A Simple Question

     As campaign season slithered toward its end, like some horrible gravid pit viper, I spent a lot of time reading medieval history – for several reasons.
     First, the reporting is more accurate.
     Think about that.
     Also, historians are polite.
     Then, I seldom get the impression that historians are lying to me.
     If a historian doesn’t know something, he’ll step right up and say, “I don’t know much about this. I’m not sure if anybody does. I wish somebody would give me some help.”
     Imagine saying such a thing.
     Good thing you don’t have to be elected to be a historian. History wouldn’t be worth shinola.
     Medieval history is interesting because that’s when capitalism was being invented. How it happened, what worked and what didn’t is interesting to look at 700 years later.
     It’s easier to look at than today’s financial mess. One, because we can see how it came out. And two, because as the historians say, up to a certain point the problem is that we don’t have enough information. Beyond a certain point, the problem is that we have too much information.
     We’re way beyond that point.
     The farther back in time, the better I like it. Once I’m 500 years away, I’m pretty sure I won’t be subjected to a campaign ad. That’s the main thing.
     This week I’ve been reading about the 16th and 17th centuries – an interesting period for us capitalists, though you don’t hear much about it anymore, since it came after the excitement of the Renaissance and before the excitement and horrors of the Industrial Revolution.
     Those two intervening centuries in Europe have a lot in common with the two centuries of American history – and one big difference. And the difference goes a long way toward explaining today’s financial catastrophe.
     The 1500s and 1600s in Europe was the age of practical men. The great inventions had been made by the ancients and by the geniuses of the Renaissance. Now men of commerce tried to figure out how to put them to use.
     Take the simple screw. You couldn’t use it to build things, because screws are hard to make. Every one had to be cut by hand.
     Miners were interested in screws because you can use a screw in a pump, and miners needed pumps to get water out of mineshafts. Their pumps didn’t work so well because they were made of wood. Metal was expensive. No one used iron cylinders in pumps until the second half of the 1600s.
     Iron cylinders worked so well that miners needed more power to run their new, efficient pumps. So in 1711 a blacksmith named Thomas Newcomen invented a screw pump with a metal cylinder that ran on steam. Newcomen used his machine to pump water out of a mineshaft in England. He didn’t know he had just kick-started the Industrial Revolution.
     The advances in chemistry, smelting, tool-making, textiles, shipping, armaments, banking and finance in those 200 years did not come from any great new inventions – they came from putting old inventions to practical use. And because all that knowledge could be stored in books – thanks to Mr. Gutenberg – history advanced to the dismal state that we have reached today.
     America too, for its first 200 years, was known as a practical nation. Europe sneered at our so-called culture, but when it came to practical stuff – putting inventions to use – we beat the world all hollow.
     What’s interesting about today’s worldwide financial catastrophe is that it came from American inventions that have no practical use whatsoever.
     Oh, the financial geniuses assured us that financial derivatives and credit fault swaps are very useful. They’re like insurance, they said. They create prosperity, they said.
     Well, then, why doesn’t anyone know what happened to the $62 trillion “worth” of credit default swaps that someone “had” before the system collapsed?
     If the U.S.’ biggest banks and the world’s biggest insurance company lost trillions of dollars, who’s got that money now?
     We know who lost it. Who won? Where did the money go? Or did it ever exist?
     Financial derivatives and credit default swaps are inventions that made it possible for a very few people to steal more money, or lose it, more quickly than anyone had ever done before in the history of the world. Yet now the inventors claim that no one knows who has the money, or even if it ever existed.
     Here’s another thing I don’t understand – why has no one asked that simple question in the runup to Tuesday’s election: What happened to all the money that banks “lost” in the financial derivatives markets?
     It’s a pretty simple question – a practical question about a problem that, we are told, is too complicated for anyone to understand.
     I don’t expect we’ll find the answer before the election. Or after it, either.
     We might as well ask Charlemagne.

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