Many Austrians saw the USA QE as a precursor to hyperinflation, for example, Dr. Gary North. On the other side Mish said no way. The two traded barbs, and Mish had the better of it with his insight as to QE is credit expansion, a monetary event, but not currency expansion, an inflationary event.
Yes, the head aches at this arcania, but it matters as you place your bets.
Now, what if instead of printing currency like drunken sailors who found a press, we had wicked central bankers issuing credit with the reserve of drunken sailors. Would we not then have hyperinflation in credit? That is the value of credit issued goes down to zero? Or negative? Like a Zimbabwe 100 Trillion dollar note?
Feel free to forward this by email to three of your friends.
Yes, the head aches at this arcania, but it matters as you place your bets.
When we have hyperinflation, the value of the currency is destroyed as it goes down to worthless. I was gifted some trillion dollar Zimbabwe notes a few years back. A one hundred trillion dollar note reflects currency inflation, and monetary event. The impressive numbers reflect the degree to which currency was printed, created, to pay bills when there was no money in the till. One might guage the trust
Now, what if instead of printing currency like drunken sailors who found a press, we had wicked central bankers issuing credit with the reserve of drunken sailors. Would we not then have hyperinflation in credit? That is the value of credit issued goes down to zero? Or negative? Like a Zimbabwe 100 Trillion dollar note?
If prices are falling, who wants to owe $500,000 on a million dollar home purchased today, that will valued at $100,000 in ten years?
Falling prices while benefits increase does not stop anyone from buying today, as we see in Apple products. But it does dissuade people from using credit at interest to buy.
Prices fall for various reasons:
1. Wicked bankers flood the market with EZ Cheap credit and the unscrupulous use it to roll-up whole industries. This is destructive.
2. Some temporary event, like a bumper harvest of peaches brings the price down for everyone. This is neutral.
3. The economies of scale are applied to innovative, specialty products over time by larger commodity producers and are able to offer more, better, cheaper faster whatever to a market the innovators could not service. This is beneficial and the process in free markets.
We are always in some mash-up, more or less, of all three.
Now, I have been pushing credit deflation as a theme. I wonder, is what we are seeing credit hyperinflation? Given negative interest rates, is asset-less-backed usury-based credit too plentiful to be of any value? Is it now priced in the negative (well, yes) like the money lost bothering to print a 100 Trillion dollar note? Has there been a crash in the wicked kind of credit?
We need more of the good kind of credit, non-usurious freely offered among traders, like the Swiss have in their WIR.
Falling prices while benefits increase does not stop anyone from buying today, as we see in Apple products. But it does dissuade people from using credit at interest to buy.
Prices fall for various reasons:
1. Wicked bankers flood the market with EZ Cheap credit and the unscrupulous use it to roll-up whole industries. This is destructive.
2. Some temporary event, like a bumper harvest of peaches brings the price down for everyone. This is neutral.
3. The economies of scale are applied to innovative, specialty products over time by larger commodity producers and are able to offer more, better, cheaper faster whatever to a market the innovators could not service. This is beneficial and the process in free markets.
We are always in some mash-up, more or less, of all three.
Now, I have been pushing credit deflation as a theme. I wonder, is what we are seeing credit hyperinflation? Given negative interest rates, is asset-less-backed usury-based credit too plentiful to be of any value? Is it now priced in the negative (well, yes) like the money lost bothering to print a 100 Trillion dollar note? Has there been a crash in the wicked kind of credit?
We need more of the good kind of credit, non-usurious freely offered among traders, like the Swiss have in their WIR.
The root of the word prosperity is spes, hope. Price reduction is fundamental in prosperity, for dreams of contributing are realizable (what? the unseen!) ... you can dream of providing a value and there are not predators awaiting to legally lend you air and take away your home if you fail...
Your suppliers finance you, you your cusotmers, and the customers eventually extinguish your debts... customers is were we need to shift focus, away form bankers.
Feel free to forward this by email to three of your friends.
0 comments:
Post a Comment