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As you read this, keep in mind that in Socrate's time the money supply was fixed. So any extra coin your pocked was one less coin for everyone else. With a fia

As you read this, keep in mind that in Socrate's time the money supply was fixed. So any extra coin your pocked was one less coin for everyone else. With a fiat currency, we tend to "create" money of thin air. The money supply is intended to grow with the economy. Obviously the speeds of growth don't always match, you end up with inflation or deflation.

kiba 16y ago
I preferred if the money supply is fixed. Beside, anybody who saved in a deflationary environment benefit.
- yahelc 16y ago
  Deflation sounds like in theory is a good thing for savers. In practice, its pernicious, harmful to everyone, and leads to a vicious cycle of economic contraction that can often take decades to get out of. See: Japan. This is a helpful primer: http://krugman.blogs.nytimes.com/2010/08/02/why-is-deflation-bad/ http://krugman.blogs.nytimes.com/2010/08/02/why-is-deflation...
  - yoyar 16y ago
    Deflation might be caused in various ways; by a lack of economic activity or it might be caused by competition naturally lowering prices over time in a healthy market. In Japan, the government so meddled in the economy that they caused the economic malaise; the same situation is currently occurring in the USA. The difference should be obvious. Deflation is too loaded a term to be used without qualification or context.
    - swift 16y ago
      In one sense, sure, the difference is obvious, but it seems to me that the negative consequences of deflation do not depend on how the deflation was caused. An excessive incentive to save will tend to curtail spending and investment no matter what, I'd think.
      - yoyar 16y ago
        Savings represent capital, and naturally cause interest rates to decrease. Lower interest rates act as a signal that investors should go ahead and make investments. Saving represent deferred spending, not a persistence absence of spending. However, in the government skewed markets of today where interest rates are forced artificially low these signals are not allowed to operate correctly and savers are penalized. There is no "excessive incentive". People save when an incentive exists sure, but this represents future spending. At the moment there is little or no benefit to simple savings; why save when your money will be worth less over time? This is a result of not allowing interest rates to float with the market. Again, interest rates are manipulated by the government. In the case where competition causes prices to decrease due to higher efficiency and quality, the money in your pocket becomes more valuable. What part of this is a negative consequence? The difference is in fact that deflation is not always a negative result, which was my point in the first place.
  - kiba 16y ago
    I disagree, because I have actually experienced deflationary growth. What it leads to is that workers are accepting discounted price for their work because of the deflationary growth expectation. That is how I work.
JoachimSchipper 16y ago
Note the subtle but important difference between "fixed amount of money" and "fixed amount of wealth", though. Socrates' Athens, even if the money supply [EDIT: didn't grow very quickly], was a much nicer place to live than the Athens of a century prior (or later).
deleted 16y ago
[deleted]
- allenp 16y ago
  Edit: In reply to deleted comment asking "why mention inflation?" I think his point is that the context of the dialog is a world where every dollar you earn means someone else can't have one - so it leaves the question if it is good or bad to want those dollars knowing you will deprive others of them.
  - zeteo 16y ago
    Profit doesn't mean money, profit means gain of wealth. Economic activity is not a zero-sum game if the money supply is fixed.
    - allenp 16y ago
      Honestly, did you even read the article?
      - zeteo 16y ago
        Hipparchus a pretty well-known (pseudo?) Platonic dialogue, and this is not the first time I've seen it. The parent seems to suggest that the friend's distaste for greedy men is related to the situation of money supply at the time. For anyone familiar with the other Platonic dialogues and the history of 5th century Athens, it seems much more related to the timeless distaste of Socrates' young rich aristocratic friends for the nouveau riches traders and speculators of the time.
    - Tycho 16y ago
      If the money supply was fixed, we wouldn't gain more dollars but we would gain greater purchasing power with those dollars, right?
      - zeteo 16y ago
        Not unless everyone decided to sell all their assets at the same time. If the money supply is fixed, and the market size is constant, prices should fluctuate very little even as large amounts of fixed capital are accumulated and total wealth is increased.
zeteo 16y ago
"in Socrate's time the money supply was fixed" Factually incorrect. Golden Age Athens used silver coinage and extensively mined silver, as one of its chief sources of income: http://en.wikipedia.org/wiki/Laurium#History_of_mining http://en.wikipedia.org/wiki/Laurium#History_of_mining http://en.wikipedia.org/wiki/Drachma#Ancient_drachma http://en.wikipedia.org/wiki/Drachma#Ancient_drachma
- bioh42_2 16y ago
  You are correct, mining did increase the money supply! I hugely oversimplified things. But central banks do tend to be a more steady supply of new currency then mines.
  - Gormo 16y ago
    If we consider mining to be an economic activity in itself - given that it requires capital labor, etc. in order to undertake - wouldn't the scale of mining operations within a given community be proportionate to the scale of the overall economy? Presuming that mining generates a consistent supply of new silver, wouldn't this actually be a fairly decent way of scaling the money supply in proportion to economic growth? And if even if the money supply is fixed, wouldn't economic growth cause deflation, and just make each unit of currency worth more?
    - bioh42_2 16y ago
      wouldn't the scale of mining operations within a given community be proportionate to the scale of the overall economy? If we consider mining success as a function of investment AND natural deposits, then if the natural deposit goes to 0, investment can go to infinity without increasing the success rate. A steady slow growth of the money supply has been proposed as a way to eliminate bubbles. No one has tried it, for all we know it is not much worse or better than what we have now. Deflation gives everyone a great reason to save. This can turn into an economic death spiral. Exceptions do apply, as for example after a destructive war there can be strong enough demand to rebuild that the economy grows even with mild deflation.
yoyar 16y ago
I was able to find this article: http://summitbusinessnetwork.net/profiles/blogs/money-from-400-bc-to-2010 http://summitbusinessnetwork.net/profiles/blogs/money-from-4... among others: http://www.google.ca/#sclient=psy&hl=en&q=400+BC+currency&aq=f&aqi=&aql=&oq=&pbx=1&fp=46a1a9641b72a60e http://www.google.ca/#sclient=psy&hl=en&q=400+BC+cur... I highly doubt the money supply was fixed. A better understanding of what is actually money might be gleaned by reading the first linked article above. What I'd like to know is if the intent of posting this Socratic discussion on HN was to disparage profit or the other way round. Are we still really arguing about whether profit is moral? Really? Or is the theft and corporatism we see all around being once again confused with voluntary exchange between individuals?

kiba 16y ago

I preferred if the money supply is fixed. Beside, anybody who saved in a deflationary environment benefit.

yahelc 16y ago
Deflation sounds like in theory is a good thing for savers. In practice, its pernicious, harmful to everyone, and leads to a vicious cycle of economic contraction that can often take decades to get out of. See: Japan. This is a helpful primer: http://krugman.blogs.nytimes.com/2010/08/02/why-is-deflation-bad/ http://krugman.blogs.nytimes.com/2010/08/02/why-is-deflation...
- yoyar 16y ago
  Deflation might be caused in various ways; by a lack of economic activity or it might be caused by competition naturally lowering prices over time in a healthy market. In Japan, the government so meddled in the economy that they caused the economic malaise; the same situation is currently occurring in the USA. The difference should be obvious. Deflation is too loaded a term to be used without qualification or context.
  - swift 16y ago
    In one sense, sure, the difference is obvious, but it seems to me that the negative consequences of deflation do not depend on how the deflation was caused. An excessive incentive to save will tend to curtail spending and investment no matter what, I'd think.
    - yoyar 16y ago
      Savings represent capital, and naturally cause interest rates to decrease. Lower interest rates act as a signal that investors should go ahead and make investments. Saving represent deferred spending, not a persistence absence of spending. However, in the government skewed markets of today where interest rates are forced artificially low these signals are not allowed to operate correctly and savers are penalized. There is no "excessive incentive". People save when an incentive exists sure, but this represents future spending. At the moment there is little or no benefit to simple savings; why save when your money will be worth less over time? This is a result of not allowing interest rates to float with the market. Again, interest rates are manipulated by the government. In the case where competition causes prices to decrease due to higher efficiency and quality, the money in your pocket becomes more valuable. What part of this is a negative consequence? The difference is in fact that deflation is not always a negative result, which was my point in the first place.
- kiba 16y ago
  I disagree, because I have actually experienced deflationary growth. What it leads to is that workers are accepting discounted price for their work because of the deflationary growth expectation. That is how I work.

JoachimSchipper 16y ago

Note the subtle but important difference between "fixed amount of money" and "fixed amount of wealth", though. Socrates' Athens, even if the money supply [EDIT: didn't grow very quickly], was a much nicer place to live than the Athens of a century prior (or later).

deleted 16y ago

[deleted]

allenp 16y ago
Edit: In reply to deleted comment asking "why mention inflation?" I think his point is that the context of the dialog is a world where every dollar you earn means someone else can't have one - so it leaves the question if it is good or bad to want those dollars knowing you will deprive others of them.
- zeteo 16y ago
  Profit doesn't mean money, profit means gain of wealth. Economic activity is not a zero-sum game if the money supply is fixed.
  - allenp 16y ago
    Honestly, did you even read the article?
    - zeteo 16y ago
      Hipparchus a pretty well-known (pseudo?) Platonic dialogue, and this is not the first time I've seen it. The parent seems to suggest that the friend's distaste for greedy men is related to the situation of money supply at the time. For anyone familiar with the other Platonic dialogues and the history of 5th century Athens, it seems much more related to the timeless distaste of Socrates' young rich aristocratic friends for the nouveau riches traders and speculators of the time.
  - Tycho 16y ago
    If the money supply was fixed, we wouldn't gain more dollars but we would gain greater purchasing power with those dollars, right?
    - zeteo 16y ago
      Not unless everyone decided to sell all their assets at the same time. If the money supply is fixed, and the market size is constant, prices should fluctuate very little even as large amounts of fixed capital are accumulated and total wealth is increased.

zeteo 16y ago

"in Socrate's time the money supply was fixed" Factually incorrect. Golden Age Athens used silver coinage and extensively mined silver, as one of its chief sources of income: http://en.wikipedia.org/wiki/Laurium#History_of_mining http://en.wikipedia.org/wiki/Laurium#History_of_mining http://en.wikipedia.org/wiki/Drachma#Ancient_drachma http://en.wikipedia.org/wiki/Drachma#Ancient_drachma

bioh42_2 16y ago
You are correct, mining did increase the money supply! I hugely oversimplified things. But central banks do tend to be a more steady supply of new currency then mines.
- Gormo 16y ago
  If we consider mining to be an economic activity in itself - given that it requires capital labor, etc. in order to undertake - wouldn't the scale of mining operations within a given community be proportionate to the scale of the overall economy? Presuming that mining generates a consistent supply of new silver, wouldn't this actually be a fairly decent way of scaling the money supply in proportion to economic growth? And if even if the money supply is fixed, wouldn't economic growth cause deflation, and just make each unit of currency worth more?
  - bioh42_2 16y ago
    wouldn't the scale of mining operations within a given community be proportionate to the scale of the overall economy? If we consider mining success as a function of investment AND natural deposits, then if the natural deposit goes to 0, investment can go to infinity without increasing the success rate. A steady slow growth of the money supply has been proposed as a way to eliminate bubbles. No one has tried it, for all we know it is not much worse or better than what we have now. Deflation gives everyone a great reason to save. This can turn into an economic death spiral. Exceptions do apply, as for example after a destructive war there can be strong enough demand to rebuild that the economy grows even with mild deflation.

yoyar 16y ago

I was able to find this article: http://summitbusinessnetwork.net/profiles/blogs/money-from-400-bc-to-2010 http://summitbusinessnetwork.net/profiles/blogs/money-from-4... among others: http://www.google.ca/#sclient=psy&hl=en&q=400+BC+currency&aq=f&aqi=&aql=&oq=&pbx=1&fp=46a1a9641b72a60e http://www.google.ca/#sclient=psy&hl=en&q=400+BC+cur... I highly doubt the money supply was fixed. A better understanding of what is actually money might be gleaned by reading the first linked article above. What I'd like to know is if the intent of posting this Socratic discussion on HN was to disparage profit or the other way round. Are we still really arguing about whether profit is moral? Really? Or is the theft and corporatism we see all around being once again confused with voluntary exchange between individuals?