[OT] Ameros will clog the tubes - was Re: Network Neutrality

[Nicholas Leippe]

On Friday 05 December 2008 10:21:01 am Von Grant Fugal wrote:
> Ok, there are probably other ways to fairly distribute new money, but
> centralized injection is not one of them. How does the government not
> benefit by having brand new money? You say "well the government is the
> people." Nice try. Power corrupts. Money is power. Giving the government
> the power to print more power is corruption in the extreme.

Agreed. Which is why you don't give them unlimited power to do so willy-nilly 
so Obama can buy a new yacht. You give them a specific power to do it 
according to a fixed-in-stone mathematical formula, using publically available 
input data that is audited before use and cannot be fudged.

> The printers benefit (the government gets more power, more pet projects,
> hidden taxation). The first receivers benefit. This is demonstrable in
> several ways. First, they get to sell more of their product than they
> would normally. They get more business. More business for any business
> is good business and most certainly a benefit. Secondly, and highly
> related, they experience an increased demand for their product.
> Supply/demand dictates that with an increased demand comes an increased
> cost. They not only get to sell more of their product, they get to do so
> at a higher charge. Lastly, they get to use all this extra money they got
> from doing extra business at extra charge to increase demand at the next
> level of the chain.

Okay, so yes, there may be an additional increase in demand from putting the 
new currency into curculation. This would raise prices--meaning more profit 
for those producers. But, it doesn't have to be done this way...read on.

> If you somehow manage to keep the money
> supply/capita ratio constant, then yes, overall prices don't go up. But
> prices DO go up on that first step, then of necessity prices drop
> elsewhere. Where? Most likely in wages and compensation, small
> businesses, etc.

Here's a kicker for you. If the government budget is required to stay the 
same, regardless of printing new currency, then taxes collected must decrease 
by as much as the new currency--thus the government buying power stays the 
same, while the population's buying power increases. There's no increase in 
demand directed at the suppliers of the goods and services to the government. 
At worst there would be an increase in demand for whatever the entire 
population buys--everything!. Oh, but wait...the capita increased--so the 
per/capita buying power did not increase after all... which is exactly what we 
wanted. Solution? Perhaps.

> > Are you talking about monetary inflation or price inflation? In some
> > ways, yes. In all ways, no.
>
> Price inflation IS monetary inflation. The only other way to get price
> inflation is with severe economic downturn. That is to say, a pronounced
> decrease in production, in wealth.

There are at least three definitions of inflation:
- monetary inflation - an increase in the money supply
- decline in the real value of money - decrease in purchasing power
- price inflation - increase price levels - this is the reigning use of the 
term today

They all can have the same effect, but have different causes.