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> Insisting on a fixed money supply is insane and destructive I would argue an infinite money supply is the thing that is insane and destructive. Infinitely gr

> Insisting on a fixed money supply is insane and destructive I would argue an infinite money supply is the thing that is insane and destructive. Infinitely growing rollover debt is somehow is a feature of this system, not a bug. Having money based on a scarcity is how our human economies functioned over the last thousands of years since the creation of money.

retrac 4y ago
> Having money based on a scarcity is how our human economies functioned Well, yes, but did they function particularly well? For example, if you tie your money to an economically scarce good, if technological or political developments result in a massive influx of that scarce good, the economy will suffer inflation until the influx either stops, or a different form of money is switched to. This isn't a hypothetical -- it was seen in Europe when Spain's conquest and extraction of gold and silver in the Americas set off ~150 years of consistent inflation (about 1.5% year compounded from about 1500 to 1650.) Prices in gold coins were about 5x higher in 1600 than in 1500. If we went back to gold and then figured out how to cheaply extract gold from seawater or something, there would not be a lot of policy options. Switch to oil? Basket of goods? Ban the mining of gold? With fiat money there are a lot more levers to pull when facing unwanted inflation, like to stop printing money for a while.
brookst 4y ago
Perhaps there is some middle ground between “fixed” and “infinite”, that would allow expansion with population and economy size? Like, what we have now. I’m all for debating the appropriate rate of expansion, or setting algorithms for expansion. But a fixed supply in a growing population in economy is necessarily deflationary, which is bad.
- candiodari 4y ago
  Ok, but that's currently much less than the money supply is growing and will, if the rest of the world is any indication, turn sharply negative in, say, 10 years or so in the US. Europe's population growth is already -0.2%. Money supply growth, in the tightest central bank environment in at least a decade, is 3%. I'm pretty sure -0.2% would currently cause a disaster in the EU economy.
- ashwagary 4y ago
  Gold isn't fixed, it has supply inflation. It seems this bill's intent is to add an element of "work" to money production. Paper and ink inventory being the current limiting factor is problematic.

retrac 4y ago

> Having money based on a scarcity is how our human economies functioned Well, yes, but did they function particularly well? For example, if you tie your money to an economically scarce good, if technological or political developments result in a massive influx of that scarce good, the economy will suffer inflation until the influx either stops, or a different form of money is switched to. This isn't a hypothetical -- it was seen in Europe when Spain's conquest and extraction of gold and silver in the Americas set off ~150 years of consistent inflation (about 1.5% year compounded from about 1500 to 1650.) Prices in gold coins were about 5x higher in 1600 than in 1500. If we went back to gold and then figured out how to cheaply extract gold from seawater or something, there would not be a lot of policy options. Switch to oil? Basket of goods? Ban the mining of gold? With fiat money there are a lot more levers to pull when facing unwanted inflation, like to stop printing money for a while.

brookst 4y ago

Perhaps there is some middle ground between “fixed” and “infinite”, that would allow expansion with population and economy size? Like, what we have now. I’m all for debating the appropriate rate of expansion, or setting algorithms for expansion. But a fixed supply in a growing population in economy is necessarily deflationary, which is bad.

candiodari 4y ago
Ok, but that's currently much less than the money supply is growing and will, if the rest of the world is any indication, turn sharply negative in, say, 10 years or so in the US. Europe's population growth is already -0.2%. Money supply growth, in the tightest central bank environment in at least a decade, is 3%. I'm pretty sure -0.2% would currently cause a disaster in the EU economy.
ashwagary 4y ago
Gold isn't fixed, it has supply inflation. It seems this bill's intent is to add an element of "work" to money production. Paper and ink inventory being the current limiting factor is problematic.