Fiat vs Gold, both crappy?

I understand now why my points seemed nonsensical. thank you for bearing with me.

First, inflation is not theft.

Second, with deflation the uneven change in prices leads to relative prive distortions, tinkers with the interest rate, causes economic cycles, according to ABCT.

All hoarding does is to raise the PPM of the money that is still in the economy (for lack of a better term). Moreover hoarding is just the satisfaction of human desires, there is nothing different in this respect to spending.

Yes it is.

Deflation can never cause the ABCT. Granted if interest rates were lower than before the length of the production process may be artificially short but that wouldn’t result in the ABCT. The ABCT is caused my misallocation of resources resulting in malinvestments, which can only be caused by a lengthening of the production process that doesn’t reflect the time preferences of individuals within society.

But I think you have to admit that HTF in relation to XCR will definitely affect the ABCDEFG. :stuck_out_tongue:

Which is reflected in an increase in the price of gold, which stimulates the gold production market, bringing supply into balance with demand (or as much as is possible in this world). The market self-regulates.

Yes, the good kind of brake, the one that prevents “expansion” into inefficient lines of production. You call it “economic expansion”; others call it “rent-seeking” (or “theft” if they’re not good with fancy economic terms).

You’re chasing a chimera. There is not, nor will ever be, a stable currency, because demand for money (in fact, for all goods and services) is unstable, unpredictable and uncontrollable.

You would be well served by reading The Theory of Money and Credit by Mises.

Why is that?

An artificially short production process still does not reflect the time preferences of individuals. It is therefore also malinvestment.

Because it’s fraudulant, or implicit theft. If a private individual starting writing notes for gold that didn’t exist it would be fraud. Why is it any different when the state starts printing money out of nowhere? The fact is they’re creating money out of nowhere transferring wealth from the original holders of the money to whoever first receives it.

No it won’t lead to malinvestment, it will lead to a lack of investment.

Then why not ban coinage?

Why cannot higher interest rates divert investment the way lower rates does?

Because coinage generates real wealth.

Because people will refrain from investment due to higher interest rates. Granted, artificially high interest rates will lead to a decline in overall utility, it will not lead to the ABCT though.

But economic growth due to increasing money supply is a facade. Any quantity of money is sufficient for needs of trade. How does coinage generates real wealth? It just redistributes the benefits of growth to the coiners. No?

Thank you for sticking around and actually listening to what we had to say. You are really here to learn, unlike some people who come to these boards. :slight_smile:

Also, another thing I want to point out is Austrians use slightly different terms than what Keynesians use, everyone else can correct me if I am wrong (I still have much to learn as well):

Inflation = Expansion of the money supply, Deflation = Lowering of the money supply, Price Inflation = Prices rising (this is the “Inflation” that Keynesians use), Price Deflation = Prices going down.

If you’re talking in terms of fiat paper money, then yes. If money is a tangible good, then no.

Who has said otherwise?

Of course it generates real wealth, it increases the stock of real goods. Credit expansion doesn’t.

If government gave up its monopoly on currency, and if its power to print and coin it were taken away, leaving the currency completely up to the market, then the best currencies would be those that were the most stable, that had the least inflation or deflation. So neither inflation nor deflation would be much of an issue anymore, and we would not have nearly as many “bubbles”.

So I do not even know why we are worrying about deflation.

Why does it matter whether it is a commodity or paper money? Gold coins are not real wealth. They are simply a media of exchange just like a fiat currency. They are not consumed, only exchanged.

Also I was talking about paper notes, not credit expansion.

Don’t be ridiculous, of course it matters. The whole point of this is that a people value the good that backs up money under the gold standard (e.g. gold). That’s the very thing that makes the difference.

As for paper notes and credit expansion, it’s not relevant.

You’re correct that a gold standard would “redistribute” wealth towards gold producers without adding any consumable goods to the economy. This was Friedman’s major objection to a gold standard – that it “wasted” the productivity of some market participants (i.e. the gold producers).

However, this is a minor issue that pales in comparison to the dangers of a paper currency,which exposes the market to the dangers of inflation and theft via counterfeiting. It’s easy for banks/governments to counterfeit paper; not so much gold. In fact, you could say that the prevention of credit expansion is one of the “goods” offered by gold producers.

Here’s a great debate between Friedman and Mundell on this issue which is very informative.