... 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?
umm no. people still value their products and labor the same. so you will have to give them the same valuation on their goods. Unless the demand changes.
If someone gets 10$ an hour and inflation was 50% he is going to demand a 50% raise because other industries are still making the same profits (purchasing power worth of profits) and he will be able to get those wages there.
btw going to bed.
to put in easier terms. if the value of gold gets cut in half from 1000 to 500.
an ipad sold for 500 at the 1000 valuation now it sells for 1000 at the 500 valuation.
the gold miner sold his product for a 1000 at the 1000 valuation and now has to sell for 500 at the 500 valuation.
He is the ONLY one that gets hurt (if everyone knows what the market valuation of gold is at all time)
Growth of the money supply supposedly hurts everyone. I'm not sure what you're saying vis a vis that.
Good night.
alsdjfalsdjfos:Not true; see the table a page back
I looked at the table, and do not see how it is relevant. It appears to simply chart the revaluation of dollars to gold over time. Please explain what the table is supposed to be showing and how that helps your argument.
alsdjfalsdjfos:As long as people continue to use gold (and other instruments subject to money supply growth), that's supposedly going to cause credit growth.
How is this an issue for AE/ABCT? It's currency-agnostic.
It shows the amount of circulating gold, which is effectively the amount being used as money.
Supposedly a steady growth of the gold supply is different from a steady growth of the money supply. There's no real explanation why, though.
That is not what the chart shows. The chart shows the value in dollars of the US Treasury gold reserves. As the dollar devalues (ie it now takes more dollars to trade for an ounce of gold), the size of the gold bars on the chart will increase. It takes no change in circulating gold for that to happen.
The purple line is the fraction of gold held in reserve. A gold standard requires some amount of reserve, and this fluctuates all over the place.
i already told you the cause for each great fluctuations in the purple line. That does not prove the money supply isnt stable in a gold standard. It only proves gresham's law.
Ban-Evader:It's used as money all the time. You just can't use it to buy groceries at Wal Mart. What obligates you? Nothing, I guess, you can just not care about whether Austrian Business Cycle Theory makes sense all you want.
Gold is used as money all the time today? Where? I demand evidence of this. I also demand that you provide the definition of "money" that you're using.
Ban-Evader:1) currency 2) see source 3) credit cycle 4) entire
We've debated before about the efficacy of GDP. Do you want to go down that road again?
What definition of "credit cycle" are you using?
If the amount of Swedish currency increased by 8% over that 25-year period, then that implies a constant annual growth rate of about 0.31% (1.08^(1/25) = ~1.0031). However, this says nothing about what kind of fractional-reserve banking was going on during that same period. You seem to be conveniently ignoring that, hence providing further support for my accusation of intellectual dishonesty against you.
Ban-Evader:I'm just going to paste Wikipedia if you don't mind.
I do mind. I want your own explanation for it. But since you quoted Wikipedia anyway, I'll address the quote in a subsequent post. I still want your own explanation though.
Ban-Evader:Of course [I consider it "statist" to protect oneself (let alone others) against fraud].
In that case, I'm a "statist" if I'm so much as willing to protect myself against someone who I perceive to be threatening my life. I guess there's no escaping "statism" then.
Ban-Evader:Plus, 100% reserve banking would not stop growth in the money supply because there are all kinds of financial derivatives to fill the role of fractional reserve banking. Are those going to be outlawed too?
Hey, if people want to exchange things for what amount to glorified lottery tickets, that's up to them. I just ask that the glorified lottery tickets not be presented as anything else, because I consider that to be fraud.
Again, I demand that you provide the definition of "money" that you're using. I highly doubt that it's even similar to the definition used by Austrian-school economics.
Even with full-reserve banking, the money supply can increase. It can increase in absolute terms (i.e. more currency being made) and in relative terms (i.e. more currency coming into circulation). But if it can increase in those ways, it can also decrease in those ways. My point has been that fractional-reserve banking greatly amplifies the magnitude of those changes. Looking at changes in base money over time is only a small part of the picture, because it completely ignores fractional-reserve banking.
As far as financial derivatives go, I wouldn't be surprised if many, most, or even all of them are fraudulent by my standards. There seems to be a lot of fraud going on in the banking system.
Ban-Evader:Because if it doesn't you get growth in the money supply.
So you're once again implying that the money supply can only get bigger, and furthermore that it necessarily will get bigger, unless people are coerced to the point (whatever that may be) that they stop making coins. In other words, you're once again ignoring what multiple people have said in this thread - that mining new gold in no way necessarily means that the money supply will increase. Intellectual dishonesty strikes again! What more fun is there than constantly shifting between positions to confuse your opponents so you can... well, I actually have no idea what your end goal is for all this.
The keyboard is mightier than the gun.
Non parit potestas ipsius auctoritatem.
Voluntaryism Forum
Okay, now to the Wikipedia quote, which I'll disassemble piece-by-piece.
The most common criticism of full-reserve banking, and by contrast, argument for fractional reserve banking, is the need for financial intermediation. Small savers often cannot lend or invest their meager savings, for want of knowledge and sufficient capital to make a loan. Likewise, without financial intermediaries, borrowers must seek out someone who can loan them the exact amount they need, instead of being able to draw on several loans from different small savers.
I fail to see how financial intermediation is impossible under full-reserve banking. Furthermore, I fail to see how "want of knowledge" and "sufficient capital to make a loan" - whatever those mean - necessarily mean that small savers cannot make loans or investments. Being unwilling to do so is in no way the same as being unable to do so. Clearly, if a person has saved money, he's able to make loans or investments. Finally, I fail to see how a borrower necessarily cannot draw on multiple loans from different small savers.
Savers also face significant risk as individual investors, since if they lend to a single firm or individual, that entity can collapse, with the savers having lost the money they lent.
If the invested-in firm or individual goes out of business, why shouldn't the investors take losses? How does that risk of loss really go away with fractional-reserve banking?
Furthermore, if they act as individual lenders, savers must wait for their loans to mature before recouping their money; a bank can make their deposits available at any time.
In other words, with fractional-reserve banking, the bank can act like both it and the lender have the same money. Nice trick, that.
There are also significant economies of scale in banks making investment and lending decisions, as they have access to knowledge and expertise which individual investors or lenders generally do not.
Full-reserve banking would certainly allow such economies of scale as well. How does it prevent a person from entrusting the investment of his money to a firm or another individual?
Under full-reserve banking, a great deal of money would sit idle, as savers stored up their money, while entrepreneurs went without much-needed capital.
Non sequitur. I don't see how that would necessarily be the case. Even if it was, if savers wanted their money to sit idle, that's up to them, isn't it? After all, it's their money, isn't it? Just because someone else could use that money for something doesn't mean he has the right to use it.
alsdjfalsdjfos:The purple line is the fraction of gold held in reserve. A gold standard requires some amount of reserve, and this fluctuates all over the place.
The purple line is the dollar value of gold held in reserve in relation to the dollar vlue of outstanding bank notes. Once again, no change in the gold supply is necessary for this purple line to move.
We have thus far been talking about a situation where there are no bank notes because gold is the money, and what the change in the available circulating gold might be. A gold standard is something entirely different from gold as money. You should read the site you linked the chart from.
The circulating gold supply will change with it. That's the amount actually being traded.
Yes, there are two separate discussions about gold as money versus the gold standard. I didn't conflate the two.
Sorry to Picard, you might have some good points in there, but it's been ten pages and I don't feel like reading more walltext. Let this thread die a good death on the "I don't care if the money supply grows as long as the Federal Reserve isn't doing it!" note.
Ban-Evader:Sorry to Picard, you might have some good points in there, but it's been ten pages and I don't feel like reading more walltext. Let this thread die a good death on the "I don't care if the money supply grows as long as the Federal Reserve isn't doing it!" note.
And just why should I listen to you here? That is, why should I let this thread die on that strawman statement? I don't think I should do that.
No, mustang19, it won't die on that note because you haven't demonstrated anyone felt that way, nor have you demonstrated an understanding of the ABCT, nor have have you proven anything.
Recessions are not caused by an expansion of the money supply. That is, it doesn't matter how much new gold is mined, nor how much the amount of gold in circulation fluctuates. This is not the cause of the business cycle. The business cycle, according to Austrian theory, is caused by an expansion of the money supply by the banking sector, thereby ARTIFICIALLY lowering the interest rates. This is the cause of the business cycle.
A gold mining company that spends its new money into existence is not altering the structure of interest rates. That's it. There is no more to ponder.
The only one worth following is the one who leads... not the one who pulls; for it is not the direction that condemns the puller, it is the rope that he holds.
It is if it's putting more money into circulation.
The business cycle, according to Austrian theory, is caused by an expansion of the money supply by the banking sector,
How about expansion of the gold-as-money supply to the banking sector? How is it artifical when one group of people do it and not-artificial when another group of people do it?
On some level, you're probably aware that your argument doesn't make any sense.