bootle - money for nothing; real wealth, financial fantasies, and the economy of the future (2003)

[...]... globalization spell the end of communities Rather, it will release the idea of community from the tyranny of the immediate locale Even in the mundane worlds of work and leisure, never mind the realm of personal relationships, in the economy of the future the real and the human will remain supreme and the virtual will be recognized as second rate In economic history the human factor has become more and more important... in the eighteenth century the celebrated economist Adam Smith, the father of economics, had a theory of economic growth that is of major relevance to us today The key to growth, he argued, was the size of the market; that is to say, the extent of the human sphere in which the deep-seated human desire to truck, barter, and exchange can be realized For the bigger the market, the greater the degree of. .. they lent like the blazes and the supply of money and credit expanded rapidly.17 Nevertheless, investors needed the confidence in the future that leads to the desire to buy and the preparedness to borrow In the late 1990s, this was supplied in the form of one of the most powerful drugs of all: an idea, or at least an expression masquerading as an idea We do not know who first coined the expression the. .. under the spell of an illusion of wealth, right under their noses the real sources of wealth were gathering their strength Then markets got ahead of the economics Now the economics are about to get ahead of the markets The Human Factor From the beginning of time the physical has exerted an overwhelming pull over our economic life Its substance has been the gathering, making, and amassing of things: things... numbers of western industries and their workers will come to depend on China and India for their markets And within the developed economies, as people get richer and richer, they will find new ways of spending their money, involving a shift of great significance in our economic history The bulk of new jobs will appear predominantly outside the physical world and in the realm of the intangible— research and. .. nowhere and for nought It was money for nothing Meanwhile, the owners and managers of older fortunes fell over themselves to transfer their cash to the new generation of e-ntrepreneurs So great was the excitement about future wealth that professional firms such as solicitors and accountants were happy to accept equity in the new dotcoms in lieu of fees for their services It was the economic equivalent of. .. stocks, Peeress and butler shared alike the box; And judges jobbed, and bishops bit the town, And mighty dukes packed cards for half-a-crown; Britain was sunk in lucre’s sordid charms Alexander Pope on the South Sea Bubble of 17201 The great stock market bull seeks to condense the future into a few days, to discount the long march of history, and capture the present value of all the future James Buchan2... that they could propagate themselves and thereby bring great wealth as a result of their productivity As Chancellor puts it: The bulbous offshoots of a Semper Augustus would neither flower nor produce further offshoots for several years and there was no guarantee that they would exhibit the same special qualities of the mother bulb, since they were just as likely to revert to the plain breeder variety... take leave of their senses The great 1990s bull market had its foundation in a combination of displacements, both economic and technological The first of these, and arguably the most important, concerned inflation The 1970s were a terrible time for the world economy There were two huge increases in the price of oil that, in the context of labor militancy and accommodating monetary policy, sent the general... expression the trend is your friend.” However, I think a good part of the reason is that investors did not appreciate the extent to which the substantial equity gains of the 1980s and early 1990s were the result of a one-off improvement, and they did not appreciate the inter-relationship with inflation The death of inflation had allowed interest rates and bond yields to fall, thereby increasing the profits . alt="" Money for Nothing Money for Nothing Real Wealth, Financial Fantasies, and the Economy of the Future Roger Bootle N ICHOLAS B REALEY P UBLISHING LONDON YARMOUTH, MAINE First published in the. after the events of the last few years. They were led up the garden path by the stock-market boom of the late 1990s and by the gen- eral sense of optimism about our economic future and then let. coming under the spell of an illusion of wealth, right under their noses the real sources of wealth were gathering their strength. Then markets got ahead of the eco- nomics. Now the economics