Did a double take whilst listening to R4’s Saturday Live on 23/6 – during a discussion on money printed and released into circulation since the introduction of Quantitative Easing, Mr Peston casually mentioned (about 29 minutes into the show) the philosophical issues around money:
“What gives money its value?
“We are living through this extraordinary period where vast amounts of new money is being created ….the Bank of England has created £325 billion of new money through …Quantitative Easing…..Why is it that when it creates this ….new money….., we believe that it is worth anything? What is it that gives the Bank of England this sort of mystical ability to magic this value out of the air …it is almost a central economic question of our age.”
There it is. Creating something out of nothing and giving it value. Surely there’s only one factor that can increase the value of any commodity and that is – as any Economics or house-buying fool know ……
Isn’t this Economics formula familiar to all individuals working in and around finance?
From another angle, all the money in the world will be useless to Neapolitans living in the vicinity of Mount Vesuvius. If the volcano ever erupts again and the villagers have to flee, their money won’t save them. They’re going to need fire-resistant shoes.
Quote from Nathan Rothschild –
“I care not what puppet is placed on the throne of England to rule the Empire. The man who controls Britain’s money supply controls the British Empire and I control the British money supply.”
Oh, and BIG subtext in the word ‘scarcity’.
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