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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Edward F. Horst Jr. who wrote (31875)	8/29/1998 6:22:00 PM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Ed, The chief group destroying the country's currency is called its government. Speculators do have a part in killing a currency, but it is more like piling on in football. They can't cause it, though they can make it worse. It works like this. The govt. of Lower Slobovia prints too much money relative to the real growth of its economy. The end game starts when those who sell real merchandise object when you hand them yet another bunch of funny colored paper you call yuks. At first, they grab the trash and run, don't walk, to the bank, to turn it into something more palatable. Lately, that has been dollars, though it has often been yen, swiss francs, d-marks or gold. Once these financial institutions themselves find they are up to here with the crap, they exchange it for real currency of some sort from the country's central bank. Those banks then have to decide whether or not they want to part with something of real value for this make believe money. At some point, they get swamped and decide they'd rather pay pennies on the dollar. Or nothing. That is extreme. Somewhere during this time period, a Georgie Peorgie Soros looks out and says, "hey, dey be in deep kimshee on da Yuk." So, he shorts some yuks against something better. Leveraged and pyramided. That hurries the yukky decline. But, even without George and his pals, that sucker be headin' south. I have seen this in person. I was living in Germany during the late 1960s and mid 1970s. I was being paid in a yuk currency called a dollar. Every time I got my paycheck of yuks, I tried to turn it into something valuable, called d-marks. Meanwhile, the mass of folks like me, who wanted real buying power, attracted the elves in Switzerland, who shorted the buck against everything. I remember in Germany in 1967, when we played poker instead of working, a d-mark and a quarter was the same bet. By 1975, you had to put two quarters and a nickle or a dime into the pot when somebody else bet a mark. That sucked. I highly recommend never getting paid in yuks and paying for rent and food in something better. So, the currency speculator vultures (these are not all currency traders, most of whom are decent people and couldn't spot a disparity in rates with an interpreter) are not without sin and IMHO, they are only one step above pond scum, taking advantage of other people's lousy govts. However, the real problem is the govt. and not the speculators. Printing money is easy and it works for awhile. But when it stops working, the punishment is far too severe. Which is why I am not a fan of Greenspan's monetary loosey-goosiness. MB