Re: Infinite money

On Sun, 17 Jun 2007 17:12:36 -0700, The Ghost In The Machine
<ewill@xxxxxxxxxxxxxxxxxxxxxxx> wrote:

In sci.econ, royls@xxxxxxxxx
<royls@xxxxxxxxx>
wrote
on Sun, 17 Jun 2007 20:48:46 GMT
<467571d4.8955170@xxxxxxxxxxxxxx>:
On Sun, 17 Jun 2007 07:51:39 -0700, The Ghost In The Machine
<ewill@xxxxxxxxxxxxxxxxxxxxxxx> wrote:

In sci.econ, royls@xxxxxxxxx
<royls@xxxxxxxxx>
wrote
on Sun, 17 Jun 2007 08:16:11 GMT
<4674bf2f.51758043@xxxxxxxxxxxxxx>:
On Sat, 16 Jun 2007 20:01:33 -0700, The Ghost In The Machine
<ewill@xxxxxxxxxxxxxxxxxxxxxxx> wrote:

In sci.econ, royls@xxxxxxxxx
<royls@xxxxxxxxx>
wrote
on Sat, 16 Jun 2007 21:00:07 GMT
<467423e8.12001810@xxxxxxxxxxxxxx>:
On Sat, 16 Jun 2007 09:44:51 -0700, The Ghost In The Machine
<ewill@xxxxxxxxxxxxxxxxxxxxxxx> wrote:

In sci.econ, The Trucker
<mikcob@xxxxxxxxxxx>
wrote:
Money is in infinite supply and not created by labor.

This is debatable, but on a technical point money, which after all is
represented by something, cannot be infinite as nothing is infinite.
There is only so much paper or metal in the world (the usual
physical representations of fiat money); even electrons are not
finite.

Trucker seems to have expressed himself badly, assuming he is not just
totally confused. Money is definitely not in infinite supply. That
is very much the point.

So who should be given it, have it, or take it?

First we need to get straight on whether the kind of money we are
using is the most suitable type for our purpose.

And that purpose is ... ?

Up to the people who will be using the money, but the main goals are
price stability and adequate liquidity.

OK, so use a fixed monetary unit (such as gold) as the basis.

At one time that was a good solution, but now it would only guarantee
deflation (declining liquidity) for any country that adopted it.

As for
"adequate liquidity", that's a threshold; one will have to establish
both a metric (e.g., total amount of money spent per day) and a
threshold to satisfy the "adequate" part. The value presumably depends
on the population, the amount of money in circulation, and perhaps on
other factors that are not clear to me.

Production is the main one.

Is there an issue regarding hoarding here?

Yes, especially with gold.

In other words,
I am one private individual of a general society. "Private industry"
is merely the businesses that I and others own (were I to own one).

Granted, that "private industry" could employ workers (who are also
people). I see three scenarios.

[1] I print dollar bills. (This is generally illegal.)
[2] The Mint, a designated public agency employing some people, prints
dollar bills in a specified manner. It manufactures its own inks and
paper (by paying market value or above-market value for the resources
going thereinto).
[3] The Mint subcontracts the printing of money to a number of private
corporations, inspects the results, and pays the subcontractors.

I would hope for [2] but do wonder.

You're talking about printing currency, not creating money. Almost
all money is lent into existence by private banks and does not exist
in the form of currency.

If one requires a fixed monetary unit one cannot create money. If one
uses gold one cannot create money except by mining and refining it.

Did you mean "creating wealth"?

No, I meant creating demand deposits by lending.

There is no limit to the amount
of money. Yet there is signorage (the dude that creates the money gets
almost full value of it) and, in addition, there seems to be "interest"
paid for this money creation.

It is, after all, someone else's money. You simply pay for it.

But the creator of the money didn't pay for it. That is the point.

Well, we're paying the creator of the money in order for them to create
money.

?? LOL! How much do you think they would be willing to pay to have
the privilege of creating money if we didn't give it to them for free?

As much as the market will bear. :-) After all, that money has to come
from somewhere.

So do laws. That doesn't mean we should be paying private companies
to produce them.

And why not? They might produce money far more
efficiently than the Feds.

They produce a lot more it, that's for sure.

Absent obvious issues such
as counterfeiting, corruption, and kickbacks (which
presumably would be problems), I for one would need some
clarification before subscribing to a blanket ban on
private money creation.

The obvious incentive is to create too much of it.

-- Roy L
.

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