Topic: The Future of Money? - page 2. (Read 8071 times)

You are just claiming that without giving any viable explanation why it is so. Obviously, this won't work. I have provided the logic behind as well as example why keeping monetary base constant would be detrimental. You did nothing to substantiate your claims. Further, there is nothing that would prevent a free market price discovery if the total amount of goods is balanced with the amount of money in circulation. In fact, that mechanism would work even better. You seem to be erroneously implying that the relative values of goods against each other should remain the same...

There is nothing that would support that point


Once again stop speaking for myself. I'm suggesting nothing in this regard. This is a separate question


Basically same as above. You also implicitly suggest that the relative values of goods are somehow fixed while they are not

Why are fluctuating prices a bad thing?  If there is an over-supply of something, prices going down would dis-incentivize production, as they should.

The important issue is not whether prices change, but what causes them to change.  If the cause is market-based, it should be healthy and/or self-correcting.  The problem with central planning of money is that prices are changed system-wide not for market reasons but due to what is ultimately market manipulation to benefit the elites.

For example, an ounce of gold used to buy a nice tailored suit when it was worth $22.  Today that gold will still buy that suit, but try buying it with $22.  Over the decades, prices always go up, because the elites generally make monetary policy too loose, to allow themselves to receive unearned wealth and power from issuing public and bank debt.

An even more damning example is central-planning-driven deflation.  All financial crises happen because (A) too much paper wealth of a certain kind has been issued and propped up (indirectly) by state power, and (B) markets have lost faith in the value of that paper.  To alleviate the economic pain after the financial bust, what central banks can do is to generate massive inflation.  (This in effect would acknowledge past mistakes and start anew.)  But what they do is to generate just enough inflation to keep the political system stable, but never enough to avert major pain.  This was what led to the Great Depression and Great Recession, plus countless examples outside the US.

The reason is that massive inflation would expose the long-term working of their system to public opinion and ultimately cause savers to go to non-state-issued money, like gold, in which case the elites will lost most of their future power.  The adopted policy contradicts the elites' own moral code of 'alleviating pain at all cost,' as propagated by modern mainstream economists.  Apparently, such a code is only good for justifying policies aimed at prolonging asset bubbles by any means, including deception, during the period of asset inflation.

Thanks for helping me talk through this line of argument. 

You suggest that if the amount of some good increases (increased production), the price in terms of a static money supply would decrease.  And of course the inverse, if the amount of the good decreases, the price in terms of a sound money unit will go up.  I have claimed that these are natural things that should be embraced as part of free market price discovery, providing signals to producers and consumers.  Are you also suggesting that some new distribution of monetary units (in any way) could somehow be appropriate in either of these cases?  I really don't see that at all, so I would appreciate some discussion of how that could in any way help with existing price signaling, or in any way whatsoever.   

Bear in mind that I am not arguing that private issuance of monetary tokens is corruptible and leads to gross inefficiencies and malinvestment, which is clearly true but is a separate issue.  I am just saying that there is no economic reason for such issuance to exist - even if somehow managed by a benevolent monarch.  If you can come up with some reason, please do state it clearly, I'd be happy to learn something new. 

Making the price of a good vs. a monetary unit stable even in the event of that good being more (or less) available is an economic problem, not something to be desired.  Right?   

 

I guess you understand what this will lead to?

If you don't, I'll try to explain. I will talk about goods only but everything is equally applicable to services as well. Let's assume that the amount of money is constant. If the amount of goods increases that would necessarily lead to price deflation, i.e. you will be able to buy more goods with the same amount of money (or a unit of money will buy more goods). If the amount of goods decreases, that would necessarily lead to price inflation, i.e. you will be able to buy less goods with the same amount of money (or a unit of money will buy less goods). Both of these cases will cause imbalances in the economy simply because the changes in the value of money (i.e. how much a unit of money can buy) in real life don't propagate instantaneously through the economy

That would lead, for example, to some people getting unwarranted advantages over other people since they could either buy goods cheaper than they should or refrain from buying goods dearer than they should

Thank you, this is exactly the point I wish to disagree with.  

Yes, money is used as an intermediary and a unit of account in the exchange of goods and the consumption of services.  Yes, amount of goods and amount of services can fluctuate.  But why does this mean the amount of units available should change?  This does not follow in any sense, rather it is the converse statement that makes sense:  the quantity of the monetary unit available should NOT change.    

The absolute quantity of the price is not important..  what is important is that the money remains sound, i.e. nobody has the right to create it from nothing, and of course: the relative costs of one good to another (price of beer vs. average salary for example).  The utility of an exchange commodity (money) is based on the supply NOT changing, it is based on markets being able to come to reasonable price discovery in that unit without malfeasance and forced disequilibrium.  

The idea that more beer produced means there needs to be more monetary tokens distributed is..  well where on earth did it come from?  Basic economics suggests that an increase in the supply with equal demand should lead to a lower price.  You don't need more tokens, you need smaller prices.    

Seriously, industry producing more means that I should be able to issue monetary tokens for my friends?  Does that sound reasonable to you?  

I guess you might want to think again

I'm not going to say that, and there is no need to speak for me, either. There was no talk about who has the right to produce new money and then distribute it, and this is what your post comes down to. This is an entirely different question. If you want to somehow challenge the point I made, you should address exactly what I said. Since you seem to heavily miss my point (this is understandable since you are obviously hellbent against anything connected with fiat), I can repeat again, in other words. Money is used as an intermediary in the exchange of goods and consumption of services, and since the amount of goods as well as the volume of services tend to change over time, the amount of money should change accordingly


Same as above. What exactly do you disagree with?

I think although bitcoin will have a stable price I think it will not be able to make fiat replaceable. major currencies will always be on fiat to any time, and may bitcoin will be the only option in the future