Jay, if there wasn't a move equity to cash and among various flavor of it, from USD cash to Euro cash, decamping, and then to CHF, and over to JPY and from there to Sterling and so forth, there would be no "friction". People who leaves off "friction" would lose their way of making a living.
Look to the UK, why haven't they joined the Euro. They will give the official vision. The real truth id that London live off "friction". "Friction" gone, many people would lose their means of life.
The real economy, the one that develops, make, move and buy and sell things, abhors "friction". It generates heat but nothing productive to society. That's why we have trade blocks, free trade agreements, customs unions and such. Because the real economy needs more efficiency and less "friction".
So don't think those movements, are real and prompted by real economic mechanisms. They are created artificially in order to create "friction". That's all. You just have to identify the kinds of 'wayos' that prompt those movements. What if raw materials related to China (coper, zing, steel etc) are being traded gold-like? You need a tiny quantity of gold the rest is reserve and means of speculaytion. If he other materials are gold-like and used as means of speculation by given the market participants the idea that the Chinese are consuming a lot of the stuff, lets say that only 30% is real Chinese consumption the other 70% is 'wayo', people would be in for a nasty surprise don't they?
Hence you need to separate the real economy from the exuberant type with their Y2K, .com etc. If you need any good, real estate, a service or a product in ten years time, it is immaterial if you are going to pay for it, in gold, USD, Euro, JPY, Sterling or whatever.That's because you don't know how the 'wayos' that will be drving those movements that will be affecting any of these means of payment in ten years time.
The reason I am saying that, is because I treat my money this way. I don't need to spend the money I have in the several currencies I distributed them. I just need to avoid evaporation, avoiding currencies that are artificially high such as the cases of the Brazilian Real, Indonesian Rupiah, Argentinean pesos etc. I am counting that given the track record of Brazil, if I am to be there in ten years time, I need another currency to buy anything I need to be purchased locally. |
