Friday, January 2, 2009

Herman Daly's Views on The Current Economic Situation

Herman Daly: The Disconnection Between Financial Assets and Real Asssets

According to Wikipedia,

Herman Daly (born 1938) is an American ecological economist and professor at the School of Public Policy of University of Maryland, College Park in the United States.

He was Senior Economist in the Environment Department of the World Bank, where he helped to develop policy guidelines related to sustainable development. While there, he was engaged in environmental operations work in Latin America.

Before joining the World Bank, Daly was Alumni Professor of Economics at Louisiana State University. He is a co-founder and associate editor of the journal, Ecological Economics.

He is also a recipient of an Honorary Right Livelihood Award (the alternative Nobel Prize), the Heineken Prize for Environmental Science from the Royal Netherlands Academy of Arts and Sciences, the Sophie Prize (Norway) and the Leontief Prize from the Global Development and Environment Institute, Man of the Year 2008 Adbusters.

In his view,

The current financial debacle is really not a “liquidity” crisis as it is often euphemistically called. It is a crisis of overgrowth of financial assets relative to growth of real wealth—pretty much the opposite of too little liquidity.

Essentially, we have come to believe that our dreamlike ability to increase how much "stuff" we produce through increased borrowing actually equates to real wealth, that is, what we have actually paid for. Follow the link for more.

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