Saturday, January 11, 2014

When money dies

I've read it once before, in a 'pirated' edition (out of print), but I came across the 2010 reprint of When Money Dies in my favorite local bookstore today and had to snatch it up. The new edition can be seen at the beginning of an interview with the author here.

On that note, there's a nice encapsulation of the purpose of a central bank, in this post at Acting Man:
One must not forget that the Fed was founded specifically for the purpose of cartelizing the banking system. One aim was to destroy the competition the New York money center banks were increasingly subject to, the other aim was to make it possible for the banks to inflate the money supply in unison without having to fear bank runs, as they could henceforth be bailed out by a 'lender of last resort'. Vast distortions of the economic system have since then become the rule, while the purchasing power of the Fed-issued scrip has utterly collapsed over the past century.
For more on purchasing power, see this site. Essentially a decline means that more units of currency are required to purchase the same amount of goods, which is OK for those with first access to money, hence the current asset bubbles which benefit the "1%". Mish excerpts the slides (PDF) linked to in the Acting Man post. See the graph under Where Did The Money Go?