Yes, I felt sorry for the Japanese back in 1988 because that country had not been through the cycles of wild speculation that American's capitalism periodically induces. I kept saying, "Those poor people, they don't know what's coming."
But anyone who will do a little figuring, read a little history, or just listen to a few well-informed people (like Templeton, Buffet, Dreman, Galbraith, and so on--to mix up a variety of types) can see that what we have is insanity. I agree with you that it is hard to feel sorry for an arrogant fool. The people who deserve sympathy may turn out to be the conscientious souls who have all their retirement money in the market.
Although the Fed has (as I think) been irresponsible in managing money and credit for some time, the creation of dollars is subject to some kinds of limitations even when M3 was expanding at 13% a year,as it was not long ago. The paper assets of the stock markets are completely out of control and any effort to convert that kind of paper into spendable money will soon make clear which is the harder to obtain. With no gold standard, there's a lot more flexibility, but (much to my surprise) the Fed did demonstrate during the later 1970s and 1980s that it can restore value to paper money by resolutely making it harder to get. I think that the scarcity of money in relation to the abundance of stock certificates may soon become evident, particularly if basic commodity prices--especially oil--continue to rise. You cannot pay Saudi Arabia for a tanker full of oil by sending them shares in E-Bay. |
