Monday, September 10, 2012

Advantage 11 – No financial bubbles

Excerpt from the book »Gradido – Natural Economy of Life«

»It must now have become clear to any responsibly minded person in the branch that the international finance markets have developed into a monster that has to be cut down to size.«

– Horst Köhler
former President of Germany

In the recent past we have had a lot of so-called »bubbles«. Real-estate bubbles and financial bubbles are created when the system does not have any functioning self-regulating mechanisms. Disasters are pre-programmed in a system that has to be most stringently controlled to prevent it getting out of hand. It suffices for something to happen that the controlling bodies had not expected for bubbles to emerge, grow and finally burst. Controlling bodies react to such incidents with even stricter controls (they have no other possibility). This leads to increasingly unbearable restrictions of personal freedom without it being possible to establish genuine stability.  

Really sustainable stability is created when pressure is kept as low as possible and gentle self-regulating mechanisms are in place, as in the case with the gradido.

Bubbles emerge at pressure points: we get blisters when our shoe pinches. An increase in pressure leads to bad blisters or bubbles. No pressure needs to be exerted in a self-regulating system, and nobody will rebel when there is no pressure.

As the money supply is constant and cannot be changed by either borrowing or speculation, no finance bubbles are possible in the gradido system. The self-regulating system runs in a stable manner without external control. 

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