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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: gpowell who wrote (54476)	2/24/2006 6:28:38 AM
From: basho	Respond to of 110194

The point, though, is that fiat supply is not unlimited in a free market, as the producer faces rising marginal costs of keeping it in circulation. What is causing confusion is that governments are today monopoly producers of money (legal monopoly, as opposed to a natural monopoly) and most of problems the criticisms of a fiat standard are more correctly attributed to the government’s role as an unnatural monopoly. Ah. Now I think I understand our seeming difficulty in reaching agreement on this point. I was working off the assumption -- as per our agreement that the free market would choose specie based money -- that a fiat system will only arise and persist on the basis of a government monopoly. Hence my comment that supply is effectively unlimited under a fiat based fractional reserve system. Given the assumption of a private fiat based system, I fully accept your point that issuers will face rising marginal costs.