tag:blogger.com,1999:blog-8774848724259616420.post7388632138745915878..comments2023-12-19T19:28:28.619-08:00Comments on Wealth is not the Problem: An argument for fiat moneyHaynesBEhttp://www.blogger.com/profile/11263223513305886233noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-8774848724259616420.post-42297177749526293372008-12-21T17:02:00.000-08:002008-12-21T17:02:00.000-08:00I don't think the question should be "fiat vs. com...I don't think the question should be "fiat vs. commodity". I think they are fundamentally different because one uses force and another doesn't. The problems that arise under commodity money are logistical problems, which are more easily solved as technlogy has increased. The problems under fiat are another kind altogether. This whole idea that some small group of people could be the "steward" of anything for the vast majority of us is insulting. Supply problems of a gold standard such as people finding vast reserves suddenly or simply running out, to the extent that they are problems, are combatted by diversification in metals and plain old reason. Inflation and deflation are natural parts of the economy, just like gravity and air-pressure are part of flying. They are best combatted by the profit-motive in reaction to surpluses and scarcity.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8774848724259616420.post-42238282867491186282008-12-21T08:45:00.000-08:002008-12-21T08:45:00.000-08:00Anonymous, my point was not to insult the author b...Anonymous, my point was not to insult the author but rather to opine that the preface to their blog was exhaustively long, and, to me, a bit distracting for their argument (it seemed to take a long time to get to the “meat and potatoes”, if you will). Anyway, I apologize to have made light of our previous encounters. However, please feel free to elaborate on the topic as opposed to bloviate about my character flaws. I will refrain from future, unnecessary opinions. <BR/><BR/>economicsfreedommatters.blogspot.comAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8774848724259616420.post-24893058518236418742008-12-20T17:04:00.000-08:002008-12-20T17:04:00.000-08:00No, Darin, ‘twas not I, Anonymous, who posted the ...No, Darin, ‘twas not I, Anonymous, who posted the post to which you refer. Your approach, however, makes pursuit of economic understanding secondary. If we understand economics perfectly, it will be to no avail if we continue to provoke one another with inept socialization or outright abrasiveness.<BR/><BR/>“I would like to comment on this debate against commodity money. First off, I must (without intending to offend the author) say that I am surprised I survived the preface to the point of the article. Is this you, anonymous?<BR/><BR/>Aside from that, I have three or so main points to contest here.”<BR/><BR/>You could have accomplished your purpose by saying: <BR/><BR/>“I would like to comment on this debate against commodity money. I have three or so main points to contest here.” <BR/><BR/>Inclusion of “First off, I must (without intending to offend the author) say that I am surprised I survived the preface to the point of the article. Is this you, anonymous,” is extraneous to your purpose. Further, it distracts from the argument you make by exposing your intent to insult the author, and in the end, you are out of line.<BR/><BR/>Have I ever posted anything similar in style or content to what was posted here? A modicum of astute analysis would lead you to the conclusion that I have not. <BR/><BR/>Try tightening up your prose and refraining from passive aggressive attacks on others, the identity of whom you know not.<BR/><BR/>-AnonymousAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8774848724259616420.post-16223654907286575232008-12-20T12:27:00.000-08:002008-12-20T12:27:00.000-08:00The money supply is just like the supply of anythi...The money supply is just like the supply of anything else in an economy. Just like the food supply and the medicine supply and the energy supply. There is supposed to be a supply of it, which keeps pace with the demand for it. Am I wrong that inflation is the continuous over-supply of money?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8774848724259616420.post-64751579126660008542008-12-20T08:07:00.000-08:002008-12-20T08:07:00.000-08:00Z, I believe you have made the inflationary point ...Z, I believe you have made the inflationary point very well. <BR/><BR/>Since inflation occurs, and inflation is a hidden tax we must all bear, corrections in the money supply are surely to follow. Booms most often occur as a result of easy credit (an inflationary measure), therefore, as we experience today, we must in turn go through a necessary correction. Productivity and investment must catch up to monetary exuberance, and during this time corrections, including deflation, are necessary. <BR/><BR/>As many of the Austrians have made the case that the business cycle is the result of central banking, would we experience the money cycle (inflation and deflation) without monetary policy? Once banks begin to again adhere to fractional reserve banking, Fed rates of near 0% are going to be very destructive. The “fatal conceit” is that no one person will know exactly when to move the rates up before the damage is already been done. <BR/><BR/>Anyone care to guess which sector will experience the next boom as a result of the current Fed policy? I wish I knew! ($$$$)<BR/><BR/>economicsfreedommatters.blogspot.comAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8774848724259616420.post-1562538204094506712008-12-19T17:08:00.000-08:002008-12-19T17:08:00.000-08:00One thing that does not make sense to me about def...One thing that does not make sense to me about deflationary cycles is the idea that only gold can be money under a gold standard. Glenn says that the economy grows but gold mining is not able to keep up with the expansion of the money supply which is needed. Why would the money supply be wedded to changes in rates of production in gold under a non-fiat system? I would think with modern advanced mining methods would make this less of a problem than it was 130 years ago or so. Since then we had the invention of crude oil and nuclear power and railroads, air-travel etc. I don't see any logistical or practical problems which could hamper the money supply these days. <BR/><BR/>Also, the word inflation suggests a bubble to me. Wouldn't there need to be a deflation at some point? Shouldn't the money supply keep pace with the growth of the economy, rather than growing faster than the economy, even at a steady 1% pace. Small inflation, then small deflation, like that? Why would it be good for the money supply ever to get bigger faster than the economy, even if at a slow pace?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8774848724259616420.post-44839045497596611912008-12-19T08:59:00.000-08:002008-12-19T08:59:00.000-08:00Glenn, Thanks so much for taking the time to compo...Glenn, <BR/><BR/>Thanks so much for taking the time to compose your thoughts and the willingness to post them here knowing that the bulk of readers would not agree with your point of view. <BR/><BR/>To all: <BR/><BR/>I have spent sometime now thinking over Glenn's post. The next topic I think I need to explore and integrate further is that of "deflationary cycles." Periods of deflation are economically painful and disruptive to individual lives and to the progress of prosperity. The question remains, however, as to whether inflation is the solution or the cause and how to assess that relationship. This gets us into the matter of explaining the occurrence of the business or trade cycle--and here there is little agreement, even amongst free trade advocates. To help discussion, I have started a glossary (see side bar) so we can be sure we are using key terms in similar ways. In the next few days I plan to post definitions for inflation and deflation. Respectful comments, as always, are welcome.HaynesBEhttps://www.blogger.com/profile/11263223513305886233noreply@blogger.comtag:blogger.com,1999:blog-8774848724259616420.post-16751446255241234352008-12-18T14:43:00.000-08:002008-12-18T14:43:00.000-08:00One more point that I meant to include in my first...One more point that I meant to include in my first post - -<BR/><BR/>When Nixon stated that “We are all Keynesians, now”, we should look at the implications and effects this had on us. The sole purpose of un-tying our currency to the gold standard at the Bretton Woods conference was to allow for, in part a floating currency base; however, the idea was the we could deficit spend without regard and or constraint. <BR/><BR/>Beth, I believe explained pretty well the value that must first exist for currency to serve as a unit of exchange. In fact, the primary purpose of currency is that is serves as a unit of exchange. Society is made better off having one, trustable unit of exchange - as this allows specialization and division of labor to expand thus allowing for standard of living to vastly increase. I believe that we can all agree on this. <BR/><BR/>However, as Mises pointed out, it (currency) must first be derived from something that is deemed valuable. Gold and silver, throughout the ages has been the most popular commodity money basically because of the inherent value and pureness that gold and silver contain. Aside from ancient rulers altering the consistency of their coins in order to create the first forms of inflation, gold and silver cannot be destroyed like fiat dollars can. Gold and silver can last forever; fiat dollars can be destroyed, animals die (when used in trade, for work and or feed) and have unpredictable life spans, salt dissipates.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8774848724259616420.post-29438727862485184582008-12-18T10:39:00.000-08:002008-12-18T10:39:00.000-08:00Darin: Glenn is not anonymous. anonymous is still ...Darin: Glenn is not anonymous. anonymous is still anonymous.HaynesBEhttps://www.blogger.com/profile/11263223513305886233noreply@blogger.comtag:blogger.com,1999:blog-8774848724259616420.post-27662420624253489592008-12-18T09:57:00.000-08:002008-12-18T09:57:00.000-08:00I would like to comment on this debate against com...I would like to comment on this debate against commodity money. First off, I must (without intending to offend the author) say that I am surprised I survived the preface to the point of the article. Is this you, anonymous?<BR/><BR/>Aside from that, I have three or so main points to contest here.<BR/><BR/>"The 13 nations that abandoned the gold standard in 1931 experienced positive economic growth from 1932 on. The three countries that stuck with the Gold Standard through 1936 (France, Netherlands, and Poland) saw a 6% drop in industrial production in 1935, while the rest of the world was experiencing solid growth." <BR/><BR/>There were several other important factors that have been left out of this equation. To speak of the U.S., we must include the problems that Smoot-Hawley created - that is retaliation from foreign markets which crippled our ability to sell products. The other is the high taxes that were imposed on the American people (especially those who were the producers).<BR/><BR/>"This is fundamental supply and demand economics, but it serves to depict in a simple sense the danger in unrestrained deflationary cycles. That's why modern industrial nations these days strive to manage their economies to sustain a 1-2% rate of inflation with monetary policy supported by the manipulation of a supply of fiat currency. In cycles of modest inflation, wages are rising (as are prices, but increasing productivity and efficiency, as well as advances in technology, can actually cause prices to fall in relation to wages – think of LCD TV or computer prices, for instance), and consumption rises." <BR/><BR/>This effect (price drops as productivity increases) is the result of what Schumpeter labeled "creative destruction" in a capitalist economy, not necessarily because "healthy inflation" numbers. Inflation at any level decrease buying power, thus real prices actually rise as a result of too much (in overall quantity) money. <BR/><BR/>"If the supply of the commodity is sharply increased due to someone discovering a vast, new deposit of it under their land – inflation, due to increased supply of the commodity occurs. Additionally, nations with commodity-back money systems can also find themselves with their currency subject to speculative attacks, causing the price of gold to rise due to increased demand from those wanting to hoard gold during times of economic uncertainty." <BR/><BR/>What about the very necessary increase in labor to extract this new gold find ( needed energy, as well). It would seem to me that this increase in demand for factors of production would equal most of the demand for increasing commodity money. Both demand and supply increase, simultaneously, on average.<BR/><BR/>"There are other reasons that I'm not favorably disposed to the Gold Standard having to do with developing economies and the hardship that it imposes on them in terms of human suffering if they don't happen to have enough of the desired commodity buried underground, or cannot acquire it through trade with nations with commodity money, due to a lack of other natural resources. These countries tend to suffer disproportionately in terms of economic development, because what they really need is vigorous microeconomic activity to develop their educational, manufacturing, healthcare, and governmental infrastructures. They can only do this with the adoption of a currency system that is backed by production and output." <BR/><BR/>This is a fair point, however, accurately debated I'm not sure. It seems that this point doesn't differ any from what "Director's Law" states about taxes actually steering money and opportunities away from the poor to the rich. Additionally, only governments deter trade so, if government created currency dictates government control and interference in the economy than how can we make the case that the opposite would be also be true? <BR/><BR/>I see the (in the preface) mention of Keynesian views, however, it appears to me that many of the author's ideas are monetarist in their development. I must admit, that I am not completely off of monetarist notions; however, empirical evidence leads me to believe (again given the fact that it requires government control of the economy) that it, too, results in failure.<BR/><BR/>economicsfreedommatters.blogspot.comAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8774848724259616420.post-2135618640695197452008-12-18T08:49:00.000-08:002008-12-18T08:49:00.000-08:00The Economy? It Is Stupid.Now, That I Have Your At...<B>The Economy? It Is Stupid.</B><BR/><BR/>Now, That I Have Your Attention:<BR/><BR/><B>The Economy? They Paint It Black.<BR/>Let's Paint it Green, Will You?</B><BR/><BR/>What Are They Offering Except to Wait, Suffer and Be Patient Till, On the Long Run, The Crisis is Over?<BR/><BR/><I>"The long run is a misleading guide to current affairs. In the long run we are all dead.<BR/><BR/>Economists set themselves too easy, too useless a task if in tempestuous seasons<BR/>they can only tell us that when the storm is past the ocean is flat again."</I><BR/><BR/>Sir John Maynard "Invisible Hand" Keynes<BR/><B>A Tract on Monetary Reform (1923) Ch. 3</B> <BR><BR>We Can't Afford to Wait That Long. <BR/>Or Can You?<BR/> <BR/><I>"The decadent international but individualistic capitalism, in the hands of which we found ourselves after the war, is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous—and it doesn’t deliver the goods.<BR/><BR/>In short we dislike it and are beginning to despise it. But when we wonder what to put in its place, we are perplexed.”</I><BR/><BR/>John Maynard "Invisble Hand" Keynes<BR/><BR/>1776 - <I>Annuit Cœptis</I> Offers Its Solution, <BR/><BR/>Dynamic on the Short Run & Stable on the Long Run:<BR/><BR/><B><A HREF="http://www.17-76.net/" REL="nofollow">A Credit Free, Free Market Economy</A></B><BR/><BR/>If It Is Stupid, Lets Teach It a Lesson Now, Will You?<BR/><BR/><I>"Education is the inculcation of the incomprehensible into the indifferent by the incompetent."<BR/><BR/><BR/>"At the present moment people are unusually expectant of a more fundamental diagnosis; more particularly ready to receive it; eager to try it out, if it should be even plausible.<BR/><BR/>But apart from this contemporary mood, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood.<BR/><BR/>Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.<BR/><BR/>Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. Emperors and armies come and go; but unless they leave new ideas in their wake, they are of passing historic consequence.<BR/><BR/>I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval;<BR/><BR/>for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest.<BR/><BR/>But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil."</I><BR/><BR/>John Maynard 'Invisble Hand' Keynes,<BR/><B>The General Theory of Employment, Interest, and Money,<BR/>13 December 1935, p. 383.</B><BR/>Quoted by Chairman Sir Alan 'El Maestro' Greenspan<BR/><B>Adam 'Defunct Economist' Smith</B><BR/>At the Adam Smith Memorial Lecture, Kirkcaldy, Scotland<BR/>February 6, 2005<BR/><BR/>To be sure 1776 - <I>Annuit Cœptis</I> will launch, its economy as soon as the number of its share holders reaches 100,000,000.<BR/><BR/>It Is the Age of Turbulence: We Need an Adventure in a New World Economic Order.<BR/><BR/><A HREF="http://www.17-76.net/opening.html" REL="nofollow">✔ Protect Your Economic Interests.</A><BR/><BR/><A HREF="http://www.17-76.net/share.html" REL="nofollow">✔ The Numbered Account: A Ticket to Ride.</A><BR/><BR/><A HREF="http://www.17-76.net/money.html" REL="nofollow">✔ The Credit Free Currency.</A><BR/><BR/><A HREF="http://www.17-76.net/opening.html" REL="nofollow">✔ Assets Transfer: an Exit Strategy no one Can Afford to Refuse, or Can You?</A><BR/><BR/><A HREF="http://www.17-76.net/interest.html" REL="nofollow">✔ A Specific Application of Employment, Interest and Money:<BR/>Why We Got Here and Why Our Exit Strategy is Credible.</A><BR/><BR/>In order to keep the public informed about the development of its actions, of the "catastrophic event" and avert the suicidal behaviours that are known to take place during periods of Great Economic Depression<BR/>1776- <I>Annuit Cœptis</I> sponsors <A HREF="http://groups.google.com/group/17-76?hl=en" REL="nofollow"> a Discussion - Support Group </A><BR/><BR/><BR/>Consider your economic environment, print and give a wide audience to this document.Anonymousnoreply@blogger.com