There is a concerted push to develop a fixed income market for retail investors in Australia. It’s a concerted push which you should try to resist. Why? Because the development of a retail bond market would give the industry yet another place to ‘safely’ plant your money, and charge you for the privilege.
And by the way, the development of a bigger, more liquid corporate bond market would probably lead to a more liquid government bond market, too. That would free the government to do what it really wants to do, which is borrow more. With a more liquid bond market, the government could conceivably say that it HAD to run bigger deficits in order to meet the retail demand for ‘safe’ and ‘risk free’ investments.
If you think that’s absurd, just wait until someone says it. It’s coming.
This leads us back to the idea we bungled last week. We flailed around on the keyboard exploring the idea that the synchronisation of interest rates and monetary policy had a cultural and political aspect, too. The homogenisation of money has led to a kind of debasement in the culture down to the lowest common denominator.
But in terms of politics, it turns out the Nazis were way ahead of us on this homogenisation of political thinking. They called it gleichschaltung. Those Germans. They have a word for everything.
According to Roger Kimball, gleichschaltung means two things, ‘First, bringing all aspects of life into conformity with a given political line. And second, as a prerequisite for realizing that goal, the obliteration or at least marginalization of all opposition.’ This, then, is the politicization of all discussions and then kind of an enforced sameness in the discussion.
It sounds pretty contemporary, actually, doesn’t it?
We’d say this is the political manifestation of a monetary phenomenon. The authority and legitimacy of modern governments are based, at least in part, on sound economic and currency management. The management of the economy and the currency is so bad in the Western world that the authority and legitimacy of the government have been eroded, if not yet outright challenged (as they were in the ‘Arab Spring’).
If you don’t want people to start asking questions about what sound money is and why the government can’t live within its means, well…you have to dominate the conversation. You have to enforce sameness. And you must marginalise all opposition. More on that tomorrow, including the tyranny of the cashless society!
for Markets and Money
From the Archives…
How to Use Preference Shares to Become an Absolutist Investor
2012-04-27 – Nick Hubble
Why Politicians Can’t Solve Economic Problems
2012-04-26 – Bill Bonner
2012-04-25 – Greg Canavan
Investor Choices – Do You Have a Lifeboat or a Bottle of Brandy?
2012-04-24 – Tim Price
A Bankrupt Idea Whose Time Has Gone
2012-04-23 – Dan Denning