Almost everyone is wrong

The euro is the state of the art, in currency systems.

The ECB and their euro touch the non-monetary real world at just two points:

1. The HICP index
2. Gold

The first they can only watch passively, the second they can actively intervene in the market for.

The ECB have one mandate and one mandate only:

1. Price stability

This means inflation will not be left to run unchecked. It also means deflation absolutely will not be allowed to unfold.

In a past age of mega-leverage, where general prices naturally felt the pressure to rise, the only thing the Central Banks could do to act against that tendancy was to intervene in the market for gold and suppress it's price, hoping that this would be noticed in other markets and put a brake on the rises within those also.

In an age of deleveraging today, where prices naturally would fall as the deflationists rightly determine, but where the Central Banks positively will not allow general prices to fall without taking some action to prevent it … what else can they do but actively support gold and hope the other markets, which they can only passively monitor, take their cues from this signal and see their own falls arrested?

This is why silverbugs don't understand how silver will underperform gold. They are scared about inflation still, despite the clear evidence the world has turned and they are focused on the wrong bogeyman.

The deflationists are absolutely right. Except for assuming it will simply be allowed to play out. It won't.

So to summarize my point: almost everyone is wrong. Just as it should be, right?

Who gets "free stuff™" from the $IMFS?

BRICs/Emerging Market nations, naturally, wish to build up their own domestic production and improve the standard of living of their people. They just want what we enjoy in the West.

While "the West" were prepared (and enabled) to mortgage their own futures to debt rather than producing for themselves, and "the Rest" were getting more out of it than they stood to lose in real terms, the Rest were fairly happy indulging the West's stupidity and turning it to their advantage. The Rest increasing their own domestic standard of living and ability to produce for themselves has been more important to them than deferring consumption of their excess production exported to us (or just not producing it at all, because they couldn't afford to waste the resources that go into production - or, indeed, on building out the means of achieving production).

In a way, the Rest have been sharing in the consumption of production that the West pulled from their future, by issuing credit to them. They got the means of production, and the West got to play with the widgets. Both sides had a part in the consumption and one side is supposed to pay for it all in the end with "money".

The Rest weren't going to get the debts repaid later, in real terms, and they knew it. But they don't mind, because they have already really been paid. They can fend for themselves when the West's debt fails, or at least fails to perform in real terms even if it does pay out nominally, because the Rest were enabled to invest in their real economies while they "helped" the West (gaming the system to their advantage) by supporting the accounting mirage of the $IMFS.

They can produce pretty much anything they want domestically or among themselves. Meanwhile, the West's infrastructure has crumbled, we forgot how to make stuff, and have populations that are conditioned to enjoy the easy life.

We're fat and lazy. Fat enough for the slaughter, and so slow we can't outrun our neighbours in our attempt to escape the bear when he wakes up hungry.

Are the Rest still getting more out of it than they

stand to lose in real terms?

#CurrencyWars - update from the trenches

USD STATUS: GETTING BY

XBP STATUS: LOSING

XEU STATUS: WINNING

XJY STATUS: CATCHING A BREAK?