Magic spells for the economy – mnews – medianet.at

editorial ••• By Sabine Bretschneider

FICTION. The election has been made – and we are as smart as ever. Commentators predict that no agreement is expected before Christmas. What ultimately lies under the tree will, one way or another, greatly irritate a relatively large group of voters. It’s good that we don’t have anything to worry about other than racking our brains over suitable coalition constellations while climate change, the Middle East conflict and recession are flying around our ears. However, the presidential election in the USA could have more influence on the further development of the European Union than the formation of a government in Austria. So, dear readers, you can sit back for the time being.

Change of subject: The lack of economic prosperity is lamented everywhere. With this in mind, a short excursion into economics: What is money? An equivalence construct of exchange in kind? In fact, a few percent of the money supply is actually in circulation in coins and notes. The rest only exists to a limited extent.

The central banks oversee the creation of money, the economy ensures demand through borrowing – and the credit institutions, as middlemen, conjure the money out of thin air by, in short, simply crediting these sums to the borrower’s account. In this way, new money is created with every loan. Companies turn credit into investment, growth and jobs. As long as things are continually repaid with interest and fresh loans are made, the work runs smoothly and the economy grows. When, like now, consumers are making savings and the economy is simultaneously trying to reduce emissions, good ideas are needed.

The fact that there was almost no space given to stimulating the economy in a way that was reasonable for the environment and the associated regulations in the pre-election discussions – as if money were actually “nothing” – makes you think.