Friday, February 13, 2009

MONEYTHOUGHTS Celebrates One Year

Have you ever looked closely at a piece of rope or metal cable? They are made up of smaller pieces that are braided together. The braiding of the small strands gives the larger piece of rope or cable its strength. The economy of a highly complex and developed society works the same way. Each strand is woven into each other strand and together they form the whole economy.

Money and banking, which includes credit, which is a big piece of the economic cable, touches every strand of the cable that represents our society. Money, banking and credit make up the smaller strands that are at the core of the cable. Without the core strands of the cable functioning the economy has little if any strength.

What I have written for the most part over the last year, today is the one year anniversary of MONEYTHOUGHTS, about the relationship that the smaller strands of money and banking (credit and debt instruments) have with each other.

Mark to market, bid and ask, credit ratings, reserves requirements, the relationship of yield to price and much more are the small strands that make up the core piece of the cable that represents our overall economy. Without correcting these small yet important pieces, the whole economy, which is so dependent upon money, banking and credit, will not function and grow. Hopefully, there are some smart people out there in positions of authority that will correct what is not working and repair that which is damaged. Our highly complex economy can not function without credit and debt instruments, and until this is corrected the overall economy is not going to recover and grow.

Stay tuned.

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