Gyroscopic Investing

I ask, because the historical record is not favorable.
This link claims that "The median age for a live currency is 37 years.."

note the 2nd list...of failed currencies

http://www.rapidtrends.com/history-of-f ... -failures/

I wonder what correlation there is between failed fiat currencies and the overall productive capacity of the economy in question.

I wonder if an economy's productivity and output have ever been expanding in the midst of a fiat currency collapse.

The collapse of a fiat currency always suggests to me a general decline in productivity in the underlying economy as a precursor to the monetary problems leading to the currency collapse.

Wow. That was sobering.

MediumTex wrote: I wonder what correlation there is between failed fiat currencies and the overall productive capacity of the economy in question.

I wonder if an economy's productivity and output have ever been expanding in the midst of a fiat currency collapse.

The collapse of a fiat currency always suggests to me a general decline in productivity in the underlying economy as a precursor to the monetary problems leading to the currency collapse.

sounds plausible. The standard narrative I read about seems to be central planners recognize that the economy is contracting...so the central bank interferes through such antics as ZIRP, central bank buying gov't debt, and massive expansion of the money supply. These manipulations then get out of hand...and at some tipping-point falling into hyperinflation / currency collapse.

did HB reference these currency collapses in his work?

murphy_p_t wrote: did HB reference these currency collapses in his work?

Since one of the premises of the PP is that it is investing its "cash" and bond holdings in the #1 currency in the world and the safest bonds in the world, it's not surprising that HB did not discuss currency collapse in the context of the PP (that I recall), other than the implicit recognition of potential for currency problems through the 25% gold holdings.

murphy_p_t wrote: did HB reference these currency collapses in his work?

In "Why The Best Laid Investment Plans Go Wrong" he mentioned it briefly.  This is why he recommends physical gold vs. paper gold.  He also mentioned keeping pre-1965 (1960?) silver dimes on hand for small transactions in the event of a collapse.  This seems to be in line with what little I've read of the actual experiences during Argentina's economic collapse.

murphy_p_t wrote: I ask, because the historical record is not favorable.
This link claims that "The median age for a live currency is 37 years.."

note the 2nd list...of failed currencies

http://www.rapidtrends.com/history-of-f ... -failures/

Also, I think the quoted lifespan of the US Dollar is a bit off.  It did not become a paper (fiat) currency until the creation of the federal reserve in 1913 and it didn't lose it's convertibility until 1971 (or was it '70?), so the real age is probably somewhere between 31 and 99 years.

I believe the UK Pound Sterling has a similar story.

I tend to think of hyperinflation as involving a lot of the oft-cited reasons by MMT/MMR, moreso than simply being a judgement of fiat currency.  Those common factors are:

Gross corruption
Destruction of productive capacity
Foreign-denominated debt
Loss of a war
Regime change

As you'll probably notice, these things often probably go hand-in-hand, and there probably is a multiple-causation situation with hyperinflation that comes down to the clout of the existing government with the people and the belief that the economy will continue to remain productive.  I am quite positive that a decent chunk of hyperinflations come with the collapse of the government itself.  I wonder if there's any cases of hyperinflation where one of the most non-corrupt governments in the world, in the most productive economy in the world, sees its currency hyperinflate.

http://pragcap.com/hyperinflation-its-m ... phenomenon

This link will show you an interesting analysis of more recent hyperinflations.

I really think it comes down to whether or not you have a "good government" or not.  And I mean that in relative terms.  If hyperinflation is more of a judgement of a country's government status and/or productive potential than it is about the actual quantity of money in circulation, it seems asinine to me that we'd see it in the US.

One could argue, though, that if fiat currencies give government flexibility in funding wars that they wouldn't otherwise have, or flexibility in other areas of confiscation or disruption of production, then this could very well lead to the productive/corruption factors that appear to have lead to hyperinflations of the past.  I could buy that to some degree, but I still feel tremendously blessed to have the freedoms I do have, and it's therefore difficult for me to see a transition into an event that is basically saying, "you are under the thumb of foreign powers, have a corrupt government and have a nonproductive society... you suck."