Monday, December 1, 2014

Fiat money

Moral: Wherein we look at "fiat" money, again, plus the cheshire multiple.

We have not had a post on this topic, for a while, but a recent WSJ article (How the 'Reserve' Dollar Harms America, Nov. 21, 2014) prompted such. So, back to the old themes.

This topic has been touched upon in all three blogs:
Call it funny money or what you may, the whole process depends upon wizards to control the process which easily veers out of control, as we have seen time and again. That the U.S. must lead the way is obvious to many; 'how is this to be?' is less so. 

Along with consideration of 'fiat' and 'gab-standard' having some focus, there ought to be, as well, some sensitivity to Minsky's thinking.


How high can it go? Well, the DOW is close to 18K today (12/3/14). There is a run-up going which we will watch. There are two caveats that need repeating.
  • This is funny money, folks, except for those who are in the position to exploit the situation: those who run the game, those with the wherewithal (the Buffets and more) to rake in gains (ill-begotten), and such. The fact: this group is a minority (very small in cardinality even if their pockets balloon immensely). 
  • Those who buy in now are lining up to be sacrificial lambs. Ah, the humanity. The fact: losers outweigh the winners by far. Even if we graduate the amount of winnings (ignoring near zero, for now) from reasonable to extremely greedy, the winner set would be small (far less than 10%, if that).  
Reminder: In the context of these discussions, 401K eyeballers are not "winners" (grieves me to even use the concept since the reality is so putrid - when the kimono is lifted) until they have cash in hand.

Now, having said that, what is needed? Rather than the headline says, Apple drops 22B in a day, we ought to think about another accounting approach where buyers/sellers bounce against an entity with a history (to be discussed). Yes, the peanut buttering of gains and losses across a whole population is stupid (always has been). 

When computers came along, were they applied to beefing up the accounting? No, they were turned into gamers to extract even more from a silly system. How has this gone on so long? 

The vested interests benefit, essentially. We do not have to rise to the level of ethics to bring the problems to public viewing. No, all that is necessary is to lay out the scheme's basis and how the ca-pital-sino is a type of "shell game." 


We were on this theme six years ago (Crooked games) and will go back to the earlier thoughts. The FED has changed the character of the game, delayed the consequences, muddied the water (really), and set us up for some interesting failings (will be worse than the last time - as many say). 

Remarks:  Modified: 12/06/2014

12/06/2014 -- Put here as placeholder: Capitalism's gravediggers.

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