Understanding Money & Banking Pt. 3: Quantity of Money

Counterfeiting and the Quantity of Money: Part 3 of a multi-part series by lawyer Paul McKeever that explains the nature of money and banking as it has never been explained to you before.

Category:

News & Politics

Tags:

• money
• counterfeit

[tricky778]

"All that can change the wealth of society... is productivity"

No! This is the classic mistake of the backseat tyrannist. If I am made happy not by consuming food or entertainment, but by sitting as still as possible, using as few calories as possible then you don't have to increase total productivity to make me wealthier, just increase the productivity:effort ratio.

For a number of people, only a certain amount of food is required, decrease the effort needed to get it and I become wealthier.

[PaulMcKeever]

tricky778: if one determines how to decrease the effort needed to create a certain thing, that IS an increase in productivity.

[legendre007]

So the economy's wealth does not primarily come from the amount of money, but from the usefulness (utility) of all the goods, services, & technology available in the economy.

In keeping with your metaphor, the society doesn't get richer by dividing the pie into more and more slices, but by baking more pies. :-)

[PaulMcKeever]

That's right. Increased productivity, not an increase in the number of dollars, is an increase in wealth.

Figuratively speaking, a dollar is one share of the dollar supply. If you increase the number of shares, then each share buys less than it would buy were the number of shares not increased.

[setanta333]

do you believe central banks,technically speaking are counterfeiting money by means of their so called loans,i.e fractional reserve system

[PaulMcKeever]

Well, "counterfeiting" is a legal term, describing a crime. Central banks and private banks are allowed to create dollars for themselves and to lend them out for interest.  It's functionally and morally the same as counterfeiting, but - surprise - our governments allow them to do it. In the end, it all comes down to having a government charter: charter holders good, charter non-holders scum of the earth. Government decides.

[willyjones7]

the Dollar has lost 95% of its value since the Federal Reserve Act of 1913!

END THE FED!

[willyjones7]

and the Federal Reserve are the biggest counterfeiters in the world!

[Geeman4561]

A dollar in the United States is a Spanish Milled dollar coin, or its equivalent, in coin form, containing 371.25 grains of fine silver. This is shown in the work, "What is the Dollar in the United States" (online), by Dan Goodman. The dollar was established by the Continental Congress before the adoption of the Constitution. The U. S. Congress established a mint to coin the dollar. This was done because Spain had depreciated its dollar. See Hamilton Report on establishing a mint (01/28/1791).

[thinkfree41]

Inflation is not theft, because theft is illegal. Inflation is essentially a charge or tax exacted on society at large in order to pay for 'insurance' against the possibility of deflation. Inflation is a wise choice if it is kept under control. If it is allowed to spiral out of control as the result of unproductive increases in the money supply or other events, it can become ruinous. If you increase the occurence of unproductive money creation, you increase the 'insurance premium' of inflation.

[thinkfree41]

@thinkfree41 You have defined the crime of counterfeiting as constituting an action which leads to a reduction in the value of the money already in existence. This is false. Counterfeiting is the action of creating money that purports to have been produced by the sovereign government or one of its (public or private) agencies. The crime is one of identity theft. By gaining a bank charter one is essentially allowed to issue currency 'in the name of' the sovereign state. This is what is wrong.

[thinkfree41]

@PaulMcKeever A central bank is incapable of counterfeiting. Private banks do not counterfeit because they are allowed by law to create money. This should be illegal and properly described as counterfeiting, but at present it is not. The ability to create fiat money should only lie in the hands of the people, represented by their government and its appendant bodies. To allow private banks to create money is to give away your national sovereignty to private profit-making entities.

[thinkfree41]

Your analysis is too simplistic here. Money supply can be increased without leading to inflation if it is done in response to productive demand. Increased government spending or lending can lead to increased productivity, thus avoiding inflation. Real conditions are also important. If imports are cheap inflation is essentially exported. Most money is created through credit, which is issued in exchange for a pledge to create increased producitvity.

[heaty007]

The pie is the value of a country. The money represents that value. Banks make the money for you through the gov you gave the right to speak for you. Gov tells the bank to make them more money so the pie can be cut to smaller pieces. The bank prints the money, then they charge your gov interest for the process. So if there is interest on every note then you can never pay it back even if you give all the printed money back. Interest is paid from your taxes MAKING YOU A SLAVE to the bank. Damn!

[CymroGoch]

Does that mean inflation favours the rich as they can more easily grab a larger share of the total wealth once you increase the money supply?