Towards A Nationalist Economic Policy

Suggesting that managed inflation and currency devaluation are pathways to greater national prosperity is bound to invite howls of derision. But critics may be ignoring factors, which, if acknowledged, might point towards consensus. At the least, it might provoke a more useful discussion.

With that in mind, here are four economic realities in America today:

1 – Despite that the word “fiat” is often used as a term of derision, all currencies are fiat unless backed by redeemable commodities. China is stockpiling gold amidst rumors they may try to tie the Renminbi to gold. Good luck with that.

2 – Throughout history, nations with the ability to sustain capital formation through financial innovation are the ones that succeeded. Prudently managed fractional reserve lending, a financial innovation, enables far more liquidity in the economy.

3 – The biggest engine of liquidity is not printing currency – there’s only about five trillion in actual printed US dollars extant in the world – it is debt formation, backed by collateral, that finances massive projects and asset acquisitions.

4 – American has been on a borrowing binge since the 1980s and total market debt – consumer, commercial and government – now stands at nearly 3.5 times GDP. This level of debt is unsustainable.

On this final axiom there should be agreement. As for the others, concerned observers might agree to disagree. Suffice to say that the economic disruption, and unintended consequences, that would accompany transition to a commodity backed currency […] Read More