Blogging from the Bog

   Economics is not a very exciting field of study, neither is it an exacting science.  It is the analysis of past events and trends over long periods of time to try and predict future, short term, events.  It’s a fool’s errand, and much like trying to drive a car by only looking in the rear-view mirror, you will want good insurance coverage in the process.  Really, the best that can be hoped for, with economics as with life, is that we can learn from our mistakes.

   I would much rather watch a magician than listen to an economist!  We know that all wars throughout history were fought for economic reasons, we know the golden rule is: He who has the gold makes the rules, and we all know that when our neighbour is out of work it is a recession; but, if we are out of work it is a depression.  Show me instead a rabbit that comes out of an empty hat!

   In the previous post, The Money Machine $2, we saw how the sleight-of-hand money manipulaters can make profits by shifting cash around fast enough to give everyone a loan of the same money.  The only thing better than that of course is to make money out of nothing!  This isn’t alchemy, the Midas touch, or theft, at least not under current usuary laws.  This is about making money where there was none before, at least none of theirs!

   I knew someone once who won a very large lawsuit and when the settlement was made the cheque was given to the offices of the legal team.  The client was never told the settlement had come into the possession of the law firm for six weeks, between the jigs and the reels it was another six weeks before the client received monies due, less of course the legal fees.  For 120 days the money sat in the law firms bank account receiving simple interest to the tune of $700 per day, money from nothing, at a loss to the client of $84,000.

   Take a look at your Eircom bill, mine has a Bill date of 27 February.  Included on this bill are phone call charges up to 27 Feb and rental from 28 Feb to 27 Apr.  The rental charges are prepaid for the next two months at a cost of about €40.  There are a minimum of one million phone bills with honest customers giving Eircom €20 million a month to play with, do you think that money is stacked up like phone books in a leaky old shed somewhere?  They are making a million a month on our money!  Sheer genius I tell ya!

   In a large city bank a computer programmer set up a simple and compound interest scenario that the bank ran on their computers to calculate the amounts due their depositors.  Even simple interest rates are not simple, that is they can often extend to fractions dozens of digits long after the decimal point.  Since the monetary system only includes cents and not tenths or hundredths of a cent the calculations were truncated at the fourth digit after the decimal point and rounded up.  If you had an account there and your interest was processed on your deposit the amount owed to you might look like this: €12.39514603.  The €12.3951 would be rounded up to €12.40 and you would have made that income on your deposit.  But the truncated part of the original solution had to be dealt with, and as it really didn’t exist at all, the programmer decided that the €0.00004603 should be put in an account with his name on it.  After hundreds of thousands of interest calculations for the banks customers were truncated and added into your man’s account he began to collect a tidy sum.  He generated money that never existed, poof from thin air!  Magic!

   These are only amatuerish attempts at performing money magic.  In the next post we will discuss the professionals.