Inflation tax

[price777999]

Point to one example. I'd like to study what happened.

I don't know of any examples but I don't think any country has used a finite currency .... gold and silver are always being mined .

But if you just think about it try and share £100 with a million people ... so what ever currency eventually you would have to split it in fractions .... maybe it's not a bad idea?

Will be interesting if bitcoin becomes a more usable currency .

 

[new_trader]

I don't know of any examples but I don't think any country has used a finite currency .... gold and silver are always being mined .

The US and the UK were on a gold standard and it was during those periods they experienced the greatest economic growth in history. And I'm not talking about the Bretton Woods abomination.

But if you just think about it try and share £100 with a million people ... so what ever currency eventually you would have to split it in fractions .... maybe it's not a bad idea?

Will be interesting if bitcoin becomes a more usable currency .

You are still not making the connection between money and productivity. Increasing the money supply through productivity like mining, is good. Increasing the money supply through debasement (Inflation) is bad, always.

Gold is divisible, and retains its value. Cut a gold bar in half and each half has the same value. You can do it again and again and again. Especially now, electronically, there is no limit to how much you can divide gold...right down to micro-grams.

 

[price777999]

Increasing the money supply through productivity like mining, is good

Mining new gold is just the same as printing new money ...

What ever currency eventually the money supply has to be increased so why not feed the new money in at the grass roots of the economy through public services .

 

[new_trader]

Mining new gold is just the same as printing new money ...

C'mon, now you're not being serious and in fact you are showing your ignorance. You think there is no difference between printing a few numbers on a piece of paper and extracting gold from the earth? You think that printing the number 100 on a piece of paper requires 10 times as much land,labour and capital as printing the number 10 on the same piece of paper? Think carefully about what you are saying...THINK first, don't just keep trying to contradict!

What ever currency eventually the money supply has to be increased so why not feed the new money in at the grass roots of the economy through public services .

Because as has been explained, it is not up to the Government to determine where money should go and then pay for it by printing money. It distorts the market and leads to gross mis-allocations of capital and robs everyone of rightly earned purchasing power. Governments are only interested in winning the next election so they are motivated by good politics not by good economics.

Savings represent a person's under-consumption and self sacrifice which enable them to enjoy an enhanced standard of living in future. Governments deny people this future standard of living and even outright confiscate it via inflation.

Many false economic signals are created when Governments interfere with the supply of money and interest rates.

The money supply doesn't 'have' to grow, despite your insistence to the contrary. You have provided no empirical evidence to back up what you say.

 

[price777999]

C'mon, now you're not being serious and in fact you are showing your ignorance. You think there is no difference between printing a few numbers on a piece of paper and extracting gold from the earth? You think that printing the number 100 on a piece of paper requires 10 times as much land,labour and capital as printing the number 10 on the same piece of paper? Think carefully about what you are saying...THINK first, don't just keep trying to contradict!

You are not understanding my point ....If we were on a gold standard and a Billion tons of gold suddenly came on the market it would have the same affect as money being printed in fiat system .

But the analogy is a bit confusing because gold actually has a use and paper is just paper .

But anyway this is not my main point ...I was trying to find a way for a more efficient tax system .

For example zero tax and privatize everything and use a finite currency ?

 

[price777999]

The money supply doesn't 'have' to grow, despite your insistence to the contrary. You have provided no empirical evidence to back up what you say.

Misunderstanding my point again ... I was trying to say money should be convenient ,with both a finite currency or an infinite currency you will have to add zero's before or after the decimal eventually.

 

[new_trader]

You are not understanding my point ....If we were on a gold standard and a Billion tons of gold suddenly came on the market it would have the same affect as money being printed in fiat system .

But the analogy is a bit confusing because gold actually has a use and paper is just paper .

But anyway this is not my main point ...I was trying to find a way for a more efficient tax system .

For example zero tax and privatize everything and use a finite currency ?

The total amount of gold mined in all of human history is approx 165,000 tons and almost all of the gold ever mined is still in existence today. One Billion tons of gold would represent more than 6000 times the total amount of gold ever mined in all of human history. Do you think increasing the gold supply by a factor of 6000 can happen just as easily and quickly as printing Trillions of US dollars or Yen?

At current prices ($US1361.40) the total amount of gold mined in all of human history is worth around $US7.22 Trillion. That is less than half of the current US debt and The Obama administration's February 2012 budget request contained $2.902 trillion in receipts and $3.803 trillion in outlays. Both represent approx 50% of what the total amount of gold mined in all of human history is worth.

The current world production of gold is approx 2,500 tons. At current prices that is approximately about $US109.4 Billion worth of new gold each year. The US Federal reserve is currently embarking on a Q.E policy at the rate of US$85 Billion per month. At that rate, the US Federal Reserve could buy the ENTIRE global gold production 9 times over....let me repeat that, the US Federal Reserve could buy the ENTIRE global gold production 9 times over.

As far as your ‘efficient’ tax system is concerned. The US has only had a federal income tax for the last 100 years. The income tax came into existence around about the same time as the current Federal Reserve. (NOT) Coincidently, it has been since the creation of the Federal income tax and the Federal Reserve that the US Government has grown in size. Before the Federal Reserve and the income tax, Government spending as a % of GDP was less than 5%. Today, it accounts for around 40% of GDP.

As I explained earlier, there have been periods throughout history where the US has had no Federal income tax while being on a classic gold standard and the economy prospered. So your hypothetical is not a hypothetical.

BEFORE you reply, read some science books and history books and see if you can come back with some hard FACTS to dispute anything I’ve written or to support your case. This is becoming tedious now.

 

[Lee Shepherd]

@NewTrader,

Rather than me constantly rep'ing you all over the place I thought I should say publicly what great knowledge and research you have done in this area.

If I was debating with you on this subject I think I would have conceded by now.

It's been very interesting hearing what you have had to say. I've certainly learnt a lot from this.

Cheers,

Lee

 

[Purple Brain]

Seconded.

 

[price777999]

BEFORE you reply, read some science books and history books and see if you can come back with some hard FACTS to dispute anything I’ve written or to support your case. This is becoming tedious now

You haven't understood my posts, i'm not disputing anything you are saying but that £100 of gold is the same as £100 of fiat .... either two can fluctuate in value according to the amount mined or printed .

But yes , its a bad analogy because we know there is a limited amount of gold on the planet and you never know what a government will do with the currency .

 

[price777999]

As far as your ‘efficient’ tax system is concerned. The US has only had a federal income tax for the last 100 years. The income tax came into existence around about the same time as the current Federal Reserve. (NOT) Coincidently, it has been since the creation of the Federal income tax and the Federal Reserve that the US Government has grown in size. Before the Federal Reserve and the income tax, Government spending as a % of GDP was less than 5%. Today, it accounts for around 40% of GDP.

This was the point I was trying to get at ...40% of GDP is not efficient ...

My opening question was ''Is inflation the most efficient form of tax ?''

I didn't mean a good economy must have inflation..... do you understand my point now ?

 

[new_trader]

You haven't understood my posts, i'm not disputing anything you are saying but that £100 of gold is the same as £100 of fiat .... either two can fluctuate in value according to the amount mined or printed .

But yes , its a bad analogy because we know there is a limited amount of gold on the planet and you never know what a government will do with the currency .

No, YOU haven't understood my posts because you are STILL saying that £100 of gold is the same as £100 of fiat when they are NOT the same at all! Gold has a value defined by WEIGHT, fiat money is a promise backed by the issuing Government. They are two entirely different kinds of money.

 

[new_trader]

This was the point I was trying to get at ...40% of GDP is not efficient ...

My opening question was ''Is inflation the most efficient form of tax ?''

I didn't mean a good economy must have inflation..... do you understand my point now ?

This was NOT the point you were trying to get at, it is exactly the OPPOSITE of your point. Inflation has allowed the Government to grow to 40% of GDP, get it? If you don't understand that then there is no point continuing because you clearly don't understand what inflation is and why it is bad.

 

[price777999]

No, YOU haven't understood my posts because you are STILL saying that £100 of gold is the same as £100 of fiat when they are NOT the same at all! Gold has a value defined by WEIGHT, fiat money is a promise backed by the issuing Government. They are two entirely different kinds of money.

I disagree, a £100 of gold is the same as £100 of fiat . The only difference is that gold has some usefulness in jewelry and electronics .

I would argue that 10% or less of golds value is in its usefulness , the other 90% or so is just determined buy how much people are prepared to pay for it(the same as fiat) ...nothing to do with its weight.

 

[price777999]

This was NOT the point you were trying to get at, it is exactly the OPPOSITE of your point. Inflation has allowed the Government to grow to 40% of GDP, get it? If you don't understand that then there is no point continuing because you clearly don't understand what inflation is and why it is bad.

Why is gold a good currency ?

Is it because there is a steady flow of new currency through mining or because its useful in electronics and jewelry ?

When new gold is mined, is gold inflated ?

 

[new_trader]

I disagree, a £100 of gold is the same as £100 of fiat . The only difference is that gold has some usefulness in jewelry and electronics .

I don't care whether you agree or disagree, I am stating an INCONTRIVERTABLE FACT. Do you understand? I am not giving you my opinion, I am giving you somthing that you have yet to provide - FACTS.

A gold standard by LEGAL DEFINITION (as in the coinage act) is defining the value of money by a specific weight of gold.

Under the current fiat system, The Federal Reserve Chairman Ben Bernanke said that $US1 dollar is worth "Whatever it buys". Under a gold standard, $1 dollar would be legally defined as a SPECIFIC WEIGHT OF GOLD!

...FFS...PEOPLE!

I would argue that 10% or less of golds value is in its usefulness , the other 90% or so is just determined buy how much people are prepared to pay for it(the same as fiat) ...nothing to do with its weight.

Go ahead, disagree with more than 2000 years of history, you are probably right and all the civilizations throughout history are wrong.

 

[price777999]

And as for deflation being good for an economy , I don't know because there has never been a finite currency used.(all gold is not yet in circulation)

But I would argue that a balance between inflation and deflation would be the most convenient currency.
Can you imagine paying £0.00000000010 for a loaf of bread ? ..... and people hoarding money as it becomes more scarce ?

 

[Purple Brain]

I disagree, a £100 of gold is the same as £100 of fiat . The only difference is that gold has some usefulness in jewelry and electronics .

I would argue that 10% or less of golds value is in its usefulness , the other 90% or so is just determined buy how much people are prepared to pay for it(the same as fiat) ...nothing to do with its weight.

£100 of fiat must be adjusted for inflation to assess its value (purchasing power) at any forward point. £100 worth of gold on any given day must have it's subsequent value adjusted for appreciation/depreciation on the underlying physical quantity of gold purchased for that £100 AND for inflation. They are (almost) the same only at the time of acquisition. I say almost as you'll unlikely be able to sell your Gold back for £100 even in the same second as you purchase it.

 

[price777999]

I don't care whether you agree or disagree, I am stating an INCONTRIVERTABLE FACT. Do you understand? I am not giving you my opinion, I am giving you somthing that you have yet to provide - FACTS.

No i'm not stating facts, i'm proposing a new tax system through inflation.I thought it would be an interesting discussion

Under the current fiat system, The Federal Reserve Chairman Ben Bernanke said that $US1 dollar is worth "Whatever it buys". Under a gold standard, $1 dollar would be legally defined as a SPECIFIC WEIGHT OF GOLD!

And what can people buy with that SPECIFIC WEIGHT OF GOLD! ...Answer = what ever the seller of goods thinks its worth at that time .

 

[new_trader]

And as for deflation being good for an economy , I don't know because there has never been a finite currency used.(all gold is not yet in circulation)

This is because your understanding of economics and money is abysmal. No matter how much I have encouraged you to read up on Economics and history you remain firmly entrenched with your distorted views.

But I would argue that a balance between inflation and deflation would be the most convenient currency.

Again, your lack of understanding shines through with idiotic statements like the one above. You still seem incapable of making the connection between money and productivity.

If goods and services increase FASTER than the money supply grows then prices for those goods and services will FALL.

If the money supply grows FASTER than goods or services then the price for those goods and services will RISE.

There isn't a single human being or group of human beings who can determine, in advance, exactly how much money should be created to balance this in an economy where there can be literrally 10's of thousands of different goods and services and new ones coming into existence.

Can you imagine paying £0.00000000010 for a loaf of bread ? ..... and people hoarding money as it becomes more scarce ?

I'd rather pay £0.00000000010 for a loaf of bread than £1000000000.00 for a loaf of bread

Why would people hoard money? If they are hoarding money then hey aren't spending it on goods and services are they? So, they will be cold, hungry, without clothes etc...etc...