Fox McCloud: in practice though, people never do that...what's the point of earning income just to store it away permanently? (Rhetorical question).
in practice though, people never do that...what's the point of earning income just to store it away permanently? (Rhetorical question).
Yes, and even if they did(hypothetically), so what? The reservation demand for money increases, that is basically what "hoarding" means; an increase in people's cash balance. Prices would then drop, that is, the purchasing power of the money unit would rise. There is no necessary loss for society if one wishes to hold on to his money. Besides the fact that it is his right to do as he wishes with his income.
The advocates of the "debt virus" will not accept the above explanation. I believe most of them are not even familiar with it. They will not even accept it if the "hoarding" was actually savings.
DD5:The advocates of the "debt virus" will not accept the above explanation. I believe most of them are not even familiar with it. They will not even accept it if the "hoarding" was actually savings.
precisely...many point to the Wörgl as mentioned here: en.wikipedia.org/wiki/Local_currency#Benefits as being something of benefit that can work...unfortunately they fail to grasp that a negative interest rate is, in essence, inflationary, by nature, and will have the same effect, in the long run, as any other fiat/paper money currency.
Resident Christian Minarchist.
No, it does not; the existing money stock will merely become more valuable (after all, money is a commodity too, it's just a unique one), which will compensate for the increase of goods and services (ie: efficiencies) in the economy. Increasing the money supply, as Rothbard shows in "The Mystery of Banking" and "What has the Government Done To Our Money? and The Case for the 100% Gold Dollar", confers no social benefit.
This is one area where I'm not sure that I entirely agree with Rothbard. To use an extreme example: you wouldn't be able to run an entire economy on a single hella-valuable gold coin. So I don't see how Rothbard can argue that expanding the money supply never has any value, under any circumstances. Of course, this is not an endorsement of printing money like there's no tomorrow.
Maybe there's a good counterargument I haven't heard. A little help?
Cork: No, it does not; the existing money stock will merely become more valuable (after all, money is a commodity too, it's just a unique one), which will compensate for the increase of goods and services (ie: efficiencies) in the economy. Increasing the money supply, as Rothbard shows in "The Mystery of Banking" and "What has the Government Done To Our Money? and The Case for the 100% Gold Dollar", confers no social benefit. This is one area where I'm not sure that I entirely agree with Rothbard. To use an extreme example: you wouldn't be able to run an entire economy on a single hella-valuable gold coin. So I don't see how Rothbard can argue that expanding the money supply never has any value, under any circumstances. Of course, this is not an endorsement of printing money like there's no tomorrow. Maybe there's a good counterargument I haven't heard. A little help?
Rothbard advocated gold because the market had chosen, on its own, in the past, it as the main medium of exchange. That said, I'm sure he would have admitted that if there were only 1 ounce of gold in the economy, it would be more feasible for the market to choose something else as its medium of exchange.
Usury is usually taken to mean driving hard bargains. The Oxford dictionary defines it as: “the lending of money at interest, especially at an extortionate or illegal rate”.Thus the word signifies the lending of money on which interest is charged - without the lender taking a share of the risk.
What, the lender takes no risk when making a loan? What about the risk they won't be paid back.
He has no focus. He's switching back and forth between concepts conflating things that are completely seperate.
Cork: To use an extreme example: you wouldn't be able to run an entire economy on a single hella-valuable gold coin. So I don't see how Rothbard can argue that expanding the money supply never has any value, under any circumstances. Of course, this is not an endorsement of printing money like there's no tomorrow. Maybe there's a good counterargument I haven't heard. A little help?
To use an extreme example: you wouldn't be able to run an entire economy on a single hella-valuable gold coin. So I don't see how Rothbard can argue that expanding the money supply never has any value, under any circumstances. Of course, this is not an endorsement of printing money like there's no tomorrow.
The supply of money is on no importance as long as the free market continues to use that money. Of course, the market would never choose a type of money commodity that wasn't practical. I believe Rothbard always explains that first. If the supply of money became so scarce as to not have enough physical metal to go around, then obviously, the market would abandoned that money and switch to something else. But the point is clear, that no one needs to temper with the money supply, other then the free market.
Protector and Fox, lets go learn about savings and interest.
already read that entire comic book.
I know the importance of savings and why there's interest; I'm merely trying to gather as much information on the opposition (and counters to their arguments) as possible; I deal with a wide-range of people who believe in various economic and political backgrounds, therefore I need/would like to have a diverse amount of information on the topic.
JonBostwick: What, the lender takes no risk when making a loan? What about the risk they won't be paid back.
I didn't read the article, but from my experience with such theories, the belief is that since the banker is creating money "out of thin air", then he is taking no risk.
I believe they also don't realize that the monetize debt becomes a liability, so by creating money, they are still taking on risk. But also, I believe that they fail to see that monetizing debt is "fraudulent" in nature, but that's OK because neither do mainstream economists. They simply don't like the idea that "private" individuals (bankers and FED) are given this privilege. Such a privilege is the role of a democratic government so it can monetize debt for the benefit of the public,.... This is why they don't want the interest, because only by eliminating the interest, can they avoid the "debt virus". By turning over the control over money from the Fed (as if the Fed somehow kidnapped the government) to the people which they equate with democratic government, the benevolent and wise government can monetize debt for public use, and not for profits. I think that the agenda behind these theories is very clear.
DD5: JonBostwick: What, the lender takes no risk when making a loan? What about the risk they won't be paid back. I didn't read the article, but from my experience with such theories, the belief is that since the banker is creating money "out of thin air", then he is taking no risk. I believe they also don't realize that the monetize debt becomes a liability, so by creating money, they are still taking on risk. But also, I believe that they fail to see that monetizing debt is "fraudulent" in nature, but that's OK because neither do mainstream economists. They simply don't like the idea that "private" individuals (bankers and FED) are given this privilege. Such a privilege is the role of a democratic government so it can monetize debt for the benefit of the public,.... This is why they don't want the interest, because only by eliminating the interest, can they avoid the "debt virus". By turning over the control over money from the Fed (as if the Fed somehow kidnapped the government) to the people which they equate with democratic government, the benevolent and wise government can monetize debt for public use, and not for profits. I think that the agenda behind these theories is very clear.
sadly, they fail to realize where this leads; it would likely create bigger and more rapidly forming booms than the current system, and likewise, even higher inflation and worse busts (which would likely lead to even more inflation, since Congress would have the incentive to literally just print interest-free money to pay for all the bailouts). The Continental and Greenback were both excellent examples of this.
People also fail to fully comprehend the Fed and its purpose...sadly, many assert that it's fully private, while others take the opposite approach and insist it's fully government (then there's those who insit it's "fully independent"). I think G. Edward Griffin did an excellent example of showing how the Fed is a hybrid of public and private and serves the best interst of Congress (monetization) and the banks (cartelization).
DD5:The supply of money is on no importance as long as the free market continues to use that money. Of course, the market would never choose a type of money commodity that wasn't practical. I believe Rothbard always explains that first. If the supply of money became so scarce as to not have enough physical metal to go around, then obviously, the market would abandoned that money and switch to something else. But the point is clear, that no one needs to temper with the money supply, other then the free market.
That is the point. The money supply should change when necessary. If it is very rigid the market will abandon the currency.
Agreed, and that's why I support competing currencies. But this seems to be a concession that the money supply does matter to some degree.
To clarify: I agree 100% that the state should not expand the money supply, because it dilutes everyone's money.
But I suppose when you really think about it, the money supply (in a market anarchist society) is basically unlimited. Everyone can choose to convert their gold/silver into rocks or plants or anything and use that as a currency instead. Or a mix of them, or whatever. The difference is that the value is never robbed, as it is under central banking.
scineram:The money supply should change when necessary.
And we seem to have very different ideas about when it is necessary.
February 17 - 1600 - Giordano Bruno is burnt alive by the catholic church. Aquinas : "much more reason is there for heretics, as soon as they are convicted of heresy, to be not only excommunicated but even put to death."
Daniel: No. You are incorrect. Not increasing the supply of gold while increasing the supply of goods and services would decrease the price of goods and services in terms of gold, thereby, increasing real wages.
No. You are incorrect. Not increasing the supply of gold while increasing the supply of goods and services would decrease the price of goods and services in terms of gold, thereby, increasing real wages.
And this in turn would lock up the "credit" because there would not be enough currency to go around, and pay the contractual prices of the year before. People then hord whatever the currency with the fear that buying now limits purchasing power.
In the real economy, prices are sticky.
I doubt a 3% drop in prices over the course of a year would be enough trigger that; future deflation, like future inflation, tends to get taken into account very quickly. Not only that, but as people hord currency, prices will fall, which, will eventually reach supply+demand equilibrium and the market will be cleared, and things will continue on, as normal.
Why would there be enough currency to go around? Money circulates, after all, and as productivity increases and the less money there is in circulation, prices adjust to compensate.
Now lets assume a thought experiment where the money supply never increases. If the supply obviously never increases, how is interest paid? Well, interest can be paid any number of ways beyond simply little notes or shiny coins. Exchange for bulk commodities or shares of the commodities could be one means to pay off interest as productivity pretty much increases with each successful investment. Whether we're talking about better farming techniques or better production technologies, so long as material wealth itself in the form of some good or service increases, the money supply if it remains absolutely static will increase in buying power. Meaning each unit of currency can now buy more. Why? because there is more to buy. It's sorta like inflation in reverse (not deflation as that is something else entirely) with the value of each unit of good/service going down in value as their supply increases. This is excluding other means to measure value (non-rational valuation methods (feelings, instincts, hype...)), of course.
So, I don't see how this is a huge problem, it just seems to me it's a red herring to punish investors for wanting a return on their wealth that they invested. Investors do a service to the economy by working on their own personal information and valuation methods to find good businesses great and small. They're one form of the Wisdom of the Crowds as it were. So, to deny a return on their investments simply derails the entire process of wealth creation.
"The power of liberty going forward is in decentralization. Not in leaders, but in decentralized activism. In a market process." -- liberty student
ladyattis: Now lets assume a thought experiment where the money supply never increases. If the supply obviously never increases, how is interest paid? Well, interest can be paid any number of ways beyond simply little notes or shiny coins. Exchange for bulk commodities or shares of the commodities could be one means to pay off interest as productivity pretty much increases with each successful investment. Whether we're talking about better farming techniques or better production technologies, so long as material wealth itself in the form of some good or service increases, the money supply if it remains absolutely static will increase in buying power. Meaning each unit of currency can now buy more. Why? because there is more to buy. It's sorta like inflation in reverse (not deflation as that is something else entirely) with the value of each unit of good/service going down in value as their supply increases. This is excluding other means to measure value (non-rational valuation methods (feelings, instincts, hype...)), of course.
In the instance of ones 30 year mortgage, is it to be flexed to reflect buying power of the currency? I hardly believe so, because during price deflation, banks have the greatest return in value giving more weight to future earnings. With that in mind, it is also not in a banks best interest to assume practices that will invoke deflationary price spirals, because that has been proven to cause a greater propensity to default. Theoretically, you can repay interest in goods, but there is a barrier in that scenario. In doing so, you assume that the lender actually demands your good or service. what if you are a high school teacher and the person who loans you money does not have children of that age? That is why we need a medium of exchange. The majority of capitol purchases are sticky.
I see nothing wrong with financial services either. Regardless, notes denominated on a fixed stream of return will always exist (bonds/debt) in a system that requires credit to function. Friedman proved individual purchase decisions are based on long run income expectations, which confirms our debt system as natural.
Fox McCloud: I doubt a 3% drop in prices over the course of a year would be enough trigger that; future deflation, like future inflation, tends to get taken into account very quickly. Not only that, but as people hord currency, prices will fall, which, will eventually reach supply+demand equilibrium and the market will be cleared, and things will continue on, as normal. Why would there be enough currency to go around? Money circulates, after all, and as productivity increases and the less money there is in circulation, prices adjust to compensate.
But does this cause people to hoard currency with the mindset to hold off capitol purchases until a later date (creating a downward spiral)? A decrease in velocity translates to decrease in total transactions.
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