Posted on 08/12/2010 9:07:23 AM PDT by blam
I worry that you're correct.
In an economy that I envision, the farmer will be king.
“now you drop your price until the competition is gone -”
Sounds a lot like the Construction industry right now.
The one with the food will be king...yes, ultimately, the farmer.
If we insist on thinking in terms of dollars then we put our heads on the chopping block with the ax in the hands of those who define the value of a dollar.
Dollars are just a convenient way to transmit value efficiently (it's easier for a piece of paper to be carried across he desert than a ton of gold). However, when the value of currency seemed stable we deluded ourselves into thinking of currency as a store of value.
In retrospect that just seems silly, and economically suicidal.
What do people who highly value gold and silver always say?
"Look! Gold is now over $1,200/oz. I bet it's going over $3,000/oz!"
Those who hold precious metals as "true money" are absolutely guilty of pricing their true money in terms of fiat money.
Instead - if they truly believed in precious metals - they should be saying:
"Look! The US dollar is now worth xyz amount of gold (or silver)"
Just a point of thought to throw out there.
You can't have both inflation and deflation - even though it's a popular thought being tossed around right now.
Inflation, by definition, is an increase in the money supply against a relative set of goods and services.
Deflation, by definition, is a decrease in the money supply against a relative set of goods and services.
The economy cannot have both. We are seeing deflation because the amount of credit outstanding (money) is shrinking so fast.
I couldn't agree more.
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