new_trader
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Utterly excellent posts ducati998
No, that has not been my argument. As I keep saying, you haven't been listening. My point has been that the ability to print money at will can be useful in certain circumstances and conveys a competitive advantage to whoever has this capability vs the one who doesn't.
As any such competitive advantage, it doesn't come without a cost, as you correctly point out. However, if you bother to perform the same cost/benefit analysis for gold, it may become obvious to you (as it is to me) that a monetary system based on gold at best does nothing better than fiat.
At worst it can make your economy dangerously vulnerable. So all I am suggesting is that you stop treating the idea of gold standard as a dogma and try to think about things rationally.
This contract violation by the banks through fractional reserve lending can only happen if there are two provisions: exemption from prosecution, granted by government, the coercive legislative power and [ii] the provision of a Central Bank that can provide new money if the commercial bank has a run on their demand deposit base and otherwise could not meet their contractual obligations.
Ultimate money & credit expansion is always a provision of the State. Commercial Banks are simply the transmission pathway.
So in basic terms you mean because the goverment allows banks to create money, government controls the money supply?
I have no problem with you disagreeing. My point isn't that fiat money is perfect (it most certainly isn't and yes, it's quite obvious that the system can be abused). All I am suggesting is that we look at the possibilities objectively and try to understand the advantages and drawbacks of each.
As I keep saying, the ability of a domestic Central Bank to print money is, effectively, an industrial policy tool.
Yes, like all other policy tools it can be abused, but in normal circumstances it's extremely useful and you don't have to go far for contemporary examples.
I have already mentioned how I think of the gold standard.
So modern societies make a choice between the two and I am not surprised that, in an overwhelming number of modern global economies, fiat money is deemed superior.
So is the solution simply to return to the gold standard?
I don't think so. One of the benefits of fiat money has been its unlimited supply as compared to precious metals, and its facility of transaction.
That governments not understanding money is one thing, sure, but I think I'd take fiat over metals.
The best case would probably be to let the market decide.
I believe I read somewhere that derivatives were becoming the new form of money which is an interesting concept.
Whatever the case, I doubt either fiat or metals would be the ultimate form of money we'd settle on because they both have their own deficiencies.
No, I can't see the gold standard as the solution. It has too many drawbacks.
You're basically eschewing economic progress for lower government control.
I firmly believe the benefit of fiat (its flexibility and ease of use) is the major determinant in using it above something merely derived from the old way of exchanging metals as money.
Let's face it, under that system the rich v. poor divide was even worse, and constrained economic opportunities to those who already had wealth.
Fiat may be ugly, controlled, and imperfect, but I do think it does more good to the economy than the gold standard ever could.
Whatever the case, neither system is what we'll settle on in the future, and I would welcome an evolution in this area. But I certainly do not want a step backwards into the gold standard.
No, I can't see the gold standard as the solution. It has too many drawbacks.
You're basically eschewing economic progress for lower government control. I firmly believe the benefit of fiat (its flexibility and ease of use) is the major determinant in using it above something merely derived from the old way of exchanging metals as money. Let's face it, under that system the rich v. poor divide was even worse, and constrained economic opportunities to those who already had wealth. Fiat may be ugly, controlled, and imperfect, but I do think it does more good to the economy than the gold standard ever could.
Whatever the case, neither system is what we'll settle on in the future, and I would welcome an evolution in this area. But I certainly do not want a step backwards into the gold standard.
.................The real purpose of fiat is to provide the State with the ability to expropriate the legal property of individual owners, to the State...........
Government has a duty to facilitate, improve and maintain the well-being of its people - standard of living - and whether by accident or design it has done that.
Government doesn't create wealth, it can only take it. To raise the standard of one group of people it must lower the standard of living of another group.
No, but it facilitates its creation. It only robs peter to pay paul if it hasn't facilitated an increase in wealth overall - which it has.
Well, it's easy to just postulate that it was "of course capitalism". However, how can you actually prove this? Moreover, there's a big question of how exactly you define capitalism...Certainly that is true. What was the causative agent for that? It was of course capitalism. Capitalism functions most efficiently with a free market money.
Well, I am going to have to disagree with you on this. Can you support this assertion with any evidence whatsoever? I can cite you a whole lot of research that suggests that a government IS, in fact, necessary where provision of public goods is concerned. This is an issue that has been discussed and covered by a lot of work and there's all sorts of evidence that suggests (not surprisingly) that, without a functioning government, social outcomes are significantly worse. Moreover, what if we take an extreme situation, i.e. your country being attacked by a foreign power (say, with a strong central government)? Do you still believe that a government of your own isn't necessary?Definitely. Government is simply not required.
Well, tbh, I was hoping that you would have a go at trying to come up with these independently, but that's OK. The costs I was referring to have to do with the loss of competitive advantage that arises when you don't have a domestic agency that controls your money supply. Moreover, that loss, in extreme cases, can lead to all sorts of severe short-term and long-term repercussions. My point here is simple and is just based on the obvious observation that you can't get something for nothing.I haven't had time to peruse the entire thread, so if you have previously elucidated these 'costs' earlier in the thread, I have not yet read them: you will have to specify which costs in particular you are referring to.
Well, this would have been true, if it weren't for some unfortunate deficiencies of capitalism. Yes, taxation creates distortions etc and that is also a well-known and well-studied subject in economics. However, taxation deadweight loss shouldn't be viewed on its own, but rather combined with the deadweight loss that results from negative externalities/public good problems. Once you have done that, you have to conclude that some level of taxation is optimal.Taxation never makes sense. Taxation alters time preferences, raising them higher, thus directly lowers production. Production is the driver of material wealth, thus in a material context, we are all becoming less wealthy as taxation rises. This of course impacts the actual revenues government can directly expropriate through taxation.
It seems to me that the Gold Standard is but one way of imposing a discipline on government, assuming they don't cheat of course. The key word is "discipline" and if that can be effected by other means, so what.
Fiat may give the State an ability to rob you, as you suggest, but again - so what. The State also has the ability to murder you if it has a mind to do so.
Government has a duty to facilitate, improve and maintain the well-being of its people - standard of living -
and whether by accident or design it has done that.
If you could say that peoples' tangible standard of living has deteriorated since coming off the Gold Standard you might have a point that we've all been robbed. But, in the face of significant improvement in peoples' tangible standard of living, you can't.
My point here is simple and is just based on the obvious observation that you can't get something for nothing.
Well, it's easy to just postulate that it was "of course capitalism". However, how can you actually prove this? Moreover, there's a big question of how exactly you define capitalism...
Well, I am going to have to disagree with you on this. Can you support this assertion with any evidence whatsoever? I can cite you a whole lot of research that suggests that a government IS, in fact, necessary where provision of public goods is concerned.
This is an issue that has been discussed and covered by a lot of work and there's all sorts of evidence that suggests (not surprisingly) that, without a functioning government, social outcomes are significantly worse. Moreover, what if we take an extreme situation, i.e. your country being attacked by a foreign power (say, with a strong central government)? Do you still believe that a government of your own isn't necessary?