Saturday, 6 October 2012

Ignorance of banking is ignorance of the economy

If we assume that asset prices are surprisingly high (to those that have no understanding of banking) then we might wonder as to an explanation. It is my contention that 'high' asset prices are primarily caused by deposit insurance and bank inflation... but if someone doesn't know about this they may be confused. If we do not know about how banks cause inflation then we would have no reliable explanation for the high asset prices. Which means we would be confused. The only way to have a reliable picture of the economy is to be aware of the role of banks in causing inflation. If we do not know about bank inflation we do not understand (high asset prices and) the economy. Only people who understand banking understand the economy.

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