Venezuelan Toddler Climbs a Mountain of Money, Handbags Made Out of Worthless Paper

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This is thus how fiat ends. The madness of the maestro, at first slowly and unnoticeably, then very suddenly, so turning the people’s trust into a pile of garbage.

The Venezuelan money printers must have been working at full capacity for now months. Deceiving their population into believing 1 Bolivar = 1 Bolivar. They all now know it doesn’t.

The tragedies too many, the stories too horrible, yet the repeat of it far too common. It is as if the command economy of fiat money doesn’t work.

Nor are the maestros only from developing countries. Fed raised interest rates for the 17th straight time in two years just before all went under with banks starting to collapse in 2007 followed by a full blown crisis in 2008.

“Government has failed, must fail, and will continue to fail to supply good money.” So can be summarized Friedrich Hayek’s Denationalization of Money where he says:

“Even if we assumed that government could know what should be done about the supply of money in the general interest, it is highly unlikely that it would be able to act in that manner…

Once governments are given the power to benefit particular groups or sections of the population, the mechanism of majority government forces them to use it to gain the support of a sufficient number of them to command a majority.

The constant temptation to meet local or sectional dissatisfaction by manipulating the quantity of money so that more can be spent on services for those clamouring for assistance will often be irresistible.”

After years of money printing by the Fed, ECB and the Bank of England to encourage borrowing and debt fueled economic growth, they’re now back to raising interest rates with some speed, so increasing the burden to the point of unbearable, with the cycle then potentially repeating.

There may be other causes too, but it seems self evident that bureaucrats can’t possibly know the appropriate price or supply of money anymore than bureaucrats in the then communist Russia knew the price of bread.

Thus they print too much, or they print too little, with it now and then becoming visible to all as worthless fiat paper is turned into handbags and wallets.

You can now buy a pretty nice looking bag or wallet made of worthless fiat for just £35. So much of it has been printed that money itself has become the product in Venezuela, rather than it being a means of exchange.

Many may point to plenty of reasons why this situation has developed in Venezuela, but where money itself is concerned the only reason is clearly because far too much was printed to the point it now fills streets.

That such power exists in central banks, which have no political accountability, is a cause of worry because it can happen anywhere. Hence why Hayek thinks such power to create money should be available to all so that they can freely compete in a free market, thus limiting abuse. With Hayek so concluding:

“The past instability of the market economy is the consequence of the exclusion of the most important regulator of the market mechanism, money, from itself being regulated by the market process… only competition in a free market can take account of all the circumstances which ought to be taken account of.”

Copyrights Trustnodes.com

 

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