Wednesday, June 24, 2009

Meaning of Money

Look at this very interesting chart from The Big Picture: Bailout Costs vs Big Historical Events

Well, it left out the world war I and II, still, the US compensation for the financial crisis is estimated to be at around USD 15 trillion, more than the US spend on all other major events combined (taking inflation into account)! Also for comparison, 2008 US Gross Domestic Product is USD 14 trillion.

Wow. But...

so, what did really happen? Just a few numbers changed. No one died, no houses destroyed, a few bankers out of their job. Compare this with the real events. How many tragedies for the whole world in case of the catastrophic events. In the other case, well, you had a rocket and exciting photos from moon and earth, or at least a big new junk of it.

So where is the problem? Something is obviously out of balance. Thought it is not just the current crisis. The problem is, what money measures is not necessary real value, it is really relative.

The numbers above give us some perspective how crazy the current situation is, but even more so, that our ordinary understanding of money is quite questionable.