My point exactly.
But the gold they are made of, and which lends them value, can’t.
Indeed.
Well, but the monetary cranks do say that.
Paper money is nothing more than stamped paper. Its value is tied up in the state, since the state has monopoly control over the manufacturing of stamped paper, i.e. money. But in a free society the individual actors will be free to choose whatever form of currency they wish and the manufacturers of the currency can do whatever they are contractually bound to accomplish.
Thus, if one form of currency is a receipt or claim against some commodity (gold) then the manufacturers of that currency are bound to produce gold upon demand, or whatever the contract states. But if I try to peddle off unbacked currency and people take it, then I am under no obligation not to inflate my stock of currency. Inflation of a currency not bound by contract is not a crime.
The example given earlier is a prime example, just because you possess some commodity does not give you the right to demand there is no increase in supply of that commodity. Paper money is a commodity like any other and is subject to the same demand/supply structure everything else follows - this is why freedom to choose is so important as well as the legal binding of contracts.
People are forgetting that the free market decides what is valuable currency, therefore paper money could be produced. I can produce Cain-Dollars if I truly wish to. However, no one would take unbacked dollars that can be easily inflated.
Which brings us back to the OP. Can it be justified to inflate a currency? Well, if the currency were left up to the private sector, it would not be a matter of whether or not one could justify inflating a currency, it would be whether or not it would be a good business decision. And yes, it can be. For example, look at libertydollar.org. If they only issued 10 coins, well, no one would care to use them. So, they will keep printing them until they satisfy the market demand.
What some here do not seem to understand, is that when they print more coins, they do not just give it to their buddies. They exchange the coins for something they think is of equal value. So there is not necessarily “inflation”, per se. They are injecting something of value into the market while at the same time taking something of value out of the market. This means the value of the currency will stay stable, even though there is more of it in the economy.
That’s commodity money ! It has nothing to do with paper money ! The liberty dollar guys are just a mint, they don’t issue unbacked paper money/fiduciary media/credit money/ whatever.
Well, it’s “ok” by me in the sense that I don’t really care if you do it. I just think,
A. You’re not going to be very successful at it and
B. The bank is just as right to hang you from your toes after they catch you doing it - like a drug dealer would do to someone posing a different product as a brand-product.
You want to go poking wild dogs with a stick, go ahead. Good luck.
I’m not complaining. I’m very happy with fractional reserve banking - not happy about a central bank, but I like fractional reserves.
And the point is that most people aren’t going to accept gold over cash in direct commercial transactions and if they do, then there’s really nothing to complain about is there?
You don’t know the basics do you ?
You guys still wasting your time here? The OP had his answer before he even asked the question.
Which was obviously yes, as there is no inherent coercion or breach of contract involved in issuing inflatable currency. However, people who hold those assets are taking a rather large currency risk.
Yes, of course.
Except that unlike other commodities, more of it provides no social benefit.
I already addressed this nonsense. Commodities are not homogenous, in fact, there are three separate categorizations. The creation of production/consumption goods increases wealth, the same is not true for money.
They’re just trolling.
It’s also true. Gold is money. Fiduciary media don’t.
Thankyou. It seems like a lot of posters on this thread are missing this. The critique of monetary inflation (including those who reject fractional reserves) is not a condemnation of the issue of paper notes altogether, it’s just that they have to be backed. There is nothing inherently wrong with token representatives of the commodity - in fact, it’s incredibly more efficient then lugging a bunch of gold around with you everywhere. I don’t believe Mises and Rothbard ever advocated a metal-coins-only standard.
Important distinction.
This is not trolling, but both sides have not defined the range of their arguments. I am speaking only in a libertarian legal framework, and thus economics have nothing to do with this argument at all. In a libertarian system of law all violations of property and contracts are ‘illegal’, whereas everything else is ‘legal’. (I am simplifying legality, I know).
Ivanfoofoo: Gold is not money, at least not inherently - as no thing is inherently valuable.
Esuric: Legally, the non-homogeneity of various commodities is inconsequential - as the nature of objects is only defined in relation to contracts and property claims.
DD5: This leads me into your argument for the provision of ‘social benefit’. Would we really use the notion of social benefit to determine what to dispense with and what to ban?
My argument: I contend that the inflation of a monetary unit is not fraud nor theft - as you can never hold claim over the value that the rest of a population places on a commodity. It is fraud to inflate commodity redemption (warehouse) receipts without the backing you have promised (although FRB with commodity money can still take place without fraud - although this is still a contractual relationship). This is why commodity money typically has a greater value than fiat money - since the supply of a commodity (like gold) is relatively fixed. If I discover how to create gold by ‘snapping my fingers’ then I can legally inflate the supply of gold, and in result make gold backed currency worthless. In a free society people are free to choose, meaning that people will demand certain characteristics with money. Personally I believe that most forms of FRB and fiat money will be eliminated by competition from commodity backed currency, but the mere legality of fiat money is non-contestable - all things equal.
Interestingly, Paul Krugman publised a blog post on Saturday on the marginal benefits of fiscal stimulus over marginal costs, and I think I did a fairly good job at a rebutta on my blog. In short, there are no marginal benefits to either “printing money” or creating money ex nihilo through credit expansion.
This is what you want the argument to be. The OP asked, “is it ever a good idea to print money?” The answer is no.
He claimed that money is the same as all other kinds of commodities, and that it’s determined by supply and demand. The first part of his statement is simply incorrect, while the latter part is undeniably true.
No, he asked if it is ever justifiable. But even if he asked if it is ever a good idea to print money, the answer is most definitely yes. If it is not printed in the first place, then no one could have it!