i have read that rothbard claimed that there was no 'social benefit' from adding additional money to an economic system.
if i recall correctly his reasoning was that the additional money-units would decrease the purchasing power of existing money stock - and this would be a drag.
are there other social benefits than that of purchasing power that would lead so many people to aquire so much gold and silver over the centuries. were they ignorant of money?
i have read at coinfacts.com that some coin designs had to be changed because of the properties of casting gold at very small amounts. i assume this coins grew smaller due to exchange flexibility?
would say a gold plated paper not meet the durabilty and storage (assay dificulties, etc) standard (market preference) of a small coin...prompting additional mining for money to take place?
are there social benefits that occur by adding to the gold/silver money-stock other than the purchasing power aspect?
sthomper: but if the new gold money facilitated purchases wouldnt it also diminish purchasing power of existing gold money and prevent some purchases from being made?
"How would it? Coinage does not interfere with otherwise planned transaction in any way."
if i planned to purchase something two weeks from now and goldmoney enters the economy diminishing my existing goldmoney stock wouldnt that prevent or delay my planned purchase requiring more golmoney?
"No increase in the money supply will have a general social benefit. It will devalue the existing supply. The real question, then, is why add more money at all? The answer, of course, is that the increase benefits the first user of the new money, as the first user spends the new money at the current exchange rate, before the market adjusts to the inflation.
However, when dealing with a commodity as money such as gold, the mining of new gold and subsequent minting of new coins, while increaseing the money supply, also introduces more of a particular good, ouces of gold, to the market. Gold is valued on the market as a commodity, as well as the medium of exchange meaning along with the an increase in the money supply, there is also an increase in the total goods available on the market, if such a thing can be quantified."
this seems to make sense to me for some reason as to why adding more physical goldmoney into an economy would take place.
i will try to look into this more.
thanks
i guess counterfitting a gold coin would be akin to goldplating a nickel and tin alloy and having the result look and fell like a gold coin?
as counterfitting a banknote or dollarbill (with ink and fancy paper) woulnt be representative of the payent claims of each.
You wrote: "was this ever a consideration in inflating the gold/silver money supply?" Check your definition of "inflation." Rothbard does NOT define inflation as just any increase in the money supply, as you seem to think.
When a gold miner produces gold, he is NOT "inflating." Inflation is currency debasement. Currency is paper money, not gold coins/bullion. Not all money is currency. I hope this answers some of your questions.
i said inflating the gold/silver MONEY supply not unmoneyed gold or silver.
"Every supply of money is always utilized to its maximum extent, and hence no social utility can be conferred by increasing the supply of money."
http://mises.org/rothbard/mes/chap11a.asp
"increasing the supply of money...." in rothbards words. i guess you don not consider that inflation.
if not reply no more.
i use inflation to mean increasing the supply of money as do many others i have read at mises and lrc. rothbard speaks of gold and silver as being a money (.Thus, consider a free-market society where gold is the money..... http://mises.org/story/3480 )
rothbard states above "no social utility can be conferred by increasing the supply of money." would you disagree if the statement said "no social utility can be conferred by inflating the supply of money. "?
do you consider a 'goldMONEY supply' impossible to 'inflate' ?
"An increase in the money supply, then, only dilutes the effectiveness of each gold ounce; on the other hand, a fall in the supply of money raises the power of each gold ounce to do its work. We come to the startling truth that it doesn't matter what the supply of money is. Any supply will do as well as any other supply. The free market will simply adjust by changing the purchasing power, or effectiveness of the gold-unit. There is no need to tamper with the market in order to alter the money supply....."
http://mises.org/money/2s8.asp
would saying "inflating the money supply only dilutes the effectiveness of each gold ounce....." have no meaning to you?
What You Should Know About Inflation......"Shows that inflation is always an increase in the supply of money, which results in price inflation...."
http://mises.org/hazlitt/hazlittbib.asp
if you cant use the term in this context in this post , post elsewhere
In MES, Rothbard defines inflation on page 990 note 106. His definition of inflation excludes increases in the stock of specie (gold and silver). I consider it impossible to find "inflation" in a 100% gold reserve standard market. One of the logical differences between increases in fiat currency and increases in the supply of gold and silver is: increases in the money supply due to new (gold and silver) money on the market do not cause the Austrian business cycle. Increases in the money supply due to the government printing excessive quantitities of paper money does cause the ABC.
You are right that gold and silver have nonmonetary utility. People use these metals to make jewelry. When the supply of gold and silver increases due to mining, some people benefit because of the nonmonetary utility the metals have. These people are those who appreciate jewelry. However, regarding monetary issues, the increase causes no net social effect, and the only people who obtain wealth from gold mining are the mining company owners, employees, stockholders, etc. Likewise, the only people who gain from issuance of new fiat currency are those who spend it before it causes a general fall in the purchasing power of money.
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