Session 1: The Phantom Economy

Posted March 26, 2011 in Curriculum, Learning. Tagged:

Part 2: The Phantom Economy

Our economy is going through a fundamental transition.   We had economic growth based on borrowing.  That is over.  Over the last couple decades, the fastest growing part of the economy was “finance” (banks, lending, investments).  According to experts, fantastic amounts of wealth were created.  But how much of this was real wealth – based on creation of real goods and services that serve our lives and make our communities healthy?  And how much was paper wealth – an illusion – like the inflated value of land and houses?

 

The author David Korten makes a distinction between REAL WEALTH and PHANTOM WEALTHREAL WEALTH includes the things we can see and touch in our local economies:  food, medicine, and useful goods.  It includes services like electricians, bus drivers, and mental health workers.

 

PHANTOM WEALTH includes betting, financial speculation, gambling on the movements of money.  It is disconnected from the productive economy with its tangible goods and services.  The phantom wealth economy squeezes value out of the productive real economy by charging fees, interest, ATM charges, and extracting money as it moves through the economy.