"Which is a better store of value, bananas or corn? ... Meanwhile, a bag of corn kernels, if properly handled, has dried to a form that can be stored to months or even years, without refrigeration. ... Not only does the corn have actual value and investment value, it has value as a speculation that its actual value will be greater in the future. By coincidence, of course, the corn is a pleasing golden color. ... In the modern economy, a barrel of oil is much like a bag of corn. Both are sources of energy. ... Other long-lasting commodities, as well as shares in corporations and bonds both governmental and corporate, are like bags of corn. Paper money and bank balances are more like the bag of bananas. Dollars, euros, yen, rubles, yuan, rupees, pesos and their numerous kin all rot, but at various rates. The German mark after World War I and the Zimbabwean dollar in the past few years rotted at least as fast as bananas, but in most years, most currencies rot at a rate of a few percentage points per year. ... Inflation is not a natural phenomenon. It is an event caused by people, particularly bankers, most particularly central bankers, especially the central bankers in charge of the world's reserve currency. ... The economists agreed with the politicians' priorities. Avoiding unemployment was the only important goal. ... Once a government gets the idea that it can control the economy, or at least smooth off the rough edges of the business cycle, there's trouble ahead", Thomas Donlan at Barron's, 13 July 2009, link: http://online.barrons.com/article/SB124726734857225645.html.
I have analogized the dollar to a rotting banana many times.
1 comment:
The idea that the Fed can "fly" or "steer" the economy is such nonsense.
Look where we are now... paying for the all years of punch bowl, full employment courtesy of "cheap money".
All roads in this crisis lead to Liberty Street. Yes, time to dismantle the Fed.
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