So, I got a very definite opinion on the root of the whole mess, and it was a really interesting thing that I found my thoughts echoed in a Terry Pratchett book from 1999 – well, actually from 2002, beause it’s the 2nd Edition of The Science of the Discworld, but that’s just a small detail.

A difficult but stubborn feature of human thinking is involved in all this: it’s known as reifying: making real. Imagining that because we have a word for something, then there must exist a ‘thing’that corresponds to the word. What about ‘bravery’or ‘cowardice’? Or ‘tunnel’? Indeed, what about ‘hole’?

What does it have to do with the current mess of the financial world? Well, skip down a few lines.

‘Debt’and ‘overdraft’are very familiar privatives, and the thinkig problems they cause are quite difficult. After all, your overdraft pays your bank manager’s salary, doesn’t it? So how can it fail to be real? Today’s derivatives market buys and sells debts and promises as if they were real – and it reifies them as words and numbers on pieces of paper, or digits in a computer’s memory. The more you think about it, the more amazing the everyday world of human beings becomes: most of it doesn’t actually exist at all.

The problem with “as if they were real” and “doesn’t actually exist” is tha when you actually have to pay, and all you have is nothing, then it gets difficult. The whole market is based on the assumption that no real money will have to be paid, it’s a huge “let’s pretend” and “make believe” game for adults – something like AD&D where you can win and lose a dragon’s hoard of treasure overnight. On paper.

The world ran out of actual money, on paper we have trillions, but that’s only because the same dollar/forint/gulden is showing up in several places as debt/promise/insurance/security/coverage multiplied and predicted, and if you trace back a million dollar to the actually existing thing in the real world you end up with a hut 20 miles from Kairo with a real value of 30 dollars.

Ok, that may be a bit extreme, but you get what I mean.