THE FUTURE OF MONEY Bernard A. Lietaer - library.uniteddiversity ...

is also well known that stock prices fall when interest rates rise, and
interest rates tend to shoot up when a currency gets into trouble. The
last asset class, real estate, presents a more complex situation. On the
one side, real estate is the best protection available against inflation.
On the other side it is also very illiquid (i.e. difficult to sell in a
hurry); so when serious financial problems arise, people who cannot
meet their mortgage payments may have to liquidate their real estate
at undervalued prices. This makes real estate investing a doubleedged
sword.
Finally, the interconnection of the different financial markets males
monetary rot a contagious disease. Figure P.5 shows the spread of
what was initially a Thai currency crisis through the stock markets of
ten different countries.
When we discover that all our egg end up in one - money basket, I
suggest keeping a close eye on that basket. Some well-qualified
people are paid to do exactly that. Let me introduce you to them, and
thereby complete the picture of the world's key money players.
Central banks and other firemen
The financial sector has always been 'special'. Even today the
finance industry is not treated as just another service industry. There
are positive and negative reasons for this:
· On the positive side, financial institutions - even the private ones -
are really performing the vital public function of providing,
hopefully, a stable currency for use by the participants in the
economy.
· On the negative side, financial institutions have often proved the
most fragile component of any society (see sidebar). And it has been