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Pastimes : Austrian Economics, a lens on everyday reality
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To: Elroy Jetson who wrote (356)11/7/2008 11:58:10 AM
From: Aloysius Q. Finnegan   of 445
 
Elroy,

You responded that "Your question reveals the typical confusion between Credit and Money. You'll see that you even use these terms interchangeably - but they're not the same thing."

Just as a point of clarification - you combined the previous posters quote on money and mine on credit into a single sentence and attributed it to me.

That aside, you clearly answered my question with the following:

"2.) I assume your second question is, wouldn't an increase in money supply be useful in a time of great need?

Answer:) No, an increase in money would not be helpful except as a method of theft. If a government requires funds, it can obtain the money by tax, credit or theft. Increasing the money supply is theft through a counterfeiting fraud. The advantage of theft is you don't need the agreement of those who would lend, and don't need to spend the overhead and time to find assets to tax."

Your response caused me to probe a little deeper. I found the following quote from Mises "The Theory of Money and Credit". Basically it concurs with everything you stated.

Mises was responding to a rhetorical question as to whether or not there are "emergencies which peremptorily require or at least justify recourse to inflation."

"In order to appraise correctly the weight of this emergency argument in favor of inflation, there is need to realize that inflation does not add anything to a nation's power of resistance, either to its material resources or to its spiritual and moral strength. Whether there is inflation or not, the material equipment required by the armed forces must be provided out of the available means by restricting consumption for nonvital purposes, by intensifying production in order to increase output, and by consuming a part of the capital previously accumulated. All these things can be done if the majority of citizens are firmly resolved to offer resistance to the best of their abilities and are prepared to make such sacrifices for the sake of preserving their independence and culture…. The great emergency can be dealt with without recourse to inflation."

Regardless of what one might think of the Austrian Economics school of thought ... one certainly can't accuse them of being incoherent.

I learned something new today. Thanks
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