Tuesday, 8 October 2013

dowager or could you borrow me a dime?

Fiat currency, money, is in essence debt—that is why it bears the instructions “legal tender for all debts public and private,” and the capacity for governments to print, conjure more money is a function of their ability to incur more debt.

Financial houses, with the blessings of their host-governments, create investment instruments that telescope That relationship, in turn, is one based solely on trust, lest one begs usurious interest rates or hyper-inflation over confidence and reputation lost. Not only do opportunists stand to realise losses over this dicey negotiation, forced to demand ever higher collateral and receding promissory-notes and not knowing if they'll ever see these loans liquidated (through it's sufficient just in the off-putting in general) but also those pensioners and small-holders who contributed without stint to a nest-egg deferred. Risk-takers, naturally, assume a fair return on their investments, as in any scenario where an institution is exposed, perhaps overly so, to a board. One can only hope that if there is any license for dictates and demands, they are considered from all stake-holders, regardless of size and heft.