Seigniorage

Moneyness; The ability to create money, or increase value of a stock, bond or currency; The ability of sovereign authority to create currency; The difference between the face value of money and its cost of production; The right of the lord to coin money; A stamp upon, mark, or etching in, that declares value and purchasing power or economic exchange.

Insolvent sovereigns cannot govern. Greece and Italy having lost their debt sovereignty, now lack seigniorage, the ability to create money. And Spain has lost its debt sovereignty and lacks debt seigniorage as well as the interest rate on its 10 year bond has risen above 6%. The periphery nations cannot spend what they do not have. They are without fiscal spending resources, and have to depend on the sovereign authority of a Euracracy, that is the EU ECB Troika. The seigniorage of fiat money is history, and the seigniorage of diktat has commenced. And it is mandating expansionary fiscal contraction as we seen in reports of the presentation of the Greek and Italian budgets.

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Inflation Destruction

The fall in investment value that accompanies derisking and deleveraging out of investments that were formerly inflated by money flows to, and carry trade investing in, high interest paying financial institutions, profitable natural resource companies, and high growth companies. Inflation destruction commenced in Brazil Financials, BRAF, and in the high growth Chinese Small Caps, HAO, in November 2010, and in Coal Producers ANR Resources, ANR, and Arch Coal, ACI in January 2011. Inflation destruction begets more of the same as former vigilant investors turn short sellers, and carry out their attack on their former investment, by going short the 200% ETFs, such as ProShares Ultra Brazil, UBR

Inflation Destruction may precede Debt Deflation which is the contraction and crisis that follows credit expansion. One of the most famous quotations of Austrian economist Ludwig von Mises is from page 572 of Human Action: “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency involved.”

The Age of Leverage was characterised by debt expansion, credit liquidity, stability, economic growth and expansion and prosperity … and passing into The Age of Deleveraging characterised byinflation destruction, debt deflation, credit ill-liquidity, instability, economic contraction and austerity.

Inflation destruction commenced in Brazil Financials, BRAF, and in the high growth Chinese Small Caps, HAO, in November 2010, and in Coal Producers ANR Resources, ANR, and Arch Coal, ACI in January 2011. Inflation destruction begets more of the same as former vigilant investors turn short sellers and attack their former investment, by going short the 200% ETFs, such as ProShares Ultra Brazil, UBR.