At a time when it seems that the world has never before been so overwhelmed by events, phenomena and information, the belief that some processes in the world of money are taking place for the first time is often heard, but that is not the kind of theory we should accept.
The notion that we are the first generation, even in a few centuries, to perceive market phenomena not seen before borders on something between narcissistic manipulation and non-acceptance of the laws of nature.
The cause is, among other things, a value system that sets things up in a chaotic way, which leads to the belief that everyone can take the risk they want. To make matters more complicated, the wind in the back of accepting such a distorted truth is given by the central banks, especially those in whose hands is the fate of the world’s leading currencies – Fed and ECB.
There are many rules that, when we notice, we can use to make predictions, literally unaware of the duration of this phenomenon. In this way, much more than the usual method was created to determine whether something had already happened or not.
In the discrepancy between the claims and beliefs, capital market participants are encouraged to believe that it is possible to buy all the securities they want, in the quantities they want, without a negative result.
This further promotes the view that all instruments actually arose from the need to call all financial instruments, whatever they may be, “fake money”. This belief takes as its premise the assessment that financial assets are always easy to exchange for central bank money.
Such a belief in the continuous growth of property value causes the feeling that money is always financially lost in the markets and that the only “risk” that can happen to it is to be replaced, e.g. for gold, digital money or shares of the company being traded.
Initially, some kind of “disinterest” of the outside world of money, which does not require a replacement as such, could make it difficult to understand any transaction with it and separate it from banking activities and bringing them to the global financial market.
Everything in the bank can be placed on the market, transferring the risk to others, because there is always one of the leading central banks ready to accept this type of risk and, with small losses in the beginning, eventually increase the balance sheet.
The money is now within a system that has provided support to banks when they do not have enough balance sheet capacity. All banking risks are transferred to large central bank systems, which explains the reasons why its value stabilizes, because almost without any examples, which would serve to convince otherwise, like a wizard, there are central banks that find interest in this type of activity.
Belief in rising real estate prices could ensure the cult structure of loans, creating an opportunity for them to always easily find a buyer.
The transformation of money was made possible by the trust that existed in it until the moment when it became superfluous when liquidity became something that was “taken for granted”.
Of all the changes that have taken place in the last few centuries, the key one is that we now clearly see what has always happened in some form, and is now taking place artificially and for the needs of long-term investments.
Such a relationship of elements in this or any system always finds sources of resources. The problem, then, is not in the scarcity of resources, but in some inexplicable, unnatural idea that the value of everything should constantly grow.
The article is the part of the series of research into post-pandemic economic recovery 2021