The legacy monetary system may have nice consumer protections on the micro scale, but it fails on the macro scale:
1. Inflation eats 2-4% of everyone's purchasing power each year, disproportionately affecting the poor. This inflation is desired by the central planners.
2. The American system of banking regulations introduces systemic risk into the financial sector.
Sure, if you can prove that your transaction was fraudulent, you can get a couple thousand bucks back into your savings account. But you'll have to gamble your money in the market to beat inflation just to break even. And then, every so often, the entire system will collapse and destroy trillions of dollars of wealth.
As an aside, you also get the bonus of having political control of banking relationships, so you can conveniently freeze and take the money of those who find the political winds aren't blowing their way.
Edit: PLEASE don't take this is an argument for Libra (sorry I wasn't clear), merely an argument for sound monetary policy and decentralization.
I’m consistently amazed by how many people here dont understand inflation at all and are confident they need to throw out the financial system before they figure it out.
Inflation is an incentive to invest. If you invest in literally anything other than cash under your mattress inflation stops mattering completely to you, and all you have to think about is constant dollar returns. That’s why we have it. So long as your wages track inflation (broadly they do) you benefit from implicit depreciation in your debt obligations. It costs you nothing if you don’t hold cash like you’re supposed to, and it costs you effectively nothing if you hold money in a savings account as many offer 1.8% interest these days, matching inflation.
What nobody arguing for a deflationary currency can tell me is why they think money should be worth more later solely by virtue of them having gotten it first. A risk-free guaranteed return at the expense of the next generation! It makes no sense.
This is basic ECON 101. High school level home ec probably. Not some big conspiracy perpetrated by the central banking cabal.
Bitcoin in particular seems to be driven by people who are really obsessed with the idea of having a store of wealth with zero risk (assuming they never make a mistake handling it, or get tricked by swindlers, which I think they're seriously underestimating).
But as you say, inflation is a tool; it motivates investment. Expropriation is a tool; I don't see how eliminating it is appealing at all to the billions of people with no savings at all. They may want to take money from the wealthy at some point.
If there's ever a point where "the masses" really understand bitcoin, and how a few HODLers possess most of it's value, they're not going to want it.
I’m referring to a US audience (Ally offers 1.8%). These rates are designed to incentivize you to allocate capital accordingly. The point is you not put much of your money there. Depending on how you feel about the future exchange rates between the EUR and USD you’re welcome to invest in US treasuries, for instance.
I'm not sure that is "why we have it". It sure is why the central banks are pumping money into the system (they quite rightly want people and companies to invest), but it's far from clear why we have it a priori.
As I mentioned before a dollar today should be worth more than a dollar next year since, if you are smart, you can make that dollar work for you for a whole year.
You have not explained why; you've explained why you think we should have inflation. And why someone thinks something should be is a long way from explaining why something is.
The same amount will be worth less in the future! That's really all there is to it. A certain amount of money is not value, money is a number that has a value associated with it, that value will continuously change depending on what you can do with it.
Inflation (deflation) simply reflect the change in value for doing something today versus tomorrow. When the economy works well you have inflation, when the economy works badly it becomes deflation.
> The same amount will be worth less in the future! ... When the economy works well you have inflation, when the economy works badly it becomes deflation.
This is backward, actually. If the economy is working well then withholding consumption (i.e. saving) means that more goods are available for others to either consume or invest. The portion that ends up invested should result in higher future productivity and, in the absence of currency supply manipulation, decreasing prices (deflation), a natural reward for producing more than one consumes.
Only in an economy which is consuming capital—investing so little that productivity is actually decreasing—should prices increase over time. In that case we need more investment to bump up production—the investments don't need to be all that good to be better than the status quo, and anything with a positive return is superior to just waiting for prices to increase further. In the deflationary case, however, we should be more selective about where we invest. It's better for the economy to simply hold our funds in reserve rather than actively compete against more competent investors to expend resources—not just money, but the labor and material it represents—on ventures that will provide lower-than-average returns.
If we expand the currency supply to manufacture inflation and thus make it look like we need more investment when we actually don't then the net result is malinvestment, wasted resources, and a lower average rate of return. It's not good for the economy or the average citizen, but the extra transactions and higher nominal prices directly benefit the bankers and tax collectors with influence over monetary policy.
Because it is my choice? If you want to use an inflationary currency, go ahead. But other people should have the option of opting out, and using a different currency, with different properties
That’s not a reason. Give me a justification for why you think money should be worth more later. Because it would be sweet for you isn’t really compelling. I gave you a reason for inflation and your counter was “because I would be rich” - see if you can make a better case and if not, maybe reconsider your position.
> Give me a justification for why you think money should be worth more later
My justification is freedom of choice. Or, in other words, the reason is "because I want it to, and I am justified in making my own free decisions".
I believe it is people's right to choose which money system that they want, and you should not have the right to prevent other people's voluntary choice to use a different money system.
I am justifying why people should be allowed to make their own decisions about what money system that they use.
Freedom of choice is a valuable principle in and of itself.
You cannot just dismiss this important concept of freedom of choice. It applies to all parts of society.
The only justification I need, is that I do not want people's freedoms to be infrindged upon.
> My justification is freedom of choice. Or, in other words, the reason is "because I want it to, and I am justified in making my own free decisions".
You're intentionally not answering my question which is: explain to me what benefit to society could potentially arise from money being worth more over time?
I'm not saying you can't do it I'm asking you why. It seems you and everyone else can't point to anything other than making yourselves wealthy.
The benefit is that people are allowed to use money of their own choosing.
Freedom is something that many people care about and value.
The benefit is also that different people want different things in their own money system, and a diversity of things and monetary systems is good, merely because of the money systems being different.
There is value in having differing money systems with different properties (merely because they are different!), and letting the market decide which one is best.
So a direct answer to your question is "because it is different from what we have now", and more diversity in monetary properties is a good thing.
Dropping a flaming turd on someone’s porch is an alternative to putting up with someone but it’s strictly worse for obvious reasons. Providing that alternative is not better if you can’t even begin to speculate on why it might be better. The entirety of your case is "#freedom" and you refuse to speculate on why it might actually be better. Nobody's arguing with your right to do stupid things, I'm just asking why your suggestion might be better and you keep refusing to even speculate.
> is an alternative to putting up with someone but it’s strictly worse for obvious reasons
If the person has the choice of this happening, and chooses, for whatever reason, to have this happen to them, then yes, I would say that it is positive, and not negative.
I am specifically referring to people voluntarily choosing something for themselves. And no matter how ridiculous, I'd still say that it is positive, if they choose to do it.
> Nobody's arguing with your right to do stupid things
I am saying that if someone chooses to do it, then it is not stupid. People can have whatever reasons that they want, for doing anything, and I am not going to argue against it.
> I am saying that if someone chooses to do it, then it is not stupid.
That may be the worst argument I’ve heard in support of anything ever. People do stupid things a lot and I’m your model that’s never true solely because they chose to do that. I don’t think you’re arguing in good faith, anymore.
I am absolutely arguing in good faith. If people want the free choice to choose a different set of properties, for their own money, then the fact that they want it is a good enough reason, in an of itself, for such a money to exist.
No other reason or justification is necessary. “Because people want it”, is good enough.
Freedom of choice is something, in an of itself, that people value. And because people want something, is a good enough reason, alone, such that it is justified.
People can want things that you think are “stupid” or “ridiculous” things if they want, and your opinion that they are stupid or ridiculous, does not overrule their own value system and wants.
There are basically no situation where your opinion on this, would matter. It would be like saying “Why do you like ice cream! That’s stupid!”. Such a statement is just meaningless. The fact that you think it is stupid that someone else likes ice cream is irrelevant and doesn’t matter.
The fact that I just like ice cream, is a good enough reason, in an of itself, for me liking ice cream. Me liking something, or not liking something, is circularly, self evidently true, and I need no other justification or reason for it. I like it, because I like it, and that’s it.
The fact that I like ice cream, is axiomatically true, because I am the one who decides what I like, not other people, and so it make no sense, and is just a meaningless statement to say that it is “stupid” that I like ice cream.
> No other reason or justification is necessary. “Because people want it”, is good enough.
Some people want to dump chemicals in the river, and yet, when its bad for society we decide not to let them do that, and I'm totally okay with that. Which is why if you want to make a broad social decision like changing how money works (even allowing for a new option) that conversation needs to be had on merits. We weigh pros and cons. Then we decide. That's how society works broadly, at least in a democracy.
Remember, your freedoms end where my rights begin. In so long as something doesn't impact anyone else, they're free to have at it. Once it starts to impact those around them, it's no longer solely their decision -- and degree matters. If you want to eat a ton of ice cream, do it. If you want to change the way a broad swath of society functions, we need to have a chit-chat. Much of our day to day is in between.
> Which is why if you want to make a broad social decision like changing how money works
No, I don't want to force you to use any money that you don't like.
It is pretty silly for you to argue that people are infrindging on other people's rights, just because they prefer to use a different method of voluntarily exchange with other people.
It is interesting that you are jumping to this argument, because you previously tried to pretend like you didn't want to force other people to make certain decisions for themselves, and now you are totally backtracking on that.
It seems like you didn't really mean anything by those statements previously then?
If you cared so much about what type of paper that other people are using voluntarily, so much that you are willing to compare it to dumping chemicals in water, then why didn't you just say that from the beginning instead of pretending like you didn't care about what voluntary decisions other people were making with their own means of exchange?
Freedom is a valuable property in and of itself, and that is the only justification I need, to say that this is a good thing.
Since this has been long and winding let me try and simplify:
- I asked you to attempt to justify the positive social value and implications of a deflationary currency, and you replied a number of times "freedom" and told me that there was no such thing as a stupid decision because someone made it. You re-iterated "freedom" as though it was an answer to my question many times, and then said that "freedom" was intrinsically awesome, which is again, not an answer to my question.
- I don't care if some people want to barter. I was trying to have a conversation about whether a deflationary currency is good for society as a whole, and what the impact would be if it took over more of society. I made numerous arguments why this would be a bad thing, to which you again replied "#freedom".
- Freedom of choice is intrinsically valuable, what people choose to do with it may or may not be, and worth a conversation on a case by case basis. Especially if impacts a lot of people, and we as a society reserve the right to curtail said choices if they don't make sense. Nobody's arguing you shouldn't be able to choose things, and similarly, you can't possibly believe anything you choose is good because you chose it, and that choices shouldn't be curtailed if they lead to negative outcomes. You know, like crimes.
- I also made the argument that the current model provides maximum freedom of choice by decoupling a long-term store of value from a unit of exchange and account. That way you can choose what you want to back your personal economy with. It also represents a voting mechanism for capital allocation. Switching to a "backed" model for currency removes the freedom by stapling back together two things that don't need to be stapled together and drags in a number of negative social consequences. Unbundling represents maximum freedom, something I figured you'd be a fan of.
> Nobody's arguing you shouldn't be able to choose things
You made a comparison to people's right to swing their fist, and that this right ends. So in other words, you did, at the very least imply that what currency people used should not be their choice.
So yes, it does seem like you want to take away people's choices on what money they should be aloud to you.
You can't have it both ways here. Don't say "I am not trying to take away your choice!", And then at the same time say that the right should be curtailed.
> Switching to a "backed" model for currency removes the freedom by stapling back together two things that don't need to be stapled together
Or... You could use it if you want, and don't use it if you don't want.
> Unbundling represents maximum freedom
Or... A person could individually decide if they want it bundled, or not bundled, for themselves, by choosing which currency to use.
I won’t reply until you answer my question. You’re intentionally trying not to understand it appears. If switching to a different currency model leads to negative social consequences then we should have that conversation. That’s where the freedom to and from intersect. If you can’t see that there’s no point in talking.
Also, please avoid these long tit-for-tat arguments that don't go anywhere and only continue because it's hard to let go. They don't interest other readers, and they end in ill feeling.
Cool. Fine. Then you should have just said that, and you shouldn't have said the previous stuff about not wanting to prevent people from making decisions about what money that they voluntarily choose to use.
Please avoid these long tit-for-tag arguments on HN. They almost always turn into arguments about the argument itself, and get unpleasant if not aggressive at the end. None of this is good reading or interesting to other users.
Short version: Deflation benefits society by preventing malinvestment in ventures with a below-average (i.e., below-deflation) rate of return which would divert labor and materials from actually profitable investments.
I think you didn’t read anything I wrote because my core focus is that inflation is 100% avoidable through investment which is the behavior explicitly being incentivized via, to your point, a stick and not a carrot approach.
It’s theft like taxation is theft: it’s not.
> a GSE creates money from nothing
Yes that’s the point. The economy gets bigger and more people are born and the money supply expands. To not do so would create deflationary pressure which, again, creates a risk free return for existing money holders for no justifiable reason. In fact you haven’t justified it either, you say it as though it’s self evident.
If you don’t believe the value of existing money should go up then you agree the money supply must expand to match economic growth and population growth. All were then arguing about is how much.
> money grubbing banks...
Banks are paid for the role they serve in the economy: liquidity and security. Look at how much they make, it’s all publicly disclosed. Banks make around a 1% return on deposits (you know, the collateral for this lending thing). Almost nothing. It’s a shit business. The remaining “free magic money” is cost of doing business and paid out to employees, landlords, suppliers and so on. You know, business expenses.
> If you don’t believe the value of existing money should go up then you agree the money supply must expand to match economic growth and population growth.
The unit of exchange (money/currency) should remain relatively constant. That's the point. Maybe it will go up some, maybe it will go down some, but having it manipulated for the profit of large banks is theft.
It's a complete perversion of free market banking and benefits the few over the many.
> 100% avoidable through investment
Not true, unless you're talking about investing in financial instruments. Investing in almost anything else subjects you to property taxes almost everywhere.
I sure hope you don’t need the army, police, schools, fire, water, roads, air and so on. Most adults came to realize at some point that some things need to be provided as a group, and they’re not free. For those everyone has to pony up.
If you don’t want to pay taxes there’s a few countries you can do that in but in most paying taxes is social contact: it’s a take all the benefits and pay taxes, or leave to a society with a contact you view more amiable.
> unit of exchange should remain relatively constant.
Well if I have 100 people and my economy had $100, and Steve has $20 of them, then Steve invented the steam train and 100,000,000 more people show up then the value of my dollar has gone up millions of times over and Steve is now the single wealthiest human on earth even though he’s only got $20. To keep it stable I’d make more dollars. If you see how this works on the macro timescale you must see how it translates to the micro.
> to the profit of the large banks
We’re paying them to provide liquidity to the economy via lending and again they only make 1% on assets on deposit. It’s not the system you seem to think it is.
> avoidable...
You just have to factor that in to the investment minimum yield. This isn’t rocket science. You are not guaranteed a risk-free return on capital. To ease this Trump is considering indexing capital gains against inflation, another approach (which I wholeheartedly disagree with).
> I sure hope you don’t need the army, police, schools, fire, water, roads, air and so on. Most adults came to realize at some point that some things need to be provided as a group, and they’re not free. For those everyone has to pony up.
I'd be willing to pay for some of those. Lots of people have an inability to separate 'goods and services required for society' and 'government.'
Society can have all of those things, there need not be a government and there need not be taxes.
> paying taxes is social contact
This is just an empty phrase used as propaganda. There's no such thing as a 'social contract.' Taxes are taken under threat of physical harm and death, always have been.
> To keep it stable I’d make more dollars
This has the presumption that you, or someone should be in charge of what money is worth. That should not be a function of the government.
> This is just an empty phrase used as propaganda. There's no such thing as a 'social contract.' Taxes are taken under threat of physical harm and death, always have been.
Tell that to the judge haha
> Society can have all of those things, there need not be a government and there need not be taxes.
Yeah no, not really.
> This has the presumption that you, or someone should be in charge of what money is worth. That should not be a function of the government.
You’ve again completely ignored my point which is that your share of the value of the economy if the dollars in the system remain constant goes up by inaction. Maintaining a constant Value of the dollar as you yourself suggested requires active management. Once you agree on that we’re just chatting degrees.
> Maintaining a constant Value of the dollar as you yourself suggested requires active management
I don't think that it requires any management. If the value of a currency increases, then the ratio of currency to goods decreases. If a currency became so valuable that people can't trade with it, they'd trade with something else.
You argued for a constant value of a single dollar and then told me what would happen if the value of the currency increases, which is the opposite of what you were telling me before. If it does increase then it leads to massively disproportionate accumulation of wealth for existing holders, which you cannot justify.
> This has the presumption that you, or someone should be in charge of what money is worth. That should not be a function of the government.
That's (a) very much your opinion stated as self-evident and (b) not currently the job of the government, it's the job of an independent private central bank specifically designed to separate monetary policy from fiscal policy and the whims of the elected officials.
The Federal Reserve is federal in the same way that Federal Express is: it's not. Doesn't this line up with the libertarian ethos?
> The Federal Reserve is federal in the same way that Federal Express is: it's not
It's analogous to hiring a contractor. The government wants a program, it simply outsourced the operation to another entity.
Here's what I actually said:
> The unit of exchange (money/currency) should remain relatively constant. That's the point. Maybe it will go up some, maybe it will go down some, but having it manipulated for the profit of large banks is theft.
It should remain relatively constant. That's the entire point of a unit of exchange. There might be periods where the relative demand for the currency outstrips the supply, and if it becomes such a dramatic situation as your presented in your contrived example, then it would cease to be useful as a currency, and something else would/should become the currency.
> (b) not currently the job of the government
Congress has the power to coin and regulate value, per the US constitution. I'm not sure how we ended up talking about the US specifically here, I'm referring to governments generally.
> It's analogous to hiring a contractor. The government wants a program, it simply outsourced the operation to another entity.
No, it isn't, explicitly so. The reason the Fed operates at arms-length is explicitly to avoid having the government set monetary policy. This degree of stability allows businesses to plan and reduces their currency risk. Otherwise you face D vs. R every 4-8 years totally reversing monetary policy.
> It should remain relatively constant. That's the entire point of a unit of exchange. There might be periods where the relative demand for the currency outstrips the supply, and if it becomes such a dramatic situation as your presented in your contrived example, then it would cease to be useful as a currency, and something else would/should become the currency.
Yes, and my whole point is to avoid a large dramatic change you apply small amounts of pressure over time. This is called managing the money supply. And once you agree that this kind of adjustment achieves your objective of "relatively" stable currency (it does), then we can talk degrees, but we're now having a very different conversation.
> Congress has the power to coin and regulate value, per the US constitution. I'm not sure how we ended up talking about the US specifically here, I'm referring to governments generally.
Government handles the fiscal policy, federal reserve handles monetary policy. They're explicitly separated. This is true in many developed countries in the world operating under a central banking model, including Canada (Bank of Canada), and all of Europe (ECB) and England (Bank of England -- privately owned from 1694 to 1946).
> Government handles the fiscal policy, federal reserve handles monetary policy.
This is entirely semantics.
> And once you agree that this kind of adjustment achieves your objective of "relatively" stable currency
I can prove to you that it doesn't result in a stable currency. See the purchasing power of the US dollar over the last 100 years.
> This is called managing the money supply
That's what you call it. I call it theft. If an individual does not have the power to create money, then neither should a group of individuals, regardless of what color robes they're wearing.
> Otherwise you face D vs. R every 4-8 years totally reversing monetary policy
I don't think there's any risk there. They're the same party, both are spend-spend-spend.
Simply being born is no justification for stealing by fiat. People should be rewarded for saving capital. Forcing people to gamble their money only to maintain the wealth they already earned is not ethical. It is sufficient for people to be incentivized to spend money on things that are useful or interesting and to invest for higher return where the investment is sound.
EDIT: the money stolen by fiat is not evenly redistributed, and definitely not in favour of the poorest.
Accumulation of savings is valuable as it can be used for capital investment at the best opportunity. Forcing people to spend prematurely on crappy mal-investment is not optimal. Spending for the sake of spending is not optimal investment.
You're telling me in the market today, there's absolutely nowhere for you to productively allocate capital for an expected return of over 1.8% per annum? Even though Ally offers savings accounts that yield 1.8% per annum? And treasury bills yields are 2.2%? Remember, a savings account or CD are also valid investments assuming they yield more than inflation. What I'm saying you shouldn't do is store literal cash in a mattress. A savings account serves as collateral for loans which are in fact productive investments.
A savings account pays below the real inflation rate here in New Zealand. The cost of housing has increased hundreds of percent over the last 20 years thanks to central bank monetary policy that artificially manipulate interest rates. A shoebox apartment is now ridiculously unaffordable. I can put money into savings that loses money after inflation, and funds a system that is fundamentally corrupt, which leaves me worse off overall than if we had a real free market without centralized manipulation of currency and interest rates.
This centralized artificial interference has caused major imbalances in the economy here. It didn't work for the Soviet Union and it's not working in the "capitalist" world either.
> A savings account pays below the real inflation rate here in New Zealand.
That's a market force designed to disincentivize that investment. Nobody's guaranteed a risk-free return, or even retention of value in what's not a long-term store of value. Pick something else to invest it in.
For what it's worth, NZ's inflation rate is tracking at 1.5% per annum and Rabobank offers a 2.4% online savings account.
> The cost of housing has increased hundreds of percent over the last 20 years thanks to central bank monetary policy that artificially manipulate interest rates. A shoebox apartment is now ridiculously unaffordable.
Cost of housing is a total red herring and largely unrelated to this conversation. Cost of housing is overwhelmingly supply-side driven. If you want cheaper houses demand municipalities permit new construction. You can always build up, there's no limit on that. Build enough, the cost will drop substantially. There's plenty of markets that exemplify this effect, like Houston and Tokyo. SF on the other hand routinely forbids totally reasonable construction and the pricing speaks for itself.
The cost of housing roughly boils down to this: the narrative is that housing "should be an investment" and that it "should go up over time" so the directionality is accepted. Homeowners tend to be older, wealthier, have deeper ties to the community and vote. Renters tend to be younger, less affluent, transient and don't vote. As such policies are enacted that benefit homeowners. This includes zoning restrictions, building restrictions and tax deductions benefiting homeowners. Too few new units are built relative to influx of population, and price goes up. It's simple market economics.
Want to solve the problem? Get people to vote to allow more housing.
For what it's worth in the US housing prices on average tend to track inflation. It's certain municipalities like SF and NYC that far exceed due to asinine policy. The monetary policy was the same in all regions of the US so why then would pricing changes be uncorrelated across markets?
> I can put money into savings that loses money after inflation, and funds a system that is fundamentally corrupt, which leaves me worse off overall than if we had a real free market without centralized manipulation of currency and interest rates.
New Zealand ranks routinely as the world's least corrupt government. A system that maintains stability of money and debases it over time slowly and predictably helps keep wealth inequality down, and benefits the less well off by inflating away debts and encourages productive allocation of capital.
> This centralized artificial interference has caused major imbalances in the economy here. It didn't work for the Soviet Union and it's not working in the "capitalist" world either.
This doesn't make sense. The Soviet Union fell for all sorts of reasons that weren't inflation related or even central planning related. Authoritarian states tend to do so in time.
I'd say it's working just fine, inflation is roughly 1-2% per annum and incredibly well controlled. We've got plenty of actual problems (like the cost of housing), though, this isn't one of them.
New Zealands actual inflation is way, way higher than 1.5%. You are very naive and gullible if you believe that number. You also have no idea how the cost of housing is determined. Central banks have artificially manipulated interest rates to an extremely low level, where savers are forced to malinvest in things such as housing, which is also encouraged by mortgage rates being way below the reasonable cost, because again, the interest rates are artificially low. The reserve bank governor even admitted they were at fault.
> New Zealands actual inflation is way, way higher than 1.5%. You are very naive and gullible if you believe that number.
It's defined with a mathematical formula based on a basket of goods. You haven't provided any sources other than your gut and a baseless assertion about gullibility. I have references [1, 2].
> You also have no idea how the cost of housing is determined.
It's literally on the investopedia write-up. [3] And also, it's basic, fundamental market economics. More supply, price goes down. Less supply, price goes up assuming constant demand. Sure lending makes unaffordable places more affordable. That doesn't really matter if you flood the market with supply though does it? [4]
FTA [4]: "Tokyo rent is cheaper because it builds lots of housing. Every year, the city adds about 100,000 new homes. This increase has more than kept up with the increase in population, leading to a housing surplus." Average rent is $2.50/sqft in Tokyo vs $6/sqft in SF. And they have negative interest rates. Supply. Matters.
> Central banks have artificially manipulated interest rates to an extremely low level.
Set them at a low level. That's their job. To maintain a consistent, low, predictable rate of inflation.
> The reserve bank governor even admitted they were at fault.
Look I'm not saying they're perfect, I'm saying inflation has little to do with the very real issues you call out.
You are fundamentally off the mark at every single point. The basket of goods specifically excludes things such as housing which is the by far the number one cost of living here, which leaves that "inflation" figure as an utterly meaningless metric.
>> Set them at a low level. That's their job. To maintain a consistent, low, predictable rate of inflation.
Your reading comprehension failed here. I am referring to control of interest rates, which has far reaching consequences beyond inflation. This is the "fatal conceit" of socialist minded people such as yourself. No one on this planet is qualified to control interest rates.
As for the Soviet Union - I was talking about their centralized / planned economy. Socialism. We have a socialist monetary system in the West.
Yes New Zealand is the least corrupt government in the world, apparently, and despite that, the divide between rich and poor is increasing. It has become way less affordable to live here since the mid 2000's and is not getting any easier. We are locked in to a corrupt global system. Our monetary policy is a slave to the global socialist monetary system.
(traditional, not "American") Socialism isn't central planning it's the state owning the means of production. To my knowledge, there's no concerted effort in New Zealand to have the government own the means of production.
> ...the divide between rich and poor is increasing...
For sure, and it shouldn't. At least in the US it really started to get bad after Reagan dropped the top income tax from 90% to the current 35%. And the estate tax from 80% to the current basically-zero. Nothing to do with inflation, in fact, inflation would reduce this spread as it would disproportionately affect those with more money, and aid those with debt.
Who would have thought that letting the wealthy keep more money would lead to the wealthy having more money? Shocking.
> We are locked in to a corrupt global system.
Explanation needed.
> Our monetary policy is a slave to the global socialist monetary system.
Is the global government (United Nations?!) trying to own the means of production?
Listen man, you’re obviously a very smart guy (I’m assuming your gender), but it seems that you haven’t been exposed much to the “Austrian School” of economics.
Keynesian theory is the orthodox economic religion, which you have fully subscribed to. Austrians are heretics and we are burned at the stake for our beliefs.
I’ve read both sides. The Austrian school is far more compelling and rational. It cuts through the obscurantist bullshit with precision.
To me, Keynesian theory with its justification for continued economic chaos, is for those suffering from “battered wife syndrome”. To accept the Keynesian excuses, is akin to a wife getting brutally raped and beaten by her husband every day, while telling everyone “It’s OK, I deserve it, he knows what’s best for me”.
If you haven’t seriously examined the Austrian side of the debate, have a look at this:
EDIT:
In the first link, read the paragraph that begins with "In the face of overwhelming arguments against inflationary expansion ..." . The entire article is good but that really gets to the point of inflation.
1. Inflation eats 2-4% of everyone's purchasing power each year, disproportionately affecting the poor. This inflation is desired by the central planners.
2. The American system of banking regulations introduces systemic risk into the financial sector.
Sure, if you can prove that your transaction was fraudulent, you can get a couple thousand bucks back into your savings account. But you'll have to gamble your money in the market to beat inflation just to break even. And then, every so often, the entire system will collapse and destroy trillions of dollars of wealth.
As an aside, you also get the bonus of having political control of banking relationships, so you can conveniently freeze and take the money of those who find the political winds aren't blowing their way.
Edit: PLEASE don't take this is an argument for Libra (sorry I wasn't clear), merely an argument for sound monetary policy and decentralization.