Tuesday, January 1, 2019

What’s the definition of money/Carlos Pueblo


What’s the definition of money/Carlos Pueblo

There is a documentary produced by a German TV company about the
phenomena that the rich make all the money. It is very interesting
program conducting several interview with students and faculties of
the University of Singen, Germany. One year, I was on my way from
Offenburg passing through and stopped over at the small town to
continue my visit of the Black Forest to Freiburg, Germany. Students are
not quite sure of the question, what is the definition of money? The
documentary posts a big question of excess money nowadays in the
world and the rich make most of money. I asked my well learned son
Arthur about the subject, what is money? He says that money is based
on the national output, a reflection of a nation’s strength. I agree with
him and I think that is a very simple and well definition of money.

In 1971, the U.S. abandoned the gold standard and printed U.S. currency
freely of some sort of percentage of the gross national product, similar to
GDP. The Federal Government keeps on issuing bonds to borrow money
Worldwide and the national debt blooming to a certain percentage of
GDP. The whole world accept the U.S. Currency as a new standard by
purchasing low interest bonds from the U.S. Treasury and free loan to
the U.S. by keeping U.S. Dollars. The U.S. has been booming forever due
to the good faith of the U.S. treasury. Everyone can purchase the goods
in the U.S. with that value of dollars. I believe that there are several
economic sound nations such as Germany, Japan, and the U.K. have the
same advantage as well. Now, foreign currencies have been consolidated
with credit cards and internet banking, etc.

The program has pointed out an example of KKR to purchase Monsanto for
a certain amount and re-sell it to a French company with a huge profit. It
is not fair as the program indicates that the money exchanged with excess
money available since de-regulation. I also agree, yet this is the new fact of
life in the current world economics. We need to know this, KKR must distribute
the profit to its shareholders, not necessary all rich shareowners but investors
like us with mutual fund investment and also another big shareholder, the IRS.
It is why I have preached so many decades on my carrier as an insurance agent
to save and invest. Save and invest wisely for a long time, we call it duration,
will make you very comfortable with the changing world economics.


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