4 ms·

I'm not so sure that this is true, but I do agree that as of this moment it is so. The key thing you are looking at is (capital goods at time 1 / currency at t

I'm not so sure that this is true, but I do agree that as of this moment it is so. The key thing you are looking at is (capital goods at time 1 / currency at time 1 ) / (capital goods at time 2 / currency at time 2). Under a gold standard, mostly this means deflation with some periods during a gold rush rapidly going the other way. It becomes better to hoard gold and do nothing, and as you hoard the value rises further. This leads to economic stagnation because we don't actually encourage innovation. Under a Fiat currency scheme, the reverse happens. The value of the currency is constantly dropping. So what you see is people hoarding capital goods. What makes this worse is that we are incorrectly treating land as a capital good. So this is what we see today, people buy shares or land, that value appreciates as the money is printed, and they earned nothing. And as people learn of this, we get crazy things like 401k's that invest in everything in order to grab a piece of this appreciation. We get crazy things like companies taking out bonds, then using those bonds to buy their stock, never actually using it to become more productive, because productivity doesn't pay. More economic stagnation. If this rate is changing over time, we get speculation. We get rent-seeking. But if we were to introduce a system that forced this rate to never change, we could get through. Of course, the leading power would never allow that, because it's the leading power that is speculating on the assets that are appreciating.

chii 5y ago
> So what you see is people hoarding capital goods. owning capital goods isn't hoarding, since that implies you are not making use of it (like a squirrel would "hoard" nuts, which over time would rot). Capital goods are doing something productive - or the capital is misallocated and is losing you money. Too much misallocation would indeed cause problems, but every owner of capital is incentivized to allocate their capital to the highest returning task they can accept a risk for. Those who do not own capital will sell their labour. Any excess they earn apart from their sustenance would be spent on acquiring capital. In this way, everyone who produce more than they consume would accumulate capital, and partake in the economic growth. As for why land is treated as capital good - land is required for a lot of things, and the properties of land is not any different from any other capital good. The problem may be that there are some gov't interventions on land use that prevent it from being used for the most productive purpose - this should be corrected, but i have no idea how as vested interests are preventing it from happening.
- ItsMonkk 5y ago
  There's a fundamental difference - nobody created land, and the value that you are capturing is of your neighbors producing it. You can buy an empty plot of land, do nothing on it, and then sell it for double you bought it for 10 years later. Someone else could have had a use for that land. That's obviously hoarding. It doesn't rot. Stocks are less egregious for this trait as it's just zeros and ones, but the fact remains that if you want to hold value, you must invest in something. For a typical person who just wants to store their labor and not make a bet, they are unable to. Back in medievil times when population and productivity were flat, the money supply was flat, and there was no need to invest to store. There's nothing other than politics saying that it can't be true again today, the math just might be trickier, but I think we can handle that.

chii 5y ago

> So what you see is people hoarding capital goods. owning capital goods isn't hoarding, since that implies you are not making use of it (like a squirrel would "hoard" nuts, which over time would rot). Capital goods are doing something productive - or the capital is misallocated and is losing you money. Too much misallocation would indeed cause problems, but every owner of capital is incentivized to allocate their capital to the highest returning task they can accept a risk for. Those who do not own capital will sell their labour. Any excess they earn apart from their sustenance would be spent on acquiring capital. In this way, everyone who produce more than they consume would accumulate capital, and partake in the economic growth. As for why land is treated as capital good - land is required for a lot of things, and the properties of land is not any different from any other capital good. The problem may be that there are some gov't interventions on land use that prevent it from being used for the most productive purpose - this should be corrected, but i have no idea how as vested interests are preventing it from happening.

ItsMonkk 5y ago
There's a fundamental difference - nobody created land, and the value that you are capturing is of your neighbors producing it. You can buy an empty plot of land, do nothing on it, and then sell it for double you bought it for 10 years later. Someone else could have had a use for that land. That's obviously hoarding. It doesn't rot. Stocks are less egregious for this trait as it's just zeros and ones, but the fact remains that if you want to hold value, you must invest in something. For a typical person who just wants to store their labor and not make a bet, they are unable to. Back in medievil times when population and productivity were flat, the money supply was flat, and there was no need to invest to store. There's nothing other than politics saying that it can't be true again today, the math just might be trickier, but I think we can handle that.