Monday, May 18, 2015

Cashing Out

Despite our improving fortunes here in Ireland (and they are improving), a lot of commentators I read on trends elsewhere seem increasingly gloomier. Dan Ariely thinks American consumers are so psychologically fragile that even a minor shock could trigger a major panic. While Tyler Cowen thinks the Great Stagnation is morphing into a Great Reset meaning things will never return to 'normal'.

Add to that a growing number of stories about controls on holding and using cash (most recently in France), surcharges on cash withdrawals in Greece, still looming debt problems (including our own), as well as negative interest rates and you begin to wonder just how real is the recovery?

Plainly there is more at play than just a very slow recovery after a very harsh recession. Whether you think that globalisation has gone into reverse, or that the EU experiment has run its course and is now exhausted (or on the brink of something much worse), it does seem that new ideas are required.

Fortunately there are plenty out there: from using bitcoin to launch a new Greek currency to Croatia cancelling the debts of its poorest citizens. Bernard Lietaer has long championed the benefits of currency diversity (mono-currency unions are dangerously vulnerable, just like mono culture agriculture). He believes that the problems we face will demand the (re)introduction of alternative and complementary currencies similar in scale and diversity to those that emerged in the 1930s during the Great Depression.

Of course, the Central Banks and the Tax Authorities weren't too keen on the idea back then; they won't be much keener in the years ahead. But they - and we - may have no choice given the challenges that lie ahead, whatever the near term prospects for Ireland.

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