3 ms·

> In a normal economy, the population is constantly expanding. That may be, but the western world is then abnormal. US population is projected to peak at 2030,

• maratd 15y ago
  Our economies, culture, the whole of our civilization is based on the assumption of population growth. Because, quite simply, that's how it's always been. We have never before experienced a reduction in the human population for any extended period of time. I wouldn't count the US out yet, it can easily augment its population with immigration. So can all the other developed countries. Anyway, regardless, making a currency with a fixed supply doesn't work under any scenario. With a constant or increasing population, you want to increase the money supply. With a decreasing population, you want to decrease it.
• stevenwagner 15y ago
  Most people don't seem to realize that when your currency inflates, there are people who get the new money. Inflation=wealth redistribution
  • maratd 15y ago
    You're assuming the government turns on the printing press and then spends some money on some social programs? That really doesn't happen anymore (if it ever did). Various operations by the Treasury and Fed affect the banks. Then you get a shiny new credit card in the mail. I wouldn't call that wealth redistribution.
    • nazgulnarsil 15y ago
      I've never seen anyone, including keynesians try to claim that newly created money goes directly to consumers. wow. read more.
    • api 15y ago
      It is. It's upward wealth redistribution.
      • guelo 15y ago
        Unless the person at the top is loaning his money, then inflation is distributing downwards.
  • nhaehnle 15y ago
    Inflation does not mean creation of new money. This usage of inflation has become obsolete with the end of the gold standard. Inflation is by definition a rise in price levels, usually measured by the CPI (whose definition is sometimes subject to debate, but no measure of price levels is perfect; the important thing is to choose one that's reasonable and then stick to it). Inflation, i.e. a rise in price levels, can then cause an increase of money supply measures, as producing firms take on larger amounts of credit to finance their operations, and this leads to a (rather weak, and only valid over the long run) correlation of inflation and growth of money supply. There are also tertiary effects that can cause both inflation and growth of money supply (such as excessive government deficits). But it's important not to confuse those things.
• notahacker 15y ago
  In addition to population growth the need for an increase in money supply is also driven by increases in productivity per worker, which is enabled by technological progress. If, on the same fixed income, technological progress leads to the people of the 2030s expecting to have pet androids, HIV vaccinations and flying cars (we've been waiting a while for those) in addition to all the stuff they'd need to have to keep up with the Jones', the prices of the stuff we have now have to deflate. I don't think we'll reach a peak of technological progress in the 2030s. Unless, of course, economic stagnation is encouraged by discouraging the inherently risky process of investment by making the average return zero.