Black Swan Capital’s Currency Currents
is strictly an informational publication and does not provide personalized or individualizedinvestment or trading advice. Commodity futures and forex trading involves substantial risk of loss and may not be suitable for you.The money you allocate to futures or forex trading should be money that you can afford to lose.
Please carefully read Black Swan’s full
disclaimer, which is available at http://www.blackswantrading.com/disclaimer
consumption as the virtue of an economy at the expense of savings, production ANDwealth creation.I mean, let
’s pretend Frederic Bastiat and the broken window fallacy never existed, right?
Bastiat put forth the idea that money spent on fixing a broken window could now
bespent by that
person elsewhere. Additionally, Bastiat emphasized the unintendedconsequences of such a destructive event, namely the assumption that the worker who ishired to fix the window actually benefits. And even if he does benefit, does society benefitto an extent at least equal to the value of the broken window?In other words, destruction for the sake of generating activity does not balance.If it did, why not hire men to destroy our roads so we can hire crews to repair them? Atsome point, it begins to amount to stealing value for the sake of generating spending andlabor. I
’m not sure about you, but
I think that
’s one of several
appropriate descriptions of acentral government.A big feature of Bastiat
’s analysis is the concept of finite resources. Critics of Bastiat point
to times when there is a slack in resources to justify employing destructive practices inorder to generate activity. Let
s call it
forcing a good investment.
In fact, there is slack in a key resource
money. With that in mind, this Sandy may just bewhat the Feds ordered.The expectations of the multiplier advocates are that this need to rebuild will beget andincrease in the velocity of money. After all, a key feature of the on-again off-againeconomic recovery since the financial crisis has been a plunge in the velocity of money.(Perhaps that
s good, since it
’s kept some of the “
inflation plot underwraps!)