Where has all the money gone? (Part Two)

Almost a month has passed since I pondered the causes of all the seemingly missing money in the world. Apart from the reminding ourselves countries have run out of cash, that banks are not flush with cash and the general public certainly have little in their pockets, nothing is clearer. As a self-certified non-economist, the best I can do is produce crude theories. Here is one such theory.

I see the world as a massive game of poker. And it follows logically that there are only so many chips on the table. We all know that governments try to avoid printing money because it makes bad things happen, such as hyperinflation. So there is always a limited number of chips.

Eventually one person ends up with all the chips in the game of poker. As far as I can make out, something remarkably similar has happened to the world financial fluidity. Of course this game of global poker is so large no individual ends up with all the chips as they would in poker, but some definitely end up with greater piles than others. Worse than that, just as with poker, when someone has a big pile of chips, it becomes easier for them to take a great deal more chips from others.

It is enough to convince me that the theory of economic success is in fact a fallacy. A successful company is based on a flawed notion that those industries and companies (who, in poker analogy, have most of the chips) must keep increasing their income year-on-year. For example, company X may make a £275m profit on the year, but this is considered failure because the previous year they made £300m. What happens when all this money is lying around static in corporations? What happens when someone retires as a Chief Executive with more money than he or she will ever be able to spend?

The answer is we end up with money that is fenced out of the system and leads to a constraining of future economic success, as well as the limitation of the economic capability of those who have to share the rest of the shrinking pot between ourselves.

What does everyone else think? Have I got it completely wide of the mark - as Tories with economic qualifications will take great delight in saying I have? I may not be an economist but I do not think so. More to follow on this no doubt....

Where has all the money gone? (Part One)

It seems as though the world has been consumed by a vacuum, which has taken all our money from us. The UK is struggling to make ends meet. The USA legislatures have spent the week scrambling around to increase the country's credit limit. Greece, Portugal and Ireland are among a group of countries that have teetered on the brink of going under because of their debts. Who is owed all this money and where has all the money gone?

Are the debts owed to other countries? If so, which ones? If the USA cannot pay its bills, then I doubt many countries are doing any better. Or maybe these countries have borrowed from the banking sector? That cannot be the case either, as governments had to bail them out for their incompetence.

The problem is I am no economist, so I do not have the answer. It seems as though dollar bills and pound notes have just vanished off the face of the earth. Maybe an economist has an explanation for this. Is it possible for money to just vanish? More reflections to follow later in the week or at the weekend.