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Cathartic monetary disorder, part I

Nobody knows what will happen. The discrepancies of economic predictions are at a record high. From deflation to hyperinflation, from the Euro getting destroyed to the dollar death cross, from idiotic “new normal” to idiotic Ken Fisher. But please note that while concrete economic criteria like unemployment, the inventory cycle, budget deficit, and GDP growth are more or less certain, at least for a few quarters, everything related to money seems totally unclear. There is something about money. In the distant past, when they used precious metals as the media of exchange, there was no credit-based money and while they had not much growth and technical progress, all was clear. When they invented money in modern form as a claim against bank assets, the most abstract economic substance, all became very much complicated. Money was introduced in Europe by Templar Knights and was abandoned when de Molay was burned. Slowly introduced again just a few centuries ago, debt-based money triggered capitalist expansion. The reason is simple- fiat money creates artificial demand for debt and allows much better price stability because the amount of money automatically expands and contracts in line with economic growth. The trouble started for debt-based money just when […]

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