Where Does Your Money Come From (cont'd)

So we left off with P. Lotor saying that no money should ever be added to the supply of money once it is accepted by the market.

I asked him the question of what he would do during war time when a country needed to defend themselves an arm their nation.

History proves that countries do not have enough money to do this, so they usually print it.

I asked P. Lotor if he would prefer the Government taking the money from the private sector, even if it leaves them impoverished, to pay for the war?

 

I don't understand this viewpoint because it is incredibly inefficient and does not deal with productivity.

Yes if the Govt prints money there is more money... but what if that money leads to more productivity?

What about all the factories that need to be built, all the ammo, tanks, planes, software, technology, etc that leads to millions of jobs.

What if all those people take their incomes and go to restaurants, buy phones, toys, cars, houses, causing the private sector to have to produce these goods and services?

So you would rather take the money from the private sector to do this instead of simply printing money to pay for it?

 

actually that thread is still going. these are the last posts from the closed thread:

purchasing power of the monetary unit goes up because productivity goes up, and the same fixed amount of money bidding against more and more production drives the price of that production down.

 

More money does not lead to more productivity. If you inject more money into the economy if there is no demand for more money, that will create an artificial economic expansion that will collapse on itself. that is what causes the business cycle. In order for more money to naturally come into circulation, the demand has to exist first. This is where Keynesian theory fails. You cannot permanently stimulate demand by increasing supply. The demand has to exist first.

Where do you think the wealth comes from to pay for things? Printing currency is one thing, but there is a finite amount of wealth in this country. That wealth has to come from somewhere. You can't just create wealth out of nothing with no increase in productivity or labor. It does not work that way. Paying for wars by inflation and paying for wars by taxes both take money from the private sector to do it. So, knowing this, I have 2 questions for you:

1. why do you support forcing the poor to have more of a burden of paying for the wars?
2. if the result is the same, then why print the money instead of directly taxing? Why the trickery?

 

So what if productivity doesn't go up?

 

What is artificial about building factories, weapons, trucks, planes, clothing, food, etc?

THERE IS MORE MONEY for the private sector to get. Inflation only hurts those that can not increase their worth. If you pay for a war and give a million military members income... that is a million customers that you can get more money from. How do you not get this? There is no similarities between paying for a war by printing money than taking money from the private sector to pay for the war.

One creates more productivity, the other takes productivity away to pay for more productivity. This argument is absolutely absurd.

The result is not the same, not even remotely the same.

 

Explain this to me. When gold was used as a medium of exchange and pirates found a treasure chest of gold... why did they become wealthy?

They found more gold so that should take away from all the other gold owners... so why did the more people who found gold and the more gold that was found the more things were built and produced?

 

And the reason why people who found gold were wealthy is because people were willing to exchange their production and services for it. For a simple example.

You are a miner and you find a new pile of gold. You take that gold to a home builder and ask him if he will build you a house for this gold. The home builder says yes.

The home builder than goes and finds some local laborers and asks them if they would help build this home for this gold. They say yes.

The laborers than go to the local bar and ask for alcohol for gold. The bar owner than goes and makes alcohol.

The more people who find gold, the more houses the home builder builds, the more alcohol the laborers buy, the more alcohol the bar owner has to make.

Does this make any more sense to you guys. Because your theories are absolutely absurd, since even what you are backing is direct proof to your fallacies.

If the home build can't build any more houses, and there were no more laborers, and the bar owner couldn't make any more alcohol... then the more gold that was found the more demand for these goods were and the higher the prices would become. But as long as the home builder could build more houses, and there were more laborers, and there was more alcohol the bar owner can make, then the more gold that was found, the more productive they were.

Think about it.

 

So what's the difference between finding gold in the ground and printing fiat money off the printing press?

Can't wait to hear this answer!

 

I don't think that increased productivity helps workers out at all. They're still expected to produce as much as possible, however much that is, within the time that they've leased off their lifespan.

 

And what are these workers producing? Is it something there's a demand for or is it an Edsel (Volt)? If there's no demand for it, why produce it?

 

It helps workers who don't have a job

 

If productivity does not go up then the monetary unit will not gain purhasing power if the money supply is fixed.. why wouldn't productivity increase?

 

Because people aren't spending their money.

Also, answer the question. Why did people who found gold become wealthy?

 

Why wouldn't people spend their money?

 

Pssst... saving money is key to a healthy economy.

 

Of course it is, but even if your currency appreciates in value people will not forego consumption forever.

 

People don't need to forego consumption, they need to save, that's what brought the US out of the Great Depression and could likely get us out of this one.

 

Because it would be worth more in the future

 

So people not spending money is what brought us out of the Great Depression?? Do you guys realize how illogical and ignorant you really are? Like seriously, think about what you just said.

 

Saving is foregoing consumption. And absolutely saving is necessary, without saving there would be no capital goods an we would be living hand to mouth.

 

Facts totally escape you. The GD1 forced people into saving, that's what provided the flow of money after the war ended and production of consumer goods increased.

Get a clue!

 

Right but if you don't spend money you die. We are mortal..

 

Whaaaaaaaaaaaaaaaat???? You are smoking some seriously good crack. Can you please provide any data or proof of this whatsoever. What brought us out of the Great Depression was the biggest spending spree in the history of America.

 

People still need to consume, they need food, clothing and shelter as basic necessities. At the same time they need to save and forego luxuries.