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Alchemy

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Wealth can't be created. Only money can.

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Since moving to Japan and selling all my dollar assets for assets in yen, the yen has appreciated against the dollar by about 23%. This means my net wealth is 23% higher than it would have been if I had stayed in the US.

I have been criticized as unpatriotic by some. But with Ben Bernanke at the helm, can anyone really blame me? Should I be patriotic, only to be stripped of my wealth?

Of course, in reality, I am a metaphor. I'm the one who does the right thing every time economically, only to show by example just how a government, any government, that has the ability to print as much of a currency (create as much debt) as it wants will, over time, destroy the value of that currency (create so much debt that it cannot be supported by the level of income produced). I do what others physically can't -- or won't -- if only to illustrate the consequences of such.

Why did I move? Through currency manipulation, governments can deceive the public because of one main fact: People don't understand the difference between wealth and money. I moved because I do understand that difference - and how crucial it is to hold ones wealth in a currency that will hold its value relative to other currencies.

Let me explain in depth by describing just what wealth is, and how money fits in.

Take the following brand-new economy and the "standard of living" it provides:



Farm A and Farm B are private folks, and don't talk much to each other. Each farm produces everything they need to live: They grow their own food, they sew their own clothes, and the cut down their own wood to burn. It takes each family 17 hours each day of work to produce this. Each farm's standard of living can be described as 17 hours of work and 7 hours of rest.

One day, Farmer A notices Farm B has land and crops superior to his own. He also notices that his wife is a much better seamstress than Farmer B's wife. He walks over and proposes a trade: Farm A will make clothes for Farm B in exchange for Farm B's food.
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