People's Power: The Power of Money

Kees, De KONING (2013): People's Power: The Power of Money.

Abstract

Money can create jobs and thereby incomes for individual households, but money can equally destroy jobs and income. Added values can be created with the assets which are based on the savings levels -the net worth of individual households- but the "money managers": a government, a central bank, banks and (international) bureaucrats can also create losses to the savings level. This dilemma should be at the heart of economic thinking. For instance in the U.S in 2006 a dollar saved and used for a home mortgage loan only returned 69 cents in home value increase. In 2007 a dollar saved and used in the same way lost 2.5 dollars. Banks moved the goalposts from relying on the income of individual households to wanting their money back out of the assets -the homes-. Individual households were never asked. The effects were that all 132 million home owners were affected rather than the 5.3 million doubtful debtors. This paper sets out the causes of such money destruction. It also explains that money can act in a positive manner to repair the damage done. Banking reforms, quantitative strenghthening as opposed to QE, economic easing and changing the focus of national accounting away from economic growth to Country Profit -the increase/decrease in the net worth of individual households are discussed.

• Item Type: MPRA Paper
• Language: English
• Keywords: Balance sheet of households; money power; money crisis; jobs and savings; ownership of savings; income lending and asset based lending; securitisation; savings behaviour; Quantitative easing and strengthening; bank reforms; economic easing; country profit
• Subjects: E - Macroeconomics and Monetary Economics > E0 - General; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E21 - Consumption ; Saving ; Wealth; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E61 - Policy Objectives ; Policy Designs and Consistency ; Policy Coordination

References

Federal Reserve Statistical Release, Flow of Funds Accounts of the United States B100 Balance Sheet of Households and Nonprofit Organizations, 6 December 2012;

European Union Eurostat Unemployement Statistics up till November 2012 for selected countries;

The Subprime Mortgage Crisis by Karen Weaver, Deutsche Bank in: Globalisation and Structured Finance 2008;

Statistic Brain: Foreclosure Statistics, 15th October 2012;

A Citizen's Guide to the Financial Report of the U.S. Government 2011 by the United States Government Accounting Office;

The Retirement Crisis and a Plan to Solve It, Chairman Tom Harkin, U.S Senate Committee on health, Education, Labor, and Pensions.,July 2012;