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Counterfeiting money is evil not because it hurts the counterfeiter, but because it takes away wealth from everybody else. Whatever the counterfeiter buys that
by dpatru 13y ago
Counterfeiting money is evil not because it hurts the counterfeiter, but because it takes away wealth from everybody else. Whatever the counterfeiter buys that is in limited supply, the rest of the people have to do without.
To the extent that debt resembles counterfeiting, it is evil. Here's an example: suppose you want to buy a prime waterfront property which is offered for auction. You've worked hard, saved your money in the bank, and you finally have enough deposited to make a substantial offer. At the auction, you meet Joe. Joe also wants the property. Joe hasn't saved as much money as you have, but he has a line of credit from the bank, a line of credit made possible because the bank is using your on-deposit money as a reserve against which it can loan out new money. Whether or not you win the auction, the price of the real estate is higher than it would otherwise be because of Joe's ability to bid against you. This seems wrong. Why should the fact that you saved money enable a non-saver to drive up your prices?
Note that without fractional reserve banking, Joe's line of credit would be backed by money deposited for a term. So the saver's prices should not be affected by the borrower, because the while the borrower is using the money, the saver has agreed not to use it. Under 100% reserve banking, a depositor never has to bid against his own deposits.
- nazgulnarsil 13y agoSo the seller of the home deserves to sell for a lower a price because you want to ban certain types of private contracts between the seller, the bank, and joe?
- gaius 13y agoThe seller of the house can choose between X dollars, or more dollars that are worth less in purchasing power anyway. The price changes but the value is the same. You can't spend dollars for which there are no goods, nor can you sell goods for which there are no corresponding dollars, so price and value always converge.
- nazgulnarsil 13y agoNo, the value that Joe wishes to exchange for the home is higher.
- nhaehnle 13y agoI would rather not use terms like "evil" in a discussion of policy. With that out of the way, counterfeiting does not necessarily take wealth away from anybody. In a depressed economy, it could just activate unused resources and stimulate production so that the overall amount of wealth increases by at least the amount represented by the counterfeit money. That said, counterfeiting is still wrong for the same reason it is wrong for you to hack into your bank's computer systems to increase the amount of money in your account: Society has agreed upon a set of rules that underlie the distribution system of our economy, and both the hacking and the counterfeiting go against these rules. Addendum: In a way, forbidding counterfeiting is a slippery-slope situation. A single act of counterfeiting does not necessarily take wealth away from anybody. But if counterfeiting were allowed, the whole system could not possibly work.