The primary function of money is to be a medium of exchange.It is the oil that lubricates the economic engine.Other functions include store of wealth and a method of deferred payment,but no one has said that money itself should be a commodity when in fact our financial institutions have made it so.
The whole capitalist system works on the premise of low wages so profits can be made and thus traded in the share market,capital investments etc.

The sub-prime mortage debacle has stolen ordinary people's productivity and now there is a shortage of liquidity to keep the economic engine moving.Businesses will fail and people will lose their jobs and houses.Money is now a commodity which our financial institutions manipulate for profit thus distorting and perverting the functioning of the economic engine thus productivity.

The oil has become more important than the engine.What restrictions should we now be putting on our financial institutions to keep the balance right?

Arjay “The whole capitalist system works on the premise of low wages so profits can be made and thus traded in the share market,capital investments etc.”

That is wrong.

The capitalist system does not depend upon low wages.

The capitalist system of profit depends on the worth of output being greater than the cost of input.

The best way of doing that is to attain the optimum productivity from the resources dedicated to the production of the product or service which represent the saleable object.

I would sooner employ someone who is highly productive and pay them a higher wage than someone has low productivity on a lower wage.

“shortage of liquidity to keep the economic engine moving.”

The problem is not liquidity. The problem is risk

The risk profile of mortgage lenders has changed because the lent to riskier sub-prime borrowers.

The theory and observable practice for lending is – the riskier the borrower profile, the higher the necessary return (as well as the expected return) because of the greater risk of failure.

The issue with oil is, after many years of comparatively low oil prices, the current price has rocketed up. In the 1970’s when this happened the western economics reaction was far less organized and the resultant recession far harder. This time the reaction seems to have been are more measured. That can only lead me to assume that whilst many businesses are significantly cost dependent upon the cost of oil, their dependency is not so critical as it was in 1970’s and they have better plans in place to deal with any price fluctuation

Col you missed my point.My oil is money which lubricates the economic engine.Capitalists do look for the lowest wages.Why does most of the world's manufacturing happen in China and India?
I'm not passing judgement just looking at realities.Now should money be a commodity when it has no intrinsic worth?It only represents human potential.Should the banks alone be able to trade in human potential?

The major problem has been the loaning of too much money that has over inflated house prices in the US.The same has happened to a lesser degree here.These mortages were bundled up and sold to unsuspecting investors as safe investments.

There needs to be changes so our economies are not starved of money.

The premise upon which you base your question is fundamentally incorrect, Arjay.

>>no one has said that money itself should be a commodity when in fact our financial institutions have made it so.<<

Money is simply an exchange medium. If the Australian dollar has greater value than The US dollar at any point in time, people will sell US and buy Aussie.

The "value" is perceived, and analysed, more closely by Banks than, say, your average overseas holidaymaker, but the principle is the same.

If money was not freely traded, it would impact the entire economy, and not in a good way. Imagine for a moment you are exporting wheat in order to make your living. How would you receive payment for your product, if your currency is not exchangeable on the open market? There are plenty of examples of the chaos caused by institutionalized differences between the "official" rate and what people are prepared to pay on the black market.

Money is most certainly a commodity.

Different currencies have easily identifiable characteristics, that can be compared openly against each other. Your money - the stuff you either give to the bank for safe keeping or borrow from it to suit your needs - also has attributes that can be tabulated and assessed, giving the dollar you put into Super a different value to that which you borrow on your Visa card.

I suggest you read a little more broadly on the topic before blaming anyone - banks, Governments, capitalist bandits - for whatever ails you.

Arjay,

You whinge about the scarcity of the "lubricating oil" called money, but it hasn't disappeared, it was not burnt or dropped in the ocean - it simply changes hands.

You complain that "ordinary people" now have less of it:
it has indeed become ordinary to want to have everything RIGHT NOW and to even be willing to borrow in order to live beyond one's means. All those ordinary people went to the bank and freely signed their mortgage papers in full knowledge of the potential consequences - which they chose to ignore. Didn't they love their bank then?

Where is this money now? is it in the banks?
well let me tell you - some of your money is finding its way to my pocket, because I save and don't buy everything that I would have liked to have. I receive good interest from the bank and my superannuation is gaining with the bank's shares. This builds up my retirement plan so I hopefully don't need to work till my last day.

*Money is most certainly a commodity.*

I agree with Pericles on this one. We've dropped the gold
standard, today money is simply worth what the market dictates.
If Govts (like Zimbabwe for instance) keep printing more of
it, it soon loses its value dramatically.

The present shortage is due to fraud commited on Wall Street.
So nobody trusts nobody, until it's been exposed as to whom
has lost how much.

A bit of an economic downturn is not such a bad thing. We find
out who borrowed too much, who financially engineered all sorts
of things. As Warren Buffett says, its only when the tide goes
out that we see who is swimming naked.

Lets face it, things were getting out of hand. People were
paying ridiculous sums for houses, simply because somebody would
lend them the money. In that sense, money was losing its value.
Now its those who have been prudent with their risks, who will
benefit, as has always been predicted