LossOfTrust

Our society operates on the base of faith and trust. Lose this and we experience misery and possible anarchy.

The basis of what makes things tick is economic. If the oil of money is not in the engine it will seize up and that is precisely what’s happening. Once the money vanishes we are left with a future of damage control.

Everything else starts to fall apart without money. Taxation must rise, but the government take decreases as businesses and individuals make less profit, if they profit at all. There will be less cash available for public works and consumers have less money to spend. Even if they have money they lack the confidence to spend when there is growing doubt that they will keep their jobs. The people are suffering from an enormous confidence deficit and an almost total lack of faith in our system.

There was never a time in modern history when our banks held enough cash to meet a potential run on the bank. These institutions, even at their most prudent and solid, never held a dollar or a pound for each pound or dollar deposited with them. It was more like 10% to 15%. It all worked pretty well when no one questioned the solidity and credit worthiness of our banking giants.

Similarly governments work because of the acquiescence of a compliant and law abiding population. The deal being that we shall abide by your laws as long as we feel they’re reasonable and not too far from our notion of fairness. When laws are seen to be unfair there are many examples of the furious reaction of the people. Revolutions and civil wars have started huge bloodbaths because of perceived injustice.

Fundamental questions like this must be asked when the rulebook is being torn up and thrown away. A contemporary large-scale survey amongst young people in Germany found that this group, although largely apathetic about political parties in general, reserved their largest support for the far right. In Austria more than 30% of the general electorate now vote for the Fascist parties. The same trends are becoming evident for a growing swathe of Europe.

Over the last few days I have been conducting a straw pole. I asked an entirely unscientific group of people, here and in the USA a question. They have no link other than me as their common denominator.

The question is this: -

“If you were now to see a person come on your television and say that he is a banker, taking deposits, to be guaranteed by the government 100%, and this guarantee is backed up by a government spokesman. The banker offers a return of 7.5% per year, starting immediately. Will you invest your money with him?”

Well, what do you think?

The banker received a 100% rejection.

Not one person I questioned was prepared to invest their money with my fictitious banker.

This proves that our faith in banks and bankers has totally vanished, and it will be a very long time before it can be recaptured. There is no more important task for our leaders than to reverse this.