4 ms·

There is no free lunch but money is not a constraint. Physical resources are a hard constraint. Labour is a hard constraint. Money is not. Inflation caused by

There is no free lunch but money is not a constraint. Physical resources are a hard constraint. Labour is a hard constraint. Money is not. Inflation caused by excess money supply (NB: not inflation caused by excess money velocity) cannot survive taxation. Taxation destroys money supply. It’s no more (or less) complicated than any of the thousands of other fiscal decisions a government makes every year. There’s a fallacy alluded to in the statement “it’s a very complicated problem” - the allusion is to one of inaction being a safer default choice but nothing about inaction in the face of a complex problem guarantees against making things worse By qualifying with “complex” problem i mean a problem that’s as complex as choosing what to fund in a national budget. A problem for which no answer can be proven correct. A problem which can only be addressed by taking a considered view on risk. A problem with unresolvable uncertainties.

concordDance 4y ago
The real constraint is indeed what that money buys, e.g the aforementioned person hours. And if you print money and inflate then the price of goods rises. So sure, you might only pay a bit more for the treatment but now fruits are more expensive and your population gets slightly more unhealthy.
- CraigJPerry 4y ago
  >> and inflate >> >> Inflation caused by excess money supply (NB: not inflation caused by excess money velocity) cannot survive taxation. Taxation destroys money supply.
  - gus_massa 4y ago
    So you are actually proposing to raise taxes. The problems is that everyone hate that, and will avoid paying taxes and/or vote for the opposition party.
    - CraigJPerry 4y ago
      >> So you are actually proposing to raise taxes It depends - in the specific scenario of an incredibly expensive drug for small numbers of patients (and other problems with similar dynamics) then tax might not be the best solution. But in other cases yes. In this particular case the returns would go to successful investors - not historically a money user class prone to causing inflation (quite the opposite). In this case you may find that you don’t need any intervention - they might take their winnings and go speculate on more investments (great!). It may be that conditions are such that they don’t presently fancy investing, perhaps you could offer them inflation tracking risk free gilts/tbills to park in for now. However you would need to be ready for their choice to go on an inflationary non productive consumption spree. In which case - directed taxation should be applied.

concordDance 4y ago

The real constraint is indeed what that money buys, e.g the aforementioned person hours. And if you print money and inflate then the price of goods rises. So sure, you might only pay a bit more for the treatment but now fruits are more expensive and your population gets slightly more unhealthy.

CraigJPerry 4y ago
>> and inflate >> >> Inflation caused by excess money supply (NB: not inflation caused by excess money velocity) cannot survive taxation. Taxation destroys money supply.
- gus_massa 4y ago
  So you are actually proposing to raise taxes. The problems is that everyone hate that, and will avoid paying taxes and/or vote for the opposition party.
  - CraigJPerry 4y ago
    >> So you are actually proposing to raise taxes It depends - in the specific scenario of an incredibly expensive drug for small numbers of patients (and other problems with similar dynamics) then tax might not be the best solution. But in other cases yes. In this particular case the returns would go to successful investors - not historically a money user class prone to causing inflation (quite the opposite). In this case you may find that you don’t need any intervention - they might take their winnings and go speculate on more investments (great!). It may be that conditions are such that they don’t presently fancy investing, perhaps you could offer them inflation tracking risk free gilts/tbills to park in for now. However you would need to be ready for their choice to go on an inflationary non productive consumption spree. In which case - directed taxation should be applied.