Aha! That might be the piece of the puzzle that I was missing. I’m assuming that the most “sound money” would be of a fixed volume. In actuality, it would probably be better to base currency on a steadily increasing commodity (for example, more gold is always being mined). I imagine something that, more or less, keeps up with the growing numbers of wage earners would be best suited as money. That would prevent the problems of sustained deflation, but would not allow some central body to artificially manipulate interest and inflation rates.
“Isn’t the reserve banks job to provide money to the economy?”
does the central bank now provide money or something else?? a currency for instance. is there a distinction??
“Aha! That might be the piece of the puzzle that I was missing. I’m assuming that the most “sound money” would be of a fixed volume. In actuality, it would probably be better to base currency on a steadily increasing commodity (for example, more gold is always being mined). I imagine something that, more or less, keeps up with the growing numbers of wage earners would be best suited as money. That would prevent the problems of sustained deflation, but would not allow some central body to artificially manipulate interest and inflation rates.”
what type of sustained deflation??? in what way would money “keep up with growing numbers of wage earners”?? a pound of money for every pound of wage-earner??? that doesnt make any sense.
a fixed volume of sound money??? what is that??
Sustained wage deflation caused by a fixed amount of money (for example a specific number of dollars or ounces of gold), despite a growing (not fixed) population of wage earners.
When I talked about money growing with wage earners, I was hypothesizing that it may be ideal to have the amount of money (i.e. number of dollars or ounces of gold) expand proportionately to the wage-earning population, allowing average overall income to remain constant. This would prevent the problems of wage deflation that could make borrowing and lending impractical, but would still allow price deflation as the number of goods and services expands (due to increased productivity). Obviously, if the regulation of that money is done by a central bank (instead of the normal and steady growth of a scarce commodity), it opens the door for mischief and manipulation.
I was working under the assumption that the most stable currency would be one with no growth or loss; the amount of the currency would neither increase nor decrease, but would be naturally distributed among varying numbers of workers. In discussing it here, it seems that this may have been a false assumption.