Renby, what a thoughtful post! Quite beautiful. Thanks very much. A most interesting theme you've touched on--simplicity as a goal in a world that seems to be anything but. It's a question many observers have asked, but answers seem few and far between. Every technological doo-dad that comes down the pike promises to make our lives simpler. Now I've got so many of the damn things, I should be cruising through life in an ozone state. Not.
Mighty strange paradox at work here. Read an interesting story about a gal who went shopping at local grocery story and had a breakdown in the cereal aisle. When she got a grip on herself sometime later, her therapist reported that the multiplicity of choices simply overwhelmed her. Obviously it was the straw that broke the camel's back rather than the complexity of the cereal choice per se. But since the story came out, lots of other folks have reported decision fatigue.
I just bought the Mother of all PC's 2 months ago. Researched my fanny off, was still scared to death to pull the trigger. What if I screw up? Now I'm in the market for a cell phone. Okay, okay--that's easy: it'll be a Q of course, but which Q? Which stock to buy or sell? Ad nauseam.
It's a wild and wonderful world out there to be sure. But there is an underlying tone of anxiety and tension, which I can't help but believe is at least in part caused by all these wonderful new toys. And where do the hip, technologically affluent go to salve the wounds? To the most remote places on the globe, seemingly to get away from the very things that permitted the trip in the first place. Why is it important to shed that which almost defines our daily life? These questions are a lot tougher than the mechanics of Super Dollars, and me not knowing that's for sure. Thanks for sharing that there's one more mystified soul out there. Mike Doyle
P.S. Somebody composed a lovely post that was eaten by IE4.0 and wanted to know just how many dollars a SuperDollar could clone. That depends on whether Alan has a bad hair day or not. [this last statement was/is a shocking lie, and I repent] Actually, the Fed establishes Margin Reserve Requirements which say that if Bank A loans Ramsey $1000 to buy Baseball Trading Cards, then said bank only needs to have a few hundred Super Dollars kicking around the vaults to make the loan. [don't know current requirements; haven't looked for a while] Note that the bank can merely create money; the wispy part being the difference between $1000 and their real dough in the vault.
In real life, the Fed very, very rarely adjusts Margin Requirements. Instead, they adjust the amount of Super Dollars each bank has in the vaults. Thus, capital creation capacity is a function of some multiplier, like 1.5, for example which tends to remain fixed; and then 1.5 gets multiplied by Y, where why equals Super Dollars which tend to bounce around. Now dig this: the Federal Reserve Board has this little arm called the FOMC which if memory serves stands for Federal Open Market Committee [little rusty, could be wrong on that one] Anyway, the FOMC or whatever is where the real action takes place. These dudes can FORCE the money center banks to buy or sell IOU's (which are the Super Dollars) from the Fed itself. Well, if the FOMC decides to sell, the banks MUST buy which reduces the SD's in their vaults which means Ramsey can't add to his Baseball Card collection, or at least must do so more anemically. If the FOMC decides to BUY, they do so by simply telling Chase: guess what, you now have 8 gazillion SD's in your faults: Chase has bought them for no money (out of pocket so to speak). They have on the other hand an exquisite asset: an absolute promise to make good from the US Treasury. Which they in turn transform in to "real money" by making it available to Ramsey. But what the Fed giveth, they can take away on a moments notice. So Chase has to be sure that Ramsey's a good credit risk and pays it back, otherwise they'll be hammered when the Fed comes calling. In the interim though, capital has been created out of thin air, or as someone said, psychology, whichever you prefer. And that someone was absolutely right because at the end of the day it all depends on everybody else believing that everybody else is good for their obligations: right on up to and including sovereign governments, which is where the buck/lira/mark/guilder stops.
And now we know why DEBT REPUDIATION which is the fancy term for county X saying we're broke and can't/won't pay you, sends the whole world into a tailspin. So instead of that they 'just' devalue their currency which permits them to pay with cheaper currency but is effectively the same thing as giving the lender a hair cut. Well the lender is often another sovereign country which means that their ability to repay is impaired and . . . . . .
Me? I'm scared to death about Canada just now cause if anybody wants to know what it means that the Asian crisis touched home shore that will be it. Their currency is under attack and they are our largest trading partner by far. This would not be a walk in the park. Keep your fingers crossed. SM |
