LLL, <So you are saying that you think our current fiat money system will be replaced by stocks? Or that people will put more value in stocks than they do in $$? What would cause this to happen? Any single event, or just a gradual building of confidence in the stock market and the value of the companies that make up the market?>
Decades ago, I used to save $NZ and then buy something, sometimes some shares in a company. Then I worked in higher-income countries, saved their currencies and bought something [house, car, shares, food and fun]. Now, I have swapped the great majority of assets into US$ which I used to buy US stocks [namely QUALCOMM, Globalstar]. Prudential Securities holds my shares, issued me credit cards and cheque books and loans. When I want to buy something, I check the price in US$ or NZ$ or whatever. If I like the price, I buy and the debt goes straight into my Prudential account.
I don't want to own money, because I think it's on a never-ending dilution road as it has been for the past hundred years. The issuers of money have got the childhood dream of a never-ending supply of new money because they simply need to write out a cheque, lend the money to a bank and they have more income at the expense of those who already hold the money.
Shares on the other hand, do not get diluted with new shares going to third parties. Sure, we might issue shares in lieu of payment of $$ to employees, but we are not diluted by others.
There will always need to be a valuing system and means of exchange, so fiat money will fill that purpose. But I suspect that some clever internet company will build a new cybercurrency based on shares in a range of companies, with the value of those companies forming the value of the currency. An index would report the value of that new currency against all other asset classes [including Alan Green$pan's money] at any given instant.
The money wouldn't be diluted. Owners of the money would reap the benefits of the earnings of the companies making up the currency. Owning the money would represent shares in those companies.
The cause of this will be a gradual shift in technologies, such as I have used to manage my assets and handle purchases. I can now buy something over the internet from Canada [or Amazon for example], pay by my Prudential credit card and receive it here in a couple of weeks [or instantly if it's a cyberspace product such as Eudora. The US$ provides a valuing mechanism.
Gradually, I think the store of value issue will be more important. As the 'financial panic' people suggest, fiat money is a confidence game. A business-backed money where the person owning the money owns actual companies represents
real assets, real values with products which people value quite permanently [coffee, food, airline travel, computers and all the other stuff making up the stock market]. Gold is as much a confidence game as fiat money. It is a single asset class which could one day go out of fashion, literally.
Sure, there can be ups and downs in stockmarkets and that's why I listen to the music, buy on lows and sell on highs and enjoy the dividends.
I actually think the US$ will gain in strength with continued globalisation, despite the growth of China economically and militarily. The USA is the new Rome. But, as shown in California with the power crisis, the USA is capable of doing really dumb things, in which case people will quickly move their assets away. But overall, the USA is likely to retain the pre-eminent economic position.
Speculating on a collapse and a sudden speculative gain in gold seems very, very risky.
I'd stick with shares or cash [perhaps not US$].
Anyway, that's my theory.
Mqurice |
