4 ms·

With phrases like "economic activity" and "mindless hoarding", you're using language that short-circuits critical thinking. You're on the right track, though, w

With phrases like "economic activity" and "mindless hoarding", you're using language that short-circuits critical thinking. You're on the right track, though, with your parenthetical note, so let's start by replacing "economic activity" with "spending". Then, instead of using the inflammatory phrase "mindless hoarding", let's use the word "saving". With this neutral terminology, we're now ready for some actual thought. We can recast the claim as follows: devaluation is good because it encourages spending and discourages saving. There's no doubt about the factual claim—devaluation does indeed encourage spending and discourage saving. But why is saving bad and spending good? This is an ethical judgment that depends on your particular set of values, but it is undeniable that devaluation (currency dilution) transfers purchasing power from savers to spenders. In particular, it's mathematically equivalent to combining a perfectly hard currency with forced confiscation (from savers) and transfer (to spenders), i.e., organized theft. Thus, from an ethical point of view, there is a strong reason not to give devaluation the benefit of the doubt. And yet, so far as I can tell, devaluation is always given the benefit of the doubt by the mainstream. Doesn't that seem odd?

enraged_camel 13y ago
>>We can recast the claim as follows: devaluation is good because it encourages spending and discourages saving. No, you can't. In fact, it is interesting that you blamed me for attempting to short-circuit critical thinking, and then turned around and suggested something so asinine as this. The reason it is asinine is because not all forms of saving are equal. A grandma stashing cash under the mattress does not help anyone else but the grandma, which is why it makes sense to discourage it using devaluation mechanics built into the economy. But if she invested that cash into a value-generating asset (e.g. a company, a piece of real estate, a public project, etc.), both her and the asset developer/owner would benefit: it would be possible to develop and maintain the asset, and she would reap greater returns. And just so we're clear, it's not like we're forcing grandma to take insane risks. Government bonds have historically been incredibly safe. So devaluation exists as a mechanic to say to grandma, "instead of mindlessly hoarding your money under the mattress, buy bonds with it. As a result, we (the government) will be able to fund public projects and you will be shielded from devaluation." It is difficult to argue that this configuration is less optimal than one in which money never loses value.
- lexcorvus 13y ago
  I see what you mean now by "mindless hoarding". This requires a more detailed discussion; happily, Henry Hazlitt has provided it: http://steshaw.org/economics-in-one-lesson/chap24p3.html http://steshaw.org/economics-in-one-lesson/chap24p3.html See also Murray Rothbard's discussion: http://mises.org/money/2s9.asp http://mises.org/money/2s9.asp You may not agree with their analyses, but at least they can serve as a counter-narrative to the mainstream views you evidently support. By the way, your comment can be improved by removing everything before "not all forms..." In that case, it would simply make a cogent point (though one with which I still take exception). As it stands, your comment comes across as petty and unrefined. Stay classy—it's nicer, and it's also more likely to persuade.

enraged_camel 13y ago

>>We can recast the claim as follows: devaluation is good because it encourages spending and discourages saving. No, you can't. In fact, it is interesting that you blamed me for attempting to short-circuit critical thinking, and then turned around and suggested something so asinine as this. The reason it is asinine is because not all forms of saving are equal. A grandma stashing cash under the mattress does not help anyone else but the grandma, which is why it makes sense to discourage it using devaluation mechanics built into the economy. But if she invested that cash into a value-generating asset (e.g. a company, a piece of real estate, a public project, etc.), both her and the asset developer/owner would benefit: it would be possible to develop and maintain the asset, and she would reap greater returns. And just so we're clear, it's not like we're forcing grandma to take insane risks. Government bonds have historically been incredibly safe. So devaluation exists as a mechanic to say to grandma, "instead of mindlessly hoarding your money under the mattress, buy bonds with it. As a result, we (the government) will be able to fund public projects and you will be shielded from devaluation." It is difficult to argue that this configuration is less optimal than one in which money never loses value.

lexcorvus 13y ago
I see what you mean now by "mindless hoarding". This requires a more detailed discussion; happily, Henry Hazlitt has provided it: http://steshaw.org/economics-in-one-lesson/chap24p3.html http://steshaw.org/economics-in-one-lesson/chap24p3.html See also Murray Rothbard's discussion: http://mises.org/money/2s9.asp http://mises.org/money/2s9.asp You may not agree with their analyses, but at least they can serve as a counter-narrative to the mainstream views you evidently support. By the way, your comment can be improved by removing everything before "not all forms..." In that case, it would simply make a cogent point (though one with which I still take exception). As it stands, your comment comes across as petty and unrefined. Stay classy—it's nicer, and it's also more likely to persuade.