POWER AND POLITICS OF MONEY

Power and Politics of Money

Table of Contents

Introduction2

Discussion3

Power of money3

Rationality of Money5

Consumer Credit6

Consumer Credit causing Financial Crisis10

Conclusion12

Power and Politics of Money

Introduction

The power of money is not just a matter of personal experience, but also a relation between productivity, goods and money form of capital, which have changed significantly over the last twenty years. Deindustrialization, in this modern British period and in many other countries, has always been a cause of concern, especially the conversion of productive capital into money capital. When a factory closes, the capital does not simply disappear, and usually it appears not easy to build a new factory in a different place again. The formerly productive money capital is typically moved around the world to where it brings the greatest profit. At the same time, the money flow has in relation to the movement of goods (trade) gained importance. In 1979, the transactions were in international financial markets at six times the value of world trade and, in 1986, they represented approximately twenty-five times the value of world trade (Zywicki 2005, 107-113).

The huge shift of money into capital has a significant impact on the states and their relations with the international economy. In Britain, the Black Wednesday (September 16, 1992, directed against the pound speculation forced the international financial markets. The major government to withdraw from the European exchange rate mechanism and a radical review of its economic policy) public awareness of the terrifying political power of vast amounts of money convinced that money is traded daily on the international financial markets which currently creates over one trillion dollars. This includes an awareness of the changing relationship between the international financial community and the individual nation states. Events such as these made it clear that it is impossible to isolate the political development of any state of the money movements to discuss on the world markets (Zeuner 2003, 80).

Discussion

Power of money

One aspect of the power of money, even more spectacular, is the growing importance of debt. The possible consequences of the debt increase in 1982 "during the so-called debt crisis clearly," which was the announcement by the Mexican government raised its repayment obligations that they could no longer meet. This had an enormous impact on the whole world: if the arrears of Mexico and other major debtors such as Argentina and Brazil can easily lead to a complete collapse of world banking system (George 1988, 92-104). At that time, the immediate danger has been avoided in part by the fact that large parts of the world's population, were unprecedented through austerity programs which had been imposed (the "lost decade" in Latin America, poverty and hunger in Africa), partly through debt restructuring. The debt shifted to richer and seemingly, “creditworthy” parts of the world: through tax cuts and rising military spending took over the U.S. government. The role of the principal debtor (obviously at a much higher level), were also in all wealthy countries, a huge increase in private and commercial ...