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> when seeing centrally planned economies as a moral evil...For this reason, central bank money, with planned (not natural) supply, are not good. What would it

> when seeing centrally planned economies as a moral evil...For this reason, central bank money, with planned (not natural) supply, are not good. What would it take you to change your mind on this? To be frank and brutal, is this a religious kind of belief where no observation , no evidence, no argument can change your mind, or a scientific kind of belief where there are ways to change your mind - even if implausible?

jeofken 6y ago
Please interpret my message in good faith - it is honest rationality that brings us to this conclusion. Epistemologically, logical arguments from 1st principle I think are of highest value, and evidence or observation after that, and both support the claim that centrally planned economies create worse outcomes, be it for cars like Trabant vs BMW or currency like $ and €. I welcome you to convince me, and that curious quest for truth is what brings many of us onto the internet. It may sound high and mighty but is sincere. This is my 2nd language so apologies for the lack of finesse. Since “nomen est omen”, let’s define. “Price” is in a free market where demand and supply meet. For labour, for cars, for chewing gum, and so much more. When there is a lot of demand, rising prices are a signal to produce and be rewarded. Those who successfully do so will be rich, and want to invest their money in the most efficient way possible. This leads them to finding others who want to satisfy demand, invest in them, and there is a virtuous cycle. This effect is simple, but very important. Don’t take it lightly - it has given even the poor what kings could only dream of a few hundred years ago. We don’t live in a perfect Eden, but we have risen far. It is also good, if ethics are universal, because it contains no coercion, violent force, or other such evils. Currency is one thing of many traded. It has a price relative to other currencies, but also to bananas, chewing gum, cars, labour, etc. What to use as currency, and the price of currency, would in a free market be set by supply and demand. The price and object of currency would therefore reflect the wisdom of the crowd, rather than committee. Central bank currency requires a state to use its police and military to force people to trade in it, rather than the currency they themselves prefer. Central bank currency allows the state to print infinite amounts of money, like in Weimar, or since 2008 with QE infinity. When you create money, the value of every salary is effectively lowered. The state first and the banks second get to deal with the new money, while it’s still valued as before it’s printed. With this you can fund wars, and bribe the population for votes with welfare programs that create addiction to the state. Central banking was Marx’s 5th point in his communist manifesto - “Centralisation of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.”. Another notable point in the communist manifesto was state run public schools rather than freedom in education. So just like central planning of the car economy in east Germany led to worse driving and long lines for East Germans, central planning of currency leads to worse economic outcome for most people. See for example how income from capital vs income from labour diverged in America after 1971, as in the link above. Labourers got majorly screwed, while growth in efficiency continued (I.e value of capital) to climb. I invite you to either from first principles or evidence show that supply and demand is better determined by the state or a semi-state organisation, preferably with a good argument for why a central planning committee will be more efficient and virtuous than free decentralised people trying to satisfy the demand of others best they can, and I promise to accept reason. It’s worthwhile to recall that philo means love and sophy means wisdom/reason. Many of these ideas I’ve learned from the books of Austrian philosopher/economist von Mises. His books are on Amazon but also available as pdf, html, and ePub here https://mises.org/library/human-action-0 https://mises.org/library/human-action-0
- beefield 6y ago
  Thanks for the thoughtful reply even if my original comment may have been a bit snarky. Let me start by saying that I kind of admire the logical coherence and beauty of the framework built from the basic building blocks of utility maximizing (rational) agents, free trade and market equilibrium. It is actually very hard to argue against the framework within the framework itself, the logical purity of the model is quite beautiful indeed. And absolutely yes, free trade has been one of the huge welfare drivers of the last centuries. Another one, in my opinion, is democracy and worker's unions, but that is a side note to this particular discussion. But (of course there is a but...), what comes to monetary policy, I'd like to ask you to consider one of the basic premises I mentioned above, namely market equilibrium. I would argue that even if in the long term the macroeconomy may be somewhat equilibrium seeking, in the short term it is quite obvious that the unconstrained macroeconomy is a complex system with different feedback loops and time constants causing a pretty much chaotic behaviour[1]. And without any exogenous controls in place, even these short term fluctuations can become large enough to cause havoc in the society. These fluctuations can be observed in macro level in the business cycles (even if the central banks and governments do their best to smooth them!), and even in micro level in repeatable experiments[2] So, if you allow economy in your model to be complex and not just perfectly equilibrium seeking, you pretty much must have some exogenous control to keep the economy even remotely stable. Unfortunately that exogenous control by definition means that somehow actions of some agents in the economy must be artificially either restricted or fostered, even if that flies on the face of the moral principle of individual freedom. And central banks are important tools in this exogenous control via money supply. [1] https://en.wikipedia.org/wiki/Complex_system https://en.wikipedia.org/wiki/Complex_system [2] https://en.wikipedia.org/wiki/Beer_distribution_game https://en.wikipedia.org/wiki/Beer_distribution_game

jeofken 6y ago

Please interpret my message in good faith - it is honest rationality that brings us to this conclusion. Epistemologically, logical arguments from 1st principle I think are of highest value, and evidence or observation after that, and both support the claim that centrally planned economies create worse outcomes, be it for cars like Trabant vs BMW or currency like $ and €. I welcome you to convince me, and that curious quest for truth is what brings many of us onto the internet. It may sound high and mighty but is sincere. This is my 2nd language so apologies for the lack of finesse. Since “nomen est omen”, let’s define. “Price” is in a free market where demand and supply meet. For labour, for cars, for chewing gum, and so much more. When there is a lot of demand, rising prices are a signal to produce and be rewarded. Those who successfully do so will be rich, and want to invest their money in the most efficient way possible. This leads them to finding others who want to satisfy demand, invest in them, and there is a virtuous cycle. This effect is simple, but very important. Don’t take it lightly - it has given even the poor what kings could only dream of a few hundred years ago. We don’t live in a perfect Eden, but we have risen far. It is also good, if ethics are universal, because it contains no coercion, violent force, or other such evils. Currency is one thing of many traded. It has a price relative to other currencies, but also to bananas, chewing gum, cars, labour, etc. What to use as currency, and the price of currency, would in a free market be set by supply and demand. The price and object of currency would therefore reflect the wisdom of the crowd, rather than committee. Central bank currency requires a state to use its police and military to force people to trade in it, rather than the currency they themselves prefer. Central bank currency allows the state to print infinite amounts of money, like in Weimar, or since 2008 with QE infinity. When you create money, the value of every salary is effectively lowered. The state first and the banks second get to deal with the new money, while it’s still valued as before it’s printed. With this you can fund wars, and bribe the population for votes with welfare programs that create addiction to the state. Central banking was Marx’s 5th point in his communist manifesto - “Centralisation of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.”. Another notable point in the communist manifesto was state run public schools rather than freedom in education. So just like central planning of the car economy in east Germany led to worse driving and long lines for East Germans, central planning of currency leads to worse economic outcome for most people. See for example how income from capital vs income from labour diverged in America after 1971, as in the link above. Labourers got majorly screwed, while growth in efficiency continued (I.e value of capital) to climb. I invite you to either from first principles or evidence show that supply and demand is better determined by the state or a semi-state organisation, preferably with a good argument for why a central planning committee will be more efficient and virtuous than free decentralised people trying to satisfy the demand of others best they can, and I promise to accept reason. It’s worthwhile to recall that philo means love and sophy means wisdom/reason. Many of these ideas I’ve learned from the books of Austrian philosopher/economist von Mises. His books are on Amazon but also available as pdf, html, and ePub here https://mises.org/library/human-action-0 https://mises.org/library/human-action-0

beefield 6y ago
Thanks for the thoughtful reply even if my original comment may have been a bit snarky. Let me start by saying that I kind of admire the logical coherence and beauty of the framework built from the basic building blocks of utility maximizing (rational) agents, free trade and market equilibrium. It is actually very hard to argue against the framework within the framework itself, the logical purity of the model is quite beautiful indeed. And absolutely yes, free trade has been one of the huge welfare drivers of the last centuries. Another one, in my opinion, is democracy and worker's unions, but that is a side note to this particular discussion. But (of course there is a but...), what comes to monetary policy, I'd like to ask you to consider one of the basic premises I mentioned above, namely market equilibrium. I would argue that even if in the long term the macroeconomy may be somewhat equilibrium seeking, in the short term it is quite obvious that the unconstrained macroeconomy is a complex system with different feedback loops and time constants causing a pretty much chaotic behaviour[1]. And without any exogenous controls in place, even these short term fluctuations can become large enough to cause havoc in the society. These fluctuations can be observed in macro level in the business cycles (even if the central banks and governments do their best to smooth them!), and even in micro level in repeatable experiments[2] So, if you allow economy in your model to be complex and not just perfectly equilibrium seeking, you pretty much must have some exogenous control to keep the economy even remotely stable. Unfortunately that exogenous control by definition means that somehow actions of some agents in the economy must be artificially either restricted or fostered, even if that flies on the face of the moral principle of individual freedom. And central banks are important tools in this exogenous control via money supply. [1] https://en.wikipedia.org/wiki/Complex_system https://en.wikipedia.org/wiki/Complex_system [2] https://en.wikipedia.org/wiki/Beer_distribution_game https://en.wikipedia.org/wiki/Beer_distribution_game