A Rising Tide?

The cliché is that a rising tide lifts all boats.  This is one of the rationales of the huge monetary easing that much of the world is experimenting with. Increasing the sea of money will cause the amount of money to increase. This is a tautology. But if you or I are sitting on the beach, and the wave comes, we might drown.  The ones with the yachts (hell, I would personally settle for a dinghy) will benefit without the risk of drowning. Yes, it will eventually "trickle down." I suppose. Maybe. But I have this picture in my head. I picture a banker on his yacht having too much champagne and complaining that the bathroom is too far away. He relieves himself over the side—into my dinghy. I suppose I need the liquid refreshment. A former Prime Minister of India would drink urine. He said you got used to it. I suppose we can get used to anything. I suppose

How does this work in the real world?

The Central bank buys assets with money they have printed. Actually it is more sophisticated than that—they push a button on a computer keyboard. It reminds me of a perverse parody of a child's taunt.

The Fed does not give money to you or me
The Fed meets that Banker behind the tree
K-I-S-S-I-N-G

The rich, well-connected, and powerful get the money first and receive the most benefit from it. I suppose it benefits Lamborghini salesmen and dealerships. I suppose it benefits Wolfgang Puck's new restaurant I saw in Palm Desert. I think I would make a great Major Domo, but where do I send my employment application?

In fact the wealthy are not doing their "part." I read where there is two trillion dollars just sitting in banks receiving less interest than the inflation rate. Not that I blame them! There is very little to invest in. In some ways we should be grateful that the rich and famous are not investing like they normally would. Can we imagine what the inflation rate would be like if this money sitting on the sidelines was actually in circulation and being used?

Make the least bad choices from what is available to you. Meditate on the words of John Wesley. Earn all you can. Save all you can. Give all you can.