Monday, December 12, 2016

The Unintended Consequences 
Of Central Bank Policies: War & Inflation
"There is now $16 trillion of sovereign debt trading at a negative yield – a financial state of affairs that would have seemed unthinkable in the years before Lehman Brothers and the U.S. housing market imploded. Now we have otherwise credible economists explicitly recommending a deep dive into the dark waters of negative interest rates. Rogoff’s references to history are disturbingly partial. 'Without paper money, there might have been no German hyperinflation, and perhaps no World War II.' Better, and more honest, to make the observation that if World War I had been fought on a sound money basis, it would indeed have been over by Christmas 1914. By prosecuting the war through inflation and abandoning hard money, the combatants ensured the premature deaths of millions of people and irrevocably changed the history of the 20th Century. Or one could cite Voltaire in that every unbacked currency ultimately deteriorates to its inherent value: of zero. Kenneth Rogoff’s book is titled ‘The curse of cash’. A more accurate if less catchy title would be ‘The curse of small-minded, hubristic academic elites’. Or perhaps ‘Government doesn’t know best.’ There are 232 pages in this book. To those who believe in personal freedom, every single one of them is an affront."
- Tim Price
LINK HERE to the essay

1 comment:

Anonymous said...

Venezuela Voids Popular Form of Currency, Setting Off Panic

Mr. Maduro displayed a new 100-bolívar coin.

The government said it was also introducing six new bills, ranging from 500 to 20,000 bolívars. Credit Presidencia Venezuela, via Agence France-Presse —



CARACAS, Venezuela — Carrying trash bags and backpacks filled with cash, Venezuelans fretfully lined up on Friday outside banks across the country to exchange currency that President Nicolás Maduro said would soon be void.

Mr. Maduro’s decision that all 100-bolívar notes must be exchanged has caused panic, partly because the deadline keeps shifting and many banks and businesses are already refusing to accept them. For many people without bank accounts, the bills, which have long been the country’s highest-denomination note, are their primary means of saving money.

“Like all Venezuelans, I’m trying to get this problem resolved,” said Maritza Sosa, 65, a retiree who had waited for hours at a bank here to exchange 2,000 bolívars in 100-bolívar bills.

The problem has long been that the notes are nearly worthless.

http://www.nytimes.com/2016/12/16/world/americas/venezuela-void-bolivars-inflation-banks-maduro.html?