William A Gardner
Flash fiction, and scenes of life and travel
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The Age of Money
It was the richest of times, it was the poorest of times. Never had there been so much money and never had people been more in debt.
It was the age of money. For a while, everyone who wasn't in poverty thought they could earn big salaries, build a safe and growing retirement fund, and retire early in near luxury. Freedom fifty-five was the dream peddled with pictures of older (but not too old) couples smiling and gamboling on a beach. In the meantime there were more products on the shelves than had ever existed in the history of mankind and people bought them with abandon. Those who didn't have money to spend, borrowed with the self-assurance that being in debt was expected and monthly payments were as natural as breathing and eating. Few held to the idea that this could not go on indefinitely. In fact few thought about it at all. Many relied on lady luck to support their golden years by buying lottery tickets.
The government printed money with a casualness that attached little value to what they were creating. The solution to every crack in the economic life of the country was to stuff the cracks with more paper bills. The answer to each new disgruntled victim was an apology and a payoff rather than risk a messy twitter storm. But it wasn't paper bills any more... simply a sequence of ones and zeroes on computer hard drives. Never had the printing of money been so easy. Never had it been so obvious that bank savings were increasingly a mirage in a global shell game that would continue so long as people believed that it would continue and that the game referees - the governments and central banks - were reasonably honest and competent. Ultimately the most powerful aspect of money became more and more obvious: it was a way of allocating resources and human nature has always been to allocate resources to oneself and the 'tribe' before anything else. If nobody else learned this the politicians and CEO's certainly did. What they chose to ignore was that resources have to be created before they can be allocated.
Globalization was de-rigeur. For every economic problem there was one solution: get larger and gain more power. For the pension funding problem it meant more immigration to create more and younger taxpayers. Corporations and financial institutions worked hard to become TBTF, or too big to fail, for that was their assurance that any serious mistake they made would be backstopped by some government, somewhere. Growth would solve all problems. Only the uneducated deplorables thought otherwise.
National leaders, faced with economic and social situations over which they had little control responded with more regulations, more taxes, more laws, more studies, a larger bureaucracy, and more borrowing. Their overt policy response to vastly increasing debt was to 'grow' their economies through increased technological innovation with the hope that a rapidly growing economy would generate sufficient tax revenue to (at least claim to) pay down the debt and provide jobs for the proletariat. Their covert response was historically familiar but with a modern twist, which was to devalue the currency while jigging the numbers to misrepresent inflation as being much lower than reality. At the same time they reduced the real return on most financial instruments to near zero partially to minimize their own debt problems. Governments and central bankers made speeches and issued statements in grave and serious tones explaining the rightness of their actions. Stagflation was back but nobody would admit it.
Yet the policy responses worked against one another. More regulations stifled innovation and risk-taking. Historically low interest rates encouraged more debt but not productive investment. Taxes rose. Inflation gradually reduced the real income for consumers and thus their ability to buy goods without going further into debt. Seniors who were unable to achieve an income from their savings sufficient to live in reasonable comfort thus stayed in the workforce longer, taking jobs that should have gone to younger people. More and more the resources of people, companies and government went to serving the increased complexity of life and government. More and more taxes went to fund the pensions of ex-government employees. It was a form of economic Catch-22 where every attempted action was blocked by a rule triggered by the previous action. It was a form of "sorry but you can't get there from here" situation where nobody seemed able to tell you where you needed to get to in order to get to where you needed to go. In the end there was an increasing stasis, a form of 'Stationary Economy' as described by Adam Smith. It was a brittle economic structure, like a china shop waiting for the bull.
As in all such cases the underlying structure that would allow the crisis to occur had been put in place slowly over time. Every rotten brick had been laid to increase convenience and safety, and to satisfy the demands of executives, unions and citizens. Every exit was blocked for good reasons. It wasn't until the crisis occurred that people realized the danger was from within rather than from without, and by then they were trapped in their own mausoleum. As Pogo was reputed to have said, "we have met the enemy and he is us". Unfortunately when people are in a panic they tend to knock down the entire structure rather than cutting open an exit.