WhatIsMoney

Context : OnMoney

What is it? How does it work?

An argument here : http://www.mises.org/journals/qjae/pdf/qjae537.pdf

Basically argues that money only signals credit you earn by useful production. So any attempt to create more money has no benefit.

But we already allow one class of people to "print" more money. The capitalist class who lend money at interest.

Because they demand back more than they lend, they either :

• don't increase the amount of money, but redistribute it towards themselves.

• increase the amount of money,

• borrow it from the future on the assumption that there will be more money in the future economy. (Is this also creating inflation)

However, there's a defence of the capitalist. She creates wealth by her investments. Is it true? Is the reward to the capitalist equivalent to the value she creates?

At the next stage up we have the second-order capitalists ... currency dealers, derivatives traders. They all do more abstract manipulations of the financial system. Once again, they may be productive, but as you get higher-order it gets harder to judge. Compare GlobalCasino.

There relation to the simplistic model of money and production maybe as emergent and difficult to understand as the relation between atomic physics and statistical mechanics.

So, it might be a straw-man to simply argue that money represents work-done, and creating more money doesn't create more stuff.

You might want to allow governments or people to create money because :

• those who do : banks, capitalists are abusing this power to reallocate resources to them. This rebalances the power.

• creating money does do some complex financial alchemy to grow the economy. So let's have more of it.

Contrast : FixedCurrency

See also OnMoney, ClassWarBetweenProductsAndServices, TheEfficiencyQuestion

CategoryEconomics