What is money?

[Gumby]

Right... but over time, as the economy grew, the cost of banana would be like $.000002. That would be some really weird currency.

And shareholders wouldn't appreciate a nominal loss each quarter! That would make taxes pretty weird too.

By the same token, today a banana is $0.50, instead of a penny. Is that really any weirder? I mean, this stuff is all a human social construction anyway. None of it is natural. We adapt to what works well enough.

What about investing in a company that goes down in value? Do you get a tax deduction when you sell for your stock for less money — even though the value of the stock is greater in real terms?

[Pointedstick]

What about investing in a company that goes down in value? Do you get a tax deduction when you sell for your stock for less money — even though the value of the stock is greater in real terms?

I admit it would be weird. But those who invest in companies are generally sophisticated folks who can figure this stuff out. As for how the taxes would work, who knows. I mean, right now nobody really knows how they work! 

[Kshartle]

Essentially, long-term, we can expect gold to maintain its real value, until the point where our economy grows and gold supply stops growing.

Then, our expectation would be that gold will gain value every year in real terms.

How can this NOT hamper investment and growth...

Even without the aforementioned unsustainable framework of having more principal and interest needing to be paid back.

If you take two completely identical societies, one with a money supply that grows about even with the economy, and the other with a fixed money supply, the former is going to grow more rapidly than the former.  I'm surprised there's debate about that.

I'm also surprised there is debate about that. It has been established beyond any reasonable doubt that printing money retards rather than assists economic growth, but obviously some people don't know that.

One hopes that after the disaster that is building is unleashed people will get it. Instead we'll probably get screwed with a "workers" crusade or some other welfareconomics people's movement. Hope you have gold overseas or you can shove enough up your @55 and bribe the border guards.

This site is much more highly educated that then gen pop and from the looks of it......we are screwed. 

[doodle]

Ultimately the only group in this scenario that has done any real work are the farmers and somehow those that have done the work and produced something tangible are also in debt to those who have really done nothing at all...the bankers. That doesn't seem very fair to me.

I'm with the bankers. They risked their cash on these loser farmers.

These economic principles you are expressing were put on a flag. It had a hammer and sickle. The results are absolutely horrifying. Millions starving to death and thrown into slave labor. All in the name of "fairness" to the worker over the bankers and their money.

Heaven help us if this welfare economic sickness continues to spread. Please, do yourself and everyone a favor by not spreading this mental disease. I don't need my kids in re-education and labor camps that result from the crusade for workers. It's a freakin scam. An obvious one.

So the farmers are not free to demand payment for their products in whatever form of money they choose? I thought you were letting people freely organize and decide the form of money they choose? Now they are forced to accept payment in gold? That sounds just like the present system of force and dungeons you were bemoaning.

Let's say the farmers have blue jay toenails in their community bank and they only will accept payment for their crops in those. The bankers are free to exchange gold coins for blue jay toenails in order to buy the food. Of course, because food is essential to life and gold isn't....the exchange rate will not be so favorable for the bankers. Both groups are acting freely, there is no coercion....so I don't understand the communist reference.

[Gumby]

I'm also surprised there is debate about that. It has been established beyond any reasonable doubt that printing money retards rather than assists economic growth, but obviously some people don't know that.

When did they establish that beyond a reasonable doubt? Last time I checked the fiat-printing US of A was the most powerful nation in the history of mankind. (again, not endorsing it).

[Libertarian666]

Right... but over time, as the economy grew, the cost of banana would be like $.000002. That would be some really weird currency.

And shareholders wouldn't appreciate a nominal loss each quarter! That would make taxes pretty weird too.

By the same token, today a banana is $0.50, instead of a penny. Is that really any weirder? I mean, this stuff is all a human social construction anyway. None of it is natural. We adapt to what works well enough.

What about investing in a company that goes down in value? Do you get a tax deduction when you sell for your stock for less money — even though the value of the stock is greater in real terms?

Capital gains taxes are one of the main ways that inflation directly confiscates capital by taxing nominal gains that may be real losses. They should be abolished.

(Note: all taxes should be abolished; I'm just specifying capital gains taxes because of their special sensitivity to inflation.)

[Kshartle]

So the farmers are not free to demand payment for their products in whatever form of money they choose? I thought you were letting people freely organize and decide the form of money they choose? Now they are forced to accept payment in gold? That sounds just like the present system of force and dungeons you were bemoaning.

Now where did I put that field full of strawmen............

[Libertarian666]

I'm also surprised there is debate about that. It has been established beyond any reasonable doubt that printing money retards rather than assists economic growth, but obviously some people don't know that.

When did they establish that beyond a reasonable doubt? Last time I checked the fiat-printing US of A was one the most powerful nation in the history of mankind. (again, not endorsing it).

In the 1920's, I believe, if not earlier. It's an elementary economic fallacy that having more money causes economic growth, namely the fallacy of confusing nominal with real growth.

[Gumby]

I'm also surprised there is debate about that. It has been established beyond any reasonable doubt that printing money retards rather than assists economic growth, but obviously some people don't know that.

When did they establish that beyond a reasonable doubt? Last time I checked the fiat-printing US of A was one the most powerful nation in the history of mankind. (again, not endorsing it).

In the 1920's, I believe, if not earlier. It's an elementary economic fallacy that having more money causes economic growth, namely the fallacy of confusing nominal with real growth.

Right, but that doesn't necessarily mean that it "retards" economic growth. That hasn't been "proven beyond a reasonable doubt" as far as I know.

[Kshartle]

I'm also surprised there is debate about that. It has been established beyond any reasonable doubt that printing money retards rather than assists economic growth, but obviously some people don't know that.

When did they establish that beyond a reasonable doubt? Last time I checked the fiat-printing US of A was one the most powerful nation in the history of mankind. (again, not endorsing it).

In the 1920's, I believe, if not earlier. It's an elementary economic fallacy that having more money causes economic growth, namely the fallacy of confusing nominal with real growth.

So wrong Tech. All we need to do is print one million dollars for everyone. Then we'd all be millionaires!!!!!!!!!!!!!!!!!

woot woot!!!!!

don't understand why they aren't printing more

[Libertarian666]

Ultimately the only group in this scenario that has done any real work are the farmers and somehow those that have done the work and produced something tangible are also in debt to those who have really done nothing at all...the bankers. That doesn't seem very fair to me.

I'm with the bankers. They risked their cash on these loser farmers.

These economic principles you are expressing were put on a flag. It had a hammer and sickle. The results are absolutely horrifying. Millions starving to death and thrown into slave labor. All in the name of "fairness" to the worker over the bankers and their money.

Heaven help us if this welfare economic sickness continues to spread. Please, do yourself and everyone a favor by not spreading this mental disease. I don't need my kids in re-education and labor camps that result from the crusade for workers. It's a freakin scam. An obvious one.

So the farmers are not free to demand payment for their products in whatever form of money they choose? I thought you were letting people freely organize and decide the form of money they choose? Now they are forced to accept payment in gold? That sounds just like the present system of force and dungeons you were bemoaning.

Let's say the farmers have blue jay toenails in their community bank and they only will accept payment for their crops in those. The bankers are free to exchange gold coins for blue jay toenails in order to buy the food. Of course, because food is essential to life and gold isn't....the exchange rate will not be so favorable for the bankers. Both groups are acting freely, there is no coercion....so I don't understand the communist reference.

Sure, the farmers can demand payment in whatever they want... before they make the contract to sell their products. Unilaterally deciding AFTER the fact that they don't want to live up to the bargain they voluntarily entered into is theft.

And it is also theft if the government decides later that the farmers don't have to pay in whatever money they agreed to pay in.

[Gumby]

So wrong Tech. All we need to do is print one million dollars for everyone. Then we'd all be millionaires!!!!!!!!!!!!!!!!!

Way to mis-represent what we are saying....again.

[Libertarian666]

When did they establish that beyond a reasonable doubt? Last time I checked the fiat-printing US of A was one the most powerful nation in the history of mankind. (again, not endorsing it).

In the 1920's, I believe, if not earlier. It's an elementary economic fallacy that having more money causes economic growth, namely the fallacy of confusing nominal with real growth.

Right, but that doesn't necessarily mean that it "retards" economic growth. That hasn't been "proven beyond a reasonable doubt" as far as I know.

It impairs the value of contracts, especially long-term contracts, which suffer more from devaluation; this makes people reluctant to enter into such contracts. It also causes capital consumption because people think they are richer than they actually are.

Both of these effects impair capital, thus reducing real economic growth.

[Kshartle]

In the 1920's, I believe, if not earlier. It's an elementary economic fallacy that having more money causes economic growth, namely the fallacy of confusing nominal with real growth.

Right, but that doesn't necessarily mean that it "retards" economic growth. That hasn't been "proven beyond a reasonable doubt" as far as I know.

It impairs the value of contracts, especially long-term contracts, which suffer more from devaluation; this makes people reluctant to enter into such contracts. It also causes capital consumption because people think they are richer than they actually are.

Both of these effects impair capital, thus reducing real economic growth.

Don't forget it transfers purchasing power to the counterfitters, which use it in ways the marketplace (humans engaging in voluntary trade) would not choose.

This makes us poorer.

Browne explains this in his earlier works very very clearly. The are good reads, suggest everyone picks them up.

[Libertarian666]

So wrong Tech. All we need to do is print one million dollars for everyone. Then we'd all be millionaires!!!!!!!!!!!!!!!!!

Way to mis-represent what we are saying....again.

What, you mean we wouldn't all be millionaires if they gave everyone a million dollars? 

[Kshartle]

So wrong Tech. All we need to do is print one million dollars for everyone. Then we'd all be millionaires!!!!!!!!!!!!!!!!!

Way to mis-represent what we are saying....again.

That one was all me baby, didn't attribute it to anyone. Where is my million bucks now?

Same principle if you advocate one dollar.

Counterfitting hurts the economy, doesn't help it, doesn't matter who the counterfitter is.

[Kshartle]

So wrong Tech. All we need to do is print one million dollars for everyone. Then we'd all be millionaires!!!!!!!!!!!!!!!!!

Way to mis-represent what we are saying....again.

That one was all me baby, didn't attribute it to anyone. Where is my million bucks now?

Same principle if you advocate one dollar.

Counterfitting hurts the economy, doesn't help it, doesn't matter who the counterfitter is.

Unless it's a billion. If a billion doesn't work, how about a trillion? I can keep going.......but you all get the point.

[Libertarian666]

Right, but that doesn't necessarily mean that it "retards" economic growth. That hasn't been "proven beyond a reasonable doubt" as far as I know.

It impairs the value of contracts, especially long-term contracts, which suffer more from devaluation; this makes people reluctant to enter into such contracts. It also causes capital consumption because people think they are richer than they actually are.

Both of these effects impair capital, thus reducing real economic growth.

Don't forget it transfers purchasing power to the counterfitters, which use it in ways the marketplace (humans engaging in voluntary trade) would not choose.

This makes us poorer.

Browne explains this in his earlier works very very clearly. The are good reads, suggest everyone picks them up.

Yep.

[Kshartle]

Anyone see the movie "the invention of lying"?

I'm writing a new one staring me called "The invention of counterfitting".

Guess the premise.

Do I need to spell out how this would hurt the economy and not help it?

Even if I call myself Ben Bernanke or the central bank or the government my counterfitting will hurt the economy. Unless I magically know better than everyone else what should be produced.

Please provide some evidence that magic exists before you believe in it.

[doodle]

I'm with the bankers. They risked their cash on these loser farmers.

These economic principles you are expressing were put on a flag. It had a hammer and sickle. The results are absolutely horrifying. Millions starving to death and thrown into slave labor. All in the name of "fairness" to the worker over the bankers and their money.

Heaven help us if this welfare economic sickness continues to spread. Please, do yourself and everyone a favor by not spreading this mental disease. I don't need my kids in re-education and labor camps that result from the crusade for workers. It's a freakin scam. An obvious one.

So the farmers are not free to demand payment for their products in whatever form of money they choose? I thought you were letting people freely organize and decide the form of money they choose? Now they are forced to accept payment in gold? That sounds just like the present system of force and dungeons you were bemoaning.

Let's say the farmers have blue jay toenails in their community bank and they only will accept payment for their crops in those. The bankers are free to exchange gold coins for blue jay toenails in order to buy the food. Of course, because food is essential to life and gold isn't....the exchange rate will not be so favorable for the bankers. Both groups are acting freely, there is no coercion....so I don't understand the communist reference.

Sure, the farmers can demand payment in whatever they want... before they make the contract to sell their products. Unilaterally deciding AFTER the fact that they don't want to live up to the bargain they voluntarily entered into is theft.

And it is also theft if the government decides later that the farmers don't have to pay in whatever money they agreed to pay in.

So you are saying that the farmers agreed to sell their produce for gold coins before they even planted it? My understanding is that the farmers used the gold coins to purcahse the land and it is that debt on the price of the land that they must pay back in gold coins. Im not talking about payment for the land though, I'm talking about the produce that came from that land which they are now selling back to the bankers. Instead of selling the produce in exchange for gold coins though, the farmers demand to be paid in another currency which the bankers can freely exchange their gold coins for if they want to eat. Why can't the farmers demand payment for their produce in whatever form of money they choose?

[Kshartle]

You seem to think that money is a tool of freedom. I think that it can just as easily become a tool to enforce social hierarchies and cement power relations.

if you're referring to fiat money......agreed.

[Gumby]

It impairs the value of contracts, especially long-term contracts, which suffer more from devaluation; this makes people reluctant to enter into such contracts. It also causes capital consumption because people think they are richer than they actually are.

Both of these effects impair capital, thus reducing real economic growth.

I believe you are talking about the effect on printing within a healthy economy. But, when private credit is contracting, or collapsing — and people are unemployed and ready, willing and able to work — I don't see why printing money, to get people to build a needed bridge or a highway, would reduce economic growth.

As private credit collapses, the broader money supply would be rapidly decreasing and the base money would be trying to play catch up with the losses in private credit. Therefore, printing might not even be able to raise the broad money supply or even properly get it into everyone's hands.

The whole "it's been proven beyond a reasonable doubt" is a bit dramatic. I don't think anything in economics has ever been "proven beyond a reasonable doubt."

[Kshartle]

Anyone see the movie "the invention of lying"?

I'm writing a new one staring me called "The invention of counterfitting".

Guess the premise.

Do I need to spell out how this would hurt the economy and not help it?

Even if I call myself Ben Bernanke or the central bank or the government my counterfitting will hurt the economy. Unless I magically know better than everyone else what should be produced.

Please provide some evidence that magic exists before you believe in it.

+1

I know it's lame, but I re-read this and had to laugh.

[Kshartle]

But, when private credit is contracting, or collapsing — and people are unemployed and ready, willing and able to work — I don't see why printing money, to get people to build a needed bridge or a highway, would reduce economic growth.

That's because you believe that counterfitters magically know how resources should be utilizied in the most efficient manner.

This is a normal thought pattern nowadays, you are by far in the majority. Those who would own you like their cattle have desperately tried to train you since nearly birth to think like this, like a slave.

No shame, we've probably all thought this way at some point.

Trust me, Mosler is just one in a long string of their pied pipers. Krugman is another. Keynes was their original superhero.

It is all a scam to control the creation of money which hands them control of the economy, everyone's lives, the military, the schools, the police, what we eat, what we do and say. They want it all. The system they erected will crash and they will pose as the saviors. And into the furnace everyone will march.

[Libertarian666]

So the farmers are not free to demand payment for their products in whatever form of money they choose? I thought you were letting people freely organize and decide the form of money they choose? Now they are forced to accept payment in gold? That sounds just like the present system of force and dungeons you were bemoaning.

Let's say the farmers have blue jay toenails in their community bank and they only will accept payment for their crops in those. The bankers are free to exchange gold coins for blue jay toenails in order to buy the food. Of course, because food is essential to life and gold isn't....the exchange rate will not be so favorable for the bankers. Both groups are acting freely, there is no coercion....so I don't understand the communist reference.

Sure, the farmers can demand payment in whatever they want... before they make the contract to sell their products. Unilaterally deciding AFTER the fact that they don't want to live up to the bargain they voluntarily entered into is theft.

And it is also theft if the government decides later that the farmers don't have to pay in whatever money they agreed to pay in.

So you are saying that the farmers agreed to sell their produce for gold coins before they even planted it? My understanding is that the farmers used the gold coins to purcahse the land and it is that debt on the price of the land that they must pay back in gold coins. Im not talking about payment for the land though, I'm talking about the produce that came from that land which they are now selling back to the bankers. Instead of selling the produce in exchange for gold coins though, the farmers demand to be paid in another currency which the bankers can freely exchange their gold coins for if they want to eat. Why can't the farmers demand payment for their produce in whatever form of money they choose?

They would have every right to do that. The problem is that they contracted to pay back the mortgages on their farms in a specific kind of money, namely gold dollars. Then they discovered that they couldn't pay back that number of gold dollars because the prices for their produce were too low, in that same money. So their solution was to change the type of money of their debt, retroactively and unilaterally.

Now, you could say that the bankers were crooks who were manipulating the money supply to impoverish the farmers, and if you could demonstrate that, then maybe the farmers should be able to void their contracts. But make no mistake that voiding their contracts is what we are discussing.