<quote name="Nicholas Leippe" date="Fri, 5 Dec 2008 at 11:00 -0700"> > On Friday 05 December 2008 10:21:01 am Von Grant Fugal wrote: > > Ok, there are probably other ways to fairly distribute new money, but > > centralized injection is not one of them. How does the government not > > benefit by having brand new money? You say "well the government is the > > people." Nice try. Power corrupts. Money is power. Giving the government > > the power to print more power is corruption in the extreme. > > Agreed. Which is why you don't give them unlimited power to do so willy-nilly > so Obama can buy a new yacht. You give them a specific power to do it > according to a fixed-in-stone mathematical formula, using publically > available > input data that is audited before use and cannot be fudged.
Obama is still going to "buy a yacht." He's just going to do so on a smaller budget. You're solving the amount of inflation, but not the distribution problem. > > The printers benefit (the government gets more power, more pet projects, > > hidden taxation). The first receivers benefit. This is demonstrable in > > several ways. First, they get to sell more of their product than they > > would normally. They get more business. More business for any business > > is good business and most certainly a benefit. Secondly, and highly > > related, they experience an increased demand for their product. > > Supply/demand dictates that with an increased demand comes an increased > > cost. They not only get to sell more of their product, they get to do so > > at a higher charge. Lastly, they get to use all this extra money they got > > from doing extra business at extra charge to increase demand at the next > > level of the chain. > > Okay, so yes, there may be an additional increase in demand from putting the > new currency into curculation. This would raise prices--meaning more profit > for those producers. But, it doesn't have to be done this way...read on. > > > If you somehow manage to keep the money > > supply/capita ratio constant, then yes, overall prices don't go up. But > > prices DO go up on that first step, then of necessity prices drop > > elsewhere. Where? Most likely in wages and compensation, small > > businesses, etc. > > Here's a kicker for you. If the government budget is required to stay the > same, regardless of printing new currency, then taxes collected must decrease > by as much as the new currency--thus the government buying power stays the > same, while the population's buying power increases. There's no increase in > demand directed at the suppliers of the goods and services to the government. > At worst there would be an increase in demand for whatever the entire > population buys--everything!. Oh, but wait...the capita increased--so the > per/capita buying power did not increase after all... which is exactly what > we > wanted. Solution? Perhaps. How do you propose to keep the government budget the same? How do you propose to decide ahead of time what the government budget will be for today and forever afterward? I can see what your saying, and it sounds good in theory. How would it be? To always have the same paycheck, it's always enough (and in fact buys me more and more as the economy grows) and always the same taxes that never increase? That's a splendid ideal. I fear it places far too much trust in the government. Also the fact remains, that even though the government has a constant budget, it still aqcuires that budget dispraportionately to the market. It's suppliers are constantly better off, and their suppliers, while the low end businesses are constantly at a disadvantage. > > > Are you talking about monetary inflation or price inflation? In some > > > ways, yes. In all ways, no. > > > > Price inflation IS monetary inflation. The only other way to get price > > inflation is with severe economic downturn. That is to say, a pronounced > > decrease in production, in wealth. > > There are at least three definitions of inflation: > - monetary inflation - an increase in the money supply > - decline in the real value of money - decrease in purchasing power > - price inflation - increase price levels - this is the reigning use of the > term today > > They all can have the same effect, but have different causes. They all have the same effect AND the same causes. Definition: cause price inflation: decline in money value or decreased supply (production) decline in money value: monetary inflation or decreased production monetary inflation: well this has one cause, and is one of the causes for the other two. Following the dependencies, we get monetary inflation: purely causative decline in money value: monetary inflation or decreased production price inflation: monetary inflation or decreased production So monetary inflation is one of the causes of all other inflation. The only other cause is decreased production. Von Fugal -- Government is a disease that masquerades as its own cure -- Robert Lefevre
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