Sound Money?

[kevsta]

There is another thread here about "the Gold standard", so this one is not about that.

I would like to know if people are in principle in favor of "sound money" however that may be achieved.

by "sound money" I just mean some form of money that cannot be debased by whichever passing politico it suits to do so, either directly, or via their favourite central planners bank

or is continual debasement a useful and necessary part of modern economic theory?

thoughts please gentlemen and ladies?

 

[TubbaBlubba]

or is continual debasement a useful and necessary part of modern economic theory?

Pretty much.

 

[kevsta]

Pretty much.

why, to give the illusion of perpetual growth which the whole system needs to not collapse, even when there actually isn't any?

 

[TubbaBlubba]

Um, growth is calculated with inflation factored in.

 

[kevsta]

Um, growth is calculated with inflation factored in.

haha yes, interesting that as growth became harder to show, the inflation figures started getting altered though isnt it?

I'm sure you're aware that if we counted it like we did back the last time round in the 80's, inflation is considerably above the quoted figures now.

I'm sure you're aware of Shadowstats?

ok the guy is drawing hyperinflation conclusions from his data, but ignore that, and just compare the data to the latest "information"

basically I don't believe the figures the governments give us. It is not in their interest for us to understand that there are negative real interest rates and they are thieving directly out of our bank accounts, daily.

http://www.telegraph.co.uk/finance/...721/Inflation-36bn-wiped-off-our-savings.html

 

[bjornart]

Commodity money can't be devalued at will by passing politicos, instead it behaves erratically and unpredictably, artificially inflating the value of whichever commodity it's based on and jumping up and down in value, not in response to the needs of the economy, but according to the availability of the commodity as production, reserves and consumption changes. If you want to call that sound, go ahead. I'd rather have a well regulated fiat currency.

 

[The Central Scrutinizer]

by "sound money" I just mean some form of money that cannot be debased by whichever passing politico it suits to do so, either directly, or via their favourite central planners bank

It sounds like you might be talking about....oh....I don't know....gold? Good thing this thread isn't about the gold standard.

 

[DrDave]

We could use leaves?

 

[WildCat]

why, to give the illusion of perpetual growth which the whole system needs to not collapse, even when there actually isn't any?

No, because a little inflation is much better than a little deflation. So better to err on the inflation side.

 

[WildCat]

We could use leaves?

Bag them or burn them you lazy bum, nobody is going to come along and trade you for them.

 

[nvidiot]

Depends on the species.

 

[brodski]

We could use leaves?

Well, at least until the A and C Arks get here.

 

[kevsta]

Commodity money can't be devalued at will by passing politicos, instead it behaves erratically and unpredictably, artificially inflating the value of whichever commodity it's based on and jumping up and down in value, not in response to the needs of the economy, but according to the availability of the commodity as production, reserves and consumption changes. If you want to call that sound, go ahead. I'd rather have a well regulated fiat currency.

does it have to be commodity based to be sound? and how do you regulate something so it can't be cheated?

Wildcat & TCS I have un-ignored you both, but please no more truther / jew hater BS?

I absolutely guarantee you, you would only ever say the Jewish jibe in particular to my face the once, so would it be possible to just stick to the topic here too please?

I am more than willing to learn anything you or anybody else here is able to convince me of.

No it's not about gold, it could be tied to anything, what else would you suggest to give stability over long periods and prevent debasement?

can it be done without tying to something tangible?

if so how do we make it fail-safe so that it cannot be debased, when you dont trust the political establishment to abide by their regulations?

after all I'm pretty sure somewhere there are regulations that prevent the Fed bailing out foreign banks with $16,000,000,000,000, but they did it anyway?

 

[ZouPrime]

does it have to be commodity based to be sound? and how do you regulate something so it can't be cheated?

"So it can't be cheated" isn't by itself an argument to not do something. If it was, we wouldn't be doing anything. Sometimes, it's preferable to use a system that can be cheated in theory instead of a system that can't, simply because there is still more benefits from using the first one.

No it's not about gold, it could be tied to anything, what else would you suggest to give stability over long periods and prevent debasement?

A commodity that has the characteristic of following the grow of the economy, ideally growing a little bit higher so that we have small inflation instead of small deflation. Personally, I don't think such "natural" commodity exists.

if so how do we make it fail-safe so that it cannot be debased, when you dont trust the political establishment to abide by their regulations?

The best you can do is what you do for everything else: you create a system that discourage debasement by enforcing division of responsabilities, etc. There's no magic solution here.

 

[kevsta]

No, because a little inflation is much better than a little deflation. So better to err on the inflation side.

says who? why are steadily falling prices so bad? isn't that what happens when productivity rises anyway?

where is the monetary law that says prices have to constantly rise, so we have to constantly print more money to make that happen?

I quite like the idea of my savings going further with time.

 

[ZouPrime]

says who? why are steadily falling prices so bad? isn't that what happens when productivity rises anyway?

If the price falls, it means my dollar tomorrow is worth more than my dollar today. So I have an incentive to sit on it, because I'm certain I'm going to be richer tomorrow. This is very bad, because it means the rich have no reason to invest and thus risk their money. All they have to do is sit on their pile of money and wait. Since there's less investment, it is more complicated to borrow money, and thus it's more complicated to create new wealth for people who don't have a lot of savings to begin with (i.e. almost everybody). This grows the gap between rich and poor, which is exactly the opposite of what we should be trying to do right now.

where is the monetary law that says prices have to constantly rise, so we have to constantly print more money to make that happen?

There's no "monetary law". It's a choice, influenced by empirical history.

 

[kevsta]

If the price falls, it means my dollar tomorrow is worth more than my dollar today. So I have an incentive to sit on it, because I'm certain I'm going to be richer tomorrow. This is very bad, because it means the rich have no reason to invest and thus risk their money. All they have to do is sit on their pile of money and wait.

a percent or 2 deflation is not going to make the greedy rich, richer.

Since there's less investment, it is more complicated to borrow money, and thus it's more complicated to create new wealth for people who don't have a lot of savings to begin with (i.e. almost everybody).

This grows the gap between rich and poor, which is exactly the opposite of what we should be trying to do right now.

Ok, well given that we have been doing it the "inflation way" for the past 100 years or so, and the gap between the rich and poor has never been bigger are you not prepared to look at this theory again?

clearly, it doesnt work?

There's no "monetary law". It's a choice, influenced by empirical history.

influenced by something or someone, for sure. vested interests, not the interests of the people.

 

[The Central Scrutinizer]

says who? why are steadily falling prices so bad? isn't that what happens when productivity rises anyway?

where is the monetary law that says prices have to constantly rise, so we have to constantly print more money to make that happen?

I quite like the idea of my savings going further with time.

Wow.

 

[ZouPrime]

a percent or 2 deflation is not going to make the greedy rich, richer.

Well, certainly richer than with inflation! With inflation, the "greedy rich" has to invest in order to get richer, if they sit on their money, they know they are going to be actually poorer!

Right now, the rich must almost always invest their money. This is so true, the very concept of "saving" and "investing" are intrinsically linked in many discussions. They hold bonds, stocks, various securities, but only a comparatively small portion of money, for the simple reason that they know this money will lose in value. The only real benefit of money is that it's very liquid.

Ok, well given that we have been doing it the "inflation way" for the past 100 years or so, and the gap between the rich and poor has never been bigger are you not prepared to look at this theory again?

clearly, it doesnt work?

<sigh>

Have you checked how the gap between the rich and the poor as changed over the last century? Have you check, over the same period, how inflation has changed? Why don't you do that, you know, to see if there's a correlation whatsoever?

influenced by something or someone, for sure. vested interests, not the interests of the people.

Well if you say so, it must be true.

 

[kevsta]

Well, certainly richer than with inflation! With inflation, the "greedy rich" has to invest in order to get richer, if they sit on their money, they know they are going to be actually poorer!

or they could just open a bank and profit from "free" interest on money they never had and seizing property of the ones who default because there is never enough money for everyone to pay back principal and interest.

Right now, the rich must almost always invest their money. This is so true, the very concept of "saving" and "investing" are intrinsically linked in many discussions. They hold bonds, stocks, various securities, but only a comparatively small portion of money, for the simple reason that they know this money will lose in value. The only real benefit of money is that it's very liquid.

so we have to licence governments to steal directly from the bank accounts of the rich (and the poor too) using inflation, on top of the taxes they pay, so the rich will go out and spend instead? this is a fair system is it?

<sigh>

Have you checked how the gap between the rich and the poor as changed over the last century? Have you check, over the same period, how inflation has changed? Why don't you do that, you know, to see if there's a correlation whatsoever?

my point is that the current system is not doing what you want it to do. I think this is because it is fundamentally flawed and needs reform.

Well if you say so, it must be true.

seriously? you're happy with the way it is all working and heading now are you? wow indeed.