Last week in Monetary Paradigm Reset, we talked about the challenge of explaining a new paradigm. We said:
“The hard part of accepting this paradigm shift, was that people had to rethink their entire view of cosmology, theology, and philosophy. In the best case, people take time to grapple with these challenges to their idea of man’s place in the universe. Some never accept the new idea.”
We were talking about the fact that money is the unit of account, and the assertion that irredeemable paper currencies are money.
Monetary Relativity
This week, Turkey provides an opportunity to discuss this in a way most people can relate to. Their currency, the lira, has been falling for years, but the rate of its plunge accelerated dramatically this week. It closed last week at 19.6 cents, but on Friday it was 15.5. This may not seem like a lot, but those 3.1 pennies are about 21 percent. In a week!
However, if the lira is money, then this is just our American bias speaking, isn’t it? To a Turk, the dollar closed last week at ₺5.08 and this Friday at ₺6.43, or a gain of 27%. Those who hold dollars in Turkey just got rich, right?
Which graph is objective?
Most people can see the principle clearly when it comes to the toilet-paper currency of a failing dictatorship. They wouldn’t say that the dollar is up 27%. The theory of currency relativity is not applied to this case.
It’s only with the dollar (and other major currencies) that things somehow become less clear. Did gold go down this week, or did the dollar go up? Everyone knows that the Federal Reserve strives to devalue the dollar at two percent per year. And they know that gold has been prized as money for thousands of years. Yet, when it comes to gold and the irredeemable dollar—they say that it’s gold which moves.
…click on the above link to read the rest of the article…
