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> Money is just a unit of account. Creating more or less of it should not create more resources or products. Actually creating money does create more resources

> Money is just a unit of account. Creating more or less of it should not create more resources or products. Actually creating money does create more resources and products and vice versa. It's pretty much the modern economic system. More money makes more investment possible which can make more resources accessible and therefore create more products. But there is a physical limit on the resource side. And if society fails to justify the money creation with more resources, products and services, then you have inflation and ultimately a currency collapse as everyone loses faith in the value of money. It's a balancing act between money and products - whether money has to catch up to more products or whether products have to catch up to more money.

hndamien 5y ago
Creating money doesn't create more resource, it just dilutes the medium of exchange and changes the vector of the capital allocation. Now somebody with newly created money gets more say in the allocation of scarce resources to hopefully create more resources and product. The creation of money itself actually hurts the system where those who had previously been successful in creating wealth through performance of capital allocation or labour and now partially disenfranchised of the full right they had earned to continue this trend.
- imtringued 5y ago
  >Creating money doesn't create more resource True, it only creates the promise to work in the future. Whether that promise is worth something is up to the person making the promise. >it just dilutes the medium of exchange and changes the vector of the capital allocation That's an odd way of saying "higher interest rates". People do investments. They pay an interest rate according to the profitability of that investment. When there isn't enough aggregate supply to allow both investment and consumption the interest rate is raised until people either stop consuming because they are getting paid interest or because there are so many investments available you only pick the best ones. > The creation of money itself actually hurts the system where those who had previously been successful in creating wealth through performance of capital allocation or labour and now partially disenfranchised of the full right they had earned to continue this trend. Money is a promise that someone will work for you. That's not wealth, that's a promise of future wealth. Letting people promise even more future wealth does in no way hurt anyone. You also have to be realistic. If the promise turns out to not be true, then lying to everyone that it's real just makes everything worse because people keep "investing" into a lie. As I said in other comments. Labor cannot be stored. Simply holding onto money doesn't mean people are still there willing to work for you. Holding onto money in that sense can be self defeating. It's like that economic pie analogy. The pie has to be baked every day. If you don't eat the whole pie it will spoil and go into the trash. Uneaten cake benefits nobody so either stop baking so much cake or eat it before it's gone. > now partially disenfranchised of the full right they had earned to continue this trend. Well, as you can see in the pie analogy he has no intention to continue this trend otherwise he would avoid monetary savings because of the labor storage problem.
  - hndamien 5y ago
    > Money is a promise that someone will work for you. Incorrect. Money is (supposed to be) proof you did work/ created value.
imtringued 5y ago
When people demand products and services they borrow, which creates money. In exchange they promise to pay which also means they promise to work in the future. Persistent inflation generally happens when an economy runs out of people. Higher interest rates basically tell people to buy less or work more. The balancing act isn't between money and products but rather between the supply and demand for labor.
- saint_abroad 5y ago
  > Persistent inflation generally happens when an economy runs out of people. While there is a short run tradeoff between unemployment and inflation, it has not been observed in the long run. The Phillips curve was contradicted the 1970's and flatlined in the 2010's. Persistent inflation happens when central banks are no longer trusted to manage M2.
  - spinchange 5y ago
    Inflation was an issue even before the existence of central banks though.

hndamien 5y ago

Creating money doesn't create more resource, it just dilutes the medium of exchange and changes the vector of the capital allocation. Now somebody with newly created money gets more say in the allocation of scarce resources to hopefully create more resources and product. The creation of money itself actually hurts the system where those who had previously been successful in creating wealth through performance of capital allocation or labour and now partially disenfranchised of the full right they had earned to continue this trend.

imtringued 5y ago
>Creating money doesn't create more resource True, it only creates the promise to work in the future. Whether that promise is worth something is up to the person making the promise. >it just dilutes the medium of exchange and changes the vector of the capital allocation That's an odd way of saying "higher interest rates". People do investments. They pay an interest rate according to the profitability of that investment. When there isn't enough aggregate supply to allow both investment and consumption the interest rate is raised until people either stop consuming because they are getting paid interest or because there are so many investments available you only pick the best ones. > The creation of money itself actually hurts the system where those who had previously been successful in creating wealth through performance of capital allocation or labour and now partially disenfranchised of the full right they had earned to continue this trend. Money is a promise that someone will work for you. That's not wealth, that's a promise of future wealth. Letting people promise even more future wealth does in no way hurt anyone. You also have to be realistic. If the promise turns out to not be true, then lying to everyone that it's real just makes everything worse because people keep "investing" into a lie. As I said in other comments. Labor cannot be stored. Simply holding onto money doesn't mean people are still there willing to work for you. Holding onto money in that sense can be self defeating. It's like that economic pie analogy. The pie has to be baked every day. If you don't eat the whole pie it will spoil and go into the trash. Uneaten cake benefits nobody so either stop baking so much cake or eat it before it's gone. > now partially disenfranchised of the full right they had earned to continue this trend. Well, as you can see in the pie analogy he has no intention to continue this trend otherwise he would avoid monetary savings because of the labor storage problem.
- hndamien 5y ago
  > Money is a promise that someone will work for you. Incorrect. Money is (supposed to be) proof you did work/ created value.

imtringued 5y ago

When people demand products and services they borrow, which creates money. In exchange they promise to pay which also means they promise to work in the future. Persistent inflation generally happens when an economy runs out of people. Higher interest rates basically tell people to buy less or work more. The balancing act isn't between money and products but rather between the supply and demand for labor.

saint_abroad 5y ago
> Persistent inflation generally happens when an economy runs out of people. While there is a short run tradeoff between unemployment and inflation, it has not been observed in the long run. The Phillips curve was contradicted the 1970's and flatlined in the 2010's. Persistent inflation happens when central banks are no longer trusted to manage M2.
- spinchange 5y ago
  Inflation was an issue even before the existence of central banks though.