Well actually, yes. For those willing to pay a little attention and try not to get frightened by all those pesky zero’s, Billions, Trillions and ones it’s quite interesting. I used to tune out of discussions about finance, until that is, I learned about international currency transfers. Now to illustrate my points I’m going to add a little bit of code to my sidebar over the next day or so, linking to Xe.com or CurrenciesDirect.com, who are two of the services I use when moving money around the world. Just so those interested can get more source information without having to navigate the factoids twisted by someone with an agenda, be they politician, speculator or ‘journalist’. Why? Because, unlike people, numbers don’t lie. Both web sites are having difficulties at the time of writing, and I know all the brokers (Cheers, guys) are working double shifts.
Here’s an interesting question (And I wish my younger self had understood this better).
Q: What is money?
A: The means of exchange, also a process.
Er.. WTF Bill? That’s bollocks. Money is a thing that you possess, what rich gits have and no one else does, surely?
Not so, and don’t call me Shirley. Money evolved from Barter as a representation for a sack of foodstuff as people began to notice it was a whole lot easier to carry round small pieces of rock, metal tokens or specially marked paper rather than have a chicken hanging off your belt in order to pay this weeks tithe. Money does not cluck, for one thing (Although in the right circumstances it can be made to sing), and can be recirculated so that the token can come to represent anything. The token or paper has no real intrinsic value of it’s own, but the token becomes the amount it represents. Also, the cost of producing the token has no bearing on the value of the token itself. Got that? A gold coin, for example, has the value that everyone agrees it is worth. No more, no less. A paper or plastic bank note likewise, is only ‘worth’ what everyone agrees is its value. Neither the coin, regardless of metallic composition, nor the note have any real value. A simple proof of this concept is to offer a gold coin to someone for a sack of spuds whilst there’s a shortage of spuds and a glut of gold coins from people desperate to be fed and breathing at the end of next week. Gold may be US$1270 or thereabouts an ounce today, but what was it six months ago, or last year, or forty years ago? Ampex Chart here.
In short, all value is relative. Stock prices and bond prices are what they are because all the traders agree this is their value. It’s a concept so elegantly simple that even I can understand it.
Well that’s all very well Bill you old smartarse, but what about wealth redistribution, or guaranteed base income? What about ‘fairness’?
I’ll come to that later you cheeky little scrote. Show a bit more respect or I’ll set the Igors on you. Did you get the bit about “All value is relative”? Remember it, it’s very important. Like at the moment with the uncertainty over Brexit, the pound is plunging on the markets. I know this because I am a fully paid up international capitalist, albeit in a small way, and make it my business to watch these things as they happen. I probably ‘made’ CAD$500 last night by timing a small international money transfer correctly. Although if the pound rebounds in the next few days or the fop does something economically irresponsible to make CAD sink through the floorboards, I’ll have ‘lost’ it again. It’s not Dragon Magic. In the meantime I’m quids in.
Right; ‘Fairness’, ‘redistribution of wealth’ et cetera are empty buzzwords which keep on getting bandied about by those without an understanding of simple economics. They’re empty political soundbites which really mean; “We’re going to take money off you and give it to our friends who vote for us to stay in our cushy non-jobs.” Which isn’t actually generating anything, in fact it’s a classic method of how to shrink an economy. As for ‘guaranteed base income’; that’s a thousand truck highway pileup just waiting to happen. It’s an economic train derailment of an idea. If it’s brought in over here I’m going into the alcohol and marijuana distribution business, because that’s exactly where the money will go. Not rent payments. Not on a better diet. Not paying increased Hydro (Electricity) bills because much of that ‘redistributed’ cash will go in politicians boondoggles and subsidies. Because the remainder will go straight into the dispensaries, liquor stores and bars. Hey, I’ve seen too much of human nature close up and personal not to be cynical.
Anyway, that’s besides the point. All value being relative. Which is the only absolute in terms of money. Trade is trade, and the big secret of trading is what? Come on. I’m waiting. That person at the back whining that it’s cheating and everyone would be better off under socialism, WRONG! (Venezuela, Cough, cough, isn’t that yet another failing socialist regime? Like all the others?)
The answer is timing. Like space is relative to time, like surfing is to waves, comedy or music, so is money to trade. Which is why I ‘made’ five hundred bucks in two hours last night. My small amount of money is now worth that much more because the markets got talked into a panic. That much on a basic 5K transfer.
All this came about because the pound ‘plunged’ in the wake of the UK referendum vote (Two weeks ago it was 1.78 CAD per GBP. Last night it was 1.87). If you had a little money put by in say, dollars, now would be the time to buy Sterling. Or invest in some stocks and shares when their markets hit bottom on Friday. Because there’s a bloody good chance it’ll all bounce back on Monday morning when everyone who panic-sold has sobered up and thought about it. Only to find the cash-rich Chinese have pounced and driven prices back up. Markets are like that.
As for the whiny little tossers on Twitter saying that the older ‘Leave’ voters have just screwed the ‘Remain’ young. Wrong again. The older folks who voted ‘leave’ may have given their heirs (Providing Britain is allowed to leave the EU on such a narrow margin) the legacy of having a vote that actually counts for something. The freedom to choose their own time and place. Their own futures. To take the tide of fortune and sail to riches or failure (I’ve done both – still here). By their own efforts. Which is far more valuable than anything the unelected EU Commissars will ever let them have, and they can take that to the bank. Or in the case of the EU commissioners, not.