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☭proletarian☭
Guest
☭proletarian☭;1819279 said:You can't 'add money to the market'; inflating the monetary supply devalues the means of exchange (printing more dollars makes each dollar worth less). An example of this is post WWI Germany or modern day Kenya, Ethiopia, or- taken to the point of utter absurdity- Zimbabwe. One must keep in mind the subjective manner in which people ascribe value to goods and services (this in opposition to the theories of Marx and Keynes*, which believe that all goods are always equal to the amount of labour taken to create them). When people invest resources and effort to create goods which they or others perceive as having greater value than the raw materials and trade these products for goods or services (or means of exchange, or money) the producer perceives as more valuable to him/herself than the product they have created, the overall wealth of the persons involved increases (each person now possesses something they feel is more valuable to them than they possessed prior the transaction. In the case of producers who make many instances of a good for sale to a large population, the seller will seek to increase his perceived wealth as much as possible, as will the buyer- this is the basis of the supply-and-demand relationship which determines the market value of the goods or services in question- the price for which it is traded (usually in the form of a given amount of another material recognized by both parties as having value and being convenient for exchange- this is currency and can take the form of fiat, which represents some portion of the overall wealth of the market, or some material, such as gold, which is itself valued).what do they propose as the alternative mechanism for adding/burning money in the market?
Moving along, as the process continues, people amass things which they believe holds value- TVs, houses, etc),m thereby increasing their overall wealth. Due to the nature of people's desires, some things are created to be resold- a refrigerator company buys materials (invests capital) to produce goods with a surplus value and make a profit. This is the creation of new wealth which the Keynesian seeks, in his foolishness, to achieve by simply creating more fiat currency (inflating the money suplpy and devaluing the currency; the effects are delayed by the manner in which this new fiat enters the market and multiplied further by the banks)
further downstream if the initial inflation was started by a central bank (in the absence of a central bank, it is the banks that interact directly with the populace which can each inflate their own monetary supply- bank notes which they issue- but no one bank can effect the entire economy without other banks also taking such actions).
An added risk of the central bank is that the government which runs it likely to use it as a political tool (as we see with the Fed constantly) and having the backing of the State (much as we saw with the bailouts on Wall Street) encourages dangerous policies and unnecessary risk taking. Such policies, including artificially low interest rates and the inflated money supply, cause the illusion of greater wealth than their really is, encouraging investments and obligations that cannot be met (Thomas E. Woods uses the analogy of a man building a house who believes he has three times as many bricks as he truly possess (this is the bubble); when he cannot complete the house, he has squandered his resources and does not receive the expected return because he cannot complete his project; he finds himself without the resources he needs and the banks no longer have anyone to loan out (this is the bust). This gives birth to the boom-bust cycle inherent in Keyne's fantasy of a 'permanent semi-boom' **'
Through open competition of banking institutions on the free market without the existence of a central bank engaged in Mark's central planning*** Minimal regulation would be involved- that is, instead of trying to manipulate the markets, the government should enforce transparency laws and work to prevent abuses and dishonesty such as we saw with Enron, SubPrime loans (which, to be fair, were largely required by federal law at the behest of Acorn and other racist groups), and the numerous repackaging of the market that contributed to America's latest economic troubles. Moral hazard is avoided by allowing banks and other cooperationsthat make poor decisions to go under, thus giving them a reason to be wise in their decisions and avoid unnecessary risks as well as putting limits on fees and fines that banks can charge to prevent abuse and exploitation by the banks (the last bit is a point of contention for some more extreme laissez faire Austrians and are naturally opposed by the banks themselves; my support for such protections putts me a bit to the left within the Austrian school, which is perhaps not surprising given my support of Social Democracy rather than a more strict Classical Liberal ideology).how do they propose isolating that device from political/private influence?
The mint would be dissolved as part of the central bank. The print produces the equivalent of bank notes for the central bank- fiat bills backed by US political influence and military power. Under the Austrian system, banks would use commodities such as gold as the means of exchange, possible returning to the issuance of bank notes which can redeemed for the means of exchange kept in the bank's vault (eg: the Gold Standard)you cant take the chicken out of the chicken and egg conundrum by removing the central bank. theres still corruptible roles being played. that leaves the mint to handle monetary policy!??
The point is that is doesn't.b Fiat currency and the central bank both lead to instability fiat money is easily inflated and the central bank quickly becomes a political tool first and a banking institution second (if it even remembers its task as such).whats the point when shit works relatively fine to start with?
*'Keynes did adopt labor hours as the measure of value and said he agreed that labor produces all value' Theories of Value and the Monetary Theory of Production
* The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps and thus keeping us permanently in a quasi-boom.
The General Theory of Employment Interest and Money (1935)
o Book 6, Chapter 22, Section 3, pg.322
The Fifth PLank of the Communist Manifesto reads:
5. Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly.
The Ten Planks of the Communist Manifesto by Karl Marx
Just thought everyone needed to read that again...
