Pass the Buck
A businessmen who just returned from a trip to Vietnam tells the story of a 7-year-old street urchin who asked for money. The child refused the man's offer of a dollar, instead specifying euros. It's a microcosm of the entire region. As 50 years of the fiat dollar standard "boom" ends, the U.S. and the world will reap what they have sown. [Full Article]
Comments (33)
Good article.
I add:
The malinvestments of this 15 year US credit boom are global. As the boom ends, rising interest rates will reveal the extent of the errors. However, many people willl be be shocked to find them in their own backyard not just in the USA. Canada, Mexico, China, and Japan as huge exporters to the US will not fair well.
Published: December 2, 2004 9:08 AM
Inflation is not the same as defaulting on payments. If buyers prove scarce for further US debt auctions, interest on new debt will rise and the payments will reach a more menacing % of GDP or taxable income, thereby restraining further debt issuance. At that point the dollar will have plummeted in value and purchasing power and US debt will have plummeted in market value, but the payment streams will continue. How will that affect China? What immediate need would it have for $ to compel it to sell bonds at then severely discounted amounts? It would not be draws on the Bank to exchange yuan for $, given the diminished purchasing power of the latter. And certainly China has no domestic political pressures to consider in the decay of the Bank's asset statements.
Exporters such as China appear to have every incentive to keep buying US debt to keep interest rates low to spur US demand for imports. Would that trump any concerns for the Central Bank's balance sheet. How would the Fed respond to this action if it decided to raise rates? Mass selloff of its bond portfolio?
Published: December 2, 2004 10:16 AM
What/where/who/how did Argentina accord China status as a market economy? I must have missed it somewhere. I didn't even know that Argentina was in the business of doing that sort of thing.
Published: December 2, 2004 10:54 AM
As nominal and real interest rates rise, a result of our currency falling, our exports should rise because American exports are now 30 percent (or so) cheaper than the competition just one year ago.
That means that American manufacturers and American service companies (engineering companies, etc.) will be in greater demand than before -- now that they are offering a New Year's 30 percent off sale.
So it will be an interesting interplay between high and rising interest rates squeezing the neck of our economy and a surge in demand from the export markets holding our economy up.
In any case, there's little hope that the Chinese will see the futility in holding our dollarettes. In the long run they will try to diversify export markets, but Europe doesn't want them, but Brazil does. Brazil wants to sell the Chinese resources. But, to whom will the Chinese sell the manufactured products?... and to whom will the Chinese sell their American dollarettes?
The theoretical answer is that the Chinese should buy American goods with the dollarettes, but apparently that's not been the case. Maybe they'll start buying overpriced real estate like the Japanese did. Our stock market is not that overpriced. Compared to other bubbles it's only at 1929 levels.
I don't think the Chinese are done gorging themselves on dollarettes and so we may have more of this Chinese water torture version of "floating" exchange rates between the Yuan and the USD.
This will only encourage "Spendthrift George" and his minions to: spend, spend, spend.
I've been an advocate of floating exchange rates, but this is the second time I've seen a mercantilist country greatly distort the system by trying to lock in the exchange rates. Japan was the first. Now it is China followed by Japan.
Hoppy
Published: December 2, 2004 10:54 AM
Are the inflationary pressures of the fiat US dollar inevitable, or could we go through a major deflationary period first? I seem to read article from anti-fiat "experts" who claim both scenarios.
Some people claim that the US will experience something similar to Germany under the Weimar Republic, where everything increases dramatically in dollar prices. Others think there could be deflation since the Fed really only encourages the growth of debt, which will wind up acting as a major "short" against the dollar, and a debt squeeze will cause massive deflation in asset prices (e.g. real-estate, stocks, etc).
What do Austrian economists think?
Published: December 2, 2004 11:10 AM
I'm no Austrian economist, but I think that--depending on the sector--both deflation and inflation are going to happen.
When the price of consumable imported "stuff" skyrockets, consumers hooked on consumption will turn to their "assets" for relief--but many of those "assets" that have been mislabeled as "hard assets" (e.g. owner-resided real estate) will in fact be experiencing their own price deflation. Ouch goes the squeeze...
Published: December 2, 2004 5:57 PM
Articles such as this with an Armageddon finish always sit uneasily with me. For all the faults of fiat money and so on, I have never seen it explained logically why it is NECESSARILY so that such systems will end with a crackup boom. It is conceivable that you could get, for example, painful periods of Volkers followed by Greenspans ad infintum.
A second observation is that the site spends a great deal of time pointing out the inherent problems with the U.S. Fed/Government but all currencies are to varying degrees burdened by similar problems? The US$ is quoted against these currencies, where maybe the abuse of the currency is not so great but where the socialist government policies make the U.S. look like a tax haven.
Aren't we really just trying to guess who is currently where in a game of the blind chasing the blind?
Published: December 2, 2004 9:08 PM
Jonathan,
Gold and silver are not plagued by these kinds of problems, especially since it's likely that soon all of the gold that exists will have been mined.
Published: December 2, 2004 11:41 PM
About Hyperinflation:
A hyperinflation ends in a depression.
Therefore, real prices fall as nominal prices skyrocket. Deflationary depression real prices fall more than nominal prices.
That is why gold does well in both.
Jeff Fisher
Published: December 3, 2004 8:21 AM
David,
I know, but what relevance does your comment have to do with my post?
Published: December 3, 2004 8:27 PM
I was struck by the following comment in "Pass the Buck"
"No longer constrained by even the nominal fetters of Bretton Wood's pseudo gold standard, America has been able to purchase imports with fiat money churned out by the Fed and uniquely finance its burgeoning indebtedness by issuing debt instruments in dollars. On the other hand, foreigners, stuck with unconvertible greenbacks since 1971, have had no choice but to adopt dollars, rather than gold, as the world's reserve asset."
Certainly the first sentence is correct, but is the second? What Nixon did in closing the Gold Window was to cease exchanging Dollars presented by foreign governments for Gold, but he had no way of forbidding them to increase their own Gold holdings. There were, and are, sources of Gold which are independent of the US - Russia, South Africa, Brazil, Canada, Australia - and any Central Bank that wished to do so could exchange Dollars for Gold at one of these producers. It was the accumulated US Gold Reserve that became inaccessible, not Gold in general.
I'm raising this mainly because it's more interesting to ask why Central Banks chose to hold Dollars rather than Gold, than to insist that they had no such choice.
Published: December 3, 2004 10:09 PM
I'm guessing that they didn't want to let the Americans have all the fun.
I mean, if you were a central banker and saw a country blatantly counterfeiting money like that, wouldn't you want a piece of the action, as well?
Published: December 3, 2004 10:51 PM
I find it odd that the governor of the Chinese Central bank would make such a statement, after all, Asian and European economies are totally dependent on the US. Americans consume their goods, they even lend us money by the bucket full to buy more of their goods. They peg their currency to the dollar to give themselves a competitive advantage in trade with the US. The problem is mainly structural, the crushing effect of social welfare drain most of the consuming power out of Europe and the Asian, due to protectionist policies (excluding Hong Kong and Singapore), simply don't have large enough markets to consume all of the good they produce. If they manufactured their current level of goods for purely domestic consumption they would have a smaller amount of unit to spread fix cost, making the end price of the good more expensive, further limit its potential market. It is much more likely, that the worlds economy will ride the dollar train to destruction along with the US. They could stop lending money and let the dollar fall, but the correction phase will be extremely painful and I doubt they will be willing to face that pain sooner then they have to.
Moreover that still does not fix the problem of domestic consumption, the Asians have made some improvements in this area with the recent announcement by ASEAN along with China and Japan to form a free trade zone which will take affect in 2010 for the wealthier nations and 2015 for the poor nations. However, with an ageing population and a strong socialist movement, it is doubtful that Europe will dismantle its welfare state.
Published: December 5, 2004 2:27 AM
To Faulksmen, seems you are looking to fake statistics and "great trade agreements" i.e.nothing more thn rethoric. Welfare state in Europe no more exists, two years of tough inflation has been horrible for wages and pensions now at starving level and where you see "socialism" in EU? Dont make me laught, you are loose in some prejudice of the past. The elderly population is close to die and the joung generation will have no welfare at all, the labour market in EU is more flexible than in USA. The strong euro make happy only the strong elitarian lobby of finance in Europe, but the euro as obviously is not strong in itself, is a poor currency instead; is the weak dollar that matter but is this a sign of decadence of the USA Empire. The USA is seen "only" for the irrational appetite of his consumers to buy everything and nothing more. The Empire is loosing pieces here and there and giving out their last vomits of militarism before stay quite at home. New economy stars are rising like China India even south america and by default Europe. The old strategy of USA vs the world is gone forever. Strategically speaking to USA remain the military power and the ugly faces of Rice, Rumsfeld etc. but all this is not sufficent for the economy.
Published: December 5, 2004 5:28 PM
Mr. Rozzoa,
I would say you have gone insane, but I don't know if you where ever sane. You are obviously filled with bitterness toward America for one reason or another, and in true American fashion, I frankly don't care how you perceive me or the USA.
Moreover, Socialism is alive and well in Europe. The Europeans have yet to trough off their massive unfunded pension systems, state ran health care, and bloated/ decaying bureaucracy. It is true that in the future, the Europeans will be unable to pay for all of the benefits they currently provide, but the attachment to them is so strong the likelihood of the elected officials voting to remove them is marginal. By ageing population, I meant those persons who are now in their 40s (who make up the bulk of the European population) and have another forty years to live; they will be expecting a pension.
America is decaying, but that is the legacy of our willingness to accept parts of Socialism and ever expanding government bureaucracy. It is not our "decadence" that makes the global economy pursue the American market, but rather our relative lesser degree of socialism and protectionism that allows our population excess income to spend. You are correct, there are new economic stars rising, like China (I would not include India their pro-rural, democracy, and socialist movements will prevent them form ever amounting to much), but they also have the problem of being reliant on the American market.
Europe will not be strengthened by a declining America, first of all trade is not a zero sum game, if America goes, who will buy their exports. Had you done your homework before making an ass of yourself, you would know that, all European economies are heavily export oriented, the largest consumer (out-side of Europe) is the United States.
As for American militarism, it is a natural part of being the most powerful economy on earth, take into consideration that the United States behaves only slightly better then Great Britain a hundred years ago, when they where the largest economy on Earth. Do you really think that when China is the most powerful nation on earth they will not behave in the same way?
Lastly, Latin America is destined to stay poor and backward as long as it is populated with people who think like you (I know you are an Italian). Latin Americans have been behind the curve of Western development since the 1860s and all they have done about it is criticize those who have been successful and reaffirm their commitment to "The Social Struggle". Even when the Europeans lend them billions to develop, they waste the money on social programs and default on their debt, that has been going on since the 1880s (Argentina).
P.S.
I would hardly call wages in Europe at "starvation levels" (they are of course less in Italy then in Northern Europe), it is the taxes needed for your beloved welfare state that reduces your take home pay.
Published: December 5, 2004 7:49 PM
To Fauksmen, seems to me your are poor in politics and even worse in economics. Insane for insane pls take a look at the Paul Craig Roberts article of today on lew site or you are thinking really that the American Empire is a benefactor of the entire world? Out of touch, sir.
The mad insistence to assert of a free market that pragmatically is NOT AT ALL, means sic and simpliciter you have unterstood nothing about.Explain me where you find socialism in Europe, a part the smart Zapatero in Spain that's socialist only by name. Labour Blair? A ridicolous Schoeder in Germany? You are obsessed to see socialism and cummies where there are none.It's the arrogance (and the ignorance too) of USA rulers that provoke a bitter and poor look to USA not ME and large part is INSIDE the USA as you may experiment every day. About Latin America, plagued for almost fifty years by USA military and economic ABUSE and support for most cruel dictators in history,practically in every countries leaving a string of thousand of millions of people assasinated, tortured and desaparecidos, put an hand to your hearth, sir, and another to your eyes. I accept to be called socialist if you accept to be called Pinochet.But don't count stories selfcontradictories in itselves. Where are the stolen money of LA dictactors advised by secret service of USA? Into the vault of american banks. And you pretend the poor argentines, or poor colombians, or poor chileans people who NEVER has seen ONE LURID BUCK from beaurocratic IMF to pay back to bondholders money they never borrow??? Are you, and people thinking like you, gone mad?? They simply CANNOT. My thesis is that if USA politic both economic and military or better say togheter, act as a BANANA REPUBLIC i.e. blind violence, after that don't call for fair behavior anymore. Cheers, amigo.
Published: December 6, 2004 12:59 PM
I will also weigh in with my prediction of future economies: My prognosis for the US during the next decade years is, unfortunately, bleak. I see no chance of the costs of empire decreasing during the preemptive-war- to-remake-the-world-in-our-image years. Furthermore, we have enormous medical and social security liabilities for which I see little political will to remove. It is possible that the Republican congress will finally get some courage to break ranks with the president, but it is more likely that the majority will remain content to have their pet spending projects rubber-stamped, at least until it becomes painfully obvious that the economy is falling apart. Additionally, energy prices will continue to increase as long as pipe lines are being blown up.
The future of western Europe is not particularly great either. The European Union did lower inter-European transaction costs, but the larger players in the union do not feel particularly compelled to be fiscally responsible and the European union seems all to ready to subsidize education, research, and agriculture. Interestingly, Italy and Spain are more interested in deregulation than their northern cousins that seem to have forgotten that economic freedom and property rights are key preconditions to prosperity. Unfortunately, these countries are now roped into a European Union that likes to pride itself on its socialistic policies.
I predict that western European airlines may overtake American airline companies because of a lower security burden.
I also forsee small, independent countries such as Singapore, Chile, Ireland, Iceland, and South Korea continuing to do well. Canada will win as a result of rising crude oil prices that will make exploitation of large parts of their country economically viable. This may offset the loss of fishing grounds to an increasingly militant US.
Published: December 6, 2004 7:24 PM
Mr. Rozzoa,
1. I come to the mises site to enjoy papers of economic analysis, not to read anti-American garbage.
2. My point was not that American power benefits the whole world, only that America reserves for itself the right to act unilaterally anywhere in the world. This has been the behavior of great powers in the past and it will be the behavior of great powers in the future.
3. If you are looking for socialism in Europe, you don’t have to look far. In all European countries we find government stipends for the unemployed, government ran health care, and government ran unfunded pension systems (excluding Slovenia), is that not socialism? Keep in mind I said socialism and not communism. Moreover, Blair, Schroeder, and Zapatero are all socialist because they support the policies of the social welfare state.
4. Whatever the reason you take a deem view of the United State, I simply don’t care. Moral or immoral, it is safe to say the majority of Americans don’t care either. The idea that Americans should be concerned by the way they are perceived aboard simply does not appeal to them.
5. As for you attack on the free market, if you don’t believe that free trade, free markets, and sound money create wealth and stability for a nation/ places and are the only way to REAL growth, then WHAT HELL ARE YOU DOING READING MISES? You’re a man his late 60s, it is doubtful that you are going to change any of your positions. However, I do advice you to take a look at the only two countries since 1965 to reach first world status (defined as per Capita GDP of $20,000.00USD) Hong Kong and Singapore, they both developed by opening their market, restricting labour movements, operating stable monetary policy, and avoiding a European style welfare state. Today they have a high GDP per Capita than your native Italy.
6. Lastly, Latin Americans have no one to blame for their problems but themselves. It is not the United States that makes Latin American politicians destroy their economy with high taxation and massive borrowing, then steal 10% of it and waste the rest on social programs. Once more, they end-up defaulting on their loans. Anyway, who supplied weapons to the Latin American dictatorships in the 80s; it was your fellow socialist nation France. During the Falklands War, every British troop killed was killed with a French Weapon. As for paying back bondholders, I am referring to the most recent default in 1997, those where democratically elected government, the general population is now responsible for paying the national debt. For the record I have always felt that Pinochet was a great man who had too little time to complete his work, he was better then that communist bastard Salvador Allende. If you must call me by the name of an elderly political leader, I would prefer Lee Kuan Yew.
7. For all of Americas faults, on its worst day it is still better than any European nation on its best day (exclude Monaco, Luxemburg, and Liechtenstein).
Steve,
Italy and Spain may be more willing to consider deregulation, but they already have more regulation than Northern Europe. Moreover, they are only willing to commit to tacit reforms.
Published: December 6, 2004 8:55 PM
"Canada will win as a result of rising crude oil prices that will make exploitation of large parts of their country economically viable."
Canada has a lot of oil, but not much of what's left is cheaply extracted. The federal government seems determined to raise the taxes on oil and on oil-burning industries in the name of the idiocy that is the Kyoto Accord. At the same time, it has poured billions of dollars of taxpayer's money into oil and gas development. Economic freedom and private property rights have not been a priority of Canada's socialist politicians for the last 40 years or so. So if Canadians are to become rich off their oil and gas, I suppose it will be "rich" in the way that the average Venezuelan is rich.
"This may offset the loss of fishing grounds to an increasingly militant US."
Canadians took care of this contingency already, by wiping out their greatest fish resources through the magic of the Commons Tragedy. Take that, Yankees!
Published: December 6, 2004 11:20 PM
To Folkmen, todos los hombres del peublo. In 7 points you dictate the most accurate DICTACTOR-FASCIST MANIFESTO so surrealistic to make envy to Salvador Dalì that's moving in his grave in la Figueras just to visit MISES (that's not a sect nor KKK) Unfortunatly I piss all over any FASCIST manifesto from my 20s, imagine you the fall i can do now in my 60s. Be aware, de no tener por la mano en papel mojado pero muy muy mojado. i leave to other reader to judge your "piece of art" sothat everybody many enjoy MISES. Adiòs, dirty gringo de mierda.
Published: December 7, 2004 11:31 AM
"In 7 points you dictate the most accurate DICTACTOR-FASCIST MANIFESTO so surrealistic to make envy to Salvador Dalì that's moving in his grave in la Figueras"
How can something that is surrealistic be "accurate"?
"Adiòs, dirty gringo de mierda."
So much for civilized conversation. I hope you have a good life as well, Mr. Rozza, even if your intelligence does not span beyond such remarks.
Adio,
Francisco Torres
Published: December 7, 2004 3:27 PM
Mr. Rozza,
I cannot understand what the hell your are saying (broken English), but if you are implying my statements where of a fascist nature, they where not. Points 1-6 where simple facts and point 7 was my opinion (based on actual standards of living -not just GDP per capita- and general economic freedom). As for "dirty gringo de mierda." there is no need to call me an Anglo sh*t, one, I am not Anglo and two, if you have a point to make please present data rather then resort to childish name calling. Your an old man Mr. Rozza, I don't want you to have a heart attack.
Published: December 7, 2004 5:08 PM
Mr. Rozza,
I cannot understand what the hell your are saying (broken English), but if you are implying my statements where of a fascist nature, they where not. Points 1-6 where simple facts and point 7 was my opinion (based on actual standards of living -not just GDP per capita- and general economic freedom). As for "dirty gringo de mierda." there is no need to call me an Anglo sh*t, one, I am not Anglo and two, if you have a point to make please present data rather then resort to childish name calling. Your an old man Mr. Rozza, I don't want you to have a heart attack.
Published: December 7, 2004 5:09 PM
To Mr.Francisco Torres, hispanic name, may be you are not well aware of grossy post exalting imperialism and assasination.It is this you mean for "civilization"? For S. Dalì, also know as AVIDA DOLLARS, it's too long to explain the connection:in fact was a fake surrealist (one that take into account the night dream as sense in everyday life) a stupid fascist, friend of dictator Franco. At the end on say Adiòs in spanish not Adio. Even an ignorant Bush say MUCHACHO sometime:
To Falsmen, I apologise the use of the last sentence, but the substance dont change too much:you have given an arrogant statement upon the SUPERIORITY, also in cultural and economic terms, of the Empire of USA that's questioned fifty/fifty INSIDE the USA not to say the rest of the world.Showing enthusiasm for murderers and despreciate an democratically elected leader is th same thing that being a fanatic fascist. Naming Blair a socialist is the same to be culturally blind.Moreover it's the second time you allude to my age, that imply you are probably a little disturbed, but dont worry: i'm very well in myself. Instead I know a lot of fascists sliding down into dementia: Reagan, Tatcher,Gorbachev, the same Pinochet. It's a natural process acting against humanity and social justice may produce distress and poor health. Hence take care of your health and sincerely accept my apologise for unfortunate end of last post. Being more moderate improve the personality and enjoy not only economics but humanities too, they are not separate. THE DOCTOR.
Published: December 8, 2004 11:44 AM
To Edoardo Rozza,
Oyeme, Eduardito, yo puedo terminar mis aportaciones al Blog como me de mi regalada gana, asi que si quiero terminar con un Adio, en lugar de un Adios, o Hasta luego, o Nos vemos güey, lo puedo hacer, no? Yo soy de Monterrey, Mexico, para que lo sepas.
With that out of the way, I guess I did not see the alleged connection between Dali and Franco and Dali's seemingly fake surrealism, but I find such facts irrelevant since I am not quite a Salvador Dali's fan. I do not agree with Mr. Falksmen's opinion of Pinochet; I am more of the opinion that the man was a lef-wing nut in his own right, even though not a communist, there is no difference between one and a fascist. But I do not agree with you, Mr. Rozza, that Mr. Falksmen's remarks represent a fascist agenda.
Cheers, adios, hasta luego, nos vemos güey, te portas bien y si no me invitas.
Francisco Torres
Published: December 8, 2004 3:00 PM
Mexicano, finalmente he conseguido en este blog de derechista que alquien habla un idioma que los gringos necesitan saber para entender algo sobre el mundo. Adio u adiòs me da igual, era màs directo a Falsemen que lamentava mi inglès.Tampoco importa los de Dalì si no sabe nada de arte. Pero almeno no me diga que l'imperio americano economicamente ha favorecido su vecino Mexico, a parte el echo que tu sea un administrador de una maquilladora yankee o algo similar. Me importa un pepino a mi que tu piensa de Americalatina, lo unico que no soporto es quienes aprecian los matones. Que puedo hacer, perdoname, soy un idealista.Ademàs exaltar asesinatos es un crimen en si mismo.Explicanselo tu a Falseman entonce que a mi me està n en los cojones los fascistas de una vez por todas, carajo! Ahora me acuerdo que los setenta estuvo en Mexico varias veces follando como un negro chicas de luxo en la zona rojas de Mexico city y ni siquiera me acuerdo el nombre de todas. Pero, tranquilo, tu eres de Monterrey y entonces ne tiene que preocuparte. Te aseguro, por amor, ni un peso. No como ahora que lo yankees se van a Tijuana todo sexo y marjuana dejando unos 10 dolares por cada golpe. Ah!, Franceschito, como cambiò el mundo en poco tiempo! Te agradezco por tu espiritu desde la cara triste de l'America, tenià razon el viejo Pancho Villa, hay que hacer otra vez una revoluciòn, tipo esta de hablar hispano en un blog inglès. Te prometo y prometo a mi mismissimo de portarme bièn. De acuerdo?
Published: December 8, 2004 6:55 PM
Alright Mr. Rozzoa where do I begin, you will not accept you defeat and let this debate die. First let me speak upon my views on America. What do you expect me to say, that I hate it? That it is an evil imperialist monster? That sir is not going to happen; G-d bless America and three cheer and one cheer more for the empire. The fact that fifty percent of the national population is opposed to this view is simply another indicator of the decline of America and western civilization as a whole; America is the last western power that will ever be a global influence. As for your age, I allude to it because it signifies that you are from another generation of economist, those born after the Keynesian revolution and those who are steeped in Fabian socialist bull sh*t. I grow anger that you would insult the names of Reagan and Thatcher (who cares about Gorbachev and Pinochet), neither was a fascist and for the record Thatcher is in good health. Furthermore, your statement that “acting against humanity� leads to bad health can be questioned, Pol Pot, Stalin, Mao, and Franco all died happy old men. Also, although Blair is not a classic socialist, he is often called “tory-lite�, he is still a socialist.
In regards to your posting for Mr. Torres, it is rude to post blogs in a foreign language, I know you intended it just for Mr. Torres, but I am going to comment on some of your statements.
1. I am in leveraged buyouts (I suppose that it is a part of “the Yankee system�), not the manger of a textile factory.
2. Apparently you feel that, since Mr. Torres is Hispanic he should side with you in hating America and calling its policies (economic and political) are evil and imperialistic.
3. There are too many things for me to go through, but I will make a closing statement. I was right about you from the beginning. You are an old-line anti-American European socialist committed to the “social justice� (you used those words in your blog). You do not understand economics and espouse some hard line mix of Marxism and Keynesianism (which was quite popular with the Nazis). You want to blame America for every problem in the world. Mexico and every other third world nation have no one but themselves to blame for their poverty. I do not wish to offend you or to castigate you, only to enlighten you. Any nation that pursue a course of free markets, free trade, limited government, no social welfare, and general economic freedom will enter and stay in the ranks of the first world. You call these view “rightwing�, but they are self evident truths, again, look at the only two nations that have entered the first world since 1965. When America is gone and the Asian economies have taken its place, will you then blame the Asian for the poverty of the third world?
4. I don’t know what to tell you Mr. Rozzoa. I will be in Italy next year on business, perhaps we could meet and I could re-educate you?
P.S.
What is your problem with Gringos (anglos)? You are aware that they make-up less than 10% of the American population?
Published: December 9, 2004 4:17 AM
I was there all the way until you used the 7-year old street urchin as an example of the dollars value. The question I have is this: what does a 7-year old street urchin know about currencies, commodities, and exchange? If you're going to end an article with a story, I think something more credible would have been in order.
I just did a test on preference with my dog "Scooter". He's 42 years old in dog years. I set down a bowl with "Mighty Dog" dog food and a bowl filled with 20s (USD). I will tell you this, Scooter was all over the Mighty Dog - he totally ignored the money. Should the US start trading with cans of Mighty Dog?
Published: December 9, 2004 4:48 AM
Scott, it seems hard to believe, but a 7-year street urchin in a developing country is precisely who knows about exchange rates and currency futures. In Nicaragua in the 1980s (I can recall), when the currency was tightly controlled and the government imposed huged sanctions for violating the controls, young children were the ones who hung outside bars and restaurants ready to give anyone with dollars a much better deal than the official rate. It was amazing, truly. They were very entrepreneurial, able to make quick computations and conversions, stayed up on changes in rates hour by hour, assessed the customer's knowledge and likelihood of return business, etc. They seemed to know more than anyone else about what was what.
Published: December 9, 2004 6:22 AM
To Andre,letting aside the political differences and coming back to economics, you tell me being engaged in a leverage buyout (General Dynamics and similia, Halliburton and similia?) I dont think so. You are misguided by too many dogmatic economic views. The State is there for the SUPPORT of economic players not the contrary. The VON Mises, VON Hayek are mainly unrealistic and inconsistent.The praxy of everyday business is the MANIPULATION of rate currencies shares oil gold, the trade is NOT free (subsidies to farmers, duties to steel and drugs etc) the government is growing more and more, not LIMITED: this is not due to bad people in order to takle the PARADISE of free here and there written in the academic books. The little boy changing money on the road in Nicaragua noted by Jeffrey is the Nobel price of "free market" and its value if thousand time that of Greespan from his cadent lips depend all the literature of current economic and finance environment.You ignore Andre the difference from the pragmatic behavior of players and what the Academy try to washbraining the students. What you call free market, in the sense you call, exist only OUT of the law frame.The USA capitalism, on say, come from the road via crime and it's true.Trying to CONTROL crime than surge corruption of state obviously but we dont live in paradisiac place. There are not "free lunch" even, as you know. The sale of food must be PROTECTED, otherwise is a confused looting. So I see higly improbable you can enlight or "re-educate" (polpot?) someone, imagine me. I wish everything good for your business (there nothing new in the case a capitalist selling off all his stuff to employees) but pay caution to LEVERAGE, may be dangerous, for your pocket I mean. Regards. THE DOCTOR.
Published: December 11, 2004 12:38 PM
At last I have time to respond, “Putting politics aside�. If you seek deception, all you shall find is deception! I have presented truth to you and you shut your eyes, you wave it away. What truth you ask, the truth of the free market. Should I waste my breath to no avail? I will not! You have already seen truth (you are on the mises site, right?) and you are blind to it. You take comfort in lies (socialism and Keynesianism), place your hope in false teachings, thus you and your countrymen are destroyed by those lies. When calamity arrives, we shall see who sits unbothered, those who sought out lies, or those who accepted the truth. We will see whom faces are shamed; whose children will have no bread to eat. We will see who is unbothered, those who said “It is society that sits atop the shoulders of government� or those who said “government rides on the back of society. Perhaps it is too late for you to turn back from your ways, but I pray your countrymen do.
Published: December 15, 2004 12:50 AM
Mr. Falsemen, you are right. we are in the church of the Mises site, sst, you are in possess of the truth, i'm the sinner, you pray my countrymen (sic!) please no, dont pray my countrymen, sir, please pray only for you, MY POPE John Paul the next, the pope of free market and the f*** obsess that belive he IS the infallible. THE DOCTOR. For now it's all, for one i go to holiday leaving for ever the sanctity of the doctrine in your benedict hands, sir Bishop.
Published: December 15, 2004 6:39 PM
Very Funny! But, you got my point. If we are to eradicate the economics lies of socialism and Keynesianism, we must have near religious ZEAL!
Published: December 16, 2004 1:18 AM