-------- Original Message --------
| Subject: | What Is Money! -- Re: Adventures of "Helicopter Ben (HB)" |
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| Date: | Wed, 26 Jan 2011 17:15:07 -0800 |
| From: | Jas Jain |
AS : "Jas, I'm curious how you personally define money in the current system. Thanks in advance."
In "the current system," I mean the global economy, the function that the US dollar serves is the definition of money—Medium of Exchange and Store of Value—and the best money, except for gold, that the world has seen in a very long time! In the existential form this money is collection of the US Treasury instruments outstanding (sovereign debt = money) of all duration and for convenience purpose the paper currency. How long the US dollar remains the best money except for gold is certainly something that one needs to be fully aware of. It would take the collapse of the American econo-political system for the US dollar to cease to serve the purpose of money and I predict that it would happen before the end of 2030. Therefore one must have the best form of money, gold, as an insurance against that outcome.
Proof
That US dollar is the medium of exchange is not in doubt. As long-term store of value the long-term US Treasuries have been the best store of value of one's savings over the past 30 years. For example, one can buy more than ten times as much crude oil or gold had one put his, or her, money in long-term US Treasuries. The long-term US Treasuries have returned far in excess of the inflation rate since 1980. The paper dollar bills are merely for convenience and not meant as a store of value.
Charlatans like Marc Faber, Jim Rogers and Peter Schiff, who have been trashing the long-term US Treasuries, are a bunch of bozos. These bozos simply do not understand money.
Jas
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Adventures of "Helicopter Ben (HB)"
David Rosenberg; 01/25/11 (my highlight of Bernanke's comment):
But we'll tell you someone who isn't panicky at all. His name is Ben Bernanke. He runs the nation's printing press, and he is one cool customer. His nickname is Helicopter Ben. We'll call him HB for short. We just saw in the King Report that HB gave an interview on CNBC last Thursday when he was queried about the success of QE2, especially since bond yields and mortgage rates have gone up substantially in recent months. Here was his response:
"Policies have contributed to a stronger stock market just as they did in March 2009, when we did the last iteration of this. The S&P 500 is up 20%-plus and the Russell 2000, which is about small cap stocks, is up 30%-plus."
Well, there you have it. When you have a central bank chief talking about the virtues of small-cap stocks, you know you really have a pro looking after the country's monetary affairs. One has to wonder whether Kramer will end up on the short list for HB's replacement when the time comes. So what we have is a Fed that is now targeting the stock market and engaging in some form of manipulation to invite the same speculative risky behaviour that has ended so badly in the past. But make no mistake, HB is spiking the Kool-Aid in a significant way and it is working for now. So the Bernanke put is really an extension of the old Greenspan put, but with just a different strike price.
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