Backstory: This Week's G-20 in Seoul

Thursday, November 11, 2010

As the meeting of the world’s 20 richest economies gets under way in Seoul, Gillian Tett, the U.S. managing editor and an assistant editor for the Financial Times, describes what leaders hope to accomplish at the G-20 summit. Plus, a look at the global reaction to last week’s announcement that the Federal Reserve would buy $600 billion in Treasury Bonds.


Gillian Tett

Comments [2]

Phil Henshaw from way uptown

Please forward to Gillian Tett,

One of the things it's possible to know about living systems, like economies or organisms, or ecologies, etc., it that as you pressure them to perform more and more it eventually crosses a threshold that will kill them. Unlike with theories, that fail for the slightest error without warning, with living things you can see the point of whole system failure approaching. Just like with balloons if you keep inflating the pressure, the containment gets rigid before it rips to shreds.

Having our whole economy organized around finding ways to increase the pressure on people to increase their performance and produce growing material returns from the earth is like that. The world and system we built for exploiting it are getting rigid in response, however, showing decreasing returns for the effort. That is precisely the warning sigh of approaching general failure. We mainly need to stop pushing it, stop continually upping the ante.

The warning gives us a little time to respond, but not much. It's a special problem, in that to stop increasing the pressure on the economy is actually "unthinkable" because it has to do with the belief in accumulating wealth. That doesn't make it impractical, though, or not completely necessary for the world as we know it to survive in a physical and historical sense.

All it means is that you'd have to do the unthinkable, and begin to unwind the debt spiral by the simple device that Keynes and Boulding, and I, have proposed using. It would take having creditors start spending enough of their financial returns to keep other people's debts from having to expand.

That's also the natural system method, i.e. "turn down the pump" when the pressure increases uncomfortably. It would avoid the traumatic stress of a world bankruptcy, and the debilitating long conflict between the powerful and powerless in the aftermath, as the system we spent two centuries building decays, with people at each other's throats...

We have so much to loose one way, and so little the other, but the symbolism. The symbolism of piling up ever more money to have the feeing of being in ever greater control, of a system that is clearly going out of control,... however,... isn't lasting.

Nov. 11 2010 02:36 PM
dbmetzger from manhattan

Clash over Currencies
The currency spat between the US and China is a major issue at the G-20 summit in Seoul on Thursday. The US says China is artificially undervaluing its currency to boost exports. But China's traders believe the accusation is unfair.

Nov. 11 2010 01:56 PM

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