Jay, what a great time to own the money tree. <the authorities around the globe, ... will print, and print some more, from the US to China, Japan to Argentina, Russia to Turkey, ... and then print still more. Even as they act individually, the effect will be the same as if they acted in concert, and thus ‘get away with it’.>
That's been my premise for a few years. At last the main event has arrived and I will find out whether my theories match reality.
When governments print more money, it gives suitcases full of money to go shopping. What fun for them. I'd love to have a printing press like that. They can go berserk for perhaps a couple of years and still there won't be any inflation.
But one day, as you say, the reckoning will come, the economies will pick up and inflation will start roaring as those freshly-printed bills look for a happy home, but everyone has got so many of them to offer workers that the workers start raising their prices to see what the market will bear {I hasten to add that the market will bear the opposite of a bear}.
So, in a couple of years, we can expect the money presses to be shut with a bang and interest rates to roar higher and higher as savers realize what a diddling they've suffered and that their money would be better invested in stockmarkets or owning cans of baked beans which will be earning more than the current low interest rates.
Stockmarkets will zoom up, the consumer price index will bound higher, hourly rates will go up, government printing presses will stop and governments will have to trim their profligacy.
Eventually, the normal stable but unstable picture will return, but with the currency measuring sticks shrunken by the theory of financial relativity. We [most of us] will have escaped the black hole of deflationary implosion and the financial cosmos will be at a new, inflated level of activity. Just put a zero on the end of anything with a dollar sign [or other currency unit] and that'll be the new mean. So, $1 an hour today will be $10 an hour then. Shares worth $40 today will be worth $400 then. Fuel costing $1 a litre today will cost $10 a litre then. Houses costing $200,000 today will be $2 million then.
Of course, with the efficiency of technology, there will be a continued lowering of costs, so mobile phones costing $100 today will only cost $200 then. People will buy a LOT of them. Other things also enjoy that productivity bonus so not everything will get a zero on the end.
Also, it might not be a zero, but I use that just as a means of description of the process.
The big losers will be the cash holders, the lenders, who loaned $1 million today for 10 years and will get $1 million plus a pitiful amount of interest when it's all over. When they decide to go shopping in 10 years, their $1 million will buy them a few cans of baked beans, one share of QUALCOMM, a tank of petrol and not much else.
There are a vast number of $$ sitting around the world in various nooks and crannies. They are all being ripped apart in a vast dilutionary scam [as you point out]. Nobody notices it. The parasitic process is painless. People can sit there watching their mattress, thinking that there is nobody getting their mitts on their money, but surreptitiously, like quantum tunneling, their money is being drained away by the printing presses at HQ.
I think the Q is going to be very attractive as a currency compared with the medieval process currently used.
When and if the markets crash down to some absurdly low level, I might feel obliged to borrow some of the freshly printed loot to go shopping for distress sales of shares in great companies. I'll just be doing my civic duty, so no need for awards for valour.
Mq |
