Friday, October 28, 2011

Money is only paper, nickels and dimes

We know (or have been told) that America is in the Red and China is in the Green; financially speaking of course. Same goes for the countries in the Euro zone: some are in the green, others in the red. In other words, some have true money while others only have printed money.

Not being a financial person I am fascinated by the machinations of the money energy!?

Take the following speculation: A country has a huge deficit base. To overcome its repayment responsibility, it raises its deficit base so as to allow for the printing of more money which also allows for the borrowing of more money.

The monies of a country is regulated and issued by its Reserve Bank.

The company that I work for gets its operating money from a Commercial Bank who in turn is supplied by the Reserve Bank.

Does this not imply that, because of the high deficit base of the country, the printed money I receive as a salary is not worth much if at all (here I am not referring to the inflation factor)?

How does negative money turn into a positive entity just because it exchanged hands?
If America’s negative money is of a larger proportion than that of China’s positive money, does that not mean that the negative difference turns China’s real money into baseless paper money?

Similarly, I understand that SA has positive reserves that can be used to offset its national deficit base. Money that can be used to bail out the economy should the negative offshore effects of all the negative ‘developed’ economies reach our shores. This is good news, yes?

But does not the same mathematical principle apply: if a negative is higher than the positive, the difference is still negative? Thus, are we not fooling ourselves into believing that all is Ok in the land of finances?

What intrigues me further is the fact that when Uganda’s Idi Amin tried the same stunt i.e. he wanted to print more money, he was shot down by the developed world!?

But I must be missing something for investors (people of whom I presume know what they are doing) are still throwing their money around...and getting richer by the day (an interesting aphorism seeing that it is mostly negative paper money that they are playing with.)

Labels: , , , , , , ,

Thursday, October 20, 2011

Life should be Just and Fair!

It is said that the ideal behind civilisation is for humanity to continually grow and evolve by making life that little bit more just and fair with each passing generation.

How can that ideal be achieved when most of the information floating around is biased one way or the other?

If life is to be made that little bit more just and fairy with each passing generation, change is required, for that is what human progress is all about. History attests to that.

It is all very well and noble but the reality is not that simple.

Change to capitalism will mean that most will have to forego some of their material gains which mean that the governmental types will not get their due recompense through taxes and other clever manipulations of the fiscal system.

Change to Democracy also carries with it much risk. Loss of voter control being one of the major concerns. Control of the masses is paramount to enabling cash flow and continued existence and survival.

Both change scenarios form the vicious circle of everyday existence that prevents any virtuous progress from taking place.

It is for this reason that Governments spend millions in advertising initiatives trying to convince the populace that a certain way of action or thought is the best way forward. It is for this same reason that media moguls spend time and thought into shaping public onion. The same goes for the feel-good lobbyists who throw money at telling all and sundry that life will be ok if one just keeps a positive outlook on things.

Jean-Jacques Rousseau, a French political philosopher, once stated that “Man is born free, and everywhere he is in chains.”

The will to affect change, whether political, personal or financially, is paramount to our continued development and human progression.

Labels: , , , , , , , ,