Hilarymannah
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Marty,.....Hey,.I love that new pseudonym,....makes me sound like a gladiator,.thanks : )
That's not necessarily correct, meanie... Suppose I borrow £100 from you at 10% pa. I spend the money to buy a widget-making machine and you accept my widgets in lieu of interest payments. Where is the creation of new money?I think it's pretty simple. New money has to be created in order to pay the interest on existing loans. It can't work any other way.
Forget "economic activity". If you have a fixed amount of money and new goods are produced (someone creates something) the value of money will go up relative to "things produced" (=deflation), as long as the fiat money is legally enforced by the democratic government (which it always will be).
I really don't see fractional reserve banking as a con, but I know there are others with an opposing point of view.
There's a Pope St. Hilarius, so you should be pleased indeed...Marty,.....Hey,.I love that new pseudonym,....makes me sound like a gladiator,.thanks : )
Sorta... What I am implying is that economic activity, aka creation of value added, is the flip side of the money supply issue. So you have to look at the two of them together rather than just the money side.Hmm, but you're implying that widgets are interchangeable with money. If they are, then the production of widgets adds to the money supply. No?
Sorta... What I am implying is that economic activity, aka creation of value added, is the flip side of the money supply issue. So you have to look at the two of them together rather than just the money side.
That's the bit I don't understand at all... Suppose we were using gold or seashells or another fiat commodity as our medium of exchange. Why would it be more difficult to measure value added? I agree that it will be problematic in a fully barter-based economy, but that's a rather different scenario. Is your beef then with the use of currency in an economy in general, as opposed to barter?But value-added doesn't really mean a thing. If no money was ever created and we still existed on a barter system, it would be almost impossible to measure "value added".
Ah, then we're in agreement, which is sehr gut...I have no beef with anything, I'm relaxed about the whole set up. I read "Lords of Finance" a couple of months ago, it's an excellent book about the period of deflation and inflation during the wars.
I think the current system (i.e. fiat) is far preferable, as long as governments are kept in check.