eye95
Well-known member
Printing money is wise? I suppose if you have a completely benevolent printer who is an economic genius and also a psychic. Saying that when money is locked to any commodity it will "fluctuate wildly" is complete hyperbole. Sure, if you linked it to something stupid it would. Market-driven inflation and deflation is much more preferable than Fed-driven booms, busts, and artificially propped up bubbles that burst. Since the Fed's aren't completely benevolant econ-genius-psychics they really can only make educated guesses at what the market is going to do. Have you ever watched the various chairmen on C-Span admitting they don't know what to do?
I agree that one of the biggest problems is unproductive spending; like the stimulus package, bailouts, handouts and 5 WARS. All made possible by your friendly Federal Reserve.
We are better off taking away the power of the government to print money so we can force them to limit non-productive and uncontrolled spending. This way we don't have to just trust that they'll do the right thing. I know some people around here are prepared to trust the government with just about anything but I'm not.
No one needs to be psychic. When inflation increases above 2 or 3 percent, slow the growth in money supply. When deflation sets in, speed the growth. It really is simple.
Again, in case the point was missed, the problem is spending. The excess printing of money is in response to wild spending that cannot possibly be covered by revenue and borrowing. The problem is not the printing of money. The problem is imprudent printing of money that is only occurring because of even more imprudent spending.
Printing money is wise. It can be used to prevent the wild economic swings that would be brought on by an inflexible standard whose supply is totally uncontrollable and cannot be adjusted to match the production of goods and services. Such a fixed commodity will cause inflation in a growing economy, thereby stifling that growth. In a shrinking economy, it would cause deflation, stunting capital investment. Inserting another commodity, currency, between any two others blunts swings between them. Instead of one increasing wildly against the other, one grows to a lesser extent against the currency, while the other shrinks to a lesser extent against the currency, causing a damping effect.
Trying to apply a gold (or silver or any other concrete commodity) standard is like trying to apply a grid to space-time. Using a currency is like recognizing the relativity of all the components of an economy. However, grasping such does require disposing of a Newtonian mindset when it comes to economics in favor of an Einsteinian one.