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While you could create infinite amounts of money, that's not very meaningful if it serves as an abstract means of exchange for goods which are ultimately somewh

by bschne 5y ago

While you could create infinite amounts of money, that's not very meaningful if it serves as an abstract means of exchange for goods which are ultimately somewhat constrained/scarce. Also, I am pretty sure it'd be a challenge to find a single economist who claimed the amount of money was fixed. What they do think (many of them, and probably somewhat reasonably, anyway) is that you can't create infinite amounts of it without things going awry — see above.

neilwilson 5y ago
That's the point though. It doesn't serve as an abstract means of exchange of goods and service. Money is exchanged and retained in its own right. There isn't a one-to-one relationship between money and stuff. It's more of an inductive relationship. Something power engineers understand of course. They have to generate and deal with reactive power every day, and ensure there is sufficient generated so that electrical items can operate at full output. Too many economists believe the apparent power of the economy and the real power of the economy must be the same.
- dahfizz 5y ago
  The term you're looking for is a store of value. USD absolutely does serve as a medium of exchange (have you ever bought something..?). It also serves as a store of value - Dollars themselves are valuable _because_ they can be used to purchase goods in the future. Economists understand this perfectly well. The relationship between dollars and things depends on how many dollars and how many things are produced. Doubling the money supply while keeping the productive output of an economy the same will only half the value of dollars. You can increase the nominal dollars infinitely, but that doesn't change the productive capabilities of an economy.
  - neilwilson 5y ago
    It won't halve the value of the dollars that are stored, because they are not being spent. Only spent dollars cause price changes, and then only if the capacity to expand is exhausted. If I have a billion dollars in a cupboard prices won't change at all. More importantly if I have a billion dollars in a bank account prices won't change at all, because money in a bank account isn't available for anybody else to use. Economists struggle with the difference between a stock and a flow, which is why their accounting is terrible. Particularly their bank accounting.

by bschne 5y ago

neilwilson 5y ago

That's the point though. It doesn't serve as an abstract means of exchange of goods and service. Money is exchanged and retained in its own right. There isn't a one-to-one relationship between money and stuff. It's more of an inductive relationship. Something power engineers understand of course. They have to generate and deal with reactive power every day, and ensure there is sufficient generated so that electrical items can operate at full output. Too many economists believe the apparent power of the economy and the real power of the economy must be the same.

dahfizz 5y ago
The term you're looking for is a store of value. USD absolutely does serve as a medium of exchange (have you ever bought something..?). It also serves as a store of value - Dollars themselves are valuable _because_ they can be used to purchase goods in the future. Economists understand this perfectly well. The relationship between dollars and things depends on how many dollars and how many things are produced. Doubling the money supply while keeping the productive output of an economy the same will only half the value of dollars. You can increase the nominal dollars infinitely, but that doesn't change the productive capabilities of an economy.
- neilwilson 5y ago
  It won't halve the value of the dollars that are stored, because they are not being spent. Only spent dollars cause price changes, and then only if the capacity to expand is exhausted. If I have a billion dollars in a cupboard prices won't change at all. More importantly if I have a billion dollars in a bank account prices won't change at all, because money in a bank account isn't available for anybody else to use. Economists struggle with the difference between a stock and a flow, which is why their accounting is terrible. Particularly their bank accounting.