Author Archives: Irma Walter

About Irma Walter

looking at life from the other side of 50...

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My recent economics studies

My own way of understanding money

The recent Euro-crisis has made me spend some time in studies, to try to understand what it’s all about. Starting with the present situation, I felt very uncomfortable with the prospects of Germany taking on liabilities for other countries, although I personally have nothing to lose and very little to fear. So I’ve listened to some learned professors on youtube, on how this Euro-crisis has come about.
As I read and listened, my jaws dropped, and dropped, and dropped some more. Join me in a recap of what I found.

How money works

I was aware of the fact that all assets are pushed out as loans in order to get served with interest. That’s how ‘money works’. And I also knew that wealth had been on the increase in Germany, and I thought that’s how we got into the situation of increasing debts, by all that wealth being pushed out as loans.
However, I learned one mind-boggling fact: banks loan out money that they don’t have. It’s a trick of book keeping. In finances, a debt claim is just as good as the money itself. Like if I want to buy something and tell the grocers’ that I haven’t got the money, but here’s an invoice I sent to my customer a month ago and that guy’s supposed to pay and don’t you see, it’s as good as the money itself. Because when my customer pays, the money will turn up. Eventually.
So now watch this: the bank creates an entry that they loaned you money, and to back up this loan with something, they don’t take money that they have from someone who deposited their savings. No, they enter a claim against the repayment of your loan and treat it just as though it was as good as money they have. Like I did at the grocer’s. So two minuses make a plus, if you just keep your accounts in separate books.
The nasty thing about all of this is, that once you’ve repaid your loan, their claim against you is settled, that means they are left with … nothing. Zero, Zilch, Naught. No more interest coming in. So they aren’t the slightest bit interested in you paying back your loans. For as long as you owe, they’ve got those debt claims, which hold value, as long as you owe and they’ve got your interest.

On an international level, when countries grant loans, they can create that money from their reserve banks. Which wouldn’t make sense in the Euro zone. Because every member state who needs money has a reserve bank and can issue Euros themselves. Of course, money creation is supposed to be closely monitored and heavily restricted, but these restrictions haven’t been enforced very well. Everybody turned a blind eye hoping the problem would go away. With some member countries increasing their Euro amounts, to repay their debts, the Euro inflates. When an item (the Euro) is well supplied, its value drops. Then some countries step in and buy the extra Euros. No, that’s stupid, you can’t buy money. That’s how schizophrenic you get when money is both goods and means of exchange. They basically absorb it and put it down a black hole where it disappears. It’s just an entry in the computer, remember. So once there are less Euros around, their value increases again, as long as that government doesn’t get the idea to take out those Euros from the black hole. But you bet they act as though they had real value in their safes. Although they can’t spend it. That’s Fiat Money. You believe it’s there until you try to spend it.

So I came away from the idea that debts are evil and immoral. Although I still wouldn’t want to have any. My aversion to debts is the reason for why I’m poor. Ha ha, because all my life I didn’t to spend money I didn’t have. Wealth is the other way around. You get rich by spending money you don’t have. Because you can’t get that kind of money unless you had an idea of how to deal with a loan, that is some assets to back up a loan. Assets can be invented, so to say, but I’m not financially creative enough. It’s my choice, not my good character. Instead of wealth, however, I’ve got the creative gift of doing without. Which might come in handy.

The Euro-Crisis as I see it

So if the Greeks took on all those loans, who pushed out all those loans? Apparently, it was us, the Germans who were at fault. We exported plenty and imported little. Which helped us to have a teeny-tiny inflation rate and abroad, our goods sold well. Apparently we overproduced, oversaved, we were overly eager to strive for success. There is just something wrong with this picture: living here in Germany, it didn’t feel like it. In fact, during the last ten years, life here inside this fancy economy has taken a downturn, to the point that people have been quite scared in their outlook of the future. Small-scale businesses closed by the droves and lining former bosses up at the employment agencies.

Professor Hans-Werner Sinn gave a different meaning to excess exports, or rather, the lacking imports: the German people didn’t spend enough. Either they didn’t have the cash, or they reacted to the fearful atmosphere by stacking up their cash in their bank accounts as savings, adding to the amount of money that had to be pushed out as loans. I think on top of the troubles and reductions in everything Germans saved to the tune of 1800 Euro a head in 2009. I mean, it drives the tears to my eyes, thinking of the reduced work and cuts in pay the population took for years, most of them without complaint, just hanging on. Yes, of course, they were grateful just to have a job. Lining up at the unemployment office is social suicide. And now Germans are collectively to blame that we incurred an export plus? And as everyone can guess, the liabilites we’re supposed to take on in return will end up on the working people/taxpayer again, not the elite who drove those exports.

Why we didn’t spend all these years

So I started to wonder why actually the climate in Germany was so depressing, when we were doing just fine, globally? Because some ten years ago, we were served Chancellor Schröder’s Agenda 2010. We were told that the social welfare and labour costs had to be reduced in order to be globally competitive or the industries would move to cheaper countries. From about 2003 onward, the country was in shock at the fundamental changes in welfare and the harsh control the administration took of laid-off workers and shut-down entrepreneurs. In order to receive any benefits at all, a person has now got to be prepared to disclose all of their private details bordering on a declaration of bankrupcy. Common kindness, generosity and hospitality are ruled out, once you’re on welfare, as they would be indicators of undeclared income. Any detail withheld is considered criminal fraud. People have to be available by phone and by post for job offers at odd days and short notice.

German law is very systematic. There is no leeway for administration to interpret or adjust it. If individuals in the administration sympathise with the population, they ultimately risk their job. There are quotas in place, or competition between departments to produce desired results. Although the people have a right to information, in practise, the administration do not volunteer that information unless they’re asked the appropriate question. An 18-y-o male turned loose without guidance is bound to end up with a police record by the time he’s 23, for being unable to adequately handle the mindless paperwork and stipulatations the administration turn out.

When the Agenda 2010 took full swing, Germans were so depressed that by end-2005 Chancellor Merkel launched the ‘Du bist Deutschland‘ campaign. Nationalist feeling had long been an embarrassment to the population and under the circumstances, the intentions of the countless ads placed in papers and on prime time TV were obviously cheap. A few months later German morale was boosted with a Das Wunder von Bern – broadcast and director Sönke Wortmann announced that he would turn the 2006 Football championship into a similar movie Deutschland ein Sommermärchen, in essence, raising hopes that the Bern miracle would repeat: football as therapy. Germans responded with the most enthusiastic football hype in history. The German flag was everywhere. In fact, the industries had not anticipated the demand and the country ran out of football merchandise weeks before the event.

What was behind the Agenda?

I went back to find out more about the Agenda 2010 and was startled to find out that in 1998, shortly after taking office Chancellor Schröder had been presented with a paper by Bertelsmann‘s Reinhard Mohn. Schröder implemented the Agenda pretty much unchanged. Mohn was a libertarian and believed in minimising government administration and maximising economy freedom. At the same time Germany saw a major overhaul of privatisation of public services. When Angela Merkel took office she thanked Schröder for his courage to see the Agenda through. It cost him his post.

Bertelsmann runs a host of TV Channels, publications and (savour this) a personnel leasing agency that is aimed at providing government administration staff. No wonder Merkel had a media campaign rigged up in no time and had no qualms to rip through her administration. They can be replaced at any time.

Incidently, Liz Mohn, the 5th and final wife of Reinhard is bosom friends with Merkel. So is Friede Springer, of Bild’s Axel Springer, who was one of the most powerful media tycoons. Along with Merkel, they form Germany’s triumvirate, no doubt the driving force behind Germany’s recent copyright issues. Both wives got to be where they are by starting out as nannies in the respective households and holding out for years as lovers, with children. In fact, in high-society at first and later in high-politics it became acceptable, if not the norm to replace the first wives by younger, more pliable, PR-worthy ones. It might be easier to count the men who stuck with their wives. Of which Helmut Kohl was one. Which might explain why he never sought the company of the rich and influential elite. And why the Agenda had to wait until Schröder was in power.

Why the Euro?

Going back even further, apparently Kohl got us into the Euro, a concession he had to make to France’s Mitterand in order to re-unify the two countries. Up until 1990 the Federal Republic of Germany had not officially regained sovereignty after WW2. It was still occupied by the allies, Britain, US and France. France’s fear of a strong Germany goes back to 1871, when the German Empire was founded under Emperor Wilhelm I, after he waged a war on France. Before that, Germany was not a national state. Incidently the ideas of a social welfare state and the deutschmark currency date back to that time as well. And apparently it was their destiny to fade out together 120 years later.

So you basically have an ill-advised Euro-currency, brought on by old external fears that Germany might be too strong and the internal concerns of the German economic elite that the re-unified country might be too weak to return the optimal profit on their assets. For some we work too hard, for some we save too hard, and now we’ll have to pay even harder.

Lists, How-To’s, Surveys — Whaddya know?

A few years ago I came across an article How to write compelling headlines. Five simple suggestions.

The article itself was – naturally – a compelling example. How-To’s and Five Steps To’s are most appealing to readers. After wasting a lot of time rummaging through such posts on blogs, social media and news, I’ve taken a little time to think.

Lists come across like cooking recipes, giving the impression that if you only follow through, you’ll achieve something close to the desired result, usually depicted in glossy, mouth-watering images. That’s what a good recipe has got to do for you. And since the process is familiar – even if only moderately successful – we quickly rely on the mental effort that others have expended on our behalf. The really nasty implication here is: if you don’t achieve the desired result, something must be wrong with you.

How to get something done is an even more subtle approach, implying success with the implicit idea that certain procedures can be automated. Yet, how-to’s are faulty and incomplete expressions. The full content would read: How you can get something done. Come to think of it – – rather presumptuous. To think that someone else would tell me what I can do…

No, that isn’t the true content of that faulty statement. It really should read: How I got things done. But such a phrase would invariably make the reader come to a logical conclusion: This is true for you, in your situation, under the circumstances you were in at the time. But I’m a different person in a different setting. A conclusion the writer would want to avoid by all cost, because it won’t get him large readership. People recommend and share what seems to be relevant for them.

Now people don’t write lists and how-to’s without some expertise. Lately, with the vast potential the Internet offers, more and more surveys and polls are taken. Naturally those must be valid for a majority, that’s how they are laid out to be. Exactly… have you ever taken part in a survey and the questions seem to give you rather narrow options of expressing our opinion? In a survey, queries streamline people’s opinions as to facilitate the evaluation of the whole darn thing. Data is the raw material for statistics, but the real work of art is the sense-making of it all, in the process of which reality inevitably gets warped.

Let’s say, lists, how-to’s and surveys are the best we can do in the way of making statements that are possibly valid for many folks. But let’s not cover up the fact that we’re talking about approximations that are far from fool-proof.

Life after Death

Ideas, thoughts, character, memories are the conclusions of our minds.
Usually, what we hold true and adopt into our personality are ideas that were passed on to us by these mechanisms.
But the more we uphold our individual personality, the more we’re bound to walk into a trap. It is when we abandon the concept of individuality, of which life after death is merely an extension, that we are free to shape our lives whichever way we want.
It’s like a fun game. All games are designed to absorb us to the full. And still most games are better played when we don’t forget that they’re just games.
Our ideas, thoughts, character and memories live on in as much as we pass them on to our children or peers, just as we have acquired them from our parents and peers.
The fact that we perceive these ideas, thoughts, character and memories in that particular combination to be us, is an achievement of our memory towards a certain purpose.
Whatever we think about life, it’s a model. We need models, because we’re sense-making creatures, not because there is a meaning to life.
So I’m free to adopt a model that I feel works best.
As an exercise, walk into an old-folks home and watch people’s memories fade away. Their personality fades. And yet you can’t say that the person is gone. Just the same as a baby, that hasn’t developed a personality yet, you can’t say that he/she is not a person. In my opinion we need a life model that includes these and other fringe-type of situations (mental illness, coma, paranormal, etc)
The latest research simply shows that need for a better model. The more we know about the brain, the more we have to adapt our models. And I’m not convinced that the model of individuality serves towards our happiness. It does serve towards our survival, that is sure. That’s why, when you touch on it, people instantly relate such a move to death and yearn for a life beyond.

One question…

As long as I can think back, there was only one subject I ever pursued – with persistent commitment. Yes, there were other pathways, but they were picking-daisies kinds, never holding my attention for long. Nothing could quench that quest not even family and children. While I had a fabulous go at it, I was running a comprehensive experiment to supply me with data about my one and only question: what is life?
There is a dilemma though: how can you objectively look at life, while you’re alive? Yet what other chance have I? Or rather has my mind?
To life itself my being alive or dead is a negligible factor; it’s my mind that is making the difference and wants to understand life.
Obviously, the experiment isn’t over until I take my last breath, but I can always give an update as to the progress…
So the latest update is:
Ta Taaaa:
There is no life except in the body. All reality is in the body. And when you consider that the body functions without the mind most of the time, then the notion that life is in the world must be a construct.
It seems to me that the mind notoriously disrespects the body and there for creates reasons of its own. Perhaps it’s merely oblivious, but the mind has the gift of focusing on what’s important.
When the body is healthy the mind isn’t aware of it, turning outward to the world.
Maintaining awareness of the body is living, and living well.

Summer is over

Thinking back over the summer in Romania, what stood out is the executive role I consistently took in order to get things done. There was no letting up, one thing led to the other, and I got the hang of it after an initial rough phase.

My life here in Germany consists of flowing with events, rather than initiating processes. If I wished to do so, I’d have to up my lifestyle which is cumbersome. Here, being on the active side of life doesn’t increase my quality of life. Not so in Romania. Every little thing I do makes my life better.

This year, settling back into the winter routine seems uncomfortable. The confines feel narrow and I can’t find my step. Feels like changes are ahead.

Country Life

Summer means country life for me, in the rural Transylvanian mountains. For the first time I am connected while here, with the internet at my fingertips through my htc phone. I wondered how that would work out.
As a matter of fact, it makes less and less of a difference… to previous years. Life unplugged is just so overwhelming and demanding, that one has to carve out a few minutes to check the streams, online ones that is.
Rural life does not succumb easily to my online presence.
However I noticed that while my personality here in Transylvania is different from the one at home, my online personality has not changed and exerts a comforting stability in the back of my mind.

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