Posted on 12/13/2013 1:18:46 PM PST by Errant
A paper currency system contains the seeds of its own destruction. The temptation for the monopolist money producer to increase the money supply is almost irresistible. In such a system with a constantly increasing money supply and, as a consequence, constantly increasing prices, it does not make much sense to save in cash to purchase assets later. A better strategy, given this scenario, is to go into debt to purchase assets and pay back the debts later with a devalued currency. Moreover, it makes sense to purchase assets that can later be pledged as collateral to obtain further bank loans. A paper money system leads to excessive debt.
(Excerpt) Read more at zerohedge.com ...
Duh! Good article though.
Tick, tock, like clockwork . . . another Tyler Durden armageddon article.
Another one, Bill Fleckenstein, announced he was getting back into the short selling business today, after losing his shirt the last time he tried it.
Waiting to hear from the gold bugs . . .
What about Obama’s Billion/Trillion dollar coin ?
The only currency better than the US’s Federal Reserve Paper Machine generated stuff, is BitCoin or maybe Tulip Bulbs.
Paper money? Ever play Monopoly? Everyone goes broke and one person ends up with it all. Not much different than the real world where you have China playing, Soros playing, and a host of others. Still, in the end, it doesn’t matter in either game because at the end of the “Day” paper is paper
Tulip bulbs. Good catch. I havd tropical fish that have held their value for 50 years. Their progeny, that is.
The country of Germany couldn't even get their gold.
“Fiscal policy!" whooped Ford Prefect. “Fiscal policy!"
The management consultant gave him a look that only a lungfish could have copied.
“Fiscal policy. . .” he repeated, “that is what I said.” “How can you have money,” demanded Ford, “if none of you actually produces anything? It doesn't grow on trees you know.”
“If you would allow me to continue.. .”
Ford nodded dejectedly.
“Thank you. Since we decided a few weeks ago to adopt the leaf as legal tender, we have, of course, all become immensely rich.”
Ford stared in disbelief at the crowd who were murmuring appreciatively at this and greedily fingering the wads of leaves with which their track suits were stuffed. “But we have also,” continued the management consultant, “run into a small inflation problem on account of the high level of leaf availability, which means that, I gather, the current going rate has something like three deciduous forests buying one ship’s peanut."
Murmurs of alarm came from the crowd. The management consultant waved them down.
“So in order to obviate this problem,” he continued, “and effectively revalue the leaf, we are about to embark on a massive defoliation campaign, and. . .er, burn down all the forests. I think you'll all agree that's a sensible move under the circumstances."
The crowd seemed a little uncertain about this for a second or two until someone pointed out how much this would increase the value of the leaves in their pockets whereupon they let out whoops of delight and gave the management consultant a standing ovation. The accountants among them looked forward to a profitable autumn aloft and it got an appreciative round from the crowd.”
Don’t the financial wizards who come up with the idea of a trillion dollar coin have any sense? Why not just make a quadrillion dollar coin and be done with it?
LOL.
I'll buy some options on the black tulip bulbs!
A fiat money system leads to inflation, as the issuing body fiats more and more money to satisfy its expansionist urges.
Gold.
Standard.
I wonder if anything is left in Ft. Knox?
Koi are excellent investments! (And you can always eat them if times get really bad. Just kidding.)
I love Douglas Adam’s writings. He and Kurt Vonnegut are masters of slapping reality upside your head.
I say that Beanie Babies are still the way to go.
My dad lived through Germany's Weimar inflation. He said he knew of one old lady who had two gold bracelets. She'd pawn one, then after a while, pawn the other and redeem the first with the inflated currency, living off the difference. I don't know how long that lasted, but it's a good example.
An interesting historical character during the Weimar Republic in Germany was Hugo Stinnes, known as ‘the inflation king’ who would borrow money, rent tools and factories, buy raw materials, and pay workers, then sell his goods, so the borrowed money would be a very small part of the value of the goods he sold.
He died in 1924 and his empire fell apart. The key to his success was the ability to get loans from the government at rates far less than the inflation rate.
Paper money is already mostly replaced with binary money.
Bruning in Weimar Germany ended inflation and instituted deflation.
The unemployment rate went past 30%. In response to that the people elected more Nazis.
Fiat “money” is artificial and creates an ARTIFICIAL world where humans develop equally ARTIFICIAL expectations and unfounded feelings of well-being that ALWAYS ultimately fail and, the longer they persist, fail SPECTACULARLY!
This one will probably set historical records!
Every time I hear the Fed announce some new paper money scheme, I’m reminded of the words over the arch of the National Archives Building in Washington. That’s where our nearly dead Constitution is housed. The words? “WHAT IS PAST IS PROLOGUE”. That’s a fancy way of saying that history repeats because humans are slow learners and each generation feels compelled to try to reinvent the wheel!
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