Thursday, December 02, 2010

Moore's Collary to Thatcher's Maxim

Margaret Thatcher, the fabulous former Prime Minister of Great Britain, once stated that "The problem with socialism is that pretty soon you run out of other people's money."

That maxim is true, except that with a fiat currency, one never runs out of money. You can always print more. What happens instead is that the money runs out of value. So the problem with socialism with a fiat currency is that pretty soon after you run out of other people's money, your money runs out of value. That's Moore's collary to Thatcher's Maxim, and we are seeing it play out now with the Euro.

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