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To: Elroy Jetson who wrote (91010)	10/1/2007 12:50:45 PM
From: Paul Kern	Read Replies (2) \| Respond to of 306849

It's very alluring isn't it. A fiat money system is fine, just so long as you have the discipline to never produce any more money than the initial supply. You will not find any civilization in history which has ever had this discipline. No. Money supply, M3, is supposed to grow with GDP. Unfortunately, our government uses a multiplier of GDP.

To: Elroy Jetson who wrote (91010)	10/1/2007 2:34:05 PM
From: RJA_	Read Replies (1) \| Respond to of 306849

Elroy -- IMHO a money system has to expand to accommodate new goods and services produced, otherwise you get deflation. Deflation is a problem -- because when a business borrows, it has to pay back in money worth more than it borrowed. Add that to the interest... and this removes much incentive to borrow or invest in working business. In that case, its easier to sit on your money and watch its value increase. Fine if you have lots, but for everyone else, IMHO depression... caused by lack of flexible money supply. Then there is the other extreme, what we have today. By the way, I am a gold bug, and would like nothing better than a gold standard (essentially money supply limited to what gold was around) but do not believe it is practical... Economic growth would be impeded. Just my opinion. RJA

To: Elroy Jetson who wrote (91010)	10/1/2007 4:38:06 PM
From: neolib	Read Replies (1) \| Respond to of 306849

You do make a mistake in assuming all wealth must be monetized with an equal amount of money. There must be enough money to provide for the needs of savings and exchange, which is a small percentage of a society's total wealth. Yes, I know that the == amount is higher than needed, but I was actually pulling that from a comment in your post which implied that was what you thought. I might have misread that. The question is do people even agree on what the amount should be? I want to clarify one other thing: Are not the non-monetarists a very small segment of economists these days? BTW, in my island script, I should have shown a track for money creation prior to credit creation. I.e. 1) Barter goods having use aside from intrinsic value i.e. most any goods or services. 2) Selection of a small set or a single item, having such use, but somehow also suited as a standard for exchange (coconuts?) because of uniformity, longevity, etc. 3) Transition to something of intrinsic value, but not much other use, i.e. baubles of some sort. 4) Adoption of anti-forgery methods and other means of regulating the supply of these baubles which have basically no use besides being money.