devaluation is good for society

Economics Economics Questions
1

Hi I’ve just been watching a clip on youtube concerning how devaluation is bad, how it is something we don’t want.

At first this seems obvious but I think devaluation also has good points.

in a economy where money retains identical value if a man gives 1million units of exchange to his son and that son doubles his money and gives two million to his son etc untill the great grandson has 10million then the great grandson has 10million pounds.

in an economy where the money loses value via whatever means say by 1000% per generation then the final 10million is worth nothing.

sorry for any logic errors in my maths here but you get the idea.

so the great grandson has done nothing to earn the money and has nothing to show for it. if he wants ten million he must use the value within himself and that value will be a representation of his realative value to society.

this alows a natural cycle that resets itself in a way that money is continuously flowwing back to the sea, before being picked up and returned to represent the value of new individuals. I think it is a very dynamic and flexible system that may at first seem flawed but is infact the interferance that is needed for a complex society. And I think devaluation cycles lead to a fairer meritocracy.

Please argue.

2

How is having less to spend good? I trust by devaluation you mean the loss of purchasing power due to inflation? This only harms savers, and individuals whose earnings do not keep pace with inflation. If the devaluation is achieved via credit expansion, the market distortions are even more horrific. As far as I can tell, all inflation does is make individuals poorer, and displaces incentives to be future-oriented in the use of one’s wealth.

-Jon

3

To be precise, devaluation (aka inflation) is good for some people in society and bad for other people in society. It is bad for people who are long in money, that is to say people who have savings accounts, bonds, or long-term money-denominated contracts. It is good for people who are on the other side of those deals.

You can be sure that very rich people are not long in money.

4

Or if you look at devaluation as deflationary, as losing value. Over time if money is saved, vast amounts of capital accumulated, allowing for such expensive things as space travel.

5

You’re making a lot of assumptions that are just plain wrong. First of all, you assume that saving is bad. Saving and investment are the catalysts for economic growth. If it weren’t for centuries of saving we’d be living in caves right now. The countries with the highest inflation and with the most consumer and government spending are the countries that are the poorest. Look at Zimbabwe or Chile before it was turned around.

Secondly, you’re assuming that children inheriting wealth is somehow wrong. Why? How?

Lastly, you act as if high inflation doesn’t screw up economic calculation. We all know that’s wrong.

6

You assume nobody within those three generations is smart enough to put the money in stocks, or gold, or an interest bearing account.

7

NASA

I don’t think space travel is really a big priority right now:)

LESS MONEY = :):):slight_smile:

Less to spend can be good because this is a society. Not about me and you. Society involves compromise. Taxes may not aid the individual but they’re necessary for society. As I’m explaining more below I believe inflation/devaluation prevents money pooling which can (I believe) increase the natural values of people artificially and de-stabilize society.

SPADE S

I did not assume saving was bad. Saving is keeping something that may be of use later. This can be a bad thing and a good thing. Saving a spade for next time you need to dig up potatoes may be a good thing. Saving 100 spades may be a bad thing. If I have 100 spades that’s 99 people that don’t have spades. If there is a limited amount of spades and they wear out ever ten years then it is more likely the spades will be evenly distributed and everyone will have potato wedges for tea.

HYPER INFLATION:(

I’m not arguing for high or hyper inflation, I’m arguing for balance, a cycle that sees wealth redistributed gradually and not pooled. I believe this balance includes intentional devaluation. I don’t think I or anyone would use Zimbabwe as a model for a successful economy.

PEOPLE VALUE PASSING ON VALUE AND POOLING

Some people are always going to have more assets that other people because they are considered more valuable to society. I accept this as fair because it is true and they will usually float to the top regardless of the context. These people are likely to form a group of similarly valuable people, which has some degree of discrimination towards lower groups. Again this is acceptable to a degree. What I don’t think should happen is them artificially increasing that value from their starting point. Say person A has a value of 11; person B has a value of 10. person A is 10% more valuable than person B. Whatever the scenario is within that society person A gets 10% more than person B in general terms averaged out that is: money, items, popularity, women. In a free society that is reset to zero generationally then this percentage will remain the same. Intense interference from societies rule makers can interfere with this percent and the passing on of culture and assets can interfere with the percent. A good example of this would be a man that goes back in time a thousand years. His knowledge could potential see him become a god vastly more valuable relative to his context…but in fact his genetic value remains relatively the same. This would be an example of knowledge pooling via cultural hand-me-downs and a kind of relative poverty for his worshipers. His true value is obscured and he can manipulate society from the point of view of one man. I feel society should be manipulated by many voices and a degree of bureaucracy. Slow is safe.

So there are two things that I can see at the moment that interfere with the true relative value of a man in his context. Society interference and the transference of non biological value, be it money or knowledge etc. You could say it was part of mans nature to pool resources into individuals and groups but I personally want society rather mans nature. I don’t see man’s nature working out too well for me :wink:

Money can be used as power and if one group pools enough money they can manipulate the rest of society. Business will be more powerful than politicians and I believe it will be an alternative route to unregulated extreme regimes. I think we can see this happening to a certain extent already today. We have monopoly regulations for these reasons I believe. To protect an environment of competition. Man will seek any way he can to dominate other men. It is in his animal nature, and that’s why we have society.

So people of greater value should be allowed the freedom to be more valuable without being able to dominate other men and become more powerful than the society itself. This would mean striking a balance between non biological transference and the rules that regulate it.

Saving is not bad…but saving too much might be. I think the best way to manage the economy and things in general effectively is to have a tool box of strategies to prevent extremes. I believe intentional devaluation can be bad and it can also be good, what is important is that it is never too good or too bad.

8

For all intents and purposes, the market does this.

The market can achieve this.

9

good point. got me there:)

10

that was a reply to harksaw. Libety student…I guess what I’m saying is that yes the current system does this and that I think the current system isn’t so bad. its argumentative and imperfect but generally it seems to have balance to it.

11

What current system? We don’t have a free market.

12

No, they’re not necessary for it. You’ll find ample material on this site demonstrating this. What is “money pooling” BTW?

That isn’t how saving works. That is more akin to hoarding, which is usually set in motion by, guess what - inflation.

Competition in free markets does this. Inflationary CB’s are what cause actual money “pooling”, transferring wealth straight into the hands of the nonproductive. Inflation is non-neutral - it transfers wealth into the hands of those who get to spend it first, i.e. well-connected elites. I have no idea why you think it’s a tool to aid the poor. That’d be deflation.

Yeah, because women are objects, just like doormats! I keep mine locked up in a big shiny vault.

[^o)]

-Jon

13

did I say we have a free market? I don’t think I did. I didn’t mean to anyway. I would say we have a free-ish market. a free market would be an extreme. An extreme would (I think)lead to a non free market. therefor we are better to have a non free market that focuses on allowing as much freedom as possible without allowing the freedom it creates to supperseed the market it exists within. I belive a free-ish market is the the best we can do.

14

So is your stealing my hard earned money your way of dominating me? Theft is theft. The sadistic thing about inflation is that all too many people are uninformed about how you are systematically destroying their wealth. And who will you and your beauracracy give the wealth to? Will you reward the “have-nots”, those who were unable to contribute enough to society on a voluntary basis to reach what you feel they are entitled to? Or perhaps people who look like you, or think like you. You can do that with your money, I won’t complain. But if you do it with mine, I will call you what you are: an armed robber, using the threat of violence to steal real wealth from everyone in society and use it for your own purposes.

I think that a much more logical and “fair” methodology to implement your master plan would just be to use government power to sieze the successful man’s money. Don’t apologize for it. Don’t try to hid the fact that you are robbing him by fun words like “intentional devaluation”. If you want to steal the rich man’s money, just point your gun at his face and take it, saying “Sir, this is what is best for society. You can sleep better at night knowing that you have helped society.” Your plan is to steal from everyone.

I don’t want to dominate you. I want to prevent you from dominating me.

And what is the “taxes are necessary for society” line? More armed robbery.

By the way, society doesn’t have a nature, or rights. Only individuals do.

Monopoly regulations do not protect consumers in a free market. They are a tool used to attack successful businesses. Likewise, there are other uses of government power sponsored by big businesses to limit competition from upstarts. The power pooled in the government is what allows this to occur.

15

No, you spoke nebulously about a current system. I’d like to know exactly what system you are talking about. Socialism? Fascism?

It’s either a free market or it is not. Again, it would help if you defined what you are talking about.

16

But that is just an assertion. And I still argue that your entire argument is unfounded, even if I were to grant this new assertion. Inflation does nothing but harm the poor and the middle class, as well as a lot of honest businesses.

-Jon

17

the system we are currently in I would say is a mixture of socialism capitalism liberalism fascism …etc. it is a free-ish system where by many differnt political ideas are discussed and a compromised outcome is reached. it can not be labled truthfully although it can be given names. To say we live in a democracy is less accurate that to say we live in a system that does a bit of this and a bit of that. not catchy enough to sell books me thinks.

that’s right, its not a free market and neither is it not a free market. its a free-ish market. its like saying nice when you are giving a critique on a painting. kind of non informative with an element of chaos:)

It should be perfectly clear by now that I have no idea of what I am talking about, and am trying to wade through the whole concept will little more than common sense. Its very interesting though.

18

To Jon:

Fair one…modern society then, needs taxes. It is a tool of society. It empowers the government. It is part of the team ethic that we can do more together than individually. Wouldn’t you say?

Money pooling or should I say value/resource pooling in the way I mean it is ultimately an unnatural amount of power in a very small space.

Hording is just an extreme form of saving. A degree of saving is ok as is a degree of inflation.

Inflation, as well as causing hording (no doubt of things like real wealth like gold mentioned above), also prevents hording because what you are hording is potentially worthless the longer you leave it. And this area of argument seems to be trying to reveal some kind of answer…but I’m not sure what it is. It’s no doubt why the gold standard was removed in the first place…because it’s impossible to manipulate an exchange medium within a context of other exchange mediums. As soon as you alter one the users switch to another so they can escape the manipulation. hmmmm you would need a global currency perhaps…and it would have to have an attribute which meant it could not be superseded by another exchange medium such as gold…no how anyone would go about that seems impossible to me. Apart from having gold in the first place and excepting that you can’t fiddle with it.

What’s a CB?

Ok due to the paragraph above I’m turning to your side here. Got to thank Harksaw for the revelation though. Very efficiently put a spanner in everything.

I’m just going to run this buy you to see how it goes. Say you give everyone in the country 100billion pounds. This makes all current money worthless and you have effectively levelled the plane field because give or take a million (equivalent of a few pennies in the new environment) everyone has the same money in theory. however…the decision makers and those in the know all have/buy real wealth like gold/property before this happens…so in effect they have immunity to the devaluation. The vast proportion of the middle and working class or say 90%+ of the population would level. Leaving ten percent to hold unreasonable power. Property and home owners would benefit. Anyone with real wealth. Poor people don’t have real wealth and we don’t live in a culture that thinks of real wealth very much. The wealth would then begin to filter down again only ending up at the poorest at the last when it is of least value.

ARGUMEMENT FOR HAVING REAL WEALTH EXCHANGE

If you had the real wealth inbuilt into the exchange medium then it retains its value and this makes the assets of the poor remain stable while it makes no difference to the assets of the rich. This changes nothing directly but the prolonged period of stability would prevent the wealth gap increasing vastly. Of course no exchange medium is entirely invincible because society might change; gold might go out of fashion or become more common etc. You can’t tax the rich (relatively greater that they would be taxed elsewhere because that will reduce investment. everything you do they are libel to find a loophole for and thereby only increate the relative gap in wealth…yes this is clicking together. So it’s not a matter of solving the problem…it’s a matter of not making it worse.

WOMEN

Women are objects in an economics sense:) never mind gold, that’s the real exchange unit:) first you get the money, then you get the power, then you get the women

I’m just kidding.

I love and respect all women as equ…well

I do what I’m told;)

19

It takes a big man to admit that. If you are going to hang out here (and I hope you will) there is no shortage of people who will try to expand your knowledge on money and economy.

20

To jason:

I’m not actually in charge of the exchange system.

stealing is something most of us do when we get our music. if there is anyone left in the world that doesnt do this and loves music then I think they should be in charge.

my point was to redistribule wealth, I have no quarms about stealing from people that don’t need the item I am stealing. other than getting caught of course.

but this is society. we give and accept that we lose some of our freedom in resurn for security. taxes are not theft and as long as we have more than we would if we lived in a hut on the hill then society has a big payoff.

If I took the rich mans mone. the rich man would move to china and invest his money there. there would be no rich men here and I think society would suffer for that. its a tricky balance you see. you can’t hit anyone too hard. its got to be subtle and the way you do it a sell it matters so much. people are pritty simple the react…they don’t think…oh yes, this will be great for the economy in 200 years…but 200 years is how long it might take…who can say, everyones so eger to be famous in their lifetime, thats probably why we have these cycles in the first place…ego economics cycles?

we both want to dominate each other, lets be fair…we’d eat each other if we could. that’s why the system has to be a good one.

well society does have a nature, the nature of individuals in groups and groups of individuals, you have to throw in the fact that society and individuals also create phenomenon that almost appear to be organisms in there own right and this leads to what I would call artificial society but is still really natural society . I mean everything that happens is natural. if it happens it was ment to happen. if we prevent it from happening then we were ment to prevent it from happening.

some power has to be pooled and thats why we need a constitution to govern it. this power must never forget it is a servant. perhaps this is impossible.

PS. i would give all the money to people that looked like me though. that would be so much fun:)