What happens when monetary representation gets overshadowed by banking interests such as housing, particularly when housing is a major component of capital for developed nations? It depends on the nation involved, and two things in particular. For one: how much production is accurately measured within a nation's borders? So long as wealth creation (production capacity) is well dispersed in a given population, housing wealth at least has some counterbalance. Also: is the country in question able to rely on its own central banking system? If not...
Greece is just one example, how problems in this regard affect employment, the maintenance of services formation and - more recently - even the ability to sustain tradable goods flows, as capital controls have led to increased reliance on barter economies. Barter - such as Greece has attempted to make do with in recent years - is no substitute for monetary representation which takes aggregate spending capacity and production potential into consideration.
Even though services barter in Greece might appear as though a marketplace for time, this form of barter is little more than a scramble for skills sets which have faced hard limits on production formation in the marketplace. For instance, it never takes anyone long, to discover that most doctors are not going to be able to exchange healthcare for babysitting hours. It simply is not feasible for today's doctors to overcome this time value asymmetry, given the circumstance surrounding one's personal obligations and costs of doing business in the marketplace.
When central bankers maintain tight monetary conditions so long that even local tradable goods flows start to break down, physicians may have little choice but to emigrate to nations which can support the level of financial engagement they need in order to maintain economic access. These physicians are part of a captured marketplace for skills value, which vastly overrides any marketplace for time that traditional barter might provide. Even though a marketplace for time value would eventually provide healthcare options for nations in dire straits, services barter - sometimes referred to as "time banks" - is faced with far too many asymmetric barriers in time use obligation.
Consider the fact that citizens are not well represented monetarily (as discussed in yesterday's post), because of a lack of integration for services production capacity. How to think about a marketplace for unmet aggregate demand? One good example would be the limitless numbers of local programs which - like so many local businesses - give up their missions when communities don't find suitable marketplace configurations to support them. Even so, more people need to be directly involved in services production and commerce formation - not less.
Wealth creation cannot simply be a matter of enforced consumption or business overhead patterns, which populations are expected to uphold. Even though this should be obvious; the fact it is not, has bearing on the current resignation regarding growth potential. Worse, governments are implicitly encouraging central bankers to cut back on aggregate spending capacity as though economic processes were slowly winding down, instead of continuing as normal while millions attempt to secure roles in the marketplace.
If only for the purpose of political and social stability, wealth creation needs to be restored at a basic level. However, loans and credit use should be optional to the process, instead of being a necessity for economic access, This is all the more important for lower income levels, which need incremental growth options. So long as loans and credit are treated as central components of prosperity, citizens will experience difficulty, gaining the monetary representation which central banks were supposed to provide. How much of the Neo-Fisherian dilemma is just the desire of governments and central bankers to maintain a credit defined, consumer driven equilibrium? Ultimately, consumption is only possible to the degree that production is also set free in the marketplace.
Fortunately, services production can be locally generated as newly created wealth. Not only would this process ease the burden on government budgets, but millions would rediscover ways to build resource capacity at local levels. It is nonsensical to imagine that services production is not "needed", given the fact that governments have had little choice but to toss services provisions time and again, due to budget constraints. This is the missing aggregate demand which supposedly does not exist. If it's difficult to envision the missing marketplace where one lives, only think of the millions at the borders, who are still looking for a chance to participate in global wealth creation.