The Kultaranta university tour culminated on Wednesday, 28 April in a discussion with Aalto University students. Under the title “Money is increasing and technology is revolutionising: Will the economic order change?”, President of the Republic of Finland Sauli Niinistö and students of economics, technology and art discussed topics ranging from change in the monetary system to regulation of technology and innovations.
President Niinistö began the event by pondering the concept of human responsibilities launched by Professor Eero Paloheimo, a pupil of Aalto University. By the concept, Paloheimo means individuals’ responsibility for the future. “It is a human obligation to continue the world on a course that produces a strong foundation for those that follow us,” he explained.
According to President Niinistö, the term encapsulates many obligations, some of which are also related to the economy. It is a matter of long-term thinking of an economic and monetary structure that can be bequeathed to the future in a sustainable way. Trust in this structure is, in the President’s words, a certain fundamental human obligation to those who come after us – “the foundation of their system”.
The President observed that there have been major changes in the monetary system over the past decade. The biggest of these is the major increase in money supply. “Where, then, has it come from? It has come from central bank balance sheets, namely created, in a way, out of nothing,” he said.
The President told the students he is uneasy about such talk as “there is money, we can always get it and there’s no need to pay it back”. He said that he had spoken to many Finnish and international economists about how long it is possible to live with a situation in which more money is being created all the time to maintain wellbeing, and credit can always be found? The responses have been unconvincing.
According to the President, the question is justified, because the increase in the supply of money in Europe, for example, was already accelerating during the five years before the coronavirus crisis. “And the problem to some extent was that it coincided with economic growth, which of course leads to the conclusion that this economic growth, which was, for sure, rather modest, is no longer enough for the people of today; it is necessary to obtain something over and above what is created by work and production.”
When we consider growth in the money supply and various debt arrangements such as eternal loans, we are also faced with the question: Do we trust our currency? “We still do, but we must keep in mind that money has only one guarantor, and that is mutual trust.”
“Money talks” power politics
Monetary economics is closely tied to power politics. President Niinistö told students that 15 years ago he had drawn attention to how the People’s Bank of China seemed to have around EUR 3 trillion in financial resources, with which one could buy all of the shares on the Helsinki, Stockholm, Oslo and Copenhagen stock exchanges.
At the same time, the Chinese state had established a state-owned company whose business was to acquire companies in the West. “In itself, of course, this is a sensible activity, but it tells us that money has a lot to say, which we must keep in mind when we consider monetary economics.”
President Niinistö also highlighted the status of the dollar as the world’s reserve currency. He said he also mentioned to President Trump in his time how Europe stands strongly behind the Bretton Woods system, which brings influence and prosperity to the United States.
According to the President, the virtual currencies that are currently much in the news are also adding a fascinating twist to monetary economics and currency competition.
Next government, when the economy recovers, the coming decades
At the end of his introduction, President Niinistö drew attention to three phrases that always “wind him up a little”: next government, when the economy recovers, the coming decades. With these phrases, the President referred to the human habit of postponing awkward and difficult issues to the future.
“Such thinking, of which these words are a warning sign, must be recognised by those who are fully aware of human obligations to the future, and they have to dare to make a deliberate difference and consider the structures needed, and in this case monetary structures, to enable us to bequeath sustainability to the future.”
The President was able to take around a dozen questions from the students in just over an hour. The topics ranged from the strengths of Finnish business and industry to cryptocurrency and opportunities presented by remote work. The discussion was moderated by M.Sc. Economics student Elina Rauvala, Vice Chair of the Executive Board, Aalto University Business Students Association.
Watch a recording of the event
The President of the Republic of Finland’s Kultaranta university tour was organised jointly with the University of Lapland, the Lappeenranta-Lahti University of Technology LUT and Aalto University. The tour discussions will pave the way for the Kultaranta Talks, to be held later this year.
The tour began on Wednesday, 21 April at the University of Lapland, where thoughts were exchanged on the intensification of great power politics. At LUT University on Monday, 26 April the topic was “Combating climate change is a human responsibility”.