... then won't a recession result when private agents increase the money supply, too?
Say there's a gold standard in place; gold is money, and the supply of gold is the money supply. If there's random year to year fluctuations in gold production, or superior capitalist production allows an ever increasing production of gold, then won't the money supply expand eventually, lowering interest rates and so forth?
But it won't cause a recession, right, because it's "good money" when private banks issue it and "bad money" when the federal reserve issues it?
See, this is what I mean. You're not interested in serious, rational discussion. You just want us to help you pat yourself on the back over your alleged moral superiority. FYI, I consider you to be morally bankrupt.
You think I'm morally bankrupt for not granting Goldman Sachs a fundamental right to make proprietary trades with its clients money? I doubt it. Maybe you do, though. But you still haven't established that libertopia wouldn't have a business cycle or that financial derivative credit growth would slow or cease. So far that's just a "maybe".
Thanks for implicitly admitting that you employed the red herring fallacy in this post - and therefore that you're being intellectually dishonest. That amounts to a complete concession of your position. In other words, you seem to have no intellectual leg to stand on whatsoever.
I'll add that your last post clearly supports the above.
The keyboard is mightier than the gun.
Non parit potestas ipsius auctoritatem.
Voluntaryism Forum
alsdjfalsdjfos,
"certain posters who have substituted indiscriminate linkposting for argument"
"I should also note that the only way to completely get rid of credit growth would be to outlaw credit growth through far reaching financial regulations to eliminate all fractional reserve banking and paper currency, abolition of public property in land and application of all rents of land to private purposes, equal liability of all to work, and abolition of all forms of interest and credit."
"A derivative isn't backed by anything besides an asset (like a house) or another financial security. You never said you were going to regulate mortgage backed securities so banks can't pile derivative upon derivative over fixed assets like they do all the time. They don't need deposits. Investment banks don't even generally hold deposits."
Bankers were seeking profit, making unsound and risky investments because there are profits to be made, a condition which had been made possible with inflationary credit and, of course, deposit insurance. This is exactly what happened during the subprime bubble. I don't dispute any of that (besides the DI bit). I'm just saying that if central bank lending or monetary base growth is insufficient, then there are other ways for private agents to create money. If the supply of base money and available reserves is insufficient to sustain lending at the level that investment banks (and their customers) desire or demand, they're free to create money in the form of securities which are either money or something very similiar to it for practical purposes. Which is exactly what happened. | Post Points: 20
I already explained why banks could not create money in excess of what public really want. Read The Theory of Free Banking.
Going back around again. A monopsony is a sufficient condition for monetary expansion, but not a necessary one. And if security purchasers make incorrect investment decisions, they can grow credit all they want.
mustang19,
Get a job.
And drop out of school? I got enough on my plate without burgerflipping grease.
Then go to class.
But they're probably teaching the marine biology of whalefucking in Goolrich 301 at the moment. It'd be embarassing to just walk in unnannounced and unenrolled.
Do what you want. You are just another useless member of society preaching about the evils of people who work.
That's pretty harsh. It's not like I'm planning out a career as a lifelong recipient. I expect to work and pay taxes like everyone else, and I'm okay with that. Public roads are pretty cool. You should drive on them some time.
Hi als & others,
This is a very interesting question! I'm not an expert in Austrian economics (started reading about it only a few months ago), so the answer that am going to suggest may be wrong or if I'm simply repeating stuff that's already been said in the previous posts then excuse me :)
Ok, now that the introductions are done here is my reply:
I think the problem is not with the increasing money supply but with the way it is brought about. In FRB, banks are creating new money in a "fake" way. What I mean by "fake" is suppose the society has saved up 100 units of money today, banks should only lend 100 units today. But when they issue fake receipts, what they are doing is borrowing money from the future in exchange for an IOU, i.e. issuing lets say 1000 units today hoping that the borrowers will pay back in some years (and hence the term money as debt). And this time travel stuff is never a good idea (if you don't agree, then I can suggest you some nice scifi literature ;))
In a central bank based banking system, the Govt. and Central bank together are creating this debt money (via govt. bonds).
There is nothing wrong when individuals borrow money today that is saved by another individual today with the promise of paying back in the future with some interest. But it is not right when, say, the individual borrows money by simply creating a fake receipt even legally, I.e. by signing an IOU and even if the bank believes he/she can pay back based on his income today. Now, why is this wrong...because it is very difficult to know how much money we can borrow from the future! This is what banks and central banks are doing now in a FRB-central bank reserves-govt. borrowing-fiat money system on a global level.