Walang-laman na mga Calories ng Fiat Currency

Pagbati mula sa Sedona…

Sorpresa, the debt ceiling was raised before any real cash crunch as part of a deal that did nothing to change anything. Surprise again when the markets proved that the whole thing was bogus by cratering instead of going higher as virtually every so-called expert predicted. It turns out that Europe’s woes are real while the debt ceiling conflict was fake. The markets generally react to what is of real consequence to the bottom line.

Sa isa pang ganap na walang-katuturang at walang kahulugan development, Pamantayan & Poor’s lowered the credit rating of the US from AAA to AA+. As usual, ang mga airwaves at mass print media na pagsusuri ng bawat hindi makatwiran detalye, and push the real issues aside. Folks, the US government can print all the dollars it wants any time it wants. Kaya, it is an absolute lock that there will never be a default on US debt. This is equally true of any country that issues debt in its own currency. Kaya, anumang utang na ibinigay sa sariling pera anumang bansa ay dapat AAA.

Any financial professional worth anything will completely disregard the lowering of US debt ratings. Japan saw its credit rating lowered years ago. Instead of rising, interes ng mga rate sa Japan ng utang nanatiling mababa at ang pera nito patuloy nito mahaba term na tumindig laban sa halos lahat ng mga pera, including and especially the greenback. In addition to issuing debt in its own currency, Ang utang ng Japan ay halos ganap na pag-aari ng Hapon mamamayan, na kalakhan nagpapaliwanag kung bakit ang mundo record Japan utang ng pamahalaan / GDP ay hindi pa sanhi seryosong problema sa ang halaga ng pera nito sa banyagang exchange kalakalan.

Isa pang dahilan para sa kawalan ng kabagayan ng ang mga ahensya ng rating tulad ng S&P is they are amazingly inaccurate. The mortgage meltdown and default on $trillions of AAA paper is only the most recent colossal failure. The S&L and commercial mortgage crises of the late 80’s and early 90’s may be cited among many examples. Only Weiss Research gave below A ratings to any of the banks and insurance companies of that era that failed. The other agencies often carried AA ratings on the firms that blew up in investors faces. This is not an endorsement or recommendation of Weiss Research. I mention this firm because it was the only rating firm that was paid by the consumer for services rendered as opposed to payment by the issuer of debt or contingent liabilities (insurance carrier). Sa ibang salita, ang buong sistema ay fatally flawed sa halata na kasalungat ng interes.

Ito ay hindi na sabihin na ang exercising ang kakayahan upang lumikha ng pera sa anumang oras sa anumang halaga ay hindi magkakaroon ng malubhang kahihinatnan, such as sharply rising food and energy prices. Sa kasamaang-palad, mga kahihinatnan ay hindi harap at center bilang kanilang salamat sa moronically hindi makakita sa malayo pagkahumaling sa S&P’s grandstanding. America’s federal debt will continue to escalate out of control partly because of the universal political pressure to buy votes and partly due to another example of what I call cargo cult economics.

Whenever gaining control over federal spending is discussed virtually all the mass media talking heads genuflect in unison to the chant that any plan must avoid serious near term cuts to avoid damaging our weak economy. This is a lame excuse for doing nothing based in the erroneous Keynesian idea that we have a deficiency of demand causing businesses to keep production down and severely retard employment growth.

Aking Enero post na may pamagat na "karga kulto Economics" nakatuon, sa bahagi, on confusing rising prices with prosperity and falling prices with depression. Dito, the cargo cult phenomenon of confusing cause and effect is again exhibited by the belief that consumption drives the economy. Consumer demand and consumption is a byproduct of prosperity, hindi sanhi nito. Sa kasamaang-palad, halos pang-ekonomiyang patakaran ng buong mundo ay batay sa kamalian na ito at na nagtutulak ng mga ekonomiya ng mundo sa kailaliman ng utang at pagpapapintog.

One element of the problem is our cultural proclivity for increasingly imprecise use of words. Demand can mean many things depending on the context. In economics demand is supposed to refer to purchasing power focused on a particular item. Sa kasamaang-palad, ang pagbili ng kapangyarihan ng bahagi ay alinman sa gusot o ganap na bumaba kapag tao, kabilang economists, makipag-usap ng mga consumer demand.

Namin ang lahat ng may halos walang limitasyong Nais ngunit limitado nangangahulugan para sa mga nagbibigay-kasiyahan ang mga ito. Yaong mga Nangangahulugan ay limitado sa pamamagitan ng kung ano ang gumawa ng namin na maaaring magamit sa trade para sa mga bagay na gusto naming. While we can borrow someone else’s production the metaphysical fact remains that nobody can consume anything that someone did not first produce. This is Reiss’ first rule of economics, "Produksyon precedes consumption".

Yet governments around the world issue the empty calories of fiat currency expecting the economy to be nourished by it. This is done to evade the inevitable consequences of producing too much of certain things like housing in response to prior bouts of cyber cash creating and the artificially low interest rates they created. Ultimate failure in the form of sharply escalating cost of necessities is guaranteed. The rich navigate through the economic maze quite well while the lower income groups, hindi upa sa naaangkop na tuktok espesyalista, maging financial kalye pumatay.

Government spending and fiat currency creation does not create jobs or prosperity. There is every incentive for the ruling elites to highlight the job created by some government project. There is also a powerful incentive for those same elites to make it difficult to see the jobs destroyed by the very same spending, pagbubuwis at paglikha ng fiat pera na nagbigay kapanganakan sa na proyekto ng pamahalaan.

The process of creating money is circuitous today. Instead of running a printing press governments first authorize massive spending exceeding tax revenues. The government then borrows the difference by issuing debt securities, much of which are purchased by banks. The central bank then purchases some of those securities from the banks by creating money out of cyberspace with a few strokes on a computer keyboard. This will continue as long as the fallacy of consumption causes prosperity continues, or until it all blows up. All historical precedent favors the latter.

Tulad ng tinalakay sa itaas, the problem is global. Most of the rest of the world is in far worse condition than we are. The events focusing on Italian debt this past week are but more evidence of this fact. Hanggang ngayon, Germany is preventing massive money creation by the European Central Bank. Historical precedence says that will not be a permanent impediment. Since German banks are huge holders of stressed sovereign debt, it is likely that Germany will cave sooner rather than later. Manatiling nakatutok.

Lahat ng mga pinakamahusay sa inyo ng lahat,

Stephen Reiss
Steve (sa) SedonaCyberLink.com