I get epiphanies now and then . It’s always a good feeling when a realization hits me (ouch) that i’ve been doing some simple basic task the wrong way for decades. And as i was driving along the highway taking in the sights, i got another one and it dawned on me that at it’s base fiat currency is simply a scorecard.
Cash or digits in the bank really have zero intrinsic value so what are they good for? Keeping score! These numbers started out as representations of real value, the value of real goods and services. The real value of the goods and services we all used to produce, that is before things got a bit more complicated than they would really have to be. Cash in whatever form is really just a representation, a scorecard, if you will. The real wealth sloshes around in the world, moving towards whoever has the desire for it and the means to acquire it.
Many have realized it’s easier on their physical bodies to be involved with the scorecard than with the actual production of those needed valuable goods. Maybe too many have realized this and will shortly have to become truly productive.
There used to be a sign in mechanics shops, back in the days when mechanics still knew how to fix cars, that listed all the different groups of people who were not working: the retired, small children, the disabled, etc and it boiled down to you and me left to do all the work, and I’m tired of doing everything!
Those who own the real wealth, shipping companies, restaurant chains, commercial farming operations, don’t waste a lot of time worrying about inflation. They can always raise their price, particularly those who hold monopolies on needed goods and services like food and diesel fuel. It’s the rest of us who fry in the heat of inflation, crushed between the millstones of taxation and inflation, as it were.
And speaking of inflation, one of the worst/best things to happen to me was getting hammered by inflation and it’s cure back in the 80’s when i got into silver fox farming. I took the biggest loan of my life just before the rates rose to a stunning 22 % . This was done ostensibly to cure inflation, and it didn’t hurt the bank’s balance sheets much either.
At the same time as that exciting feature entered the equation, the price of fur plummeted due to worldwide protests for using plastic instead of fur and i found myself holding a putrid, wet soggy, foul bag of maggot-infested turtle dung instead of the riches i had envisioned myself squandering on my pleasures.
Paying all of that debt off out of my meager earnings as a life insurance salesman cured me for life of the desire to pre-spend my income. Perhaps some of our dear leaders need such a lesson?
Apparently, Japan’s largest banking institution is feeling the heat a bit now and is in the position of having to liquidate some of it’s financial assets, specifically it’s holdings in US treasuries, due to the recent increase in interest rates and the resulting depreciation in the value of their bond holdings. My sympathies Japan! Who could have realized that interest rates would rise once again? And although rates of 4 or 5 percent may seem shocking today, what would happen to the value of bank holdings if they rose to 23% ?
So perhaps we are witnessing the first slight tremors of a massive underground skidding of global platelets, an earthquake in today’s vernacular, of the banking system? If so, how will it affect you? Well that depends a lot on where and how you have stored the fruits of your labors, if any, labors that is. Or else, maybe it depends on how you have stored the fruits of the labors of others. More on this later… maybe.
Skulltripper 