A hundred years ago, what I'm writing now was self-evident.
What is the essence of a good person? Someone who produces more than he consumes. Why? Because that is the only way someone can give away anything: By making more than he consumes himself.
With honest money, savers get rewarded. They achieve individual Liberty and prosperity for all, as the savings will be invested to improve the lives of everyone.
When money becomes dishonest, when it becomes inherently worthless, it destroys the savers. It instead rewards those who live beyond their means. For the longest time, we (me included) believed that we could outfox inflation by buying assets on credit and come out ahead. Many who followed this belief have now been bankrupted by the collapsed real estate bubble.
Instead of encouraging savings, fake money has rewarded consumption. Real wealth has disappeared. For a while, it appeared, on paper, that we were getting richer: In reality, wealth and incomes declined.
Instead of reversing course and learning from our mistakes, those in power are determined to accelerate in the same direction. The predictable outcome? Our money will truly be worthless: Savers and retirees will be destitute, unemployment will rise, and the only people to make money will be those who are connected to the government.
We have seen this scenario play out too many times in the 20th century: Destitute people will call for a "strongman", a dictator, to set everything right again.
Can we avert the precedence set by Germany in the 30s, South America in the 80s, Yugoslavia, Russia, Zimbabwe ?
At this moment, we are still enjoying a most incredible lunacy: Record low interest rates as inflation has already taken off. The German government sold 6 month paper at a negative yield last week.
This, in my view, represents the mother of all bubbles.
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