The Euro is a Symptom of Centralisation

Your editor is preparing for an unplanned trip back to the United States. Details about why will follow in the coming days. But for today, we'll keep our reckoning short and sweet.

"I'm going to Thailand first to study Muay Thai fighting because why not? I'm young and it's cool. And then after, I'm going to go to Greece. I figure I could find some embassy work there and I hear they're going to go back to the Drachma. Things are going to be cheap!"

You can tell a natural contrarian when you meet one. And we met one yesterday in the Prince of Wales at lunch. Mind you we weren't drinking our lunch. We were watching the U.S. vs. Canada Olympic hockey game. And, in exchange for twisting the caps of some stubborn bottles, the bar maid had given us permission to eat a chicken Caesar salad while not drinking beer.

A young Canadian man from Saskatoon moseyed on up to our table and asked about the score. Canadians are some of the politest people in the world. But when it comes to beating the U.S. in hockey, they do not stand on ceremony. But after we exchanged unpleasantries we got to talking about our relative experiences in Australia.

"I love Melbourne," he said. "People are laid back. But it's really expensive you know? I can't wait to get to Greece."

"Do you speak Greek?"

"A little. I mean, my family isn't Greek. But I've always liked it. And I have a political science degree. So that should help."

"Do you think it's the best time to go there?"

That's when he told us he thought things would be cheap. We probably should have offered him a job at that point. Risk taking and a sense of adventure are at a premium in today's work force. Plus, you can never have too many Muay Thai fighters around.

But whether he's right about Greece or not remains to be seen. Stock markets are meandering through February as if no clear signal about the pending sovereign debt crisis has been issued. Everyone seems to believe - assuming they are thinking at all - that Europe will get its fiscal house in order and adopt an easy monetary policy to compensate.

The natural trade is to sell the heck out of the Euro. Everyone's doing it. Sentiment is so bearish on the euro we're half inclined to buy it, but just as a bounce back trade. On the other hand, maybe sentiment on the euro, and on paper money in general, is not nearly bearish enough.

The euro itself is a symptom of the big trend of the last 100-years: centralisation. Centralise the production and distribution of electricity...of oil...of manufactured goods (China), of financial services (big banks), of health care, and even of how we live together (more people living in big cities, fewer in the country).

But if we're witnessing the breakdown of centralisation - for a variety of reasons - the breakdown in centralised banking and paper money (a corporatist mash up between the banking cartel and its minions in government) then buying and selling stocks is not a sufficient wealth protection strategy.

More decisive action is required. This is exactly why we're headed back to the States for a week. We'll tell you more as the story unfolds. Until then...

Dan Denning
for The Daily Reckoning Australia

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