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Let’s see. Say I have an income of $20,000 this year but I spend $35,000 and go $15,000 in debt to lenders who are not necessarily friendly to me. I also plan to do this every year for the foreseeable future. I already owe $130,000 in debt to those lenders on which I must pay interest on each year. The rate of that interest is currently very low but is subject to constant change. In addition to this, I have contractual obligations to pay out over a million dollars in the future and I have no money set aside to honor those obligations.

I have only a limited ability to increase my actual income but I am allowed to print money. Unfortunately the total value of all my money is tied to my real net value so, while I can pay my creditors and meet my contractual obligations with the additional money I print, the actual value of that money is reduced. To make matters worse, as my creditors and the contract holders discover what I’ve done they will lose faith in me and my money driving the actual value down even further. If I respond to this by simply printing even more money my creditors and contract holders will simply write me off as a deadbeat, refuse to accept my money at all, and demand real assets in payment for any goods or services they provide.

For real world examples see Weimar Republic or Zimbabwe. By the way, the first paragraph is an approximation of the current financial situation of the US government. Is it any wonder people are looking for ways to not have their futures tied to the value of that money?




Contra todo mal, mezcal; contra todo bien, también