GLOBAL RESOURCES ANALYSIS
RESOURCES | CAPITAL
Capital is a virtual resource. Like the government with its legal system a virtual resource is, or IP-numbers are, or DNS (Domain Name System) is. Virtual resources are as important as the other resources: they facilitate today and tomorrow for mankind. The importance of virtual resources for mankind / the economy is easily forgotten. Capital drives the economy, just like energy. Capital has a price (just like energy has) and an availability (just like energy has). In the Western World capital as resource is in dire straits due over-accessibility in the last 20 years. When production efficiency and thereby wages stop to rise the Western World switched over to artificial economic growth by building huge piles of debt. For the Western World capital as resource is over-used and thereby slightly to heavily exhausted. The Western World has passed PeakCredit in 2007. Maybe the numbers will growth still in for example the USA, but the purchase power of credit is over it's top in the Western World. Credit is a product of a system. This system in the Western World needs heavily and intensive maintenance / restructuring / rebuilding before it can again become a growth driver. The capital system in the Western World can be saved by hedging it with energy. Currency based assets decline in value (as the real economy declines), but energy increase in value: Connect those two together and the financial system of the Western World is saved from collapse. Connect those two not and the financial system of the Western World will collapse for sure. Why? The financial system of the Western World is based on growth: In the Money is Debt model, the money of the principal is created virtual by signing of the loan, but the money for the interest payments must be generated/created by growth. If economic growth (real by production or artificial by credit) lowers, get absent, or even switched over into decline, the money for the interest payments is not created and thereby (with mathematically certainty) the financial system enters dire straits. This only can be addressed by no longer Interbanking based credit growth, but only by Central Banks based credit growth. As we all know: Central Banks based credit growth doesn't produce real economic values, it just waters down the value of a currency (and thereby of all financial assets (like savings, pensions, bonds, derivatives) in this currency. The only solution for the West is hedging their financial system with energy, than they inject a stabilization delivering value increasing facet into the value declining system. Hedging the financial system with energy values can be done with the models described in the Energy Finance paper of Planck Foundation, a part of the Energy Economics series of Planck Foundation. They can downloaded for fee on www.planck.org. Besides hedging with energy values there is more needed. The financial system in the Western World is polluted by fraud / faked values: abusing the system has got to much space from the management of the financials, their regulators, their auditors, their legislators, their authorities and the legal system. This has to change. Otherwise the hedge with energy will just be feeding a white elephant. The financial system needs a moral reveille: a different state of mind, new management. A complete new ambiance that is focused on the economic reality of zero growth. Positive said: Economic Adulthood. If the financial world not address this issue in this way, the right of money creation should be taken away of them and go back to the governments. Otherwise the financial system will reboot itself and that will deliver a non democratic global governance structure (in more clear/plain english: a dictatorship) operated by corporate financial powers. Don' be fooled by the mis-perception that virtual resources are easy to change: changing them is as hard as changing non-virtual resources behaviour.
Author: Gijs Graafland
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