>From Robin:
...
> In reply to Wm. Scott Smith's message of Thu, 14 Apr 2011 15:13:42 -0700:
> Hi,
> [snip]
> >If they immediately have virtually free energy, but no new goods and
services
> have been already developed, the economy will feel the extra money; this
will
> cause inflation.
Yes, I believe it could... at least initially. However... it would
simultaneously stimulate the economy through increased spending. Kind of
like getting a massive tax rebate. This will cause the economy to want to
product more products, which in turn increases the supply of products and
services. Eventually a new supply & and balance equilibrium will be created,
stabilizing inflation.
> If I understand inflation correctly, then it's when the price goes up
without
> a matching increase in actual value (price may also be the price of
labor).
IMO, the questions that should be pondered are: (1) what mechanisms drive
the price of a product to go up, and (2) what's happening to the status
productivity while currency is maintained as a fixed supply?
I would simplify the definition of "inflation" as simply meaning it occurs
when there is too much money chasing too few products and services.
Increased supplies of money, while simultaneously maintaining a fixed supply
of products and services, automatically generates an artificial increase in
demand for products and services. This results in price increases through
the supply and demand equation - aka inflation. The solution to keeping
inflation at bay is to increase productivity (increases in supply of
products and services) in more-or-less direct proportion with increases in
the supply of currency.
The implementation of automation, as has often been discussed within the
Vort Collective, throws a vexing wrench into the productivity equation since
the traditional use of labor as a means of spreading "productivity"
throughout society is being removed. What to do with all that surplus
"labor" needs to be addressed. IMHO, the solution is to create new products
consumers want to buy along with new forms of services... particularly new
services that in the past might have been perceived as non-existent and/or
considered irrelevant and/or unproductive, like the National Association of
Professional Video Game Players - The NAPVGP.
The solutions: Either print less money - or take it out of circulation such
as with the recent mortgage lending fiasco. (which generates extremely
unpleasant side-effects - recessions and depressions), or produce more
products and services while keeping the supply of currency more-or-less
fixed. The best solution, IMHO, is to increase the supply currency in direct
proportion to increased supplies of products and services. However, this is
often a difficult thing to manage since it would seem to be nearly
impossible to accurately interpret the status of just how productive the
country really is at any given moment in time.
> However when something actually gets cheaper to produce (energy), then the
> consequence is real growth, not inflation.
I would agree with this assessment. I would also add that this
interpretation is the equivalent of producing more products while keeping
the supply of money stable. Decreasing the amount of energy needed to create
the product would certainly do that.
Regards,
Steven Vincent Johnson
www.OrionWorks.com
www.zazzle.com/orionworks
