A View of the Current Crisis
Written by Alfonso Elizondo
Created on Thursday, August 4, 2016, 13:08
Many factors have contributed to the fact that the world today is going through a major crisis, both politically and economically. In trying to deal with only one aspect of this complex problem in this short article I will refer only to the negative effects of the excess money supply in recent years, when most of the world’s major countries decided to stop paying for the main State services and transferred them to their public debt by issuing treasury bills and other types of bonds offered to other countries or individuals worldwide for the medium and long term.
Public debt is the debt the State owes other countries or individuals. In recent years, public debt has grown rapidly in most countries and has become one of the main causes for concern in the world’s most important economies. Public debt is defined as the sum of a government’s debt and is expressed as a percentage of GDP. The Treasury Department issues debt securities that may be Treasury bonds, Treasury bills or debentures which, when bought by private banks or the foreign sector make up the public debt of that State.
The latest data from the world’s largest economies show the following:
COUNTRY MEASUREMENT DATE MILLIONS OF DOLLARS PERCENTAGE
Germany 2014 5,597,000 142%
United Kingdom 2014 9,219,000 406%
United States 2014 17,260,000 106%
France 2014 5,496,000 182%
Japan 2014 5,180,000 250%
China 2014 949,500 4.11%
From these figures it is clear that with the exception of China, the world’s leading economies owe more than 100% of GDP, but not one of them has attempted to restructure its economy in the area of production of goods and services. Instead they have settled on making profits from speculative money and storing fortunes in their tax havens of choice, or transferring, by design or accidentally, these monetary surpluses to the criminal economy, or creating terrorist groups that can justify the production of weapons of mass destruction and all kinds of instruments used in war, as well the irrational exploitation of all types of energy outside environmental standards.
In addition, a study conducted by Visual Capitalist’s ‘The Money Project’ quantified the volume of the various types of money often referred to as ‘good money,’ and found the following:
Total cash is 5 trillion dollars
The value of gold in circulation is 7.8 trillion dollars
The Federal Reserve has increased from 1 to 4.5 trillion dollars since 2008
The total money in savings and current accounts is 80.9 trillion dollars
Global sovereign debt is 60.0 trillion dollars
This debt is split between the US with 29%, the European Union, 26%, Japan, 20% and China, 6%.
So overall the global debt amounts to 199 trillion or 29% higher than in 2008
The total value of all stock markets stands at 70 trillion dollars.
In terms of the size of global stock exchanges, the United States accounts for 52%, the European Union 8%, Japan 7% and China 2%.
Total derivatives worldwide cannot be calculated exactly but the estimate is between 630 and 1.2 trillion dollars.
So if a restructuring of the global financial and monetary order does not occur it will not be possible for a new world order to be reconstructed where there are guaranteed minimum incomes for workers in the world of manufacturing, manual services, tourism services and the farming of agricultural lands and mining, since all this is done through companies that subcontract poor people (outsourcing) and do not guarantee decent minimum wages much less the provision of basic health services and services essential for survival with freedom and dignity.
This has generated terrible inequality in almost all countries in Africa, the Middle East, Asia, in Latin America and some countries in southern and eastern Europe. These states no longer have the resources to guarantee basic public services for their residents, as is happening with Greece, Albania, Romania, Hungary, Poland and the neighboring nations of Russia. The situation is the same in all Latin American and Caribbean countries including some that were successful in earlier decades, such as Brazil, Mexico, Chile and Argentina.
Addendum: I think that a new world order will be established peacefully with the creation of the new trade routes that China opened to Europe and its Asian Infrastructure Investment Bank that is funding two dozen poor countries in Asia. This is in addition to the trade route to Australia through Polynesia and the South American coast, without using conventional money but through a kind of traditional barter system, as well as the imminent development of digital technologies. Although we may have no idea yet of what will be the occupational basis of the digital world’s new facilities, or what will happen with the baby boomers whose numbers have already surpassed the number of new youth without university education who are unwilling to work for business organizations.