The Problem Can't be the Solution

Following the in the footsteps of his predecessor it appears that Pope Francis has decided to bestow his economic wisdom on the world while knowing very little about economics:

Rome: Pope Francis has attacked the ''dictatorship'' of the global financial system and warned that the ''cult of money'' is making life a misery for millions.

He said free market capitalism had created a ''tyranny'' and that people were being judged purely by their ability to consume goods.

Money should be made to ''serve'' people, not to ''rule'' them, he said on Thursday, calling for a more ethical banking system and curbs on financial speculation. Countries should impose more control over their economies and not allow ''absolute autonomy'', in order to provide ''for the common good''.

While the Pope properly identified the problem he completely misidentified the solution. The monetary system we currently live under is setup to, in effect, make people servants of money. With continuing devaluation people are encouraged to turn their cash into stuff as soon as possible. Central banks in many countries keep interest rates artificially low. Artificially low interest rates encourage people to take out loans now instead of saving their money (which is constantly devaluing) so they can make large purchases later. Once you have a loan out your credit rating, which much of you existence in the first world depends on, is at risk if you fail to pay. In addition to trying individuals to the state's banking system the monetary systems of the world ensure resources are misallocated. The artificially low interest rates signal the market that a great deal of excess capital exists, which causes people to invest capital into large projects. Economic law rears its ugly head when it's realized there is no excess capital in the system and all the resources being invested into large projects don't exist.

I could go on and on but it would be easier for you to read Economics in One Lesson by Henry Hazlitt [PDF] to get a quick understanding of actual economics. Suffice it to say the Pope did properly identify a major problem in our world.

What about the solution? According to the Pope world governments should impose more control over their economies. This is a rather absurd proposal since it was the world governments that imposed our current monetary system on us. Why would we want to put the bastards who caused this problem in charge of fixing it? That's like putting a child molester in charge of a church youth group... never mind, you get the point.

The Pope should really stick to theology because his economic knowledge is lacking. Perhaps someday the world will get luck an a genuine Christian anarchist will be appointed as a Pope.