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I'm no economist. I do understand how our system creates new money as debt though. And I do see how that creates a spiraling sort of problem.
So isn't the real core question that has to be solved this one:
"When should a new unit of value (dollar or what have you) be created?"
In short, when is it legitimate to say a fresh new dollar of value has come into existence and thus should be minted?
Or perhaps, "What is the correct number of dollars to be in existence at any one time, and why?"
Anyone have a way to solve or explain how that number should be arrived at.
Clearly too many dollars in existence equals inflation as the value of each dollar is dilluted. No different than if a new source of gold suddenly flooded the world with gold.
On the other hand, too few. Well, I'm not sure. Deflation? After all you could continue to divide dollars (or gold coinage) into infintesimal increments.
But the core question still stands. "What is the best way to establish the correct size of the money supply?" Doesn't it?
1. please provide the proof that China is falling into line, actually let's make it all of Asia. And please give a credible source. Otherwise it just conjecture.
2. Never said the Fed and Treasury is the End all Be all to the world economy. Though very important in the scheme in our economy and how the other world economies view our monetary stewardship.
Hi baystater,
Its possible China is not. I hope you are right. They actually have a best seller called "currency wars" that so far has not been translated into English by that author. Some of their leaders have read it and are concerned about its implications. Perhaps they can make a last stand. They are a bit surrounded however. It reminds me how the Russian/Union alliance held off the central bank controlled Britain and France for a while. Maybe China is the last chance.
I'm no economist. I do understand how our system creates new money as debt though. And I do see how that creates a spiraling sort of problem.
So isn't the real core question that has to be solved this one:
"When should a new unit of value (dollar or what have you) be created?"
In short, when is it legitimate to say a fresh new dollar of value has come into existence and thus should be minted?
Or perhaps, "What is the correct number of dollars to be in existence at any one time, and why?"
Anyone have a way to solve or explain how that number should be arrived at.
Clearly too many dollars in existence equals inflation as the value of each dollar is dilluted. No different than if a new source of gold suddenly flooded the world with gold.
On the other hand, too few. Well, I'm not sure. Deflation? After all you could continue to divide dollars (or gold coinage) into infintesimal increments.
But the core question still stands. "What is the best way to establish the correct size of the money supply?" Doesn't it?
Hi JMadison,
I really like this post. I am one of those people that takes the problems of today rather than worry about the one's tomorrow. I have seen enough Utopian dreams follow from the Fed problem. I agree lest just see what happens after we fix this one thing and especially beware of an equally bad system.
Its really quite easy. A simple index on 25-50 commodities will tell you about inflation. We would also know the total issue of currency. They can tax or print. Anyone could run the system. I don't think anyone on that island was an economic wizard either. Its the swindlers who like the shell games.
I really like this post. I am one of those people that takes the problems of today rather than worry about the one's tomorrow. I have seen enough Utopian dreams follow from the Fed problem. I agree lest just see what happens after we fix this one thing and especially beware of an equally bad system.
Its really quite easy. A simple index on 25-50 commodities will tell you about inflation. We would also know the total issue of currency. They can tax or print. Anyone could run the system. I don't think anyone on that island was an economic wizard either. Its the swindlers who like the shell games.
We know that bankers are like lawyers, and produce nothing of value. Without debt they cannot steal value from the productive members of society. Imagine how prosperous the United States would be without banking and a national debt.
We know that bankers are like lawyers, and produce nothing of value. Without debt they cannot steal value from the productive members of society. Imagine how prosperous the United States would be without banking and a national debt.
Hence the reason for the current world banking system...
No, it would mean we have to start producing again. Under the current system we would have 0 money if we have 0 debt.
And what is so bad about having to produce again?
Wouldn't that be the cause of our issues in the first place, that we have changed from being an exporting nation into an importing nation? The only way to support the fractional reserve system and maintain a 'zero debt policy' would be to bring more money into the nation than we send out and for there to be a constant fixed sum of global wealth (otherwise inflation is caused because of increased money but no increase in value), correct? Granted, it would depend on making some other nation bankrupt... but it would work for our nation.
Sort of along the lines of the physics law "Conservation of energy", whereby energy is neither created nor destroyed, just changed or transferred.
Wouldn't that be the cause of our issues in the first place, that we have changed from being an exporting nation into an importing nation? The only way to support the fractional reserve system and maintain a 'zero debt policy' would be to bring more money into the nation than we send out and for there to be a constant fixed sum of global wealth (otherwise inflation is caused because of increased money but no increase in value), correct? Granted, it would depend on making some other nation bankrupt... but it would work for our nation.
Sort of along the lines of the physics law "Conservation of energy", whereby energy is neither created nor destroyed, just changed or transferred.
That is the point I was making. Without fractional reserve all money would have to come from work. The lack of inflation will cut off nonsense like real estate speculation and credit for consumption.
No, it would mean we have to start producing again. Under the current system we would have 0 money if we have 0 debt.
Well we do have coins and they are real money.
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