Letters – May 2008

Issue: 25 – May 2008
Letters – May 2008
Money & wealth
A chara,
The series of articles on finance, credit and money by Tommy Price were simple and clear. It created a wonderful basic working knowledge everyone should know. It expressed the concern by Professor Alfred ORahilly the Chancellor of the University of Cork (1943-54) that the basics of finance were not being taught at either a school or University level.

Knowledge is of no use unless it can be used to better our lives or prevent predictable outcomes. Here come my suggestions on the present and future finance: As circulating currency is not benchmarked against any one commodity such as gold or silver but rather against consumable commodities such as oil/food then we see the price of oil escalates. We should view not the price of oil/food but the trading exchange value of our currency (Euro, dollars, sterling, yen etc.)

Result: The value of all currencies is eroding rapidly in relationship to material commodities. This reminds us historically of what South American nations suffered in the 1970s before benchmarking against the dollar began. Now the dollar has fallen and eventually the Euro/Sterling will follow rapidly. Currency is chasing each other in a downhill spiral. Savings in currency will be daily eroded. Stock prices along with property will fall initially as credit from banks becomes more restricted but will reach a point that there is only true measurable value in material objects- commodities and property.

Transferring value for work preformed into salaries has in the past 200 years ment saving for the average person accumulating currency in the bank or buying a portion of a company producing material products. (Stocks and shares)

The Irish farmers mainly invested in property (another field) or more live stock. Some portions of his work was transferred into currency which ended up as in investments in family education (educating priests, doctors, nurses, lawyers etc.,) It was simple yet diverse. The added field was productive property.

Now we seem to concentrate on money as our wealth which is so far from the truth. Money is only the vehicle of transfer of services and commodities from one owner to another. Money enables the free transfer from one to another. The money truck is breaking down and we fail to see it. [Beware of buying broken down trucks.] Accumulating savings in a currency is not the smartest maneuver. We should transfer wealth into material commodity or productive property; not speculative land only productive land and productive property.

In times like this be sure your wealth is in something you can touch and see: Gold and silver are static and of themselves do not produce added value. They are a stable commodity as well as easily transferable credit. Good for some but not for all!

Productive property in uncertain times seems to be the safest another arable field, a new fishing vessel, a part owner in a commercial property that will be productive even during a recession a more efficient farm etc. The market is restricted but there is always something to convert your saving currency into; check it out and keep it as local as possible.

Beware of transferring falling property into an unstable currency. Hold fast to what you can see and touch; it is reality. Base the value on its productive wealth not just the fleeting principle that its value is what someone else will pay for it. Think long and deeply before changing property into cash. Tommy Price, what do you think?

Joe OBrien, USA


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