It could be argued monetary policy as well, is a cause of currency volatility. Money flow is essentially this, it is flow and it is unstable, investing is a stable process. But send flow money into assets and their value goes up. Invest in assets and you depend on the ability of those engaged in creative action with those assets to grow them using this money (but the US can do precisely this).
It might be expected an investing economy would have more stable currency valuations. Because money flow valuations are prone to drastic revaluations and slides (there is a time decay to their effectiveness, which seems inherent and unavoidable). The drastic revaluation was the crash in 2008, the slide was the recent slide back down we have been witnessing in stocks.
Investing moves are amazing, they have that self boosting mechanism this blog noted, they have a firm foundation and an inherent valuation. It is the difference between a note and piece of gold, yes, except the notes can be as strongly valued as the gold if they are backed by an investing economy.
© 2010 Guy Barry - All Rights Reserved.
