THE GLOBALISATION AND FINANCIAL CRISIS; COMPLEX INTEREST RATE MECHANISM SHOULD ENABLE THE REDISTRIBUTION OF WEALTH FOR

THE SURVIVAL OF MANKIND! 20.08.2010 Prof.Dr.Mehmet Erda Berlin www.mehmeterdassapbidanismani.com Finance, production and sales are the controlling powers in World markets. Especially energy markets play a crucial role, such that Money, googs and services could be produced and consumed. The Final goal of Production is consumption,at all. After the 1980s the world economy faced a lack of aggregate demand. US Government started star wars projects and increased military spending for a few years more than 400 bio.US Dollar. US Economy was lacking more and more by deficit spending. On the other hand exploded the real estate speculations. Even jobless people could get mortgage financing of 400.000-500.000 USD worth houses. Federal reserve could not adjust and match aggregate demand and aggregate supply by using the interst rates mechanism, as John Maynard Keynes has suggested. The big imbalance and volatility in financial markets and real economy, a totally decoupling of finance from production and sales has occurred after 2000, leading to a global financial crisis in 2008, by the bankruptcy of Lehman Brothers. The globalisation and financial crisis are totally different concepts in scope, such that one implies the increasing global scale interdependancy of all economic actors in time and in their decision making, the other one implies the decoupling of financial markets, production and sales, i.e. demand and supply processes are more diverging than converging. The future trends show that the Euro and US Dolar against other currencies are going to lose their dominant role. In order to be able to prevent this from happening, at least for a few decades more, the US intervention scenario in Irak and Afganistan, for keeping the energy markets coupled to US Dolar, by using military force. The US soldiers withdrawal from Irak, could lead to the new series of political conflicts between Arabs and Kurds, leading to the division of Irak. This would influence other economies in Middle East, causing new interventions of turkish Military into Irak, escalating the war in the region. Unless all OPEC countries sell and value their oil in world markets in US Dolar, US is going to lose its global power and deficit financing functions, leading to the collapse of US and world economy.

In the Euro zone, the debt servicing of Greece, Spain, Portugal, Italy and Ireland is not guaranteed at all, although a 700 Bio.Euro support package has been made ready by the EU. The greek economy is facing a big threat, losing up to 70% of its markets growth potential. Joblessness increased in a global scale and and the consumer confidence has been lost. People in Europe are not trusting in even gold and they buy agricultural land in order to be able face the shortage of foods for a survival in the coming decades. The increasing frequency of occurrence of natural desasters, like earthquakes, mansoon rains, causing flooding in India and Pakistan, Indonesia, China, leading to starvation of 20 Millions of people within a couple of days. The energy imbalance and climate change in the world, is threatening the survival of mankind on the planet earth. There is no other planet in the the space, with water and atmosphere, other than science fiction movies, that could enable the same natural life on earth. The growth strategies, profit maximization goal and interest rate mechanism are to be questioned and re-adjusted to new faire equilibriums. The mankind has to get used to consume less and protect the natural resources to enable the survival of next generations at all. Otherwise the nature is going to destroy itself and recreate and re-establish its balance and natural measures completely from the very beginning era of Adam and Eva. Karl Marx, David Ricardo, Sylvio Gesell. Have all pointed out to the monopoly forces inherent in the interest rate mechanism and profit maximization through growth strategy. Today, the production of any kind of goods and services is not a proble any more, but to sell and consume those goods and services through lack of demand is not possible any more, without redistribution of wealth in the world. This is the challenge of this age to capitalism. Either Redistribution or destruction through war and by nature itself. The interest rate definition of todays economic and financial theories are completely obsolete, to match the aggregate demand and supply through socially faire redistribution. The real componen of interest rate, leading to classical physical capital accumulation process, has to be expanded and completed by an imaginary interst rate component, enabling the redistribution of wealth and natural resources in the whole world. Otherwise, the new measure and imbalance of power in the nature, accumulated through the many past centuries, thanks to selfish growth strategies and profit maximization goals of wild capitalism, is going to lead potentially into apocalypse, putting an end to civilization and survival of mankind. If the timing of nature should not be captured and measured by scientists at the right pace, there will be no chance to recover for survival of mankind. It would be too late even to start a nuclear war.

After the globalisation and the latest financial crisis processes in US Dolar and Euro zone, the necessity of introducing new interest concepts for wealth redistribution, new international institutional infrastructure replacing the old IBRD, IMF, UN, IFC and a new international monetary system instead of US Dolar and Euro could not be established soon, by common wisdom and concensus of main player nations in peace , it would be too late to prevent a third world war, starting from Middle East, Far East, or Southern Asia. The Cold war era was more stable than today.