How can a piece of paper make society richer?

We think it’s good to go back to the basics from time to time. The world of finance and financial analysis can easily become over-complicated… often too technical for no good reason. We regularly find the financial analyst or TV commentator creates complexity just so that we need him to explain it to all of us – it’s plain and simple job security.  As long as you (the reader/viewer) feel slightly confused then you will always need “an expert” analyst or commentator to explain it to you.

We don’t think it needs to be that way.

The current narrative in the United States (and most of the developed countries of the world) is that the monetary stimulus (money printing) programs that have been in effect since 2008 have “solved” the major problems that spun out of control in 2007. This same narrative would lead most people to believe that the US is on the road to sustainable long term growth and a healthy financial future.

That just isn’t true, so let’s keep it simple and focus on the facts.

Economist Hans Hermann-Hoppe does a great job of keeping it simple. Consider his approach: “It is very important that we don’t get involved in technical details, but ask some questions almost like a child.”

In that spirit, let’s evaluate QE by asking a few simple questions:

• How an increase in paper pieces possibly make a society richer?
• If that were the case, explain to me why there is still poverty in the world…
• Isn’t every central bank in the world capable of printing as much paper as they want?
• And if they did, would society as a whole and the whole world be richer?

We could keep going, but you get the point. Anyone who choses to avoid the noise of rhetoric and tries to keep it simple can easily see that these “strategies” only lead us further down the road to problems – not away from them.

If you’d like to discuss these questions, don’t hesitate to call, comment, or email us… we’d love to help you create an alternative investment vision.

Categorized in: Blog

This post was written by Conscient Capital