Where are We going?

I remember vaguely long gone Arguments with my Peers on the question of Size, and how it affects the Signaling system which is Money within the Economy. It is hard to determine how I arrived at this theme coming from this article, but you really have to read the article to grasp the context of the Argument. Money is a Signaling system, though a poor one; the numbers of Participants in the Markets change the exact nature of the signals sent, but so do the quantities of Cash available in the Market, shortages of Product in the Market, the difficulty of Transportation of Product through the system, etc. Rice is being aced out in Australia by White Grapes, not because there is a greater Market for white grapes than Rice, simply a result of directed focus upon Participants within the Market structure (think white grapes need a tightly controlled weather environment, Rice does not; Grape production is concentrated on areas where it can be grown, while Rice uses standardized World-wide Rice Rents). Here Rice, a Staple, gets undercut by white grapes, which is a variety specialty food; all because of the intrusion of greater Cash held by the Consumers of the Products involved. Examination of the Process will outline the fact that Rice Consumers can be mutual white grape Consumers, without impacting the allocation of resources to Rice production; the greater Size of the Rice Market combine with the lesser average Income of Rice, lowering the Return to planting of Rice; it being immaterial that Rice is the more necessary Product in greater Demand.

Central Bank policy to effuse liquidity into financial markets has the unenviable effect of presenting liquidity to white grape Consumers at far greater rate, than enhancing Income of Rice Consumers; the basic transference mechanism based upon relationship of all Consumers to the central banking marketing systems. Easy Money policies are simply destroying Consumer access to the Rice Market far faster than it is destroying white grape Consumer access to the white grape Market. It highlights the vulnerability of traditional economic practice to Ravages produced by promotion of more technologically-advanced economic practices.

It is instructive that another Staple, Oil, faces an equal impact from liquidity measures of central banks. Traditional economic practice cannot endure Oil price increases, because Market Consumers cannot pay for the Increases through traditional low Profit margin economic activities set by the low Incomes of their Consumption markets. It is especially disingenuous when Central Banks realize that increasing liquidity will have very little economic incentive for high technology markets, due to a lack of funded Consumers in technological Product markets. One has to ask if it is wise to make economic conditions worse for traditional economies, when there will be very slight promotion of high-Tech economic performance. lgl