::::::::
Plea for a New World Economic Order.
Chapter III.
Greenspan Conundrum and
Bernanke Global Saving Glut.
Paragraph 7: Of The Justification
of Interest Rate and Credit.
Jean Paul Sartre
L'Existentialisme Est un Humanisme.
1946
Abstract:
This paper shows that interest rates are the sum of
an arbitrary rate, an unjustified rate and an morally unacceptable rate.
Interest Rates:
Prevailing theory about the cost of capital, CPAM: Capital Asset Pricing Model., states that it is the sum of risk free rate, systemic risk return, default risk return and liquidity risk.
Arbitrary Risk Free Rate:
We will see in Chapter IIX: The Adjusted Credit Free, Free Market Economy. that this arbitrary rate could be set at a very low price and that its only justification is the necessity to create some scarcity of Capital in order to maximize the return on Bank's Capital.
Unjustified Systemic Risk Premium:
I will show in Chapter III: Greenspan Conundrum and Bernanke Global Saving Glut. Paragraph 7: Systemic Risk. That this return was either to insure an non-existent risk or rewarded a risk the insurer can't assume.
Morally Unacceptable Risk of Default Premium:
This rate is morally unacceptable on several ground:
It is
discriminatory:
Its price varies according to the customers, as such in any democratic capitalist state it is unconstitutional.
It discriminates against the poor:
When any civilised country should favour the poor.
It is
a collective
punishment:
It is set according to the economic class you belong to. Moreover who pays for that risk of default? Precisely those who didn't. Those who did default obviously didn't pay that risk premium. Imagine that a teacher punish all his pupil because several of them did make something wrong and punish those who precisely didn't do it.
Morally Unacceptable Liquidity Premium:
Its justifications are similar to the previous.
Conclusion:
Apart from causing Market instability and the inevitable destruction of the economy, the only justification of interest rates are their Market price. We conclude that Market can justify morally unacceptable behaviours and mathematically unsound results. The only way to suppress these unwanted results is to do what we do with drug dealing: make it illegal.
All of This Stays True Until the Poor
Becomes Richer Relatively to the Rich.
My Political Orientation
According to Nolan Chart Survey!
As Libertarian as Friedrich August von Hayek!
Extreme Economic Conditions Call for Radical Solutions.
The Provocative & Controversial Innovation
Since John Maynard Keynes and Friedrich August von Hayek.
It is of the Uttermost Importance That, When the Crash Comes, Which It Will Inevitably Do, we Restore as Fast as Possible the Economy by Implementing our Plausible Alternative Solution as to Minimalize the Economic Sufferings of the People. To That Order I am Building Redundant Social Networks. Please Grow the Networks!
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