Good morning Jay. It's 5.30 am here on Sunday morning, and I'm lying in bed at the crack of dawn, with birds already awake, singing, catching worms and chasing girls [the mating season is now on, fast and furious = the bird GDP, housing and productivity is enormous; humans, having a year long mating season maintain such energy, production and enthusiasm constantly]. I must have something on my mind. I suspect it's the shape of the JP Morgan, Citibank and GE legs still hidden above the hemline. I've done my share of reproduction, so I don't think it's spring fever.
I am right, not wrong: <<<What printing can do is transfer ownership of assets from one bunch of people to another and maintain price stability and reduce the propensity of people to keep money stashed in a mattress>>, you are wrong, because poverty is being transferred from one group to another, and thus neither will continue to spend. >
Printing of money transfers assets from the people who currently hold them to the people who print the money. I am not saying that's a good thing, just observing what happens. My view is that it's a bad thing, especially since those with the printing presses are not too reliable [being a democratically elected mob-rule kleptocracy - dictators lack even the merit of a lot of people being in favour of theft]. It's important to accept certain facts of life, not as being right or wrong, but just are. Printing money is asset transfer to the printing people. I know you know this to be true.
Price stability is considered by many to be the vital aspect of a fiat currency because that's the way to retain confidence in it as a store of value and to make it a measuring stick to value a vast range of human activity and natural resources. If a measuring stick is like one of Dali's melting watches, morphing in shape, or an elephant with incredibly long legs, one never knows where one stands.
Printing money can maintain a constant value by increasing the number of fiat units when the size of the pie is increasing and there are more and more units of stuff to be valued and transacted and people.
Also, if productivity is increasing and more and more can be produced for less and less cost, prices would fall. Printing money can avoid deflation, which a lot of people don't like. Assets can be transferred to the money printers without anyone noticing, because prices are stable [when they would otherwise be falling]. Again, I am not saying that asset transfer is a good thing, just is. I am not saying that price stability as an avoidance of human deflationary productivity is a good thing, it just is.
People stashing a lot of money in mattresses isn't a good thing because those are promises being stacked and a vast stack of promises cannot be kept. It's important not to have too many unbackable promises in a community. Paper money [or pixel money] is NOT a reliable store of value. It's just a piece of paper. When too many people have a big stash of cash, then they get the wind up, they will cause hyperinflation when they all pull it out and try to redeem the promise made to them simultaneously.
By printing, their stashes can be stolen by inflating them away, spirited away by quantum tunnelling, right through the walls of the house and the mattress, without disturbing the bed.
When prices are falling, people are encouraged to stash cash. If inflation is burbling along, they are discouraged from holding excessive cash. Governments [the money printers] can steal from savers to fund essential government services such as bankruptcy proceedings and police [to defend assets which will otherwise be stolen]. Savers are the only ones who can be stolen from without active force [taxation and other feather plucking from golden geese causes too much squawking and commotion - taxation by stealth is like a swan paddling along the surface of water; smooth as silk viewed from above but going like hell underneath].
So, now you can see that I was right, not wrong. Which is, I reaffirm, not to say that I agree with the process taken to extremes, but certainly to the extent that our great and admirable idol, Uncle Al, KBE, has done.
He has printed to perfection. Give or take a $billion or two. Which is an amazing achievement given the fact that it's an infinitely variable world and predicting mob behaviour, especially in financial manias of irrational exuberance, is notably difficult.
The point for we investors is to know that the printers will print and these processes will proceed. That just is what happens. You might not like it and might think there's a better way, that just as the the day has dawned, it will be. There are consequences. Being in the right position BEFORE those consequences are recognized is a good idea, with watchful waiting to ensure that the processes are indeed proceeding on plan and retreat and regrouping isn't a better idea.
I had to do an unseemly retreat and regrouping following the Globalstar debacle and the far greater crunching of market miscreants than I expected would be required to tidy up the market [me turning out to also be a miscreant which I fortunately recognized before the headmaster got the cane out - made myself scarce].
Mqurice |
