Post by steveb on Mar 31, 2013 15:03:03 GMT
Was thinking about analogies as tools to help explain the monetary system.
Not really a new idea, but a combination (and extension) of two that I have heard:
Society is like a bus, and the engine is analogous to the economy, giving the necessary movement to take our bus where it wants to go. The fuel for the engine/ economy is comprised of the natural resources, human labour and ingenuity that make our working lives what they are. The oil in the engine is like the money in the economy - it lubricates the machinery and interactions between people. Too much or too little oil causes problems in the running of the engine, as is true for money in the economy: too much money can lead to inflation and asset price bubbles, too little money and the economy starts to grind to a halt. Our current monetary system is like an engine with a leaking oil sump; money in the form of loans/ debt is constantly being fed into - and leaked out of the economy. The bus is at the mercy of the filling stations at which it needs to keep calling to top up the oil reservoir (these would be banks that create our money supply by making loans). It's an expensive and slightly ludicrous way to run a bus.
It's fair to say that most discussion about the running of the bus has centred around the fuel supply (the labour and resources) and/or the destination of our bus (society); the role of money/ oil often gets overlooked, but it is just as essential as the other issues.
We -the public, are for the most part passengers. The driver, the destination? Well there is a lot of disagreement about those.
Not really a new idea, but a combination (and extension) of two that I have heard:
Society is like a bus, and the engine is analogous to the economy, giving the necessary movement to take our bus where it wants to go. The fuel for the engine/ economy is comprised of the natural resources, human labour and ingenuity that make our working lives what they are. The oil in the engine is like the money in the economy - it lubricates the machinery and interactions between people. Too much or too little oil causes problems in the running of the engine, as is true for money in the economy: too much money can lead to inflation and asset price bubbles, too little money and the economy starts to grind to a halt. Our current monetary system is like an engine with a leaking oil sump; money in the form of loans/ debt is constantly being fed into - and leaked out of the economy. The bus is at the mercy of the filling stations at which it needs to keep calling to top up the oil reservoir (these would be banks that create our money supply by making loans). It's an expensive and slightly ludicrous way to run a bus.
It's fair to say that most discussion about the running of the bus has centred around the fuel supply (the labour and resources) and/or the destination of our bus (society); the role of money/ oil often gets overlooked, but it is just as essential as the other issues.
We -the public, are for the most part passengers. The driver, the destination? Well there is a lot of disagreement about those.