http://www.mediafire.com/?i9d7eafffp7hj49
Martin brings the goods in this essay. He tackles a wide range of issues including the current state of discontent in the USA. Explains what "money" is and what it isn't and how we got to where we are.
In a nutshell money today can be thought of as shares in a country. However, as anyone who has ever bought shares in a company can tell you you may wake up one morning and find the owner has issued a whole bunch more shares to his friends or just "printed" off a whole bunch to buy his neighbors property or just because he needs a new Porsche. It's a virtual thing for the most part. In a round about way he is saying we cannot keep printing unless it gets into the hands of those who will use it to produce.
"The Fed bought back long-term government debt, but in a global economy where 40% of the interest payments are exported overseas, there is absolutely NO way to ensure the bonds being purchased were not previously in the hands of foreign holders. In such a case, the money paid is simply exported for foreign lands and provides ZERO domestic stimuli."
There is a lot more in here and it is well worth the time to read.
Martin brings the goods in this essay. He tackles a wide range of issues including the current state of discontent in the USA. Explains what "money" is and what it isn't and how we got to where we are.
In a nutshell money today can be thought of as shares in a country. However, as anyone who has ever bought shares in a company can tell you you may wake up one morning and find the owner has issued a whole bunch more shares to his friends or just "printed" off a whole bunch to buy his neighbors property or just because he needs a new Porsche. It's a virtual thing for the most part. In a round about way he is saying we cannot keep printing unless it gets into the hands of those who will use it to produce.
"The Fed bought back long-term government debt, but in a global economy where 40% of the interest payments are exported overseas, there is absolutely NO way to ensure the bonds being purchased were not previously in the hands of foreign holders. In such a case, the money paid is simply exported for foreign lands and provides ZERO domestic stimuli."
There is a lot more in here and it is well worth the time to read.
3 comments:
That last section is a head spin ... proposing a new, neutral reserve currency? Agree with it in principle - to help settle international trade balances, but controlled by who exactly? The united nations? Ouch.
Whatever happened to letting the market decide what the value of something is? Oh that's right, those views are so last century (supply and demand, ho ho ho) ... and those in power continue to pull the (new and improved) levers for the benefit of .. human society? Ha! A little jaded, ... getting ready for a few more decades of having our pockets picked. The wealth pump is well and truly alive and well.
I didn't like the idea of that. Get your Sharpies and Magic markers out and we can scribble the number of the beast on our foreheads :)
We can't get Europe to agree on the price of a Greek bailout under a common currency.
I am sure it would settle down after a while and trading ranges would be established for individual currencies against his super currency. It's a big idea that no one will agree to.
USA absolutely not for several obvious reasons. China no. As they know it's a waiting game before they are the big winners and they have their 5 year plans in place already.
Europe no because they still hold out hope of the Euro kicking ass in the future and it would mean they might have to submit to an audit :)
His criticism of Gold and Silver is that occasionally someone hits the mining lotto and that messes with the local supply. Fair enough for the past but I think it's fair to say the low hanging fruit has been plucked as far as mining goes. Throw in there is no such thing as long term local distortions now as the world has become a lot smaller since his examples of supply distortions.
Very interesting stuff all the same. I may not like where he is going with it but then again there are no central bankers asking my opinions.
The most ideal 'global, neutral reserve' would of course be gold - it's very neutral ... the stuff just sits there doing exactly nothing. And yep, don't use it as a currency, just a reserve asset - all it's other properties (internationally accepted store of value, etc) make it the ideal candidate ... but ..
having gold as the go-to international neutral reserve asset will never be adequate for the lever-pulling folk who want to run the show. It's a bit like how an electronic voting machine COULD easily be built to be completely 100% tamper-proof ... except there is absolutely no market for completely tamper-proof electronic voting machines :)
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