The Debt Realignment Initiative
For a global problem we need a global solution.
"That fondness for science, ... that affability and condescension which God shows to the learned, that promptitude with which he protects and supports them in the elucidation of obscurities and in the removal of difficulties, has encouraged me to compose a short work on calculating by al-jabr [restoring, referring to the process of moving a subtracted quantity to the other side of an equation] and al-muqabala [comparing, referring to subtracting equal quantities from both sides of an equation] confining it to what is easiest and most useful in arithmetic." Abu Abdullah Muhammad bin Musa al-Khwarizmi (780-850), Persian Mathematician, Worked in "House of Wisdom" in Baghdad - from whom the word "algorithm" comes. The word "algebra" is derived from al-jabr, one of the two operations he used to solve quadratic equations.
"A number is an abstract object, tokens of which are symbols used in counting and measuring. A symbol which represents a number is called a numeral, but in common usage the word number is used for both the abstract object and the symbol. In addition to their use in counting and measuring, numerals are often used for labels (telephone numbers), for ordering (serial numbers), and for codes (ISBNs). In mathematics, the definition of number has been extended over the years to include such numbers as zero, negative numbers, rational numbers, irrational numbers, and complex numbers. As a result, there is no one encompassing definition of number and the concept of number is open for further development." Wikipedia
Number usage dates back to around 30,000 BC. Bones and other artifacts have been found with tally marks cut into them and are thought to have been used to keep track of certain events. In ancient Babylon understanding of numbers evolved, were systematized, and written down. Numbers, numbers theory, and applications understood and built upon throughout the millenia have resulted in our present-day economic, accounting, and financial systems.
Numbers represent a system of logic -- or are supposed to do so. They offer us understanding of how things work in the real and hypothetical worlds. Numbers are able to assist, to build, to organize, to explain; or, to thwart, destroy, disorganize, confuse. The numbers are tools. They are used as we use them. Numbers work for us, or we work for the numbers. We decide. Presently, we are allowing the numbers to work the people, rather than the people working the numbers.
In the real world there are people, resources, and time. Capital is both real (you can use it and it does not feel good without it) and an abstract resource. Capital is a tool. Numbers represent all of these, the real and the abstract. Human beings have a proclivity to build complexities while they forget the basics. Humans have a proclivity to build idols, even to disciplines of mind. This includes set ways of doing things. It is difficult for people to change. Mathematics is absolute in its rules. Economics is not. Finance is not. Two plus two must always equal four. But economics and finance bends, reaches, is modified, assisted, restructured. We must use the tools we have and allow the flexibility that is available to reach ultimate freedom of people, resources, time and capital.
Each day, each minute of the day and night, billions of dollars, as numerals, symbols, are transferred across the globe via computers among the nations around the world. These symbols are moved quickly, efficiently, smoothly. When this decreases because of liquidity concerns economies slow down. When there is an increased flow with credit available progress is had. Markets go up and markets go down, and the symbols reflect these. Progress is marked by the increase in numerical progression -- unless it for adding up debt. Stagnation is marked by the decrease in these number representations -- unless the debt is decreasing.
Numbers are a means of communication that humans use -- or abuse. When there is proper regulation of the numbers and what can be done, and not done, we can reasonably expect stability. When regulations over the numbers are removed, human-nature too often is for self-interest. The "invisible hand" is not always benevolent. This propels economies into extremes.
On any given day worldwide there are a certain number of people, a certain amount of resources, and time. The first two do not change radically day to day in the normal course of events. These natural assets of Earth are represented by numbers, more or less precisely. Combined, people, resources, time, and capital produce products, tangible or not, and these are offered in markets. The markets reflect reality to a degree, but very impercisely, particularly when not regulated. Perception, expectation, confidence, pessimism, all these influence the markets and the numerical representations which represent assets and liabilities; and the numbers fluctuate on the computer screens across the globe representing all of this. The natural assets do not fluctuate to the degree the numbers do. The screens flicker imperceptibly. There is no "real" money being moved, just notations, just numerals in various computers. Money only comes with a cash-out.
The numerals, representing numbers are not people. They are not resources. They are not time. They are not hard cash. They are mere notations. They are symbols of something else. Because of leverage, these symbols produce more "mere" symbols. They may represent capital, but we see what can happen to capital over a short period when we look at the Stock Market. Billions can vanish quickly. It all depends on many variables.
Numbers, like words in a word processor, can be copied, stored, deleted, moved, processed, adjusted, and changed. The numbers are not sacred. Yet we treat them as though they are. The countries of the world with real, live, thinking people at their head can do what they will with the numbers that represent debt. The numbers are not in control. People are in control -- or should be. The rules for these representations are set down by economic and accounting principles. When there is a crisis, rules can be lifted or modified in extreme cases if this solves the problem, to be reinstituted once the crisis is over. We can solve this crisis. But only if we institute Global Debt Realignment. The austerity programs will not.
The numbers represented in the computers around the world that stand for the world debt and the debts in individual countries have gotten so large in respect to the people, resources, and time through whatever means: neglect, error, poor judgment, numerical compounding, speculation, overselling, etc. they will not be paid off. It would be immoral, unjust to put the yoke of oppression on the backs of people in a futile attempt to try if there was a means to meet the challenge in another way. It would be foolhardy to attempt to print our way out of it as in Wiemar Germany.
Worldwide debt is untenable. It is immoral, when the world faces so many challenges, to not control it. This must be solved. It can be solved. We have to control the numbers and realign them.
Luca Pacioli (1445 - 1517.) published the basics of accounting in 1494 in a section of a book on applied mathematics entitled Summa de Arithmetica, geometria, proportioni et Proportionalita. Pacioli, a Franciscan monk, dedicated his life and work to the glory of God, forwarded the idea of double-entry balance sheets on what the Venetian merchants of the day were using. The accounting of today is based on his work. The United States of America follows what are called the Generally Accepted Accounting Principles (GAAP). GAAP for governments are set by the Governmental Accounting Standards Board (GASB) which states that the primary cornerstone of financial reporting is accountability. HELLO.
Balance sheets are tools, just as numerals are tools. Accounting principles are tools (which work best when used). But there are times when you must switch tools, pick something else up and come back later to what is in your hand (and mind). Tools are used to assist people. When building a house we put down the hammer and use a saw when we want to cut a piece of wood. The balance sheet and numerals should not be such a closed fixture in our mind and actions that we set them up as the only tools. It has been said that "if your only tool is a hammer, everything looks like a nail." We have more than one tool to fix our financial and economic crises. How we use these tools is not fixed in stone, particularly with our modern knowledge base and technology. President Franklin Delano Roosevelt realized during The Great Depression we had to start anew, that we needed "a new deal." Today, during The Great Recession we need a new deal. We need to realign the global debt.
The greatest tools we have are our minds. We have possibilities which expand our choices, if we see them, if we use them. We must think about all the options.
We need to have a worldwide meeting of the world's leaders and central banks and we need to realign the debt, starting fresh with new balance sheets. We need to do this globally. We need to reshuffle the deck. Something big needs to be done. And we need to do it now.