Friday, November 03, 2006

A random economic thought

A random economic thought

Not mine of course - it's Friday and my brain is innocent of thought as I gaze at TV through the vee of my feet.

The US Treasury combined with the US military and three hundred plus years of American social capital formation mean that our seignorage services are second to none. The three institutions work together to take tree pulp, put green ink on it, back it with a few hundred thousand boots on the ground, and convert it into a store of value that’s as good as gold, and much more portable.

Every US dollar is, in a sense, a small contract - a bit of intangible property.

Proposed: we’re not buying tungsten and oil and DVD players and containers full of manga…we’re trading for them - their consumer goods versus our micro-contracts.

Of course, the value of the trillions of micro-contracts we’ve already sold (and all the ones we hope to sell in the future) could be decimated by inflation, military cowardice, and/or excessive multilateralism that amounts to kowtowing.

Makes sense to me.

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