I am not an economist. Even as an undergraduate, I didn't take one class in economics or political science. Instead, I took courses that had more relevance to real life and were of more practical use: The Idealism of Plato, Medieval Proofs of the Existence of God and The Dialectics of Hegel. I wouldn't know how to go long, much less short, or the difference between a call and a put. I'm not interested in derivatives of securitised, collateralised, complex commercial transactions, and I wouldn't know asset-backed commercial paper from toilet paper.

With a mind uncluttered by all this expertise, I can see what led to the current global economic meltdown and how to fix it.

Economists and politicians, by contrast, like the generals who are always fighting the last war, are turning to the Great Depression of 1929-1939 for guidance. But even myopic generals have the sense to look to past winning tactics for guidance. Today's economists and politicians are adopting the throw-money-at-it strategies that failed to pull the world out of economic depression.

The Great Depression came to an end, not because of strategies formulated by economists, but by the outbreak of the second world war (when the generals started placing orders for obsolete weaponry of the type that had been used in the first world war.) Despite all this stimulus, the Dow Jones Industrial Average still didn't return to its 1929 peak until 1954. But for Hitler, world leaders could have perpetuated the Great Depression to this day!

What caused the current global financial meltdown?

The easiest way to explain it is to retell a joke my sister-in-law, a financial adviser, told a group of women 15 years ago.

There was this guy who bought a truckload of sardines at a penny a tin. He resold them for two cents a tin to somebody else, who resold them for three cents a tin to somebody else, who resold them for four cents a tin to a fourth person. Shortly after, the market for sardines collapsed and the fourth guy couldn't sell them, so he figured he may as well eat them. He opened the first tin and the sardines were rotten, the same with the second and third.

"Great," he thought to himself. "I can give them back and not suffer a loss." So he went to the guy who sold him the sardines for four cents a tin and said: "Those sardines you sold me were rotten. Here they are. Give me back my money." The guy who sold the sardines looked at him with pity and said: "Oh, you don't understand. Those weren't eating sardines, those were trading sardines."

That, in a nutshell, is why we are experiencing a global economic meltdown. Our economy was based not on producing goods and services people would pay for, but on producing financial transactions.

The purpose of financial transactions should be to enable the creation of goods and services. When financial transactions become an end in themselves, and goods and services exist only to enable financial transactions (rather than the other way around), as sure as night follows day you are headed towards an economic catastrophe. When a large part of the gross domestic product of a country consists not of doing something useful but producing financial transactions, that country's economy becomes a house of cards waiting to collapse.

Banks should be there to lend money to people or corporations who need it in order to establish or expand viable businesses or acquire their products. If those are the rules of engagement, the banks will be selective in who they lend to and will try to ensure that the people they lend to will ultimately succeed in their business plans. It will charge interest and other fees for giving a loan or establishing a credit facility and make money in that way.

However, when the purpose of a bank lending money is not to itself make interest and charge fees to its customer but, rather, to sell that indebtedness to some other person or institution who will then repackage it and sell it to someone else, who will then again repackage it and resell it, there is no incentive for the original lender to satisfy itself that the business will be viable. In a system of financial transactions for the sake of financial transactions, in which performing a useful function becomes some accidental footnote, we're not talking about an economy, we're talking about a lottery.

To be sure we don't call it a lottery. We call it derivatives, hedge funds, speculative currency trading, the UBS Bloomberg Constant Maturity Commodity Index, short to long bond yields. But basically it's just gambling.

That is the problem. The solution is not to print a trillion dollars to bail out those who created the mess so that they can rise again in order to revisit the rest of us with some derivative of the calamity 10 years down the road. That is nothing but socialism for the rich. The rich have never cared if they destroyed the rest of us, just as long as they made themselves richer in the process. Now that they are inadvertently destroying themselves in the process, why should everyone else come to their rescue?

In Canada, where I live, the federal and one provincial government committed to General Motors the obscene amount of C$10.5bn, or 40% of all the corporate taxes it is estimated the federal government will collect in 2009. Canadian taxpayers pay income taxes by making out cheques to an entity know as The Receiver General. It would save administration costs if we just made them out directly to The Receiver General Motors.

Nor are ill-conceived "shovel ready" construction projects an answer. A subway or light rail system from nowhere to nowhere might put people to work immediately, but will saddle future generations with the much greater cost of operating something that never made sense to begin with.

The solution? The solution is obvious. We need an economy based not on trading sardines but eating sardines; one that is not a chimerical fantasy driven by the buying and selling of notional mathematical constructs, but a real economy based on productive labour; one led not by people who know asset-backed commercial paper, but by people who know their assets from a hole in the ground.