Introduction: What is the root cause of the economic crisis?
1、 Meaningful questioning and interviews
After the 2008 global financial crisis, the Queen of England questioned a group of economists. Since you are experts, scholars, and professors studying economics, why was no one able to predict the occurrence of the crisis? Faced with the issue of the British old lady, the economists present chose to remain silent and speechless.
Not only does this elderly lady in the UK have such doubts, but most people in the world also share this sentiment. She just represents the majority of people on Earth who are unaware of the truth, seeking an explanation and clarification from economists.
Faced with the question raised by the old lady, the economics community, after holding back for over a year, came forward by the famous Lucas to defend economics. Lucas’ answer is as follows: Economic studies have proven that such events are unpredictable; Because if such events could be predicted, people would react accordingly to avoid their occurrence – thus, this prediction becomes incorrect.
After listening to this explanation, many people may think that this is nonsense. If economics is like this, then what’s the use of this subject? Isn’t it a civil science. He’s not really a civil science expert. He’s a well-established official economist and has even won the Nobel Prize in Economics.
After listening to Lucas’ answer and explanation, John Kay, a columnist for the Financial Times, carefully analyzed the answer and couldn’t help but write at the end of the article: This sounds like the response that an idiot scholar would give.
What does this indicate? It shows that economics cannot predict the occurrence of economic crises. And if an economic crisis has already occurred, can economics save the world economy and cure the economic crisis? Let’s hear how professional leaders in economic work answer this question.
Financial Times reporter Barber once conducted an interview with former Chinese Premier Wen Jiabao after the outbreak of the financial crisis. One of the dialogues goes like this——
Barber: Many people say that only China can save capitalism.
Wen Jiabao: I don’t see it that way. My mind is clear headed. Because we are a developing country with a population of 1.3 billion, the tasks we face are very heavy, and the road we have to walk is still very long.
That is to say, after the economic crisis, Westerners have lost hope in rescuing the crisis and turned their pleading gaze to China, while the leaders of the Chinese economy poured cold water directly on them. We are very clear that we cannot save capitalism.
Eight years have passed in the blink of an eye since the outbreak of the 2008 financial crisis. The illness of the world economy has not only failed to recover, but is also becoming increasingly severe. So in the past few years, what have economics, economists, and the leaders of the world’s major economies been doing?
The professional elites who control the world economy are all well aware of pretending to continue driving a car that has already broken down, just one more day. As for how to fix the car, no one knows, that’s the scariest thing.
Or in other words, in the past 8 years, the various prescriptions prescribed by economists and the consultations and treatments conducted around the world economy as a patient were essentially pretending to treat a corpse.
If the world economy is like a car, we will find an awkward phenomenon through previous economic crises: the driver’s team composed of economists not only cannot drive this car well, but also do not know when this car will be damaged by them. I have no idea how to fix the car after it breaks down.
So, we cannot help but ask: why is this happening?
2、 Real world, economic world, economic world
The fundamental reason why economics cannot predict and solve economic crises is that the world in which economics operates and the economic behaviors that occur in reality are not the same world. They are divided into two completely different worlds, not only unable to understand each other, but even unable to communicate, this incomprehension is almost like the gap between the worlds of life and death.
A carriage driver is driving a horse, the horse is running and pulling the carriage forward, leaving two ruts on the wheels of the carriage on the road.
The running horse is the real world composed of human economic behavior. The carriage pulled by horses is the overall appearance of human macroeconomic behavior. And the two ruts left by the wheels on the road are the domain of the economic world. The people squatting on the road, holding magnifying glasses, trying to understand horses and carriages by studying ruts, are economists.
Can we predict when the carriage will stop, when it will run, and when it will arrive at a certain place through the ruts? For this question, there is no need to think about it. As long as one has normal intelligence, a conclusion can be drawn through common sense.
We can predict when a horse will be hungry, when it will drink water, when it will eat grass, when it will get sick, when it will overturn the carriage, when it will trip, when it will fall under the bridge, and when it will die through the beautiful ruts and curves? Obviously, neither can.
Since the information obtained through ruts is so meaningless for understanding the real world, why don’t economists go up in dimension and enter the world of carriages and horses? Why do we have to be confined to the world of ruts? Are they all fools?
This is related to the rationality of the tools they use, as they employ mathematical and modeling thinking, thus destined to reach the limit of their comprehension, which is the rutting curve on the road.
Otherwise, is it possible for economists to use mathematics to describe a running horse? Even professional mathematicians, the most genius mathematicians, bound together with a million Gaussians, cannot perfectly describe a running horse with mathematical tools.
However, the ruts on the ground can be completely described using mathematical tools. That’s two smooth, continuous, and beautiful curves. In understanding economic behavior and human behavior, economists, mathematicians, and the mathematical world presented by ruts are the highest ceiling that their understanding can reach. So, they exhausted their minds and tried to invent various models to describe ruts in order to understand the real world.
Now, it’s almost clear. Why can’t economics predict and treat economic crises? Because economics cannot understand real economic behavior. Why can’t economics understand real economic behavior? Because the mathematical world cannot understand the real world.
This kind of superstition towards the mathematical world, and using it as a basis to guide the real world, will lead to a series of absurd decision-making judgments and behaviors.
3、 Stomach and belt
The length of the belt is a phenomenon in the mathematical world. But in the real world, why a person is fat and why they are thin is a complex phenomenon that cannot be described or understood by mathematics.
As individuals with normal intelligence, we can use common sense to determine that it is impossible to control our weight based on the length of our belt. If a person is too overweight and needs to lose weight, we can understand weight loss as saving their weight, which is similar to saving an economic crisis. Can reducing the length of the waist belt save a person’s obese weight? Obviously, we can tell with common sense that it’s impossible.
The horse is running, the carriage follows, the wheels rotate, leaving ruts on the ground, two beautiful curves. This indicates that everything is either done or done, with a cause and effect. The relationship between weight and waist belt follows the same principle: one must first have a certain weight before they can have a waist belt of appropriate length.
This illustrates a general principle: the real world is the cause, and the mathematical world is the effect. The real world is the root, the mathematical world is just the surface. To understand its nature, one must know its reason. Instead of reversing causality and understanding the real world through appearances.
Believing that the length of a belt can control weight is not the most absurd thing.
4、 Goods are goods, coins are coins
The understanding of currency by humans is the most reflective of their level of absurdity.
In neoliberal economics, the prominent monetarist school of thought, led by Friedman, believed that all economic phenomena are monetary phenomena.
When we talked about weight and belts just now, most of us, intellectually normal people, can judge through common sense that attempting to control weight with belt length is absurd and foolish. But when it comes to economics, which is such a grandiose thing, many people dare not activate their common sense, otherwise it is easy to touch the sensitive dignity of the entire human race.
All economic phenomena are monetary phenomena. The translation of this sentence means that economic phenomena are the weight of the national economy, and the money supply is the length of the belt of the national economy. The monetarist school believes that by increasing or decreasing the length of the money supply belt, the growth or decrease of the national economy can be controlled.
The basic idea of the monetarist school is actually more absurd than the notion that the length of the credit belt can rule weight. Moreover, what is even more absurd than this absurdity is that people not only refuse to strip away its emperor’s new clothes, but also regard it as the crown and pearl of the economic world. Whoever opposes and questions it, fanatical believers believe that he is a layman who has not received basic academic training in economics, he is a civil science expert.
Has this world gone crazy? Why is such an absurd thing so popular and respected, and revered as authority and wisdom? In fact, absurdity has always been the main theme of humanity, and it has never left.
Since the current most mainstream, authoritative, and glorious monetary theory is so absurd. So how to understand currency as a non absurd idea?
This requires separating the two words’ currency ‘. Goods are goods, and currency is currency.
If there were no humans, there would be no human labor; Without human labor, there can be no production of goods; Without surplus goods, there will be no exchange. If there is no exchange, there is no need for a medium of exchange. Without a medium of exchange, there would be no currency.
It should be easy to understand now. What we usually understand as currency actually refers to currency, which means there is stock before it can be sold out. If we understand goods as weight, coins are belts. If there are more goods, the belt should be longer; if there are fewer goods, the belt should be shorter. So, the normal relationship between goods should be calculated to ensure that the coins and goods always fit well. Too loose, pants will fall off, too tight, stomach will burst. The length of the belt corresponds to the price.
From the above analysis, it is not difficult to conclude that wealth is real, tangible goods that are our bodies themselves. But economists don’t think so. They believe that belts are wealth, and our bodies are not very important.
They also invented one theoretical system after another specifically for belts. They believe that there is a perfect belt in the world, and once humans wear this belt, they can achieve a standard perfect weight without gaining or losing weight. Therefore, the world economy will never experience an economic crisis, and there will be no adverse consequences that need to be saved. This theory is the Price Equilibrium and Efficient Market Hypothesis. In fact, this is still the absurd idea that weight can be controlled by the length of the belt, with different tricks and rhetoric.
For the real world, prices are just appearances. But this appearance is the entirety of economics, economics only studies the knowledge of appearances, not the knowledge of the real world.
Legal tender, also known as formal currency or credit currency, refers to the currency issued by a sovereign government as a reserve of its own credit, which is the paper currency we usually use. Its appearance has made this absurd world even more irreparable.
5、 Foam is a new form of pompous style
Legal tender has finally freed currency from the constraints of goods. Coins originally needed to anchor orders to make sense, but after fiat currency, coins anchor government credit.
How did the economic crisis arise? Before the emergence of credit currency, there was no frequent occurrence of economic crises in world economic history. Since the Song Dynasty first invented the credit currency Jiaozi, the history of human economic crisis began, and Jiaozi’s fate ended in super inflation. So, to understand the causes of economic crises, it is necessary to conduct in-depth analysis of the relationship between credit currency and the national economy.
In the primitive economic state, all the population of a tribe, who collectively cooperated, hunted and gathered, participated in wars, and the food they harvested was usually evenly distributed. In this economic state, it is impossible for an economic crisis to occur. If the harvest is too much, the people of primitive tribes usually squander and even destroy the fruits of their labor, without considering it a waste of wealth or a pity. Bataye referred to this phenomenon as “overcharging” in his anthropological works. Primitive people cannot understand what modern people call overproduction.
In the typical natural economic model of ancient China, everyone lived a self-sufficient life, with some surplus or deficiency, and then adjusted through merchants. In this model, it is unlikely that there will be a large-scale surplus, so there will not be a serious economic crisis. For natural economy, political crisis is the main cause of social decline, mainly due to land consolidation. Almost every unified dynasty of the Central Empire perished due to land consolidation.
The true large-scale overproduction occurred during the capitalist era.
What is the essence of capitalism? It is a socialized large-scale production dominated by financial capital, that is, currency. It flips the causal chain of population → labor → goods → currency, turning it into currency → goods → labor → population. In the previous natural economic chain, humans were the masters of everything. In the latter chain, people, their labor, and the fruits of their labor have all transformed into slaves to currency.
In the economic history of humanity before capitalism, there has never been a concept of overpopulation. But in capitalist society, not only will there be an excess of population and power, but there will also be an excess of goods. The surplus of goods, which is a general overproduction, has led to an economic crisis. To solve the problem of surplus, the surplus population can be eradicated and the surplus goods can be destroyed.
Is it absurd for people to choose self destruction in order to adapt to the existence and growth of currency? Of course it’s absurd. In the history of human civilization, it can be said that there has never been such an absurd thing.
Based on our common sense, we would believe that only talent is the most fundamental. All human actions ultimately come down to their own survival and reproduction. However, capitalism is contrary to common sense. In capitalist society, every dollar of currency is born with life, and the operation of the entire society is for the survival and reproduction of currency. And the survival and reproduction of humanity are to serve the survival and reproduction of currency.
Wait, this is too absurd. What is the proliferation of currency? To explain the proliferation of currency in a more popular way, it refers to the sustainable economic growth measured by nominal currency rather than real wealth. The existence of currency is not to make humans have more children, but rather to make currency have more children. All of this sounds too absurd and goes against human common sense.
This is not even the most absurd thing. Because when humans lose common sense, absurdity has no end. Money worship, wealth worship, let the human hand, one hand grasp the asset foam, the other hand grasp the wealth pompous style. Grasping countless absurdities with both hands, running wildly on the path of anti humanity.
Foam and pompous style are both psychotherapy for economic crisis.
Since its independence in 1783, the United States has experienced multiple economic crises in 1825, 1837, 1847, 1857, 1866, 1873, 1882, 1890, 1900, 1907, 1920-21, 1929-33, 1937-38, 1948-49, 1957-58, 1969-70, 1974-75, 1980-82, 1990-91, and 2007-2012.
If we understand capitalism as allowing money to have more children in human life, then the economic crisis of capitalism is the problem with the reproduction of money. For the money worship Americans, they first used the inflation foam to come from my psychotherapy, and after the foam burst, they used the pompous style to come from my psychotherapy.
The American trend of exaggeration began around 1900, intermittently, and lasted for about half a century. In the flamboyant atmosphere of Americans, corn weighing 100 tons, potatoes weighing several tons each, strawberries weighing 100 tons, cabbage as high as mountains, and fish that can only be carried by trucks are all commonplace. Americans are the pioneers of the world’s flamboyant style.
Originally, during the Lenin Stalin era, the former Soviet Union did not have such a phenomenon of exaggeration. Since Khrushchev’s spiritual conversion to the West, he has learned the essence of exaggeration from Americans. So, the absurdity of exaggeration spread to the Soviet Union. At that time, Khrushchev had a die hard fan in China, Commander Liu, who also imitated the exaggerated style in China and followed Khrushchev’s example. For a while, China also swept up the exaggerated style.
In terms of inheritance, the founder of the exaggerated style of the Great Leap Forward was the United States, the Soviet Union was the second generation disciple of the United States, and China was a student of the Soviet Union. The United States tricked the Soviet Union, and the Soviet Union tricked China. But China is still quite reserved in this regard, with a yield of ten thousand kilograms of rice per mu, which is really embarrassing compared to the large corn that weighs one hundred tons per grain.
China’s Great Leap Forward and flamboyant style are worth considering. The chairman said that the output value should be set higher next year, which is called a great leap forward in strategic decision-making. The result was that the general manager, along with the deputy general manager, caused the company to collapse the following year due to fraud, which is called exaggeration. After the company collapsed, the general manager shifted the blame, and in the end, the chairman had to take the blame.
The exaggerated style invented by Americans, this anti common sense, anti human currency worship, and fetishism fanaticism, have caused serious problems. During the Great Depression around 1930, over 7% of the population in the United States died from famine. Conservative estimates suggest that 8 million people died of starvation, while non conservative estimates suggest that over 10 million Americans died from famine.
In Shenzhen, an ordinary house can be worth 20 million yuan. Is there any difference between this and 100 tons of corn per stick? Essentially, they are both consequences of currency worship and fetishism, as well as consequences of anti common sense. In other words, the foam and the pompous wind have come back in a new form.
This time, the ideas of monetarist economics, a type of monetary exaggeration, were also learned from Americans. Every time Americans engage in exaggeration, they can directly or indirectly deceive China. It seems that the cost of being a loyal fan of Americans has always been high, and it is difficult to be a red comprador.
Once the foam and pompous wind blows, it shows that the next economic crisis is not far away. The last crisis has not been cured yet, and the next round of economic crisis seems to break out again. The onlookers may be anxious again: Why can’t economics save the economic crisis?
Because economics is an absurd product of human loss of common sense, and capitalism is even more so. Because the entire human race lives in absurdity, how can they overcome it. It’s like in a movie, there’s a beautiful female protagonist being chased after, and the audience who like her is so excited that they almost jump out of their hearts, even thinking, ‘Hurry up and jump out of the screen, the bad guys won’t be able to kill you.’. If she can really jump out of the screen, is that still a movie?
Economics not only cannot save an economic crisis, but it is also the source of the underlying causes of economic crises. Let economics treat economic crises like letting a cold virus treat a cold. The answer to enabling humanity to overcome economic crises once and for all is actually very simple, which is to wake up from absurdity and restore common sense. This common sense is that cars are slaves to horses, ruts are slaves to carriages, currency is a slave to people, belts are slaves to waists, and the mathematical world is a slave to the real world, not the other way around; All human actions are for their own survival and reproduction, not the opposite.
One day, humans will truly regain common sense, return to the real natural world, overcome and triumph over all absurdity, just like jumping out of a movie screen. If there is no absurdity in life, is human life still life? That should be equivalent to reinventing humanity, a true human being.
The deeper one understands economics and economists, and the various bizarre ideas invented by Americans, the more one can’t help but marvel at how absurd humans are.