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Yield Purchasing Power

Summary:
Most people think in terms of purchasing power. How much can one’s cash buy? I reject this view on two grounds. One, it encourages a liquidation mindset. If your life savings consists of 100,000 dollars in the bank, plus a house and some shares of AAPL and INTC, how many years’ worth of groceries can you buy? If the grocery-value goes up, people cheer. Life savings is not supposed to be about liquidation. People used to be able to earn a yield on their money. We should think of an estate as a business, with assets that generate income (as people once did). In this view, you don’t think of selling the business every minute of every day, cheering when its price goes up. You think of its profits. You think of how many groceries you can buy–by operating a business to generate profit. You

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Most people think in terms of purchasing power. How much can one’s cash buy? I reject this view on two grounds. One, it encourages a liquidation mindset. If your life savings consists of 100,000 dollars in the bank, plus a house and some shares of AAPL and INTC, how many years’ worth of groceries can you buy?

If the grocery-value goes up, people cheer.

Life savings is not supposed to be about liquidation. People used to be able to earn a yield on their money. We should think of an estate as a business, with assets that generate income (as people once did). In this view, you don’t think of selling the business every minute of every day, cheering when its price goes up.

You think of its profits. You think of how many groceries you can buy–by operating a business to generate profit.

You don’t think of the purchasing power of the business, but its Yield Purchasing Power.

The conventional purchasing power paradigm paints a rosy picture. That may help explain why apologists for the regime of the irredeemable dollar promote it.

The yield purchasing power view shows something altogether different.

I have written eight short articles on Yield Purchasing Power. I gave a talk about it, in fall 2016 at the American Institute for Economic Research, which was recorded on video. Below are the links, gathered here in one landing page (which will be updated as I add more material).

Yield Purchasing Power: Think Different About Purchasing Power
Falling Yields, Rising Asset Prices -Rising Yields,Falling Prices
Interest – Inflation = #REF
THERE’S Your Hyperinflation!
Yield Purchasing Power: $100M Today Matches $100K in 1979
The Economy is in Liquidation Mode
Who the Heck Consumes Capital?!
Move Over Entrepreneurs, Make Way for Speculation!
Who Is Worth More: Some Hedge Funds or All our Kindergartens?

Video of my talk at AIER

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Keith Weiner
Keith Weiner is CEO of Monetary Metals, a precious metals fund company in Scottsdale, Arizona. He is a leading authority in the areas of gold, money, and credit and has made important contributions to the development of trading techniques founded upon the analysis of bid-ask spreads. He is founder of DiamondWare, a software company sold to Nortel in 2008, and he currently serves as president of the Gold Standard Institute USA. Weiner attended university at Rensselaer Polytechnic Institute, and earned his PhD at the New Austrian School of Economics.

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