Thursday, May 26, 2016

The Choice For Venezuela Is Stark: 
Either Print Money & Fail Or
Establish Sound Money 
Charles Hugh Smith* provides analysis of the financial situation in Venezuela .. "Once a currency is mortally wounded, the government has a stark choice: either print more money and try to stimulate a dying economy by spending the fast-depreciating money, or relinquish the dead currency and establish a sound currency that will attract capital to the country's economy." .. either print money or accept sound money .. if they print or borrow, private capital will flee because the writing is on the wall .. if the government accepts sound money, private capital will enter the economy because "it can trust that the currency can't be devalued by politicos or the central bank" .. "What capital will sniff out is the possibility that a cheap currency will get even cheaper. As I always note, no nation has ever devalued its way to prosperity or influence. Devaluing one's currency impoverishes every holder of the currency, which invariably includes the bottom 99.9% of your population."
LINK HERE to the commentary

1 comment:

Anonymous said...

Notes From Underground: How Do You Say Chutzpah in Chinese (Or G-7: Part II)

As I begin my further analysis of the unfolding political/economic factors facing the global markets I seek your indulgence and set the table by quoting from what I believe is one of the most significant chapters in western literature. Notes From Underground takes its title from the essay of the same name of by Fyodor Dostoyevsky. The tagline, 2+2=5, is a summation by Dostoyevsky to poke at the Rationalists of his day. But the chapter of note is from the novel The Brothers Karamazov titled, “The Grand Inquisitor.” The scene is set as the Grand Inquisitor has arrested the Christ figure for daring to upset the social order that the Church has created. The entire chapter is so moving but allow me to quote a small part:

“Receiving bread from us, they will see clearly that we take the bread made by their hands from them, to give it to them, without any miracle. They will see that we do not change the stones to bread, but in truth they will be more thankful for taking it from our hands than for the bread itself! For they will remember only too well that in old days,without our help, even the bread they made turned to stones in their hands, while since they have come back to us, the very stones have turned to bread in their hands. Too, too well will they know the value of complete submission! We shall show them that they are weak, that they are only pitiful children, but that childlike happiness is the sweetest of all. They will become timid and will look to us in fear, as chicks to the hen. They will marvel at us and will be awe-stricken before us, and will be proud at our being so powerful and clever that we have been able to subdue such a turbulent flock of thousands of millions.”

Yes, the Great Fyodor portrays well the concept of the Davos crowd as it leaves in awe of the miracles, mystery and authority promoted by the world’s self-anointed elites.