Re: Question regarding the budget deficit

"Johnny Tsunami" <nobody@xxxxxxxx> wrote in message
news:432c9a60$0$4865$8b463f8a@xxxxxxxxxxxxxxxxxxxxxx
> Paul Gee wrote:
> > In other words, we MUST reassign something of value to our money.
Something
> > like gold. I don't say it would be helpful. I don't say it would be
handy.
> > I say we MUST. We MUST!!!!
>
> We already assign a value to money. We do it collectively. And
> judging from this conversation there really ought to be a class on what
> money means.
>
>
> It used to be that money was gold. Or tied to some particular item.
> That money was something tangible in the same way as a Kilo, a Pound, a
> Foot, or a Meter is tangible. But the problem with that is that there
> is that money will not be worth the "right" amount. There will always
> be too much or too little money to run an economy. Especially REALLY
> BIG economies.
>
> So when we went off the gold standard, and gold became worth what it
> should be worth compared to everything else. What is a dollar worth and
> how is it "created".
>
> A dollar is created when anyone in the economy creates a dollar worth of
> wealth. And so long as that happens and the money supply stays roughly
> the same as the amount of wealth that is created then prices are stable,
> incomes are stable, and the entire system is reasonably equitable. But
> it isn't always truly "fair". There are definitely jobs that create
> more dollars for less "work". Most of it around Intellectual Property.
> But also things like alot of CEO pay, professional sports and maybe
> poker playing.
>
> This can work indefinitely so long as the Reserve Bank does not issue
> more worth than is created.
>
> But there are cheats. You can create more wealth than is created if
> people are willing to destroy wealth in other ways. Say invest it in
> the stock market, or in real estate. (The bubbles in both of these are
> a way to create and destroy massive quantities of wealth). You can also
> spend it on things like fossil fuels.
>
> The problem with spending it on things like fossil fuels is that where
> the money goes they end up with large fantastic piles of it. They can
> spend it in the US (where OPEC owns approx 10 percent of the US), and it
> can be destroyed in military operations (like Al Qaeda).
>
> So as to the ultimate questions, are the deficits bad? Not if the
> economy keeps growing in the US. Economic Growth tends to hide most
> bad things about capitalism. So far, in the history of the US, economic
> growth has ALWAYS happened. But economic growth tends to require the
> destruction of resources, and it is not clear if we can continue to grow
> without ever larger sources of resources.
>
> The scary ghost in the closet isn't deficits. Trade or otherwise. The
> scary ghost is growth. If we stop growing, capitalism starts falling
> apart (pre-reunification Germany, and France are two places where this
> started to happen), and it really isn't clear what happens next.
>
> So pray for growth! Pray for increased productivity! Pray for
> increased immigration! Pray for unlimited resources! This is a lot to
> pray for.
>
> But it is not the fault of being on the gold standard or not.


If the ten dollars in my savings account buys less and less as inflation
continues, where does that value go? Who is benefitting from inflation?

If a criminal forges a check, who benefits from that?

If a criminal counterfeits money, who benefits from that?

If the government has a green light to spend and print more money as
recklessly as they want, who benefits from THAT?

-Paul G.


.

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