Historically, money has flip-flopped
between being asset based and being debt based.
Asset based monetary
systems, aka hard money, favor the net producer and saver, as the purchasing
power of savings is preserved well in a hard (not easily inflated) money system.
Debt
based monetary systems, aka soft money, like today's irredeemable fiat
system, favors the net consumer - i.e, the "I'll have it now and pay you
later (unless I default)" type of person.
Both hard and soft systems are barbarous relics that will go down in history as belonging to the monetary dark ages.
Unfortunately,
we are still in the monetary dark ages. The good news though is that
the day of monetary enlightenment will soon be upon us.
This
enlightened monetary system will have two halves - the debt half and the
asset half - the soft half and the hard half - the yin and the yang -
the debtor's fiat, and the saver's gold.
Welcome to Freegold.
The delusion...Value Investing
- Why it's the best long term investing strategy. Why most investors don't have what it takes. Why and how individual investors can outperform most fund managers, and why some fund managers are worth reviewing
Other stuff
- What is money, where did it come from, and where is it going? Some tax effective investment structures. The Australian Property Bubble. How investing, insurance, gambling, betting are all the same thing..
Should Australia join the Euro?
Well, that may sound like a pretty silly question with all the Euro mess hoo-hah at the moment. With riots in Greece and Spain, and "austerity" such a dirty word, why would any country want to join the Euro? And to be clear, by joining the Euro, I mean completely dropping the AUD as legal tender, and making EUR legal tender in Australia. Well, 17 countries have joined the Euro. Why? Surely, a nation must have a good reason to give up it's national currency, and all the political privileges that go with it. Was it an experimental whim doomed to failure, or are their deeper rationales at play?
Why join a currency union?
On the surface, the primary reason to join a currency union is to facilitate better and more efficient trading relationships. Trading contracts within a currency zone are simply simpler. They do not need to consider, exchange rates, relative interest rates, hedging, etc.
Under the surface, a damn good reason to join a currency union is because your currency is about to collapse. This reason alone will cause the Euro to grow over time. It is the same reason that the UK will soon join the Euro, and somewhat related to why Greece will never leave the Euro.
Beyond political reasons, I cannot think of one reason why a country would not want to join a currency union.
Subscribe to:
Posts (Atom)
Posts
