The Long and Sordid History of Currency Debasement
Indeed, the French may lay twenty French crowns to one
they will beat us, for they bear them on their shoulders; but it
is no English treason to cut French crowns, and to-morrow the
King himself will be a clipper.
— Shakespeare’s Henry V (Act 4, Scene 1)
Every day reveals to us the world anew, Fellow Reckoner. It is the same old molten orb, of course, but we experience it differently with each passing moment in time.
Old fools fall for the same old tricks…and new fools rise to take their place. Hucksters of yore thud into shallow graves…replacement politicians’ footprints squarely on their backs. And doe-eyed voters march to the ballot box…eager to express their desire for change by electing the same old kleptos, larcenists and porch climbers as before.
Not that this process is anything new. Take currency debasement, for example, one of the favored and recurrent tricks of the looter class. Bereft of the modern printing press, the Romans resorted to clipping their metal coins, a practice most prevalent during the reign of their infamously pyromaniacal emperor, Nero. The idea was simple enough: Boss Man calls in ten coins…then reissues eleven, fashioned out of the same amount of metal. And, voilà! Wealth has increased by 10%!
The scam here is obvious…except to the credulous acolytes of modern finance.
The present spin on this same old debasement jig, lately updated and turbocharged via use of Bernanke & Co.’s “magical” printing press, goes by various tweed coat monikers, “Quantitative Easing” and “Operation Twist” among them. None of this matters one jot, of course; inflation is inflation is inflation. To paraphrase the poet above, What’s in a name? That which we call theft by any other name would smell as rank.
And yet, the Feds even have an inflation (theft) target rate: somewhere between 2-3%, depending on what nation state is issuing the doctrine. That rate, they contend, is the sweet spot…precisely what the economy needs to run nice and smoothly. Mr. Bernanke even promised to drop freshly inked bills from helicopters to achieve this goal, should he feel the need arise.
Why do good folk go along with this scam, Fellow Reckoner? Is it simply that they don’t know any better? Maybe they just don’t have time to revolt? Most people are too busy cutting hair and mowing lawns to pay attention to what their elected officials are up to. They’re trying to make ends meet…trying to outrun the Feds’ (increasingly successful) attempts to send them to the poorhouse. Still, it doesn’t take a genius to see that things are getting worse, not better.
Here in Europe, where the so-called PIIGS crisis has been dragging on like a World Cup penalty shootout, it’s business as usual on the streets. The Germans produce. The Spaniards lounge. The Greeks protest. And the French shrug, take a long drag on their Gauloises cigarettes and order another café au lait. And up and down the continent, politicians put on a show for their voters, vowing to “do something” about the mess they themselves caused. AFP had the story in this morning’s papers:
Hollande, Monti agree ‘not enough progress’ on economic crisis
French President François Hollande met with his Italian counterpart Mario Monti in Rome Thursday to discuss finances amidst eurozone pressure to reign in debt. Monti told the press he and Hollande agreed Greece should stay in the eurozone.
AFP — Italy and France said there was “not enough progress” on the eurozone debt crisis on Thursday, as fresh market tensions increased pressure on EU leaders to find a way to end the two-year crisis.
“The progress made, including in the governance of the eurozone, is not sufficient and we need to strengthen the weak parts of the system,” Mario Monti said during a visit by French President Francois Hollande to Rome…
…The talks came a week before a key four-way summit at the end of June.
Yes, Fellow Reckoner, it’s more intervention…more do-gooding…more meddling and market distorting. And so it is, around and around we go…always something new, just like the time before.