Doug,
Your questions raise the problem that it really would take a book length exposition to do justice to the various questions being raised, yet much of this would have to be supporting detail to deflect the invariable criticism to any complex argument. Since you do seem far more curious of the issues, than critical of my observations about them, I'll try raising a various salient points and let you process them from your own frame.
Consider two terms you would run into in any in depth reading of economics; Derivatives and re-hypothecation.
If you know much about gambling, derivatives amount to a form of parimutual wagering, where one is betting against other betters, rather than the house. So effectively you can have enormous amounts of money gambled on a very minor issue of probability. For instance, millions of dollars being wagered on a horse race, where the purse might only be 5-25 thousand. The difference though, is these bets don't have to be closed after every event, but can be rolled over into another, so the losses don't have to be declared.
Re-hypothecation basically means the same asset is being used to back multiple securities/loans/etc. Now on its surface, this might seem like outright fraud, but monetary systems have effectively worked this way for centuries, in that there is rarely enough gold/assets in the treasury to back the amount of money in circulation. In fact, prior to the world going off the gold standard, they were often required by law to only have about 25% gold to money in circulation.
Now with low interest rates, money can be borrowed into existence generally cheaper than the stock market is growing. For instance, if you can borrow money at 2% and the stock market is growing about 5% a year and lots of people are doing this, the rising market absorbs the fresh money being created and the only ones losing are those foolish enough not to be speculating in the market, since it does eventually drive down the value of the money.
The larger reality is that this process is being driven by the entire society valuing money more than they might more intangible assets, like environmental resources and the stability of societies in other parts of the world, because of the promise of security. It is like a wave. While we might focus on its peak, the real force driving it is hidden under the water.
The bigger this bubble of notational value gets, the more desperately it needs tangible assets to feed off of and the more amoral it becomes in acquiring them, so the greater the effective suction being applied to the entire economy.
The reason it requires so much complex math, is not simply to confuse those outside the process, but to maintain enough friction and balancing of obligations within the system, in order to store vastly more notational wealth than the actual economy is capable of producing. As for getting quantum theorists from MIT to do this, versus normal accountants, I do think it should be noted that physicists currently believe that math is foundational to reality and any reasonable mathematical structure must reflect some form of actual reality and so that entire universes must exist to reflect the models they formulate. Yet accountants understand the math as only an abstraction of reality and should they get too imaginative in their formulations, it could well attract legal attention and create enormous personal difficulties. So it is simply logical for the bankers to appeal to the quantum theorists for help in inflating these bubbles.
Yes, this process has occurred throughout history, but a large part of that is because we naturally edit much of the facts about reality to what is immediately convenient and so it is much easier for most people to think of these notes as a commodity to be traded around, much as any other commodity and thus loose sight of the network of obligations giving them value and making the system function. Then the system of regulation becomes a burden to the process of creating and managing these flows of value and so is bought off and consumed by it. It is like a wave, in that it exponentially increases and then crashes. Like a game of Monopoly, when one person actually owns everything, the game is over and the paper money is re-distributed. In real life, this often involves pitchforks and torches. What goes up, comes back down.
This is why I'm trying to emphasize that we need to step back and remember these notes are a contract, not a commodity. You no more own those pieces of paper in your pocket, then you own the section of road you happen to be driving on. It behooves those managing this system for people to think they own the money, then people are far less concerned with how integrated it becomes into every function of their lives, while not understanding the power this gives those responsible for managing the value and flow of this money to tax and otherwise control deep social functions.
If your average Joe Sixpack knew those bills with the picture of a dead president were a form of public utility, that he was only being allowed use of, he and the rest of society would naturally be far more careful how much they would extract value from social relations and the environment, in order to acquire these notes. There are many functions in life, from elder and child care, to local community projects and primary education, which throughout history were normal social effects and didn't require established currencies to occur. In this way, social relations and the environment are stores of value to be preserved and built on, not just resources to be mined, because they arise from organic social contracts that we are born into.
In the first part of the essay, I did brush over some equally controversial topics. Obviously the one about religion and how spirituality is more logically a bottom up impulse of a primal sense of self, rather than a top down ideal. This would well be a book length topic. For instance, good and bad are the biological binary code of attraction to the beneficial and repulsion of the detrimental, not the rather useful narrative contrast of the cosmic forces of righteousness and evil our stories lead us to believe. Going forth and multiplying is good on the individual level, but bad on the planetary level. Just as what is good for the fox, is bad for the chicken and there is no clear line where the chicken ends and the fox begins.
This is not to to disparage the top down executive function, as individually it is the conscious state that mediates all our subconscious impulses and collectively it manages the forces within society for the betterment of the group. Yet being able to appreciate it in this relative context and not as an absolute, would allow us to better mediate decisive factors and not have single minded desires and obsessions create more havoc than is normal. In the age of kings, we came to understand the executive function had to be an expression of the better judgement of the people and not just left to the whims of the heir of the prior decision maker. Similarly, our economic medium of money has to serve the interests of the whole society and not just the desires of those tasked with managing it.
Another topic I get into on physics forums, is that since we experience change as a sequence of events, we think of time as the present moving from past to future and physics further distills this to measures of particular duration, to use in calculations. Yet the actual physical process is that change is creating and dissolving these events, thus it is the events going from future to past. For example, the earth does not travel/flow/exist along a dimension from yesterday to tomorrow, but rather tomorrow becomes yesterday because the earth turns. This point has had me banned from a number of physics sites, since it makes time an effect of action, rather than the dimensional basis for it. Effectively it is much more like temperature, than space. Time is to temperature, what frequency is to amplitude. It's just that we experience temperature as a cumulative effect and overlook the multitude of individual actions(velocities/amplitude) creating it, but with time we experience the individual effect of sequence and overlook the fact there is no universal clock, only the effect of a multitude of changes. In fact a faster clock only burns quicker and so falls into the past faster. Remember that, the next time you are in a hurry.
Obviously this is another subject which would take a book to examine, but it is reflective of our necessarily episodic, sequential view of reality, which makes us focus on the concept of objects, more than the processes creating them. Thus such tangibles as notational devices seem more real than the processes giving them force.
I could further develop these subjects, but this should give you something to consider.
Regards,
John
