Question: What has 3 zeros, one one and a RRS type answer ?
Answer: This post.
<<Ram, ... the money talked about back then was 400 million, not billion>>
yes and no, as in it really was Billion, as in the B in bubble or balloon
400 billion US dollars created from a couple trees, with glue and ink added
lets see,
my Mom's 1 cent candy bar
became my 5 cent candy bar
is now at the store, I see for 50 cents
guess that means candy bars are a good investment
as their value (worth?) increases rapidly
making them worth (value?) greater over time
and this trend seems to be the opposite of ??????
GOLD
as its use to back paper money decreased
the amount of paper money to buy a candy bar increased
getting dizzy again
so I better reread for the first time Ron Reese's explaination
To: Doug A K (36242 )
From: Ron Reece
Thursday, Jul 1 1999
to explain to us that its not only ok and good,
but correct for Japan to add ink to $40,000 of paper
and call it paper money worth $400,000,000,000.00 (I CORRECTED)
Doug,
It is no different than suddenly discovering a major gold strike at Sutter's mill and declaring that more paper can be printed because more physical gold inventory has increased.
Money is created either based upon the amount of substance that physically or psychologically backs it. Respectfully, the only difference is that gold backs currency physically without respect or regard for worker productivity, so even if productivity is going through the roof, or more skilled and entrepreneurial individuals are entering the best earnings phase of their lives, the amount of money they have available to them is restricted to the economies ability to extract a shiny yellow metal, and thus, their ability to print so many little pieces of colored paper.
With Fiat money, it is the economic productivity and economic strength of the underlying economy and population base that determines the strength of their currency. The last thing Japan needs now is a stong currency. To achieve that end, the BOJ has maintained low interest rates, speculators have borrowed and sold yen, and bought dollars/T-bills in this fascinating little balancing act.
Without the BOJ inflating their monetary supply, there would be little pyschological inpetus for the Japanese people to once again commence the consumption that would pull their economy out of recession. Money is worthless unless it is being put to work (ie: at risk). It doesn't matter how much money there is or what backs it, so long as the general public accept it at a set value as a proxy for barter.
That's all money is, after all; a proxy for direct barter. And it is as valuable as the public perception permits it to be, regardless of whether it is backed by gold or anything else. Gold did not prevent a collapse in confidence during the '29 crash.
And it did not spur economic recovery afterward. It was not until the gov't coercively confiscated gold and inflated the economy that people were FORCED out of their "bunker mentality" and forced to put their money at risk once again.
Money solely equates to psychology and preservation of the belief that we are economically healthy. (and we basically are here in the US).
Regards,
Ron |
