There is nothing like to feel alive, being able to enjoy life and be happy. This money cannot buy.
Money can of course prevent poverty but poverty is not starvation and not suffering in the strictly absolute sense.
All of us live in relative poverty when compared to all the rich people, in terms of money. Rich people live in relative poverty when compared to ordinary people who can love and trust and be honest in equal measure without fear of the person closest to you stabbing you even when you are guarded.
Of course, all assets are relative in value, relative to money and relative to each other.
Now, the values of all types of assets are going to be measured by which way the economy is going to adjust.
The biggest fear is that interest rates will rise to curb inflation. It is a bit too late to curb inflation. The world economy is already highly inflated. Prices are already very high, so say too high. Prices must adjust ie to fall in order for the economy to adjust back to equilibrium. Why adjust back? Because the global economy has stopped growing, China has stopped growing. So prices must adjust downwards in the coming future.
Interest rates are not going up because all policy makers and politicians are interested. Their wealth will evaporated as whenever there is an economic depression. We do not need a cut in the money supply for proper adjustment to take place. We just need the growth of the money supply namely the growth of debt creation to slow down. Then deceleration forces will bring about the needed economic correction. Those with their hands full of assets will be devastated.
The cryptocurrency investor has a major reckoning to make. Even cryptocurrency unit is now worth more than an ordinary person's lifetime income. More many of these units are out there waiting to cash out? If all the cryptocurrency units where to be sold, there don't think there is enough volume of the money supply to support that value under the supply curve of cryptocurrency. Even if that happens, the cryptocurrency investor will now hold all the money supply in the world and surely the interest rate on money will rise. They would want interest rates to be high then they can gain from holding cash. There is a convoluted thinking in cryptocurrency. We will let the cryptocurrency investors figure that one out. Similarly, the case with gold investors. The only real gold investors are those accumulating gold to support a new international reserve money. They will not ever sell their gold holdings, as would be the case for cryptocurrency investors who want to be wealthy in that digital unit.
The food for thought here is the nature of value of assets as we await how policymakers decide to solve their debt repayment problem. Unless, they all print money till all hell breaks loose, which it seems to be. Then, we should be gladness just to be alive. Enjoyment of life is an added bonus. How cool the night is tonight. Nice!
2 comments:
Just as money is to inflation, antibiotics is to inflammation. Past a limit, it causes the immune system to break down. For the human body, disease and pain; for the market, dashed hopes and ruin. The difference is that for the human body, it's a biological fact but for the market, it depends on what excuse can be coaxed to buy-in more in order to move prices up.
Crypto is now in vogue; like money in banks, it's also digital except as anonymized distributed ledgers with value determined by scarcity and animal spirit; it used to be governments didn't like crypto because it was a channel for illegal transactions and scams and avoidance of official control.
But now, Trump 2.0 is anointing crypto after once calling it a scam. It wants to make it a digital reserve. Because of that explicit support, crypto prices have shot up beyond interest income from any other asset class.
He has also threatened to bar and tariff countries which don't support the US dollar so that their exports into the US will be levied hefty import duties, however paid by American buyers who are still under inflationary duress which he seems to have forgotten was his campaign gripe, something he will soon be reminded when his 25% tariff on Canada and Mexico hits oil, groceries, timber, cars, tequila and many other things.
The BRICs countries are trying to supplant the US dollar as the traditional reserve currency because they were spooked when the US froze Russia's dollar asset and might also be stealing its interest income.
They were (are) worried about the size of the US debt; they also rankle the fact they are all subsidizing the US financially each time they transact using the dollar; while the US can mint a single special coin to settle the debt by moving it from right to left hand, doing so will however ruin the reputation of the dollar.
In any case, if the said countries conduct multilateral trade among themselves, they can do currency swaps using the mBridge electronic exchange that is an alternative to SWIFT. Or they can use crypto or issue gold certificates. After all, what they want to do as sovereign nations is not up to just one bully to decide.
When a bully throws his weight around, furthermore ungrounded by common sense and rationale, it is wiser to walk away and mix only with others who are more reasonable.
Because of specialization, capital flows, technology, supply chains and cross-border work, the world has become more integrated and mutually dependent so that any policy that puts national interest of oneself above the national interests of others will have to be uniquely founded on sustainability.
The US might be able to achieve that but for how long? it will come at a heavy cost to its own peoples and industries; former who can't afford its local prices, latter who can't sell to other countries it sanctions which will retaliate.
2/2
The problem arose because the US left its private sector alone to make money so the sector went overseas where costs are still lower, hollowing out its own manufacturing.
Yet, for advanced economies like the US, automation and systems improvements will inevitably mean less workers are needed for more output so that as their wages rise, they will spend it on services. Just as agriculture sunsets to manufacturing, so too manufacturing sunsets to services in tandem with higher education standards.
Besides, it is very hard to find skilled trainers and supervisors for workers in factories whose construction will also take years because of regulatory redtape, something the Europeans themselves are only too familiar with.
Now we have artificial intelligence as the new tool to supplement and complement humans. But unlike humans who will grow old and get too tired to learn and relearn, the AI machine never tires at learning; it can absorb everything and statistically pattern out quasi-human responses. One day, it will pass the Turing test and then pop comes singularity.
Meanwhile, we should be grateful for small mercies, temporary respites as transient interstices between one disaster and another until all systems close shop and the curtain drops.
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