Friday, January 16, 2015

Currency

Recently Switzerland bankers, decided to stop supporting the Franc against the Euro. Money managers, and speculators did not expect the move. I posted Nobel prize winner Paul Krugman's take on that move. I'm a theoretical physicist, not an economist, but here are my views.

Money is a symbol for economic activity. Gold, is not materially that different from a bank note, or a charge in a circuit kept in a bank. All these different states of objects, are not that much different from the ancestral pile of stones to count sheep. 

The sheep are important, not the stones. 

Thomas Piketty has shown, how some of us have a tendency to accumulate an inordinate amount of stones, thus risking the whole economic game. When I need stones to develop my business, and I cannot get them, my business stalls. I used to think that the whole game was rational, but recent environmental events, and currency crashes, lead me to rethink.

Many money speculators, like Soros, have a theory of mind. They understand how others think, and get handsomely compensated, but what I want to address here is a more serious issue. 

Professor Krugman has been pointing out for some years now, that we are entering a global deflation. Japan was act one. A highly monopolistic society lost its agility. Less money circulating, less demand, and less money circulating. Abenomics is addressing the problem. Fortunately Shinzō Abe was reelected, and there is a chance of seeing his policies working. Nevertheless Krugman warns us about important men who want austerity, austeritarians he calls them. As far as I have understood his argument, they are the ones holding the stones, and do not want to give them back.

In this simplistic view, the solution to the problem which appeared this week, is to give the stones to the rest of us.

Austeritarians be damned. 









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