[Mempho]

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It's still free money...for the lender.

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Its not risk free for the lender as your money only has value if someone else wants it. I can print up $10,000 in tolbiny dollars and try to buy my way into the ME but they aren't going to take it, so no one is going to come and borrow the $10,000t from me (and i have lost whatever it took to print it up). On a larger scale, lets say Zimbabwe since there is a thread going on them right now, if i print to much money no one will accept it and it becomes devalued heavily. When you try to pay people with it they rebel, go on strike, refuse to accept it, use other mediums of exchange (if you travel to zimbabwe everyone there will accept US $ or South African Rand (sp?), but no one wants the Zimbabwe dollar. So now the government (supplier of Z$) is losing power/influence and gerneally sucking all around. The supplier does not benefit without risk, but the wider the power he has (ie the more in demand his currency is) the more he can print without exposing himself to these risks.

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Even if 80% of my customers never pay me a dime, I get filthy rich just by getting business.

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If you are just printing money whenever someone asks then why would they ever accept it as payment? YOur dollars are worthless

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I was talking about American dollars, of course. I was just making an example (as if I were the mint). That said, shouldn't we know exactly how much dilution is occuring on a daily basis? Would that not affect our beliefs in regards to rate of return on investments and such. After all, if inflation is 3% and your savings account is a no-fee 2.5%, aren't you going in the hole by having the money there?

Also, if our money is getting diluted at the benefit of others, isn't that a type of theft from people that are holding American currency? I mean, everything is subject to supply and demand, even supposed inflation hedges, like gold. If a company finds a new gold mine that will increase the world gold supply by 10%, then, in a vacuum, that 10% should eventually be reflected in gold prices (relative to the dollar, of course).

Money is, of course, the same way. I would think that it would be far better to benchmark the currency against something of relatively constant value, however. For instance, if all science indicates that 95% of the world's platinum has been found, why not back the currency with platinum since it figures to be a better benchmark than a fiat system.

However, if we're going to have a fiat system, is it not better to have a constant amount of currency (or a constant amount per capita) in the system rather than a fluctuating amount?

I had heard on a talk radio show just a few days ago that there was an $800B difference between money created and money destroyed over the past two years. I have absolutely zero idea of the source of that information or if it is factually correct, but I do realize that this would be the equivalent of $2,666.67 for every man, woman, and child in America. That would be a heck of a lot of dilution for just two years.