Money World
January 12, 2011
Credit-worthiness. The ability to repay a loan.
Lenders calculate it by looking at your assets (stuff you own: houses, cars, stocks, land, companies) and at your earning potential (present job, training, resume, skills, income-from-assets).
Your rating represents where you stand in society. Stock brokers are more important than teachers. They are both less important than the founders of Google and are both more important than the the un- or underemployed. People are for the most part treated accordingly. Although the basic idea is egalitarian, we hold over the customs of the Middle Ages and treat our economic betters as our social betters as well.
Credit ratings are everywhere. People and families have them. Institutions have them. Harvard has a 27 billion dollar endowment (read: pile of money). If they put that in a savings account and make .2% interest, that’s 54 million dollars of income every year. What does harvard do with that? A: Whatever the fuck they want. One thing they won’t do with it is endanger their credit ratings.
poor, middle class, rich, super-rich.
Countries have credit ratings too. When Russia devalued their currency like two years ago (made their exports cheaper so they’ll sell better), my friend Leo who worked at a hedge fund told me that everyone was “selling Russia.” Its rating was going down. It was becoming a worse investment so everyone sold. Maybe rebuy later at a new price, maybe not, but definitely sell now.
The US Treasury is the absolute #1-rated thing on planet earth. We print dollars, the international currency. We’re the biggest consumer on earth so everyone wants to do business here. We’re the richest of the rich. Highest per capita income by far with the only exceptions being like Norway and the U.A.E. hat have tons of oil and no people. When the financial crisis happened, everyone on earth bought extremely low-yielding american federal bonds. 30-year treasury notes. Cuz they’re the absolute safest investment there is. America will be there tomorrow. that — and our army — are the reason we tell everyone what to do (or try).
The official Big Looming Danger is that the US will cease to be the world #1. Our model is big + stable + advanced, but other countries are catching up. Japan was huge and still is. Europe is trying to become one big economy and Germany is totally a superstar. Plus Brazil, Russia, India, and China (the BRICs). China is 94th in per capita income, but 2nd in income overall (after the US). Lots of capita. But they’re becoming more advanced. As are the others although you hear less about Russia now because its stultifyingly corrupt.
The fear is well-founded. America’s challenge is to become like a huge Germany. Super advanced, but also modern and a welfare state and culturally vital. Not facist bullshit like china.
China has 50 million political prisons who do slave labor.
But I digress.
Value is all about perception. That’s where it meets Psychology. Its what people think its worth, or more precisely: what they’ll pay. Earning potential is a matter of making an educated guess. Who the fuck knows what’ll really happen. And its self-reinforcing. Projecting value ends up getting you jobs, investments, etc and making you more valuable.
Well, not all about perception. You have to be competent. But the fact of the matter is, we haven’t evolved to the point where there are THAT many high-level jobs for really smart people. i feel like a lot of people are overqualified for their jobs. Business isn’t really about anything too interesting or deep. Iphones are amazing. I love a lot of what those guys produce, but still. Its number crunching and stuff-shuffling with a heavy interpersonal element. Its not Philosophy, Science, Psychology, Literature, Art, etc. Its not high culture.
We’re evolved to want to rise in society. Ours assigns standing based on creditworthiness, so talented people pursue it. That ends up leading to great stuff. But it aint’ so spiritual cuz there’s no value placed, in and of itself, on wisdom or virtuousness or honor or beauty or love or compassion or anything like that.
Those things are valuable in themselves and people will always know that, but this capitalist kind of world is in danger of forgetting de-incentivising them In come we. Artists and thinkers and makers of plays, songs, images, objects, and ideas. The big invention would be a whole new self-sustaining system of looking at life and the world that everyone wants to be a part of it. But there are lots of smaller inventions on the spiritual front. Ways of looking at things. Attitudes. And they can be conveyed with quality art and personal charm.
