Home » Posts tagged 'fiat money' (Page 2)
Tag Archives: fiat money
Venezuela Increasingly Looks Like A War Zone
Venezuela Increasingly Looks Like A War Zone
Over the years, we have repeatedly poked fun at the transformation of Venezuela into a “socialist utopia” – an economy in a state of terminal collapse, where the destruction of the currency (one black market Bolivaris now worth 107 times less than the official currency’s exchange rate) and the resulting hyperinflation is only matched be barren wasteland that local stores have transformed into now that conventional supply chains are irreparably broken.
Just this past Wednesday we showed a clip of what is currently taking place inside Venezuela supermarkets, noting that “the hyperinflationary collapse in Venezuela is reaching its terminal phase. With inflation soaring at least 65%, murder rates the 2nd highest in the world, and chronic food (and toilet paper shortages), the following disturbing clip shows what is rapidly becoming major social unrest in the Maduro’s socialist paradise… and perhaps more importantly, Venezuela shows us what the end game for every fiat money system looks like (and perhaps Janet and her colleagues should remember that).”
Unfortunately, while mocking socialist paradises everywhere is a recurring theme especially once they have completely run out of other people’s money to burn through, what always follows next is far less amusing – completely social collapse, with riots, civil war and deaths not far behind.
That is precisely what the video shown below has captured. In the clip, a demonstration against Venezuela’s poor transportation services quickly turned violent. End result: one person dead from a gunshot wound, more than 80 arrested and four shops looted on the Manuel Piar Avenue in San Felix.
What is most distrubing is how comparable to an open war zone what was once a vibrant, rich and beautiful Latin American country has become.
…click on the above link to read the rest of the article…
Why Japan is Not Greece or EU For that Matter
Why Japan is Not Greece or EU For that Matter
QUESTION: Hello Martin
There are a few writers who speculate the the yen will be the first currency to fall (because Japan has been tied into QE and flat interest rates for decades already, and their manufacturing is suffering). How do you think the currency situation will play out for Japan?
thank you, best wishes
M
ANSWER: This is the classic example of people who keep touting fiat and money supply as if it was the beginning and end to everything. I have stated that ALL money is fiat even when a government fixes the price of gold for they are dictating its value. The floating exchange rate has its advantages. It is truly the check against government for money is simply the expression of confidence in the total productivity of a nation. It is not gold – it is the people.
Japan rose to the 2nd largest economy with a tiny island, no gold, and no resources. It did so proving Adam Smith was correct based upon the total productivity of its people. Inflation does not correlate to money supply. If it did, thenALL commodities would be higher today. Inflation is a matter of confidence and as long as people know someone else will freely accept whatever money might be at that moment, then they will accept it as well. Disturb that confidence and you get inflation all the way up the scale to hyperinflation, which also involves the collapse in confidence in banks and people spending everything as fast as they get it – the opposite of deflationary hoarding.
Interest Rates are also a reflection of INFLATION. You would never lend money with a rate of return BELOW the purchasing power of money at the time you expect a return. Therefore, rates have been flat in Japan because of the massive deflation that is also the hallmark of hoarding (savings).
…click on the above link to read the rest of the article…
One Last Look At The Real Economy Before It Implodes – Part 1
One Last Look At The Real Economy Before It Implodes – Part 1
We are only two months into 2015, and it has already proven to be the most volatile year for the economic environment since 2008-2009. We have seen oil markets collapsing by about 50 percent in the span of a few months (just as the Federal Reserve announced the end of QE3, indicating fiat money was used to hide falling demand), the Baltic Dry Index losing 30 percent since the beginning of the year, the Swiss currency surprise, the Greeks threatening EU exit (and now Greek citizens threatening violent protests with the new four-month can-kicking deal), and the effects of the nine-month-long West Coast port strike not yet quantified. This is not just a fleeting expression of a negative first quarter; it is a sign of things to come.
Stock markets are, of course, once again at all-time highs after a shaky start, despite nearly every single fundamental indicator flashing red. But as Zero Hedge recently pointed out in its article on artificial juicing of equities by corporations using massive stock buybacks, this is not going to last much longer, simply because the debt companies are generating is outpacing their ability to prop up the markets.
This conundrum is also visible in central bank stimulus measures. As I have related in past articles, the ability of central banks to goose the global financial system is faltering, as bailouts and low-interest-rate capital infusions now have little to no effect on overall economic performance. The fiat fuel is no longer enough; and when this becomes apparent in the mainstream, all hell will indeed break loose.
…click on the above link to read the rest of the article…
