Monday, November 28, 2005

The Scourge Of The Supernote

A couple months ago I first heard the term "supernote" in an NPR broadcast. I don't have a link to that, but here is a recent story that sums up the issue pretty well: U.S. Allegations Of North Korean Counterfeiting Emerge. The trouble is that foreign counterfeiters are producing virtually perfect $100 bills. Does anyone else find this amusing?
I wonder what really is the problem? Those unscrupulous, wantonly capitalistic asians printing up our money, purely for their own profit, and creating monetary inflation? Surely, this will not stand!
Well actually no printing press, no matter how fast, could possibly create monetary inflation in the US dollar. Presses can only make $100 bills. The US Federal Reserve creates dollars by the tens of billions, just by pushing buttons on their secure keyboards. And they do, every week. These are T-bills of course, that require no printing. But perhaps the problem is not really the extra dollars floating through wallets worldwide, but the principal of the thing? Creating money should be carefully controlled, and only done by most intelligent and visionary experts, such as Alan Greenspan. Money should not be made just because someone wants a little extra cash, like if someone needed to pay for a war..
Or maybe there is a different reason that these supernotes are so scary: the problem is that it threatens American pride that those Koreans can make something higher quality, and at cheaper cost than our own Yankee mint. It is painful to think that America no longer has the world's finest manufacturing industry. Yeah right.
Seriously, this could be one of those growing-pains-of-globalization issues. An economist might say "Sure a few employees at the mint might be hurt, but see how much better off we'll all be with those fine Korean made dollars".
Maybe we should just say "Thanks, for printing up the bucks" and let them counterfeit. Especially while they are still doing it for free!

Monday, November 21, 2005

Energy Conservation??

When I bring up peak oil issues with people who are not generally obsessed with the topic the conversation often turns to energy conservation. This makes me pessimistic, because I hear conservation discussed as if there is no downside, no pain. The fact is that the flip side of conservation is recession: they come together.

The American economy is based on three things; consumption, over-consumption, and conspicuous consumption. There is no easy slowing down for us. Our economic growth, and ironically, our much admired "productivity", consists of pure full bore spending. Our republican cabal realizes this, that is why they do not want conservation. Conservation means fewer large houses in suburban developements, less shopping, less driving. It is not about turning off the water when you brush your teeth.

And when I hear about local economies, I get even more pessimistic. Our economy is based on shipping virtually everything we need from China. We are screwed if this becomes unprofitable. If this business model falls apart we will have NO economy at all. It will take many years to have any sort of local, or national, economy. And these years will be years of economic depression. Take Wal Mart as an example. I hear practically every day how much Wal Mart is hated, how it is destroying America, etc. So, would we rather Wal Mart became unprofitable, and started to close down stores, and lay off people? They are the largest employer in America, even if they do suck. And Wal Mart can't easily scale back, their whole business model is based on massive economy of scale, huge parking lots, people driving in from wherever. If Wal-Mart goes into the red, America goes into depression. We may be able to build a national, and local economy, but it will take decades, and we will have depression.