Original post:
Dylan is Albert Edwards' devil-may-care little buddy, sort of a Gilligan to Albert's Skipper.*
From FT Alphaville:
To those who think inflation is not a problem SocGen’s deep-thinking strategist Dylan Grice has two charts for you:
And what connects the first with the second is the fundamentally dishonest practice of printing money.*Not.
From Grice’s latest Popular Delusions note:
By issuing bonds to itself the government seems to have miraculously raised revenue without burdening anyone else. This is probably why the mechanism is universally adopted throughout the world’s financial system. Yet free money does not, and cannot, exist. Since there can be no such thing as a government, or anyone else for that matter, raising revenue ‚at no cost‛ simple logic tells us that someone, somewhere has to pay.But who?...MORE
See:
September 2010
Société Générale's Dylan Grice: "Higher crop prices 'permanent'" (ADM; SYT)
Nov. 2010
Société Générale’s Dylan Grice on Bursting Bubbles
Dec. 2010
Société Générale's Dylan Grice-"Commodities: ‘Their Expected Long-Run Real Return is 0%’"
Jan. 2011
The 5 Black Swans That Keep Société Générale's Dylan Grice Up At Night... (And How To Hedge Against Them All)
Update:
ZeroHedge goes with "Dylan Grice Deconstructs The "Perpetual Ponzi Machine" Of Global Finance, Sees Gold At $10,000 In A World Of Dishonesty":
Everyone, especially various textbook "schools" of postmodernist Keynesianism which (in addition to apparently never having actually been in the real world) believe there is such a thing as a free lunch as long as a reserve currency can issue infinite debt, and stubbornly fail to see the creeping currency devaluation which ultimately represents itself in hyperinflation, should read the following note from SocGen's Dylan Grice who explains pretty much... everything, including why in world starved for honesty, gold is the benchmark, and is now worth $10,000.
Key extracts from: The market for honesty: is $10,000 gold fair value? (highlights ours)
Last week, the Swiss National Bank (SNB) pledged to buy ‚unlimited? amounts of foreign exchange to prevent the Swiss franc from further appreciating. In other words, it is willing to print 'unlimited? quantities of Swiss Francs, tolerating an 'unlimited' debasement of its currency. Why would the Swiss of all people, one of the world’s few remaining 'sound money' proponents make such a commitment? Because unlike its main ‘competitors’ in the market for currency (the major central banks), which are either debasing with abandon or looking as though they’re about to, Switzerland had been rewarded for its rectitude with an uncomfortable share of the world’s flight capital and a painful currency overvaluation. So the SNB has given up trying to be honest in a dishonest world.
So let me explain why I believe printing money to be a fundamentally dishonest endeavour. Think about how it works. When the central bank, at zero cost, increases the monetary base by 1%, where does that money go? Answer: into the market for government bonds. Since printing the money to buy government bonds costs nothing, government revenues are obtained ostensibly for free. Of course, it buys those bonds in the secondary market rather than from the government directly, and the pretense of an arm’s length transaction between government and central bank is thus maintained, with all parties claiming a separation of monetary and fiscal policy. But it’s only a pretense.
By issuing bonds to itself the government seems to have miraculously raised revenue without burdening anyone else. This is probably why the mechanism is universally adopted throughout the world’s financial system. Yet free money does not, and cannot, exist. Since there can be no such thing as a government, or anyone else for that matter, raising revenue "at no cost" simple logic tells us that someone, somewhere has to pay....MORE
