Pieces of eight

Hi All,

Not I haven't become a parrot! 

But what's interesting is that the pieces of eight was a coin - the Spanish dollar- a one ounce silver coin that served as global silver currency for as long as the Spanish Empire existed. 

Today there's no currency that is directly transferable into specie at a price set by the government ,i.e. precious metals such as platinum, silver and gold. I collect bullion coins ago about 1 ounce and fine purity, which are issued by various mints around the world. Platinum and gold coins are quite expensive, but silver, while it is  a precious metal , is relatively cheap in relation to the other two. 

I buy  these  coins ,  as well as  keeping some  physical cash and diamonds because as my grandmother taught me they are good things to have if you need to escape a country quickly and also because it is a hedge against inflation. 

Don't forget it is highly likely that Corbev could come to power in a few years or well before that there could be another economic crash in which the government has to bail out financial institutions. In both cases it's highly likely that the government will be forced to increase the  e-printing of the pound sterling , to pay for either or both.  

The printing of money (supply) without demand is inflationary. More accurately inflation is a subtle regressive tax which hurts people on lower incomes ,  which is why conservatives , who govern in the interests of all classess of society and believe in the welfare of the poor  , aim to keep the rate of inflation low and the currency stable .

 While the UK has been printing money for a decade it has been giving this money to a handful of banks, rather than the general population. These banks are only interested in making more money, thus the cash has gone into stocks, and  to a lesser extent loans. Thus house prices and the stock market have been inflated , rather than inflation on the goods and services "normal"  people use.  

With Corbev the Labour party intent to spend in the real economy , doubtless with massive public sector pay increases.  It is not that the increase in spending creates inflation , if it is matched by tax increases or borrowing at market rates  . But eventually the government will find that it's borrowing is maxed out and taxes have hit a plateau. It is then that the government  would force the central bank to create money out of thin air and this does create inflation. It is the psychology of people which creates what my sister calls the speeding up of the "velocity of money"  around the system .

 So my sister  explains that if there's big public sector pay increases, there's enough aggregation of people for them to start spending in the economy. Unfortunately the economy can only produce so much in a particular time frame , thus eventually more money is trying to buy the same amount of goods, these goods in effect became rationed , via price increases . As the costs of goods and services increase this causes the velocity of money to increase around the economy as people psychologically begin to think that prices are going up and will go up , therefore they'd better spend money before they can't afford x, y, z. 

That creates a feed back mechanism by which prices are forced up faster than they ordinary would and greater than the initial pay increases.  The typical response of a socialism government to this is not to decrease or control the supply and speed of money, but to create more money for the public sector wages to match the inflation increases. This exacerbates the situation, with ever increasing inflation than can lead to hyper inflation (Weimar Germany, Hungary, Zimbabwe, Venezuela) if left unchecked. 

Therefore as a hedge against this scenario , I coin collect.

Pieces of eight!!!!