The baby sitting co-op story is here: http://www.slate.com/id/1937/
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It’s a nice story, but it does not apply to the economy. Because when the new coupons are issued, they do not water down the value of the old ones. The old coupons can buy an hours worth of sitting, just like before. But when new dollars are printed, the old and the new dollars lose some of their purchasing power.
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Another flaw is that the new coupons were issued to everyone at the same time. But new dollars are issued to Obama and his pals, not to you and me. Imagine if the head of the co-op said “Guys, there are not enough coupons in circulation, so I am giving myself a thousand more. You fellows of course get no new coupons.”
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Yet another flaw is that the coupons and money do not work the same way. The coupon only allows one hours worth of baby sitting. That’s it. It can never be worth two hours of baby sitting, or half an hour. But money can change in value. When there is less money, by the law of supply and demand, its purchasing power goes up.
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Let’s think again about those coupons. They are a promise made by every member to work [=babysit] on demand. If the community did not agree to honor those newly printed coupons, but they were imposed by force, it would of course be slavery. So that printing more coupons is not the same as printing more money. It simply represents a promise by the community to work more. Since there was a shortage of labor, promises to work more solved the problem.
But what does printing more money represent? It is not a promise by anybody to do anything. Newly printed money does not fill any holes that existed in the economy. It is simply couterfeiting.
Amazing the sophistry of this guy. Coupons are paper, money is paper, so what is true of one is true of the other.