My answer to What are the biggest risks to the global financial system?
Answer by Desmond Last:
Itself. The Global Financial System (GFS) is only a System because it is inter-connected. The supply and demand flows that provide the support to the GFS arrive in the system through no planned and calculated systemic action between labour, capital and regulation ie Government. In an ideal world we would plan production and only produce that which is needed to maximise resource efficiency and equalise wealth ownership. The GFS has no consideration for the benefits of say Nigeria making coffee for France and France making cars for Nigeria. A lack of safe productive investment opportunities and a regulatory system which does not protect the movement of capital to those who add its original production value devalues labour. It then in compensation produces destructive free trade agreements. ie the retained and reused value is only in the production cycle which the originator finds is reduced by the added speculative value of financial market speculation which removes his wealth generation by monopolization of capital. As Australia and the U.K have found out there is no such thing as a level playing field – ask the car workers in Melbourne and the 'bend over' Steel Workers and Coal Miners in the U.K. Should we allow currencies to be fixed to protect the production value with a global re-value every 24 months and should we use a trade-weighted system to equalise currencies rather than use the Euro and the IMF. By that I mean at the moment centralised credit supply is used to inflate currencies so that an economy which cannot buy is now able to ie the reason why the Euro is so important to Germany. The biggest risk to the GES is thus that it will run out of customers – there will not be enough surplus value capital to be speculated and hence added to failing economies. The distortion of AID donations has also presented a problem for the GFS as so much capital has not been used for economic multiplication to enable economies' to support themselves . Military build-up due to the Security Council failure to bring Peace anywhere has removed economic multipliers – you can only use a missile once and it destroys not increases value
to the GES. Now there is little left for Climate Change and soon AID will stop due to corruption and lack of funding. What is the point on spending so much on the military if the World cannot enjoy the Peace and economic trade it is meant to bring? Unless we adopt a more rigorous and planned approach to our GFS it will crash and burn and due to its interconnectedness it will be Global. That does not mean the answer is communism. But it does mean country economies adding value to their product's through comparative advantage rather than an excess of production – such as the Chinese Steel dumping.
My new economic system does deal with the problems the GFS has began to experience but David Cameron wants me in a mental Institution, so that is my fate as far as he is concerned. http://www.desmondlast.com