As you said yourself, "money is a medium for barter" why does the medium need to keep up with what is being bartered, so long as it is sufficiently divisible?
Because we build long-term contracts around it, debt and all. We want its value in relation to a given level of production to remain relatively stable. This is pretty basic. If money doesn't have relatively predictable value in relation to a given basket of goods/services the economy is inefficient. What you're asking for is that each unit of money be able to buy more and more goods as time goes by and the economy grows (if it even can with this policy). This isn't how money is supposed to function.
If the real rates on such an investment are only 2-3% as opposed to 6-7%, isn't that going to throw a massive wrench in most retirement plans?
We've already established that our definitions of "real" rates of return are probably vastly different, but to answer anyway, you act like the 10% is fixed, and the inflation is the variable. I think you'll probably find that this is a very bad description of the options we have. It's much more likely that we could receive a real (using CPI, not M2) return that is greater if along the way the gov't issued enough net financial assets to use the econonomies full capcity, and only after that will we see an increase only in our nominal, not real, return. Your example just has a lot of erronious assumptions built into it regarding inflation and return.
Wouldn't this mean that you are destined to work for the rest of your life, well into your 60s or even 70s depending on how long you expect to live? Tell me this, the powers that be, would they prefer you employed (for them) or living off static investments drinking beers on a beach?
Real wealth, not money and debt, is what our lives are really about. Money just makes transactions easier. More money in an economy will tend to pull more REAL goods and services, (aka, REAL wealth) out of the productive capacity of that economy, until we reach full employment, at which point we'll just start seeing rising prices. How we get from that to people working forever to "beat inflation" is beyond me. This is giving inflation WAAAAYYY too much credit in its ability to make peoples' lives miserable. Every net financial asset issued by the gov't ends up in someone's account. It doesn't just make things expensive and then disappear, stealing your cake and not letting you eat it either.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
- Thomas Paine
