Tuesday 11 November 2014

On reflection

Consumer prices are not a global constant, but a reflection of the current state within each economy.

When an economy flags, consumer demand is tepid and, conversely, boom brings high demand.

Given they are managed with the goal of price stability, currencies also measure economic state.

Objective comparison of economic state (via currency proxies) requires a universal unit of account.

In the real world: consumer goods demand changes; currency values adjust; gold remains constant.

You may say gold demand changes, and I'd agree. That is a reflection of demand for other things.

Protect me from what I want

Thursday 24 July 2014


US Constitution, 14th Amendment, Section 4: The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

The issue for the US government is not whether it can and will repay its current debts, which it absolutely must according to the Constitution as we see above, but only whether or not it can continue to increase its level of indebtedness without sacrificing the exchange value of its currency.

US government default, in nominal terms, is out of the question. It would be illegal.

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