Flush with money

Step- one of the guys in my office...a Harvard MBA to boot...thinks I'm one of the geekiest guys he knows because I spend a fair bit of my weekend reading the Economist.
I have to confess that is true. I am a geek. I read the Economist for pleasure.
Now, feeling light headed from my confession here is a reply to a debate regarding the future of the IMF that was pretty interesting though the poster seems to have digressed a fair bit.
Here goes:

1. Money is a token that represents scarce resources. But if money is not scarce, it has no value. Could it be that the wonderful new concepts of economics based on gee-whiz faith of the last twenty years, such as the idea that unlimited money supply is the same as unlimited wealth, be catching up with the global economy? I think it has.

   What has emerged is a world system with two tiers of money supply. The money supply that exists in the investor tier is unlimited and growing faster than that, as greedy and stupid economists encourage greedy and stupid bankers to break every prudent restraint. The money supply that exists in the consumer or exchange economy is still limited. Thus we have the situation where you can't even give away investment capital at this point. So the IMF is going out of business, since it was peddling money in the investment tier, and there isn't a customer left who can absorb any more investment capital. At this point the most ridiculous and impossible investments are flush with captial, things that have little or no chance of value return, things like Google stock, or YouTube the non-business with the no-business-model. Horrible investments like Chinese banks and businesses are overfed with excessive capital. Now in Chinese culture money is never, ever, ever, returned to investors and it is the basic practice of every business or individual to keep two or three or four sets of books and for capital to disappear in 100 ways like rain through a sieve. The reason for orientals doing business exclusively with relatives is that only relatives can be made to return investments or fairly pay, and that only with much pressure. Yet there are trillions of dollars available to be flushed into that drain without any reasonable hope of return, because investment capital is now available without limit or restraint.

   The IMF is being put out of business, because their product, investment capital, has been cheapened.

   Posted by sharncedar at February 3, 2007 6:27 PM

Interesting...remind me when I become a VC to be VERY cautious investing Fund money in China.