Masters of Money (Episode 2: Hayek): a breathless race through the life and work of a defender of classical economics

Tristan Quinn, “Masters of Money (Episode 2: Hayek)” (2012)

Using a mix of interviews with former politicians, economists and academics together with a voice-over narrative by Stephanie Flanders of his life and times, this second episode in the “Masters of Money” series dwells on the influence of the Austrian-British economist / political philosopher Friedrich Hayek on global economics and politics in the 20th century. A major theme of this series is whether the work of the economist-philosophers featured is still relevant to economics and political philosophy and can offer ideas or solutions to the current malaise affecting Western economies. Affable presenter Flanders gives a chronological run-down of Hayek’s early life in Austria-Hungary against a background of middle class wealth and comfort, World War I and its aftermath, his arrival in the UK in 1931, his rivalry with John Maynard Keynes and the period of ideological wilderness he endured from the 1940s to the 1980s when his ideas and work defending classical economics were resurrected by the US and UK governments under President Ronald Reagan and Prime Minister Margaret Thatcher respectively.

The program is stronger delineating Hayek’s early life and the ideological underpinnings of his work than it is dwelling on his later life. The structure of the program seems quite muddled and hinges very heavily on following Hayek’s fortunes over the decades. The essential ideas of Hayek’s work – that economies should be completely free, that money flows should be completely free and allowed to achieve their own equilibrium, that centralised control through government institutions such as a central bank or regulated exchange rates or interest rates can be dangerous – are present. A theme emerges very strongly from this episode: Hayek’s distrust of government and its control over a nation’s economy (and ultimately society and culture, politics and the level of freedom allowed to citizens)  through monetary and fiscal policies. Influenced by Charles Darwin’s theory of natural selection, Hayek believed markets were best left alone by governments to regulate themselves and governments should be content to provide the rule of law and a social safety net (as opposed to instituting a cradle-to-grave welfare state) and ensure the proper flow of information to enable markets to function on their own effectively. Throughout his life Hayek opposed political systems that were premised on centralised government control. (Curious to think that in his own way, Hayek was something of an anarcho-capitalist.) His rivalry with Keynes centred on the problem that if the economy was in trouble and in recession, whether governments should step in and try to solve the problem: Keynes believed governments should spend to stimulate the economy, Hayek was in favour of leaving alone and letting the economy sort itself out.

Hayek’s ideas were attractive up to a point to the US and UK governments and private business interests but even the most laissez-faire elements in those agencies still wanted some power and control in and over economies. Hayek himself wasn’t immune to contradictions in his own behaviour and thinking vis-a-vis the implications of his work and ideas: he admired Pinochet’s rule of Chile, accepting awards and honours from the military government there and went so far as to recommend Pinochet’s restructuring of the Chilean economy to Margaret Thatcher. Though opposed to dictatorships, Hayek decided that a dictatorship creating a liberalised, deregulated economy in the short term (with the expectation that the dictatorship would give way to a democracy) was to be preferred to a country, whether democratic or not, that had a regulated economy.

There’s very little critical examination of Hayek’s work in the program which on the whole is quite breathless and fawning in its race through Hayek’s ideas. Hayek’s own interpretation of Darwinian natural selection might be problematic: if his interpretation is based on a belief that such evolution is based purely on competition and the competitively based survival of species (a view popular in the late 19th and early 20th centuries), then his work may not allow for co-operation and it will be flawed in that respect. Nearly the whole edifice of his economics teeters on that interpretation! Another possible problem is that Hayek misunderstood the natures of fascism and Communism and how these political ideologies came to the fore; conflating the two together, he failed to see that his work could be corrupted by governments and private interests and turned into a tool of political and economic control. Hayek’s belief that the free flow of information would enable money to flow efficiently to where it’s most needed and is most useful falters against what we know of human behaviour and the phenomena of groupthink and herd psychology in markets: in some situations, too much information about money flows, combined with time restraints on decision-making and awareness that time and money are being wasted with delays in decisions, can lead to a wrong decision being taken, and everyone blindly following that decision. A small action can lead to disequilibrium in money flows which in turn compound the problem by shutting off options and alternatives and forcing investors down paths in which they might make worse decisions.

It’s ironic that Hayek, in setting out to do what he believed was good for human society, might have come to flawed conclusions about human psychology, economics and the behaviour of markets that have had adverse impacts on societies across the world, increased social, political and economic inequalities and made our world more insecure, more prone to fascism and more enslaved to a global power elite in whose hands economic and political power has become more centralised, not less.

Masters of Money (Episode 1: Keynes): good introduction to the work and ideas of a major 20th century economist

Martin Small, “Masters of Money (Episode 1: Keynes)” (2012)

This is the first episode of a three-part series by the BBC on significant economists / philosophers who thought and wrote on the role of money or capital in Western societies, with a view to applying these people’s insights and work in solving economic and financial crises as exemplified by the Great Depression of the 1930s and the Global Financial Crisis of 2008 whose effects are still reverberating in many countries across the world. Episode 1 deals with the British economist John Maynard Keynes and his ideas and contributions to the theory and practice of macroeconomics, and running economic policy. The episode links the economist’s background and historical context, in particular significant historical events such as the two World Wars and the Great Depression, to his thought and the development of his ideas.

The episode emphasises in particular some of his most significant ideas in running and controlling economies: that market economies are not self-correcting and can stay sunk indefinitely; that governments must understand how economies work and must stimulate under-performing economies by spending on public works; that economic actors such as employers in labour markets and investors in financial markets do not always behave rationally; and that a global institution is needed to oversee international trade and money flows. These ideas are demonstrated to be rooted in Keynes’s experiences as an economist and investor and in other work he did for the British government, in the mistakes he made and the successes he had, and in his efforts to create and obtain acceptance for a radical system of managing international currencies which would include an international currency, a world central bank and an international clearing-house to regulate trade and balance of trade and balance of payment surpluses and deficits.

In about 50 minutes, the episode explains the basic ideas and concepts for which Keynes is famous, and how they might be used to solve the problems and issues underlying the Global Financial Crisis of 2008, how it came about and the continuing stresses that arose from it and which continue to plague countries like Greece, the United States and the United Kingdom among others today. The episode also touches on the issue of financial bubbles in markets such as the stock-market, the property market and other areas of investment (such as college student loans in the US) and the phenomenon of herd psychology which Keynes also addressed.

As an introduction to Keynes’s work, the episode fulfills its remit well, pointing out the economist’s innovations that are now taken for granted by high school economics students as well as university students and those academics and economists still keen on Keynesian economics. Where Keynes’s ideas are still applicable and the pitfalls in his economics and the assumptions that underlie them are also indicated. While Keynes was no doubt familiar with corruption, greed and the slippery thinking that distorted his ideas and economic tools among the politicians, economists, industrialists and academics of his day, he could have had no idea that his entire economic philosophy might end up being abused by a future generation of ruling elites for their own benefit; hence, the present-day predicament in which governments can no longer apply Keynesian solutions to stimulating under-performing economies as those economies are already heavily in debt as a result of bailing out large banks for past abuses of the public trust by profligate lending and various sharp practices in a context of financial and economic deregulation. This shows up a short-fall in Keynes’s thinking: for all his innovation and breakthroughs in areas such as behavioural economics and finance, and the control of flows in money and goods and services in global markets, he failed to grasp the relationship between money and debt, and how debt drives the creation and movement of money in the financial and real economies. At the very least, the kinds of financial and economic institutions to mitigate the more extreme effects of global trade and the money flows associated with it that he envisaged (and which were adopted either in adulterated form or in ways that benefited the US government and corporations) when he attended the United Nations Monetary and Financial Conference in Bretton Woods on behalf of the UK in 1946, could be applied at the microeconomic level too, weakening and softening the impact of debt and the power of banks over borrowers, and he should have realised that.

The episode might have delved more into Keynes’s early background and the upper middle class culture that informed it and his thinking. Ultimately Keynes was a creature of his upbringing and social class, and I believe this was a brake on the way he thought about economic practice and what governments should do to support their economies.

The next two episodes in the BBC series focus on Friedrich Hayek and Karl Marx as significant influences on 20th century economic practice.


Sharia Money (Episode 2: The Price of Paradise): easy-to-follow documentary on Islamic banking and finance

“Sharia Money (Episode 2: the Price of Paradise)” (2011)

In the wake of the Global Financial Crisis of 2008 and people’s realisation that the global finance industry, dominated by Wall Street, New York City, in the United States and the City of London in the United Kingdom, was a law unto itself (and lawless at that), new interest in alternative forms of banking and finance is spreading across the world. One such alternative form of banking and finance is Islamic banking and finance. This program, the second in a two-part series, looks at Islamic banking as practised by individuals, small traders and businesses and larger companies in three countries: Indonesia, Malaysia and Singapore. It’s scaled to a pragmatic level easy for the general public to follow and though the documentary is dominated by voice-over narration, there are interviews with several people from different walks of life who explain what Islamic banking means to them, why they believe in it or not, what it has done for them and how they believe it benefits them and their families.

Coming across as an extended news or current affairs / travelogue program, the documentary is easy to follow with much attractive  scenery: the skylines of Kuala Lumpur, Jakarta and Singapore feature throughout and the camera takes viewers on little trips through cities and towns with bustling markets, streets crowded with commuters in both Western and Islamic dress and sleek skyscrapers with their plush, neutral-toned furnishings and glass barriers. The program explains what Islamic banking concepts are and money is regarded as a means of exchange bringing together suppliers and consumers of goods and services, and not as an end in itself as a repository of wealth. Speculation in money and the charging of interest are frowned upon: the ultimate aims of Islamic banking are ensuring the equality of actors engaged in a financial transaction and achieving social justice for less fortunate and more vulnerable members of society.

The program goes to some length explaining how shari’a-governed banks and Western banks grapple with the concept of Islamic banking and how it forces them to rethink and change the products and services they offer to customers. The growing demand for shari’a financial products has generated a huge demand for Islamic scholars and researchers who can advise on and check shari’a-compliant products, and has led to universities in the Southeast Asian region offering courses teaching Islamic banking. An example of a large foreign coporation, Nomura Securities, joining a Malaysian financial corporation in a venture to sell aeroplanes using Islamic financing is shown in the program.

Calm in tone, even-handed and sympathetic to the idea of Islamic banking and finance, the program does not say if there are aspects of Islamic banking that can’t compete with Western banking. Since Islamic banking abhors speculation for its own sake, naturally it would be weak on the kinds of financial products developed in the West since 1990, in particular financial derivatives (a type of financial contract in which two parties stipulate the conditions such as dates, notional amounts and values of the underlying variables, hence the name) and semi-prime mortgages carrying large interest rates. On the other hand, Islamic banking favours loans made at fixed rates and partnerships and joint ventures in which the lender and borrower are equals in the financial transactions involved. This would suggest that lenders and borrowers communicate their needs and requirements well to each other and that lenders show a keen and active interest in the business of the borrower and ensuring that it succeeds.

No figures or statistics are given so viewers have little idea of how sophisticated Islamic banking can be and of the large amounts of money that circulate through Islamic banks. One interviewee gives his opinion that Islamic banking is most suitable for small traders and businesses. The impression viewers may get is that however good and ethical Islamic banking might be, the system cannot cater for the supposedly more advanced banking and finance needs of Western corporations. It should be understood though that the so-called “sophistication” and “complexity” of Western-style banking and finance are what got the West into deep economic shit in the first place and that a system of banking which is easy to understand, which treats lenders and borrowers alike as equal partners and which does not countenance exploitation of borrowers and other weak and vulnerable agents should be one the West should follow.

I get the impression that the program, being an SBS TV program, is trying to be all things to all people, not specifically advocating one banking and finance system over another but suggesting the two can co-exist together, in spite of the possibility that one system definitely does look better than the other. That’s called “balance” in the world of contemporary Western news media.


Outsourced!: small-scaled film offers a resigned look at call-centre work outsourcing

Anna Cater and Safina Uberoi, “Outsourced!” (2006)

An interesting and pleasant personalised film revolving around eight call-centre workers in India and Australia, “Outsourced!” examines the effect of the offshoring of call-centre jobs from First World countries like Australia to developing countries like India on both Australians and Indians alike; in particular, the impact of call-centre work on Indian society and attitudes towards working women, gender relations, marriage and life-styles. The film tackles these topics by following four female call-centre workers in Gurgaon, a burgeoning hi-tech satellite city on the outskirts of New Delhi in northern India. To a much lesser extent, the film also looks at how the outsourcing of call-centre jobs and similar white collar jobs will affect the Australian workforce and Australian people’s attitudes towards Indians and other people in countries where Australian industry and the jobs associated with them are flying to.

Through interviews and a voice-over narrator, the film itself flies back and forth between its Indian interviewees and Australian interviewees, contrasting the very different attitudes of Indians and Australians towards call-centre work. In Australia, call-centre work carries lesser prestige than most other white-collar jobs and many workers are employed on a casual or temporary basis; no special qualifications are thought necessary to apply for a call-centre customer service job. In India on the other hand, working in a call centre is considered highly prestigious and many people with impressive university qualifications – one of the Gurgaon-based women featured is a medical professional – hanker and compete for such work though it is stressful and tiring and makes considerable demands on Indian workers. Indian employees spend a great deal of training time perfecting their accents in speaking English so they are not suspected by Australian callers of being foreigners. Many Indians also have to unlearn what they were taught about saving money and only buying what they need and/or if they can afford it: buying things on credit and taking out a mortgage on a house are not only unusual and unfamiliar activities for these workers but the very nature of these activities may strike them as unethical and morally suspect.

The effect of working in call-centres on Indian women is dramatic: a generation of young female call-centre workers is discovering financial freedom and independence, and this discovery is generating a demand for goods and services which in turn leads to a rise in retail jobs and businesses, construction of shopping malls and an accompanying rise in the value of commercial real estate as more land must be made available to build shops and other businesses. (Nothing is said about how such results might be having an adverse effect on slums and slum-dwellers, farms, wildlife reserves and areas where tribal peoples live.) Call-centre workers work in groups and teams, forcing young men and women of different ethnicities, religions and social levels to rub shoulders: Western work habits and values must be learned and adhered to, distinctions of caste are breaking down, traditional ideas about how unrelated men and women should interact are falling away, people no longer care what religion their boyfriends and girlfriends belong to, women are putting off marriage and starting families at a later age, and a new youth culture based on a fusion of Western youth culture and local Indian cultures is developing in new night-clubs and other places frequented by the workers in their free time with cash to spare. Just to watch these young Indians, men and women, boldly negotiating a new path for themselves and their families, confronting old ways of thinking and behaving, defying family and cultural traditions, and contemplating and relishing personal ambitions and goals hitherto alien to their families and culture, can be very dizzying and uplifting; imagine then, what effect this generation of youngsters might have on Indian society in the future. (This is assuming that current trends in global offshoring of jobs to India will continue, and that assumption cannot be taken for granted.)  At the same time though, a new Indian youth culture might end up having a homogenising effect on Indian society and much about traditional Indian cultures that’s seen to be incompatible with Western and fusion Western / Indian culture may well be lost forever to our detriment.

Back in Australia, call-centre workers ruefully accept that they can’t stop jobs going off to developing countries. Some are happy that Indian people who’d otherwise live in poverty are able to earn money and live comfortably. Australian employers interviewed talk about how Australia must develop more highly skilled work for IT and other white-collar professionals but this depends on universities and TAFE colleges being able to educate and train people to the standard required. Obviously if the Australian government continues to cut funding to higher education and does nothing about the working conditions and job security of Australian university and TAFE teachers – about two-thirds of Australian university academics are employed as sub-contractors and have no job security or holiday and sick leave provisions – then the highly skilled hi-tech professionals required will become very scarce and this will be Australia’s loss. As for India, some people there are already concerned that countries like China and Sri Lanka will compete with India for call-centre work and some such jobs in India will flow to those countries; in the not too distant future, countries like South Africa, Kenya and Nigeria will also join the competition with even cheaper English-speaking labour.

No statistics are offered in this program and the documentary doesn’t look at any trends likely to affect globalised call-centre work or whether it will even last well into the 21st century. Rapid changes in technology could all but make call-centre work redundant in the next 10 or 20 years. The film accepts that call-centre work in its present predatory form, migrating to whichever country can offer the cheapest, most compliant labour and cutting a swathe through traditional society and ways of thinking and acting wherever it goes, is here to stay: no challenge or alternative ways of working are offered. For that bleak and unsatisfying outcome, I leave the film in some despair.

The World According to Monsanto: hard-hitting documentary about the infamous agribusiness corporation

Marie-Monique Robin, “The World According to Monsanto  / Le Monde selon Monsanto” (2008)

At issue in this informative documentary directed by the investigative journalist Marie-Monique Robin is Monsanto’s astounding record of environmental and food safety thuggery across the world and its collusion with and manipulation of governments, scientists and scientific research, not to mention the extraordinary extra-legal (and plain illegal) tactics and practices used, to dominate global agriculture. Robin opts for a hard-hitting approach with voice-over narration, interviews with US government officials, scientists, farmers, lawyers, activists and people affected by Monsanto’s activities and occasional animation and diagrams to detail the long history of Monsanto’s destructive practices in the pursuit of profit and domination of agriculture and food supply. Robin herself makes frequent appearances in the film.

Various examples of products made and promoted by Monsanto provide the meat, potatoes and structure of the documentary. Robin speaks to various people about the effects of Monsanto products such as polychlorinated biphenyls (PCBs), Roundup herbicide, transgenic crops and recombinant bovine growth hormone (rBGH): the results can be horrific and include cancers affecting the prostate gland and women’s breasts and ovaries among other things. Robin goes into great detail investigating each and every case study of a Monsanto product and some of the information she uncovers is astounding: Monsanto-produced Agent Orange (a brand-name for dioxin) was used as a defoliant in Vietnam to flush out Viet Cong fighters. The methods the company uses to get its way and to deceive governments and the public verge on the criminal: one interviewee describes the lax procedures Monsanto researchers used to determine that Agent Orange was safe for people to use; another interviewee tells of how a whistle-blower at Monsanto who questioned the veracity of Agent Orange studies and the results achieved ended up being bullied and harassed by Monsanto management.

The promotion and spread of GMO or transgenic crops and how their increased use promises more profits to Monsanto through intellectual property law in US get special attention. False advertising and claims of working with farmers to ensure fair treatment when the contrary is true are par for the course; the only difficulty Monsanto seems to have is in how low the company can go scraping the bottom of the ethics barrel. US farmers growing conventional soy crops are visited by the so-called “gene” police from Monsanto who check that the farmers aren’t growing crops with Monsanto-invented genes in a way that intimidates and frightens the farmers. In addition Monsanto buys up seed companies so as to be able to control the gene pools of non-transgenic crops (and perhaps convert them to transgenic crops). In India where transgenic cotton is grown, government officials admit that farmers cannot NOT grow transgenic BT cotton due to seed dispersal; at the same time, farmers must buy transgenic seed from Monsanto at huge prices, forcing them to borrow money from money-lenders at exorbitant rates. Many farmers fall so deeply into debt that they commit suicide.

Ranging across so many Monsanto outrages against farmers and communities, Robin does miss a few issues: the destructive effect Monsanto’s products and GMO crops must have on soil quality, water and ecosystems, and ultimately on the water cycle itself with troubling consequences for the oceans that receive water contaminated with GMO herbicides or crop waste containing genetically modified bacteria; the possibility that GMO crops may permanently cripple people’s health and immune systems when eaten; and the reduced genetic diversity that GMO crops brings to food crops, making global food supplies vulnerable to even small climatic changes and potentially threatening food insecurity and food shortages across the world. One particular issue that’s probably beyond Robin to cover is Monsanto’s political clout with the US politicians themselves: though she documents the revolving door between Monsanto and the US Food and Drug Administration staff, she doesn’t address the possibility that Monsanto may be a significant lobbyist on Capitol Hill and contribute money to politicians during election periods. There’s some investigation into the potential transgenic crops may have for altering land ownership patterns that favour large landowners and agribusinesses at the expense of small farms and the rural-to-urban flight that may cause with consequences for the future of cities in many countries, already bursting at the seams with slums and the social problems that often accompany them, not to mention the loss of agricultural knowledge and practices and the destruction of rural communities.

Robin makes no claim to impartiality, piling on one Monsanto offence on top of another relentlessly, to the point where it all seems too unreal. Except of course, this is one very real nightmare that’s gone on far too long and which tragically many people like those Indian farmers who have taken their lives in despair have never been able to wake up from.

Debtocracy: good film about the 2011 Greek financial crisis and how it could be solved

Katerina Kitidi and Aris Hatzistefanou, “Debtocracy” (2011)

Made on the cheap, this is a passionate and compelling documentary about the current Greek financial crisis, how it came about, what possible solutions there are to solve it and what the Greek government under Prime Minister George Papandreou should be doing. The film follows a definite narrative strand in which various economists and academics discuss the origins of the Greek debt crisis and how the Eurozone is structured in a way that privileges the economies of the core states such as France and Germany, and works against the interests of the poorer peripheral countries like Greece, Ireland and Portugal; this investigation is followed by an account of what problems the Greek economy faces and how other countries like Argentina and Ecuador have dealt with similar problems. The film concludes with a call to its intended audience (the Greek people, both mainland and diaspora, and the Greek government) to make a decision and take action on the crisis.

The film works animation, including one animated passage on odious debt that could pass as a separate mini-documentary in its own right, together with excerpts from other documentaries into a barebones, straightforward structure that includes interviews and camera shots of colourful street scenes in Athens, Ecuador and Argentina. With a small budget, the film can’t afford to be visually spectacular but the subject matter. the interviewees and the clever use of animated sequences and postcard shots take care of maintaining audience interest. The talking heads are emphatic that most of Greece’s debt should not be blamed on the Greek people or their expectations of the social welfare state; the debt rather is the fault of successive Greek governments imposing an unfair taxation regime on the country that taxes poor people the most but is lenient on companies and wealthy individuals, and at the same time borrowing heavily to fund a welfare state. Many of Greece’s debts are illegal and include bribes and gifts made to politicians by foreign firms like Siemens to gain potentially profitable contracts. Other causes of the Greek debt crisis include privatisation of state companies, Greek government policies, International Monetary Fund and European Central Bank advice, and the constant servicing of old debts with new loans, that is, new debt replenishing old debt.

“Debtocracy” makes no claim to be neutral with respect to economics or political theory: it is unabashedly social-democratic in outlook. Kitidi and Hatzistefanou present a point of view and diligently marshal the support and evidence to prove their point. They do not interview anyone who has an alternate view on what went wrong and how to resolve the debt crisis. Interestingly, one historian they interview comments that the only time Greece ever lent anything to anyone was during World War 2 when the country was occupied by Nazi Germany and forced by Hitler’s government to supply German forces with raw materials. As a result of this and an Allied blockade of Greece, during the winter of 1941-2 the Greek people suffered a terrible famine which killed 300,000 in metropolitan Athens alone (Wikipedia). The loan Greece made to Germany in the 1940s was never paid back by that country so it’s a surprise that no-one in the film even suggests Germany should cough up payment of the principal, the interest and the interest upon the interest.

The comparisons with Argentina and Ecuador strike me as a bit peculiar and not quite appropriate: Argentina is a much bigger country in population with a more varied economy and Ecuador relies much more on oil exports and is underdeveloped. Perhaps a better comparison would have been with Iceland which suffered similar problems (and actually defaulted) or other small European countries like Latvia, Hungary and Austria which have their own economic woes. But of course not all my suggested countries have social democratic governments or societies that have a socialist cultural orientation. Cuba perhaps provides the best example of a country that decided to “go it alone” in dealing with the economic problems that arose after the fall of the Soviet Union.

If there’s a major criticism to be made about “Debtocracy”, it’s that the flm makes much of Greece’s victim status vis-a-vis Germany and how Greece has always been compelled to borrow. Nothing is said about the financial contributions of overseas Greek communities to their home towns and villages or about the reasons why the country has always had to borrow money. There is some mention early in the film about Greece being dominated by a very small cliquey political and economic elite drawn from a tiny number of families but the documentary doesn’t dwell on this elite and how it has dominated political culture and influenced the government’s housekeeping attitudes. The role of Greece’s hypocritical trading partners is underplayed: France and Germany insist on Greece meeting its debt obligations and restraining its spending on social welfare yet which countries are trying to force Greece to buy their weapons and military jets? Do they not realise that arming Greece to the teeth is likely to encourage neighbours like Bulgaria, Albania, Israel and Turkey  to collect arms too?

Although aimed specifically at a Greek audience, “Debtocracy” is a watchable film about how small countries can get into economic strife for reasons not always of their own making, and the steps they can take to rectify their situation.


The American Dream (by The Provocateur Network): informative if biased documentary on money and American banking

Tad Lumpkin and Harold Uhl / The Provocateur Network “The American Dream” (2010?)

This is a well-made animated documentary that tries to explain how the American people have been misinformed and exploited by agencies of the US government to support the current financial system and the banking industry’s control of it. Everyday man Pile rejoices in having bought a beautiful McMansion house only for his bank manager to foreclose on it because Pile can barely afford the hefty monthly mortgage payments. Desperate to get his house and dog back, Pile is visited by an old childhood friend Hartman who takes him on a voyage through time and space to show Pile how money and banks originated in response to human needs for the exchange of goods and services, and how debt became part of early financial systems. They find out how Pile’s bank gets its money from the Federal Reserve Bank through the Federal government which then taxes the public through income taxes to pay back the Federal Reserve with interest. Hartman then shows how through the ages banks and financiers profited from lending money to governments to pay for expensive wars. They stop off in Revolutionary America to see how Thomas Jefferson and Alexander Hamilton argued over the merits of having a central bank (Jefferson was against, Hamilton was for). Viewers also discover when and how the US Federal Reserve Bank was established in 1913 after several previous attempts to establish a central bank failed. Owned and operated by private interests, the Federal Reserve took over the power to print money from the US government. Interestingly the film pauses for a moment in 1963 when then US President John F Kennedy signed Executive Order 11,110 to regain US government control of creating money instead of giving that power away; six months later, Kennedy was dead in Dallas and his successor Lyndon B Johnson put the order aside. Since then, successive US governments have ignored Executive Order 11,110 and have continued to borrow money from the Federal Reserve and to pay that money back with interest with US taxpayer monies.

In explaining the basics of the US financial system and how it rips off the American public at a level that most people, even school-children can understand, “… Dream” glosses over many details in an effort to keep things simple and on track to its ultimate message which is that Americans must reclaim their money and the power to print it back from the banks that operate the Federal Reserve. The “elite” that controls the Federal Reserve is portrayed as “the Red Shield” (the Rothschilds); according to Wikipedia, the Federal Reserve’s structure and leadership are complex and involve a Board of Governors chosen by the US government and many member banks throughout the country so the organisation ends up being a mix of private and public owners. A notable flaw in the film is one where the US Mint produces dollars (it actually produces coin). If viewers are interested in finding out more about the history of banking in the United States since 1776, and in particular about how the banking and finance industry came to have such a stranglehold on the nation’s economic direction, they should go to the film’s website which has details about some of the real-life characters Pile and Hartman see in the film and which also suggests what people can do to protest against the conduct of banks and how to rein in their rapacity.

The style of cartooning is based on that of Matt Stone and Trey Parker’s “South Park” with less crudely drawn bug-eyed characters moving more freely than Stan, Kyle, Kenny and Cartman. The film’s pace is fast and very focussed which can be a bit inconvenient for some viewers with no prior knowledge of banking and finance trying to digest the information thrown at them. Fractional reserve banking is covered in a big rush without much explanation. The plot builds up to a suitably dramatic climax where Hartman leads an army of everyday folks like Pile against the banks and Hank Paulson tries to inveigle him into changing sides.

Yes it’s quite a biased film but “… Dream” at least attempts to explain to a general audience how the current financial system in the United States is structured and how debt and inflation are incorporated into it. Several myths and misconceptions about how banks operate and how money is created are met head-on and demolished. My main complaint is that the film falls into a good-versus-bad plot stereotype with no suggestion of what alternatives exist to replace the present debt-based fiat money system. The film does not differentiate between commercial banks (the banks that lend for business purposes and provide savings, cheque, credit and fixed-term deposit accounts) and investment banks; a little information about these types of banks and how they were kept separate by the Glass-Steagall Act from 1933 to 1999 would have been helpful so that viewers can see that having banks is still beneficial and that regulating banks’ activities for the benefit of the real economy (that is, an economy focussed on producing and supplying goods and related services) is necessary.

For US audiences, the film is worth watching as many times as is needed to understand the concepts spelled out and families with children will find it helpful in gaining a basic understanding of how debt operates and how banks try to rope in more people into borrowing on credit. The film will be of limited benefit to overseas audiences but its explanation of the role that debt and inflation play in financial systems is still relevant. Funnily, I found out about this film on the same day I read on that Citibank in New York tried to get several customers arrested by police for daring to close their bank acounts!

Inside Job: hard-hitting documentary about 2007/08 Global Financial Crisis

Charles Ferguson, “Inside Job” (2010)

 For many people, this incisive documentary on the immediate origins of the 2007 – 08 Global Financial Crisis will prove a real eye-opener into the workings of the various large American investment banks, insurance and other finance corporations all collectively known as “Wall Street” and of the failure of the US government and its agencies to monitor and regulate the industry’s activities. The consequences of the failure of successive US governments from the 1980’s onwards to control Wall Street’s rapacity and excesses are becoming all too apparent as “Inside Job” makes clear: collapsed banks and insurance companies; economic instability resulting in over-caution on lenders’ part, forcing businesses to downsize operations and lay off workers; huge public debts which force government cut-backs in spending on education, medical and social welfare services; increased debt burdens on households; people’s savings and superannuation and pension funds wiped out, among other results. Director Charles Ferguson who also wrote the script and produced the documentary tracks down and interviews a number of bank executives, public officials and economists about aspects of the GFC, and many of the interviewees who appear in “Inside Job” reveal themselves as corrupt or corrupted participants in and beneficiaries of Wall Street’s greed, arrogance and lack of ethics.

The film traces the roots of the GFC to the early 1980’s when the Reagan government began deregulating the banking and finance industry and watered down a number of government acts and regulations that came into force after the Great Depression of the early 1930’s. Even after the collapse of savings and loan associations in late 1980’s which should have been a warning that something was not right in the finance industry, deregulation continued well into the next decade and after the Cold War ended in 1991, a number of physicists and mathematicians entered the finance industry with ideas on playing the stock market like a giant casino, and many creative and convoluted ways of converting mortgage and other types of loans into more lucratvie financial instruments, backed by other weird, wonderful and wacky financial products whose origins were so diverse and complex even for finance industry workers to trace, came into being. Eventually a crisis of trust and confidence developed and spread like a wildfire, undermining large corporations like Bear Stearns, AIG and Lehman Brothers which ended up being taken over by large banking corporations, and the US government under President George W Bush was forced to bail out Wall Street for US$700 billion.

The film’s major strength is its examination of the incestuous links among US government officials and agencies charged with supervising and regulating Wall Street activities, the financial corporations themselves and university academics who basically performed a cheerleading function for the often unethical if not illegal activities of the banks. The interviews with two university academics at Columbia and Harvard Universities are very entertaining in this respect, with the questions hitting a very exposed raw nerve for one economist who challenges the film-maker to make the most of a suddenly shortened interviewing time of three minutes. Other entertaining interviewees include an expensive callgirl and a psychiatrist / therapist both of whose Wall Street clienteles must have overlapped considerably.

Unfortunately the film falls flat with a watery conclusion that Wall Street must be subject again to regulation to avoid repeat crises and leaves it at that. Having exposed the collusion that went on between Wall Street and the White House, Ferguson’s retreat into a call for re-regulation is a huge letdown and disappointment for this particular viewer. A future of re-regulation followed by deregulation followed again by re-regulation can never be a viable solution as long as an “old boys’ network” continues to operate between governments and the financial sector. As long as people forget or refuse to learn the lessons of previous financial crises and continue to believe in political and economic ideologies that prize self-interest, the quick accumulation of wealth at any cost and extreme dog-eat-dog competition (which feeds on fear and encourages a herd mentality and irrational behaviour), the global financial system will remain essentially unstable and prone to crises. The effect of regulation will only soften the more extreme effects of such a system but can’t prevent crises from happening. We need to re-examine our assumptions about our current financial systems, what place they should have in a real economy based on producing goods and services to suit all people, and in particular we need to question the role that money, debt and banks play. Already there are commentators like Ellen Brown ( and websites like Social Credit ( who question the worth of a financial system in which money can be created and start to circulate only if someone asks for a loan and incurs a debt. There need to be better ways to stimulate production of goods and services other than creating debt that attracts interest that accumulates and produces more interest. Islamic financing which prohibits usury and systems based on social credit and ingenious forms of bartering are some alternatives that could be considered.

Apart from a weak ending, “Inside Job” is a thorough hatchet-job on the architects and builders of an elaborate edifice that took years to build but fell apart very quickly with effects on the economy, society and culture in the United States that may still be working (and wrecking) their way through. We may not have seen the full outcomes of the GFC and it may be that its worst effects will be felt by the very poor and most disadvantaged people in American society.