I think you didn’t read anything I wrote because my core focus is that inflation is 100% avoidable through investment which is the behavior explicitly being incentivized via, to your point, a stick and not a carrot approach.
It’s theft like taxation is theft: it’s not.
> a GSE creates money from nothing
Yes that’s the point. The economy gets bigger and more people are born and the money supply expands. To not do so would create deflationary pressure which, again, creates a risk free return for existing money holders for no justifiable reason. In fact you haven’t justified it either, you say it as though it’s self evident.
If you don’t believe the value of existing money should go up then you agree the money supply must expand to match economic growth and population growth. All were then arguing about is how much.
> money grubbing banks...
Banks are paid for the role they serve in the economy: liquidity and security. Look at how much they make, it’s all publicly disclosed. Banks make around a 1% return on deposits (you know, the collateral for this lending thing). Almost nothing. It’s a shit business. The remaining “free magic money” is cost of doing business and paid out to employees, landlords, suppliers and so on. You know, business expenses.
> If you don’t believe the value of existing money should go up then you agree the money supply must expand to match economic growth and population growth.
The unit of exchange (money/currency) should remain relatively constant. That's the point. Maybe it will go up some, maybe it will go down some, but having it manipulated for the profit of large banks is theft.
It's a complete perversion of free market banking and benefits the few over the many.
> 100% avoidable through investment
Not true, unless you're talking about investing in financial instruments. Investing in almost anything else subjects you to property taxes almost everywhere.
I sure hope you don’t need the army, police, schools, fire, water, roads, air and so on. Most adults came to realize at some point that some things need to be provided as a group, and they’re not free. For those everyone has to pony up.
If you don’t want to pay taxes there’s a few countries you can do that in but in most paying taxes is social contact: it’s a take all the benefits and pay taxes, or leave to a society with a contact you view more amiable.
> unit of exchange should remain relatively constant.
Well if I have 100 people and my economy had $100, and Steve has $20 of them, then Steve invented the steam train and 100,000,000 more people show up then the value of my dollar has gone up millions of times over and Steve is now the single wealthiest human on earth even though he’s only got $20. To keep it stable I’d make more dollars. If you see how this works on the macro timescale you must see how it translates to the micro.
> to the profit of the large banks
We’re paying them to provide liquidity to the economy via lending and again they only make 1% on assets on deposit. It’s not the system you seem to think it is.
> avoidable...
You just have to factor that in to the investment minimum yield. This isn’t rocket science. You are not guaranteed a risk-free return on capital. To ease this Trump is considering indexing capital gains against inflation, another approach (which I wholeheartedly disagree with).
> I sure hope you don’t need the army, police, schools, fire, water, roads, air and so on. Most adults came to realize at some point that some things need to be provided as a group, and they’re not free. For those everyone has to pony up.
I'd be willing to pay for some of those. Lots of people have an inability to separate 'goods and services required for society' and 'government.'
Society can have all of those things, there need not be a government and there need not be taxes.
> paying taxes is social contact
This is just an empty phrase used as propaganda. There's no such thing as a 'social contract.' Taxes are taken under threat of physical harm and death, always have been.
> To keep it stable I’d make more dollars
This has the presumption that you, or someone should be in charge of what money is worth. That should not be a function of the government.
> This is just an empty phrase used as propaganda. There's no such thing as a 'social contract.' Taxes are taken under threat of physical harm and death, always have been.
Tell that to the judge haha
> Society can have all of those things, there need not be a government and there need not be taxes.
Yeah no, not really.
> This has the presumption that you, or someone should be in charge of what money is worth. That should not be a function of the government.
You’ve again completely ignored my point which is that your share of the value of the economy if the dollars in the system remain constant goes up by inaction. Maintaining a constant Value of the dollar as you yourself suggested requires active management. Once you agree on that we’re just chatting degrees.
> Maintaining a constant Value of the dollar as you yourself suggested requires active management
I don't think that it requires any management. If the value of a currency increases, then the ratio of currency to goods decreases. If a currency became so valuable that people can't trade with it, they'd trade with something else.
You argued for a constant value of a single dollar and then told me what would happen if the value of the currency increases, which is the opposite of what you were telling me before. If it does increase then it leads to massively disproportionate accumulation of wealth for existing holders, which you cannot justify.
> This has the presumption that you, or someone should be in charge of what money is worth. That should not be a function of the government.
That's (a) very much your opinion stated as self-evident and (b) not currently the job of the government, it's the job of an independent private central bank specifically designed to separate monetary policy from fiscal policy and the whims of the elected officials.
The Federal Reserve is federal in the same way that Federal Express is: it's not. Doesn't this line up with the libertarian ethos?
> The Federal Reserve is federal in the same way that Federal Express is: it's not
It's analogous to hiring a contractor. The government wants a program, it simply outsourced the operation to another entity.
Here's what I actually said:
> The unit of exchange (money/currency) should remain relatively constant. That's the point. Maybe it will go up some, maybe it will go down some, but having it manipulated for the profit of large banks is theft.
It should remain relatively constant. That's the entire point of a unit of exchange. There might be periods where the relative demand for the currency outstrips the supply, and if it becomes such a dramatic situation as your presented in your contrived example, then it would cease to be useful as a currency, and something else would/should become the currency.
> (b) not currently the job of the government
Congress has the power to coin and regulate value, per the US constitution. I'm not sure how we ended up talking about the US specifically here, I'm referring to governments generally.
> It's analogous to hiring a contractor. The government wants a program, it simply outsourced the operation to another entity.
No, it isn't, explicitly so. The reason the Fed operates at arms-length is explicitly to avoid having the government set monetary policy. This degree of stability allows businesses to plan and reduces their currency risk. Otherwise you face D vs. R every 4-8 years totally reversing monetary policy.
> It should remain relatively constant. That's the entire point of a unit of exchange. There might be periods where the relative demand for the currency outstrips the supply, and if it becomes such a dramatic situation as your presented in your contrived example, then it would cease to be useful as a currency, and something else would/should become the currency.
Yes, and my whole point is to avoid a large dramatic change you apply small amounts of pressure over time. This is called managing the money supply. And once you agree that this kind of adjustment achieves your objective of "relatively" stable currency (it does), then we can talk degrees, but we're now having a very different conversation.
> Congress has the power to coin and regulate value, per the US constitution. I'm not sure how we ended up talking about the US specifically here, I'm referring to governments generally.
Government handles the fiscal policy, federal reserve handles monetary policy. They're explicitly separated. This is true in many developed countries in the world operating under a central banking model, including Canada (Bank of Canada), and all of Europe (ECB) and England (Bank of England -- privately owned from 1694 to 1946).
> Government handles the fiscal policy, federal reserve handles monetary policy.
This is entirely semantics.
> And once you agree that this kind of adjustment achieves your objective of "relatively" stable currency
I can prove to you that it doesn't result in a stable currency. See the purchasing power of the US dollar over the last 100 years.
> This is called managing the money supply
That's what you call it. I call it theft. If an individual does not have the power to create money, then neither should a group of individuals, regardless of what color robes they're wearing.
> Otherwise you face D vs. R every 4-8 years totally reversing monetary policy
I don't think there's any risk there. They're the same party, both are spend-spend-spend.
Simply being born is no justification for stealing by fiat. People should be rewarded for saving capital. Forcing people to gamble their money only to maintain the wealth they already earned is not ethical. It is sufficient for people to be incentivized to spend money on things that are useful or interesting and to invest for higher return where the investment is sound.
EDIT: the money stolen by fiat is not evenly redistributed, and definitely not in favour of the poorest.
Accumulation of savings is valuable as it can be used for capital investment at the best opportunity. Forcing people to spend prematurely on crappy mal-investment is not optimal. Spending for the sake of spending is not optimal investment.
You're telling me in the market today, there's absolutely nowhere for you to productively allocate capital for an expected return of over 1.8% per annum? Even though Ally offers savings accounts that yield 1.8% per annum? And treasury bills yields are 2.2%? Remember, a savings account or CD are also valid investments assuming they yield more than inflation. What I'm saying you shouldn't do is store literal cash in a mattress. A savings account serves as collateral for loans which are in fact productive investments.
A savings account pays below the real inflation rate here in New Zealand. The cost of housing has increased hundreds of percent over the last 20 years thanks to central bank monetary policy that artificially manipulate interest rates. A shoebox apartment is now ridiculously unaffordable. I can put money into savings that loses money after inflation, and funds a system that is fundamentally corrupt, which leaves me worse off overall than if we had a real free market without centralized manipulation of currency and interest rates.
This centralized artificial interference has caused major imbalances in the economy here. It didn't work for the Soviet Union and it's not working in the "capitalist" world either.
> A savings account pays below the real inflation rate here in New Zealand.
That's a market force designed to disincentivize that investment. Nobody's guaranteed a risk-free return, or even retention of value in what's not a long-term store of value. Pick something else to invest it in.
For what it's worth, NZ's inflation rate is tracking at 1.5% per annum and Rabobank offers a 2.4% online savings account.
> The cost of housing has increased hundreds of percent over the last 20 years thanks to central bank monetary policy that artificially manipulate interest rates. A shoebox apartment is now ridiculously unaffordable.
Cost of housing is a total red herring and largely unrelated to this conversation. Cost of housing is overwhelmingly supply-side driven. If you want cheaper houses demand municipalities permit new construction. You can always build up, there's no limit on that. Build enough, the cost will drop substantially. There's plenty of markets that exemplify this effect, like Houston and Tokyo. SF on the other hand routinely forbids totally reasonable construction and the pricing speaks for itself.
The cost of housing roughly boils down to this: the narrative is that housing "should be an investment" and that it "should go up over time" so the directionality is accepted. Homeowners tend to be older, wealthier, have deeper ties to the community and vote. Renters tend to be younger, less affluent, transient and don't vote. As such policies are enacted that benefit homeowners. This includes zoning restrictions, building restrictions and tax deductions benefiting homeowners. Too few new units are built relative to influx of population, and price goes up. It's simple market economics.
Want to solve the problem? Get people to vote to allow more housing.
For what it's worth in the US housing prices on average tend to track inflation. It's certain municipalities like SF and NYC that far exceed due to asinine policy. The monetary policy was the same in all regions of the US so why then would pricing changes be uncorrelated across markets?
> I can put money into savings that loses money after inflation, and funds a system that is fundamentally corrupt, which leaves me worse off overall than if we had a real free market without centralized manipulation of currency and interest rates.
New Zealand ranks routinely as the world's least corrupt government. A system that maintains stability of money and debases it over time slowly and predictably helps keep wealth inequality down, and benefits the less well off by inflating away debts and encourages productive allocation of capital.
> This centralized artificial interference has caused major imbalances in the economy here. It didn't work for the Soviet Union and it's not working in the "capitalist" world either.
This doesn't make sense. The Soviet Union fell for all sorts of reasons that weren't inflation related or even central planning related. Authoritarian states tend to do so in time.
I'd say it's working just fine, inflation is roughly 1-2% per annum and incredibly well controlled. We've got plenty of actual problems (like the cost of housing), though, this isn't one of them.
New Zealands actual inflation is way, way higher than 1.5%. You are very naive and gullible if you believe that number. You also have no idea how the cost of housing is determined. Central banks have artificially manipulated interest rates to an extremely low level, where savers are forced to malinvest in things such as housing, which is also encouraged by mortgage rates being way below the reasonable cost, because again, the interest rates are artificially low. The reserve bank governor even admitted they were at fault.
> New Zealands actual inflation is way, way higher than 1.5%. You are very naive and gullible if you believe that number.
It's defined with a mathematical formula based on a basket of goods. You haven't provided any sources other than your gut and a baseless assertion about gullibility. I have references [1, 2].
> You also have no idea how the cost of housing is determined.
It's literally on the investopedia write-up. [3] And also, it's basic, fundamental market economics. More supply, price goes down. Less supply, price goes up assuming constant demand. Sure lending makes unaffordable places more affordable. That doesn't really matter if you flood the market with supply though does it? [4]
FTA [4]: "Tokyo rent is cheaper because it builds lots of housing. Every year, the city adds about 100,000 new homes. This increase has more than kept up with the increase in population, leading to a housing surplus." Average rent is $2.50/sqft in Tokyo vs $6/sqft in SF. And they have negative interest rates. Supply. Matters.
> Central banks have artificially manipulated interest rates to an extremely low level.
Set them at a low level. That's their job. To maintain a consistent, low, predictable rate of inflation.
> The reserve bank governor even admitted they were at fault.
Look I'm not saying they're perfect, I'm saying inflation has little to do with the very real issues you call out.
You are fundamentally off the mark at every single point. The basket of goods specifically excludes things such as housing which is the by far the number one cost of living here, which leaves that "inflation" figure as an utterly meaningless metric.
>> Set them at a low level. That's their job. To maintain a consistent, low, predictable rate of inflation.
Your reading comprehension failed here. I am referring to control of interest rates, which has far reaching consequences beyond inflation. This is the "fatal conceit" of socialist minded people such as yourself. No one on this planet is qualified to control interest rates.
As for the Soviet Union - I was talking about their centralized / planned economy. Socialism. We have a socialist monetary system in the West.
Yes New Zealand is the least corrupt government in the world, apparently, and despite that, the divide between rich and poor is increasing. It has become way less affordable to live here since the mid 2000's and is not getting any easier. We are locked in to a corrupt global system. Our monetary policy is a slave to the global socialist monetary system.
(traditional, not "American") Socialism isn't central planning it's the state owning the means of production. To my knowledge, there's no concerted effort in New Zealand to have the government own the means of production.
> ...the divide between rich and poor is increasing...
For sure, and it shouldn't. At least in the US it really started to get bad after Reagan dropped the top income tax from 90% to the current 35%. And the estate tax from 80% to the current basically-zero. Nothing to do with inflation, in fact, inflation would reduce this spread as it would disproportionately affect those with more money, and aid those with debt.
Who would have thought that letting the wealthy keep more money would lead to the wealthy having more money? Shocking.
> We are locked in to a corrupt global system.
Explanation needed.
> Our monetary policy is a slave to the global socialist monetary system.
Is the global government (United Nations?!) trying to own the means of production?
Listen man, you’re obviously a very smart guy (I’m assuming your gender), but it seems that you haven’t been exposed much to the “Austrian School” of economics.
Keynesian theory is the orthodox economic religion, which you have fully subscribed to. Austrians are heretics and we are burned at the stake for our beliefs.
I’ve read both sides. The Austrian school is far more compelling and rational. It cuts through the obscurantist bullshit with precision.
To me, Keynesian theory with its justification for continued economic chaos, is for those suffering from “battered wife syndrome”. To accept the Keynesian excuses, is akin to a wife getting brutally raped and beaten by her husband every day, while telling everyone “It’s OK, I deserve it, he knows what’s best for me”.
If you haven’t seriously examined the Austrian side of the debate, have a look at this:
EDIT:
In the first link, read the paragraph that begins with "In the face of overwhelming arguments against inflationary expansion ..." . The entire article is good but that really gets to the point of inflation.
> “inflation is theft”
I think you didn’t read anything I wrote because my core focus is that inflation is 100% avoidable through investment which is the behavior explicitly being incentivized via, to your point, a stick and not a carrot approach.
It’s theft like taxation is theft: it’s not.
> a GSE creates money from nothing
Yes that’s the point. The economy gets bigger and more people are born and the money supply expands. To not do so would create deflationary pressure which, again, creates a risk free return for existing money holders for no justifiable reason. In fact you haven’t justified it either, you say it as though it’s self evident.
If you don’t believe the value of existing money should go up then you agree the money supply must expand to match economic growth and population growth. All were then arguing about is how much.
> money grubbing banks...
Banks are paid for the role they serve in the economy: liquidity and security. Look at how much they make, it’s all publicly disclosed. Banks make around a 1% return on deposits (you know, the collateral for this lending thing). Almost nothing. It’s a shit business. The remaining “free magic money” is cost of doing business and paid out to employees, landlords, suppliers and so on. You know, business expenses.