alt.politics.economics

On Sun, 17 Feb 2008 02:07:19 -0800 (PST), raylopez99
wrote:

>On Feb 16, 10:09=A0am, Les Cargill wrote:
>>
>> >> To date, we only have a history of a government's controlled currency
>> >> which has included massive inflation and bubbles.
>>
>> > The problem with monetary systems today is not that government is too
>> > controlling but that government is not controlling enough. =A0The best
>> > course is to eliminate private banking's connection to introducing money=
>
>> > into circulation and make money a true government monopoly by spending
>> > funds into circulation.
>>
>> > Mark M.
>>
>> This is a very interesting thing to say. I may be completely wrong, but
>> I note two things about the money supply:
>>
>> 1) If we could have increase in the money supply that
>> perfectly tracks GDP growth, prices would
>> still rise because people confuse "increase
>> in the money supply" with inflation. Inflation is
>> really "increase in the money supply without any corresponding
>> increase in real GDP." The Fed tracks this by use of
>> increases in goods-basket-prices which is a sort of
>> "error bar".
>
>First, you cannot increase money supply that perfectly tracks GDP
>growth--

?? So what? NASA can't perfectly track shuttle trajectories, either.
That doesn't stop them from launching payloads.

>this is akin to predicting the economic cycle.

Nope. No more than driving a car requires you to predict where all
the other drivers are going.

>You CANNOT prevent bubbles--animal spirits as Keynes called them.

Of course you can. Just stop making asset ownership into an unjust
privilege. Problem solved.

Of course, that's not something monetary reform alone can achieve.

>but you cannot *prevent* bubbles. Medicis found this
>out when the money supply was 100% private.

Garbage. The Medici did not control 100% of the money supply.

-- Roy L