On Friday 05 December 2008 09:18:21 am Von Grant Fugal wrote: > There is less MONEY to go around, but I will say it time and time again, > MONEY IS NOT WEALTH!
I agree. Money is not wealth. Money is a means of wealth transferrence. Wealth, is measured in property. An interesting aside is, when you use a precious metal as money, it now wears two hats. > Why is it bad for me or anyone else, if when capita increases, we all > have less money? There's more people per unit money, but there's also > more goods per unit money, so really it all balances out. How is there magically more goods per unit money with an increase of capita? An increase of capita is an increase in demand, not supply. > How does constant per capita money facilitate exchange? If the US > population doubled tomorrow, those new people would absorb approx half > the money supply. I can see why this would be problematic, but such > dramatic change does not occur. With the doubling, eventually all the > new people would become producers (you might even say they would become > producers by necessity before they absorbed any of the money supply) so > at the same time they are shrinking the per capita money supply, they > are also increasing product, or generally maintaining a relatively > constant per capita production (in reality per capita production goes up > over time, THIS is economic growth, THIS is wealth, regardless what the > money does.) So if everyone makes pies, and there's on average one pie > per person. What mattereth it that now there's twice as many pies, twice > as many people, but we all have half the money with which to buy pies? > Pies would simply cost half as much. In reality such changes take place > gradually, giving plenty of time for these adjustments to happen > naturally and smoothly. I think this argument is seriously flawed. Let's assume from your example that an increase in capita incurs an equal increase in both demand and supply. Both curves shift to the right by the same amount. In this case, prices stay exactly the same while the quantity of goods exchanged increases. Fine and dandy. However, you're forgetting, that with a static currency supply, the per capita purchasing power has now decreased inversely proportional to the increase in capita. Now what have we got? We've just lowered the demand--the demand curve shifts to the left, lowering both the price, and the number of goods exchanged per capita--some of your population now cannot afford the goods. When this gets to excessive levels, we call it poverty. Now redo this with a steady per-capita currency supply, and that final decrease in demand is eliminated. Everyone's purchasing power is unaffected by changes in capita. Your economic growth is still measured in terms of quantity of goods exchanged, so you grow with your capita, moreso if you have exports. /* PLUG: http://plug.org, #utah on irc.freenode.net Unsubscribe: http://plug.org/mailman/options/plug Don't fear the penguin. */
