Ironic that the German government wants to avoid irresponsible monetary policy through a private entity when it is literally printing money to stimulate growth through the ECB.
Monetary and fiscal policy is not the same as us balancing a checkbook at the end of the month. Money is created over time for many reasons, on a micro scale for stimulus, and on a macro scale because the economy grows over time and money represents a slice of economic activity. Keeping it from going up and giving disproportionate gains to money holders past is part of the job. There's nothing ironic about it, this is the job of central banks, and there's nothing shady about it.
>Keeping it from going up and giving disproportionate gains to money holders past is part of the job. There's nothing ironic about it, this is the job of central banks, and there's nothing shady about it.
There is something incredibly shady about it, because inflationary monetary policy is inherently a regressionary redistribution of purchasing power and wealth due to Cantillon effects whereby those relatively closer to the printing press (governments, banks, and asset holders in roughly that order) gain a higher purchasing power than those at the very end of the chain which has traditionally been wage-earners and average workers.
There is no need to print money in a growing economy, it's purely ideology from the Keynesian economic establishment where they've somehow convinced the general public that it is crucial to have a steady inflation in an economy because otherwise people won't spend money or invest (which is a priori false, as time preference is a thing in both humans and firms). For thousands of years gold has been used as a monetary backing (which is deflationary by definition), and some of the highest recorded levels of economic growth in history has generally been slightly deflationary (the United States during the 1800s is a prime example).
> There is no need to print money in a growing economy...
There is, for a number of reasons, but not least of which is fairness. If I get a dollar, then the size of the economy doubles, my purchasing power as a fraction of the total amount of economic activity doubles. This creates wealth inequality over time, too. Likely to the benefit of the same people.
I hear you re: Cantillion effect, though I'm sure that could be solved with a targeted tax.
Most importantly, philosophically, nobody owes you a risk-free return over time on your idle, un-invested capital. I can think of no justification for why your dollar should be worth more in the future than it is today. At best, I could see an argument for the same amount, though I think a little bit less to encourage investment is a totally reasonable place to draw the line.
> ...some of the highest recorded levels of economic growth in history has generally been slightly deflationary (the United States during the 1800s is a prime example).
You mean the industrial revolution? I'd say there were externalities that affected that. Counter-point, the great depression.
>There is, for a number of reasons, but not least of which is fairness. If I get a dollar, then the size of the economy doubles, my purchasing power as a fraction of the total amount of economic activity doubles. This creates wealth inequality over time.
You assume that as an economy doubles prices won't decrease. The natural tendency of a free market is a decrease in prices due to competition, technological innovation, and other factors. If anything, holding the same dollar will lead you to purchase more goods at a higher quality than before as the market develops and expands - a higher purchasing power.
Wealth inequality is exactly what is caused when you print money to match the growth of the economy due to the aforementioned Cantillon effects.
>Most importantly, philosophically, nobody owes you a risk-free return over time on your idle, un-invested capital.
There is nobody that is giving you that return. The so-called "return" is the tendency of a free market to lead to cheaper prices and higher quality goods and services. If anything, I can't see a justification to allow the public's money to decrease in value over time.
>You mean the industrial revolution? I'd say there were externalities that affected that. Counter-point, the great depression.
Yes, there were externalities that affected it, but the core point remains the same. Competition and rapid technological innovation lead to a decrease in prices over time. The Great Depression was not a consequence of a natural deflationary regime rather it was the consequence of extremely lose monetary policy during the 1920s ("The Roaring Twenties") and it would have resolved itself quite quickly but as letting people be unemployed is usually politically unpopular Roosevelt enacted price controls that extended the market correction process that would have otherwise taken a much shorter time than it did.
> If anything, holding the same dollar will lead you to purchase more goods at a higher quality than before as the market develops and expands - a higher purchasing power.
AKA, a risk-free return on your uninvested, idle, capital that nobody owes you. The poor tend not to have much savings, by definition, which means that all this win goes to the already wealthy. Your argument is simply that your dollars should be worth more later because you got your dollar first. That's not a good reason, IMO.
> If anything, I can't see a justification to allow the public's money to decrease in value over time.
Let's say you decide it should be worth the same amount forever. Fine, that still requires printing new money. All you're arguing now is the magnitude.
>The poor tend not to have much savings, by definition, which means that all this win goes to the already wealthy.
This is not true - saving rates were higher in the past before irresponsible monetary policy took over after the erosion of the gold standard.
>Your argument is simply that your dollars should be worth more later because you got your dollar first.
This is exactly what happens in an inflationary monetary regime, althought the difference is that the distribution of purchasing power increases is not homogenous in an economy rather it is concentrated on those who are either politically or economically well-connected, usually asset holders.
>Your argument is simply that your dollars should be worth more later because you got your dollar first.
How about not controlling the value of money and instead letting it reflect the general purchasing power in an economy?
You've kinda dodged the core of my argument: why should your money be worth more later than it is today even though you're not doing anything with it? And further, if you think money should be backed by gold, why is it not sufficient for you to simply buy gold with your fiat as you earn it? I'm having trouble understanding why this fails to meet all your objectives.
>Monetary and fiscal policy is not the same as us balancing a checkbook at the end of the month.
This is a candidate for most tired meme on the internet and I really don't understand what it even has to do with this discussion as I've never met a household with a printing press (running the press is exactly what GP was referring to).
Right, a technically private institution which is built on capital of all EU member states and tightly knit into the complex web of EU entities is literally the same thing as a social media giant who denies even conducting business at scale in Germany or France to dodge taxes and comes freshly out of manipulating the US elections for profit.
Germany is not perfect, neither in ideology nor in execution. Neither is the EZB or the EU, for that matter. But this is just bad faith arguing.
It's pointless because you're not going to persuade anybody, but rather recapitulate a timeless, tedious dorm-room argument. The article is about Germany and Facebook. It isn't an essay on whether central banking is evil.
