Robin Hood Economics

          So I have been considering a lot of economics lately, and more particularly economic systems. I find myself drawn towards socialism and communism because I am aligned with the things they seek to produce, although the key problem here is that in a system with that much government it must be hierarchical and built like a pyramid. What this means is the temptation for corruption at the top is just too great. Any of the “communist” countries you can think of fit this bill. Now the draw towards capitalism is that it is more practical in that it actually gets the things done that socialism promises (or at least as well as it can with the amount of wealth any given country has). So what I am proposing is a new kind of economy, but first I must explain a bit further to get you on my side.

          The big problem with capitalism is money. It turns money into a commodity, but not just that… the ultimate liquid commodity which makes stockpiling it extremely valuable. Recessions occur when people begin to value money more than the things that money can buy. Money is no longer a means to an end, but an end in itself. And this makes people hoard money, thus not spending it. Now this was actually more of a problem before money, back when we had our fixation on gold. But when banks opened (advertised as a vault to store your gold), they began giving vouchers to people that had gold stored there. These vouchers represented a certain amount of gold, and represented the first paper money. This money could be traded as freely as gold, only much less cumbersome. This system had inherent problems of its own, and thus the government had to step in and print one kind of national money. At this point we could no longer trade our money in for gold (which was being held at the mint), and it is at this point that our fixation transferred from gold to money.

          We solved the problem of hoarding this money by allowing banks to invest some of the money that they get from the customers, so that they could cover the expenses of the bank. This usually means loaning out money to clients, at particular rates of interest that fluctuate with the amount of money in circulation. This return money is then reinvested, but the problem occurs when too many customers want to come take out money that is currently being used in the investment. This is what led to bank runs, when it looked like the bank didn’t have enough money to pay the people back. But what really happened is that it transferred responsibility to another person who is paying everyone back slowly (the person that took out the loan). This creates a completely different problem.