I finally feel
Niall Ferguson’s pain.
I now know how it feels like to be a saver who gets screwed by a monetary authority that prints currency for short-term profit. It happened to me twice today.
I’m a loyal customer of Delta Air Lines and Hyatt hotels. And today, both Delta and Hyatt announced devaluations in their rewards programs — debasements, if you will, of their reward points currencies.
Take Hyatt’s reward program. I have significant savings on deposit with them: 117,146 rewards points. Under Hyatt’s old rules, I could have redeemed 22,000 points to stay one night at the Park Hyatt resort at the base of the Beaver Creek ski resort in Colorado.
Given the eye-watering ski season room rate of $US911.81 (including taxes and fees) that implies a point value of 4.1 cents and an account value of $US4,855. Now a redemption at the Park Hyatt will now cost 30,000 points, meaning I’ve experienced a sudden 36% inflation and my rewards account is worth a mere $US3,561.
Delta’s “changes” (cuts to reward values are always neutrally and euphemistically described as “changes,” because a monetary authority never just comes out and admits it’s inflating) will also substantially reduce the value of my balance there.
Libertarians often advocate for a system of “free banking” where monetary authority is shifted to private actors, who would theoretically be policed by consumers who demand stable currency values and protection from inflation. But as we can see, America already has a system of private monetary authorities, and they’re an inflationary mess.
Airlines and hotel firms lock in loyal customers, only to pull the rug out from under them once they’ve run up significant asset balances. They cannot resist the urge to print. Can you imagine the disaster if we extended this system to ordinary currency?
Janet Yellen is a rock of monetary stability compared to the private authorities who might replace her. If you care about sound money, you cannot support private currency.
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