Dylan Grice on money, trust and social cohesion

At its most fundamental level, economic activity is no more than an exchange between strangers.  It depends, therefore, on a degree of trust between strangers.  Since money is the agent of exchange, it is the agent of trust.  Debasing money therefore debases trust.  History is replete with Great Disorders in which social cohesion has been undermined by currency debasements.  The multi-decade credit inflation can now be seen to have had similarly corrosive effects.  Yet central banks continue down the same route.  The writing is on the wall.  Further debasement of money will cause further debasement of society.  I fear a Great Disorder. 

I am more worried than I have ever been about the clouds gathering today.  I hope they pass without breaking, but I fear the defining feature of coming decades will be a Great Disorder of the sort which has defined past epochs and scarred whole generations. 

"Next to language, money is the most important medium through which modern societies communicate,” writes Bernd Widdig in his masterful analysis of Germany’s inflation crisis, Culture and Inflation in Weimar Germany (2001).  His may be an abstract observation, but it has the commendable merit of being true.. all economic activity requires the cooperation of strangers and therefore, a degree of trust between cooperating strangers.  Since money is the agent of such mutual trust, debasing money implies debasing the trust upon which social cohesion rests. 

So I keep wondering to myself, do our money-printing central banks and their cheerleaders understand the full consequences of the monetary debasement they continue to engineer?  Inflation of the CPI might be a consequence both seen and meas-urable.  A broad inflation of asset prices might be a consequence seen, though not measurable.  But what about the consequences that are unseen but unmeasurable—and are all the more destructive for it?  I feel queasy about the enthusiasm with which our wise economists play games with something about which we have such a poor understanding.

~ Dylan Grice

(As quoted by Tim Price in "Flying Blind," December 4, 2023.)

Daniel Kahneman on money and happiness

Money doesn't buy you happiness, but lack of money certainly buys you misery.

~ Daniel Kahneman

Tony Deden on money debasement

Dishonest money begets dishonest statistics, dishonest accounting, dishonest balance sheets, dishonest means, dishonest objectives, dishonest compensation policies, and dishonest relationships; that it begets ambiguousness and corruption in every aspect of life.

~ Tony Deden, "Investment value in an age of booms and busts: a reassessment," Grant's Fall Conference in New York, October 9, 2018

Friedrich Hayek on government management of money

The history of government management of money has, except for a few short happy periods, been one of incessant fraud and deception.  In this respect, governments have proved far more immoral than any private agency supplying distinct kinds of money in competition possibly could have been.

~ Friedrich Hayek, The Fatal Conceit, Chapter 6

Lysander Spooner on the intersection of money and government

The love of money is the root of all evil.  And it is omnipotent government which is best able to carry out the evil plans of those who love money.

~ Lysander Spooner

Anthony Deden on confusing money printing with wealth creation

Frankly, we now have two generations of economic agents who are entirely ignorant about the nature of money. We welcome rising prices and see them as wealth even as they are merely the result of inflation. We demand more cash to save the system, instead of allowing those who fail to go bankrupt, so that more efficient competitors can emerge. We have tolerated the Swiss National Bank sale of our gold reserves in exchange for American paper money and promises.

We demand cheaper currency to stay competitive because we do not know the true nature of competitiveness. If cheaper currency is the source of wealth, where has Bangladesh gone wrong? If cheaper money means economic prosperity, why not just print as much as we can and give it out to everyone? We have become fools. The customers know nothing and the advisers know even less. And then we have the idiot economists—the neo-classical, Keynesian variety with solutions to problems they did not even anticipate; solutions that have, in fact, long been discredited. And so we lurch from crisis to crisis—eating our meager capital in the hopes of becoming rich in money. It’s a pity.

~ Anthony Deden, "Reflections on the Role of Gold in Investment Practice," November 19, 2009

Greenspan spots bubble before the burst

It’s a bubble. It has to have intrinsic value. You have to really stretch your imagination to infer what the intrinsic value of Bitcoin is. I haven’t been able to do it. Maybe somebody else can.

I do not understand where the backing of Bitcoin is coming from. There is no fundamental issue of capabilities of repaying it in anything which is universally acceptable, which is either intrinsic value of the currency or the credit or trust of the individual who is issuing the money, whether it’s a government or an individual.

~ Greenspan says Bitcoin is a bubble with no intrinsic value, Bloomberg, December 4, 2013

Marc Faber says the dollar is no longer a unit of account

If you measure the stock market not in dollars but gold, it is down 80% since 1999. I no longer regard the U.S. dollar as a valid unit of account. People shouldn't value their wealth in dollars because one day, in dollars, everyone will be a billionaire.

~Marc Faber, investor and author, The Gloom Boom Doom Report, Barron's magazine 2011 Barron's Roundtable, January 15, 2011

Alan Brown on sound money

You can't have an honest population with a dishonest currency.

~ Alan Brown

Tony Deden on money

When you destroy the money, you destroy the glue that holds society together.

~ Anthony Deden, Sage Capital Zurich