A conversation about inflation

[maxtower]

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The fact that every economy in the world operates on a fiat money system. If hard currency is such a good idea, why does no one use it anymore and also kick the rest of the world in the butt with their stellar economic performance?

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This could also be the result of Gresham's Law.

[VarlosZ]

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The fact that every economy in the world operates on a fiat money system. If hard currency is such a good idea, why does no one use it anymore and also kick the rest of the world in the butt with their stellar economic performance?

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Pretty much every government has chosen a fiat money system because it allows them to tax their population more without them realizing it (among other things). It is bad for the overall economy but good for the people who run the government. The people who run the government make the obvious decision in their own self interest, while the people who get hurt have no idea WTF fiat even means. Brand of cars? Italian soccer team? New sports drink?

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Of course, but you're forgetting the most important reason. By enriching themselves as you describe, the people who run the government have been able to corner the market on mustache wax, which, as we all know, is the essential commodity for mustache-twirling über-villains.


Seriously, though, why is it that "the people who run the government" are conceived of as both brilliant long-term Machiavellian schemers who successfully maintain a strict code of secrecy about their ingenious conspiracies, and as bumbling semi-baboons who can't run the day-to-day affairs of the state any more efficiently than a drunken Kazakh bear?

I have lots of respect for many AC/Libertarian positions, but I get the feeling that some of you guys are actually railing against the boogeyman.

[Exsubmariner]

This is why you have to come up with a financial strategy based on a falling $.

[Exsubmariner]

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Seriously, though, why is it that "the people who run the government" are conceived of as both brilliant long-term Machiavellian schemers who successfully maintain a strict code of secrecy about their ingenious conspiracies, and as bumbling semi-baboons who can't run the day-to-day affairs of the state any more efficiently than a drunken Kazakh bear?

I have lots of respect for many AC/Libertarian positions, but I get the feeling that some of you guys are actually railing against the boogeyman.


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YYYYYEEEEEEEUUUUUUUUUPPPPPPPP.........

[Exsubmariner]

Pay close attention to what he said in part 19. I actually suspect that deflation is the thing that is coming. People will eventually stop borrowing because they can no longer afford to. They will pay back debt and spend less. An over abundance of goods in the market will drive prices down, not up. People will be more interested in simply selling inventories and holdings to simply get capital out of them rather than selling them for profit.

[ianlippert]

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Seriously, though, why is it that "the people who run the government" are conceived of as both brilliant long-term Machiavellian schemers who successfully maintain a strict code of secrecy about their ingenious conspiracies, and as bumbling semi-baboons who can't run the day-to-day affairs of the state any more efficiently than a drunken Kazakh bear?


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They arent doing a good job because they are persuing their self interest. I dont think the two things are mutually exclusive. Some politicians actively screw over the tax payer and some of them are just economically ignorant. We arent all Neilso, nice strawman though.

[ShakeZula06]

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If hard currency is such a good idea, why does no one use it anymore and also kick the rest of the world in the butt with their stellar economic performance?

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Perhaps because the US gov't have went after every alternative hard currency I've ever heard of (liberty dollars and E-gold).

Let's turn the question around. If our current monetary policy is so awesome, why does government outlaw competition with it?

This all ignores the obvious point that the government isn't part of the market. Most governments have chosen to use a fiat system doesn't mean that's consequentially the best decision for all the citizens of that government, it just means it was consequentially the best decision for those that make those decisions (ie, the FED, the President, the republican party higher ups, the democrat higher ups, lobbyists, special interest groups etc). The only thing standing in their way is the average uneducated American voter on any issue, and this is made even worse by the fact that politicians rarely talk about monetary policy and the president himself doesn't even know the members of the FED.

[The once and future king]

Isnt saying that the government prints money to erode their debt an absurdity?

If the Government can print money, why is it in debt? Also, what do people think that debt is?

The government debt itself will have been created mostly out of thin air by the Banking system of fiat money. The debt is inflating in and of itself of course. It is not the Governement that mostly creates the money supply it is the PRIVATE banking system.

For all the money in circulation in the US economy at the moment only circa 5% comes from the government, the rest was created by the money as debt banking system. This is why the Government is in debt.

It is worth noting that under the present system if there was no public and private debt, there would be virtually no money.