reply to post by gandalph
I am not responding solely to you but a few others also.
Your summation would be spot, if we were still on the gold standard, it isnt though.
It is faith based currency, combined with a infinite growth economic model.
Let's address the former first. Inifinte growth is a nonsensical philosophy, as there are obviously finite resources, basing an economy on infinite
growth is, well silly. It doesn't even make sense. It does though provide a incentive to continually cut pay, raise rates, and provide less service
for the price, as soon as a company reachs the top tier and runs out of "infinite growth" room. See too big to fail.
As stated before, our money is based on faith not actual wealth. No matter how much money is printed, as long as people agree it is worth X it is
worth X. On the inverse, even. If they don't print any money, if everyone believes it is worth nothing, it is worth nothing.
Inflation, as used in economic speak, is not based off of a set standard of wealth, it is solely based on belief.
For example. On the gold standard. We will say America has 1 dollar of gold. We print 1 dollar, this dollar is worth 1 dollar of gold. Now we print
another, making a dollar only worth .50 dollars of gold. This is inflation the way your using it. This is a misunderstanding, as I will show in the
Example 2. America has 1 dollar of "fiat" currency. It is worth 1 dollar gold, not because we have 1 dollar in. Reserve, but because we believe if
we take it to a store, we can buy 1 dollar of glod worth of commodities with it.now the .gov prints another dollar. This doesn't mean it is now only
worth .50 worth of commodities like on the gold standard. On the contrary, they can print as much as they want, and as long as we all believe 1 dollar
can buy 1 dollar worth of commodities, than it can and will. As I believe it when I spend it, and you believe it when you sell me the items in
So printing fiat currency is not even close to printing more money on the gold standard. As fiat or faith based currency isn't taking a whole and
fractioning it every time another dollar is printed. You can't fractin faith, all you can do is print so much people will start to question the
actual ability of 1 dollar to buy 1 dollar of goods. At which point inflation happens. Not because we printed too much money and fractioned a whole
down to the point of being meaningless. Instead, as long as everyone believes the U.S. dollar can buy 1 dollar of goods it can.