Nov 22, 2011

The danger

Nowadays, some economists think that the increase in inflation will be the trend for the next period. Therefore, the monetary mass which is in people’s possession will increase substantially together with interest rates (both for borrowers and lenders) and all prices. The result is a lower standard of living.

The real facts are: all interest rates have fallen to a historic low, the quantity of money which belongs to the population has been decreasing in the last few years and there is a constant pressure on prices to decrease. This pressure is coming from a lower level of demand for all goods and services. The trend is clearing the way for deflation.

Many Central Banks tried to raise the monetary mass by the Q.E., i.e. by buying a lot of bonds before their due dates or by printing money, without any result in the markets. Large quantities of money were transferred from the state to a few persons (individuals or companies), most of the time without anything real in return.

Currently, all this new money is now in the markets and it is feeding ‘bubbles’ on commodities like gold. Asset prices have also been decreasing.

The danger comes from the possibility of transfer of property rights from people to Q.E.’s beneficiaries at a deflated prices.

Every political decision should have a cost-benefit analysis. If this is the case, all costs will have to be met by the general population because all new and existing money is public money. The short term credit for these decisions will go to the current politicians because social benefits will not follow the path of public revenues, which would have been the normal situation, i.e. all public deficits being financed by borrowings. Benefits for the long term will go to those who lent money to the state because they will gain the power to influence political decision making.

I entitled the article “The danger” because I suppose that the main role of public government is to represent the interests of majority. If this is not true, this article could be a true economic forecast for medium and long term period.

Nov 20, 2011

A very motivational film

Today I begin a new topic - personal development - because in nowadays a good social education and an efficient personal development are essential for everyone. The economy is strong related with human social behavior and all current trends are based on it. Therefore, a happy life is not possible without a good social education.

This film refer to the life of a triathlete and her motivation to continue a plan for phisical development. The basis here is a strong motivation.

Nov 17, 2011

The Greek referendum: would have been right?

In the recent days all leaders of the world gathered at G20 summit in Cannes in order to take only those decisions which are more suitable for the current financial crisis.

The Greek's behavior is the main problem of this summit. I believe that the Greek’s application to the EU was fraudulent. Fraud is not a basis for long term relations. Now the public Greek debt has been increasing without any efficiency, i.e. all expenditure was for social benefits and nothing for investments.

In this world in which the human feelings are the foundation for the value of money, the main principle is that the society is impossible to continue to exist without ethics and morality. Another important thing is relate to the rights. Everywhere rights are followed by obligations. Without obligations, rights never exist.

The Greek Government did not organise a referendum when it used fraud by any means to gain more rights in the EU. Now, they do not want to assume their obligations. There is a misunderstanding of reality and a misuse of rights.

The ethics and morality are not present in the Greek's behavior. The proposal for a referendum in order to decide if they will accept or not the consequences of their actions is not fair.

International political pressure is normal in this conditions and it is just a step for rectify this type of wrong behavior.

Nov 3, 2011

The old law of the world: efficiency

All changes that have occurred in human history in the organization of the community (from the smallest up to the greatest empires and nation states) had two main components: the social and the innovation. The two essential and interdependent elements are the main reasons of change in the model of any human organization.

Social organization always has been dependent on the existing level of innovation. Throughout history, civilizations that had a new weapon or a lot of tactical knowledge and social organization skills have always been the leading civilizations. The Romans managed to build a great empire due to a superior social organization and the Vikings maintained their supremacy with those fast water craft. All great civilizations have lost their supremacy only when the advantages of a unique social organization or a better level of innovation disappeared. Where innovation was present in several communities at the same level, the social organization made ​​the difference between dominator and dominated.

I would be able to say that the model of social organization and the innovation have created a social paradigm and define the way of thinking and human action.

The existence and use of the currency, Stock Exchanges, Central Banks, fractional reserves system, financial derivatives are all the results of the innovation process. And we can generalize. Any development - from weapons to the most trivial aspect of life - is based on innovation and social organization. Therefore a better social organization has a potential to generate innovation and the innovation can change the social organization.

For example banks were just simple primitive metal deposits, the printing has made ​​available notes and tickets issued by banks and created conditions for emergence of central banks; the computer has made ​​possible the existence of fractional reserves and electronic transactions. Note that the history of innovation in the currency system is based on a series of social changes, i.e. optimization of social relations. Small errors in social organization were eliminated.

I believe that humanity due to globalization, innovation and social changes is at the moment when the social paradigm is changing.

This requires a notice: the change of the social paradigm occur in many years or decades. Look only how much the innovation has evolved in the last decades, how many types of social organization were cease to exist and how many adaptive changes were took place in the entire world.

The economic system is a part of social system, and the change of the current social paradigm is an adaptation of economics to new realities.

Any social paradigm (exactly as I defined it - an organic combination of social organization and innovation) whose inefficiency has been proven, cannot be experienced again in the same form.

In conclusion, efficiency is the law which govern human activity and it causes the shift of the social paradigm. 'Crisis' is the generic name for the period of time in which this social paradigm is changing.