A paper
currency system contains the seeds of its own destruction. The temptation for
the monopolist money producer to increase the money supply is almost
irresistible. In such a system with a constantly increasing money supply and,
as a consequence, constantly increasing prices, it does not make much sense to
save in cash to purchase assets later. A better strategy, given this senario,
is to go into debt to purchase assets and pay back the debts later with a
devalued currency. Moreover, it makes sense to purchase assets that can later
be pledged as collateral to obtain further bank loans. A paper money system
leads to excessive debt. This is especially true of players that can
expect that they will be bailed out with newly produced money such as big
businesses, banks, and the government…… There are
at least seven possibilities:
1. Inflate. 2. Default on Entitlements. 3. Repudiate Debt.
4. Financial Repression. 5. Pay Off Debt. 6. Currency Reform. 7. Bail-in. ....To Read More.....
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