No. of Recommendations: 22
Recently (and despite no one asking) I opined on Shred'm about fiat currencies, particularly the USD: The short version: a stable fiat currency is utterly necessary for the world we live in. The US dollar has been the default (reserve) currency for the lifetime of virtually everyone living today, so it – like the ecosphere – are taken for granted...Historically, a given fiat currently is stable until it’s not – that moment being when it loses trust as a permanent store of value. Exactly when that shift happens is, I think, most akin to Hemingway’s description of going bankrupt: gradually, then suddenly.
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This morning, I open up the annual Chairman's Letter and read:
"Paper money can see its value evaporate if fiscal folly prevails. In some countries, this reckless practice has become habitual, and, in our country’s short history, the U.S. has come close to the edge. Fixed-coupon bonds provide no protection against runaway currency."
and
"never forget that we need you to maintain a stable currency and that result requires both wisdom and vigilance on your part."
(bolding mine)
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I'm a scientist, and a businessman in a very modest way, but by no means an economist. But -- Dunning-Kruger be damned -- I stand by a set of conclusions I reached twenty years or so ago:
- stable fiat currencies are utterly necessary for the world we live in
- they work well only as long as responsible, mature adults are in charge of the currency printing presses
- and since that will not happen uninterruptedly forever, all fiat currencies will eventually go to zero
-- sutton
awfully glad our Chairman is staying, for now, in Treasuries
