… that blows no good at all.
Monetary impact of ransom payment to Somalia Pirates
News reports say that a $3 million ransom was paid to free the Sirius Star supertanker; and that between 5 and 10 (reports vary a lot) pirates drowned making their getaway.
That’s the first good news. But there’s more.
According to somaliweyn.org (Somali News), at least some of the cash went down with them: “… reports we are getting from the ground says that pastoralists traveling along the shore have slowly collected dollars floating on the surface of the sea, and some brought by the ebb tide to shore.”
The financial meltdown of the Bush Recession has been on my mind lately. I’ve predicted that the longer term price we will pay for this is a merciless inflation due to the expansion in the money supply. But, in fact, we owe a small debt of gratitude to the Somalia pirates for reducing that just a tiny bit.
Here’s the way that works. The US gets the benefit of every dollar created. The government can spend them on roads, health care, or blowing holes in the ground in Iraq. (These particular dollars were probably spent buying oil to drive SUV’s around in American wilderness preserves and make Walmart shopping bags.) But when those dollars are given to pirates who, in turn, take them to the bottom of the sea … it’s like we got the oil for free!
Good on ya, Somalia pirates. Keep up the good work! (As long as you promise to take a few million ransom dollars to the bottom of the ocean with your rotting corpse.)
Did you see the latest – a body of one of the pirates washed up on shore in Somali with $153,00 in cash in a plastic bag in his pocket. So, according to your theory, that’s less free oil for us. When the money is returned, do you think it will be used for roads or health care? I assume that we won’t get it back until after the 20th and so that decreases the chance it will be used for blowing things up in Iraq.
It’s not a theory. It’s just the way things work. If the money disappears entirely, then the oil was free. But now that some Somali fisherman has it, it can be spent again. Money represents a claim on goods. If the money exists, somebody has a claim on goods that can be bought with it.
And, like I said, this particular money came from a wealthy Saudi, so we had already spent it on oil. We can only choose what to spend it on while we still have it, not after it’s sent over to a Saudi prince.
I think this way because I spent too much time in economics classes when I was trying to stay out of the draft during the Viet Nam war.