Are there people who think money grows on trees? Yes, Virginia there are. Sometimes you just have to shake your head in wonder.
What Norman does not seem to understand is that increasing the money supply cannot create wealth. There is no perpetual motion machine. You can get "Money for nothin' and your chicks for free," according to the Dire Straits song. But looking at washed-up rock stars, we can easily see the end of that path.
If you print money, you change nothing. The same real estate existed as before; the same factories exist; no new assets suddenly appear. If the amount of money increases as in the hypothetical money volcano cartoon on the right, everything costs more. But the people in the cartoon have been lucky, they got there first so they get the advantage of using the debased money first.
Why is there no inflation? It is simple: the money is mostly sitting on the sidelines waiting for better days—two trillion worth. The speed at which money circulates has been declining as well. This cannot last forever. But it can last a good long time. Use that time wisely.
Here is Peter Schiff's view of Mike Norman. It includes a debate between them in 2006, right before real estate crashed.
Hearing my daughter play the theme from Gilligan's Island over and over again as she practices piano has led me to consider the hapless castaways. They seem to be a metaphor for the mess we are in. As you can see, others have had this thought too. I even saw an author interviewed on his book on the subject. But I doubt that each islander represents one of the seven deadly sins. Maybe the castaways were actually dead and in hell. No, No, that can't be right, no TV show would do that! Nor do I think Sherwood Schwartz's explanation that the show is a metaphor for international relations is valid, if he really said this. (It is dumb enough to be true.)
But the analogies are so obvious they could not have been intended.
First there is the millionaire, and his wife. They never actually seem to do anything, and he seems to always have an alcoholic drink with a straw. Everyone seems to have brought along a lot of possessions for a three hour tour—the Howes especially. The wealthy actually do a lot more than is realized, but often stereotypes have some basis in reality. The Howes are always ready to provide advice as long as no work is involved. What is weird is that every other castaway gives then deference even though on the island there is no reason for it.
The professor represents old-fashioned American ingenuity. He will get them off the island! But the Skipper and Gilligan seem to always mess everything up.
This is natural as the Skipper and Gilligan are the authority figures, the government, on the island. The government always messes everything up.
My blogging predecessor suggested that Ginger represents the propaganda machine. Maybe. In any event I always picture her meeting up in the jungle with the professor.
This leaves the unfortunate Mary Ann. Neither she nor the professor were important enough to be mentioned in the first season's theme song. She represents the common person who does all the work. While it seemed that Ginger helped, Mary Ann seemed to do most of the cooking.
Romantically Mary Ann's choices were limited—the Skipper or Gilligan. Not the best of choices. That's right, Mary Ann's only options, just like the common man she represents, was to be screwed by the government.
As for our heroes in real life, they got no residuals for their work. In real life they got screwed too.
This documentary is from the 70's and it shows; but that is part of its charm. The early Libertarian movement has not had much success even as it became stronger and stronger. Things are less free now than the mid-seventies. So while the documentary makes some great points in a funny way, it also at the same time gives me a glance into my own past-when everyone was a hipster.
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
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.