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The Emperor's Magic Clothes

It's Election time once again. What is the number one item on the political agenda these days?

"It's the Economy, Stupid! "

Jobs, jobs, jobs!

What do economists really know about economics? When we open a textbook on economics, we are deluged with equations and graphs depicting market forces, supply and demand. They lead us to believe that economics is a science that can be understood. They fail to remember that economics is classified as a social science, a subject that cannot be studied in a laboratory nor that can be reduced to a bunch of graphs and equations.

We witness the sub-prime mortgage meltdown in the United States, the credit crunch and the global financial crisis that we are in. What do economists really understand?

The economy is an illusion. Money is an illusion. Not that it does not exist, but that it does not portray what it ought to represent.

We have all heard the story of "The Emperor's New Clothes" by Hans Christian Andersen. Allow me to retell the story with some adaptation to suit my message.

There was a little kingdom in a mythical land far away. One day, a couple of swindlers appeared in the kingdom selling a magical fabric. They approached members of the king's court and told them, "This fine piece of fabric is so magical that only the very wise can see the beauty and splendor of the material. It is totally invisible to a simpleton or fool".

Well, of course the members of the king's court immediately started to discuss among themselves how this is the finest and most beautiful piece of fabric they have ever seen. The king's advisors presented the crooked weavers to the king who, for fear of being called an incompetent fool, agrees to finance the weaving of this magical fabric to be made into a royal gown for the upcoming royal parade.

As the story goes, on the day of the grand parade, everyone in the kingdom lined the streets to witness the king dressed in his latest splendor. Everyone marveled at how smartly dressed the king was - all except one little boy. You see, this boy had not been told about the magic suit of clothes. So when he saw the king, there was a look of horror on his face as he exclaimed, "Look at the king! Look at the king! He is naked!"

The story of "The Emperor's New Clothes" is a legendary fable that is playing out right before our eyes today.

What is the magical fabric of society that consumes all of our attention in our daily lives? It is money. Money is that magical material. It is an illusion.

Who are the swindlers? These are the banks and financial institutions that create money out of thin air, as if by magic. Banks entice us into this magical world of instant wealth in the form of credit, a world of make belief by providing us with this magical fabric.

Who are the members of the king's court, the advisors? They are the economists who preach the mantra of economic growth.

Who is the king or the emperor? He is the government in power that is led to believe anything in order to disguise its ignorance and incompetence and will do anything to hang on to power.

The people of the kingdom believe what they see, not because of fear of being called simpletons, but because they have been brainwashed to see only a fantastic suit of clothing. They are all of us who are enraptured in this magical fabric, money.

And finally, who is the little boy crying out, "Look at the king! Look at the king!" ? It is the lone voice crying out in the wilderness that no one wishes to hear.

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