Posted on 12/13/2013 1:18:46 PM PST by Errant
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 scenario, 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.
(Excerpt) Read more at zerohedge.com ...
Just FYI - the author is pretty sophisticated (check out his posts). He is using the phrase "printing money" metaphorically to mean diluting the currency in relation to the value generated by the economic domain. Anyone who has studied the subject for a while knows that QE does not literally mean running printing presses.
You're ten times more optimistic than I, lol. I give it two years max with the possibility of serious signs of a second recession by spring.
those of us who were too chicken to extend too much are really left behind...
Don’t be too sure. Many of those people are trapped in debt. Look at the rate of foreclosures in this country for verification. With QE and kicking the can, eventually everyone will suffer a tremendous decline in standard of living. This is not the time to take risks; it’s a time to protect what you have from calamity.
Paper IOUs...
If he was sophisticated he’d use accurate words. He didn’t, so he isn’t.
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