Friday, January 23, 2009

The Floating World

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In 1840 Thomas Carlyle observed that every significant social connection had dissolved into cash, and this realization was so unpleasant that even a grim contrarian like Carlyle could only pronounce it in a book about Chartism, a fundamentally optimistic British movement intended to reconnect the working class with something, because the cash connection had left it more or less completely out of the loop.

Unfortunately for the Chartists, the something with which they tried to connect was Parliament, a gang of lords and squires that was happy enough to laugh down three million signatures on a petition for government reform that would have thrown lords and squires out of power.

"Cash payment the sole nexus," said Thomas Carlyle, and for the cashless working class, no nexus at all.

Now cash is the least significant form of money, and the Federal Reserve extends credit by two or three trillion dollars in a week, all of it invisible to the human eye, and the destination of most of it demonstrably incomprehensible even to the subtlest financiers, who only a moment ago misplaced the same unthinkably enormous sums.

The cash nexus is long gone, and the credit nexus is quickly breaking down. Banks are bankrupt, mere bubbles left behind when a greater bubble burst, sustained only by a current of fiat currency that flows from nowhere, and can only return to the same.

Chartist optimism has been miraculously reborn in the Democratic multitudes who elected Mr. Obama, and now they earnestly petition new lords and squires to save their jobs and houses and avert the evil day that even the very next dawn may bring.

The auguries are inauspicious, but our optimism is not disproved, and no one is likely to convince us we were falling instead of floating, until we hit the ground.