Monday, January 2, 2012

Debasing a currency - is it really going to be different this time? Europe's Leaders May Need History Lesson - WSJ.com

Europe's Leaders May Need History Lesson - WSJ.com

In some ways, are not economies perhaps like giant old battleships - i.e. it takes them 20 miles of ocean to make a turn.

So perhaps it is with all this printing of money.

It may seem to not have any grossly deleterious (read: inflationary) consequences. Yet, there was someone on Bloomberg toward the end of the year who strongly stated that the US is significantly 'understating' the current inflation. He talked of 8% or so last year - backing it up with the increases in a number of goods and services (such as educational tuition and healthcare).

In Roman times currencies got debased by shrinking the size or precious metal content of coins. Today, we just make more paper (or, in fact, electronic) coinage.

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