"Wealth is potentially infinite. Every scientific and engineering breakthrough has the potential to expand wealth in ways unimaginable before the breakthrough. Any monetary system that build in artificial scarcity is absurd."
My response:
Money is a yardstick for comparing the value of two things.
For example, if I'm willing to pay a silver dime each for a carton of eggs and a gallon of milk, I value both equally.
If technological advances allow egg farmers to produce eggs twice as efficiently, then they can sell them for half as much and make the same amount. And they're incentivized to do this so they can increase their market share.
Instead of paying a silver dime for a dozen eggs, consumers would pay with a silver nickel instead.
Thus, there's no need to expand the supply of silver to communicate the real increase in wealth that has happened. In the absence of inflation, better, cheaper goods would simply become less expensive in terms of silver than they were before.
Roman emperors used to shave off the edges of their coins and keep the extra silver for themselves. Yet they demanded by government decree that the coins be treated as if they had the same value as they were before the coin was debased. It was a form of tax.
By inflating the currency, present day governments are doing the same.
Declaring that we need inflationary money because wealth is increasing is like declaring we need to expand the length of yardsticks because cars can go farther.
My response:
Money is a yardstick for comparing the value of two things.
For example, if I'm willing to pay a silver dime each for a carton of eggs and a gallon of milk, I value both equally.
If technological advances allow egg farmers to produce eggs twice as efficiently, then they can sell them for half as much and make the same amount. And they're incentivized to do this so they can increase their market share.
Instead of paying a silver dime for a dozen eggs, consumers would pay with a silver nickel instead.
Thus, there's no need to expand the supply of silver to communicate the real increase in wealth that has happened. In the absence of inflation, better, cheaper goods would simply become less expensive in terms of silver than they were before.
Roman emperors used to shave off the edges of their coins and keep the extra silver for themselves. Yet they demanded by government decree that the coins be treated as if they had the same value as they were before the coin was debased. It was a form of tax.
By inflating the currency, present day governments are doing the same.
Declaring that we need inflationary money because wealth is increasing is like declaring we need to expand the length of yardsticks because cars can go farther.