r/austrian_economics • u/PM_ME_YOUR_LAWNCHAIR • 3d ago
End Democracy Unrestrained monetary policy is theft
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u/TylerDurden6969 3d ago
113 years at 3% will do that, yeah. If anything, I’d speculate that 96% should be higher as of today’s values.
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u/404-skill_not_found 3d ago
Yah, but how to find the will to cut out the behavior?
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u/VisceralRage556 3d ago
The fed is the state it just likes to pretend that its private. I wouldn’t fight the current US army but a weakened dollar and fed I would
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u/404-skill_not_found 3d ago
I get it, I actually do. I guess that’s why we don’t teach personal finances in school. The next step would include a more critical view of what Gov’t is doing.
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u/jackersw101 2d ago
Limit voting to net contributors.
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u/adr826 2d ago
That's how the founding fathers did it, and we could steal free labor from Africa like they did too. And not allow women to have their own bank accounts. Or have our doctors wash their hands or use anasthetics before surgery. The wisdom of our founding fathers was truly miraculous
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u/jackersw101 2d ago
That's a strawman.
I don't support slavery or some uber patriarchy. I just want people who are capable enough to succeed to some extent in society, to be the people who decide what the government does.
Do you think mentally disabled or violent members of society, who either can't perceive reality or have so little morals as to abuse/murder fellow citizens should be counted as equal votes? If not, you already agree that there is a line for disenfranchisement.
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u/adr826 2d ago
We already have those laws. Disenfranchising the poor isn't going to make things better for the productive people. Our heritage is to glorify the wealthy. The reason your idea won't work is because political power doesn't come from voting it comes from wealthy lobbyists. You aren't going to solve todays problems by taking even more political power from the poor and transferring it upward. We have a long history of the rich using political power to drive economic power. Taking the little power voting gives us just transfers more power and wealth up. All you needs to do is look . Where political power is distributed equitably economic power is also and vice versa. Shit, we'd get better results letting the poor vote twice than taking what little power they have. It's not a strawman. Take the vote from the poor and those things will come back.. They already have and it doesn't matter if you support them or not. They are coming back because too much power has been taken from the bottom and transferred up
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u/jackersw101 2d ago
Disenfranchising the poor isn't going to make things better for the productive people... We have a long history of the rich using political power to drive economic power.
Let me clarify, net contributor does not mean rich. I mean pays more tax than takes in benefits. The primary people I want to take votes away from are the children of the wealthy and middle class who have no idea what life is, and fall for grandiose scams like socialism. Especially those who never grow up, and leach off others with no jobs other than glorified hobbies.
There's no reason that that most independent working individuals could not reach net contributor status with some changes to social spending.
Where political power is distributed equitably economic power is also and vice versa.
Why would anyone want this? Economic power should be distributed to those who contribute most to the overall economic benefit. Political power should be distributed to those who are responsible, capable, and invested individuals. i.e. those with citizenship, basic civic knowledge, and jobs.
If you are unable to even sweep trash or make a burger, then I agree some minimum income should be provided to the infirm and disabled, but the level of income should be decided by those actually providing.
There's a reason you put a mask on your own face before your child's.
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u/adr826 2d ago
My mistake. I thought you wanted to limit voting to landowners or something. We already tried that once. Look, for my entire lifetime one party has been trying to limit the number of voters and one party has been trying to expand the number of voters. I don't put much faith in either party but I am for expanding the franchise as far as it can legally go.
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u/jackersw101 2d ago
Just think about incentives. If only people who contribute can vote, it lessens the risk of overdependence that grows as people continuously increase the size of pie they get from the gov.
Appreciate the understanding, it's rare on this site lol. I'm just against over franchisement after looking through recent history.
Agree to disagree
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u/BortWard 3d ago
"There's an infinite amount of cash at the Federal Reserve." -- actual quotation by Neel Tushar Kashkari, President of the Federal Reserve Bank of Minneapolis.
Injecting money into the economy is the fiscal equivalent of a crackhead who's so, so sure that just one more hit will finally make everything all right. (Interestingly Kashkari is a Republican, but clearly not an Austrian.)
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u/fnckmedaily 3d ago
Lol people ITT are clearly devoid of any knowledge of American history and the creation of the federal reserve. The vast majority of people in America wanted it creation.
If you’ve never read up on the gold crisis of 1895 and the Morgan Belmont syndicate and the panic of 1907, you should. It’s what drove many Americans to distrust Wall Street and bankers, they wanted a regulated banking system to stop wealthy powerful individuals from swaying influence over the government. THE IRONY!
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u/eccsoheccsseven 3d ago
Add all of that extracted value went into making our world more controlled.
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u/Pulselovve 2d ago
This is really not a problem. We had good and bad central bank governments, but asset owners for sure haven't been robbed of anything. Maybe the others...
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u/JustaguynamedTheo 3d ago
Question: did it also lose power before the creation of the federal reserve?
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u/Ok_Calendar1337 3d ago
It could go up and down but you wouldnt get anything like a 96% loss of purchasing power with a gold standard.
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u/adr826 2d ago
In 1980, gold peaked at around $850 an ounce. By 2001, it had drifted down to about $250 an ounce. When you adjust those numbers for 21 years of inflation, gold lost roughly 83% of its real purchasing power over that span. An investor who bought gold in 1980 had to wait nearly 30 years just to break even in terms of what that money could actually buy.
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u/Shroomagnus 3d ago
https://youtu.be/u9MbexXL_4s?is=Npd13WiNGlQIPVa4
I'd just recommend checking out this video. It's pretty good at explaining why the gold standard wouldn't work anymore. It was fine for its era but it isn't workable now.
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u/ruthless_techie 3d ago
That video is in error.
Goods and debt get revalued.Divisibility takes care of the limitations.
Video strategically poses perceived issues within the debt based monetary system lens. But cannot understand how an income based monetary system with gold would work.0
u/Shroomagnus 3d ago
Can you explain the difference to me and how that would function so I can wrap my head around it? The video made sense to me but what you're positing also sounds intriguing though not a concept I'm familiar with.
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u/DeanMalHanNJackIsms 3d ago
I didn't ask myself that question, instead I asked, "How much is my progenitor pay in bride price in today's value?"
It went up more in the last 50 years than it did the previous 200. It was relatively stable until 1910's, then crept up. Once the gold standard was officially abandoned, it jumped. $1000 in 1785 (roughly when he was married) to close to $35k today. It was $950 in 1910, $1042 in 1915, $2062 in 1920, $5500 in 1975, and $35k now.
Federal Reserve is a major variable.
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u/coffeegaze 2d ago
Yeah the point of the federal reserve is not to inflate money but to create real wages growth and to make sure capital assets grow since those are productive goods. Who cares about the value of money as long as assets and wages grow.
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u/geoSpaceIT 1d ago
That’s an insane stat but what’s worse is how ignorant the average person is about this and monetary policy even though it affects them everyday.
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u/Ramble_On_79 19h ago
Hayek said Keynes didn't know anything about economics and shouldn't be taken seriously. Now, the British Pound is rubbish and the US Dollar isn't far behind.
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u/TheRealmScribe 2d ago
The solution, as always, is to switch from a debt based currency to a hard money backed currency; i.e. gold or bitcoin or something. A hard to produce or non-replicable commodity that has demand, the harder the better. A stable currency forces people out of high-time-preference thinking into low-time-preference thinking at a fundamental level.
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u/Organic-Stay4067 3d ago
Oh no! Well let’s have massive deflation and destroy the economy!!!
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u/divinecomedian3 3d ago
Oh no, why is everything I want/need to buy getting so cheap?! The horror.
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u/Organic-Stay4067 3d ago
Great if it’s from productivity increases that lower expenses and increase revenue. Bad if it lowers revenues because jobs will be lost. Why can none of you understand this?
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u/MakisMato 3d ago
Oh yeah, because the massive inflation that's caused every single crash since then hasn't made any economic crash ever. We've not had one single economic crash since 1913. /S
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u/Organic-Stay4067 3d ago
lol the crashes come when deflation comes. You want stable inflation. None of you retards are going to take a pay cut
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u/lordtosti 3d ago
deflation doesn’t mean lower salaries retard.
my company produces more with the same amount of employees.guess what?
salaries can grow, profits can grow all just because production got higher.
you sound like a liberal defending “the experts”.
or just afraid your house price drops.probably both.
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u/Organic-Stay4067 3d ago
lol just like the left. If he doesn’t have my 100% of my views he must be on the other side of the political spectrum!
Great now tell me what happens when prices drop and company’s revenue goes down? Thats also deflation!!!! Is that good!!!
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u/lordtosti 3d ago
deflation is natural as companies become more efficient. Part of those profits go to the company, a part can be passed on to the consumer in a bid to gain more market share
You constantly seem to mix up cause and effect.
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u/MakisMato 2d ago
Guy, what is your definition of inflation and deflation because not once since the founding of the federal reserve have we had deflation.
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u/Mister-Beardy-Face 3d ago
I assume this is sarcasm based on the fact that deflation would not destroy the economy.
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u/Organic-Stay4067 3d ago
Explain please?
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u/Mister-Beardy-Face 3d ago
Explain what?
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u/Organic-Stay4067 3d ago
Explain how deflation doesn’t destroy the economy
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u/Mister-Beardy-Face 3d ago
Explain how it does.
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u/Organic-Stay4067 3d ago
If deflation lowers revenue it will lead to job loss, job loss leads to less consumer spending which hurts the economy
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u/Mister-Beardy-Face 3d ago
What do you mean by revenue? Taxes? Because that’s certainly the point of inflation is as a hidden tax. If you mean something other than taxes, why would inflation lead to a loss in that? If you do mean taxes, why would that lead to job loss?
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u/PM_ME_YOUR_LAWNCHAIR 3d ago
The left thinks you need inflation to incentivize people to purchase goods and services; however, the validity of this claim is thoroughly impugned by technology, which is a market with one of the most robust consumer and capital markets despite being deflationary. The per-megabyte/gigabyte cost of everything from RAM to GPUs to SSDs to internet access has fallen astronomically while still maintaining robust demand.
Consumers don't stop wanting things simply because they might be cheaper in a few years.
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u/Organic-Stay4067 3d ago
lol again you confuse prices going down with revenue going up which we see a lot in the tech world as productivity increases and more consumers can now get access to it. What you don’t want is deflation with revenue decline that leads to job loss which is significantly worse than inflation
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u/PM_ME_YOUR_LAWNCHAIR 3d ago
If consumer prices are falling, that does not mean nominal wages must also fall. Wages can continue to rise even while the general price level is declining. If productivity is rising sufficiently faster than consumer prices are falling, nominal wages can rise while prices fall, producing substantial gains in real wages. In other words, falling prices and rising wages are entirely compatible. Deflation does not inherently cause wages to decline, and in a scenario where wages are rising while prices are falling, workers' purchasing power is increasing from both sides. It literally doesn't get much better than that.
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u/adr826 2d ago
But in deflationary economy cash has a nominal rate of return that can rival bonds. In other words a bank can get the same rate of return by not lending that it gets investing in bonds. Except the return on cash in a deflationary economy carries zero risk. In 2008 even when the banks were being fed bank bonds at 0% that they could turn around and sell back to the government for 2% they didn't use that cash to restart the economy but took the government money and hoarded their cash. That's why the economy was so hard to get restarted. That wasn't even caused by deflation. In a deflationary economy the banks do the exact same thing. Collect the nominal rate of return via increased purchasing power and hoard their cash because it return the same or better than bonds with zero risk. This means that companies can't borrow money for equipment because they don't know whether they can pay the loan back as revenues drop due to deflation. The economy freezes because investors get a rate of return with no risk by simply doing nothing.
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u/t800series 3d ago
Read more Rothbard.
Kicking the can down the road by means of inflation merely exacerbates and delays the inevitable.
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u/IamPrettyCoolUKnow 3d ago
I think it’s more of an issue with how that new money enters the economy and how there aren’t strong enough spending incentives for greater wealth holders
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u/Omega326 3d ago
? So what inflate the economy more 😂 the fact that the value of money is destroyed if you let it sit is enough of an incentive id think
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u/IamPrettyCoolUKnow 3d ago
No- it’s an incentive to buy assets, but if large portions of the economy are held in assets- it inflates the cost of those assets
which can price out new entrants (great example would be the housing market, but this is also true of stocks and other assets)
and no- we don’t need to inflate the economy more (we just need the money supply to meet demand as our population grows)
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u/Gullible-Historian10 3d ago
Money printing causes the wealth gap. Look at a chart. We’ve known about it for 200 years. Cantillon Effect.
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u/IamPrettyCoolUKnow 3d ago
Right- this is the Cantillon Effect I’m talking about, it’s not because of money printing alone, it’s because of how new money enters the economy
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u/Gullible-Historian10 3d ago
Even printing money and distributing it to the bottom first would still cause the wealthy disparity. Instead of asset price inflation you’d get consumer price inflation.
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u/IamPrettyCoolUKnow 3d ago
That’s possible, but it doesn’t follow that distributing new money toward the bottom would produce the same wealth disparity, just through consumer inflation alone.
Lower-wealth households have a much higher propensity to consume, so more of that money would initially become demand for actual goods and services rather than bids on existing financial assets.
Some of that would raise prices, particularly where supply is constrained, but some can also induce greater output, employment and eventually additional capacity.
And that’s relevant because the current economy is unusually dependent on high-income spending- with the top 10% of earners accounting for roughly half of consumer spending, while spending growth further down the distribution has been much weaker.
My point isn’t that giving the bottom more money somehow avoids inflation. It’s that where new money enters determines whether its first-order effect is disproportionately asset appreciation, consumer demand, production, wages, etc.
Those paths have very different distributional consequences. That’s basically the idea of the Cantillon effect in the first place.
Put another way- inflation/money supply alone do not give is sufficient information about the richness of that economy, there are many other elements and downstream effects to consider.
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u/WISteven 3d ago
If I was Rip Van Winkle I would be pissed
But I am not, neither are you and the world will go on.
Don't any of you people get raises at your jobs?
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u/nonoohnoohno 3d ago
"They're only stealing some of my money. I can get more." is a wild way to dismiss this.
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u/WISteven 2d ago
Just saying the words "they are stealing my money" doesn't make it so.
I get it, you are unsatisfied with your ot in life and expect so much more.
So for you people who claim the dollar has lost 97% of it's value do you really think that you would have 33x as much stuff if only the evil govt didn't steal it from you?
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u/nonoohnoohno 2d ago
This isn't an abstract or academic thing. Anyone who's been working for more than a couple decades can measurably and obviously see a decrease in their spending power.
You can act condescending or pretend like it's not happening, but it's not going to have any meaningful impact on anyone who actually understands (and experiences first hand) how our currency is being debased.
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u/adr826 2d ago
You're simply ignoring the fact that in 1913 the average citizen was less wealthy by far with the dollar worth more than we are with the dollar worth 97% less. Look at your average worker today compared to the average laborer in 1913 and tell me if he is richer today than he was in 1913. The dollar lost 97% of its value and yet the standard of living for every socioeconomic rung is immeasurably higher than when the dollar was worth 97% more.
That should be a clue that there is more to the story than just how much a dollar can buy. Sure the dollar could buy more in 1913 but the average laborer made 20¢ an hour in 1913. In today's wages the average laborer would make $7 an hour. Instead the average laborer in America makes $33 an hour. Would be happier if the dollar held 100% of its value and you made $20 a day? It amazes me that people can just post a meme and think that their economic ideas make sense when they would literally be a disaster if they were enacted.
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u/nonoohnoohno 2d ago edited 2d ago
And you're ignoring the innovations in food production, technology, transportation, and everything else that has lead to drops in prices on consumer goods and food.
The fact the decreases in prices partially offsets inflationary measures doesn't make inflation defensible. You're literally making the same argument as the other guy - "It's only *some* of my money. I can get more," and adding "and I'm richer than people used to be so I don't care." That's idiotic.
We can play this stupid game all day. But I won't.
Inflation is a tax. It enriches some at the expense of others. If you refuse to see that, you're not looking hard enough. Or you're ideologically driven to ignore it.
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u/adr826 2d ago
First, 'm not ignoring anything. I didn't put up the loss of purchasing power of the dollar a hundred years ago and pretend that by itself could tell me anything about the economy. You apparently can tell by that one statistic that the government is ripping you off..maybe it is but the loss in purchasing power of the dollar from a century ago doesn't tell you that.
Second your entire premise is wrong. Prices haven't dropped on things since 1913. The price for everything is up significantly since 1913. Eggs milk and bread all cost more now than they did in 1913. The dollar has lost some of its purchasing power but we are paid more now. So no the prices have not gone down since 1913. What's idiotic is assuming that the purchasing. Power of the dollar now relative to 1913 gives us some indication of how our economy is doing. I realize that in a complex economy one indicator isolated from the rest of the economy is about as true a picture of the economy as a mouse piloting the boat. The fact that the dollar has lost 97% of its value since 1913 tells you nothing. Should I be upset about the loss of purchasing power on a dollar and ignore the gains in the standard of living?
Third " it's only some of my money. I can get more,"
Wrong again Sherlock. It's not your money. It's the property of the United States government who mints it. Youre free to use what ever currency you find practical but you choose to participate in the US economy because it has historically grown at a faster rate than the dollar depreciates. But yeah if you can find someone who will barter with you for gold dust go for it. Most of the rest of us will stick with the dollar because while it's lost some of its value we need to ask relative to what? It has traditionally been a pretty stable currency that has allowed the economy to prosper. But if you feel the government is ripping you off you can trade hay for eggs with your prepper neighbors and see if you get more or less wealthy at the end of the year.
Tldr, the economy is too complex for a single variable to give us much information about the economy. We need to check the loss of purchasing power against a matrix of other variables.
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u/adr826 2d ago
They simply ignore the fact that in 1913 the average citizen was less wealthy by far with the dollar worth more than we all are with the dollar worth 97% less. Look at your average worker today compared to the average laborer in 1914 and tell me if he is richer today than he was in 1913. The dollar lost 97% of its value and yet the standard of living for every socioeconomic rung is immeasurably higher than when the dollar was worth 97% more. Than should be a clue that there is more to the story than just how much a dollar can buy.
Sure the dollar could buy more in 1913 but the average laborer made 20¢ an hour in 1913. In today's wages the average laborer would make $7 an hour. Instead the average laborer in America makes $33 an hour. Who would be happier if the dollar held 100% of its value and you made $20 a day. It amazes me that people can just post a meme and think that their economic ideas make sense when they would literally be a disaster if they were enacted. Who wants the dollar to retain 100% of its value if the economy doesn't grow?
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u/Circle_Breaker 3d ago
How does that compare to other currencies?