many at mises and lrc have spoken of monetary inflation as an ill or a disease and the harm it causes.
i assume there belief is sincere? maybe not.
was the california gold rush considered bad considering all the gold that was pulled out of the ground?
with so many people entering a nearly uninhabited area did this have an effect on PP of gold and silver money? was there some type of mind/money ratio taking place?
i read that san franciscos economy boomed and remained rather healthy.
are there any other documented cases where money introduced into an economy the inflation, iow didnt do harm but good - documented instances of where the claimed ‘double incidence of wants’ was improved upon via money and better served trade…the turning point iow, if there is such a point.
has this been notion been extrapolated into existing economies where say…new money/credit goes to cutting edge research or new industries that can be considered the new/primitive economies and the new or inflated money works in the same way as money entering into the historical primitive economy and better facilitating trade ?
where the cutting edge tech or new industry greatly improved human existence making inflation beneficial as the new money overcame the double incidence of wants obstacle in old economies?
Of course, money is like any other good. The rising demand for money prompts an increase in its production making its price fall relative to what it would have been without the increase in its supply.
For starters, gold is a commodity money, so more gold for monetary purposes means there is also more gold for its other uses. That is not to say that a dramatic increase of the supply of a good won’t have consequences, and some will be perceived as bad… that’s the thing about dramatic changes. But in the end, there is more of a useful commodity, which raises the standard of living. I don’t see this kind of inflation as bad.
The inflation of paper money, which the people around here mostly speak of, is the creation of new money substitutes out of thin air, without a corresponding useful good or commodity. This is surely very profitable for those doing it, but is seen as ‘bad’ due to the many negative consequences it produces.
If many people suddenly enter an area, then it obviously will have an effect on its economy. (Don’t know what you mean with the mind/money ratio). The California Gold Rush has produced a lot of a useful commodity - and a boom should be therefore expected. It wasn’t inflation, that improved their lot. (The ‘double incidence of wants’ has nothing to do with that.)
The “cutting edge/research/new industries” argument has been extrapolated many times. Printing more money does not create more resources, so the businesses started with new credit have to take away resources from existing, more useful businesses. What follows afterwards has been written here about many times.
The thing about commodity money is that it’s not easy to inflate, you have to go dig, hope to find something, and so on. You only do that because what you’re pulling out is valuable - that is, there is a limit to how much the gold supply can increase at a given time by digging, because at some point your time becomes better spent doing other things. There is no such limit on fiat currency.
In fiat currency, any inflation is “bad”. This is because creating the liquidity necessary to promote a greater number of transactions does not require inflation. It simply requires the issuing authority to replace large denominations with smaller ones. Thus, take a $5 bill out of circulation, and put 5 $1 bills into circulation. There is no inflation, but more transactions can be performed.
For a commodity, this is impossible. You’d have smaller and smaller coins, until they had problems being used in exchange. Thus, adding to these commodity stocks does add social value. At the same time, inflation will erode purchasing power, and to the extent that additions to the commodity are “shocks” that are unanticipated, this will harm the ability of entrepreneurs and individuals to make long-term finance plans. Gold generally doesn’t have this problem. Even the gold rushes failed to dramatically impact total supply. Further, not all such additions contributed solely to money supply.
Finally, there is the Austrian business cycle theory. This can only occur due to new money first appearing as loanable funds. In other words, the money must be created by banks as fiduciary media or fiat currency, impacting the interest rate before effecting other prices.