let it go beyond a certain point, and it will
tend for a time to gain strength from its own development as its effects spread and return to
intensify the process of collapse”(Friedman and Schwartz, 1963: p.419).