8 Nov 2017 12:50 am
Bad move, friend. Do not ask me to defend a system I don't agree with. I would gradually do away with money altogether.Cannonpointer » 07 Nov 2017 9:18 pm » wrote:Google, "counterfeiting."
When you've exposed yourself to the fact that money CAN BE AND IS "created out of thin air," you can then take on the task of explaining precisely what makes the original fed notes more "authentic" and more "valuable" than their counterfeit cousins. I will be waiting raptly for that explication.
I took issue with your criticism because your mortars are launched in the wrong direction - it is interest and not "printing money" that you ought to concern yourself with. Fiat money and commodity money both serve the same purpose - as media of exchange and storage of value. The only difference is fiat money is not intrinsically valuable and requires the users' faith in, or forced compliance by, the issuer (usually a political entity, like the US state).
Which brings me to a couple of points, and why the "out of thin air" phrasing is silly: what kind of currency in circulation isn't "created out of thin air?" If a country on the gold and silver standard mines gold and silver deposits, which results in inflation, how is that any different from a central bank printing money?
I know you jest about conjobs and fake libertarians like AteWedge sucking on banker cock, but you can't use that line on me.
Now let's examine your claim - counterfeiting. Suppose the total amount of money in circulation is X, and the total amount of goods and services produced is Y. The base case ratio is X/Y. One unit of X buys one unit of Y.
Using your logic, if a counterfeit operation or central bank (in your view, those 2 are no different) prints money and increases X by 20%, we now have 1.2X/Y. Each unit of X is devalued by 17% (1 / 1.2). What really happens is the money adjusts accordingly so that 1.2 X buys 1 Y, and each unit of X only purchases 83% of what it used to buy.
The value is taken from the existing pool of money and re-distributed to adjust for parity for the added money. In the real world, this "inflation" hurts those who hold/are lending out money, and helps those who owe money.
Let's take the inverse case - What if a currency deflates? Suppose a central bank takes 50% of a currency out of the money supply. We now have 0.5X/Y.
Is that "destroying money out of thin air?"