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Friday, June 10, 2011

Who Failed Monetary Economics?

Court Order "No one leave the Country" 

Who Failed Monetary Economics?

Redefining Intrinsic Currency
A Brief

In the end, we are all accountable, in some way; economists, governments, accountants, regulators, bankers, media;
Wall St et al. for the debasement of currencies.Focus should not be so much on "who’s to blame?"- But rather how do we fix it?

The conceptual issues related to currency remain highly abstract. And this issue by its nature will not change as the complex idea of "value" itself... has meanings offering multiple definitions. A form of social consensus or contract is needed to be practical.

In theory, we print money based on a nation's on-going ability to produce goods and services...Its wealth. It assumes GDP (income statement) properly measures that wealth. This is where conundrums occur. Currency has future value if a nation continues to produce at higher, current or reasonable historic levels. It is preferred that these values are concrete objects over intangible abstracts.(i.e. more legal, accounting, banking fees and the sort add little to the real object economy).

What is not accounted for in this traditional equation is the productive asset capacity of a nation (balance sheet). This would in some measure, consist of its natural resources - a.k.a depleting concrete objects. So it follows any nation/planet with natural resources concurrently erodes the value of its currency as such resources are depleted. This suggests then that the "intrinsic value of a nation's currency" rests somewhere between its income statement and balance sheet. If it has resources.

Nauru  is a worse case example of a nation with fully depleted resources. A zero balance sheet. And thus no currency value, with its related consequences. What's scary? The US and our planet are both at risk of rapidly following into this same circumstance. (I suggest G Soro's implied this view in his past currency trades).

As to gold - being a last store of value - trading one abstract for another is simply a redundant exchange. Abstracts do not feed, heal or warm folks. Concrete objects do. The end goal then is to focus on sustaining and allocating the concrete asset capacity of a nation/planet for as long as possible. It means changing our way of looking at things.

CURRENCY: A Depleting Natural Resource?