“Icelanders discovered that trading bits of paper isn’t a productive enterprise. A handful of guys, who fancied themselves as financial experts, were taking out tens of billions of dollars in short term loans from abroad. They were then re-lending this money to themselves and their friends to buy assets, such as soccer teams, cars, homes, etc. Since the entire world’s assets were rising; thanks to people of like mentality paying crazy prices for everything, the Icelanders appeared to be making money. One non-Icelandic fund manager said that its like, “You have a dog and I have a cat. We agree that they are each worth a billion dollars. You sell me the dog for a billion, and I sell you the cat for a billion. Now, we are no longer pet owners, but Icelandic banks with a billion dollars in new assets. They created fake capital by trading assets amongst themselves at inflated values.” Doesn’t that sound like the rest of the world’s financial geniuses?” – Don Stott of Colorado Gold, posted in the Whiskey and Gunpowder e-newsletter
Jim’s Quote of the Day:
