The Money Illusion and Hubris

I must keep up the pace. That is of writing. I have not heard from Susan for sometime. Why? Nor come to think of it my daughter. I wonder what is going on over there in the UK. It is interesting how one adapts. We are special. Yet we are not. We are human.

China or at least this little bit of England in its vastness, Nottingham University, is simply great. My students are the best I have ever had. They absorb knowledge and understanding like it is food and drink. Maybe to the Chinese consciousness come to think of it , it is.

These little pension funds, my students, are without doubt seem now to be a lot better investment than those pension funds insurance companies and blue chip public companies to which those in the West had confined their hopes. These are taking a hammering. Knowledge can never depreciate even if the value we choose to allocate to it does. In this its value is no different to that of the financial instruments apparently loosing their value at the moment.

It will be interesting to see a year from now whither the global downturn in confidence seeps into this market. It may. Times are hard but only in our minds. This must be remembered.

Money and finance are a social illusion that depend entirely on belief not reality. Things have more or less value simply because we believe them to be. The McKinsey Quarterly has just published a paper that tells us this although that was not its intent.

The paper to which I refer demonstrates that the distribution of companies in an industry follows a power curve not a normal distribution. The big get bigger and more successful and then there are the rest clustered way down the power curve. Success breeds success. To me this is unsurprising.

In THIS POST MODERN WORLD value is determined as much by belief as by objective reality. Modern banks from the dawn of their existence worked on a lie and a deception. They were where the gold was. People "knew" One could alway ask them for our money and get it provided everyone else did not at the same time and they never did as long as we believed it was there which it was not.

Certificates of gold deposit were for our convenience treated as if they were gold because this served the human social purpose. This was so and is so even more today when they do not have gold at all. In the past they never held much more than 10% of the gold their bits of paper said they had. Their certificates of deposit were money. Such was money such is money and such will be money. An illusion born out of convience. Despite the recent crisis this remains so. The houses on which the so called subprime mortages were raised still exist unlike the gold that formed the base from which banks were constucted. People still need to live in them and pay their rents. The crisis(?) what crisis.

Value is a convenient lucrative illusion we human beings create for our convenience. We believe in the illusion and it works for us. We cease to believe in the illusion and it will not.

The solution to the current crisis is for us to rekindle our belief in value. Things will be valuable if we believe they are. waht is the value of the gold that started all this other than belief its utilitarian purposes are almost non-existent other than as a foil to our capacity to believe.

We do not really need a bunch of politicians to convince us that everything is OK. It is OK if we choose to believe it is. I suppose to give them their due our politician's job is to help as re-find our belief in what we have to believe in ourselves. If we want to we can just do it with out their assistance ourselves. What people, us, choose to consider valuable, do-able and worthwhile is valuable, will be done and is worthwhile. We only have to believe.

In this we are God. What we conceive was, is and will be.