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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Elroy Jetson who wrote (25758)12/10/2004 3:22:21 AM
From: GraceZRead Replies (2) of 306849
 
The simple definition of a Monetarist is someone who believes that the money supply is not neutral to the economy. By this simple definition I'd say that even you are a Monetarist since you blame the money supply expansion for a world of sins.

Debt existed long before fiat money. During feudal times it was very common for serfs to borrow for supplies until their crops came in. They'd owe it back to the Lord and if they were very lucky, the Lord died and their debts were forgiven. Otherwise every year they were alive they'd get a little deeper in debt. Debt most likely originated with the development of agriculture. Along with commodity futures!

Money OTOH is not the same thing as debt. Money is simply a piece of paper or coin or electronic chit representing stored value, a medium of exchange, nothing more. You may look at the money supply and see debt, I see the asset side. Every day you and I go to work and add value to the economy (well at least I do), if there wasn't money added to the money supply to represent that value, at some point as transactions scaled up, we'd run out of representations of that value or they'd have to divide each unit ever smaller and smaller as money became more and more precious as a medium of exchange. If it became scarce enough, we'd be stuck exchanging goods in a straight barter. So something else might be used to add to the money supply, maybe cakes, or haircuts or gold. This is what happens in less robust economies where the supply of money is tight or "dear", people wind up exchanging goods directly with each other without the medium of money.
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