Thursday, November 20, 2008

Fiat Money and Growth

One of the arguments for the central banking model is that we "need more money" for a growing economy. This is a popular fallacy which we will consider in greater detail later. In simple terms, if all cars cost $300 or $3,000 or $30,000 or $300,000 why do we care one way or the other, as long as wages have a similar relative value to the car as now?

The "price" of the good and "quantity" of money is meaningless.

What is important is the relative value of goods and labor. Money is simply the common commodity that enables economic calculation. With money one can compare the value of an acre of land and a tractor, for instance. Suppose an acre of land is equivalent in value to one tenth of a tractor. If the land costs $10 and the tractor costs $100 this works just as well as the land costing $10,000 and the tractor costing $100,000. The relative value is unchanged.

In addition, since we know a car in the past cost $3,000 and a car today costs $30,000, we can clearly see that the same good can sell for a higher price in the future. If it can sell for a higher number of monetary units (price) in the future, why not a lower number. It's just math...

In a sound money economy, a car would actually cost less today than in the past. Your money would have greater purchasing power today than 100 years ago or even 20 years ago.

If the idea of printing new money is to make sure everyone has enough, then all prices should have remained stable. But instead prices are much higher. Why?

Since the quantity of money is not important and since we have seen with the Five Guys Analogy that inflation serves no purpose if everyone gets the new money on the same day and since we know that the purpose of inflation is to cause a hidden wealth transfer, we can draw a few simple conclusions.

First recall that in our inflationary monetary system, one is either pillaging or being pillaged. There is no middle ground.

To make the argument that we "need more money" in order to have a healthy, growing economy is to make the following ridiculous argument:

A productive and independent business person just can't make it unless a significant portion of what he produces is stolen from him.

He can never be expected to succeed unless his profit is forcefully taken away from him through the process of inflation; the confiscated money must be used to bury him in regulation, while burdening the workforce and consumer with destructive lies and propaganda, paid for out of their own productivity.

One must never expect an increase in wealth if people are allowed to keep what they earn.

Sounds like a bad idea when one discovers that the architects of this monetary system actually expect us to believe that we will grow wealthy by allowing ourselves to be robbed...

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