Uncle Sam's Money-go-round A Wild Ride
Newcastle Herald
Friday January 25, 2008
I FEAR for Great Uncle Samuel.
He hasn't quite been himself for some time now, and I'm afraid he might be headed for the home.We two have never been close, but he fought alongside my Pop in New Guinea and his influence has always been present in my life.His side of the family is the one with the money, a lot of it inherited from old Great Grandpappy Jonathan Bull, who had quite an empire before creeping senility saw it frittered away.When Samuel became head of the family business he soon took it to heights that old John would have been proud of. Manufacturing, mostly, although Sam's finger was, and still is, in a lot of pies.I can't quite say when it was that things began to go wrong.Personally, I think the rot set in when some of those smart banking and finance types started getting in his ear with all sorts of get-richer-quicker schemes. Sam was always a sucker for a fast buck and these blokes showed him how to make a fortune in a flash. Or so it seemed.Great Uncle Samuel used to be quite famous for making top-notch stuff. Cars, planes, computers, movies, machinery: you name it.But there was a lot of competition in those fields and Sam got tired of having dirty hands and the finance types persuaded him to concentrate his efforts on funny-money schemes. Over the past couple of decades the only business old Sam has really been into has been selling IOUs.Sounds crazy to you, I guess, but when you realise how rich Sam was and how big his business empire grew you'll understand why nearly everybody was happy to treat his IOUs just like money in the bank. A few years ago I started to worry though, especially when his annual reports suddenly stopped recording exactly how many of his IOUs were floating out there in the world. And when I looked a bit closer it seemed to me that a lot of the things Sam used to own, that generated all his real income and wealth, didn't belong to him anymore. The IOU-selling business seemed to have taken over everything. A lot of my cousins over on Sam's branch of the family were whingeing that he couldn't give them work anymore. The jobs they could get didn't pay well and because Sam's IOUs were flooding the world like an unstoppable torrent, the people who were buying them were running out of places to spend them. The price of everything was going up. Except for the price of Sam's IOUs.Seems like a lot of other people are starting to share my concerns about Uncle Sam.Just last year they were happy that their wealth, measured in Sam's IOUs, was rising fast. Now they're all looking for buyers and trying to find something safer to own.Great Uncle Samuel, it seems, has only got one plan. He's printing more IOUs as fast as he can. He figures that if he repays his creditors with tomorrow's IOUs, and if tomorrow's IOUs can buy a lot less than the IOUs he printed yesterday, he might still win the game.It's a bad plan but it will seem to work as long as enough people believe it can work.Uncle Sam wants you to believe.gray@theherald.com.au
© 2008 Newcastle Herald