People, natural resources, finished products, those things are finite and thus there's a need to allocate them. Money has turned out to be a good way of doing that.
Actually creating money does create more resources and products and vice versa. It's pretty much the modern economic system. More money makes more investment possible which can make more resources accessible and therefore create more products. But there is a physical limit on the resource side. And if society fails to justify the money creation with more resources, products and services, then you have inflation and ultimately a currency collapse as everyone loses faith in the value of money.
It's a balancing act between money and products - whether money has to catch up to more products or whether products have to catch up to more money.
Persistent inflation generally happens when an economy runs out of people. Higher interest rates basically tell people to buy less or work more. The balancing act isn't between money and products but rather between the supply and demand for labor.
While there is a short run tradeoff between unemployment and inflation, it has not been observed in the long run. The Phillips curve was contradicted the 1970's and flatlined in the 2010's.
Persistent inflation happens when central banks are no longer trusted to manage M2.
True, it only creates the promise to work in the future. Whether that promise is worth something is up to the person making the promise.
>it just dilutes the medium of exchange and changes the vector of the capital allocation
That's an odd way of saying "higher interest rates". People do investments. They pay an interest rate according to the profitability of that investment. When there isn't enough aggregate supply to allow both investment and consumption the interest rate is raised until people either stop consuming because they are getting paid interest or because there are so many investments available you only pick the best ones.
> The creation of money itself actually hurts the system where those who had previously been successful in creating wealth through performance of capital allocation or labour and now partially disenfranchised of the full right they had earned to continue this trend.
Money is a promise that someone will work for you. That's not wealth, that's a promise of future wealth. Letting people promise even more future wealth does in no way hurt anyone. You also have to be realistic. If the promise turns out to not be true, then lying to everyone that it's real just makes everything worse because people keep "investing" into a lie.
As I said in other comments. Labor cannot be stored. Simply holding onto money doesn't mean people are still there willing to work for you. Holding onto money in that sense can be self defeating. It's like that economic pie analogy. The pie has to be baked every day. If you don't eat the whole pie it will spoil and go into the trash. Uneaten cake benefits nobody so either stop baking so much cake or eat it before it's gone.
> now partially disenfranchised of the full right they had earned to continue this trend.
Well, as you can see in the pie analogy he has no intention to continue this trend otherwise he would avoid monetary savings because of the labor storage problem.
Incorrect. Money is (supposed to be) proof you did work/ created value.
This is also why I think Bitcoin rests on shaky foundations, and why I get tired of people who want a balanced federal government spending budget.
If the government were to optimize its net worth, then it would be pretty obvious that borrowing money to build transportation infrastructure and providing healthcare is "good" government spending and doing tax cuts or welfare is bad with debt. I don't know why but a lot of people pretend that governments are basically private households and all government spending is consumption.
Not all of it though. Giving an 80+ year old dialysis or extending their life a few months or nursing home care requiring round the clock staffing is not going to net any returns for society. A third of healthcare spending was post 85 years of age, as of data 20 years ago. Surely it has skyrocketed since:
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361028/
Imagine these resources put towards children.
And fewer children will lead to even higher healthcare spending, since as far as I know, much of the tasks for elder care is not yet in the wheelhouse of automation, and it is highly undesirable work.
Conversely, creating more debt (as is with QE) adds value to everyone who has borrowed to invest. At some point though (usually through bankrupcy) this becomes inflationary.
It is inflation that steals value from producers who trade work for money: remedied only by demanding more money this is a vicious cycle.
Let's say I have a car that is worth $30k. I create a car coupon that lets you buy the car for $0. I have created more money without "stealing value".
Money is created by promising work in the future. Considering the huge demand for work in the future it should be pretty obvious why there is so much debt out there.
There's a finite supply of money that can be added to, taken away, allocated, or fluctuate in its price according to any other arbitrary unit (i.e. dollars in terms of euros, or in terms of baseball cards, or pounds of steel).
Just like legal entities or "social liquidity", the supply and allocation of money is an ultimately imaginary thing that nonetheless exerts real world influence on how many other resources and products are created.