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June 26, 2017 | Money Symbols ($$$) Decoupling from Wealth Creation!

Donald B. Swenson: Born January 24, 1943, Roseau, Minnesota. Graduated H.S. 1961, Moorhead High, Minnesota. Graduated College 1968, Moorhead State University, Minnesota. Designated member of Appraisal Institute (MAI), 1974. Employed with Western Life Insurance Company, 1968 – 71; Iowa Securities Company, 1971 – 73; American Appraisal Company, 1974 – 81. Part-time teacher/valuation consultant/bartender, 1979 – 2008 (taught workshops at Waukesha County Technical Institute, Wi. and Madison Area Technical College, Wi.). Retired 2008 (part time teacher/blogger), AZ. Self educated economist/philosopher/theologian:

Image result for dow jones industrial average

The current value of this money symbol indicator ($$$) is 21,409…nearly 27% increase in one year. Central banks have kept this index from correcting and from measuring our real wealth! Is this sound economics. Can this continue indefinitely?

Markets continue upward (now 98 months) for the DOW index with no major correction. The DOW index has increased over 26% these past 12 months. The NASDAQ index has had 158 consecutive days with not even a 5% correction (according to today’s WSJ). This index has increased 33% in the past 12 months. Why this increase in our electronic markets (money wealth) while real wealth creation (goods) is from 1% to 3% over these past 12 months? Isn’t an increase in overall money wealth supposed to transfer into production increases (real wealth)?

What I have witnessed is that there is a ‘decoupling’ taking place in our global markets now that our money units are ‘virtual’ (imaginary). Money wealth (our virtual symbols) can continue to go Up and Up while our real goods wealth is mostly stagnant. The best example of this situation is over in Venezuela. The Caracas General stock index has increased some 750% in the past 12 months (300% since April) while the production of steel and crude oil has declined to record lows. This reveals that there is a sharp ‘decoupling’ taking place between money wealth (now mere virtual symbols) and real goods wealth (that which comes from nature).

The rich are getting much richer while the workers and producers are getting continually poorer. Those with money wealth (virtual symbols) can buy more stuff while the country as a whole often gets poorer and poorer in the production of real goods wealth. Is this sound economics going forward? I don’t think so! What I witness today is a corrupt and manipulated money system which is not transferring to general prosperity for the masses of consumers. The situation in Venezuela is a stark example of what has occurred these past few years.

Virtual money symbols ($$$$$) do not necessarily increase general prosperity for our various economies. The USA is not a good example as our virtual $ is the reserve currency of the world and this allows Americans to purchase unlimited goods with virtual $$$$$ created out of nothing. Most countries do not have this advantage and this means that their currencies will not buy more if their general goods economy is collapsing (as in Venezuela). This ‘decoupling’ will continue as a money symbol ($) has no ‘tie’ to real goods production today. Our $ is now virtual/inner/imaginary and our goods (real wealth) are material items from nature.

At some point down the road our markets will get much more distorted and decoupled. Prices will not reflect the realities of supply and demand. The rich (who have money symbol wealth) will benefit at the expense of the producers. All this is corrupt economics which at some point leads to collapse and a serious correction. To date, our Central Bank computers have been able to pump up our index markets indefinitely. But this artificial process must at some point come to an END. Prepare now for this END as it is likely to happen within months (not years). Virtual money wealth is really imaginary! That is my perception! I am:

Real wealth (goods):

Image result for goods, economics

Image result for goods, economics

Image result for goods, economics

Today, our money wealth (in virtual symbols, $$$$$) increases exponentially as our goods wealth grows arithmetically (slowly)! Why? My sense is that their has been a ‘decoupling’ of money symbol wealth from the underlying production of goods. This reveals that our money symbols ($$$$$) have no ‘tie’ to material reality. Under the gold standard, money symbols had this psychological ‘tie’ which is crucial for long-term price stability and real growth in our prosperity! The ‘tie’ was revealed in the definition $1.00 = 371.25 grains of silver (the original tie to material nature) in the Coinage Act of 1792! Today, we trade with mere imaginary ‘symbols’ ($$$$$). 

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June 26th, 2017

Posted In: Kingdom Economics

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