Skip to main content

Paper money or bumpf

Having money is something. But not just any money. Iraqi Dinars are useless as are Libyan or whatever they use there. Unless they peddle black market dollars which have a lot of value, even in Iraq.

Then again if you ask the rest of the world the dollars are actually worth less than what they indicate. Reason is there is no reserve against which they are being issued - as in printed. We can run the press all night long and print more but if there is no real value to back it up then it is merely paper. Expensive paper at that.

Consider the currency of any country really and it is valued using a vague algorithm established after WW II called the basket of currencies and the USD as the reserve. Used to be pegged to the value of physical gold but then dropped.

To me the inherent model should really be in terms of ranking each country's capacity to produce goods and services i.e. GDP which can then determine if and what they can afford to buy from another country or set their own value equivalence of the currency.

Why 1 dollar is 50 INR or 0.8 EUR is arcane and makes no logical sense. Bartering during the days of the emperors was in concept more realistic exchange where perceived value was traded.

Relevance of a cow for one could equal to a cord of wood for another and an even exchange could occur. House swaps in modern times are a sort of barter as are some other innovative ways using the power of the internet to trade ancient postage stamps for a bicycle. Maybe the clueless generation will wake up and go back to something like that on a grand scale.

You cannot eat money or gold or any other stupid metal and so the idea of assigning nominal value is itself flawed. Right now people are sitting on asset classes that were priced differently yesterday than today; different from an hour ago than now, because apparently the free market determined that the supply and demand equations are changing by the minute. The amount of volatility itself has become a tradable commodity as witnessed by exotic instruments like options et al.

What it boils down to is that no body really knows what anything is worth anymore than they did 100 years ago. Globalization just made it that much more screwed up. The entire Eurozone basket case (pun intended) is living proof. Global equity markets are pricing in the commentary on a daily basis causing ridiculous fluctuations in equity and bond markets like a roller coaster out of control.

This ship is truly ruderless and the sail too is almost ripped. A gale force wind is further increasing in velocity and their is not going to be anything left to throw up - i.e. people are going to go at each other in frustration.

Sounds doomsdayish but perhaps a good whipping and cleansing is in order to eradicate the excesses of few generations that sat on their behinds experimenting with psychedelics or some other addiction like Iphones.

Comments

  1. Thought provoking. I think I agree, though I don't understand the technicalities.

    ReplyDelete

Post a Comment

Popular posts from this blog

Of chocolates

I like chocolates. Godiva Dark with Almonds - not sure of the naked woman on the horse to be the icon of some choice cocoa based products but tastes good. Started in Belgium but now owned by some Turks. Cadburys - Fruit and Nut Milk Bars - awesome combination of dried fruit pieces along with a medley of nuts makes your toungue dance - started by a Brit now owen by Kraft USA. Lindt Hazelnut spheres - made by a Swiss confectioner are divine balls that melt in your mouth with a lingering nutty taste Ghirardelli Milk Crisp Squares - crunchy and light these milk squares are easy on the palate but pack some serious calories - all good I say! Originally founded by an Italian who moved around till he landed in SF Bay today also owned by the Swiss Lindt empire.

Columbia SC

 The Palmetto state.  One of the confederate kinds. History dating couple centuries back.  We visited the capital yet again this time to take in the SC State Museum. Occupying the former digs (literally remodeled) of an erstwhile cotton mill this structure is an amazing piece of reimagination.  Four floors of excitement for kids and young at heart alike. Located on the shores of the Congaree River formed when the Broad meets up with the Saluda River, this edifice is approx. 60 years old.  The front of the building has a more modern planetarium that was added about a decade ago.  The museum itself has different areas of interest segregated on each of its four floors. The first floor has gift shop and a diorama of some of the local geography including the swamps and the state beaches with audio guides to help understand what fauna thrives locally. The second floor is all about natural history and showcases animal kingdom that may have survived on this latitud...

But What If We're Wrong?

I attempted to read this book by author Chuck Klosterman backward to forward but it started hurting my brain so I decided to stop and do it like any other publication in the English language.  Start from page 1 and move to the right. Witty, caustic and thought provoking this is a book you want to read if you believe that the status quo might, just might be wrong. At times bordering on being contrarian about most things around us it tries to zero in on the notion of what makes anything believable and certain in our minds.  The fact that there is a fact itself is ironic.  Something analogous to the idea that you can never predict the future because there is no future. Many books and movies have tried to play on this concept - best that I recollect (I think I am) was 'The Truman Show'.  This book by Klosterman attempts to provoke the reader to at least contemplate that what they think they know may be wrong. He uses examples like concept of gravity, and how it ...