Money makes the World go round.

W S Gilbert said that ‘ love makes the world go round ‘ . Paul Van der Merwe disagreed in his 1960s musical Cabaret set in Berlin 1931. Then Liza Minnelli told us in song that ‘ money makes the world go round ‘

In recent times the world has been going round a little faster than normal. In the UK alone the Government have issued nearly £900 billion pounds in bonds just to stave off the end of the world as they know it. Covid 19 caused the issuance of £167 billion of these bonds. In the USA the QE Fed issuance has been circa $1.5 trillion.

No wonder we now face through inflation the devaluation of these currencies . If you print more money it becomes like confetti or more crudely toilet paper. Inflation rates officially are around 10% but on the ground it looks more like 20%. Some may argue that inflation reduces these debt piles by that rate. Does anyone understand it ? Is anyone out there willing to admit that we don’t understand it ? The fact is inflation at 100% will wipe out all these debts ( is that not a good thing ? ). The answer is of course not.

Interest rates at 400 year lows were intended to help when in fact all that happened is that the free often hot air pumped up the asset balloons like house prices and share prices. These are now set to fall and as the circulation of money slows will the world go round a tad slower. The answer is of course not as the globe maintains its 1,037 mph spin. We don’t of course experience the spin but just know it’s there , a bit like how the economy works.

Inevitably a new system of global exchange will come. Crypto has tried to creep in but the like of Bitcoin has fallen 60% in value in the last 7 months with tales of very unstable stable coins to add. What that new system will be we need to wait and see but I do know that the world will still go round.