Monday, August 6, 2012

The Pig in the Python Effect?

This weekend, a well respected financial journalist carried on his tirades against baby boomers here in New Zealand.

I got mad enough to write a brief comment on the article.

The gist of his latest piece appears to accuse baby-boomers of causing a blockage in investment. This because they are holding onto their savings and not releasing them into the economy to provide capital for much needed investment. That they are being too conservative at a time like this is causing a 'pig in the python' problem.

Here's my response:

Sir, either you enjoy blaming older savers for all our problems or you have hit on a formula to make your articles more popular. I hope it is neither.

Anyway, you are again using incorrect logic and knowledge of the financial system.

Here's why. The financial system is not working properly because there is too much debt. Pure and simple. Since 1971, debt has accummulated in the system to where we arrived at breaking point in 2008. You well know that banks freely created buckets of new money (debt) in sectors that allowed them to make huge profits. For example the housing sector.

Not only did they create new money but they leveraged this with new financial instruments that nearly took the system down, and maybe still will. These banks are the pigs, not the older generation.

In fact, savings are being decimated by high inflation and low interest rates in order for governments and banks to survive the debt bubbles they built. This is called stealing from savers. Do you hear older savers complaining? No, because they probably don't understand what is happening. How about calling for justice for older people rather than sticking it to them once again.

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Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $33.96 per oz
Previous all-time high: $59.19 per oz (30 Apr, 2011)
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