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Very Hot Topic (More than 25 Replies) Inflation Is Just Another Tax (Read 544 times)
Jeff
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Re: Inflation Is Just Another Tax
Reply #10 - Jul 25th, 2018 at 2:26pm
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The Opposition wrote on Jul 25th, 2018 at 11:36am:
Then it's that law that's aggression. It would still be aggression regardless of whether there's inflation or not.
What the real aggression was was when the government confiscated people's gold and forced them to accept FRNs in return.

Yes the Federal Reserve Bank is a private bank, but they have been given the power to control the supply of FRNs and the power to control interest rates.

Inflation happens when the Fed creates money above and beyond what is needed due to expanding population. When more money is available, it drives prices up.

The essential problem is the Keynesian idea that a growing economy needs more money to keep growing, and that supplying more money and keeping the economy growing is a good goal.

In fact, as the Roaring 20s showed, expanding the supply of money along with a growing economy induces speculation and malinvestment.

What is in fact needed to keep an economy healthy is a limited supply of money, so that when an economy grows, money becomes more scarce, which automatically causes interest rates to rise, which automatically puts a damper on speculation and malinvestment.

Free markets with sound money are self regulating, with the result that only good businesses survive and only good investments pay off. The result of that is a healthy economy where prices fall rather than rise.

Keynes wrongly envisioned (and eventually saw his mistake) that a constantly growing economy with constant low unemployment was possible through control of the money supply and interest rates. What in fact happens under such a system of control is bigger economic bubbles and bigger/longer recessions/depressions when the bubbles inevitably burst.
  
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SicklersDink
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Re: Inflation Is Just Another Tax
Reply #11 - Jul 25th, 2018 at 3:07pm
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If all the gold bugs and libertarians took their paper money and bought gold with it, would that have made a difference?

It definitely would have stopped the fed from printing paper money in a hurry, providing there were enough gold bugs and libertarians to make the move significant.

Some gold bugs did and were rewarded.
Some got taken to the cleaners too.  Cry
  
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Jeff
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Re: Inflation Is Just Another Tax
Reply #12 - Jul 25th, 2018 at 4:40pm
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If all the gold bugs and libertarians took their paper money and bought gold with it, would that have made a difference?

It definitely would have stopped the fed from printing paper money in a hurry, providing there were enough gold bugs and libertarians to make the move significant.

Nonsense. Legal tender laws make it insane to try to use gold as money.

The only feasible way to use gold as money under a fiat money regime with legal tender laws is to barter with it, and that only works on a primitive level.

No bank is going to loan you gold to buy a house, no matter that the seller insists on payment in gold, because the legal tender law says you can pay the bank back in FRNs.
  
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SkyChief
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Re: Inflation Is Just Another Tax
Reply #13 - Jul 25th, 2018 at 4:52pm
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Jeff wrote on Jul 25th, 2018 at 4:40pm:
No bank is going to loan you gold to buy a house, no matter that the seller insists on payment in gold, because the legal tender law says you can pay the bank back in FRNs.

Its Ironic that a bank will loan you money (FRNs) to buy a house, but wont let you pay off the mortgage with FRNs!!   Grin    Grin    Angry    Grin


  
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Jeff
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Re: Inflation Is Just Another Tax
Reply #14 - Jul 25th, 2018 at 5:02pm
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SkyChief wrote on Jul 25th, 2018 at 4:52pm:
Its Ironic that a bank will loan you money (FRNs) to buy a house, but wont let you pay off the mortgage with FRNs!!   Grin    Grin    Angry    Grin


What? Which banks do that?

Legally, they can't.

FRNs are required by law to be accepted as payment for all debts, public or private.
  
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SicklersDink
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Re: Inflation Is Just Another Tax
Reply #15 - Jul 25th, 2018 at 5:31pm
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SkyChief wrote on Jul 25th, 2018 at 4:52pm:
Its Ironic that a bank will loan you money (FRNs) to buy a house, but wont let you pay off the mortgage with FRNs!!   Grin    Grin    Angry    Grin




Gold bugs don't do business over the counter with gold. They buy gold as their savings. Is anybody so stupid as to think you would try to buy a car with gold? Duhhhhh!
  
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Jeff
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Re: Inflation Is Just Another Tax
Reply #16 - Jul 25th, 2018 at 5:59pm
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Gold bugs don't do business over the counter with gold. They buy gold as their savings. Is anybody so stupid as to think you would try to buy a car with gold? Duhhhhh!
If you can't follow the discussion, I suggest you stay out of it.

You could easily buy a car with gold. Probably you could negotiate a good discount.
  
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SkyChief
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Re: Inflation Is Just Another Tax
Reply #17 - Jul 25th, 2018 at 6:17pm
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Jeff wrote on Jul 25th, 2018 at 5:59pm:
If you can't follow the discussion, I suggest you stay out of it.

You could easily buy a car with gold. Probably you could negotiate a good discount.

Before FDR outlawed gold in 1933, cars were often purchased with gold.

I often buy tobacco and get haircuts with silver.  And sometimes our auto mechanic will take silver in lieu of cash for his work,  but only when his work doesn't require parts.   I don't know why this is.
  
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Jeff
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Re: Inflation Is Just Another Tax
Reply #18 - Jul 25th, 2018 at 6:31pm
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SkyChief wrote on Jul 25th, 2018 at 6:17pm:
Before FDR outlawed gold in 1933, cars were often purchased with gold.

I often buy tobacco and get haircuts with silver.  And sometimes our auto mechanic will take silver in lieu of cash for his work,  but only when his work doesn't require parts.   I don't know why this is.
Right. Barter on the level of a barter economy.

If you buy stock with gold, expect to get FRNs when you sell it.

If you loan out gold, you will get FRNs in return.
  
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The Opposition
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Re: Inflation Is Just Another Tax
Reply #19 - Jul 25th, 2018 at 11:25pm
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SkyChief wrote on Jul 25th, 2018 at 12:09pm:
Another good reason to disband them.


Actually, the fact that the Federal Reserve is not a part of the government means they should be able to do whatever they want, as long as it's not aggression. But see below.

Jeff wrote on Jul 25th, 2018 at 2:26pm:
What the real aggression was was when the government confiscated people's gold and forced them to accept FRNs in return.


Yes, that was definitely wrong.

Jeff wrote on Jul 25th, 2018 at 2:26pm:
Yes the Federal Reserve Bank is a private bank, but they have been given the power to control the supply of FRNs and the power to control interest rates.


They shouldn't have the power to control interest rates - that's force - but they absolutely should be able to manufacture as much as they like, of whatever good they produce.

Jeff wrote on Jul 25th, 2018 at 2:26pm:
What is in fact needed to keep an economy healthy is a limited supply of money,


That depends on what you mean by healthy. Some people don't think there should be a damper on malinvestment. Your money, your choice. Choose wisely.

What a limited supply of money does is keep the economy fair. In other words, if you earned $20, you're not going to be non-aggressively cheated and scammed out of it; you are, in all likelihood, actually going to be able to buy $20 worth of stuff.

You can go extreme libertarian on this and say that the more malinvestment opportunities, the better the economy is, because it presents the scammers with more ways to non-aggressively relieve people not as clever of their money. In other words, more competition, more good and bad options, more chances to succeed, and more chances to fail.
  

This moral relativism of yours is exactly what lets government take this freedom, then that freedom, until we have lost them all.
-SnarkySack
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