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Sorry for putting words in your mouth. Serious question: Why must the money supply must expand?

• jsprogrammer 11y ago
  I have not worked out the full equation, though someone may have. But, essentially, each dollar that is created also creates a secondary obligation (interest), for which no corresponding "money" is created. The interest obligation must be met with money created from a primary obligation (principal). Such a system could perhaps be default free, if the interest receipts were uniformly distributed back to all participants in a timely fashion. Typically, however, the interest proceeds are locked up, at least for a time, by those who are able to receive them (central banks and their dependents). In aggregate, if the interest proceeds become unavailable to the economy for a long enough period of time, it is guaranteed that at least some participant in the economy will not be able to meet an upcoming interest payment. Solutions: no interest; distribute interest to everyone (still requires some kind of trade solution); or, expand the supply of money.
• gnaritas 11y ago
  > Serious question: Why must the money supply must expand? Wealth isn't fixed in supply, nor can the money supply be that we use to trade it without bad effects on the economy. If wealth expands and money doesn't, price deflation hits; if wealth shrinks and money doesn't, price inflation hits. For stable pricing, money supply must fluctuate.