Gold has a history that precedes King Tutankhamun
? U.s. stocks are approximately 6% this year. Gold went up to three times more expensive.Money the Federal Reserve has been losing ground against the nature of these past ten années.Environ money if you had blocked with gold you need five times the power to purchase that you have obtained by dollar.
It is quite clear, isn't it?
But you could go back and look at the history of pure paper currency. Take a look at how he did against yellow things.Same story each fois.Aucune exception. Once you leave humans human friendly "Silver" at will, they will be printed lot. Unless repeals the law of diminishing marginal utility offers and demand, the paper money will be losers.?
The law of diminishing returns said do you something less good, it is you. We do are not certain that this is true of convientMae West had a slight twist on the concept. "Too much of a good thing is wonderful" or something like that.But for almost everything, but that thing, more you do, less get you her Institute applies the printing of tickets $ 100 too.
The marginal utility is simply another way to consider the same concept. It tells you when you get more of something, each additional unit of value than that which came before it.You can see how that works in the case of dessert, for example. The first pudding chocolate taste great. The 10th one makes you malade.à this time there, you get not only a reduced marginal utility, you get negative marginal utility - which is what you get credit too, but it is another story.
Once again, we knew that a very rich man.Ran for Governor of New York.Nous asked him why he dérange.Il did not need stealing taxpayers.He already had enough money.
"Yes", he replied. "But it's just all." I reached the point where the marginal utility of more money is extremely low. I need to do something else.?
He has not won the race.
But the point is, gazillionth dollar fed is worth much less than its first dollar.Plus they print, you want or you.
And you already know the law of supply and demand. There is a certain quantity of goods and services available. This amount may be increased. But not for the night. It is time, investment, expertise…and etc.
In contrast, the Federal Government to increase the supply of dollars almost instantanément.Il can simply add zeros and multiply the provision by 10. These new dollars in competition with ancient for available products and services.Soon enough, prices are growing and fast.
OH, if it were not so simple.Problem is, there is also the rate of the money.When the economy takes a cold shower, silver speed slows down to a front.Then, the Federal Government can add as many new funds they want.He does is necessarily on the manner in which the old money used.Everyone holds onto it.Banks keep in their caves.Bulletins keep in their portfolios and mattresses.All the figures that he would need.
When trouble struck in 2007, the banking sector was only $ 2.3 billion in the excess reserves (money they inmates than the legal requirement)-barely sufficient for a lens a good bar.Now they're swimming in il.Ils you scored 976 billion in excess reserves.Then how consumer prices are not go wild?
By the way, where money result?The US Federal Reserve has already given the economy paper money BIG dose.The Federal Government are afraid that the banks have been omis.Ils had reason to peur.Ils were wrong trying to make some chose.Il would have been preferable to let the chips fall where they may…maintain the integrity of Government own finances and protect the dollar.Il existed reasonable bankers heap well funded to pick up the pieces of broken and do something many of them.
And, once plus.Ce is not only our avis.Mexique and crossed Chile a similar crisis at the beginning of 1990s 1980.Mexique did this they would do a quarter of a century more tard.Il "licence of [its] archaic system of bankruptcy to perpetuate life business unprofitable and assigned credit by the orientation of the Government, says Grant interest rate observer."
And the Chile? it left undertakings fail and allowed its markets erase.
And what is the difference? Chile was on track, a decade later, soon surpassed its curve of growth redescendu.Mexique, on the other hand, never completely rétabli.Il is still 30% below trend.
Everything that you would expect, in other words.
Why the value of paper money decline as rising quantity by Bill Bonner released in the daily trial.
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