APEC 2024 Peru. Biden shafted to a corner in the back row. Xi in front row next to Peru's President
9/13/2007
The road to self destruction
It must be the most efficient, effective and certain road to take to self destruction. The formula is simple, over pricing and over paying and let them run to their natural ends.
Let the cost of living run free, be delirious with all the high property prices and cost of doing business. Let all prices go one way, up, to give the impression of quality and well being. And as all things get more costly, pay the employees more so that they can afford them, or if not, still appears to be catching up with the runaway prices.
Feel good to pay $100k for a car when others only need to pay $20k. Feel good to pay $100 per visit to a doctor when people can pay $10. Feel good to pay $10,000 for a stay in the hospital when others pay $300. And there will be this illusion of richness.
A million dollar used to be able to buy several landed bungalows. Now you will need several millions just to buy a sem D. The old property owners might owned several properties, but could only called themselves millionaires. Does not sound great when every private apartment owner could possibly be holding to a million dollar property. Now the rich will flash around with their self worth in the billions.
One day when paper value disappears, owning 10 houses is still 10 houses. One apartment is still on apartment. A car is still a car, be it $100k or $20k.
In the mean time, keep paying and keep chasing the runaway prices. See how many more years can this go on before it collapses under a moutain of banana notes.
And people are encouraged to buy annuities that will pay $300 of banana notes in the future.
The illusion of wealth is already around, people borrowing heavily to buy properties, cars etc. Almost everyone in Singapore is a property owner courtesty of the CPF money meant for old age. Wait till the property bubble burst like Japan ten years ago. The Japanese still cannot find their feet after ten long years.
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ReplyDeleteBut how is it that they can borrow?
ReplyDeleteSimple answer: soft money policies of the banks (MAS central bank and Goh Chok Tong to blame) leading to lots of credit money being produced.
Interest rates are artificially LOW which means there is a disincentive to save money, and an incentive to BORROW and spend and BORROW and invest.
So people BORROW to spend, and invest driving UP the prices of investments and scarce producer goods—like petroleum—whose increase in price flows onto other goods and services.
And this borrowing and spending/investing is not matched by SAVINGS—the money being used is "created out of thin air" in the centrally-managed (MAS) fractional reserve banking system; and there is a "fight for funds" between spenders and investors.
Spender: "Wah interest rates low, all my bankers offering good credit terms... I think I'll buy a Lexus, a Condo and a few club memberships."
Investor: "Wah people are demanding more cars, more homes and more entertainment venues.... interest rates are low—money is CHEAP—so let's BORROW to expand our business to meet and anticipate the market demands."
Meanwhile, there's very little saving going on. However there is PRODUCTIVITY. China is (still) booming despite toy recalls and toxicity warnings. Industrial sectors doing well too. These folks put their earnings into the banking system.
But instead of lending out at a 1:1 ratio, the banks lend out at (for e.g.) a 1:10 ratio. That means for every one dollar in savings, the bank lends out NINE BUCKS IN CREDIT.
When the credit money is absorbed into the system, it is indistinguishable from the "real" uninflated money—i.e. all the printed paper dough has the same Dead President's picture on them. So people go about their lives merrily believing that "times are good"...some of the credit money ends up back in the banks, who piggyback another 1:10 inflated money on top.
So what happens it that there are CREDIT BUBBLES right through the entire capital structure of society, which create this "illusion" of success.
It is interesting to note, that all great civilizations collapsed because their financial exchange mechanisms failed. (i.e. money is a medium of exchange)
The greedy monarch, or the conquest-hungry government tinkered with the money by DEBASING it, and the civilization became EXTINCT in the worst cases, and at the very least experienced a DECLINE in living standards.
Examples:
1 Roman empire
2 Hitler's Nazi's 3rd Reich
3 Spain
4 Great Britain
5 JAPAN as mentioned by anon 122
etc etc.
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Monetary inflation is very bad. On the self-experiential, self observation and empirical level, you can witness this yourself:
1 A general feeling of wealth and success
2 Yet a foreboding feeling that some kind of "market correction" will wallop the population
3 A need to "get serious" with the stock market and real estate
4 A need to "get serious" with acquiring more material stuff
5 A feeling of being spiritually lost, and therefore a desire to "get serious" about spirituality...
....and so on. Fucking hell, can you see the contradictions?#!$
TOO MANY ATTACHMENTS LAH!!
~ yawn ~
ReplyDeleteprimary 6 or 8 talking?
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